Political turmoil in the United States is weakening the value of American currency. Speaking at a press conference at the World Economic Forum in Davos last week, U.S. Treasury Secretary Steven Mnuchin stated, "obviously a weaker dollar is good for us as it relates to trade and opportunities," adding that its short-term value is "not a concern of ours at all."
"Political turmoil" is not causing a weak dollar. That's what caused an "emotionally driven" spike. What actually does cause the value of the dollar to fluctuate, you ask?
And without getting too far into the weeds, the US dollar being a fiat currency which is backed by nothing more than the so-called "full faith and credit of the US government" does it no favors.
Let's take a look at another set of facts. Federal Reserve policies have driven the value of the dollar to almost nothing compared to its value in 1913. For fun, just type in the year you were born and see how much the purchasing power of the dollar has dropped since then:
Sounds like you're saying the Executive Branch has no impact on the value of the dollar. It's all the genius hand of the market (supply and demand!) sentiment, technical features. And you say a fiat currency has a valuation set at the whim of the market.
But then you say the Federal Reserve has been running the show, driving up inflation (apparently a secret to you?).
Which is your actual opinion of how money works, because those two sound mutually exclusive.
Also, do you not realize inflation is purposely coaxed into existence to spur investment, so people don't just sit on their capital? And what exactly are you saying with the rest of those words?
Regarding the part I bold-ed: A lot of people, in my estimation most, don't understand that basic and important reality. Modest inflation is important as a way of discouraging those who hold society's accumulated wealth from just sitting on it, so to speak. It encourages them to put it to work within the economy (in a more dynamic way).
Continued and increased economic prosperity depends, to a significant degree, on things done tomorrow having a slightly greater (retained) value than things done yesterday did. That's what encourages people to do more today. The difference can't be too large (because today is tomorrow's yesterday, just as it is yesterday's tomorrow), but there needs to be a difference. That is what inflation represents, a relative weighting of the value of things done tomorrow versus the value of things done yesterday.
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