14 ms·

A strengthening dollar is bad for the world economy

116 points by dx034 10y ago

EasyTiger_ 10y ago
Can always rely on the news outlets to temper optimism in a world which is bereft of things to be optimistic about.
- mediumdeviation 10y ago
  Economics is not called the dismal science for nothing
  - maxerickson 10y ago
    Isn't that largely because people don't understand it?
    - the_duke 10y ago
      The term is more a criticism of the reductionist view of Economics, ignoring human value and ethical considerations. But the problem with economics is that it is often viewed or presented/used (by governments) as a hard science, while it is much closer to some humanities: a game of deducing, abstracting, and guessing. Economies are hugely complex and intertwined systems, which are hard to understand and harder to predict, because they depend on so many variables. Economic models often only work when everything is going well or down an established path, and not when you would actually need them.
      - saosebastiao 10y ago
        Math is closer to the humanities than economics is. Math is not empirical, with its expanding knowledge driven more by philosophical thinking than empirical deduction. Economics is not a hard science, and shouldn't be treated as such, but to claim it is more like the humanities is disingenuous. It is a social science. That is to say that it is still ultimately empirical, just that the empirical implications of working with humans makes the job a lot harder and ocassionally less repeatable (are we measuring innate human nature, or a fluid and ever changing culture?).
        AnimalMuppet 10y ago
        We're measuring human behavior. The problem is that, as the circumstances change, humans change their behavior. That means that economic models only work as long as the economy keeps doing what it has been, so that the humans keep doing what they have been, which leads to an economy that continues to do what it has been...
  - yummyfajitas 10y ago
    That's not why economics is called the dismal science. Economics is called the "dismal science" because of it's "find[ing] the secret of this Universe in 'supply and demand,' and reducing the duty of human governors to that of letting men alone". Carlyle took a different view, feeling that the "idle Black man in the West Indies" should be "compelled to work as he was fit, and to do the Maker's will who had constructed him". https://en.wikipedia.org/wiki/The_dismal_science https://en.wikipedia.org/wiki/The_dismal_science Mencius Moldbug also has an interesting take on Carlyle, suggesting that his views on slavery and hierarchy were significantly more nuanced than what my pithy summary above describes. I have not managed to read enough Carlyle to form my own opinion (maybe on my next 24 hour flight). https://unqualified-reservations.blogspot.com/2009/07/why-carlyle-matters.html https://unqualified-reservations.blogspot.com/2009/07/why-ca... https://unqualified-reservations.blogspot.com/2009/07/carlyle-in-20th-century-fascism-and.html https://unqualified-reservations.blogspot.com/2009/07/carlyl...
    - maxerickson 10y ago
      Iconoclastic mood affiliation?
- Pigo 10y ago
  I'm curious what course of action they would suggest. Should we stop trying to have a better economy for the sake of global concerns? I'm genuinely asking because I have zero knowledge of currency market. What is the right move to strengthen our economy with the least amount of global impact?
  - grigjd3 10y ago
    The dollar is going up because of the prospect of a lower corporate tax rate and increased infrastructure spending. The first means companies will have more motivation to bring profits into the United States and the second is believed to lead to investment (though China is an example that shows this can be taken too far). As to whether this will improve the economy, I have serious doubts that US presidents have much ability to impact the economy barring very extreme measures, and those measures generally do damage, not good.
    - Pigo 10y ago
      I completely understand people's over-estimating the power of President. They do have an ever widening ability to declare war without Congress, but they don't control everything.
      - dpark 10y ago
        Republicans will control the presidency and both houses of congress for at least two years. They can potentially push a lot through in that time, especially if democrats don't want to take on the mantle of "the party of no" and filibuster endlessly in the Senate.
        grigjd3 10y ago
        I have my doubts as to what can be accomplished with only 51 Senators. Just like with the Democrats in 2008, the Republicans are not as monolithic as they would like you to believe. They face reelection as much as anyone and if they start massive tax cuts for corporations and the wealthy, but obviously won't be able to bring back a manufacturing economy, then I think they'll be facing a tough situation in 2018.
- enraged_camel 10y ago
  Why is the world bereft of things to be optimistic about?
  - ionised 10y ago
    because humans are fundamentally insane and inevitably corrupted by power? Just a guess.
- TeMPOraL 10y ago
  The world is actually full of things to be optimistic about - media outlets aren't usually writing about them though.
  - camelNotation 10y ago
    That's so depressing.
    - andruby 10y ago
      It's actually uplifting! That means that the world is actually a better place than portrait by the media.
      - camelNotation 10y ago
        True, I was trying to be ironic. Guess it didn't work, ha!
- navait 10y ago
  If it makes you feel any better, last week's issue of the economist was about how the future is bright for clean energy and the fight against climate change, even with Trump in the white house. http://www.economist.com/news/leaders/21710807-or-without-america-self-interest-will-sustain-fight-against-global-warming-climate http://www.economist.com/news/leaders/21710807-or-without-am...
  - randomguy23 10y ago
    "even with Trump in the white house(sic)" - can we put this to bed yet? Trump isn't an oilman, he's a business man.
    - cheriot 10y ago
      When has he expressed support for renewable energy? http://www.ontheissues.org/2016/Donald_Trump_Energy_+_Oil.htm http://www.ontheissues.org/2016/Donald_Trump_Energy_+_Oil.ht... Or even business like consideration for technology that's rapidly dropping in price? Since the election, he's been making promises to coal workers: https://www.technologyreview.com/s/602853/trumps-empty-promise-to-coal-country/ https://www.technologyreview.com/s/602853/trumps-empty-promi...
    - wheelerwj 10y ago
      He's not really much of a businessman either, is he?
    - mcv 10y ago
      He's not a businessman, he's a salesman. On green energy, I'm getting the impression that some threshold is finally being passed where clean energy is picking up momentum, and won't be so easily stopped anymore. Trump may have promised coal to the former coal miners, but coal is getting too expensive, so that's unlikely to happen. On oil, with some luck, he may want to make the US less dependent on Saudi oil. So despite his denialism, he might turn out to be okay here. Of course you can never be sure with him.
    - st3v3r 10y ago
      No. Look at his picks to head government agencies. His pick for the EPA is a climate change denier.
m00dy 10y ago
Turkish Lira has lost its value against US Dollar more than 30% in the last couple of months.
- AnimalMuppet 10y ago
  That might say more about the lira than the dollar, though...
  - egeozcan 10y ago
    Exactly, especially when one considers the similar situation against the Euro.
rrggrr 10y ago
Necessitated by artificially low interest rates in the US, and a flight to relative safety as compared to Asian and European currencies. The reckoning has been deferred for too long and an orderly adjustment will be impossible if there is more delay.
- emp_zealoth 10y ago
  To me it became clear that current global finaces are completely unhinged from reality at least 5 years ago, if not 10. I also am becoming more and more sure it was all fucking Thatcher and fucking Reagan who are at the heart of it all Not to make a massive dissertation: just look at the debts everywhere, how nicely exponential they are... So I'mm sitting here, waiting for the inevitable collapse, hoping it comes sooner than later (so there might be a slight chance that SOMETHING survives)
  - msandford 10y ago
    Personally I suspect it was from earlier than that. I think you can trace it back to Nixon at least who fully severed the dollar from gold and thus removed the last bit of restraint that countries had against the US from inflating too much or too quickly. But if you go back further why did that happen? All the great society programs of the 60s are what ran up the debt. The notion that we're so rich we can just government program ourselves out of very thorny problems by giving people money. I'm not necessarily saying that doesn't work or isn't good. But it does cost a lot. Why did we think we could do that? The new deal maybe? I don't know. It didn't bankrupt the country and it did give people jobs. You could probably keep going back further if you wanted. Presuming that you know the exact date and time that the fall was precipitated is fun but not intellectually honest. Everything tends to build off of things that came before until it all falls apart.
    - skylan_q 10y ago
      Personally I suspect it was from earlier than that. I think you can trace it back to Nixon at least who fully severed the dollar from gold and thus removed the last bit of restraint that countries had against the US from inflating too much or too quickly. This was a huge hit that helped to spark runaway debts and inflation, to be sure. But I'd go further back and say The Fed. It did more than anyone to give us the roaring 20's and the great depression.
simonh 10y ago
With the Dollar as strong as ever against every other currency in the world, and China taking action to prop up the Yuan, I'm guessing Trump will shelve efforts to get China labelled a currency manipulator for deliberately weakening their currency. Right? Or is that not how that works.
- AnthonyMouse 10y ago
  > With the Dollar as strong as ever against every other currency in the world, and China taking action to prop up the Yuan, I'm guessing Trump will shelve efforts to get China labelled a currency manipulator for deliberately weakening their currency. Right? Or is that not how that works. That is actually the opposite of how that works. China manipulates its currency to make the yuan weaker against the dollar because it makes Chinese products cheaper in the US and US products more expensive in China, causing manufacturers to move to China so they can pay wages in yuan and sell products for dollars instead of the other way around.
  - zaroth 10y ago
    Which is why it was bizarre to read TFA claiming China was taking steps to shore up its currency against the dollar...? > The yuan has fallen to its lowest level against the dollar since 2008; anxious Chinese officials are said to be pondering tighter restrictions on foreign takeovers by domestic firms to stem the downward pressure.
    - maxerickson 10y ago
      It's a balancing act. Too weak of a yuan undermines their efforts to shift towards basing more of their economy on internal consumption.
      - AnthonyMouse 10y ago
        > It's a balancing act. Too weak of a yuan undermines their efforts to shift towards basing more of their economy on internal consumption. It is a balancing act but that's not why. A weak yuan promotes internal consumption in China for the same reasons it promotes US consumption of Chinese goods. But once the yuan is weak enough that manufacturing does move to China, making it even weaker is only throwing money away. It's like selling below cost to drive competitors out of business -- if you can drive them out of business by selling for $1 below cost then there is no reason to sell for $2 below cost. Otherwise they would just print a trillion yuan every day. Also, prohibiting foreign takeovers doesn't increase the value of the yuan, it only solves the "problem" of a weak yuan encouraging foreign takeovers. If Chinese companies can no longer be bought and they're traded in yuan then that will only reduce demand for the yuan.
lefty2 10y ago
The dollar is only temporarily strong, because people think Trump will improve the economy. When that fails to happen it'll just drop again. Problem solved.
deleted 10y ago
[deleted]
kurthr 10y ago
Contrary to the article, I thought that it was the $2.6T tax holiday (significant even to the currency market) which Trump promised that caused the currency speculation and rapid rise in the dollar. It may be true that most of the money is held by big corps offshore as $ denominated securities... but it still seems like a transfer out (and directly spending those untaxed $ in the US) would necessitate someone else (foreign?) buying those securities with other currency (and those offshore banks maintaining $ reserves). That should cause a medium term (years) rise in the $ relative to those currencies. https://www.bloomberg.com/news/articles/2016-11-17/a-2-6-trillion-myth-for-the-dollar-trump-tax-holiday-is-a-dud https://www.bloomberg.com/news/articles/2016-11-17/a-2-6-tri...
scotch_drinker 10y ago
Maybe this is true, maybe not but sometimes, it's ok for things to be bad for the economy. The economy isn't supposed to always go up and when we meddle in an attempt to iron out the bumps, we only serve to make the future bumps much worse. I wish our leaders and economists would both believe this and succinctly explain it to the public.
- smallnamespace 10y ago
  Leaders who try to explain this to the public inevitably get voted out of office, because the opposition will explain the exact opposite and the public can't tell the difference.
  - scotch_drinker 10y ago
    Do we know that for sure? Has anyone tried it lately? I'd like to find out but the cynic in me says it's pretty unlikely.
- twoquestions 10y ago
  I agree that we should tamper with natural economic forces as little as possible, we should remember that even economic nature can be a cruel, cruel bitch. Read the following for why we should sometimes risk economic meddling, despite the costs and risks. https://morecrows.wordpress.com/2016/05/10/unnecessariat/ https://morecrows.wordpress.com/2016/05/10/unnecessariat/ TL;DR: Being on the bottom of the economic ladder is terrible and near impossible to escape.
  - scotch_drinker 10y ago
    Totally agree. I would have far preferred the bailout in 2008 to be put into an infrastructure program that put those classes of people to work instead of enriching the Wall Street crowd. But, no one asked me. Government should protect the unprotected and let everyone else fend for themselves. Instead it does the opposite these days, at least in America.
vinceguidry 10y ago
Sounds like an excellent opportunity to print more dollars, create some inflation, increase liquidity in emerging markets, and pay off some of the national debt. Am I missing anything?
- theandrewbailey 10y ago
  The people who own said newly printed dollars aren't the people holding the national debt. The Federal Reserve is not the US Government.
  - vinceguidry 10y ago
    I guess organizationally and politically it's not feasible, but is there anything wrong with the economics of that plan?
  - ensignavenger 10y ago
    You and I may have different notions of what is and is not "the US Government". https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm
at-fates-hands 10y ago
In short, a strong dollar is bad for business, but good for the consumer. Also, considering how bad the US economy has been, having a strong dollar means there's a whole bunch of other places that are doing worse then we are, which is pretty eye opening. Seems the global economy as a whole is incredibly weak right now.
- sumanthvepa 10y ago
  Perhaps you may want to clarify that a strong dollar is bad for US businesses and good for the US consumer. It would be the reverse for non-US entities. i.e. it would be bad for non-US consumers and good for non-US businesses.
abhv 10y ago
1. Trump will spend, reduce taxes, increase debt, and therefore US interest rates will have to go up. (This happens whenever a government promises to spend a lot on infrastructure improvements.) 2. Foreign investors anticipate this and are buying US dollars. This makes the dollar stronger w.r.t. other currencies. I think a strong currency is usually a good thing in a scarce market environment. It means that your country can buy a lot of the world's natural resources easier than others. This should usually be a good thing (for the US). But there is a problem: The US doesn't actually do anything with natural resources anymore, we don't make things like steel or plastic etc anymore, or rather, we don't "add value" to natural resources. Instead, with a strong dollar, we let others add the value and (import) buy their finished goods. The few things that we do make become more expensive to others, so our exports decrease. Domestically, there are fewer "manufacturing" jobs. Trump will try to stop this and the only tool he has is to increase import tariffs. This article seems to equate that with global financial ruin, and it is the point of contention that I want to raise. These two facts: raising import tariffs and a strong US dollar may help cancel out the effects. Instead of destroying foreign markets, it may simply "transfer" who gets the surplus generated by the strong dollar from the foreign markets to our tax base.
- strictnein 10y ago
  > "The US doesn't actually do anything with natural resources anymore" ... "we don't "add value" to natural resources" Not sure that's accurate. The US refines more oil than any other nation. http://www.hydrocarbons-technology.com/features/featurethe-10-biggest-oil-refining-countries/ http://www.hydrocarbons-technology.com/features/featurethe-1... And is #4 in steel production https://en.wikipedia.org/wiki/List_of_countries_by_steel_production https://en.wikipedia.org/wiki/List_of_countries_by_steel_pro...
  - intrasight 10y ago
    But we don't buy those natural resources from other coutries
    - strictnein 10y ago
andruby 10y ago
Maybe the dollar is only going "up" because the other economies are scared shitless of Trump as a president, and their currencies are going down as a result of the uncertainty.
- danarmak 10y ago
  If other economies are more scared of Trump than the American economy is, and if both are right to react so, that would imply the markets believe Trump's promises of benefiting the American economy at the expense of others. Unlike some common rhetoric that says Trump's proposed changes would harm the American economy. Disclaimer which seems necessary even on HN these days: I'm just pointing out implications, not stating my own beliefs or preferences.
  - tveita 10y ago
    As this isn't a zero-sum game, they could also believe the American economy will do badly but other economies will do even worse.
    - up_so_floating 10y ago
      That would be easier to believe if the US market indices were not at all time highs.
      - keywordwilldo39 10y ago
        They're at all time highs with Obama on the outs, and Trump coming in. You could say that means people are into Trump coming in, pushing them up. However... The parent comments are prognosticating. The way the world looks today is not a good data point when the future includes, what many believe to be, a wildcard President coming in. And let's not forget the establishment party with a hard on for regressive policy control all three branches of US government. Their entire MO of the last few decades is "no compromises". They've destroyed their reputation as a group (Congressional approval ratings), but don't care because individually they're fine. They've shown no desire to improve their image. So a wildcard President, and a group of stubborn old assholes is in control. Stick to the guns or spray and pray at the wrong time, and the all time highs could crater.
unknown_apostle 10y ago
Nobody seems to mention the interesting issue that goes to the heart of Trump's and Bannon's economic nationalism. Decades of supposedly "allowing" China and Mexico to steal US jobs has a different side not often discussed. It was one way to deal with the Triffin dilemma. With great power comes great responsibility. As long as the US has the privilege to print the world's reserve currency, it has the responsibility to keep the planet flooded with sufficient dollars. Therefore, I'm (genuinely!) not sure for how long they will be able to combine a strong dollar, run deficits, manage the debt, boost US exports at the expense of others, help those other countries with any dollar shortages and keep the global monetary order friendly and stable -- all at once. I do know that when the world meets with the Triffin paradox in one variety or another, big changes have occurred. Right now the pundits are comparing Trump to Reagan. Maybe in a few years they will end up comparing him to 1971's Nixon.
- digi_owl 10y ago
  I guess there is always the bancor option... https://en.wikipedia.org/wiki/Bancor https://en.wikipedia.org/wiki/Bancor
snake_plissken 10y ago
Serious echoes of the Asian Financial Crisis of 97/98. A lot of Dollar denominated debt being issued outside of the United States with prospects that the Federal Reserve is going to raise rates. Although it's a little different, this time, as there are not as many Dollar pegs left in the world. That was one of the things in the late 90s version; countries that pegged local currency to the dollar effectively mimicked US monetary policy, so when the Fed started to raise rates around 1994, they also had to start raising rates, which meant higher debt servicing costs as it became more expensive to service US debt in local currency.
spectrum1234 10y ago
This author doesn't understand basic economics. He is negating all sorts of feedback loops that keep things in check. He is also completely ignoring root causes or attempting to address this issue at large. Is there an app that makes me aware of articles I'm reading by authors I've flagged as incompetent? Seriously.
- AnimalMuppet 10y ago
  Rather than complaining of incompetence and ignorance, you might supply some actual corrections...
- habitue 10y ago
  Please do elaborate
st3v3r 10y ago
Are there better terms to use than "strong" and "weak" when it comes to this stuff? One of the problems with using those is the emotional impact of those words. A Strong currency makes your goods more expensive for people around the world, so you'd want to Weaken it. But nobody wants to say, "I want to weaken our currency." People want a Strong currency. It sounds good. "We're strong."
- snrplfth 10y ago
  Exactly. See also: "trade deficit/surplus" and "value". Economists use all sorts of jargon that really does not convey to the layman what it actually means.
Veen 10y ago
From a selfish perspective, I'm British and I work for an American company that pays me in dollars. A strong dollar coupled with the pound going down the toilet after the brexit vote means I'm quite a bit better off than this time last year.

116 points by dx034 10y ago

EasyTiger_ 10y ago

Can always rely on the news outlets to temper optimism in a world which is bereft of things to be optimistic about.

mediumdeviation 10y ago
Economics is not called the dismal science for nothing
- maxerickson 10y ago
  Isn't that largely because people don't understand it?
  - the_duke 10y ago
    The term is more a criticism of the reductionist view of Economics, ignoring human value and ethical considerations. But the problem with economics is that it is often viewed or presented/used (by governments) as a hard science, while it is much closer to some humanities: a game of deducing, abstracting, and guessing. Economies are hugely complex and intertwined systems, which are hard to understand and harder to predict, because they depend on so many variables. Economic models often only work when everything is going well or down an established path, and not when you would actually need them.
    - saosebastiao 10y ago
      Math is closer to the humanities than economics is. Math is not empirical, with its expanding knowledge driven more by philosophical thinking than empirical deduction. Economics is not a hard science, and shouldn't be treated as such, but to claim it is more like the humanities is disingenuous. It is a social science. That is to say that it is still ultimately empirical, just that the empirical implications of working with humans makes the job a lot harder and ocassionally less repeatable (are we measuring innate human nature, or a fluid and ever changing culture?).
      - AnimalMuppet 10y ago
        We're measuring human behavior. The problem is that, as the circumstances change, humans change their behavior. That means that economic models only work as long as the economy keeps doing what it has been, so that the humans keep doing what they have been, which leads to an economy that continues to do what it has been...
- yummyfajitas 10y ago
  That's not why economics is called the dismal science. Economics is called the "dismal science" because of it's "find[ing] the secret of this Universe in 'supply and demand,' and reducing the duty of human governors to that of letting men alone". Carlyle took a different view, feeling that the "idle Black man in the West Indies" should be "compelled to work as he was fit, and to do the Maker's will who had constructed him". https://en.wikipedia.org/wiki/The_dismal_science https://en.wikipedia.org/wiki/The_dismal_science Mencius Moldbug also has an interesting take on Carlyle, suggesting that his views on slavery and hierarchy were significantly more nuanced than what my pithy summary above describes. I have not managed to read enough Carlyle to form my own opinion (maybe on my next 24 hour flight). https://unqualified-reservations.blogspot.com/2009/07/why-carlyle-matters.html https://unqualified-reservations.blogspot.com/2009/07/why-ca... https://unqualified-reservations.blogspot.com/2009/07/carlyle-in-20th-century-fascism-and.html https://unqualified-reservations.blogspot.com/2009/07/carlyl...
  - maxerickson 10y ago
    Iconoclastic mood affiliation?
Pigo 10y ago
I'm curious what course of action they would suggest. Should we stop trying to have a better economy for the sake of global concerns? I'm genuinely asking because I have zero knowledge of currency market. What is the right move to strengthen our economy with the least amount of global impact?
- grigjd3 10y ago
  The dollar is going up because of the prospect of a lower corporate tax rate and increased infrastructure spending. The first means companies will have more motivation to bring profits into the United States and the second is believed to lead to investment (though China is an example that shows this can be taken too far). As to whether this will improve the economy, I have serious doubts that US presidents have much ability to impact the economy barring very extreme measures, and those measures generally do damage, not good.
  - Pigo 10y ago
    I completely understand people's over-estimating the power of President. They do have an ever widening ability to declare war without Congress, but they don't control everything.
    - dpark 10y ago
      Republicans will control the presidency and both houses of congress for at least two years. They can potentially push a lot through in that time, especially if democrats don't want to take on the mantle of "the party of no" and filibuster endlessly in the Senate.
      - grigjd3 10y ago
        I have my doubts as to what can be accomplished with only 51 Senators. Just like with the Democrats in 2008, the Republicans are not as monolithic as they would like you to believe. They face reelection as much as anyone and if they start massive tax cuts for corporations and the wealthy, but obviously won't be able to bring back a manufacturing economy, then I think they'll be facing a tough situation in 2018.
enraged_camel 10y ago
Why is the world bereft of things to be optimistic about?
- ionised 10y ago
  because humans are fundamentally insane and inevitably corrupted by power? Just a guess.
TeMPOraL 10y ago
The world is actually full of things to be optimistic about - media outlets aren't usually writing about them though.
- camelNotation 10y ago
  That's so depressing.
  - andruby 10y ago
    It's actually uplifting! That means that the world is actually a better place than portrait by the media.
    - camelNotation 10y ago
      True, I was trying to be ironic. Guess it didn't work, ha!
navait 10y ago
If it makes you feel any better, last week's issue of the economist was about how the future is bright for clean energy and the fight against climate change, even with Trump in the white house. http://www.economist.com/news/leaders/21710807-or-without-america-self-interest-will-sustain-fight-against-global-warming-climate http://www.economist.com/news/leaders/21710807-or-without-am...
- randomguy23 10y ago
  "even with Trump in the white house(sic)" - can we put this to bed yet? Trump isn't an oilman, he's a business man.
  - cheriot 10y ago
    When has he expressed support for renewable energy? http://www.ontheissues.org/2016/Donald_Trump_Energy_+_Oil.htm http://www.ontheissues.org/2016/Donald_Trump_Energy_+_Oil.ht... Or even business like consideration for technology that's rapidly dropping in price? Since the election, he's been making promises to coal workers: https://www.technologyreview.com/s/602853/trumps-empty-promise-to-coal-country/ https://www.technologyreview.com/s/602853/trumps-empty-promi...
  - wheelerwj 10y ago
    He's not really much of a businessman either, is he?
  - mcv 10y ago
    He's not a businessman, he's a salesman. On green energy, I'm getting the impression that some threshold is finally being passed where clean energy is picking up momentum, and won't be so easily stopped anymore. Trump may have promised coal to the former coal miners, but coal is getting too expensive, so that's unlikely to happen. On oil, with some luck, he may want to make the US less dependent on Saudi oil. So despite his denialism, he might turn out to be okay here. Of course you can never be sure with him.
  - st3v3r 10y ago
    No. Look at his picks to head government agencies. His pick for the EPA is a climate change denier.

m00dy 10y ago

Turkish Lira has lost its value against US Dollar more than 30% in the last couple of months.

AnimalMuppet 10y ago
That might say more about the lira than the dollar, though...
- egeozcan 10y ago
  Exactly, especially when one considers the similar situation against the Euro.

rrggrr 10y ago

Necessitated by artificially low interest rates in the US, and a flight to relative safety as compared to Asian and European currencies. The reckoning has been deferred for too long and an orderly adjustment will be impossible if there is more delay.

emp_zealoth 10y ago
To me it became clear that current global finaces are completely unhinged from reality at least 5 years ago, if not 10. I also am becoming more and more sure it was all fucking Thatcher and fucking Reagan who are at the heart of it all Not to make a massive dissertation: just look at the debts everywhere, how nicely exponential they are... So I'mm sitting here, waiting for the inevitable collapse, hoping it comes sooner than later (so there might be a slight chance that SOMETHING survives)
- msandford 10y ago
  Personally I suspect it was from earlier than that. I think you can trace it back to Nixon at least who fully severed the dollar from gold and thus removed the last bit of restraint that countries had against the US from inflating too much or too quickly. But if you go back further why did that happen? All the great society programs of the 60s are what ran up the debt. The notion that we're so rich we can just government program ourselves out of very thorny problems by giving people money. I'm not necessarily saying that doesn't work or isn't good. But it does cost a lot. Why did we think we could do that? The new deal maybe? I don't know. It didn't bankrupt the country and it did give people jobs. You could probably keep going back further if you wanted. Presuming that you know the exact date and time that the fall was precipitated is fun but not intellectually honest. Everything tends to build off of things that came before until it all falls apart.
  - skylan_q 10y ago
    Personally I suspect it was from earlier than that. I think you can trace it back to Nixon at least who fully severed the dollar from gold and thus removed the last bit of restraint that countries had against the US from inflating too much or too quickly. This was a huge hit that helped to spark runaway debts and inflation, to be sure. But I'd go further back and say The Fed. It did more than anyone to give us the roaring 20's and the great depression.

simonh 10y ago

With the Dollar as strong as ever against every other currency in the world, and China taking action to prop up the Yuan, I'm guessing Trump will shelve efforts to get China labelled a currency manipulator for deliberately weakening their currency. Right? Or is that not how that works.

AnthonyMouse 10y ago
> With the Dollar as strong as ever against every other currency in the world, and China taking action to prop up the Yuan, I'm guessing Trump will shelve efforts to get China labelled a currency manipulator for deliberately weakening their currency. Right? Or is that not how that works. That is actually the opposite of how that works. China manipulates its currency to make the yuan weaker against the dollar because it makes Chinese products cheaper in the US and US products more expensive in China, causing manufacturers to move to China so they can pay wages in yuan and sell products for dollars instead of the other way around.
- zaroth 10y ago
  Which is why it was bizarre to read TFA claiming China was taking steps to shore up its currency against the dollar...? > The yuan has fallen to its lowest level against the dollar since 2008; anxious Chinese officials are said to be pondering tighter restrictions on foreign takeovers by domestic firms to stem the downward pressure.
  - maxerickson 10y ago
    It's a balancing act. Too weak of a yuan undermines their efforts to shift towards basing more of their economy on internal consumption.
    - AnthonyMouse 10y ago
      > It's a balancing act. Too weak of a yuan undermines their efforts to shift towards basing more of their economy on internal consumption. It is a balancing act but that's not why. A weak yuan promotes internal consumption in China for the same reasons it promotes US consumption of Chinese goods. But once the yuan is weak enough that manufacturing does move to China, making it even weaker is only throwing money away. It's like selling below cost to drive competitors out of business -- if you can drive them out of business by selling for $1 below cost then there is no reason to sell for $2 below cost. Otherwise they would just print a trillion yuan every day. Also, prohibiting foreign takeovers doesn't increase the value of the yuan, it only solves the "problem" of a weak yuan encouraging foreign takeovers. If Chinese companies can no longer be bought and they're traded in yuan then that will only reduce demand for the yuan.

lefty2 10y ago

The dollar is only temporarily strong, because people think Trump will improve the economy. When that fails to happen it'll just drop again. Problem solved.

deleted 10y ago

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kurthr 10y ago

Contrary to the article, I thought that it was the $2.6T tax holiday (significant even to the currency market) which Trump promised that caused the currency speculation and rapid rise in the dollar. It may be true that most of the money is held by big corps offshore as $ denominated securities... but it still seems like a transfer out (and directly spending those untaxed $ in the US) would necessitate someone else (foreign?) buying those securities with other currency (and those offshore banks maintaining $ reserves). That should cause a medium term (years) rise in the $ relative to those currencies. https://www.bloomberg.com/news/articles/2016-11-17/a-2-6-trillion-myth-for-the-dollar-trump-tax-holiday-is-a-dud https://www.bloomberg.com/news/articles/2016-11-17/a-2-6-tri...

scotch_drinker 10y ago

Maybe this is true, maybe not but sometimes, it's ok for things to be bad for the economy. The economy isn't supposed to always go up and when we meddle in an attempt to iron out the bumps, we only serve to make the future bumps much worse. I wish our leaders and economists would both believe this and succinctly explain it to the public.

smallnamespace 10y ago
Leaders who try to explain this to the public inevitably get voted out of office, because the opposition will explain the exact opposite and the public can't tell the difference.
- scotch_drinker 10y ago
  Do we know that for sure? Has anyone tried it lately? I'd like to find out but the cynic in me says it's pretty unlikely.
twoquestions 10y ago
I agree that we should tamper with natural economic forces as little as possible, we should remember that even economic nature can be a cruel, cruel bitch. Read the following for why we should sometimes risk economic meddling, despite the costs and risks. https://morecrows.wordpress.com/2016/05/10/unnecessariat/ https://morecrows.wordpress.com/2016/05/10/unnecessariat/ TL;DR: Being on the bottom of the economic ladder is terrible and near impossible to escape.
- scotch_drinker 10y ago
  Totally agree. I would have far preferred the bailout in 2008 to be put into an infrastructure program that put those classes of people to work instead of enriching the Wall Street crowd. But, no one asked me. Government should protect the unprotected and let everyone else fend for themselves. Instead it does the opposite these days, at least in America.

vinceguidry 10y ago

Sounds like an excellent opportunity to print more dollars, create some inflation, increase liquidity in emerging markets, and pay off some of the national debt. Am I missing anything?

theandrewbailey 10y ago
The people who own said newly printed dollars aren't the people holding the national debt. The Federal Reserve is not the US Government.
- vinceguidry 10y ago
  I guess organizationally and politically it's not feasible, but is there anything wrong with the economics of that plan?
- ensignavenger 10y ago
  You and I may have different notions of what is and is not "the US Government". https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm

at-fates-hands 10y ago

In short, a strong dollar is bad for business, but good for the consumer. Also, considering how bad the US economy has been, having a strong dollar means there's a whole bunch of other places that are doing worse then we are, which is pretty eye opening. Seems the global economy as a whole is incredibly weak right now.

sumanthvepa 10y ago
Perhaps you may want to clarify that a strong dollar is bad for US businesses and good for the US consumer. It would be the reverse for non-US entities. i.e. it would be bad for non-US consumers and good for non-US businesses.

abhv 10y ago

1. Trump will spend, reduce taxes, increase debt, and therefore US interest rates will have to go up. (This happens whenever a government promises to spend a lot on infrastructure improvements.) 2. Foreign investors anticipate this and are buying US dollars. This makes the dollar stronger w.r.t. other currencies. I think a strong currency is usually a good thing in a scarce market environment. It means that your country can buy a lot of the world's natural resources easier than others. This should usually be a good thing (for the US). But there is a problem: The US doesn't actually do anything with natural resources anymore, we don't make things like steel or plastic etc anymore, or rather, we don't "add value" to natural resources. Instead, with a strong dollar, we let others add the value and (import) buy their finished goods. The few things that we do make become more expensive to others, so our exports decrease. Domestically, there are fewer "manufacturing" jobs. Trump will try to stop this and the only tool he has is to increase import tariffs. This article seems to equate that with global financial ruin, and it is the point of contention that I want to raise. These two facts: raising import tariffs and a strong US dollar may help cancel out the effects. Instead of destroying foreign markets, it may simply "transfer" who gets the surplus generated by the strong dollar from the foreign markets to our tax base.

strictnein 10y ago
> "The US doesn't actually do anything with natural resources anymore" ... "we don't "add value" to natural resources" Not sure that's accurate. The US refines more oil than any other nation. http://www.hydrocarbons-technology.com/features/featurethe-10-biggest-oil-refining-countries/ http://www.hydrocarbons-technology.com/features/featurethe-1... And is #4 in steel production https://en.wikipedia.org/wiki/List_of_countries_by_steel_production https://en.wikipedia.org/wiki/List_of_countries_by_steel_pro...
- intrasight 10y ago
  But we don't buy those natural resources from other coutries
  - strictnein 10y ago

andruby 10y ago

Maybe the dollar is only going "up" because the other economies are scared shitless of Trump as a president, and their currencies are going down as a result of the uncertainty.

danarmak 10y ago
If other economies are more scared of Trump than the American economy is, and if both are right to react so, that would imply the markets believe Trump's promises of benefiting the American economy at the expense of others. Unlike some common rhetoric that says Trump's proposed changes would harm the American economy. Disclaimer which seems necessary even on HN these days: I'm just pointing out implications, not stating my own beliefs or preferences.
- tveita 10y ago
  As this isn't a zero-sum game, they could also believe the American economy will do badly but other economies will do even worse.
  - up_so_floating 10y ago
    That would be easier to believe if the US market indices were not at all time highs.
    - keywordwilldo39 10y ago
      They're at all time highs with Obama on the outs, and Trump coming in. You could say that means people are into Trump coming in, pushing them up. However... The parent comments are prognosticating. The way the world looks today is not a good data point when the future includes, what many believe to be, a wildcard President coming in. And let's not forget the establishment party with a hard on for regressive policy control all three branches of US government. Their entire MO of the last few decades is "no compromises". They've destroyed their reputation as a group (Congressional approval ratings), but don't care because individually they're fine. They've shown no desire to improve their image. So a wildcard President, and a group of stubborn old assholes is in control. Stick to the guns or spray and pray at the wrong time, and the all time highs could crater.

unknown_apostle 10y ago

Nobody seems to mention the interesting issue that goes to the heart of Trump's and Bannon's economic nationalism. Decades of supposedly "allowing" China and Mexico to steal US jobs has a different side not often discussed. It was one way to deal with the Triffin dilemma. With great power comes great responsibility. As long as the US has the privilege to print the world's reserve currency, it has the responsibility to keep the planet flooded with sufficient dollars. Therefore, I'm (genuinely!) not sure for how long they will be able to combine a strong dollar, run deficits, manage the debt, boost US exports at the expense of others, help those other countries with any dollar shortages and keep the global monetary order friendly and stable -- all at once. I do know that when the world meets with the Triffin paradox in one variety or another, big changes have occurred. Right now the pundits are comparing Trump to Reagan. Maybe in a few years they will end up comparing him to 1971's Nixon.

digi_owl 10y ago
I guess there is always the bancor option... https://en.wikipedia.org/wiki/Bancor https://en.wikipedia.org/wiki/Bancor

snake_plissken 10y ago

Serious echoes of the Asian Financial Crisis of 97/98. A lot of Dollar denominated debt being issued outside of the United States with prospects that the Federal Reserve is going to raise rates. Although it's a little different, this time, as there are not as many Dollar pegs left in the world. That was one of the things in the late 90s version; countries that pegged local currency to the dollar effectively mimicked US monetary policy, so when the Fed started to raise rates around 1994, they also had to start raising rates, which meant higher debt servicing costs as it became more expensive to service US debt in local currency.

spectrum1234 10y ago

This author doesn't understand basic economics. He is negating all sorts of feedback loops that keep things in check. He is also completely ignoring root causes or attempting to address this issue at large. Is there an app that makes me aware of articles I'm reading by authors I've flagged as incompetent? Seriously.

AnimalMuppet 10y ago
Rather than complaining of incompetence and ignorance, you might supply some actual corrections...
habitue 10y ago
Please do elaborate

st3v3r 10y ago

Are there better terms to use than "strong" and "weak" when it comes to this stuff? One of the problems with using those is the emotional impact of those words. A Strong currency makes your goods more expensive for people around the world, so you'd want to Weaken it. But nobody wants to say, "I want to weaken our currency." People want a Strong currency. It sounds good. "We're strong."

snrplfth 10y ago
Exactly. See also: "trade deficit/surplus" and "value". Economists use all sorts of jargon that really does not convey to the layman what it actually means.

Veen 10y ago

From a selfish perspective, I'm British and I work for an American company that pays me in dollars. A strong dollar coupled with the pound going down the toilet after the brexit vote means I'm quite a bit better off than this time last year.