DOLLAR SHORTAGE: Here’s why there’s been a dollar shortage in so many countries around the world.
At the heart of it, a dollar shortage is usually caused by a fall in a country’s “balance of payments…” which essentially just means there are more dollars going OUT of a country than coming IN.
That can happen for different reasons in different countries, but here are the 3 main factors that have been driving the RECENT shortages:
First, you’ve had YEARS of limited travel, and tourism is a HUGE source of dollars for a lot of countries.
Second, the FED started raising interest rates, which made it more expensive for countries to BORROW dollars to make up that shortfall.
And third, to make matters worse, more dollars were also flowing OUT of a lot of countries because the war in Ukraine pushed up food and fuel prices, and a lot of commodities are sold in dollars. That can actually HELP the balance of payments in countries that SELL a lot the of the expensive commodities, like Brazil, but it was part of the problem for most others.
While these EXTERNAL factors have made the problem worse, it’s usually INTERNAL factors like economic mismanagement that scares away foreign investors, and too much government spending that drives up inflation, which REALLY cause the dollar shortages.
#dollarshortage #fundamentalsoffinance
Instantly Unlock My Free Investing Workshop, "The 9 Secrets of Successful Investors" https://www.fundamentalsoffinance.com/9secrets
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#dollarshortage #fundamentalsoffinance
At the heart of it, a dollar shortage is usually caused by a fall in a country’s “balance of payments…” which essentially just means there are more dollars going OUT of a country than coming IN.
That can happen for different reasons in different countries, but here are the 3 main factors that have been driving the RECENT shortages:
First, you’ve had YEARS of limited travel, and tourism is a HUGE source of dollars for a lot of countries.
Second, the FED started raising interest rates, which made it more expensive for countries to BORROW dollars to make up that shortfall.
And third, to make matters worse, more dollars were also flowing OUT of a lot of countries because the war in Ukraine pushed up food and fuel prices, and a lot of commodities are sold in dollars. That can actually HELP the balance of payments in countries that SELL a lot the of the expensive commodities, like Brazil, but it was part of the problem for most others.
While these EXTERNAL factors have made the problem worse, it’s usually INTERNAL factors like economic mismanagement that scares away foreign investors, and too much government spending that drives up inflation, which REALLY cause the dollar shortages.
#dollarshortage #fundamentalsoffinance
Instantly Unlock My Free Investing Workshop, "The 9 Secrets of Successful Investors" https://www.fundamentalsoffinance.com/9secrets
Twitter: https://twitter.com/FoFInvesting
IG: https://www.instagram.com/fundamentals_of_finance/
TikTok: https://www.tiktok.com/@fundamentals_of_finance
#dollarshortage #fundamentalsoffinance
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