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The US dollar is on track for its worst year in modern history
- rokkamokka 1y agoStrike dollar from the title and it'll still be true...
- qsort 1y agoStrike "the US" as well...
- 0xy 1y agoThe inflation of 2021-24 was a biblical disaster for the working class, and it's nowhere near as bad now. I'd say that makes 2025 a marked improvement from the economic disaster of the last 4 years, and which was backed up in every political poll (economy was issue 1).
- mindslight 1y agoThe monetary inflation dump in Trump's previous term was early 2020, which then took time to work through asset prices and into consumer prices. So yes the next few years are going to be worse, as the effects of the terrible policies really set in. And unlike last time, we won't have leadership at the helm who might even try pulling up until 2027. And that's assuming enough Americans get their heads on straight to vote out the congress currently rubber stamping this wanton destruction.
- jaybrendansmith 1y agoYup. And again we conveniently ignore that the prior inflation was a textbook supply shock caused by COVID, and that the US response to it was quite better than the rest of the world. The difference here is the current and pending inflation will be caused by tariffs, and be a compete self-own by the current clown show.
- mindslight 1y agoSupply shock exacerbated by trillions of dollars in helicopter money across all levels of society. A good chunk of that was a self-own too, except for voters with the attention span of a gnat and no ability to grok economics ended up blaming the next administration.
- jaybrendansmith 1y agoNot accurate. US handled the supply shock inflation quite a bit better than everybody else. The trillions was enough to keep the economy afloat, and did not contribute to the inflation. There are charts you can look up. As far as the 'self own' ... I don't think most realize how powerful the propaganda arm is at this point. It is truly a firehose of bullshit and lies.
- mindslight 1y agoI mean, one instance of helicopter money was people getting PPP "loans" that would then have counted as taxable income, had they not gone and bought a fancy new truck/trailer with sec 179 accelerated depreciation, and supply shock making that a sellers market. Another instance was propping up the stock market because The Line must never go down, which then made a whole lot of people feel rich to spend on home improvement/expansions rather than hunkering down with what they had. These are anecdotes, but I don't see how all of that new money would not have contribute to price inflation, but with a delay because the immediate velocity of money was low. If you want to point me to some of the graphs you're thinking I'll certainly give them a look with an open mind, but denying that fundamental dynamic feels close to the opposing propaganda that's always maintaining that monetary inflation has no bearing on price inflation.
- jaybrendansmith 1y agoA smaller CARES Act would have still been as helpful as it needed to be, but would have stimulated more normal growth and a bit less inflation. How much less? I don't know. Maybe 2-3 percentage points? It's hard to draw firm conclusions because pandemic inflation is fundamentally different than ordinary inflation. Still, even though the supply side of things was unusual (caused by product shortages due to COVID), we still wouldn't have had any inflation if we'd skipped the stimulus entirely and allowed incomes and consumption to decline. It was our determination to keep people whole that produced stable consumption desires in the face of product shortages, leading to inflationary pressure. My guess is that a stimulus sufficient to address a recession is almost always going to produce some unwanted inflation. We just don't have the capability to fine tune things precisely enough to avoid it, and it's better to err on the side of maintaining growth even if that risks more inflation than we'd like. I like the tradeoff we made for COVID (strong growth, too much inflation) way more than the tradeoff we made for the Great Recession (slow growth, normal inflation).
- the_third_wave 1y agoApproval poll numbers seem to indicate a plurality of US voters agree with much of what the current government is implementing and for the first time in a very long period the majority of US voters seems to think the country is on the right track. You may not like what Trump and his crew are doing but most people did not like what your preferred candidates were doing and planning to do. Given these numbers I'd say "your democracy" (which is a constitutional republic but I'll just borrow some of the oft-heard rhetoric from the "democratic" party) seems to be functioning quite well and certainly a lot better than under the previous regime when approval numbers were abysmal.
- buckhx 1y agoWhat are you talking about? The admins current net approval rating is -6.9% https://www.natesilver.net/p/trump-approval-ratings-nate-silver-bulletin https://www.natesilver.net/p/trump-approval-ratings-nate-sil... Biden was at a +5% net rating at this point in his term
- mensetmanusman 1y agoApproval ratings are just measures of partisanship. Ideally it drops to zero. The fact that it was nearly 40% for a leader experiencing dementia-like symptoms confirmed this with political theoreticians.
- mindslight 1y agoBiden had a team around him to work with, plus the general separation of responsibilities of independent agencies. So nominal "Biden" was doing just fine regardless of the one man. This time we're getting the full dementia experience from a manic mad king who has already driven away anyone that might tell him no.
- mensetmanusman 1y agoSo these polls are about the idea of Biden and not the person? That also supports the idea that polls don’t matter.
- jamisteven 1y agoEntirely by design.
- ggm 1y agoCheaper dollar boosts US exports. Makes imports more expensive even before tarrifs. Which situationally, some industrial sectors will want. The exporting ones. The ones reliant on imports, less such. The US isn't self sufficient in food. Food imports are going to get more expensive.
- lifestyleguru 1y ago> boosts US exports The world doesn't need that much guns and missiles. There are two major markets currently and that's all mostly.
- clarionbell 1y agoUS doesn't just make weaponry but let's roll with that. You said there are two major markets now, I assume you mean Europe, that is the most wealthy continent, and Middle East one of the most awash with cash regions in the world. You may be tempted to assume that only active participants in wars buy weapons, but that has never been the case. And especially now, you have many countries trying to restock and prepare.
- arethuza 1y agoA lot of European countries are probably rethinking dependencies on the US as a supplier of weapons.
- AtariATMHacker 1y ago[dead]
- mensetmanusman 1y agoAfter they think, what will they do?
- FiniteIntegral 1y agoIt 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.
- zorton 1y agoIt's easy to blame an individual administration but the reality is pure fiat currencies will always end in this way. When was the last time the US had a balanced budget? Clinton? If you don't have a constraint on printing new currency you will always print more. A good example I heard today was this. Imagine if you have a legit money printer. Show me the most pure human and eventually they will hit that button and print new money. That's what we've been doing for a long time now to finance all the wars and bailouts. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL A good book: https://www.lynalden.com/broken-money/ https://www.lynalden.com/broken-money/
- PartiallyTyped 1y agoIt isn't just one administration. There's quite a bit of consistency over which administrations are "good" for the economy and the people, and which are "bad".
- justinrubek 1y agoOh we can happily blame every administration that did this. It may be the natural conclusion of this behavior but that doesn't mean we need to continually rush head first into trouble. The current administration absolutely needs to shoulder more scrutiny than the past ones because they are actively making decisions. They don't get a pass just because the others did it too.
- peterbecich 1y agoMore about this: https://en.wikipedia.org/wiki/Nixon_shock https://en.wikipedia.org/wiki/Nixon_shock
- toredo1729_2 1y agoDebt reduction by 7%.
- ipnon 1y agoMost 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.
- whatever1 1y agoExcept from all the investors who are literally dumping dollars and treasury bonds and use other things to transact and store value. Good luck getting loans & investments for your 100% American business ideas. Hint: Go to any country that is not called the USA and try to get a $1M equivalent loan/investment for your startup and let us know how it goes.
- dep_b 1y agoThe flip flopping of the government is also a gigantic macroeconomic signal to not invest in the US as there is no long term prediction possible. CHIPS act goes away, something else comes, trade deals are made, then tariffs, then no tariffs, then tariffs again. You don’t offset a cheaper dollar against counter tariffs. You’re one nationalization away from becoming the next Argentina.
- mylifeandtimes 1y agoWeimar-a-largo
- AtariATMHacker 1y ago[dead]
- n4r9 1y agoIs the cost of food and housing going down?
- konart 1y agoI was under impression that americans already have pretty high wages, cheap food and cheaper housing. At least compared to many other countries.
- snovv_crash 1y agoFrom outside the US, all the 'stock market gains' have actually been zero or negative because of this. I wonder how long before inflation hits...
- mrweasel 1y agoBecause stock market gains can't keep up with the lose of the dollars value? Assuming that you bought your stocks using Euros or some other currency?
- rsynnott 1y agoYeah, that's what they mean. Here's a euro-denominated S&P500 ETF: https://finance.yahoo.com/quote/CSPX.AS/ https://finance.yahoo.com/quote/CSPX.AS/ and a USD denominated one: https://finance.yahoo.com/quote/SPY/ https://finance.yahoo.com/quote/SPY/ Have a look at the 1 year view. Note the fairly dramatic difference.
- CalRobert 1y agoIf only it were easier to buy etfs that aren’t PFIC’s
- mindok 1y agoNot in Australia. Our dollar has taken a beating too. I guess digging holes and selling property to each other at ever higher prices isn’t that interesting to the rest of the economic world.
- lifestyleguru 1y ago> I guess digging holes and selling property to each other at ever higher prices isn’t that interesting to the rest of the economic world. Wow this is the case in most of the Europe too, what a coincidence. Fancy investing in our premium real estate?
- patrickhogan1 1y ago
- fmaga 1y ago[dead]
- lifestyleguru 1y agoThank you daddy Donald, awaiting 1.5 USD for 1 EUR. I like cheap dollar. I like money.
- mensetmanusman 1y agoThen payments to Tim Apple will be more affordable!
- fpmatwork 1y agoDoes this mean EU tech workers are now even more expensive for US companies?
- zelag 1y agoIn most cases EU tech workers that work remotely for a US company get their invoices paid in USD (same with the outsourcing agencies), so I'd say no.
- rockmeamedee 1y agoyeah but they're still >50% off SFBA salaries. SFBA comp for a sr dev can easily be $200k+ (and can go higher, lots of anecdotes on here about $350k+ salaries at BigtechCos), for an EU dev scratching 90k euro is considered "good". Devaluing the dollar by 10% and increasing the price of EU salaries by 10% doesn't really change the picture.
- wqaatwt 1y ago> even more They were extremely cheap, though? Even in richer Western European countries..
- comrade1234 1y ago7% lower vs what? Feels like it's about 20% down vs the Swiss franc.
- csomar 1y agoIt literally shows that in the graph. A basket of the world currencies.
- forgotoldacc 1y agoLooking 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.
- hnlmorg 1y agoI think the bigger problem is the reason why people are pulling back their money from US markets.
- dismalaf 1y agoUS markets have been flying high since COVID. Much more than other countries' markets. Why not take profit when US markets + dollar is at a high?
- more_corn 1y agoWhy are you ignoring the real reason?
- moi2388 1y agoBecause emotions are terrible investment strategies
- const_cast 1y agoPolicy is not emotional. There is such a thing as good policy, and bad policy. And, ironically, failing to call obviously bad policy bad is emotional.
- patrickhogan1 1y agoDXY 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.
- black_puppydog 1y agothat index grew significantly in both those years...
- patrickhogan1 1y agoVolatility is normal - the main point is the index was lower than it is today (meaning we had a weaker dollar than this blog post is referring to as problematic) and the result wasn’t chaos - the economy grew.
- snickerer 1y agoTrump: We are buying much more than we are selling. Let's make buying more expensive for us! I am a genius! Economists: No, no, no, no... The People: Genius! Genius! Let's vote him!
- rgmerk 1y agoIt seems that no one is prepared to point out the obvious - devaluation of the dollar is a cut in American living standards.
- pavlov 1y agoTariffs and a devaluating currency are a double whammy of inflation on imports. It will be reflected in overall inflation statistics, and that limits the Fed’s ability to cut rates.
- thrance 1y ago> that limits the Fed’s ability to cut rates. Only insofar as it remains sort of independent. Trump has ranted several times already about taking control of the thing and forcefully cutting rates.
- spencerflem 1y agoTotally agreed. My only hope is that the evil bastards who willed this to happen bear the suffering more.
- jjav 1y agoThey just gave themselves billions in tax cuts, so they'll be comfortable.
- spwa4 1y agoIt's 6500 billion dollars, generally referred to as "trillions". A vote for Trump, as it turns out, was a vote to increase US national debt by double what anyone increased it by before (which was also Trump, so anyone saying they "didn't see this coming" ...)
- lunarboy 1y agoGOP being the "fiscally responsible" party is the best generational propaganda it's honestly impressive
- wazoox 1y agoThis week there is the BRICS summit in Rio, and a lot could happen there. Also Japan debt seems about to dangerously spin out of control. I'm afraid we're to live in very interesting times real soon.
- mrtksn 1y agoIt'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. Maybe crypto will eventually be useful for trade?
- SeanAnderson 1y agohttps://i.imgur.com/LkclqgV.png https://i.imgur.com/LkclqgV.png 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?
- b112 1y agoAs a Canuck who has seen these swings for decades of his life, with both our currency and the US dollar both contributing to this, I see nothing unusual in the current trends. I take it that the "on track" is determined by extending a current downtrend as if it will continue precisely the same, for the next 6 months, which seems unlikely. I get that with the recent passage of this US bill, people want to pile on. I can assure you, that Canadians have no love of the current administration. But this is another click-baitish thing being done to us all, feeding on people's upset, the time of year it is, the US holiday, and more. Ah well.
- spencerflem 1y agoI'm convinced that 1. USA is about to experience dramatic inflation 2. US Stock market is an overvalued bubble Not sure what to keep my retirement fund in if not those though :c
- verteu 1y agoVXUS is a reasonable choice given those concerns.
- mensetmanusman 1y agoThe entire world will experience dramatic inflation around 2040 when population decline starts spiraling down the population side of GDP shrinkage.
- spencerflem 1y agoMaybe its just because I grew up on rhetoric of population crisis and malthusian collapse but shrinking population is one issue I genuinely can't bring myself to care about.
- wqaatwt 1y agoShrinking population as such might not be terribly on an individual perspective. Aging population and a significant decrease in per capita productivity. Well that’s not great for anyone..
- mensetmanusman 1y agoThe interesting one is which technologies we won’t be able to support because of missing workers in the supply chains.
- spencerflem 1y agoI'm much more worried about war or climate change's impact on supply chains.
- Surac 1y agoIf only Ronald mc Dumb has a brain. But he and his maga tribe will celebrate this as a big win
- checksum256 1y agoI 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.
- wqaatwt 1y ago> as much control over the people as possible Also significantly increasing economic and financial stability (compared to the days of the gold standard with its permanent boom and bust cycles)
- checksum256 1y ago[dead]
- derbOac 1y ago"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."
- more_corn 1y agoBut are we great?
- mensetmanusman 1y agoThe Yen carry trade is unwinding and this activity will weaken the dollar because the arbitrage was propping up the dollar above its net value. Meanwhile the CCP hasn’t unpegged their currency while they are experiencing deflationary price declines. Yikes
- almog 1y agoTrump 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.
- patchule 1y agoDon’t they want a weaker dollar to bring manufacturing back to the US? If manufacturing jobs were up while service sector hiring fell, would that be proof that they are succeeding? Not good for the middle class, perhaps intentionally, but if you’re homeless and need a low skill manufacturing job you’re prospects are finally looking up.
- almog 1y agoYes, it could support US exporters while it increases inflation.
- rayiner 1y agoWhat does “worst” mean in this context? Countries often want to keep their currency weak because it helps their exports: https://www.investopedia.com/trading/chinese-devaluation-yuan/ https://www.investopedia.com/trading/chinese-devaluation-yua...; https://www.investopedia.com/terms/d/devaluation.asp https://www.investopedia.com/terms/d/devaluation.asp
- daft_pink 1y agoI think that’s the goal. Trump wants to devalue the dollar to make imports more expensive and exports cheaper. It’s inline with his tarriff policy to reduce the balance of trade deficit. It’s just that countries don’t admit when they are devaluing currency, because devaluing currency could cause a loss in market confidence, devaluing it could cause a tit for tat currency war, or it could result in speculative attacks against the currency. But just to emphasize my point, the dollars decline is intentional.