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The Devaluation of the U.S. Dollar & You | USMR Market Insights

hundred dollar bill with sign of red de-escalating stock image
May 6, 2019

There have been a lot of debates surrounding the devaluation of the dollar and its impact at home and abroad. While currency depreciation can help countries improve their trade balances, it can also lead to negative consequences affecting your own pocket book.

The Devaluation of the U.S. Dollar & You- Video Transcription

Patrick Brunson:               00:01                    

The devaluation of the dollar over the last 40 to 50 years has been a major economic topic of discussion by many economists. But what we are seeing is that the average consumer has no real understanding of it. Only the fact that the grocery bills and gas prices have been going up. So we have to understand why. If we want to prepare for devaluation in the future. So let's just start with the basics. First off, it's pretty obvious that the United States will have to drastically devalue the dollar in the next few years. There are many pros and cons to a greenback devaluation that many people just don't understand. Obviously, trade provides the most compelling rationale for developed dollar devaluation. A weaker currency encourages exports by making a nation's products cheaper in global markets. Conversely a weaker currency discourages imports by making them more expensive.

Patrick Brunson:               00:51                    

Decreasing U.S. imports is one of President Trump's top priorities. Therefore dollar devaluation is a logical policy for his administration. The president is taking a huge risk here because the benefits from a weaker dollar might not kick in until after the 2020 presidential election. So basically Trump will have to incorporate a dollar devaluation policy very quickly if he is in fact serious about re-election next year. With that said, we all need to understand what this means for us as the private sector and how this will impact our finances directly. The main effect that devaluing the dollar has on the economy, is inflation. Our dollar would basically buy less goods and services. However, Americans tend to ignore one of the greatest benefits of currency devaluation. A weaker currency makes it very easy to pay off your debts. For example, if you owe one hundred thousand dollars in student loan debt and then the dollar's value was cut in half, now you would basically owe fifty thousand instead of one hundred thousand.

Patrick Brunson:               01:54                    

But that is not necessarily a good thing for all the money that people have in savings and retirement accounts. This is only a benefit to those who have debt. When the dollar comes down, so does the purchasing power of the dollars that we have in our savings. And if the bank or financial institution that's holding your money is not giving you a return to meet the devaluation of the dollar itself, then you are losing money. In some cases, you are hemorrhaging purchasing power, and this is the biggest fear for most retirees today. Mass inflation from the devaluation of the dollar can send many retirees back into the workforce, if they don't protect the money that they're going to need to spend long term. This is one of the many reasons that consumers are turning to gold as a form of insurance or protection for future devaluation, especially if we see another major financial crisis like what we saw in 2008.

Patrick Brunson:               02:47                    

With that said, if you'd like to get more information on this topic, you can pick up U.S. Money Reserve's latest report ‘in debt and out of time‘. It has a lot of great info in regards to the topic discussed today and it can also give you some insight and solutions to the greenback's devaluation. So please, call the number on your screen or click on the link below to get your copy. If you liked the information that we've talked about today, please like and share this video. And if you're watching from YouTube, subscribe to our page so that you don't miss a single episode.

Patrick Brunson:               03:16                    

I'm U.S. Money Reserve's Patrick Brunson, and as always, thank you for watching. Market Insights.

 

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