We can debate the necessity of Federal Reserve policies from 2008 – 2018. Too low, too long, etc. Certainly, the policy has skewed the real value of money and it seems likely to change. There will be a reset of the value of the dollar. We will realize cheap money wasn’t sound money. It was great for buying flat-screen televisions, stock buybacks, etc. but not [so] great for wages, food, energy, and savers. Seniors particularly took a hit during this time.
Since the global financial crisis of 2008, the value of the US dollar has experienced periods of decline as well as periods of strength. It is important to note that the value of any currency is influenced by numerous factors, including economic indicators, interest rates, geopolitical events, and investor sentiment. Here are some key developments that have affected the value of the US dollar since 2008.
In response to the financial crisis, the US Federal Reserve implemented a series of monetary stimulus measures known as quantitative easing (QE). These actions involved the purchase of government bonds and other securities, which increased the money supply and put downward pressure on the dollar’s value.
Following the crisis, major economies around the world, including the US, embarked on a path of economic recovery. As confidence in the global economy increased, investors sought higher returns in other countries, leading to capital outflows from the US and a relative decline in the dollar’s value.
In the years that followed the crisis, central banks in various countries adopted different monetary policy stances. While the US Federal Reserve began raising interest rates from 2015 – 2019, other central banks, such as the European Central Bank and the Bank of Japan, maintained accommodative policies. This divergence in monetary policies contributed to a stronger US dollar.
Trade tensions and geopolitical developments can also impact the value of a currency. For instance, shifts in trade policies, such as tariffs or trade agreements, can affect the relative attractiveness of a currency. Additionally, geopolitical events, such as political instability or conflicts, can create uncertainties that influence currency values.
The outbreak of the COVID-19 pandemic in early 2020 had a significant impact on global financial markets, including the value of the US dollar. Initially, there was a flight to safety, and the dollar strengthened as investors sought a secure haven. However, as central banks worldwide implemented massive stimulus measures, including lowering interest rates and providing liquidity, the dollar’s value declined.
It is important to note that currency values fluctuate over time, and the US dollar’s value can be influenced by a multitude of factors. While it has experienced periods of decline since 2008, it has also had periods of strength depending on the prevailing economic conditions and market dynamics.
The recent, drastic, rise in interest rates (meant to curb inflation) has created problems in the banking sectors and corporate layoffs. Many of the aforementioned factors as well as supply chain restraints during 2020-2022, have contributed to inflation. This has weakened purchasing power of the US consumer, caused a volatile employment market, and is deteriorating savings.
Ironically, this occurs at a time when it [finally] pays to save.
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