The strong dollar
It’s beyond question that the hollowing out of the US manufacturing base is a grievous problem, and that it declined during years of free markets and floating currencies.
By 1985, the strong dollar — particularly compared to the Japanese yen — reached a point where a group of central banks met at the Plaza Hotel in Manhattan and agreed to allow other currencies to strengthen against it.
On a broad basis, taking into account relative levels of consumer price inflation, the dollar is now stronger than it was then, although still considerably weaker than at its top.
It’s certainly very strong by historical standards
John Authers 18 July 2024
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