As global “reserve currency" the U.S. dollar forms the backbone of our world's financial system.
But according to a new research report, the U.S. dollar could lose its status as the world’s reserve currency as a result of the new US legislation, which takes effect on July 1, 2014.
The report claims that the new law, U.S. House of Representatives Bill “H.R. 2847”, passed into law by U.S. Congress in 2010, will usher in a potential meltdown of the U.S. dollar.
Compiled with input from analysts, the report says that this new law will wreak havoc with local currencies around the world, including the S.A. Rand. It may be the U.S. Government’s biggest blunder which could effectively lead to a collapse of the U.S. Dollar.
The New York Post recently reported, "The US dollar is getting perilously close to losing its status as the world’s reserve currency. Should it cross the line, the 2008 financial crisis could look like a summer storm."
As the U.S. dollar gets closer to losing its position as the world's reserve currency, the impact will be felt worldwide. America contributes 34% to the global economy. Should the U.S. Dollar collapse America’s economy will just about shutdown. Business will at least temporarily grind to a halt. This will directly affect America’s trade partner countries like South Africa.
Commodity prices for petrol, oil and other commodities are expected to skyrocket. Almost everything will get dramatically more expensive - clothing, furniture, household goods, food, electronics, televisions, computers and cars.
Currency crisis. In Cyprus citizens cannot withdraw or write cheques for more than €300 per day from their own accounts. In Argentina citizens must pay an extra tax on vacations abroad. In the Ukraine, recent tensions mean that Ukrainians must wait six working days before making any type of foreign currency purchases.
All these countries have one thing in common – they’re all in the midst of a currency crisis. Unfortunately, in just a few weeks the USA will not be spared the same fate. Neither will other countries.
What to expect when the US Dollar collapses
This is not good news for the rest of us, I’m afraid. Briefly here’s what to expect in South Africa when the US Dollar collapses.
· South Africa’s struggling economy will plummet deeper into recession.
· Inflation will run rampant, as a new currency crisis undermines the last, which will set off higher inflation, even bigger price hikes on essential foods.
· The SA Rand will tumble to unprecedented lows on the back of the news, instead of improving, and will be on the back foot for months before making a slow recovery.
Since the U.S. dollar has been the world’s reserve currency for decades now, most people cannot comprehend what the repercussions will be of a dollar collapse.
The research report, called U.S. Dollar Meltdown Report[i], gives the facts on how this new regulation that will be enforced on July 1, 2014, will affect investors, business and consumers in general in the coming months.
[i] For information about the research report, called U.S. Dollar Meltdown Report, contact the author on firstname.lastname@example.org.