Americans are all experiencing the detrimental effects of the inflation crisis in America. This crisis has resulted in countless goods and services being significantly more expensive than they were even just one year ago. Americans are not receiving pay raises at the rate of inflation, so the majority of Americans have felt the burden of having to cut back on their expenses, and for many families, the cost of living has exceeded their income. The average cost of living is $32,000-55,000 depending on the state. The costs factored into these figures are housing, healthcare, taxes, food, and transportation.
As we all know, there are ample extra costs of living outside of these main categories. Many religious people tithe their income, most people purchase gifts for loved ones occasionally, there are countless unexpected fees involved in owning a vehicle, insurance, and replacing things. This does not even include important financial decisions like investing, saving, and setting aside funds for emergencies or purchases that are for ‘fun’ like restaurants, personal shopping, or vacationing. All of these things add up extremely quickly and make the cost of living far greater than the projections that include only housing, healthcare, taxes, food, and transportation.
The average salary is $45,000-76,000 depending on the state. Given how extremely high the cost of living in the U.S. is, this average salary does not cover the costs of living with much ‘extra’ to spare for important financial choices like investing and saving, or anything extra like vacationing or generous giving to others. The increasing costs of groceries, houses, and vehicles is causing many Americans to be alarmed and wonder what caused these conditions and how they can be resolved. The major issue we are seeing in the American economy is inflation, and its resolution becomes more questionable as de-dollarization increases globally.
The inflation crisis in America is only getting worse. Inflation skyrocketed to an 8% rate in 2022. Feeling the effects of this in our everyday lives and carrying the financial burden of inflation, many people have wondered if the United States Dollar or the U.S. economy is going to collapse. Many economists argue that the dollar is unlikely to collapse because many other countries’ economies are dependent on the USD. However, we are seeing this dependence decrease rapidly.
Investopedia describes what it would take for the USD to collapse, “If the Federal Reserve creates money and the U.S. government assumes and monetizes debt faster than the U.S. economy grows, the future value of the currency could fall in absolute terms. Fortunately for the United States, virtually every alternative currency is backed by similar economic policies. Even if the dollar faltered in absolute terms, it may still be stronger globally, due to its strength relative to the alternatives.”
We see hope and confidence among sources that claim the USD is secure. This is usually based on the assumption that the rest of the world is dependent on the USD. However, we are seeing that crumble quickly. Recently BRICS expanded by including several more countries to join their union. Several BRICS nations have already left the dollar for the yuan in trade among themselves. Additionally, we are seeing the global reserves impacted by these trends away from the dollar. In 2001, 73% of federal reserves were held in USD, but today that number has fallen to 58%.
— Nguyen Loi (@ng_loii) September 11, 2023
Although the USD is currently secure, we are seeing many trends away from the USD globally. Many explanations of the security of the dollar are based on the global reserves, but we are seeing them consistently drop. With dwindling global command, the U.S. will need to stop printing money and funding things without having the funds to do so. Without other countries depending on the U.S. economy and the USD, the many concerns of the security of the U.S. economy will become even more relevant. Since a currency collapses when the government creates money and assumes and monetizes debt faster than the economy grows, the U.S. is on track to have its currency fall.
#BRICS nations are de-dollarizing to reduce reliance on the US dollar and challenge its dominance in the global financial system. For this, BRICS has opted for several strategies. #Dedollarization #PolicyEast pic.twitter.com/AjkZjPZnTv
— PolicyEast (@east_policy) September 17, 2023
This may not happen ‘soon,’ but as other countries continue to replace the USD in their reserves and trade with other nations, the US will need to control the variables of currency collapse that are currently sustained by global dependence on the USD such as printing money and taking on debt. If the U.S. cannot do this, a currency collapse will happen. This is why investing in other currencies is critical. We cannot know when the USD will collapse, but it is important to make investments in currency alternatives like gold and silver or cryptocurrency. If stored physically (as opposed to in a third-party digital wallet), Bitcoin cryptocurrency would be secure from government seizures and therefore safe from the USD or U.S. economy collapse.
‘Physical’ currency alternatives to the USD are gaining more popularity as people are increasingly uncertain about the future of the US economy. Hopefully, strong patriot leaders like Trump will be able to stop the out-of-control spending and stabilize the USD. Even if this does not happen, many currency alternatives to the USD are growing in popularity. It is only a matter of time before the U.S. government is forced to reckon with its actions, either through the collapse of the USD and the rise of alternate currencies or by practicing more reasonable spending and stabilizing the currency.
Erin Weeks is a Staff Writer at Turley Talks.
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