Richardcyoung.com

  • Home
  • Debbie Young
  • Jimmy Buffett
  • Key West
  • Your Survival Guy
  • How We Are Different
  • Paris
  • About Us
    • Foundation Principles
    • Contributors
  • Investing
    • You’ve Read The Last Issue of Intelligence Report, Now What?
  • The Swiss Way
  • My Rifles
  • Dividends and Compounding
  • Your Security
  • Dick Young
  • Dick’s R&B Top 100
  • Liberty & Freedom Map
  • Bank Credit & Money
  • Your Survival Guy’s Super States
  • NNT & Cholesterol
  • Your Health
  • Ron Paul
  • US Treasury Yield Curve: My Favorite Investor Tool
  • Anti-Gun Control
  • Anti-Digital Currency
  • Joel Salatin & Alfie Oakes
  • World Gold Mine Production
  • Fidelity & Wellington Since 1971
  • Hillsdale College
  • Babson College
  • Contact Us

Is the Dollar About to Crash?

November 9, 2020 By The Editors

By Krakenimages.com @ Shutterstock.com

At the Financial Times, Michael Mackenzie explains the long term forces stacking up against the dollar. He writes:

With alarm bells ringing across financial markets in recent days, the US dollar has found its footing, reflecting its haven status whenever equities and investor sentiment take a knock. But that may prove fleeting given the longer term forces stacking up against the world’s reserve currency. Since climbing to its best level since 2002 in the wake of the pandemic earlier this year, the Federal Reserve’s trade-weighted dollar index has been pressured by a combination of rising trade and budget deficits, alongside expectations that ultra-low US interest rates are set for an extended stay. Despite rising this week, as global equities headed for their biggest weekly fall since the March turmoil, the dollar has still declined by 9 per cent from its peak in that month.

A weaker US currency acts like a safety valve within a global financial system that is heavily reliant on dollar-denominated debt and trading flows, particularly for emerging market economies. A sliding dollar also supports US business activity when interest rates are anchored near zero.

Renewed dollar weakness may well follow given the challenges facing the US economy, even in the wake of its record rebound in growth in the third quarter. Some economists believe a return to pre-pandemic US output does not beckon until late 2021. With rising coronavirus cases hitting an embattled service sector and employment prospects, the urgency of additional stimulus looms in the wake of next week’s US Presidential and Congressional elections.

“Regardless of the election outcome, the dollar has entered a cycle of relative decline,” observes Marc Chandler, chief strategist at Bannockburn Global Forex. “The old meme of twin deficits is coming back. The dollar becomes a shock absorber for the economy by weakening.”

The pandemic has already prompted a sharp deterioration in the US trade deficit in goods and services this year, according to official data. As for government spending, the Congressional Budget Office projects a $3.3tn budget deficit for 2020, constituting 16 per cent of gross domestic product and the largest amount of borrowing since 1945. For the 2021 financial year, the CBO expects the deficit to be a still eye-watering 8.6 per cent of GDP.

Rising deficits have so far failed to push long dated US interest rates significantly higher. This reflects expectations of a long recovery process for the US economy and jobs, as well as a Federal Reserve willing to expand its balance sheet and buy a lot more Treasury debt.

Expanding the balance sheet of the US central bank may take on greater urgency given an important aspect of the global pandemic, a rebounding Chinese economy and its currency.

Read more here.

An alternative to the dollar is Swiss francs.

Related Posts

  • US Dollar Craters vs Swiss Franc
  • Crash II, Preview
  • The Crash that Cured Itself
  • "Obamacare Enrollment Crash"
  • Author
  • Recent Posts
The Editors
The Editors
The Editors
Latest posts by The Editors (see all)
  • STARLING: IBM Is Building a ‘Fault Tolerant’ Quantum Computer - June 16, 2025
  • Mossad in Iran - June 16, 2025
  • Are California Politicians Abetting the Violence? - June 11, 2025

Dick Young’s Must Reads

  • YOU DESERVE FREEDOM: Your Hard Work Will Make It Happen
  • RAPPOPORT: War Applauded by “Stone Cold Utopians”
  • “An Epic Struggle Over the Definition of America”
  • You Need to Seek Some Shelter for When Things Get Ugly
  • My Battle-Hardened Stock Market Strategy for the Worst of Times
  • What Do You Know About Rho-Kinase?
  • Life: When Others Resent You for Your Success
  • Who’d be Nuts Enough to Have Put Money into SVB?
  • Washington Is the Systemic Risk
  • Vermont Abandoned, Dairy Farm Economy Devastated

Our Most Popular Posts

  • The Night of the Living Dead
  • TRUMP: "Everyone Should Immediately Evacuate Tehran!"
  • Are You Familiar with the EF and Arithmetic?
  • People Are on Edge
  • A Classic Issue from Richard C. Young’s Intelligence Report
  • A Nationwide Day of Defiance
  • Epic Man Cave with Car Elevator in Utah
  • Best Bang for Your Buck: Top 5 AR-15s of 2025
  • Israelis Speculate on American Involvement in War with Iran
  • Whoa, Hang on Here. There’s Trouble in Culver City

Compensation was paid to utilize rankings. Click here to read full disclosure.

RSS Youngresearch.com

  • A Great Victory for Liberty
  • Letchworth: Are You Living Your Best Retirement Life?
  • Job Openings Rise in Four States, National Rate Steady
  • Ethane Shipments Stall as U.S.-China Trade Tensions Rise
  • Historic Tax Cuts Across All States
  • Are You Familiar with the EF and Arithmetic?
  • Canadian Shipbuilder Targets U.S. Arctic Contracts
  • Israel-Iran Conflict Triggers Freight Rate Surge and Maritime Caution
  • US Export Prices Drop Sharply in May
  • Retro Meets Futurism: Dacora’s Ultra-Luxury EV Channels 1930s Elegance

RSS Yoursurvivalguy.com

  • Letchworth: Are You Living Your Best Retirement Life?
  • Will SALT Kill the “One Big Beautiful Bill?”
  • You’ve Read the Last Issue of Intelligence Report: Back to Investor’s Yield
  • The Sound of Silence?
  • Are You Familiar with the EF and Arithmetic?
  • “Happy I Found Richard C. Young’s Intelligence Report”
  • A Classic Issue from Richard C. Young’s Intelligence Report
  • The Rich Man “Doesn’t Need the Markets”
  • Is Bitcoin Really Digital Gold?
  • Epic Man Cave with Car Elevator in Utah

US Treasury Yield Curve: My Favorite Investor Tool

My Key West Garden Office

Your Retirement Life: Traveling the Efficient Frontier

Live a Long Life

Your Survival Guy’s Mt. Rushmore of Investing Legends

“Then One Day the Grandfather was Gone”

Copyright © 2025 | Terms & Conditions | About Us | Dick Young | Archives