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The Future of Dollar ?

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photocms The Future of Dollar ?

There has been tremendous predictions about the future of dollar and the US economy from as early as 1999 they were making up with two important predictions one was the break down of the US economy and the other was the end of dollar hegemony. The dominance of a currency is world trade is determined with the three criteria like it should serve as a unit of account. work well as a medium of exchange and also should be a store of value. The first point describes the people should accept the valuation of the currency, The second one is that they should be ready to trade in return for goods or services. the third situation would be that it should give future demand, to hold as savings which are valued in units of the currency. 

 

The conversion of gold into currency has helped with the growth of the dollar post second world war, the dollar was widely used as the principal currency for gold conversions which replaced the pound sterling. The growth of the dollar was made rapid by the Marshall Plan were US was the main supplier of services and goods for the reconstruction of European countries after the war. The demand was mainly for the US commodities, and naturally dollar had its place in all the International transactions. The US was able to keep the value of the dollar fixed in relation to gold till 1971. Any currency which follows the basic three properties would be used as the reserve currency irrespective of political preferences. The US dominance in the world production of goods and services from the 1980′s to 2007 nearly accounted for 30% of the world production (GDP). The future of the dollar will be at risk when the world production shifts from the US sub continent to some other countries which exhibits the same political stability. The next near candidate would be Euro but the EU27 production has fallen continuously since 1980′s and is around 25%. China did you say so its about 6% of the GDP of the World.  

So the dollar will have its presence for some more long time without the lack of a proper candidate to replace it by all means.

51qQVKrVMgL. SL160  The Future of Dollar ?

Future of the US Dollar Part 2