Biden’s confirmation of Janet Yellen as the Fed chairwoman 2.0 pretty much sealed the fate of the U.S. Dollar and I expect it to be renamed the ‘U.S. Weimar’ just before its replacement by monopoly money which it appears to be more resilient against haphazard inflation. But to be honest a crashing Dollar is par for the course for a nation that is incapable of holding a presidential election without certified results over one month later.
Make no mistake – the current surge across numerous U.S. asset classes has very little to dow with good old fashioned value generation and is simply a natural response to the systematic destruction of the U.S. Dollar. It’s also part of a narrative that strangely seems to be favored by both sides of the political isle – for different reasons. In other words, rapid loss of confidence in the greenback is pushing asset holders into whatever tangible they can get their hands on.
Rumor has it U.S. Treasury Secretary Mnuchin wants a stable Dollar and that protecting its status as a reserve currency allegedly is the goal of the Trump administration. Unfortunately it appears that Mr. Mnuchin’s definition of ‘stable’ differs significantly from mine as the DXY has effectively entered a state of freefall over the past week.
Have you noticed that Trump hasn’t been bitching about the Dollar even once over the past few months? Which may come as a surprise as it’s remained on a massive tear higher for over two years now. One that has finally propelled it into shouting range of its coveted 100 mark. Maybe the Donald has finally realized that multiple efforts by the Fed to stomp it back lower have effectively been rendered fruitless. However despite an ever strengthening Dollar the U.S. economy continues to run on six cylinders. So it bodes the question: Does it matter? Can you have your economic cake and eat it too?