Why is Currency Devaluation So Bad?
It is simple really. The less your currency is worth, the less goods and services you can buy with your money, the less companies make for receiving payment for goods and services, and the less people actually make when they take their paychecks home. This causes governments and citizens to pump more and more money into the system to try to get the number of goods that they used to buy. So, not only is their money worth less, but inflation also can become a very big problem. Currency devaluation is only solved through changes in tax laws, aggressive interest rate increases, reduction in trade deficits, and/or strong corporate profits. If the Dollar is replaced as the world’s reserve currency will it be bad? It certainly wouldn’t be good for the U.S., at least temporarily. If the world switches to some type of new reserve currency, whether it be the Euro, the Yuan, or some basket of currencies, there will be an initial shock to the U.S. system. Just imagine if there was a giant recall o
