Why a Strong Dollar Is a Double-Edged Sword for the U.S. Economy | WSJ
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- เผยแพร่เมื่อ 9 พ.ค. 2024
- The dollar is getting stronger. While that may sound like something to be happy about, a runup in the value of the dollar can ripple through the economy in unexpected ways. WSJ's Julia-Ambra Verlaine explains.
Illustration: Jordan Kranse
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Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.
Right now, things are peculiar. Because of inflation and the emergence of other strong nations who are willing to trade in their own currencies, the US dollar is losing value. The good news is that a lot of people continue to utilise the Dollar since it in some way guarantees safety. I'm concerned that these and other variables may lead my $420,000 in retirement funds to lose value. We need to keep our money somewhere else.
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After a massive rally in stocks came and yields collapsed, bond yields and the major averages are higher on Wednesday. How do we deal with such market conditions? Typically my $2m worth of holdings go up 8% then lose 20% right after and the cycle continues.
Investors embracing the idea that abruptly cooling inflation will put interest rate hikes on ice. During recessions your dividend gains or income reduces. Speaking to a certified market strategist can help with navigating this downturn.
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You have to consider net debt, the US is owed trillions by other countries. 60% of all foreign reserves are held in US dollars . there are more US dollars outside the US than inside the US . the US dollar represents 90% of all trades in foreign goods world wide . The US dollar is the global reserve currency . The US dollar is valuable just on its own. the US net debt is negligible relative to the real size of the US economy. which is far bigger than specified because many of the companies are held in the Cayman islands . The US , its people , companies and Government own approximately 40% of all the assets in the world. think of Boing , General electric Tesla, etc. When i buy tractor parts from China , i have to pay in US dollars , and I'm Australian . they wont take Chinese yuan , or Aus dollars only US dollars . US dollar and its economy is king . it is incredibly dynamic . Has been since WW2
My greatest worry is how do we recover from all these economic and global troubles? Especially with the political power tussle going on in the united states.
@@kashkat987 Every person is affected by this directly or indirectly. Taking myself for instance, Investments or stocks still retain their values very much but I'm still at crossroads of deciding if to liquidate my $53k worth of stocks or hold on to them cos I'm scared they might lose value.
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US Dollar is going down in value eventually. India, parts of EU, SEA, and China are buying Russian gas in rubles and yuan. Every empire ends eventually. US is still powerful, but declining in global influence gradually.
Invest in Asia. Invest in China. Invest in the real global economy.
@@empr1ze lol US can produce oil and can compete russia and saudi in the market but they chose not to because oil will be cheaper and oil stocks will go down. the S&P 500 of US is hard to beat. google and social media US tech like youtube or facebook is now part of your life lol. even US haters cant boycot US products lol.
Nice video, very clear! Thanks.
Educating people on America is exactly what WSJ is trying to do here but there's a bigger issue. For more context and for understanding something most people don't search TH-cam for “Literally step 1 of 5 on how to fix America” You'll find a treat and a very well researched understanding of the root problems we face. Thank you for being the type of person who educates yourself and values knowledge, you make the world a better place.
Productivity is the real currency. Purchasing power is the real money.
r8
Very true
Sorry that not how real world works !
@@Dudevegaslv why not
real
This is a good explanation of how the dollar actually works! Good video, ty.
which would mean, by your comparison, that we are headed for 08 like price action on the dollar again... but now we dive into the whole reason the FED was "late". So all other currencies would crash first. That was the real move.
Nothin like 2008, the housing crash caused that recession. If we're currently in a recession it will be caused by the fed.
@@seanthe100 the Fed caused that one too... i disagree with you but all good in the hood. this is a nuanced debate, so it's isn't any one thing
Great info
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Wonderful explanation
Ok this is like an earnestly good video. WSJ surprises me sometimes.
Nice video.
Good content
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This is the best time 2024
I'm an American from Manila Philippines sir thank you central out
I actually wish the video was longer and slightly more in depth
Intresting!
Wonderful to see a great video of good content. we all have to win in order to overcome recession and inflation
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The latter remarks of stops smiling made me laugh and smile. What an ironic thing in life.
@WallStreetJournal please boost your videos' volume. It's too low.
Quality over quantity.
How long will federal reserve keep hiking interest ?
Uh, guys, it's called the Federal Reserve. Hiking interest rates increases the value of the dollar. The "smile" stuff is nonsense.
Also, there's often a flight to safety (the dollar is the world's safest currency).
👌
@@ok-kk3ic The fact that the dollar is the world's safest currency is enough to terrify you. 31 Trillion in debt, giveaways like the 7 Trillion Covid debacle and quantitative easing for over a decade and we still are outperforming the Yuan, the Ruble, the Yen, the Euro, etc. is insane
why does the dollar drop in the crash of '08? if assets plunge and people go out of jobs isn't it better to hold on to cash or bonds?
+ or is it because of QE?
Imagine how high inflation would be in the US if the dollar wasn't so strong right now... Way to much government stimulus..
Inflation been growing for the last 4 years. Then boom you have covid supply chain issues, people spending money like crazy due to it being post covid, and the Ukraine war. A recipe for disaster. America is kinda in the lower middle of the spectrum in comparison to the world.
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all we just need is a stong tether and that's it right
Done
Wow
Ms. Verlaine, what is the figure that hangs from the chain of your necklace? It's very nice. Does it have meaning or is it just a piece of jewelry? Looks more like an amulet than an ornament.
The Wallstreet Jornal needs to talk about Ecosia they are a search engine that plants trees
Do consumer look for stronger currencies to make purchases that cover inflation
Sounds like a win win to me.
This trend is most detrimental to developing countries who, most of the time, have outstanding international debts in dollars. This translates to their governments spending more of their internally generated funds in the repayment of dollar denominated loans at the expense of the well needed investment into local development and infrastructure.
So Japan Yen have opposite strategy?
Strong dollar is needed for technological development.
It will settle around September or October
What's your price target when it settles?
Print more USD then the interest will cause inflation to go to 20%
What does 'dollar value' mean? Value relative to what? 🤔
What would it take for countries to use Euros instead of US Dollars in a time when USD is too strong for them to afford?
We are about to find out in real time
You can "use" any currency your trading partner will accept.
And if you are fast enough with your transactions, if you "use" a currency that is plummeting in value you won't see much loss.
But if you want to "keep" wealth in the form of currency, you will choose the most stable one you can find preferably one that is increasing in value (relative to other currencies.)
So in answer to your question, for the Euro to be as desirable a currency as the USD, both for transactions and reserves (store of wealth), it would have to begin tightening its supply in these globally inflationary times as much as the US Federal Reserve has.
Not losing 30% of it value in 6 months.
It would have been excellent to invest in the dollar right after the money supply dilution during COVID
Julia Scott THX Green TMC 🐅 tiger Media
I love america I'm an American 🏈🏀🏈🏈🏈 citizen from Manila Philippines sir
Don’t these companies produce in different countries anyway?
We can not dictate the market because it is against freedom but when we deal with lazy and low quality manufacturer then we had no choice but to make a strong dollar in to fight low quality products but it had counter effect on our manufacturing base ... fortunately by having strong dollars we don't have to export too much and so we save drain our material supply inventory for higher bidder
The smile won't last long
America, can you spell
D E D O L L A R I Z A T I O N ...?
It'll be nice to learn how the US $ & EURO were cheaper than the Jordanian Dinar , at least in October 2021. I was shocked to learn about it when I visited Jordan. It doesn't export oil, even the locals said it's expensive to do business there
How about Turkey? Plenty of spice, equal lack of deodorant….
It's been pegged to be 1.4 USD. Thinking that the exchange rate on a currency means anything about an economy is like thinking that NVR's revenue is 50 times more than Google's because of its stock valuation.
Idk if we have cohesion in general understanding
If economy confidence keep high
Wasnt that contra productive with the fed policy?
The problem is if global consumption fall incoherently with inflation
We worried for technical deadlock bcoz the control of economy no more at cbank capacity
Mean this issue no more at economist capability
It's called a "carry trade" trying to profit from the valuation of the currency exchange as well as the asset being purchased.
Dollor: Do you know how I got this smile?
Other countries: we have too, but it's upside down!
You mean a "relativity strong" US Dollar...
For now good luck with that. I don't see it coming for now anytime soon.
3:53 Alaska is no longer USA territory.
It's a double edged sword for the world economies not US because it's the only reference tradable currency world over.
It drives inflation in countries where the central bank 🏦 is unwilling to defend their currency. I’m betting 40baht to a $ soon.
I tell you people, if one strong country back to silver and gold money, any fiat papper money will be useless...
SEC security and exchange commission
China further added to USA supply chain issue
Im so sad that these greedy corporations are loosing money ..no one ever !!!
We are all losing money. The dollar in your wallet is decreasing in value.
Besides, those corporations employ people. If they go bust, so do the jobs.
Dollar is a currency, not an asset.
1:25
stronger dollar helps consumers overcome inflation
I remember trying to europe 15 years ago noone wanted the dollar. Now it’s opposite
Here in india people are worried for recession in the usa market.
The dollar is at its top.
Start up companies, small companies who have more debt really hurt buy higher interest rates. Lots of zombie companies
Strong dollar creats problem for the investors who are doing business aoutside the country .
I watched my crypto deflate until I was just above even, and cashed out. It was a speculation, and nothing more.
I can't wait for the Recession to hit this coming October.
September
@@rogaldorn3947 what makes you say that? how can we know when it will hit?
good i hope millions of homeless families camp at your mom's basement
Growth will be slow for the US and China, Europe will be bracing for a cold winter.
Asia’s risk of recession is around 20%, the US at 40%, and Europe is over 50%.
The dollar's current strength is just the calm before the collapse. Just like how we had a whole year of 2021 being a buyer's market and now inflation turned around and you can't buy oil or apartments or groceries. Enjoy it while you can because 2024 is going to be a whole different story.
Housing was already unaffordable and oil companies see record profits, something tells me inflation isnt the problem there.
Uh, the issue post-2021 had nothing to do with economy and everything to do with the massive pandemic that hit.
In my opinion 2023
@@stephenjenkins7971 um no, it has everything to do with the LOCKDOWNS the government forced. A virus didn't shut down the economy, government mandates did.
❤
What I don’t get is if the major player in the current inflation is rise in oil price by Ukraine-Russia war, aren’t we missing the big point here? Raising interest rate will have impact to a certain degree but it won’t impact anything on the war?
Increasing domestic oil production in the US would help cool global markets too.
It could have gone the other way instead.
7 trillion us doller healy by 149 country😮
never knee this
❤❤❤❤❤
Fed has increased rates 16 fold, 2022. Trying to make for not increasing rates 2021 when they were saying inflation transitory. Just like now with 2 negative quarters GDP not a recession. Indexes look in the past. How about a quick look forward before jumping conclusions.
Many of the statements are wrong
Singaporean here, our Dollar is strong as well.
Five Dollar...Make you Hollar 👄👅
Are you also tightening your currency supply to fight inflation?
You know, the way central bank monetary policy 101 says you should?
If the ECB and other currency regulators want to continue loose money stimulus into a global inflation economy they can't also act surprised when their currency depreciates....
Only dollar is seeming strong whilst every currency is suffering
I learned that the stock market was a rich man's game (yes, grandparents lost it all back then and preached that forever) but I've been around long enough to really taste how great it can be. To be profitable, with inflation at 6.1% These are surely desperate times, but in my opinion, there is no market condition that a good financial advisor cannot navigate, especially those that have existed since the crisis of 2008 and before.
Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are alot of wealth transfer in this downtime if you know where to look.
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End the Fed
Used to be all countries had savings in USD, but now, because of excessive, disastrous sanctions, and trade wars, many countries are avoiding the USD, and are now developing alternative systems of international payments....
This trend can not be reversed, because sanctioned countries learned their tough lessons...
this video is saying the exact opposite. People are buying dollars to preserve the value of their money in other words saving in dollars.
@@fernandoflores-hernandez8739 not true. A lot of countries are seek alternatives now. US dollar going to be not worth the paper it is printed on.
This is a straight lie, people are fleeing specifically TO the USD because of how unstable so many other currencies are atm. The only possible alternative to USD was the Euro -all other competitors were way too far behind USD usage at 44% of the international economy.
@@stephenjenkins7971 Well he's a propagandist. You could never reason with them because it's their job to lie or be stupid
Chinese Renmibi is stronger than Usd. This is a fact.
The dollar is going down the toiler. Precious metals ftw baby.
No one is gonna mention those rolled up bills? 🤣❄
Chance of snow
First comment 💪🏻.love wall street journal they always bring quality content.
LOL
All of these currencies SUCK in 2022, the US dollar just sucks the least at this point in time
A lot of major countries is starting to de-dolarize their central banks they definitely learned what happened on Russia. And this is now a catastrophe for the u.s economy.
Untrue. Only a few countries got rid of a little bit of the dollar, nothing on a major amount. They then replaced this for yen. They did this to diversify their holdings. Israel for example did this. Countries aren't stupid, they understand why what happened to Russia happeend.
If that's true, why is the dollar so strong?
Only country that is lowering their USD reserve is China, and even then they're going down from the very absurd high of 1 trillion USD. Russia is splurging USD to maintain their flagging economy.
@@jonathanmccain8646 You can't reason with a liar/propagandist. No one's on Russia's side so why would everyone change currency just by seeing how Russia's shunned for their evil actions. As long as people don't engage in criminal acts of invasions or stealing IP, they will not be santioned
We need more American exporting..make countries buy our product,instead of letting them set up shop with their cheap line of goods here..buy our own products first..America makes some pretty good stuff..it's tough love..but in order to "make America great again"..we must "put America first"..
Why never we had red ink in u.s. dollars is that why it is luckier
CNBC News taking about Investors like Layla Claire and Mike Axel how did I get to want of this investors and how much did I need to invest to make at least $15000 a month?
@Charles George Okay
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Successful people do what unsuccessful people are not willing to do. Don't wish it were easier, wish you were better, you have to take risks but not to your own detriment or been persuaded into going contrary to your decision
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Depends on dividend yields. If you found stocks paying you a 10% yield annually that would be $120k. Even at a %5 annual yield you'd have to have $240k. Realistically, stable companies will pay annual dividends between 1%-4%. AND when stock prices go up due to inflation (not demand) dividend yields tend to decrease. Ideally, you're looking at $850k-$1.5m.
Strong dollars reduce American manufacturing jobs but it has no effect on local economy
I think finally the world has had enough of the dollar and the shocks that many countries are facing right now.
Several countries want several reserve currencies in the basket not just one. Concern USA is printing way too much money and overspending. World debt 233 trillion. Increased rates wrecking havoc. World energy crisis, debt crisis
Good For Rich People On Foreign Vacations
Bad For Poor People Buying Kitchen Appliances
How many kitchen appliances does the US export to poor people in other countries anyway?
Countries are lowering use of dolllar for trade now to save their own currencies to fall in value. This will hurt economy as well.
Any local currency has a rate which is determined against USD that means even if someone takes a detour it still helps dollar because the reference range stands against dollar.Whether you like it or you hate it USD stands as the natural choice.
@@yourmom9608 India,China,Brazil,Russia,Vietnam all have started mechanism by which they can trade with each other in their own currecies, Iran too, it may seem small now, but in the future this can shake the dollar.
@@homijbhabha8860 That will last until one of them does something really stupid with the value of their currency (overprinting, overleveraging debts, etc..)
And then it's back to the wider currency exchange market. "Wheelbarrow Cash" syndrome can happen to any currency if mis-managed enough. Even the USD.
@@homijbhabha8860 the value of the exorbitant privilege is greatly overated.