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Following the adage “Even a broken clock is right twice a day,” financial market gurus continually entertain readers with their predictions. Lately, the focus has been on three key questions:
- When will the stock market finally crash?
- When will BTC/USD soar above $1 million per coin?
- When will the US dollar fade into oblivion?
So far, no one has been accurate with any of these forecasts. You’d think they’d stop making futile predictions and trying to manipulate the market, but this wasn’t the case.
With news that the US national debt has hit a record $35 trillion (up $1 trillion since the start of the year and 50% since 2020), there will undoubtedly be fresh warnings of an impending apocalypse.
But should we fear the end of the US dollar?
The growing debt-to-GDP ratio is indeed worrying because it can’t continue indefinitely. However, it’s worth noting that it has slightly decreased to 121.7%.
While still high, it’s clear that this could eventually become a severe problem.
Yet, claiming this will happen in the next year or two is entirely irresponsible. Japan, for example, has managed with a debt-to-GDP ratio above 100% for several decades and is still holding on.
What should we do?
First and foremost, do not panic. Despite the doomsayers’ wishes, there are no viable alternatives to the dollar in the market right now: neither the euro nor the Swiss franc.
If the United States’ financial situation improves, money will flow back into its assets because of its high liquidity, strong economy, and military power.
No other country possesses these qualities. As for gold and Bitcoin, both are very volatile. Therefore, don’t rush to sell dollars when you see a lot of news about the U.S. debt problem.
Much more crucial for the DXY and the U.S. market, in general, this week’s earnings from the big techs and Jerome Powell’s speech following the rate decision.
