The Elizabeth Theory: Why I Don't Think It Can Be True
In response to Thin Elizabeth's theory that the reaction to covid-19 is a smokescreen to devalue currency. I see that it's getting a lot of traction around here, so here's a comprehensive rundown on why I don't think it makes sense.
1. Trump has wanted to devalue the dollar for years and has been vocal about it. He has publicly feuded with the fed about taking steps to weaken the dollar.
2.There are actually transparent ways that the government can devalue US currency and they have been actively and openly exploring them for several weeks. The dollar has been surging in the face of the covid 19 issue. Because it's considered one of the safest assets in the world, a surging dollar harms the entire global economy. It's very rare for US to make a targeted intervention, but it has happened. Also, when it happens, it's coordinated with other countries' central banks. (China is unique in that it's central bank is not independent, which is the reason it can manipulate currency so easily.)
3.The strength of the dollar is not determined by how many are floating around, but by how badly people want them. China manipulates currency by accepting payment for goods in dollars,keeping that money in reserve, and paying workers/debtors with yuan that they print up like monopoly money. It drives up the value of the dollar and makes chinese goods more affordable. But even if America just printed up 3 trillion and carpet bombed it on the international economy, everyone would still want it, especially now. It wouldn't weaken the dollar, it would strengthen it.
4.3 trillion is a lot of money, but it won't do shit to devalue the dollar. The strength of the dollar is measured a few different ways,
but pretty much all of them involve international exchange. Almost all of that good covid stimulus money is going to be circulated domestically.