[avidiax]

Seems strange that the US printed lots of money, which caused inflation, which caused high interest rates, and now causes a strong dollar.

You wouldn't think that printing money leads to a stronger currency, but perhaps this is a delayed effect after you stop printing.

[cherryteastain]

US printing is not the same as everyone else printing. Almost all trade deals worldwide are done in USD. Everyone except the US must export goods and services (i.e. actually work) to acquire the dollars which will finance their imports; US can just print.

Goods and services that are traded internationally are priced in USD. Other currencies do not end up directly representing goods and services; they are relative to the USD. Therefore, the demand for dollars is always very high, and it will be as long as the dollar keeps the reserve currency status.

[p_l]

Goods and services traded internationally are priced in whatever the parties want.

Ultimately they want to exchange for the currencies they need to pay bills, wages, and taxes in.

"Reserve" currency has little to do with it - if anything it's the high volume of trade with USA that makes it worthwhile to keep reserves of USD, because the high volume of US trade means you get many chances to exchange USD for whatever currency you actually need.

[fractalb]

> US can just print. How does that work? All the world’s economy is just equal to the US paper? Really?

[pineaux]

You should read "the global minotaur" by yanis varoufakis. It explains exactly why this is the case. This is true only for the US and it is because other countries buy dollars in bulk to keep the dollar high because: 1) not keeping the dollar high will devalue their dollar reserves. 2) they need large reserves of dollars to be able to facilitate trade in dollar denominated resources like oil. 3) they buy us treasury bonds because this will raise the value of their dollars and because it ks historically a safe investment.

[oytis]

> because it ks historically a safe investment.

That's the key IMO. USA has a long history of being a safe country for investment. It has uninterrupted democracy and rule of law since it was founded. It hasn't had a war on it's territory since the Civil War. It has a lot of free land and natural resources.

It's just good fundamentals first - and then of course you need not to fuck up massively to ruin that, which USA has not.

[defrost]

> It hasn't had a war on it's territory since the Civil War.

    American Civil War (April 12, 1861 – May 26, 1865)

    Black Hawk's War (1865–72)
    Red Cloud's War (1866–68)
    Comanche campaign (1867–75)
    Modoc War (1872–73)
    Red River War (1874–75)
    Great Sioux War of 1876 (1876–77)
    .... 10 more ....
    Ghost Dance War (1890–91)

    Crazy Snake Rebellion (1909)
    New Mexico Navajo War (1913)
    Bluff War (1914–15)
    Colorado Paiute War (1915)
    Posey War (1923)

https://en.wikipedia.org/wiki/List_of_American_Indian_Wars

[resolutebat]

Calling any of those "wars" is a stretch when casualties were mostly in the single digits.

[defrost]

Take it up with the US historians that call these wars.

    Red Cloud's War consisted mostly of constant small-scale Indian raids and attacks on the soldiers and civilians at the three forts in the Powder River country, wearing down those garrisons.

    The largest action of the war, the Fetterman Fight (with 81 men killed on the U.S. side), was the worst military defeat suffered by the U.S. on the Great Plains until the Battle of the Little Bighorn in the Crow Indian reservation ten years later.

[oytis]

My point still holds, there was nothing as threatening investments as WWI, WWII, Yugoslavian wars, Russo-Ukrainian war, no coups or revolutions.

[openrisk]

Maybe its all relative (i.e., versus what other central banks have done in response to the same shocks).

In any case the post-pandemic interest rate hikes are recent. There seems to be a much longer term (decades long) dollar strengthening pattern that is not really touched upon in the article.

[codexb]

They're somewhat unrelated, because while there's more dollars, the domestic demand for those dollars is also higher now, for lots of reasons. Inflation, the high amount of American debt (which must be paid in dollars), the looming threat of a recession, which entices Americans to save (and they'd prefer to save in dollars and not some other currency).

It says a lot more about the preferences of Americans that it does about any of the other countries.

[littlestymaar]

> You wouldn't think that printing money leads to a stronger currency

Money isn't a commodity, and that's why the Monetarist view is so off.

Inflation is never caused by a decline in the value of money, but it can cause a decline in the value of money, just not in every conditions (and with central banks raising interest rates when there's inflation, in practice it has the opposite effect)

[mitthrowaway2]

Also strange that this effect is to the point that the dollar gets stronger as the yen gets weaker, even though inflation in Japan has been weak and strong in the US. So the dollar's buying power weakened domestically even as it strengthened internationally.

[sschueller]

Same im Switzerland. Our inflation is very low yet the dollar is getting stronger against the Swiss franc.

[adriancr]

perhaps everyone printed money and US less then the rest

[ipaddr]

It's more like everyone is printing money panic, run to US dollar for safety

[refurb]

It’s all relative. Many, many countries effectively expanded their monetary supply during Covid.

[p_l]

The relative value of different currencies is not at all related to "how much is printed". Heck, even internally the actual value of money is unrelated to how much is printed.

Main drivers of exchange rates are international trade of all kinds and its requirement to use specific currencies in specific places (you can accept payment in JPY when your company is in USA, but you need to pay your taxes in USD!), and speculation.

Essentially for FOREX, the exchange rate is essentially determined by entities needing specific currency for something - for example to pay for purchases or services, pay wages, taxes, etc. - when you have money in different currency.

The rest is plain market - you put an offer like "I will buy 100k USD in exchange for 11m JPY", but others were willing to offer more, and thus the averaged (I know, simplification) exchange rate goes up.

But you might be able to catch a trade at lower price because someone might need JPY right now (or other forex-compatible asset you have) quicker than it could sell USD at higher prices, etc.

You can of course also purely speculate on the prices and make money from "nothing", pure financialization, pure capitalism, close to zero value being produced.

Printing money can be used to artificially change the exchange rate by offering "cheap" money for other currencies. The reason why you might want to do is simple - your currency being "weaker" tends to benefit exports (at the same time exports drive currency "stronger"), while stronger currency benefits imports (but imports drive currency "weaker")