While the U.S. dollars has shown remarkable strength in recent months, it is still a relatively stable currency compared to many fiat currencies across the globe. However, economists and analysts are concerned that the greenback may eventually collapse in an unprecedented manner. The owner of aheadoftheherd.com, Richard Mills, published a comprehensive research post on Wednesday called “Walking Dead U.S. Dollar,” warning that “we are rushing headlong into a U.S. dollar crisis of epic proportions.” The investor thinks that within the next five years, the greenback could very well “lose its status as the world’s reserve currency.”
Richard Mills Discusses the Dollar Losing Its ‘Exorbitant Privilege’
If you are acquainted with the financial world, then you probably know that the U.S. dollar has been on a tear and Richard Mills, the investor and owner of aheadoftheherd.com, doesn’t think the greenback’s bull run will last. The U.S. Dollar Index, DXY, experienced a short dip in the first week, just after it reached a 2022 peak, which was above the 114.000 mark on September 27, 2009.
The DXY is currently trading between the 112.000-113.000 area on October 20, 2022. This follows some rangebound activity in the 48 hour period. Comparing the U.S. dollar’s value to a variety of fiat currencies like the yuan, yen, pound, euro, and the dollars of Canada, Hong Kong, and Australia highlights the significant losses these currencies have seen over the last six months.
Mills published a blog on aheadoftheherd.com explaining how the dollar is performing, six months worth of rising interest rate and why short-term and long-term U.S. Treasury bond and Treasury markets have been showing erratic behaviour.
“Rising interest rates have put upward pressure on the dollar, as foreign investors pour capital into the country,” Mills’ blog post details on October 19. “The dollar has also done well because the U.S. economy is perceived to be stronger than Europe’s, which is suffering from an energy crisis. August 22nd saw the euro fall to an unprecedented low of 0.9903 USD, a mark it has not seen in two decades. The New York Times stated in July that the dollar is the strongest it’s been in a generation, citing safe haven demand, inflation, higher interest rates, and worries over growth as factors.”
Akin to most of the blog posts on aheadoftheherd.com, the article called “Walking Dead U.S. Dollar” is jam-packed with citations and data to back up the claims Mills makes in his editorial. After explaining how strong the greenback has been and detailing what it has been doing to foreign nations, Mills says he believes the U.S. dollar is “due for a reckoning.” “Only six months into the Fed tightening cycle, we’ve got developing countries defending their own currencies against the surging U.S. dollar, trying to support them by selling Treasuries and dumping the dollar,” Mills writes.
A strong dollar hurts U.S. exporters, according to the author. “When American companies sell their products to other countries, the latter’s purchasing power is weakened by the strong dollar. The result is lower demand for U.S. exports,” Mills explains. Mills, owner of aheadoftheherd.com added:
Conversely, the dollar as the world’s reserve currency can only go so low because it will always be in high demand for countries to purchase commodities priced in U.S. dollars, and U.S. Treasuries. It should not be allowed to fall too much, because that would risk the dollar losing its ‘exorbitant privilege.’
‘We Are Rushing Headlong Into a US Dollar Crisis of Epic Proportions’
Mills isn’t the only one who thinks the dollar will fail. Many market analysts and strategists believe the greenback has reached its final straw. Robert Kiyosaki is the author of Rich Dad Poor Dad. He predicted that the U.S. will go bankrupt by January 2023. Economist and gold bug Peter Schiff recently explained that the U.S. central bank faces two choices, either “a massive financial crisis” is in the cards or “the world will run away from the dollar.”
Mills is an investor and author who believes in the possibility of an economic crash and the loss of the status of the greenback as the world’s currency. “I personally believe we are rushing headlong into a U.S. dollar crisis of epic proportions. In fact, within the next five years, the buck could lose its status as the world’s reserve currency,” Mills’ blog post on Wednesday notes. Mills claims that Jerome Powell of the Federal Reserve won’t be able get inflation to below 2%, even if they significantly raise the Federal Funds Rate.
“Arguably the Jay Powell Fed will not be able to bring inflation down to its 2% target without increasing the FFR significantly — probably into the double digits. How high can rates go, and how strong can the dollar get, before the rest of the world ‘cries uncle’?” Mills asks his readers. Mills added:
Powell will make the same mistakes as Volcker and run the economy to the ground by raising rates? Given the Fed’s focus on not just taming inflation but also maintaining the dollar system, it seems probable. Mark Twain is reputed to have said, ‘History does not repeat itself but it rhymes.’
Let us know your thoughts about Richard Mills as an investor and what you think of his views on the U.S. dollars. Leave your opinions below in the comment section.
Images CreditsShutterstock. Pixabay. Wiki Commons
DisclaimerThis information is provided for educational purposes only. This article is not intended to be a solicitation or offer to sell or buy any product, service, or company. Bitcoin.com doesn’t offer investment, tax or legal advice. This article does not contain any information, products, or advice that can be used to cause or alleged result in any kind of damage.