While half the world attacks the U.S. for trying to devalue the dollar, what’s funny is that there still isn’t any proof that that the U.S. is doing so. The dollar index (Bloomberg: DXY) is actually at about the level it was two years ago, and higher then the lows of 2008.
On a five-year view, as shown below it’s clear that the dollar actually fell in value relative to other currencies before the financial crisis, not afterward.
Thus if anything is to blame for the falling value of teh dollar, it’s the policies and environment ahead of the crisis. Since the crisis, despite the radical monetary policies of the U.S., the dollar has actually maintained its value. So why do so many feel like the dollar is being devalued relative to the world? Probably because we’ve had a lot of volatility in the dollar index over the last two years, and in politics our memories are usually just about six months long at best. Thus the recent dollar dive is stuck in the global conscious, yet the previous dollar ascent in the beginning of 2010 has been mostly forgotten.
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