What happens to the average American if the dollar collapses?

[bleedingheart]

I am sure this has been covered before but what happens to the average american if this occurs? Will the effect be immediate?

[aden_nak]

1. Rampant Inflation and Crippling Fucking Poverty, I believe.

Though correct me if I'm off base.

[Warpy]

7. Everything we import will suddenly become

prohibitively expensive. That's all our clothing and shoes, electronics, fabric, furniture, half the parts that go into cars, just about everything will skyrocket in price. Expect to see ten buck a gallon gasoline, at least.

Domestically produced goods and services may not see much initial inflation, but that won't last.

In the longer term, US workers will start to seem much more attractive than their third world counterparts, and our industrial infrastructure will slowly be rebuilt.

[Coastie for Truth]

16. It won't be good

initially imports will go up in price and exports will drop in price. But - in the next stage, while our exports drop in price, the volume won't go up and the jobs will neither come back, nor be created. It will be like the "Great Depression" - but not as bad unless Bush "privatizes" social insurance and FDIC and FPBGC.

There will be a rearrangement of the world economy and the US economy. But the US will come out on the short end-- and the average American will come out on the short end of the short end.

That's the way it is -- massive federal deficits, the dismantling of the New Deal safety net - social compact.

See:
1. International Economics: Theory and Policy (6th Edition) by Paul R. Krugman, Maurice Obstfeld

2. Microeconomics by Paul Krugman, Robin Wells

3. Currencies and Crises by Paul Krugman

4. The Return of Depression Economics by Paul R. Krugman

5. The Great Unraveling: Losing Our Way in the New Century by Paul Krugman

[chicagojoe]

2. We're fucked, that's what happens.

[BurtWorm]

3. I believe anyone who has a debt will feel the crunch

because of rising interest rates. We'll have less spending power, and inflation will make it even more painful. It could also pop the housing market bubble, which would be devastating to a lot of homeowners who went deeper into debt to make their homes appreciate in value.

PS: Other than that, everything will be fine. :thumbsup:

[bleedingheart]

8. All debt or certain types of debt..?

[BurtWorm]

11. I think any debt with a variable interest rate.

Credit card debt, for example.

[HereSince1628]

13. The double digit inflation of the late 70's/early 80's made my parents

retirement package.

They were just working class folks that pushed money into the bank every payday....With moneymarkets at 15-17% interest they began to really accumulate large amounts of dollars.

Moreover, they paid off their fixed-rate mortgage with dollars that were much less valuable than those they borrowed.

at the same time I was trying to buy my first home...at 12% interest, and I was getting killed.

I am afraid that once again its a good news, bad news story.

I sure hope that rumors of improved competitiveness of American workers turn out to be true.

[bleedingheart]

15. so staying in my much less expensive house would be a good idea..

hmmmm...

[HereSince1628]

20. It worked ok for may parents who during the peak of the last

inflationary crisis didn't make anyother purchase on credit...they stuck with a car for nearly 10 years and didn't have ANY consumer credit.

At 15% interest they more than doubled the face value of their life savings across that period. Moreover as inflation faded from consumer goods in the 80's, they were perfectly positioned to ride the inflation bubble in the stock market in the 90's.

All in all, they did ok because during the inflation period they were not taking on debt, but rising along with the tide of inflation.

[chicagojoe]

23. I know my 5% mortgage rate is gonna make people jealous.

[natrat]

18. 10 dollar gas and 10 dollar loaf of bread is bad new bad news

[HereSince1628]

27. $10 gas? I can almost imagine, $10 for a loaf of bread I can't

can you give a reference or an explanation of where that number comes from?

[Blue Wally]

26. Rampant inflation will trivialize the debt.

If you owe a bundle, it will be much easier to pay off (if you have a job).

[zbdent]

4. Well, since we're importing damn near everything EXCEPT jobs

and the dollar gets weak against every other recognized currency worldwide,

the average American gets to pay a lot more.

[Enraged_Ape]

5. We already have inflation, though the media won't talk about it

I know my cost of living has gone up at least 10-25% over the last year. EVERYTHING is more expensive. My gas bill alone almost brings me to tears.

But I suspect that prices are just about to go into the stratosphere. I can't imagine how the media will hide it, though try they will.

[tridim]

6. Good question..

I don't know the answer. Although I'd be more worried about what will happen to America as a country if the dollar collapses. I'm afraid it would mean the abrupt end of the American experiment.

[Walt Starr]

9. Have you ever seen the films of the Great Depression?

Those will be considered "Good Times" compared to a collapsed dollar.

[Karenina]

10. Not IF,

WHEN.

[Tactical Progressive]

12. Big tax breaks

If only they had an income to take advantage of them.

Investments in the toilet.
But low capital gains taxes on their $370 in interest.

Social Security cut in half.
But their privatized accounts will make up the difference, again, if only they had an income.

[Colorado Blue]

21. Yeah - that income thing is pesky, ain't it:)

[Hugin]

14. You remember those movies about nuclear war?

Especially that part where you bend over and kiss
your hind end good-bye.

That's where the average American family will be.

[Coastie for Truth]

17. Look at the Money Markets - South Korea and US Treasuries

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1265514

[Colorado Blue]

19. I think it would cost massive jobs. Employers have to...

import stuff to run their businesses and those prices would rise drastically. Already people who use airfreight or shipping, ie antiques importers just for an example, are hit hard by the weak dollar for product combined with high fuel prices. On a micro-level supplies for artists are costlier as key elements such as cadmium are rising.

We would have a depression.

Hell, my dad says we're gonna have one anyway:)

Does anybody have any ideas how to stop this???

[Deja Q]

22. Yup. Offshoring is good for the country's economy.

Whoops.

[Stop_the_War]

24. the rich get richer and the poor get poorer

and the middle class ceases to exist.

[djack23]

25. DavidJ48

1) Prices for imported products become significantly more expensive (toys, oil, electronics etc.)
2) Interest rates will rise as Feds will raise rates.
3) Housing prices will fall as people are forced to spend more money on other items
4) Stock Market will fall as intsability increases.
5) Vacations to foreign countries will rise significantly in price.