Could the US Dollar Actually Collapse?

Monday September 5, 2011

If you check out the range of news stories that have been published recently about the US dollar, you will come across more than a handful that talk about the possibility of the demise of the US dollar.

But is this just scaremongering or could there be more to it than that? Is it possible that we might be about to see the downgrading of the dollar in our lives – and the possibility of the dollar collapsing and disappearing entirely?

It seems hard if not impossible to imagine a world without the US dollar playing a significant role in it. But let’s just recap a moment on some of the major events that have taken place in the last two or three years. Firstly we had a major global recession – the likes of which have not been seen in many years. In fact we are still in enough of a pickle to warrant very real fears of the so called double dip recession. This is where we start to come out of a recession but events conspire to send us virtually straight back into another one before the recovery can fully take place.

Secondly the US has just gone through an unprecedented event. It managed to come to a decision on its huge national debt, but it was not enough for the credit rating of the US to remain at its triple A rating. Instead it was downgraded, giving America more to worry about in the process.

So where do things go now? Let’s remember that the US dollar is not backed by gold, so it is essentially paper money that is worthless. Perhaps this is one reason why more and more people are wondering whether the currency could actually nosedive right out of existence in the near future.

What would the world be like without the US dollar? It seems hard to imagine but if you track the existence and performance of the US dollar back through history, you can almost see inevitability about its current situation. So perhaps the biggest question is this – what will the world be like if the dollar did disappear? How would America cope? What would it do next?

If things go according to the way that some commentators think they will, we could soon be on the verge of finding out. Keep an eye on the dollar in future months – it could be an interesting ride.