The German Mark was backed by gold until the end of 1914, much like the USD used to be supported by a gold reserve until 1971 when the US completely abandoned the gold standard. The German mark traded at 1 trillion Marks to 1 USD after the hyperinflation incident in 1923.
Now, as the US continues to print more and more currency in response to the pandemic and other global issues, the same way Germany responded to their WW1 war debt, hyperinflation will happen again, and history will repeat itself with the collapse of the USD in the same manner as the German Frank collapsed.
As the world transitions to a digital age, digital currency (cryptocurrency) will take the USD’s place as a global currency, and the USD will be dead.
Why will the US Dollar Collapse?
The main issue that concerns Americans is the inefficiency of the Federal Reserve to meet debt payments. The Federal Reserve has increased its debt to over $28 trillion.
In the past, US debt to GDP levels were never higher than 73% — today, it is 107% and expected to reach 115% by 2021 year-end. The present trajectory is unsustainable, and the financial crisis that currently looms is the one to watch.
To remedy this crisis, the Federal Reserve plans to increase interest rates as early as 2023 — another reason Americans are uncomfortable with the debt owed by the Federal Government.
To understand the root of the problem, it is necessary to go back to 1971. This was when President Nixon announced the US would no longer convert dollars to gold at a fixed value, and the US went off the gold standard and was no longer committed to maintaining its wealth via gold.
What will replace the US Dollar?
Over the past year, Bitcoin has surged in value exponentially, which has generated thousands of speculations about the future of Bitcoin as a global currency.
While the “death” of the USD as an international currency may not happen soon, many people think digital currencies do have the potential to replace the USD in the future.
When you think about it, Bitcoin is the digital representation of gold, and the mining process is much like the gold mining process where you are rewarded with Bitcoins for discovering new gold in a vast P2P market.
Because ‘Bitcoin’ is the future of money, other digital currencies values will likely follow suit, making it nearly impossible to tell which will eventually be dominant.
Like gold, Bitcoin is currently competing with numerous coins which are backed by different commodities and countries.
How will this affect our lives?
One of the biggest fears of a collapse of the US dollar is the potential impact on the nation’s economy.
With the US having more debt than any other country, finding the funds to cover the money lost from the falling dollar will be challenging. If a collapse in the USD comes to be, a catastrophic event could be in store for the global economy.
It is evident that a lack of trust in the USD will hit foreign investment in the United States, leaving us in a dire economic position. This would ultimately be a disaster for the American economy and create a domino effect that would reverberate throughout the world.
In order to survive a global currency collapse, it is likely that China will quickly try to gain control of the USD. For these reasons, it would be wise to invest in things that increase at a rate that exceeds inflation and not hold many dollars.
Back in 1923, wealthy Germans with boatloads of Marks were better off using them to heat their homes as their value became less than the value of wood. Similarly, rich people holding too many dollars will see their wealth diminish to the value of dirt and will be better off using their dollars as fertilizer for their gardens.
The US Governments’ inability to audit the trillions of dollars that have been printed for their purposes has attracted the attention of a long list of nations. For this reason, several global elites have attempted to store and control a value of digital currency.
As bitcoin’s market cap continues to grow, digital currency will be adopted more rapidly worldwide. Furthermore, as the US economy slows down, the USD will no longer be seen as a safe-haven currency.
In time, digital currency will replace the USD. In addition, digital currency will play a role in the crypto revolution and allow users to move funds between themselves seamlessly, which has been made possible through the development of smart contracts.