Bridger Pennington argues the U.S. dollar has hit 20-year highs despite inflation, and examines why. He covers Federal Reserve policy, Saudi Arabia's potential move away from dollar-based oil trading, and how the dollar stacks up against the yuan, Bitcoin, gold, and silver.
Chapters
Okay, so I totally disagree with inflation actually. The last 12 months, you've seen inflation go like this, right? It's going straight up. What has the US dollar done? The US dollar, every economics book, you would say the US dollar would be devalued, right? It'd get less valuable. Well, guess what's happened? The US dollar is at 20-year highs. Inflation's gone like this and the US dollar has gone up in value compared to the yuan, compared to Bitcoin, compared to gold and silver. It has gone up in value. What that means, you look back the last year, Saudi Arabia about a year ago said, we are going to consider not trading oil in US dollars, which we have the petrodollar since the Bretton Woods Agreement. The entire world trades oil, large amounts oil in US dollars. About 70% of global trade is in US dollars. And what happened right after that? The Fed said, okay, you want to mess with us? The Fed is the most powerful organization on planet Earth. Their best product of all time is US dollars. That's their export. They're going to protect their most valuable product of all time. They're going to say, you know what, we're just going to screw with economics just to screw with it. You want to trade stuff without US dollars? Go ahead. We're going to make inflation go up, making all of our asset values go up over time theoretically, but we're also going to make the US dollar go up at the same time. So Saudi Arabia, if you go trade in yuan or you want to trade in rubles or euros, cool, you can do that. A year later, Those are worth way less if you would have held them than if you would have held on to the greatest, best export of the world reserve currency of all time, the US dollar.
