Among the threats that Donald Trump’s government interest rates represent to the American economy, no one can be as strange as liquidation (Sale) The dollar. Coins climb and go down constantly due to fear of inflation, central banks and other factors. But economists are afraid that the latest case in the dollar is so drastic that it reflects somewhat more threatening, while Trump tries to reshape global trade: a loss of confidence in the United States.
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Dollar dominance in international trade and how security assets have been nourished by governments for decades as it helps to maintain low US loan costs and allows Washington to project power abroad – enormous benefits that can disappear if confidence in the United States was damaged. “Global trust and dependence on the dollar have been built over half a century or more,” says economist Barry Eichengerm from the University of California, Berkeley. “But they may be lost in a moment.”
Since mid -January, the dollar has dropped 9% over a basket with currencies, a rare and sharp drop and reaches its lowest level in three years. Many save investors with Trump do not believe that the dollar will be quickly removed from their currency position for world reserve – rather than a slower case. But even this can be scary enough considering the benefits that would be lost.
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With most of the world’s goods exchanged in dollars, demand for currency remained strong, even with the US folding of federal debts in 12 years and performs other measures that would normally cause investors to flee. This has enabled the government, consumers and US companies to take out loans at abnormally low interest rates, which helped to speed up economic growth and raise the patterns of life.
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Dollar dominance also allows the United States to press other countries such as Venezuela, Iran and Russia, which prevents them from accessing a currency they need to buy and sell with other nations. Now this “unreasonable privilege”, as economists call it, is suddenly at risk.
Not everyone is convinced that one of the main causes of the dollar is the loss of trust in the United States. Steve Ricchiuto, economist at Mizuho Financial, says the dollar’s weakness reflects expectations of higher inflation due to customs. But even though investors do not feel so comfortable maintaining dollars in their wallets, he says they really don’t have much choice. No other coin or active, such as Yuan, Bitcoin or Gold, has enough to meet all demand.
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There may be no alternative, but Trump tests the boundaries. It is not just customs, but the unpredicted form when it implemented them. Inexplication makes the United States look less stable, less reliable and a less safe place for money.