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Is the Biden Administration Intentionally Weakening the Dollar?

Is the Biden Administration Intentionally Weakening the Dollar?

May 31, 2024

Is the Biden Administration Intentionally Weakening the Dollar?

In a recent article by Zerohedge, questions arise concerning the Biden administration's fiscal policies and whether they are contributing to a deliberate weakening of the US dollar. The controversial move to freeze Russia's central bank assets has sparked debate about the intentions behind this and other monetary policies that may be detrimental to the dollar's value.

The US government has historically protected the dollar's status as the world's reserve currency at all costs, an arrangement symbolized by the petrodollar system that ties the currency to oil prices and global trade. Yet, under President Biden, notable shifts in policy have been observed, which some argue could be undermining the dollar's strength.

Chief among these policy shifts is the call for a weaker dollar by some of Biden's advisors, such as chief economist Jared Bernstein. Advocates for a weaker dollar argue that it facilitates additional money printing to cover the nation's growing deficits. With the US injecting trillions into the economy to cover these deficits while other nations do not, the natural consequence is a devalued currency due to oversupply.

Moreover, a weaker dollar has the advantage of making US exports more competitive by offsetting the costs imposed by taxes, regulations, and various mandates that burden American production. Manufacturing regulations alone impose costs that make competing on a global scale challenging without such adjustments to the dollar’s value.

However, this strategy is not without its victims. While a cheaper dollar benefits exporters, it can also lead to higher domestic prices for goods, including essentials like food and fuel. The devaluation of the dollar could result in significant inflation, reminiscent of the 1930s, adversely affecting the middle class and consumers at large.

As the situation unfolds, the potential for a significant devaluation of the dollar looms on the horizon. Should the US proceed with intentional de-dollarization, the consequences could be far-reaching, with the possibility of a 30% or greater devaluation and inflation rates surging beyond 50%, especially in critical sectors like food and gasoline.

The world watches as the US grapples with its fiscal policy, and the stakes for the global economy and the domestic welfare of Americans are high.


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