The amount of hyperbole and demagoguery surrounding the issue of the U.S. dollar’s pending demise has reached a fever pitch. Particularly on the Internet, where marketing campaigns prey on the high level of fear people have over our country’s collapse. One of the most popular campaigns I’ve seen is from Porter Stansberry, and he calls his video presentation, “The End of America.”

Recently, a subscriber wrote me an email asking me what my thoughts are on the prospects of a dollar collapse, and how it would affect my investment recommendations. I suspect that many of you have these questions, so let me give you my thoughts on this important matter.

First off, I do believe that the dollar is vulnerable to a continued, yet controlled, decline going forward. However, I think that a collapse of the dollar is an extremely low probability event. Here are the reasons I think the dollar will continue to remain the world’s reserve currency for many years to come, despite its issues.

1.    During times of financial and/or geopolitical crises, the dollar becomes the world’s safe haven currency. Look at what happened during the 2008 financial meltdown. The dollar experienced a flood of capital, and the greenback rallied some 20% vs. rival foreign currencies.

2.    There is no viable alternative for the world’s banking system. The euro is an example of an attempted alternative to the dollar, but that currency is suspect at best. Over the next five years, we may well see the euro fall apart. Certainly, the Chinese cannot be trusted to provide any alternative to the dollar, and Japanese yen has proven to be a less-than-worthy ally.
 
3.    Gold is not going be a viable alternative to the dollar. Many people believe that gold could serve in this capacity, and there have been a chorus of voices calling for a return to the gold standard. If this were to happen, I think we would see far less leverage and much less currency speculation. That may sound good, but the deleveraging in the currency would make access to capital a whole lot harder, and that would not be good for business. Besides, even if it were feasible to go to the gold standard, there is just not enough political will out there to make it happen.

4.    Our lead position as the world’s mightiest military superpower will ensure the dollar remains the dominate currency across the globe. The fact that we are still the biggest stick on the global block, and as such we -- as well as our currency -- will remain at the top of the geopolitical food chain.

I am of the opinion that investors need to stop worrying about things that are very unlikely to happen. A better use of your time and financial focus would be to concentrate all of your efforts on growing your liquid assets, and providing your family with the income needed to prevail regardless of what happens with the value of the greenback. The bottom line is that betting on the end of the world is a really bad bet, so don’t get caught up in apocalyptic investing.