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A Strong U.S. Dollar Weighs on the World

nytimes.com

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Re: A Strong U.S. Dollar Weighs on the World

#31

Post by oytis »

servus45678981 wrote: post #17
rdm_blackhole wrote: post #8

I think the main reasons of the strong USD are: - it's status as world reserve currency - it's seen as a safe heaven - The US is still the most profitable market to launch new product - the US job market is still performing well compared to the battered economies of Europe where unemployment is starting to go back up If the ECB decides to lower interest rates before the US Fed does, then even more capital will flow i…

I still don’t get why anyone would invest in a regime like the US or China. Europe will show its glory again; no matter what. We will get back what was stolen.

What US "regime"? Have I missed something? Is Trump already a president for life?

> Europe will show its glory again; no matter what.

Unless Europe finds a way to monetise retired people, lack of natural resources and free land and the grip of bureaucracy and old money I find it highly unlikely

Re: A Strong U.S. Dollar Weighs on the World

#32

Post by Brajeshwar »

metaphor wrote: post #2

https://archive.is/xOVVY https://web.archive.org/web/20240430191512/https://www.nytim...

I've tried subscribing to NYTimes couple of times (it is super-cheap, here in India) just to get rid of these irritations but I never succeeded -- error with the payment processors.

Re: A Strong U.S. Dollar Weighs on the World

#33

Post by Moto7451 »

ilikerashers wrote: post #27

For all the drama in US Politics, you have to admit they run extremely well economically. Quick to keep rates high, good forecasting, good trade policies, good energy policies. Europe is like a kid copying the US homework, trying to make the equations work.

The Federal Reserve (The Fed) is supposed to work independently of the political process which is why we have the same Fed Chair as we did during the Trump years. Ironically this means the Fed Chair keeping rates high is the same one that set a zero base rate. The various Fed leaders operate under the same guise of serving outside the political cycles.

They’re still human so they can be swayed by Presidents and obviously have their own political leanings. In general the ability to not listen to politics allows them to make choices that are inconvenient for an election cycle but good for the US economy.

Re: A Strong U.S. Dollar Weighs on the World

#34

Post by bwb »

ilikerashers wrote: post #27

For all the drama in US Politics, you have to admit they run extremely well economically. Quick to keep rates high, good forecasting, good trade policies, good energy policies. Europe is like a kid copying the US homework, trying to make the equations work.

The FED has done an amazing job and are utterly filled with the smartest people in the field. I love watching the q&a with members as they give such detailed and informative answers on just about everything. Worth watching if you are an econ nerd.

Re: A Strong U.S. Dollar Weighs on the World

#35

Post by danielheath »

bamboozled wrote: post #30
po wrote: post #15

> The yen is at a 34-year low against the U.S. dollar I live in Japan and this has happened so quickly it's been stunning. While not much has changed domestically so far, I am hearing and starting to see foreign people question whether they could work and live here long term if it stays like this. It's fine if you are earning USD and visiting Japan (wow there are so many tourists this year) but if your salary is pric…

you can borrow JPY and invest in USD and make 4-5% on it. I have JPY, can I make money on it, or do I need to borrow it? Is the idea here to buy USD, wait for the price to go up, and then sell it back in JPY?

A spread on interest rates means you can e.g. borrow some JPY at 2% interest, spend it to purchase USD, then loan the USD to someone else at 6% interest.

After you pay back the 2% interest to the original lender, you're left with 4% as profit.

This usually happens when one government pushes banks for lower interest rates (to stimulate the domestic economy).

It creates a large volume of trades buying USD with JPY, and by doing so causes the JPY currency to become less valuable relative to USD.

Re: A Strong U.S. Dollar Weighs on the World

#36

Post by realusername »

ilikerashers wrote: post #27

For all the drama in US Politics, you have to admit they run extremely well economically. Quick to keep rates high, good forecasting, good trade policies, good energy policies. Europe is like a kid copying the US homework, trying to make the equations work.

I'd say that it's more a statement of China doing significantly worse than expected more than anything else.

You can be sure that the day the USD isn't viewed as the global currency, all this printing will come bite back hard and probably cause a collapse.

Re: A Strong U.S. Dollar Weighs on the World

#37

Post by Nursie »

ilikerashers wrote: post #27

For all the drama in US Politics, you have to admit they run extremely well economically. Quick to keep rates high, good forecasting, good trade policies, good energy policies. Europe is like a kid copying the US homework, trying to make the equations work.

> Quick to keep rates high

Well, compared to most other countries I know about, US rates work a little differently.

Homeowner mortgages are (AFAICT) almost all fixed for the full term of the loan. So a rate hike doesn't immediately take money out of the pockets of a large proportion of the population. It may slow new home finance agreements, and affect a lot of other credit agreements, including the ability of business to borrow, but it doesn't kick a huge number of people right in the domicile.

Whereas here in Aus and in the UK (two places I've held mortgages) fixed terms are only available on a relatively short basis (1-5 years) and people won't take them out at all if they feel the rates are already a little elevated (like now), as there are penalties for refinancing in the fixed period. So interest rate rises directly impact people's pockets and threaten their housing stability.

So over here mortgage holders really do hate rate rises and feel personally aggrieved when the central bank raises them.

This situation conceivably makes tackling inflation easier - public spending plummets when rates go up - but it is massively unpopular.

Re: A Strong U.S. Dollar Weighs on the World

#38

Post by po »

bamboozled wrote: post #30
po wrote: post #15

> The yen is at a 34-year low against the U.S. dollar I live in Japan and this has happened so quickly it's been stunning. While not much has changed domestically so far, I am hearing and starting to see foreign people question whether they could work and live here long term if it stays like this. It's fine if you are earning USD and visiting Japan (wow there are so many tourists this year) but if your salary is pric…

you can borrow JPY and invest in USD and make 4-5% on it. I have JPY, can I make money on it, or do I need to borrow it? Is the idea here to buy USD, wait for the price to go up, and then sell it back in JPY?

As a retail investor, you can do Forex trading or you could do time deposits at a Japanese bank (assuming you live here). SMBC Prestia is offering 6.5% on it right now for example:

https://www.smbctb.co.jp/en/timedeposit2404/?icid=24_en_top_...

Re: A Strong U.S. Dollar Weighs on the World

#39

Post by ilikerashers »

realusername wrote: post #36
ilikerashers wrote: post #27

For all the drama in US Politics, you have to admit they run extremely well economically. Quick to keep rates high, good forecasting, good trade policies, good energy policies. Europe is like a kid copying the US homework, trying to make the equations work.

I'd say that it's more a statement of China doing significantly worse than expected more than anything else. You can be sure that the day the USD isn't viewed as the global currency, all this printing will come bite back hard and probably cause a collapse.

Seems like China will do as well as the US lets it. It has little domestic consumption and is reliant on exports to the US.

Maybe China will have strong consumers in the future but then it'll have to ensure it can compete with US wages which erodes its competitiveness.

House always wins.

Re: A Strong U.S. Dollar Weighs on the World

#40

Post by a_wild_dandan »

Moto7451 wrote: post #33
ilikerashers wrote: post #27

For all the drama in US Politics, you have to admit they run extremely well economically. Quick to keep rates high, good forecasting, good trade policies, good energy policies. Europe is like a kid copying the US homework, trying to make the equations work.

The Federal Reserve (The Fed) is supposed to work independently of the political process which is why we have the same Fed Chair as we did during the Trump years. Ironically this means the Fed Chair keeping rates high is the same one that set a zero base rate. The various Fed leaders operate under the same guise of serving outside the political cycles. They’re still human so they can be swayed by Presidents and obvio…

FYI, Trump has vowed to purge the executive branch of unloyal employees, aiming for unitary rule during his 2nd term. It’s unclear how much of this his conservative SC majority will allow, but…the norm of stable, institutional independence might be gone soon.
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