The US Dollar is disguising itself

21 Apr, 2022
Category: Currency
Tags: USDX

Although the US Dollar looks strong, its purchasing power is being eroded.

While a short-term view shows that the dollar is surging higher, the reality is the US Dollar is weakening at the fastest pace since the 1980s.

The US Dollar index is a measure that how many euros or pounds they can buy, but it does not measure how much stuff a single dollar can purchase. It is the dollar exchange rate against stuff that matters. Luckily, we have a name for that too — inflation.

This second chart is the CPI index inverted, showing the accelerated devaluation of the dollar in recent years.

We think the serious issue faced by every investor is no longer the Fed’s inflation target or any announcement from Fed Chair Jerome Powell, who is likely to confirm that we are in for some rapid policy tightening.

What we are facing could be a total collapse of the Bretton Woods system, something we see at the end of the Roman Empire, Song Dynasty, or any empire that is collapsing due to currency debasement.

What should you do? Stay invested.

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The US Dollar is disguising itself

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