Happy 4th of July! It’s one of my favorite holidays for the simple fact that summer is my favorite season. Parades, lakes, boats, beer, BBQ and fireworks — I’m in.
In honor of America here is a post I wrote a couple of years ago (with some updated charts) about why I remain bullish on the old US of A.
*******
Following the Great Financial Crisis of 2008 a number of macro doom-and-gloomers began predicting a collapse of the U.S. dollar.
The Fed was “printing” trillions of dollars.
Interest rates had never been that low before.
It was an appealing narrative if you were someone stuck in the negative feedback loop of the biggest economic crash since the Great Depression.
In recent years, it was the crypto maximalists who began predicting the end of the global reserve currency status of the dollar.
Alas, the U.S. dollar has been strong for years:
Now it’s important to remember that currencies, in general, are cyclical.
You can see the dollar has more or less gone nowhere against a basket of other developed market economy currencies over the past 5 decades or so:
Said another way, a basket of other developed market economy currencies over the past 5 decades or so has gone nowhere against the dollar.
But the main takeaway here is every prediction about an imminent collapse of the U.S. dollar has been a terrible bet.
Could the dollar be surpassed someday by some other currency or digital equivalent?
Of course.
But a total collapse of the U.S. dollar?
This seems unlikely to me anytime soon.
Why?
Well, this country has an abundance of natural advantages over the rest of the world that help give us that global reserve currency status.
Let’s count the ways:
There aren’t any natural heirs to the
