Could the U.S. dollar collapse?
There are the odd commentators who consider the dollar could go through the floor. Although rupiah-watchers tend to compare rupiah with dollars there has not been significant movement of late but both currencies have actually fallen against stronger currencies such as the British pound, the euro and the Aussie dollar. The U.S. dollar could indeed fall further for several reasons, among them the long-standing and massive budget and trade deficits, plugged only by continuing inflows from cash-rich countries. Then again, it is likely that interest rates in the U.S. will start falling before those of other Western countries. These arguments are logical, but logic does not always apply. Countries like China and Japan would stand to lose heavily if the dollar fell due to their huge reserves in the currency. Nevertheless, it is evident that a shift to other currencies is taking place so the days of the all-dominant U.S. dollar could be numbered. The message here for the small investor is that
