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According to this, the valuation of stocks in a different currency like euro or chf would look differently than in dollars, since the dollar price with respect
by maxwell86 5y ago
According to this, the valuation of stocks in a different currency like euro or chf would look differently than in dollars, since the dollar price with respect to these currencies would have deviated.
Is this the case for another more stable currency ?
- TekMol 5y agoThat is an interesting question I pondered every now and then but have not an answer to yet. When the FED signals it will change interest rates, Asset prices change in every currency. I guess there is some explanation to this. Maybe that other currencies are measured in how much Dollars their central banks have in reserve. So a Euro would just be a certain amount of Dollars. Similar to how it was a certain amount of Gold during the Gold standard. But I am not sure.
- maxwell86 5y agoI think the answer is that when the FED prints more money, the "value" of 1 dollar doesn't change much, so the ratio of dollar to euros doesn't change. Sure with more money, people in the US spend more, US inflation increase, as in stuff gets more expensive, but none of this directly impacts the ratio of the value of the dollar with respect to the EUR. So the original claim, which is essentially that there is some company called "The US", of which dollars act like a stock, and the FED printing more money is like diluting the stock, is just not true. Dollars don't behave like stocks.
- TekMol 5y agoHard to say. I think the effects of printing dollars are complex. In the short term (months and years) they are pretty chaotic. And in the long term (decades) they are simple: The more dollars, the less value a dollar has. Over the last decade, dollars and euros have been printed like crazy. So it is not easy to compare.