It really says something when the instability of the dollar is (relatively) as bad as when Nixon took us off the Gold Standard in 1973. Trump's policies certainly have caused a large amount of instability.
Most Americans don't need cheaper iPhones and Amazon/Taobao slop, they need higher wages, cheaper food, cheaper housing. A cheap dollar moves industry back to America and this is a win for the average American. A weakening dollar is basically a gigantic macroeconomic signal to move investments back into the American economy instead of pushing them away.
Looking at the scale of a few years, the dollar has been insanely overvalued post-COVID.
Historically, the euro has generally been a good bit more valuable than the dollar. But in 2022, the dollar was more valuable than the euro at a point. Recently it's been bouncing around at nearly 1 euro=1 dollar.
Then there's the yen. Used to bounce around between 1 dollar = 100~110 yen. Recently reached 1 dollar = 162 yen.
The dollar losing its value is a return to the pre-covid norm. Lots of countries pumped money into the US to make money off skyrocketing stocks and high interest rates, and now they're pulling it back into their countries. It's a high that can't last forever. And if it did last forever, that would not be good for the world as a whole since it would mean every country is supporting the US at the cost of devaluing themselves.
DXY index - often what these news reports use when talking about the dollars decline is ~97 today—still stronger than the ~90 it finished 2014 at and almost the same as 2018.
Ask yourself, did you panic during these years? Mostly no. These were pretty good years.
It's not just the value of the USD but its usage in trade and as a reserve currency in central banks is going down. Europeans are fantasizing about Euro taking over the reserve currency status but it doesn't appear to be happening, instead gold, crypto and other currencies appear to gain ground.
Here's how the US Dollar Index has performed over the last ~30 years. The swing looks pretty typical to me. If it drops another 10% (as the article says Morgan Stanley thinks it might) then I could see this event as an outlier. For now, I find it interesting but not especially concerning. There's pros and cons to having stronger/weaker currency. I think it's probably worse to have a volatile currency than an especially strong or weak one?
I can't believe people still put faith in fiat. It is controlled by the government and the sole purpose is to have as much control over the people as possible. Monero is the answer for it. You get full control, privacy and anonymity. The ultimate financial prison break. It saves you from the prison of taxation imposed by evil and nasty governments of the world.
"Food for thought: The year that came closest to 2025 in dollar depreciation was 1973, and the result was then-President Richard Nixon taking the US off the gold standard. “Big moves in the dollar tend to create moments of instability,” Morgan Stanley’s Wilson said."
Trump and Bessent announced in the past week or so, that instead of terming out the debt, they'll ramp up refunding using T-Bills (max 52w duration) until Fed Chair Powell's term ends in 9 months. If they actually follow through on that (I suspect they just try to jawbone Powell), it could weaken the dollar even more.
26 comments
[ 2.9 ms ] story [ 20.9 ms ] threadHistorically, the euro has generally been a good bit more valuable than the dollar. But in 2022, the dollar was more valuable than the euro at a point. Recently it's been bouncing around at nearly 1 euro=1 dollar.
Then there's the yen. Used to bounce around between 1 dollar = 100~110 yen. Recently reached 1 dollar = 162 yen.
The dollar losing its value is a return to the pre-covid norm. Lots of countries pumped money into the US to make money off skyrocketing stocks and high interest rates, and now they're pulling it back into their countries. It's a high that can't last forever. And if it did last forever, that would not be good for the world as a whole since it would mean every country is supporting the US at the cost of devaluing themselves.
Ask yourself, did you panic during these years? Mostly no. These were pretty good years.
Economists: No, no, no, no...
The People: Genius! Genius! Let's vote him!
I'm afraid we're to live in very interesting times real soon.
Maybe crypto will eventually be useful for trade?
Here's how the US Dollar Index has performed over the last ~30 years. The swing looks pretty typical to me. If it drops another 10% (as the article says Morgan Stanley thinks it might) then I could see this event as an outlier. For now, I find it interesting but not especially concerning. There's pros and cons to having stronger/weaker currency. I think it's probably worse to have a volatile currency than an especially strong or weak one?
Not sure what to keep my retirement fund in if not those though :c
Meanwhile the CCP hasn’t unpegged their currency while they are experiencing deflationary price declines.
Yikes