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Here Is Why The US Dollar Collapse Is Imminent

Here Is Why The US Dollar Collapse Is Imminent

Here Is Why The US Dollar Collapse Is Imminent

The US dollar has declined about four percent year-to-date. What’s its outlook? Could the greenback recover the losses and continue to move higher, or is it only headed down from here?

Recently, I had a chance to talk to Michael Lombardi, founder of investment research firm Lombardi Publishing Corporation and the popular financial web site Profit Confidential.

Michael Lombardi believes that a US dollar collapse is a real possibility and that the rise we have seen in the U.S. dollar over the past few years is nothing but a dead-cat bounce.

Below is an excerpt from the conversation with Michael Lombardi. It has been lightly edited for clarity and a chart has been added to make the concept clear.

Moe Zulfiqar: Why do you believe the US dollar could collapse when it’s the darling of investors and institutions around the world? People trust in it and whenever something happens, it’s considered a safe-haven currency.

Michael Lombardi: I am a true believer in fundamentals. When looking at the data, the future of the dollar seems very bleak.

In basic economics you are taught that when there’s a lot of something, its value declines. Let me tell you this—and sadly no one is talking about it—there are a lot of US dollars out there, and the amount is increasing every day. For instance, look at the monetary base [a measure of money supply]. It has increased over 350% since the financial crisis.

(Source: Federal Reserve Bank of St. Louis, last accessed August 16, 2016.)


To give you an idea of how fast this growth rate is, consider this: prior to the financial crisis, the monetary base increased by 351% in roughly three decades.

Moe Zulfiqar: So, is too much money the only reason the US dollar could collapse, or are there more?

Michael Lombardi: The list of reasons why the US dollar could collapse is getting bigger daily. Some factors I am closely following include;

With all this said, I also want to add that I don’t expect the US dollar to collapse instantly. It’s going to take a long-time.





Courtesy: Moe Zulfiqar [1]