Currency Collapse

A currency collapse occurs when the value of a currency falls dramatically.

Causes of a collapsing currency include:

  • High inflation, reducing the value of money.
  • Balance of payments crisis. When a large current account deficit cannot be financed by
  • capital flows on the financial account.
  • Lack of confidence in the economy.
  • Political turmoil and instability.

Examples of currency collapses include:

  • German D Mark during hyperinflation of 1920s
  • Russian Rouble in early 1990s
  • Zimbabwe currency in 2008
  • Icelandic Currency in 2008

Some fear that the US Dollar could collapse if National debt became unmanageable and government responded by increasing the money supply. See: US Dollar Collapse?

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