by Gil Valo

Created on: December 05, 2011   Last Updated: December 06, 2011

Our recent United States debt crisis has had a debilitating affect on the dollar as the international reserve of the world. The U.S. economy is currently facing a crisis in which the government must print more dollars to help keep struggling businesses avoid closure, an action that weakens the U.S. dollar’s value in comparison to rising foreign currencies.

The Federal Deposit Insurance Corporation ( The FDIC ) is unable to protect investors from a declining dollar. They only protect investors from failing banks, but U.S. paper money saved in banks all around the world potentially lose foreign exchange value. Higher Canadian and certain European currencies are more desirable.

Foreign banks such as China make an effort to protect their holdings by diversifying their foreign exchange rate holdings and reduce their dependency on U.S. currencies. Indonesia and Russia have already reduced their U.S. dollar holdings. U.S. high federal budget debt will not only encourage foreign banks to diversify currencies, but money market investors will continue to follow suit, and diversify their own foreign currency portfolio. Investors who own U.S. Treasury bonds look for buyers to purchase their dollar-denominated notes, and they can re-invest the money into profitable foreign currencies.

A declining dollar makes it impossible to purchase more foreign goods, and hurts the U.S. import industry. Food imported from other countries, foreign automobiles, and clothing products, are much more expensive to purchase. The declining dollar, however, helps export goods from the United States by lowering their purchasing price in comparison to foreign products. U.S. exporters use the current financial conditions to act more competitive in selling their U.S. manufactured goods to foreign markets. Presidential candidates in the upcoming presidential election can use the declining dollar as an opportunity to promise the public that they will encourage congress to make a better effort to export a larger volume of U.S. exports when they deliver their campaign speeches.

Iran and Venezuela expressed an interest in establishing a euro oil trading market instead of continuing to allow U.S. dominated dollars to control their crude oil value. The Organization of Petroleum Exporting Countries are always looking for a more successful foreign rate exchange. American consumers are always forced to pay expensive imported oil products when they are rising and it influences them into borrowing more money.

The declining dollar makes it more expensive to travel to Europe, and other overseas countries. Foreign visitors, on the other hand, enjoy coming into the U.S. because their currencies give them greater purchasing power. It is an important factor that benefits an international traveling business. Foreign investors have more clout in purchasing businesses in New York and other U.S. cities, and they are opportunistic in raising property prices.

A declining dollar can help investors make profits by investing in the stock market, gold, silver, copper, and real estate. Almost every American is aware that investing is a risky venture, and whereas some investors become rich, other investors can lose a lot of money. Investing in stocks, precious metals, and real estate, requires careful planning, an understanding of how the declining or rising U.S dollar measures in comparison to other changing foreign exchange values, serious consultation with Wall Street investment marketers, and some luck.

Learn more about this author, Gil Valo.
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