If the dollar crashes, as Warren Buffet thinks it will, What effect will it have on the poor and middle class?

Question

Warren is betting billions that the dollar bill will crash on the world market. If this happens will it effect the working class adversely, and how?

Answer 1

Your question isn't accurate. Warren Buffet has never stated that he believes the dollar will crash. About 2 years ago he started investing in other currencies because he believed the dollar would decline. It did so, and he has reduced those positions. He still maintains positions in foreign currencies but a look at the percentage of his portfolio invested in this way doesn't indicate any belief that the dollar will crash. In fact, it seems to indicate a lot of faith in the American economy.

With regards to the effects on the working class. It is likely that there would be some short term pressure on the working class, but this would likely be offset by increased job opportunities as American products become more cost competative, and increased wages as American companies are able to sell more products both at home and abroad. Short term may mean 2-5 years, but the working class, in some respects, is less exposed. They have mortgages denominated in dollars, most of their food is grown in America. If the dollar crashes, dollar denominated debt should be easier to pay off. It's the people wanting to take trips to Europe, or needing their $5 Starbucks Latte every day, that are going to be hit the hardest.

For more on what Warren Buffet actually thinks and how he is actually investing, check the annual letters below.

Answer 2

Where did you read this?

It is unlike Buffet to attempt to crash currency.

However, a decline of 30% is expected in the next 2 years and is okay with the Bush Administration.

The main impact is foriegn goods become more expensive for US consumers. The Dollar has fallen 30% in the last 3 years, and inversely the cost of high end forigen cars has also risen 30%. International travel also becomes a lot more expensive because the dollar does nto buy as much.

Answer 3

Next to none. It crashed in 1985-87, remember? And very few people even noticed...

The value of U.S. imports is about 15% of GDP, the value of exports, about 10%. So if the dollar crashed, 15% of the economy would be affected (somewhat) adversely, while 10% will be affected (somewhat) favorably...

Answer 4

It will affect every one. the Domino effect will occur. the Countries that are emerging in the marketplace,outsourcing and other contributing factors too lengthy to speak of (some countries what to put us in that predicament. Just think of what will happen when China takes control of what is owned by it in the United States.
total take over without a shot fired. Better learn how to speak Mandarin Chinese.

Answer 5

you have changed the question in your post. the original presupposes that it will have a negative effect by asking for its explanation of detriments.

however the big picture is this: the money supply tightens. short term prices spike and wages stagnat. then the fed adjusts the prime and bussiness bring jobs and goods back home and everything washes in the long run. Remember the economy micro and macro is cyclical.

Answer 6

The most obvious effect will be an increase in the prices of imported goods. Considering the percentage of manufactured goods that are made overseas, that would make a real dent in the poor/MC purchasing power.

On the other hand, our manufactured goods will be more competitive overseas, so you will see an uptick in manufacturing jobs in the US.

Answer 7

It means very little except that the poor and middle class will be able to buy fewer snails for dinner next time they vacation in Paris.