Days are numbered: the dollar is predicted to collapse by 30 percent

© Depositphotos / FeverpitchИзображение Benjamin Franklin with a black eye on the banknote in $ 100Days are numbered: the dollar is predicted to collapse by 30 percent© Depositphotos / Feverpitch

MOSCOW, 3 Dec — RIA Novosti, Natalia Dembinski. Recently, the U.S. currency fell sharply reacted on the statement by fed Chairman Jerome Powell that now the interest rate is slightly below the neutral range. Financiers are indifferent to such fluctuations, but be warned: by the end of 2019, the dollar will enter a downward trajectory, and for many years. And billionaire investor ray Dalio confident that the rate will fall by 30 percent because of the «triple deficit» that will eventually lead to the inevitable — the dollar will lose status as a global reserve currency.

Expensive money

With the end of 2017, the fed tightens monetary policy, consistently raising the stakes. The logic controller is simple: the crisis is long over, the U.S. economy is recovering, but because the incentive measures time to finish. This year alone, the fed raised the key rate three times. Such rate of appreciation of money has put many companies in a very difficult position: to take out new loans more expensive, and should be to pay off old debts. Trump has already harshly criticized the strategy of the regulator, saying that the fed «went crazy» and became the main threat to the us economy.

The danger is real: the real estate market has already reacted to the fed slowing, housing prices have exceeded the levels that preceded the 2008 crisis. Analysts do not exclude that in 2019, the regulator can take a break. But Powell still made it clear that the market should prepare for a smooth and gradual increase in the base rate.

Such a trajectory will bring the cooling U.S. economy and a pause in the cycle of fed rate hike in the second half of the year.

«In the end we are waiting for a downward movement of the dollar for many years. In the second half of next year, if the fed is really taking a time-out, the economy will slow and the rest of the world stabiliziruemost, we will witness the decline of the American currency» — quoted by Blooomberg global strategist JP Morgan Gabriela Santos.

Economists at JPMorgan, the US economy will slow to 1.9%. «The decline in growth to 2% — a scenario in which the dollar is waiting for the falling» — noted analysts of the Bank.

Dalio also points to gold as one of the most reliable instruments to hedge currency and political risks. And there is a reasonable explanation: in the case of the collapse of the dollar system (and this is facilitated by, among other things, a huge unsecured debt), gold is definitely not worthless. Keeping the function of means of payment in world trade, the asset reduces the dependence on any currency.

Not surprisingly, dollars Russia is increasingly prefers bullion. The gold reserves have reached record levels, but the share of treasuries in the international reserves of the Central Bank practically has come to naught.

«I am confident that the global reset will happen when the world’s governments will need to get rid of debt and they tie everything to the price of gold. That’s why countries like Russia and China accumulate gold — they know what can happen in a few years,» stated Keith Neumeyer, Chairman of the Board of Directors of First Gold Mining.