FT: The Unjustified Dollar Privilege Comes to an End

By the end of 2021, the US dollar may collapse by 35%. After this unjustified privilege of the American currency will come to an end, writes the British newspaper Financial Times.

Back in the 60s of the twentieth century, the head of the French Ministry of Finance, future president Valerie Giscard d'Estaing said that Washington was using its position in bad faith, maintaining a high standard of living at the expense of others. He called it unfair and offered to end this state of affairs. Now there is a chance that his wish will come true very soon.

In the United States, there is a catastrophic decline in domestic savings, which is accompanied by an increase in the current account deficit in the balance of payments. In Q2020 1,2, net domestic savings were at the level of -4,1%, i.e. they became negative, which is 1947 p.p. below the first quarter, the largest drop in history since 3,5. At the same time, Washington, having no internal reserves, but having a great desire to ensure growth, simply took advantage of its privilege. This led to a change in the current account deficit to -1,4% of the country's GDP in the II quarter, which is XNUMX percentage points. lower than in the first quarter, and was the largest decline on record.

The United States has become very vulnerable - if in the period from 1960 to 2005 the level of net domestic savings there was 7%, then in 2011-2019 it dropped to 2,9%. And now this indicator is simply not there. As the budget deficit widens, financial pressures rise and economic Problems. The federal budget deficit in 2020 will be 16% of the country's GDP, and in 2021 it is likely to become much larger. This will have dire consequences for the future of the United States.

After that, the dollar will lose its special position in the world. The financial situation in the United States has been slowly but steadily deteriorating since 2000. The dollar is now the most overvalued currency in the world and this makes it vulnerable.

The dollar has always benefited from the seductive charm of its lack of alternative, but now the euro, yuan, gold and cryptocurrencies have become an alternative to the once invincible "green". Therefore, there is no doubt that a real disaster looms for the dollar, which has become vulnerable to impact.
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  1. Sergey Latyshev Offline Sergey Latyshev
    Sergey Latyshev (Serge) 8 October 2020 11: 34
    What a nightmare!
    And the state of the Russian oligarchs is considered in dollars ... and not in rubles

    It's scary to think what will happen to the ruble ... at 21 ... with the oligarchs' money ... I suppose tomorrow everything will be thrown into rubles, and the exchange rate will immediately become visible ...
  2. Igor Pavlovich Offline Igor Pavlovich
    Igor Pavlovich (Igor Pavlovich) 8 October 2020 11: 52
    As Vysotsky sang -

    But as for me - she was in Paris,
    And Marcel Marceau himself said something to her!

    Let's better talk about the Motherland -

    The budget deficit in Russia grew by 85% over the month.
    The deficit is more than RUB 1,5 trillion. formed as a result of the excess of federal budget expenditures over its revenues - 11,92 trillion against 10,399 trillion rubles.

  3. g1washntwn Offline g1washntwn
    g1washntwn (George Washington) 8 October 2020 12: 05
    The kapets comes not to the dollar itself, but to the bubbles that are inflated so that it does not fall from heaven where it climbed.
    They will not collapse with a stone, but the tailbone will suffer so that it will be uncomfortable to sit. Who saw how a deflated balloon drags a basket with balloonists along the ground? Something like this, but the economy, which will be deflated to a real product, will drag them with their muzzle on the sinful Earth. (unless, of course, they generate a new planetary-scale scam or, for lack of choice, zero the world with a global war).
  4. Alexzn Offline Alexzn
    Alexzn (Alexander) 8 October 2020 16: 52
    This is the third kapit of the dollar this week. I even felt sorry for him.
  5. Oleg Rambover Offline Oleg Rambover
    Oleg Rambover (Oleg Pitersky) 9 October 2020 18: 07
    What's again? How long to.