> That means it is more expensive for Americans to travel abroad and less attractive for foreigners to invest in the United States, sapping demand when the government is trying to borrow more money. On the flip side, the weaker dollar should help U.S. exporters and make imports more expensive, though these typical trade effects are in flux because of the tariff threats.
I'm confused how a weak dollar makes it less attractive for foreigners to invest in the US. If your currency is stronger relative to the USD, doesn't it make productive US assets cheaper?
This seems like a pretty elementary mistake, doesn't even require economics, just common sense. Makes me question the rest of the editorials in the piece.
bigyabai•7mo ago
There's a ton of different factors at play, and American debt is one of the big ones. The dollar isn't like a stock, you typically want high confidence that the dollar will be strong when your investment matures. In the 1950s, buying a 30-year yield bond made a ton of sense and people did it like crazy, which gave the US treasury a lot of short-term liquidity. Comparatively, buying a 30-year bond in today's climate is like betting black on roulette and closing your eyes.
intermerda•7mo ago
Did you get a chance to read the two paragraphs leading to what you quoted?
> This time the seismic event is President Trump’s efforts to remake the world order with an aggressive tariff push and a more isolationist foreign policy.
> The combination of Mr. Trump’s trade proposals, inflation worries and rising government debt has weighed on the dollar, which has also been buffeted by slowly sliding confidence in the role of the United States at the center of the global financial system.
> That means it is more expensive for Americans to travel abroad and less attractive for foreigners to invest in the United States[...]
throwawaysleep•7mo ago
> If your currency is stronger relative to the USD, doesn't it make productive US assets cheaper?
Depends on where you think the dollar is going. If the answer is further down, you have lower expected returns in your own currency.
bko•7mo ago
I'm confused how a weak dollar makes it less attractive for foreigners to invest in the US. If your currency is stronger relative to the USD, doesn't it make productive US assets cheaper?
This seems like a pretty elementary mistake, doesn't even require economics, just common sense. Makes me question the rest of the editorials in the piece.
bigyabai•7mo ago
intermerda•7mo ago
> This time the seismic event is President Trump’s efforts to remake the world order with an aggressive tariff push and a more isolationist foreign policy.
> The combination of Mr. Trump’s trade proposals, inflation worries and rising government debt has weighed on the dollar, which has also been buffeted by slowly sliding confidence in the role of the United States at the center of the global financial system.
> That means it is more expensive for Americans to travel abroad and less attractive for foreigners to invest in the United States[...]
throwawaysleep•7mo ago
Depends on where you think the dollar is going. If the answer is further down, you have lower expected returns in your own currency.