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...no. You are overthinking this significantly. If the USD falls 20% against the GBP or JPY or whatever...why do you care? It doesn't affect you...unless you ha
by hogFeast 7y ago
...no. You are overthinking this significantly. If the USD falls 20% against the GBP or JPY or whatever...why do you care? It doesn't affect you...unless you have liabilities priced in terms of that other currency.
The fall and the rise of the USD is very important outside the US. It makes no difference to 95% of people within the US.
- gumby 7y ago> The fall and the rise of the USD is very important outside the US. It makes no difference to 95% of people within the US. Except that their lawn mowers and phones are manufactured overseas. So they are implicitly, if loosely, exposed to forex. If the swing of the dollar makes French cheese or wine too expensive people will switch. If they need a new refrigerator they have less choice.
- hogFeast 7y agoYep, it doesn't work that way. First, the US isn't a big trader relative to the size of the economy. Second, depreciation doesn't passthrough to inflation 1-to-1. Three, because of the relative size of the US economy and the international use of USD, US imports are generally not sensitive to exchange rates in the way that you see in other countries. Btw, I live somewhere where the currency has depreciated significantly, and we import almost double what the US does...prices go up a little but not much. And for most people, the difference is just zero (the difference for companies is often not zero...companies are often constrained in how they change prices, which is the reason for a lot of the point above, so they end up taking a lot of cost changes to their profit).