This article provides a discussion about the major factors which have contributed to the devaluation of the US currency. Supply side economics dictates that the loss of value seen of the US currency is really a supply and demand issue. Money supply has increased, and demand for the currency has decreased. Here we examine why.
In this article we examine the most important causative factors which have contributed to the fall in value of the US currency. What our research has found is that while there are variable opinions as to why we have seen massive devaluation of the US currency,Guest digital assets Posting at the end of the day, all indications are that it really is a simple supply and demand issue, which comes from the conceptual understanding of supply side economics.
But what has caused such a large supply and a weakened demand for the US currency, resulting in devaluation. First we will look at the demand side and later will examine the supply side. Lets examine these issues.
There are three basic forms of demand that can exist for the US currency. The first is the US economy itself. To what degree are consumers spending and borrowing money. What we currently see, given the poor US economy, is very little spending on the consumer side. Mortgages and various consumer loans are down. The Federal Reserve (Fed) has tried to stimulate consumer borrowing by lowering the interest rate, which is a classic method by the Fed. But this seems to not have worked very well, and consumer as well as business borrowing of money remains low.
In a robust economy, where consumer spending is up, and people are getting loans to buy homes, there is what can be called an internal demand for the US currency. Also, in a robust economy, business expansion through the borrowing of money takes place. Currently, consumer and business borrowing is down, which is what you would expect in a bad economy. The net result is less internal demand on the US currency.