The Dollar Has No Value
- Posted by TheArmoTrader
- on December 22nd, 2011
I often hear, “The Dollar has lost 95% of its value”, or “If we print any more, the dollar will be valueless”. Im here to set things straight. The dollar has NO value. It can’t gain or lose any value. Why? Because its just a piece of paper. When we were on the gold standard, the dollar did have value, but not anymore.
So what does the dollar (and any other fiat currencies) have if its valueless? The Dollar has buying power which is determined in the markets through a modern floating exchange rate system. The buying power and stability of the US Dollar is determine by a couple of things.
- Taxation: The government taxes in dollars. If you try paying your taxes in something else, good luck. You will be likely sitting in jail if you do not pay taxes in dollars. This is what gives the dollar its stability.
- People’s trust: Of course, the citizens of a state can get up at any moment and riot against the government, which would mean they no longer trust the nations currency (be it from too much “printing” or another reason).
- Currency Management: Simply put, this is the government’s control over the currency.
- Productivity: The productivity of a nation is what determines the currency’s strength or weakness.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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