Dying Dollar

Dying dollar?” you may ask. “Obviously you have not seen today’s non-farm report or unemployment rate. The unemployment rate is the lowest since 2008! How could you say that the dollar is dying?”

Since the year 2000, the U.S. Debt has roughly tripled. TRIPLED. Instead of looking at today’s news, let us take a few steps back and see the big picture. If so much damage has been done in such a short period of time, it is sad to think of where America could be in the next 10 years if something isn’t done. To see past debt numbers and future expectations, visit the U.S Debt Clock.

Common sense is not common

The current proposed methods of handling and reconciling the U.S. economic crisis spell out death for the dollar. With a 16 trillion dollar deficit in front of the White House, it is hard for them to see past it to economic restoration. The burden of debt has blocked vision for the coming generations, therefore we are making decisions without any regards to our great-grandchildren. President Obama currently wants to raise the debt ceiling…

It’s possible that the White House is so weighed down by the U.S. debt burden that they have spiraled into a state of confusion. Common sense seems to have been set aside in handling current U.S. fiscal issues. For example, common sense would say “spend less than you make”.

Whether the republicans or democrats are victorious in the fiscal cliff debate, long-term, we still have an ever-increasing mountain of debt. I think the democrats proposal, if passed, will not divert the 2013 Fiscal Cliff. It will accelerate the U.S. economy’s journey towards a much larger “Fiscal Cliff” of epic proportions.

With the Forex market, you can take advantage of these circumstances. Therefore, the more informed we are, the more prepared we are, and the better we can position ourselves for success. “People perish for lack of knowledge”.

Taxing the rich is a death sentence

The recent democratic proposal would like 1.6 trillion in new taxes, not even 400 billion in cuts, and extra spending which is greater than the amount they are willing to cut. In John Boehner’s words, it is not a serious proposal”.

Some 230 GOP representatives and 40 senators have vowed to oppose tax increases.” (Money Morning)

Who owns the businesses of America? The wealthy.

Therefore, who provides jobs? The wealthy.

If the wealthy are required to pay more in taxes, decreasing their yearly net revenue, they will have less money to hire employees.

Not only will their hands be bound when it comes to hiring but, they will have to let some employees go too. The unemployment rate recently found itself at it’s lowest since 2008. It cannot stay there for long if the wealthy experience tax hikes. Unemployment could easily be up to 10% within a few years . More people could be out of work which means, more people would be collected unemployment, which means the government’s net revenue would be decreasing, although taxes are high. The laffer curve may go into affect and the government will not bring in as much money because business revenue will be down, and the government will be taxing a less substantial amount of income.

As the U.S. economy declines, I think there are two possibilities for the U.S. Dollar. Risk Aversion could kick in and the value of the Dollar rise for a season until people completely lose confidence in the Dollar’s strength, or the Dollar’s sentiment is so ugly already that the value of the dollar decreases in a more immediate fashion throughout the next couple years. 

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