For many decades, the United States of America has been dubbed a superpower.
However, in recent years, the US economy has experienced some very disappointing plummets.
The economy of the United States is a highly developed mixed economy. It is the world’s largest economy by nominal GDP and second largest by purchasing power parity.
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“The reputation of our nation’s money is being severely compromised,” wrote Judy Shelton in The Wall Street Journal. “The U.S. has long represented the virtues of democratic capitalism. To be ‘sound as a dollar’ is to be deemed trustworthy, dependable, and in good working condition…
As the dollar weakens, America’s purchasing power shrinks and the U.S. share of global GDP declines. Everything the United States imports, from petroleum to electronics, becomes more expensive.
Because Americans import the vast majority of things they need, this could result in higher inflation and interest rates in the future. Ultimately, a weak dollar could cause living standards in America to decline.
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The dollar’s status as world reserve currency could also be in jeopardy. Recently, the United Nations, China, Russia and other nations have questioned that status, advocating replacing the dollar with another currency or a basket of strong regional currencies.
How does this affect the average American citizen?
The Wall Street Journal explains it in an article: “The exploding size of that burden suggests that, short of devaluing the dollar and taking a large bite out of the middle class through inflation and taxation, there is no way to ever pay down that bill.
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“Unless Americans are made aware of this financial crisis and demand accountability, the very fabric of our society will be destroyed.
Interest rates and interest costs will soar and government revenues will be devoured by interest on the national debt.
Eventually, most of what we spend on Social Security, Medicare, education, national defense and much more may have to come from new borrowing, if such funding can be obtained.”
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