The USA is no longer a world giant. This has been written about during the last years by two-three journalists from the whole world, including the United States. Certainly, not everyone agrees with this statement, and it is obviously because of the continuing influence of the United States on the global processes. However, this impact is not precisely defined as in the nineties of the twentieth century or in the beginning of the twenty-first. Meanwhile, the U.S. was a giant not only in geopolitical, but also in economic terms.
What means for the United States the loss of status as a "world leader" for the world economy? The analysts of the Binary Options Broker Optionova commented.
The USA loses positions: arguments – geopolitics and dollar.
The USA loss of its world power status became evident after the end of the situation with Syria. For a long time all American propaganda machine, backed by the range of friendship, or simply dependent, European MSM, escalated the situation around Syria. It was at least the upcoming invasion, if Syria does not comply with the USA ultimatum. But to start with, Americans fell diplomatic through at the UN, which, despite all the training undertaken, refused to recognize the arguments of the USA against Syria sufficiently.
And then the Americans suffered the heaviest blow: the situation around Syria was resolved peacefully, with the scenario proposed by Russia. However, this has disturbed just American hawks, while President Obama himself was obviously pleased that the invasion was avoided. No wonder: case studies at that time showed that almost 70% of the U.S. population thinks that military operation against Iraq and Libya were mistakes, and they don’t want to hear about support for the invasion of Syria.
Anyway, they could not impose their own version in the USA and had to agree with one of the most unacceptable (ideologically) with Russia. This is how outside observers see it. However, not only observers but also some American experts interpreted the incident as a geopolitical failure that dropped the USA from its pedestal, but forced to share this pedestal with others. The most pessimistic USA experts even joined the chorus of foreign enemies, who became prophesy imminent collapse of the American positions and beyond geopolitics, particularly, in the economy. Naturally, the first negative forecasts touched the number one currency in the world, the U.S. dollar.
Longtime death prophecy of the dollar: from myths to reality.
We should notice that the hard destiny of the dollar as the world's number one currency has been predicted long ago and it is reasonable. First, we should not forget that the United States since the nineties of the twentieth century are in a difficult position in terms of production. Globalization processes, the transfer of production capacity to "cheap" countries, rising unemployment, violation of economic relationships, all this, of course, could not help affecting the "fortress" of the dollar.
This problem was managed by the American government in two ways: military stimulating of the economy and commonplace emissions, backed only by the printing press existence. Mainly foreign countries, whose economies were tightly “tied” to the dollar, suffered from this but didn’t have access to the printing press.
But the financial crisis of 2008 was the second reason for "dollar malaise." Despite the fact that the U.S. economy, which has become the "base" of the crisis, benefited from certain benefits, the global status of the dollar crisis has a long-term impact. It is a long-term, as a sharp drop in rates has affected many currencies, but not the dollar. But the Dollar felt a severe blow in 2011 and it's the third ground for pessimism about the dollar. In 2011, China and Russia have moved in trade calculations on Yuan, replacing them until the ubiquitous dollar. The mere fact of failure of the "trouble-free" number one currency became tangible blow and image to the position of the dollar.
Also, we should not forget that growing problems in the European market are reflected in the income of American companies and the value of their shares. Companies are getting cheaper and China buys them, in parallel with this, American capital begins to leave the United States, which also does not bring anything good for the dollar. What should we expect in the nearest future? "There are a few key points," - explained the leading Binary Options Broker Optionova expert, Mikle K.
1. The FED meeting on Wednesday. According to forecasts, we will see a reduction of QE3, if so, at the moment the pair will decline.
2. The inflation and unemployment on Friday. A number of financial institutions, including the IMF, concern the beginning of the deflation process in the euro zone; it will therefore close attention to these data. Latest data on PMI in the euro zone have been better than expected, indicating the steady growth of the economy. If the data is in line with expectations, it will support the euro rate, because at the background of a growing economy, we see a weak inflation, but not weak enough to take the additional incentives.
3. The U.S. debt. Session is scheduled for the 7th of February, but the fact of uncertainty imposes additional risks for the dollar, which obviously will not support it.
Conclusion: at the moment the euro rate will remain stable, with a prospect of modest growth, but, as before, the potential of this growth will be limited. Above 1.39, longs for the moment it is not recommended to keep.
We can see an attempt to push the price to the seller, but without the continuation of the movement, which indicates the presence of sufficient demand at current levels, and when while drivers appear the price can be raised:
What do experts say about the dollar’s destiny?
Are there enough grounds to herald the collapse of the dollar? However, for forecasts reasons, it is clearly enough, but how close are these predictions to reality? Indeed, many analysts argue that in 2014, the next wave of the crisis “will cover" not just Western countries but the "Asian Tigers". Production, consumption and GDP in Japan, India, Singapore, Taiwan and, most importantly, China is shrinking. Slowly, but it is shrinking from 2011. But the Chinese construction market is inflated to the same American levels that provoked the mortgage crisis, as the analysts of Binary Options Broker Optionova explained.
Nevertheless, even the fall in production in China, the ability to bring the next huge problem worldwide, China itself is not very hurt. The scale of Chinese savings and the prospects of the Chinese market even when the production, consumption and GDP remain significant. At that time, as the U.S. has been steadily declining all the economic indicators, can maintain itself only with the printing press, and unable to do anything to stop it at a public outcry, China actually may at any time without any loss go to austerity – as there has never been an “affluent society " and even a "consumer society ". In addition, its huge dollar reserves, China will gladly spend (already spending) for all sorts of loans: and why should it keep dollars if they are inevitably devalued?
Now let's think: if China today, for example, proposed to replace the dollar in its international status of the Yuan, would there be countries that would support him? Certainly, every year their number grows. Economists like to abut the fact that China can’t make profit from it; maybe. However, if you make a choice between "not very profitable” and " very profitable ", perhaps, the first option would be more popular.
Notice that most forecasts of the U.S. dollar today remain completely empty. The Federal Reserve has already taught analysts to its unpredictability, what will be happening with the American printing press no one understands. What kind of predictions can we talk about? And here arises the main argument: the dollar ceased to be predictable and therefore a reliable currency. Accordingly, today the world's need in it is provided primarily by the OPEC countries. The European Union has the euro, which the U.S. tried desperately to "undo" all these years and failed. China does not need dollars, maybe just as a weapon against the United States. The IMF, which supported their dollar credit reputation, loses positions: loans from the representative of American dominion are not needed not only for Ireland, southern European countries, but also for Ukraine.
Apparently, the policy of the Obama administration, aimed, in fact, to rescue the financial system (to the detriment of all other systems), has dealt to this system the biggest blow. And probably we will celebrate 2015 with completely different layouts of a ranking of the world currencies as very, very high.