In the 1970’s the dollar went off the gold standard, oil prices went up, the US started importing oil,gold went up, the value of the dollar went down and the US balance of payments fell off a cliff , bond’s prices were falling and yields were rising, tax revenues fell and federal budget deficits increased.
Pretty much the opposite of that is happening today. Oil production is going up, oil imports are going down, the value of the dollar is going up and gold is going down, bond prices are rising and yields are falling, federal revenues are rising and federal budget deficits are falling.
Its nice to be pumping oil again in a big way. Lots of good things flow from that.
I don’t think the balance of payments will improve much because most countries are positioning their currencies so that they can under price the US products and sell into US markets as the USA did to them from about 2000-2011.
There’s also this.
While the debt problem is mountainous — there are some truely mountainous technological changes coming that are being priced into the US dollar. These changes will be very favorable to the USA. Beginning in 2013 there was no longer any net loss of US jobs due to offshoring. Because the value of a currency like a stock is in part based on the expected FUTURE strength of the economy just as part of a stock’s value is based on the expected FUTURE earnings of the stock.
How do you explain the price of the TESLA stock. Current earnings don’t justify it? Its all about the future. Similarly as with currencies. Similiarly as with the US dollar. The future looks bright.
Bond prices are going up and yields are still falling because everyone in the world is socking their extra cash into US government bonds.
Your point is?