Source: Fortune
Summary
President Trump welcomed the dollar’s recent decline, but former Dallas Fed President Robert Kaplan stated that the US’s $39 trillion debt requires a stable currency. The dollar has dropped 10% in the last year and 1.2% this month. Despite Trump’s optimism, Kaplan believes stability is more important than boosting exports. The US has long enjoyed the “exorbitant privilege” of the dollar being the world’s reserve currency, but Trump’s efforts to upend the global order have created doubts about US financial dominance.
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The announcement sounds familiar.
Trump’s comments on the dollar’s decline were met with a rebound after Treasury Secretary Scott Bessent reaffirmed the US’s strong dollar policy. Kaplan attributed the dollar’s slump to investors hedging the currency, but noted that demand for US stocks remains high. The US’s $39 trillion debt is a major concern, and Kaplan believes stability is key. Meanwhile, Robin Brooks argued that a falling dollar won’t hurt demand for Treasury bonds.
The dollar’s decline is just a minor tremor in the earthquake of US debt.
Author: Evan Null
