A strong and steady King Dollar is always essential to overall free-market prosperity and economic growth. But a wildly fluctuating greenback is not.
Since last November, the trade-weighted dollar index has risen roughly 16 percent.
Moreover, the dollar has jumped approximately 25 percent against the euro alone.
Of course, the euro’s collapse is a function of the debt crisis in Greece and the European debt-default contagion threat. But roughly 15 percent of U.S. trade is done with the European area. So here’s my point: This huge dollar jump against the euro negatively impacts the terms of trade for U.S. exporters and the S&P corporate profits of global companies.
It’s a deflationary influence when the dollar shoots up way too fast.
Incidentally, during the dollar-appreciation move that began late last year, the stock market has basically stopped advancing. In fact, since mid-April, when the dollar made another big move versus the euro, cyclical sectors like commodity materials, energy, industrials, and retailers have gotten clobbered by nearly 10 percent. There is clearly a dollar influence going on here.
Look, currency stability — a steady King Dollar — is what we want for growth.
We need steady money.