6 ms·

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 tha

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.

hnlmorg 1y ago
I think the bigger problem is the reason why people are pulling back their money from US markets.
- dismalaf 1y ago
  US 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 ago
    Why are you ignoring the real reason?
    - moi2388 1y ago
      Because emotions are terrible investment strategies
      - const_cast 1y ago
        Policy 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.
    - dismalaf 1y ago
      And what do you think the real reason is?
      - wqaatwt 1y ago
        Economic instability and uncertainty. How high it is compared to other markets is debatable it has increased significantly this year due obvious reasons, though
        dismalaf 1y ago
        S&P500 literally at an all time high. Even I wasn't paying attention for a few days (just flew to Canada from Europe). So my theory of profit taking seems right, back to fresh highs.
        wqaatwt 1y ago
        > S&P500 literally at an all time high. It still has 10% to go to surpass its previous peak if measured in euros. Which is kind of the point. Currency depreciation is usually good for the local stock market, that’s not too surprising. Since Trump’s inauguration even the STOXX 600 managed to outperform the S&P 500 which is something that almost never happened.
  - EasyMark 1y ago
    The US Market is definitely more optimized more than say European, at the sacrifice of the common good of the people and to the advancement of broligarchs. Trump is doing is best to kill even that (I think it's not his intention, he's just not good with money), via tariffs and crazy economic policies and promoting even bigger deficits than we had during covid. I'm not sure how much longer it can fly high though.
- AlecSchueler 1y ago
  It's kind of jaw dropping to see people here continually avoid the elephant in the room, same thing in discussions about Tesla sales.
  - mindslight 1y ago
    The points avoiding the elephant in the room are basically deliberate, in support of the elephant. They think the elephant is some good thing that is going to destroy the woke, or inflation, or the immigrants, or whatever the hypocritical bogeyman is next week. But it is certainly not poised to destroy them, because they are the true patriotic Americans, don't you know. It is only everything else about this country that is wrong. And as soon as the elephant is done wrecking everything that is bad, their own true brilliance will be allowed to blossom. Or at least so they seem to think.
timewizard 1y ago
> the dollar has been insanely overvalued post-COVID. That's an odd way of saying the US doubled it's federal budget from $3T to $6T in response to COVID and has now ensconced this pork further into law. Under a "republican" administration, no less. > The dollar losing its value is a return to the pre-covid norm. Which is to say that even $3T contained an unjustified amount of debt spending just not as obscene as it is today. > It's a high that can't last forever. That's the "big beautiful bill" for ya.
- throw101010 1y ago
  > Under a "republican" administration, no less. Are you under the impression that this is surprising? Republicans are consistently the ones spending more when they are in power. It's time to dispel this myth that they are fiscally "conservative", they have presented more unbalanced/defficitary budgets than Democrats and the latter in recent memories are the only ones who managed to present budget with surpluses, under Clinton.
  - fakedang 1y ago
    It's fairly obvious the reason he put it in quotes was because the Republicans and conservative movements claim to be all about "fiscal prudence and discipline", when in reality they're the ones responsible for the ballooning deficit.
    - AlecSchueler 1y ago
      It wasn't at all obvious if it was ironically poking fun at that claim or that they genuinely believed it.
      - deleted 1y ago
        [deleted]
  - timewizard 1y ago
    Corruption has been compounding. Malicious business interests don't actually care which party has power. Just that they have access. It's telling that you have to reach back 30 years to find an example where the budget was balanced for one single year.
littlestymaar 1y ago
> 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 That's what inflation does. People are routinely taught that inflation is the “decline of value of money”, but that's not the reality. Inflation is just the increase in consumer price, which is perceived as a decline in the relative value of the money, but its absolute value on foreign markets isn't (directly) affected by inflation. And when the Central bank raise the interest rate to cool the economy down and temper inflation, then the absolute value of the money rises (because the higher the interest rates, the pricier the currency on the FX market). This increase in the currency value in turn also helps fighting inflation because it lowers the cost of imported goods. So, indirectly, because of the central bank's reaction, inflation is actually increasing the absolute value of money, and this is what we saw in 2022 when the Fed raised the interest rates 9 month or so before the ECB start doing the same (because the inflation came in advance for the US compared to EU).
corimaith 1y ago
>it would mean every country is supporting the US at the cost of devaluing themselves. That's what they want as export based economies.
- forgotoldacc 1y ago
  Not when you get to the point where your currency is so devalued that importing raw materials necessary for those exports becomes expensive, and basics like food and fuel become unaffordable for locals, as is the case in Japan. A balance is necessary, and things have been off balance recently.
presentation 1y ago
The yen has other reasons to be weak though, namely that Japan barely increased interest rates as compared to the US.
msgodel 1y ago
European interest rates are crazy low, that's why.
- Cthulhu_ 1y ago
  Lower than their 2024 peak, but still much higher than before 2022 where for a long period it was at 0% or even negative interest (apparently, I don't know much about these things). It's at 2% or 2.4% at the moment, last time it was around that was in 2008. See https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html https://www.ecb.europa.eu/stats/policy_and_exchange_rates/ke... But I'm no economist and don't know what these numbers mean or what the consequences are.
  - wqaatwt 1y ago
    In general lower interest rates would cause your currency to depreciate.
- wqaatwt 1y ago
  Which would mean that the Euro would depreciate significantly against the dollar under normal circumstances. Yet the Euro increased by > 10% despite the ECB cutting the rates quite significantly. Imagine how low the dollar would go if the Fed listened to Trump and cut to 1%..
koliber 1y ago
Donald Trump has stated that he wants to weaken the dollar. It seems that he is succeeding. My guess is that he wants to make it more attractive when it comes time to refinance the large portion of American long-term debt. He also wants to keep the interest rates low for the same reason. My questions is: What is causing the actual slide? The concrete mechanics and motivations that are causing people to sell USD.
- ethbr1 1y ago
  Devaluing the dollar is 100% the goal. It's literally noted as a key component in what the people running US trade policy now said they wanted to do, before joining government. It has the side effect of boosting nominal investment value (even if real value stays flat or decreases), maintaining political support from people who can't do math. The numbers continue to look good, but outcomes worsen. There are two flies in this ointment: international capital response and inflation. The latter is why Trump has been spending political capital on demonizing the Fed and Powell. The house of cards collapses if actual inflation bites and reveals the game. As to the former, it's tough to look at the situation and see US debt / equities as attractive as they once were: 1. Unsustainable US budget deficits 2. Political threats against the US central bank 3. Tariffs 4. Decreased immigration and worsening demographics
  - pandaman 1y ago
    These do not explain how DXY[1] had been rallying up and started falling at the end of September 2022. At that time, if you don't recall, Trump was facing prison time and the US government was in the reliable hands of the most popular president ever with his cabinet of brilliant minds. 1. https://www.tradingview.com/symbols/TVC-DXY/?timeframe=60M https://www.tradingview.com/symbols/TVC-DXY/?timeframe=60M
    - ethbr1 1y ago
      Or, take a look at measures objectively instead of predeciding whose side you want to be on. https://finance.yahoo.com/chart/AAAU https://finance.yahoo.com/chart/AAAU
RickJWagner 1y ago
If a dollar used to equal 100 yen, and now the dollar is worth 162 yen, isn’t that moving opposite to the stated direction?

hnlmorg 1y ago

I think the bigger problem is the reason why people are pulling back their money from US markets.

dismalaf 1y ago
US 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 ago
  Why are you ignoring the real reason?
  - moi2388 1y ago
    Because emotions are terrible investment strategies
    - const_cast 1y ago
      Policy 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.
  - dismalaf 1y ago
    And what do you think the real reason is?
    - wqaatwt 1y ago
      Economic instability and uncertainty. How high it is compared to other markets is debatable it has increased significantly this year due obvious reasons, though
      - dismalaf 1y ago
        S&P500 literally at an all time high. Even I wasn't paying attention for a few days (just flew to Canada from Europe). So my theory of profit taking seems right, back to fresh highs.
        wqaatwt 1y ago
        > S&P500 literally at an all time high. It still has 10% to go to surpass its previous peak if measured in euros. Which is kind of the point. Currency depreciation is usually good for the local stock market, that’s not too surprising. Since Trump’s inauguration even the STOXX 600 managed to outperform the S&P 500 which is something that almost never happened.
- EasyMark 1y ago
  The US Market is definitely more optimized more than say European, at the sacrifice of the common good of the people and to the advancement of broligarchs. Trump is doing is best to kill even that (I think it's not his intention, he's just not good with money), via tariffs and crazy economic policies and promoting even bigger deficits than we had during covid. I'm not sure how much longer it can fly high though.
AlecSchueler 1y ago
It's kind of jaw dropping to see people here continually avoid the elephant in the room, same thing in discussions about Tesla sales.
- mindslight 1y ago
  The points avoiding the elephant in the room are basically deliberate, in support of the elephant. They think the elephant is some good thing that is going to destroy the woke, or inflation, or the immigrants, or whatever the hypocritical bogeyman is next week. But it is certainly not poised to destroy them, because they are the true patriotic Americans, don't you know. It is only everything else about this country that is wrong. And as soon as the elephant is done wrecking everything that is bad, their own true brilliance will be allowed to blossom. Or at least so they seem to think.

timewizard 1y ago

> the dollar has been insanely overvalued post-COVID. That's an odd way of saying the US doubled it's federal budget from $3T to $6T in response to COVID and has now ensconced this pork further into law. Under a "republican" administration, no less. > The dollar losing its value is a return to the pre-covid norm. Which is to say that even $3T contained an unjustified amount of debt spending just not as obscene as it is today. > It's a high that can't last forever. That's the "big beautiful bill" for ya.

throw101010 1y ago
> Under a "republican" administration, no less. Are you under the impression that this is surprising? Republicans are consistently the ones spending more when they are in power. It's time to dispel this myth that they are fiscally "conservative", they have presented more unbalanced/defficitary budgets than Democrats and the latter in recent memories are the only ones who managed to present budget with surpluses, under Clinton.
- fakedang 1y ago
  It's fairly obvious the reason he put it in quotes was because the Republicans and conservative movements claim to be all about "fiscal prudence and discipline", when in reality they're the ones responsible for the ballooning deficit.
  - AlecSchueler 1y ago
    It wasn't at all obvious if it was ironically poking fun at that claim or that they genuinely believed it.
    - deleted 1y ago
      [deleted]
- timewizard 1y ago
  Corruption has been compounding. Malicious business interests don't actually care which party has power. Just that they have access. It's telling that you have to reach back 30 years to find an example where the budget was balanced for one single year.

littlestymaar 1y ago

> 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 That's what inflation does. People are routinely taught that inflation is the “decline of value of money”, but that's not the reality. Inflation is just the increase in consumer price, which is perceived as a decline in the relative value of the money, but its absolute value on foreign markets isn't (directly) affected by inflation. And when the Central bank raise the interest rate to cool the economy down and temper inflation, then the absolute value of the money rises (because the higher the interest rates, the pricier the currency on the FX market). This increase in the currency value in turn also helps fighting inflation because it lowers the cost of imported goods. So, indirectly, because of the central bank's reaction, inflation is actually increasing the absolute value of money, and this is what we saw in 2022 when the Fed raised the interest rates 9 month or so before the ECB start doing the same (because the inflation came in advance for the US compared to EU).

corimaith 1y ago

>it would mean every country is supporting the US at the cost of devaluing themselves. That's what they want as export based economies.

forgotoldacc 1y ago
Not when you get to the point where your currency is so devalued that importing raw materials necessary for those exports becomes expensive, and basics like food and fuel become unaffordable for locals, as is the case in Japan. A balance is necessary, and things have been off balance recently.

presentation 1y ago

The yen has other reasons to be weak though, namely that Japan barely increased interest rates as compared to the US.

msgodel 1y ago

European interest rates are crazy low, that's why.

Cthulhu_ 1y ago
Lower than their 2024 peak, but still much higher than before 2022 where for a long period it was at 0% or even negative interest (apparently, I don't know much about these things). It's at 2% or 2.4% at the moment, last time it was around that was in 2008. See https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html https://www.ecb.europa.eu/stats/policy_and_exchange_rates/ke... But I'm no economist and don't know what these numbers mean or what the consequences are.
- wqaatwt 1y ago
  In general lower interest rates would cause your currency to depreciate.
wqaatwt 1y ago
Which would mean that the Euro would depreciate significantly against the dollar under normal circumstances. Yet the Euro increased by > 10% despite the ECB cutting the rates quite significantly. Imagine how low the dollar would go if the Fed listened to Trump and cut to 1%..

koliber 1y ago

Donald Trump has stated that he wants to weaken the dollar. It seems that he is succeeding. My guess is that he wants to make it more attractive when it comes time to refinance the large portion of American long-term debt. He also wants to keep the interest rates low for the same reason. My questions is: What is causing the actual slide? The concrete mechanics and motivations that are causing people to sell USD.

ethbr1 1y ago
Devaluing the dollar is 100% the goal. It's literally noted as a key component in what the people running US trade policy now said they wanted to do, before joining government. It has the side effect of boosting nominal investment value (even if real value stays flat or decreases), maintaining political support from people who can't do math. The numbers continue to look good, but outcomes worsen. There are two flies in this ointment: international capital response and inflation. The latter is why Trump has been spending political capital on demonizing the Fed and Powell. The house of cards collapses if actual inflation bites and reveals the game. As to the former, it's tough to look at the situation and see US debt / equities as attractive as they once were: 1. Unsustainable US budget deficits 2. Political threats against the US central bank 3. Tariffs 4. Decreased immigration and worsening demographics
- pandaman 1y ago
  These do not explain how DXY[1] had been rallying up and started falling at the end of September 2022. At that time, if you don't recall, Trump was facing prison time and the US government was in the reliable hands of the most popular president ever with his cabinet of brilliant minds. 1. https://www.tradingview.com/symbols/TVC-DXY/?timeframe=60M https://www.tradingview.com/symbols/TVC-DXY/?timeframe=60M
  - ethbr1 1y ago
    Or, take a look at measures objectively instead of predeciding whose side you want to be on. https://finance.yahoo.com/chart/AAAU https://finance.yahoo.com/chart/AAAU

RickJWagner 1y ago

If a dollar used to equal 100 yen, and now the dollar is worth 162 yen, isn’t that moving opposite to the stated direction?