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May 7, 2010 2:25 PM Subscribe
Will the US dollar become ever become worthless? Why?
This post was deleted for the following reason: chatfilter -- jessamyn
Sure. Since the dollar doesn't actually represent anything tangible anymore since they stopped redeeming silver certificates during the Johnson administration. The dollar is backed by the "full faith and credit of the United States". Once there's no faith in the US financially anymore, there's no value to the dollar. So if that ever happens...well, let's hope none of us are around to see that.
posted by inturnaround at 2:32 PM on May 7, 2010
posted by inturnaround at 2:32 PM on May 7, 2010
Yes, because it will be replaced by some other currency/commodity which is backed by the human and natural resources with now determine the value of the dollar, or the value of the natural resource will be totally depleted (or lost due to the ruin of agriculture in central North America), or the worth of the American labor force will be lost due to lack of support and renewal.
posted by Some1 at 2:36 PM on May 7, 2010
posted by Some1 at 2:36 PM on May 7, 2010
The Confederate dollar became worthless in a short period of time.
Who knows what the future would bring; civil war, massive economic crash, nuclear holocaust, etc can all work to change the importance of a green piece of paper.
posted by JJ86 at 2:40 PM on May 7, 2010
Who knows what the future would bring; civil war, massive economic crash, nuclear holocaust, etc can all work to change the importance of a green piece of paper.
posted by JJ86 at 2:40 PM on May 7, 2010
As currency, yes. All things come to an end.
As paper, no. The paper can always be used for some purpose: burning it to create energy/heat, shredding it to use as filler. I heard this one anecdate about how the value of some country's currency dropped so low that people where popping holes in the coins and selling them as washers to wealthier countries.
posted by whiskeyspider at 2:43 PM on May 7, 2010
As paper, no. The paper can always be used for some purpose: burning it to create energy/heat, shredding it to use as filler. I heard this one anecdate about how the value of some country's currency dropped so low that people where popping holes in the coins and selling them as washers to wealthier countries.
posted by whiskeyspider at 2:43 PM on May 7, 2010
As long as there are currencies and the US exists, it's very unlikely. Of course, many unlikely events can occur of your timeline is forever, including: the US going bankrupt (though in most scenarios, I imagine you would still get some percent of your investment back), the US declaring a new currency by fiat, with minimal to no exchange of existing holdings (North Korea did this recently, with disastrous results), hyperinflation reducing the current dollar to 1/1000th of its value (see pre-WWII Weimar Germany for one example of this), running all the way to cataclysmic events such as: the death of all life on the Earth, the death of the Sun, the heat death of the Universe.
But I'd say that, as long as there is a functioning world economy and a United States, the odds of the dollar going to zero are infinitesimal.
posted by zippy at 2:45 PM on May 7, 2010
But I'd say that, as long as there is a functioning world economy and a United States, the odds of the dollar going to zero are infinitesimal.
posted by zippy at 2:45 PM on May 7, 2010
A month and a half ago, bonds sold by Berkshire Hathaway sold at a lower interest rate than US Treasury bonds, suggesting the market has more faith in the former's permanence than the latter. More realistically and to your question, the market also determined around that time that Eurozone bonds were less risky than US ones. If we were to start a one-world trading zone anytime in the forseeable future, its currency would be better off as the Euro than the dollar.
posted by l33tpolicywonk at 2:48 PM on May 7, 2010 [1 favorite]
posted by l33tpolicywonk at 2:48 PM on May 7, 2010 [1 favorite]
It's a pretty good bet that people will someday become extinct.
posted by box at 2:50 PM on May 7, 2010
posted by box at 2:50 PM on May 7, 2010
It turns out that the real value of the US dollar is that you can use it to pay taxes. As long as the US government continues to exist and collects dollars for taxes, the US dollar will be worth something.
posted by Chocolate Pickle at 2:53 PM on May 7, 2010 [2 favorites]
posted by Chocolate Pickle at 2:53 PM on May 7, 2010 [2 favorites]
We should wait and see how the EU debt crisis plays out before declaring the Euro as the logical successor to the dollar. The world economy is sorta screwy right now, and the US isn't the only country in hot water.
posted by hwyengr at 2:53 PM on May 7, 2010 [2 favorites]
posted by hwyengr at 2:53 PM on May 7, 2010 [2 favorites]
Just to expand on that a bit, when governments cease to finance their operations with taxes and rely instead on other sources of revenue (borrowing, or the printing press) that is when their currency collapses entirely e.g. Zimbabwe.
posted by Chocolate Pickle at 2:54 PM on May 7, 2010
posted by Chocolate Pickle at 2:54 PM on May 7, 2010
Pull out a dollar bill. On the front, it will say, "This note is legal tender for all debts, public and private."
"This note" = This piece of paper is promissory note, which means it's essentially a contract. A promise, if you will, to pay you, the bearer, of the note.
"legal tender" = The note is a negotiable instrument, backed by the force of law, making it legal tender as payment for debts.
The dollar bill, then, has value because the U.S. government promises that it does, and backs up that promise by legal force.
For it to become worthless, you either have to arrive at the conclusion that the U.S. government can't back up its promises, or doesn't have the legal means to do so.
And keep in mind, there are plenty of stops along the way to "worthless." The Argentinian peso pretty much went tits up, and while I wouldn't want to live there, Argentina still seems like a mighty nice place to visit.
posted by Cool Papa Bell at 2:56 PM on May 7, 2010
"This note" = This piece of paper is promissory note, which means it's essentially a contract. A promise, if you will, to pay you, the bearer, of the note.
"legal tender" = The note is a negotiable instrument, backed by the force of law, making it legal tender as payment for debts.
The dollar bill, then, has value because the U.S. government promises that it does, and backs up that promise by legal force.
For it to become worthless, you either have to arrive at the conclusion that the U.S. government can't back up its promises, or doesn't have the legal means to do so.
And keep in mind, there are plenty of stops along the way to "worthless." The Argentinian peso pretty much went tits up, and while I wouldn't want to live there, Argentina still seems like a mighty nice place to visit.
posted by Cool Papa Bell at 2:56 PM on May 7, 2010
I don't it will become worthless with the nationl/world government structure we have in place. However, if that were to change...
Now, within the confines of our current system, I would say that because of the current political crisis in the EU over the past couple of months/year, that the dollar can only gain in relevance/power. It looks like the Euro (the only true competitor to the dollar's global dominance) is about to crumble and as there is no successor proposed, the only outcome is the continued backing of the dollar as the global currency.
posted by TheBones at 3:06 PM on May 7, 2010
Now, within the confines of our current system, I would say that because of the current political crisis in the EU over the past couple of months/year, that the dollar can only gain in relevance/power. It looks like the Euro (the only true competitor to the dollar's global dominance) is about to crumble and as there is no successor proposed, the only outcome is the continued backing of the dollar as the global currency.
posted by TheBones at 3:06 PM on May 7, 2010
Douglas Rushkoff thinks that all national currencies are scams, basically, and advocates for some kind of whacky decentralized system of micro-currencies. I don't share his thinking, but he's got some interesting ideas and thinks that national currencies in general are on the way out.
posted by adamrice at 3:15 PM on May 7, 2010
posted by adamrice at 3:15 PM on May 7, 2010
The U.S. dollar as a currency is worth as much as your imaginary friend Mr. Snuffleupagus. The only thing between its value and total collapse is people's "confidence," which as we all know is shaky now. Such is the reality of fiat money. Of course just about every currency in the world is a fiat one, so you're not really left with much of a choice if you want your wealth to hold its value. The best you can do is convert FRN into gold bars and store them in a safe, but that's impractical for a number of reasons. They won't lose their value, but they're also inaccessible, heavy, and difficult to break down into smaller denominations. Paper money has its advantages, when it's backed by some kind of commodity (whether it be hard metals or some other equally scarce material in fairly consistent demand).
That said, the U.S. dollar will never be worth zero because everything has inherent value based on the usefulness of its component materials. A dollar bill is worth 3.8 cents (or did fifteen years ago; the intrinsic value is constant but the unit of measurement has changed, courtesy of inflation). Still, that's practically worthless. A dollar coin is worth about 8 cents, metal being more valuable than paper and ink. Intangible dollars represented by ATM cards are of course nonexistent. If confidence were to wane completely, those whose only financial assets were stored digitally in bank computer systems would be hit the hardest.
Not to preach doom and gloom, or suggest a survivalist approach is needed. If the dollar dies, something else will come along to replace it. There will always be demand for human labor; no one will be left with nothing at all. Still, it's worth acknowledging the thin air that our current monetary system is based upon.
posted by The Winsome Parker Lewis at 3:25 PM on May 7, 2010 [1 favorite]
That said, the U.S. dollar will never be worth zero because everything has inherent value based on the usefulness of its component materials. A dollar bill is worth 3.8 cents (or did fifteen years ago; the intrinsic value is constant but the unit of measurement has changed, courtesy of inflation). Still, that's practically worthless. A dollar coin is worth about 8 cents, metal being more valuable than paper and ink. Intangible dollars represented by ATM cards are of course nonexistent. If confidence were to wane completely, those whose only financial assets were stored digitally in bank computer systems would be hit the hardest.
Not to preach doom and gloom, or suggest a survivalist approach is needed. If the dollar dies, something else will come along to replace it. There will always be demand for human labor; no one will be left with nothing at all. Still, it's worth acknowledging the thin air that our current monetary system is based upon.
posted by The Winsome Parker Lewis at 3:25 PM on May 7, 2010 [1 favorite]
This question is either unanswerable or trivially answerable depending on what you mean by "ever" and "worthless".
The trivial answer is yes, because on a long enough timeline we're all dead.
As "ever" and "worthless" get closer to the present the question becomes unanswerable. Nobody knows for sure though, of course, it becomes much less likely as your time horizon shortens.
So basically this is chatfilter as there is no non-trivially-true answer.
posted by Justinian at 3:25 PM on May 7, 2010 [1 favorite]
The trivial answer is yes, because on a long enough timeline we're all dead.
As "ever" and "worthless" get closer to the present the question becomes unanswerable. Nobody knows for sure though, of course, it becomes much less likely as your time horizon shortens.
So basically this is chatfilter as there is no non-trivially-true answer.
posted by Justinian at 3:25 PM on May 7, 2010 [1 favorite]
Response by poster: Thank you very much for the thoughtful answers everyone. I really appreciate your insight.
posted by yoyoceramic at 3:56 PM on May 7, 2010
posted by yoyoceramic at 3:56 PM on May 7, 2010
FIAT money is a "future" but it has a knockout.
Unfortunately the threshold of the knockout will not be known in advance.
posted by yoyo_nyc at 5:34 PM on May 7, 2010
Unfortunately the threshold of the knockout will not be known in advance.
posted by yoyo_nyc at 5:34 PM on May 7, 2010
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posted by mr_roboto at 2:29 PM on May 7, 2010