Odd Lots Why the US Dollar Is Booming And Creating A Possible Doom Loop
Jul 18, 2022
Jon Turek, founder of JST Advisors and author of the Cheap Convexity blog, dives into the strength of the U.S. dollar amid global crises. He discusses how the dollar is hitting a 20-year high against the euro and the yen, raising concerns about a looming recession. Turek explains the 'doom loop' that strengthens the dollar while stifling economic growth. He also touches on the adaptive strategies of central banks, particularly in Europe and Japan, highlighting the complex landscape of global macroeconomics and currency dynamics.
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Dollar Strength and Doom Loop
- The US dollar's strength is ironic given predictions of its decline.
- A strong dollar negatively impacts the global economy, creating a potential "doom loop".
Structural Dollar Strength
- The dollar's strength isn't just cyclical; it's structural.
- The U.S. is self-sufficient, especially with its energy resources.
Commodity Privilege
- The U.S. having abundant commodities contributes to its strength.
- This new commodity-oriented regime favors resource-rich nations.