Listen now (14 mins) | Or why is the dollar so strong?
US Marne General Smedley Butler said, in 1935:
“I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers.”
Point being, government exists to support corporations, certainly in the US and UK. So all economic analysis should also flow from that assumption.
The analysis presented in this article that identifies the importance of corporate interests as a causative factor for understanding global currencies is spot-on, IMO.
Outside of China and some other geopolitical fellow travelers (Russia, Iran, Venezuela, perhaps Pakistan and Cambodia) US Multinationals have a de-facto monopoly in almost every industry, and especially in tech & data.
Unfortunately for me, I was too bearish on the US dollar and US equities for too long. I came of age in the 2005-8 period when "DGDF" (dollar goes down forever) was popular, and I think that biased my expectations of capital markets, which made me slow to fully appreciate the monopoly rents that Silicon Valley could extract not just from its home market, but worldwide. Just like those who came of age studying Japanese markets from 1989-93 probably swore off equities as an asset class for a generation, much to their detriment.
How ironic, I still remember in 2006 when PNAC (Project for a New American Century - the neoconservative think tank) closed up in the aftermath of the Iraq war debacle. Back then I thought that the American century was truly over. In hindsight, that was the moment to load up the truck on US equities, especially US tech!
Makes me worry about GBP!
Not sure how innovative Switzerland is! You are certainly correct in that the USA government is subsidizing the individual and corporates whilst running massive deficits and have no intention to close the gap with tax increases. I guess this will continue until people start to lose a little faith in the system.
It’s funny I’d be in the strong dollar camp but more on the supply / demand side. I don’t see it as a big predictor rather it releases a nice carry from Euro invested into USD assets.
That’s probably what is happening with Trade surpluses around the world, not T-Bills but other USD denominated assets. Hence I can see a time when strong USD strong Gold price happens.