The Dynamics Driving the Dollar Down

May 12, 2023

by Alasdair MacLeod Gold Money

This article examines the currency imbalances between US dollars and the other currencies and concludes that should foreign holders decide to reduce their dollar exposure, the consequences for its value would be dramatic.

The dollar’s problems should be laid at the door of the wishful thinkers who think the state knows better than free markets. It is that which has led to currency imbalances. Central banks attempting to manage economic outcomes by manipulating interest rates and “stimulating” economic activity have acted in defiance of Say’s law, which defines the relationship between production and consumption, and the true role of a medium of exchange.

By dismissing this fundamental truth, the US authorities have made a rod for their own backs.