Discussion
Trump is destroying the dollar.
At its peak, a US dollar was worth 1.03 euro in 2022 under Biden. Today the dollar is worth 0.86 euro.
In other words, Americans can now buy 17 percent less for their money internationally. This means import prices go up, and American tourists can afford much less when traveling.
When a Chinese made TV or EU made medicine gets more expensive, this hurts the purchasing power of ordinary Americans.
@randahl And the Euro is low because of Putin's invasion and other reasons, so the USD is even lower than it appears.
@randahl He touted this as an instrument multiple times in the last decade to make U.S. products more competitive...
@masek but did his voters understand the consequences?
@randahl This is a rhetoric question, isn't it? :-)
Did the German voters in the 1930's understand the consequences of what Hitler wrote in his book "Mein Kampf"?
Do the voters of the AfD understand the consequences of the party program of that party for their lives?
Trump was elected because he radiates anger. And the people felt angry, so they chose him. They didn't understand a shit about what that means for them.
There are two big myths:
@randahl It also means that people will (in theory, weird new taxes aside) buy more from the US both domestically and abroad.
A weakened currency is great for kickstarting domestic industrial production, you're effectively exporting your unemployment to other countries.
I'm sure it's 100% intentional.
There are downsides too, of course. Higher inflation, more expensive raw materials for companies buying from abroad, etc.
But if your goal is a more self-sufficient and self-reliant economy it makes sense to try to weaken your currency.
@CarstenBoll that is correct. But so many products consist of parts from many different countries, and when a US company needs to buy a Chinese manufactured part for a US made product, that part needs to be paid with the money the US company has in dollars… which are now worth less, meaning they can buy less parts.
I agree, in an economy as globalized as the US economy it's a fairly heavyhanded tool to use unless you want to move demand from China to the US which is, I suppose, the long term goal.
I understand the desire for this, it's what we want to do in the EU as well - for security reasons, because it does not make sense in a strictly economic analysis. It's a strategic decision.
There are plenty of dumb decisions being made in the US, but I don't think this is one of them long term.
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