Value of the U.S. Dollar

I would love to accept gold but unfortunately most countries accept US dollars as the global currency.

It may not be this for much longer but at this point in time it is and so that is why we deal in US dollars.

Q

I have switched everything back over to AUD in my merchant accounts.

I know what is goign to happen to the US Dollar. I do not have to spell it out for you hear. You will see what happens. You already probably know subliminally what is going to happen to it, if you watch the news and understand a bit about the economy.

This is only the start of the US collapse. Do not expect things to get better. But hey, I just gave away a massive tip. Of where alot of the money still out there is going to go.

USD is still the standard currency traded online. Until a new default currency is accepted, customers will always expect to pay in USD.

This is a great subject, one of a lot of debate.

But as far as the USD being the world's reserve currency, it's starting to drop out of that ... like it or not, the USD is falling out of favour ...

What do I mean? Well, typically for any transaction from one country to another, their local currency would have to be converted to USD, then from USD to the receiving country's currency. How does this work?

Take Russia and China for example. When Russian companies were buying Chinese goods, they would have to transfer their rubles into USD, then those USD into Renminbi (aka Yuan). The company would get charged of course, by the middle man, the transferring US bank for the "privilege" of using their services.

No longer is this the case. Recently, Russia and China signed an agreement to have transactions done in their native currencies. So, that means the USD will no longer have to be bought and sold to conduct this transaction, thus removing volume from the USD on the open Forex market.

We've also seen this move by other countries and organizations. OPEC has recently announced that they will accept Euros in payment for their product, and not just USD.

Where is the USD heading? Likely to it's intrinsic value, which is what the input costs are. These days, with the Federal Reserve able to print money with the click of a mouse, the most likely answer to that question is ... all the way to zero.

If you think that's impossible, well, do some research on your own and you will see that there are only 2 outcomes for the debt the US government is now in: massive inflation via printing money or default on the debt obligations and liabilities.

The US dollar isn't backed by anything if that's what you're asking.

U.S Dollar is acceptable in most countries that's why. Don't let your self bother of this matter.

So what is the USD anyways? From Wikipedia:

The US Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies.

It is a weighted geometric mean of the dollar's value compared only with

• Euro (EUR), 58.6% weight
• Japanese Yen (JPY) 12.6% weight
• Pound sterling (GBP), 11.9% weight
• Canadian dollar (CAD), 9.1% weight
• Swedish krona (SEK), 4.2% weight and
• Swiss franc (CHF) 3.6% weight

USDX goes up when the US dollar gains "strength" (value) when compared to other currencies.

Even though Wiki doesn't say it, the corollary of that would be that the USDX goes down when the US dollar loses value against other currencies.

Is this really an issue when you are using an online payment processor? If you decide to accept a currency besides USD - it's only a click to do so. No planning required. I can send any currency to my bank and they will take it - but adjust the amount to USD when my account is credited. The most I would have to do if I wanted to actually deal in a different currency altogether is put my money in a bank that would allow transactions in that currency. If we lose reserve status, that will probably be most banks.

I wrote a similar thread like this a few months back (don't know where it went though). Responses then was different, but seems the overall notion now is that everyone knows the US Dollar is going to down gradually. It's happening, and you don't need to read a lot to be convinced.

Nonetheless, USD is still the major currency on the Internet. As to whether it will be replaced by a new global reserve currency or what will be of it eventually remains to be seen. Thus the variables you can play with now are:

1) pricing your products

2) sell to more people, and if you want to you can

3) sell to local markets outside US in their own currencies

Edmund

I accept US dollars because I live in the US, and it's kinda hard to cash foreign currencies such as Japanese Yen and German Marks. Sorry, but my bank won't take foreign currencies to pay my mortgage, National Grid won't take foreign currencies to pay for my utilities, and the stores I shop in won't take it either. If they won't, then why should I?

BTW: If you are using a credit card, all major cards will convert the currency automatically...so you don't have to do any conversion at all.

I don't know why people see this as a problem...if you live in a certain area, that is the currency you accept as payment. In India, you take rupees...in China, you take yuan...in Brittain, you take sterling pounds.

The US economy is made up predominantly of small businesses. Small businesses creating, innovating and producing products and services people want - people just like us. As long as these small businesses continue to innovate and create then the US economy will continue to be strong. As a person wo has lived in multiple countries - I have absolute confidence in the people of the United States to be entrepreneurial and to bring themselves out of any recession through hard work, creativity and perseverance. There is a reason why the United States is such a great nation - its culture, its spirit and most of all, its people.

Focus on growing your business and expanding into new markets. Thats my advice. If you want an international market, you should still accept USD since it is STILL the "default" currency of choice.

I know exactly what is going on with the U.S. dollar. It is a fiat currency and the only way it moves is down, just look at its chart. If you understand anything about the money supply, the only thing it does is expand, especially to pay for wars. That is why the "Nixon shock" happened in '71 to get the U.S. off of the gold standard so we could print money to pay for Vietnam. The U.S. dollar's days are numbered. I just wanted to see how many people realized that here, and what they were doing about it. People I question about it and give me a blank stare, those people are in trouble.

Interesting responses.

Well my guess is that up till the elections and the replacement of the current President by the one elected next year, the dollar will keep dropping and may even be replaced as the standard currency of the world. But when the new President takes over, a new Treasury Secretary is appointed, the policies will be different and more emphasis will be placed on the position of the US Dollar. Things are going to change around the end of next year.

For me, Its a marketing decision, not a currency decision.

For people outside the USA - they are very used to paying for things in US Dollars - so their is no disconnect in the sales process.

For Jo and Jane Smith in the USA, asking them to buy in a foreign currency is a disconnect and hurts sales.

So we tend to go with US dollars - also if your business is all accounted for in the one currency - the fluctuations don't hurt your bottom line.

As an Aussie getting paid in US dollars - I do wish the Aussie Dollar would drop a bit!!

Ed

I guess more people would accept more forms off money if merchant accounts accepted it.

For me I accept dollars so I can go buy assets.

I have been watching the slow but steady decline in value of the USD and am on the fence about what to do about it as a non-American who buys and sells products in US dollars.

The good: I buy my hosting, domains and other internet services and products mainly from US companies, and with my local currency being valued higher, I can buy more of them for less.

The bad: I sell my products in USD, and as it declines, I get fewer dollars coming in after currency conversion on the income side.

The really bad: I too believe its going to get much worse before it gets better, and that the ramifications are going to be global. I wish this were mere pessimism and I hope that I'm wrong about it; because if I'm not then its going to present very real problems for all of us:

1. In really bad economic times, demand for non-staple goods plummets. And while seeing demand fall on the US side would be bad enough, if this does become global than we're looking at a switch to that type of demand everywhere. How many of us are in staple good markets?

2. Inflation could easily become global, robbing many (all?) currencies of real value - and not just the USD, although the worst of it will probably still be seen there, at least initially.

In any case, this is something I mainly feel like a passive spectator on: I will continue on as I am now and hope for the best while continuing to watch the situation with the USD closely.

On the flip, I don't think its going to reach the true meltdown point. Its more that correcting the current course requires the kind of sacrifices that is presently political suicide for any politician who dares to seriously even discuss it. Once the dollar and the economy has been dealt enough damage, then the public will be more willing to accept those types of sacrifices and elect the people who will make them (i.e.: when its do or die time).

-Spyder

While this is currently true, I suggest you not take a vacation in Mexico with only dollars in your pocket!

Why?

Because most hotels and banks will only change somewhere around $200 USD or so into the local currency, if that. And they don't really want to do even that much.

The rationale being given is supposedly that there are too many narco-dollars floating around, so to stem the flow of drugs and drug money, the Mexican government has established a rule limiting the amount of dollars allowed to be deposited into any bank account by any individual or business. They are no longer accepting USD. And those US citizens that live in Mexico are also limited in the amount of dollars that they can bring to the bank, although the amount is much higher than $200. That's for those with residency in Mexico.

Who would have thunk it that Mexico would no longer want US dollars?

But the truth is, they just don't want to get stuck holding the bag of a currency that's becoming worth less and less every day.

And this isn't even current news. This was instituted LAST YEAR!

Nothing, really. It's a fiat currency. It has value because we say it does.

Because most of the things I buy are paid for in US dollars, and if the currency in my account is in some other currency, I get charged an extra fee for the currency conversion AND the exchange rate is invariably fudged by the financial institution to cheat me out of a little extra money... so the less often I convert funds, the better.

Well Paul I happen to live in the U.S. and so do a lot of other people...not all, but a lot, and wouldn't it make sense to accept the U.S. Dollar for now? I think the Australian Dollar would be better though. But again, I live in the U.S.

By the way there's not much to the U.S. Dollar now days. It's just pretty printed paper. We have nothing backing it whatsoever. How's that for being the biggest scam in the world! LOL!

I don't really worry about WHY the USD changes value because there really isn't anything I myself can do about it. I do worry about what it's worth though. I've basically taken a 40% pay cut since 2009 thanks to the strong AUD.

as a newbie in this industry, i personally do not care at all about currencies. Anything will do, as long as there is something.

there is no need to care weak US dollar, focus more on how to make money, that's the solution

I would love to accept Canadian dollars but unfortunately it will decrease my conversation rate. Since US dollars are the world's main currency most people prefer to pay for things using that and some get "scared" thinking it's a scam or you're trying to make more money off them when you put another currency.

When the US dollar loses its status as the sole reserve currency, its value (for people who are not based in the US), will slide...

Can't we just bring back the colonial script?

I'm not going to butt in here, but I just wanted to throw this in since I don't live in the US:

The American Dream By The Provocateur Network - YouTube

I'm not a conspiracy nut (it's not as crazy as it sounds really, to me anyway ), but regardless, the US has really taken a hit over the last few years. I used to get more Australian dollars for my US earnings but since then, I've had to make some serious changes.

Nothing you or I could do about this situation. The Federal Reserve screwed the pooch when they decided to move from the gold standard and be the world bank. Glad I grab a lot of coins during the 90's internet bust, ROLF!
A year ago, I decided to expand my business to different markets due to a strong pound and steady-for-now euro. Now, a few ventures accept these payments instead of USD and I'm happy for that.
I suggest those in this business consider doing the same..