United States President Donald Trump is contemplating a weak-dollar policy, a move that would break a policy adopted in the 1990s. But some members of his administration are breaking ranks by supporting a strong-dollar policy.
Speaking in an interview with the Wall Street Journal on Wednesday, Treasury Secretary Steven Mnuchin explained that a strong dollar is “a good thing” in the long-term as it reflects confidence in the U.S. economy. Reiterating what he told the Senate confirmation hearing last month, Mnuchin added that a strong greenback helps preserve its reserve currency status.
“For longer-term purposes, an appreciation of the dollar is a good thing, and I would expect longer-term, as you’ve seen over periods of time, the dollar does appreciate,” Mnuchin told the newspaper.
“In the short term, there are certain aspects (of a strong currency) that are positive about the dollar for our economy and there are certain aspects that are not as positive. A lot of the appreciation of the dollar since the election in particular is a sign of confidence in the Trump administration and the economic outlook for the next four years.”
Just days before his inauguration, Trump noted that a strengthening dollar against the Chinese yuan has been “killing us.” This trend, he said, makes it more difficult for U.S. companies to compete on the global stage, adding that China is a currency manipulator.
The U.S. dollar index has been surging since the financial crisis. But you have to ask: compared to what exactly? There aren’t too many fundamentally sound currencies, and numerous nations are partaking in devaluation efforts as part of the currency war.
Overall, the dollar has lost 90 percent of its value since the inception of the Federal Reserve, and it takes $25 to buy something that once took just a buck. Inflation is coming, and if Trump really wants to weaken the dollar then greater bouts of money printing are in store for the U.S.