Tags: dollar | euro | currency | collapse

Why the Dollar Is Safe

By    |   Friday, 06 Mar 2015 08:33 AM

Currencies are different than stocks are and that means the chances of a dollar crash are nearly impossible in the current environment.

Currencies are relative investments. When you own dollars, as an investor, you are betting the dollar will be relatively stronger than other currencies. This doesn't mean the dollar is better than the euro is. Owning dollars might simply mean you expect the dollar to lose less than the euro does.

Stocks are usually thought of in terms of absolute performance. If an investor buys a stock, it's because they expect the price to rise. They don't usually compare the performance of one stock to another when making investment decisions, although they should, as I'll explain in future articles.

It is possible a company can collapse, but it is nearly impossible for a country's currency to decline to zero.

In the past 100 years, there have been just 29 cases of hyperinflation and a currency collapse around the world. In each case, the value of the currency decreased while the currencies of other countries moved higher. The relative performance of the currencies determined winners and losers.

Today, the global economy is in danger of deflation rather than hyperinflation. The U.S. is among the most stable economies and the dollar is strengthening against the euro and other major currencies. If the dollar collapsed, the euro would need to soar. Few see any chance of strong gains in the euro, let alone a move strong enough to force the collapse of the dollar.

Investment strategies based on hyperinflation scenarios or a weak dollar should be reviewed in light of the current state of the global economy. It could be better to invest new money in ways that gain from strength in the dollar.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
MichaelCarr
Currencies are different than stocks are and that means the chances of a dollar crash are nearly impossible in the current environment.
dollar, euro, currency, collapse
292
2015-33-06
Friday, 06 Mar 2015 08:33 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved