[mgh95]

> But no one wants to hold them because they devalue and will continue to do so at an accelerating rate.

Devalue against what is the main question though, isn't it? The real longer term issue is that the USD is devaluing against the Euro, but even that has serious issues for Europe's export oriented economies [1].

[alphazard]

> Devalue against what is the main question though, isn't it? The real longer term issue is that the USD is devaluing against the Euro...

I don't think that FOREX rates are the best way to think about this, but if you work in that world or otherwise have an intuition for it, then go ahead. Most of us only handle 1 currency, and reasoning in terms of 2 isn't exactly an intuition pump.

Instead think about:

1. The dollar valued against itself a year earlier, and a year in the future. That is the interest rate or yield of the asset if held. It should have a positive real yield, but right now it doesn't.

2. How much your personal basket of monthly expenses costs in terms of dollars. Ignore a basket that someone on the news told you to care about, like CPI. I mean your personal basket, all the stuff you personally buy, how much is it in dollars, now, a year in the future, a year earlier.

If you stored value in business or a precious metals in the last year and then converted back, you would probably have more dollars, or be able to buy more stuff, that's all there is to it.

[mgh95]

> I don't think that FOREX rates are the best way to think about this, but if you work in that world or otherwise have an intuition for it, then go ahead. Most of us only handle 1 currency, and reasoning in terms of 2 isn't exactly an intuition pump.

Forex rates, balance of trade, and relative strengthening are great ways of understanding international fluctuations. They are exactly the way to understand reserve currency movements

> 2. How much your personal basket of monthly expenses costs in terms of dollars. Ignore a basket that someone on the news told you to care about, like CPI. I mean your personal basket, all the stuff you personally buy, how much is it in dollars, now, a year in the future, a year earlier.

This hits at a major part of the issue: goods that have no importable replacement good (housing and healthcare, namely) are a huge part of what lead to the huge bout of inflation. But those are domestic economics, not international economics.

[thfuran]

>The dollar valued against itself a year earlier, and a year in the future. That is the interest rate or yield of the asset if held. It should go up, but right now it goes down.

You’re saying there should be deflation?

[throwaway2037]

    > the USD is devaluing against the Euro

The EUR/USD FX rate has been pretty stable for about 10 years. I think (sadly, didn't check notes before I wrote this), the trade balance between US and EU is well-balanced. As a result, the FX rate should also be well balanced.

[marcosdumay]

> but even that has serious issues for Europe's export oriented economies

Hum... There are no reliable numbers out there, but I don't think the dollar devaluation has been keeping up with the US inflation.

And if so, no, Europe's exports are becoming more competitive, not less.

[mgh95]

> Hum... There are no reliable numbers out there, but I don't think the dollar devaluation has been keeping up with the US inflation.

There isn't anything like "dollar devaluation has been keeping up with the US inflation". You are interested in what is called the import/export price index [1] and for imports that has been relatively flat for the past ~24 months(import +.3%, export +3.8% for TTM). So in a sense, imports for a fixed good are relatively unchanged in constant-currency terms.

It's more along the lines of "if the EUR goes to 1.5, what does this do to eurozone economies?" and the answer to that isn't pretty for europe. This would greatly impair the economy of Germany and other large eurozone economies pretty substantially(see this article for why [2]).

And finally, remember: the US actually exports inflation [3]. Most economies cannot simply say no to this effect.

[1]https://www.bls.gov/mxp/ [2]https://www.bloomberg.com/opinion/articles/2025-10-06/europe... [3] https://www.bloomberg.com/news/articles/2022-07-18/strong-us...

[ProjectArcturis]

Assets, not other currencies. Equities, commodities, consumer goods.