General Question

imrainmaker's avatar

What will happen if world stops using dollar as exchange medium?

Asked by imrainmaker (8365points) December 24th, 2017

This is a hypothetical question. What will happen if say Euro takes place of dollar as currency for international trade or Yuan what will be the impact on US economy?

Observing members: 0 Composing members: 0

19 Answers

zenvelo's avatar

It would make international trade more difficult for US corporations, especially if our large trading partners said “you must pay us in euros” or “we will only pay in euros”.

But really, it isn’t as if all international trade is dollar denominated. Most trade is not; much trade is done in euros and in renminbi and other currencies, without dollar involvement.

The more worrisome question would be, “what occurred to have people getting out of dollars and into euros (or other currency)?”

SergeantQueen's avatar

We’d be screwed

Darth_Algar's avatar

America will finally be great again.

seawulf575's avatar

Research Argentina, Weimar Republic, Zimbabwe. We would see hyperinflation and our economy would crash. Following the marxist ideals will ensure this happens.

elbanditoroso's avatar

I really depends on what currency takes over. None of the ones mentioned (Euro, Chinese Renminbi) have the worldwide coverage like the dollar does (which is why it won’t happen).

If it did in some way occur, even then we wouldn’t see that much difference, because the US dollar floats in relation to other currencies and that would still be the case.

@seawulf575
is partially wrong. The reason ZImbabwe and Weimar Germany had hyperinflation is because their economies had nothing that the rest of the world wanted to buy, which made their currencies worth less and less.

As long as the US keeps manufacturing things the rest of the world buys, then the dollar retains its worth to a large degree.

Call_Me_Jay's avatar

As long as the US keeps manufacturing things the rest of the world buys

I am not an expert, this is off the top of my head. But the US share of world manufacturing has been shrinking for a long time as more countries join the game.

Maybe the strength of the dollar is also from the size of the IMPORT market. The US is the 3rd largest country on Earth, with much higher per capita spending power than the other big countries.

Whether we are importing or exporting, there is a huge amount of international trade with an American on one end or the other.

Darth_Algar's avatar

Umm, what does the US manufacture these days?

ragingloli's avatar

I am sure that every single piece of hardware in my PC was manufactured in an East Asian factory.

stanleybmanly's avatar

@Darth Algar Really stupid politicians.

Call_Me_Jay's avatar

There is a lot of manufacturing done in the US. It’s a smaller part of the economy now, and doesn’t include a lot of consumer goods, but googling says US manufacturing is 18% of the world total.

seawulf575's avatar

The reason our economy would crash has nothing to do with what me manufacture. It has to do with all the currency we print. We can get away with printing money on top of money because we are the world’s reserve currency. If something else replaced the dollar, all that money we print would become worthless paper. The value of the dollar would plummet because of the huge number of dollars out there. Our national debt would overwhelm us. We would, for all intents and purposes, become a third world nation.

imrainmaker's avatar

^That’s valid point!

LostInParadise's avatar

Bitcoin is doing rather well with nothing to back it up. Could digital currency be the way of the future, with appropriate regulation of course.

ragingloli's avatar

Bitcoin is fluctuating so much, with a large decline in value just a few days ago, it is useless as an actual currency.

LostInParadise's avatar

It is still in its early stages. I like its decentralized structure. It is worth watching.

ragingloli's avatar

Like Tulip bulbs.

rojo's avatar

US influence on World collapses.
Interest rates skyrocket,
Other countries and nationals cease buying US Treasury Debt as an asset and investment.
Value of the currency plummets.
Costs of goods and services rises substantially,
Exports drop.
Trade deficits increase rapidly
Financial market craters
US government bails them out again,
We all (except for the top 1%) go hungry and broke.
Economic Collapse
Great Depression.
Opioid Market booms.
Funeral and associated Market booms however casket sales fall since no one can afford one.

LostInParadise's avatar

The current issue of Scientific American has “The Future of Money” on its cover, which refers to three articles about digital currency.

dabbler's avatar

One of the most worrisome aspects in my mind if the world shifts away from the dollar are increased costs of re-financing the national debt as bonds expire. Because so much commerce is done in dollars there are lots of countries, corporations, and high-net-worth individuals willing to buy U.S. debt. If that commerce goes to some other currency we will have to pay more interest on a very very big amount of debt. Interest rates are low now, if they go up our national budget will be soaked up by interest payments.

Answer this question

Login

or

Join

to answer.

This question is in the General Section. Responses must be helpful and on-topic.

Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
or
Knowledge Networking @ Fluther