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If you woke up one morning and an announcement was made that the US dollar was devalued by 10%, what would the practical application of this be to the average citizen?
Suppose someone had $10,000 in the bank. I understand they would still have $10,000 in the bank, and that this money would be worth 10% less (i.e. it takes more dollars to buy the same thing). But what would the average citizen be looking at for cost increases ? Will products made in the US not be affected as much as those imported? or visa-versa? What items are likely to be more sensitive to a devaluation than others?
The U.S. dollar floats, so any devaluation vs. a specific currency would have to be driven by market forces. Other currencies appreciate vs the dollar all of the time, and we hardly notice it unless we are involved in a business that imports assets denominated in that currency or exports products sold in that currency. I really don't think this question is phrased appropriately.
how should it be phrased? there has to be some effect on the average citizen when this happens...
Do you understand the difference between a pegged currency and a floating currency?
Who would "announce" the currency devaluation? The federal reserve? The consequences of a stimulus policy that caused a 10% drop in the dollar vs a basket of world currencies would be much more important than the devaluation itself.
Against what currency would the US dollar be devalued and what market forces caused it? A trade deficit driving a devaluation vs. the yen would certainly be different than a weakening against the Swiss franc driven by Swiss bank monetary policy.
Currencies trade in pairs so it would have to be a 10% drop vs a specific other currency. Take the euro, our exports would become more attractive to those using the euro. The euro has dropped 10% over the last two years vs the usd but do you feel any different? It actually dropped more than that in four months back in 2014-2015 and the only noticeable change was my vacations to Europe got cheaper
If you woke up one morning and an announcement was made that the US dollar was devalued by 10%, what would the practical application of this be to the average citizen?
Suppose someone had $10,000 in the bank. I understand they would still have $10,000 in the bank, and that this money would be worth 10% less (i.e. it takes more dollars to buy the same thing). But what would the average citizen be looking at for cost increases ? Will products made in the US not be affected as much as those imported? or visa-versa? What items are likely to be more sensitive to a devaluation than others?
Right away there might be nothing palpable. You might start to see some imports costing more USD. And then our export businesses might expand.
But WHY would the USD devalue?
The US does very little to actively devalue its currency, China is more engaged, as it is still export dominated.
Even having the Fed create many trillions of new USD after the 2008 crash, it has remained a very strong currency. And it will only get stronger when rates rise.
Now if you woke up one morning and discovered the USD was devalued by 100%, look outside and see if we are still here!
The Fed has been KILLING US Dollar for years and years. QE and ZIRP = US DOLLAR DEVALUATION. The Fed has been stealing money out of our pockets by dollar devaluation. Everyone exchanges their labor for US Dollars in America. By devaluating our currency and with wages not meaningfully going up for 30 years the Fed managed to destroy American middle class and slaughter our poor citizens.
The Fed has been KILLING US Dollar for years and years. QE and ZIRP = US DOLLAR DEVALUATION. The Fed has been stealing money out of our pockets by dollar devaluation. Everyone exchanges their labor for US Dollars in America. By devaluating our currency and with wages not meaningfully going up for 30 years the Fed managed to destroy American middle class and slaughter our poor citizens.
This is simply untrue but that never stopped you from spreading untruths before
This is simply untrue but that never stopped you from spreading untruths before
So you are attacking me here and accusing of spreading untruth without presenting the facts. Are you telling us that QE or ZIRP were not designed to devaluate the dollar? Would the stock market or real estate prices be at these levels today without devaluating the dollar and lowering rates to zero, keeping rates at zero for 8 years?
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