Can the US dollar collapse and what are steps that I should take in the event that this happens?

Question

A friend of mines says that the US dollar is so "heavily intertwined" in other nations that if the US Dollar was to become worthless then that would have a major impact on the world.

However with the little to no backing in gold and division of the US dollar by digital currency as well as referring to history, isn't the US headed down hill?

There is the argument that the US dollar was able to buy more in the past however it seems to be proportional; the dollar bought more however we made less as a normal wage eg. cents versus dollars.

For example, other countries buying our food producing land, concrete factories being owned by other nations when our highway infrastructure needs repair, small factories closing and machinery being auctioned at little to no cost.

So... I was thinking about starting to save in Euros and perhaps looking into Bitcoin which I understand is volatile but it is rare and capped...

Any thoughts on this?

Further I am not heavily into economics (that's probably pretty obvious) so if you can fill in any additional gaps I missed, I would appreciate that.

Answer 1

The reason the US dollar is not destined to collapse anytime soon is that the United States has the most powerful military in the world, and one of the strongest economies.

To put it simply, we produce sufficient food and clean water to feed our people, and we have sufficient housing and infrastructure to ensure that basic needs are met for the vast majority of our citizens. That isn't likely to change in the near future. This means that our currency in a way (though not directly) is backed by those resources (food, water, shelter, electricity, etc.) despite not being tied directly to an indicator like gold. This being the case the only other possible downfall of our currency would be theft or extortion by foreign powers that would deprive us of those resources. As I first noted, our military ensures that this will not happen.

Often, a point of concern for many people is our debt. We have $20 Trillion in debt at the moment. However, just like you wouldn't go try to collect the debt owed to you by "El Chapo," Al Capone, John Gotti, or other violent groups with more guns than you, other countries are deterred from attempts at aggressive collections on the US debt. This is where the intertwining of our economies becomes important. With those economic relationships in place, these countries ultimately get things of value from the United States. Why would they cede those things to the detriment of both the US and that country unless they had an extraordinary reason? This paradox helps to ensure the stability of the currency as well.

That said, if it's still something you're worried about gold and bitcoin are both good investments, as are foreign currencies. A fundamental principle in investments is diversification. The more you spread your money into reasonable investments the less likely it becomes that all of your investments will fail. Thus you will always have something to fall back on.