A recent news story read that China had proposed to the International Monetary Fund that the yuan become a reserve currency, and then the rest of the article speculated that this was a move that would devastate the U.S. economy and cause the dollar to become worthless quickly if it were to happen. The truth is, a catastrophe is a possibility, but not a likelihood. There’s always a chance that a currency can fail, even one as widely used as the U.S. dollar, simply because the dollar is just a piece of paper with some pictures and numbers printed on it. The dollar has value because people trust in it, and they trust the government and the organizations backing it.
There are a lot of little things that can be pointed to to “prove” that economic collapse is imminent. China wanting to make their currency in order to help out their economy is not necessarily one of them. While it’s true that China would benefit from the U.S. economy being weakened, so would every other country that relies upon U.S. produced goods within their economy. Another example that’s been pointed to more recently is how on Tuesday, March 31st, the S&P 500 futures market had a huge drop in price. The drop was only momentarily, but it was enough to turn heads--and raise concerns like these.
What can you do to prevent something like this? First, don’t obsess about it. If an economic collapse is going to happen, one person can do nothing about it. You can take measures to make sure that your financial health is kept safe, though. For starters, the best thing you can do is to diversify your holdings. You see this in the stock market and it’s a popular buzzword on Wall Street, but diversification is an important safeguard. It makes sure that all of your cash isn’t tied up in one spot, because there’s always a chance that the one spot could fail and everything could disappear. The dollar isn’t likely to see this happen, but it could happen theoretically.
Using alternative methods of trading can help add protection, too. For example, having a 401(k) at your work, buying a CD here and there through a bank or credit union, and having a binary options brokerage account all at the same time is a good way to split your money up and grow it a little more safely. Yes, the CD will grow slowly, but that money is backed up by the government and you have far more than a 99 percent chance of getting that agreed upon rate of return as long as you follow the stipulations put forth by the bank. These are usually just a waiting period, agreed on by you and the bank before you open your CD.
Remember, a lot of the hype you see and a lot of the warnings out there are not well founded. In fact, many of those people are trying to sell you something. So, when you read a sensational story like one of these, be aware that the person who wrote the article might be trying to sell you something as a way for you to “protect” yourself from the story they are telling you. When it comes down to it, these are scams, and you need to watch out for them and stay as far away from them as possible. Even in reputable markets, like the Forex and binary options markets, there are smaller scams out there that exist. Be smart and pay attention to these so you really can protect yourself.