To keep the dollar going, the system has to keep borrowing more and more.
If we look at the next 30 years, the trend might look something like this: we’ll see a short-term deflation and a crash for the strong dollar, followed by a big drop in dollar value and a massive bull run for the markets. Then, we’ll likely face even more deflation and a temporarily strong dollar again, but eventually the dollar will drop even further.
After each crash, they’ll have to cut rates even more and lower the dollar’s value over time. This will lead to rising inflation, making housing prices soar even higher.
Long-term, the dollar is on a steady decline. Sure, short-term bonds could offer high yields for investors, but the dollar will keep losing value. After any short-term strong dollar moments, it’ll just keep slipping until many can’t afford basic things due to crazy high prices, while wealthy investors from the U.S. and abroad gobble up assets traded against the dollar like real estate, land, crypto, and gold.
The dollar’s value and the cost of living will rise together, and investors are already noticing the dollar’s slow decline compared to other assets.
But this doesn’t mean the end for the U.S. or the dollar it just signals the biggest transfer of wealth from many to a few. The future of AI, bots, and automation will transform the U.S. into a major production hub, shifting the focus from consumerism to production.
A lower dollar will still attract foreign buyers to U.S. goods and services, and the world will be flooded with dollars as traders try to sell theirs cheap just to get rid of them.
Why make a post like this?
Also, I can imagine the US following a similar style of Russia and taking a decline in dollar value to expand their government and military resources. I do think it might be unlikely the dollar falls though, it's still the main traded currency with the highest liquidity. It's falling in terms of gold and stocks but that rate's more consistent. I don't think interyear and intrayear inflation effects people that much too.
Basically you expect a kind of boom-bust cycle, where debt increases while the dollar is strong, then a cathartic inflation increase like in 2021-23, and then continuing the strong dollar.
I guess your logic is the following:
1) Strong dollar leads to deflation, contraction of economy and debt increase,
2) interest rates have to be lowered,
3) this means more fiat creation, culminating in a strong inflation jump after some years like in 2021-23, without really solving the debt problem.
4) once the dollar stabilizes, the cycle begins again, and the inflationary waves get stronger and stronger.
I've heard this logic several times in the forum. It's what some "crash prophets" are saying for decades. The current fed policy of moderate rate cuts with a relatively weak dollar seems to hint that now this isn't the case, and Trump is also partidary of a weaker dollar as he'd like even stronger rate cuts. So this isn't really an automatic development, it depends on political will and central bank policy.
The above scenario could indeed be bullish for Bitcoin. However, I'm not so sure about real estate. Real estate needs some "real" demand at some time, otherwise the price will eventually crash.
I dunno, In many of these areas China is quite competitive and has the advantage that they are already the leading industrial country. This will be difficult to be countered by a low dollar, it would have to become much lower to really compete with China again.
Even if the dollar loose purchasing power over decades because of this continues borrowing of money (which is actually needed for the US economy), The system still continues, the economy will still function regardless this is because dollar is a global reserved currency, business, banks, investment etc keep trading and spending, So even if dollar looses value the economy will still function
And it will also later be of good help to the dollar.