Ask HN: What does the rising value of the US dollar mean for me?
I'm wondering how the value of the US dollar affects both my personal wealth as well as the US economy as a whole. EDIT: I live in the US.
Let's assume you live in the US. First, its important to note that when we say the US dollar is rising, its always in reference to something else, usually another currency, or basket of goods.
A rising dollar against another currency means that good from that country become cheaper to you. This means its cheaper for you to travel abroad and to buy imported goods from other countries.
But, it also means that its more expensive for you to sell your goods abroad as the foreign buyers will have to pay more to buy your goods. it also makes it more expensive for foreign investment in your country.
Now as to your personal wealth, it might not matter at all. You still have the same amount of US dollars.
If the goods you consume are produced locally with no foreign involvement then you may end up net neutral.
- devastating changes in income in your country (e.g. Greece)
- at least 20 orders of magnitude bigger fluctuations against another currency (a-la bitcoin)
- you need to work a FOREX
- you need to have someone investing at FOREX for you (which means that your grand-children and their grand-children will not have to get a real job no matter what).
So the real answer here since the OP lives in the US (so the first two options are off and last one is highly unlikely) and doesn't work on FOREX probably nothing.
> - devastating changes in income in your country (e.g. Greece)
> - at least 20 orders of magnitude bigger fluctuations against another currency (a-la bitcoin)
> - you need to work a FOREX
> - you need to have someone investing at FOREX for you (which means that your grand-children and their grand-children will not have to get a real job no matter what).
:) Sadly your post is almost entirely false. Much smaller changes can affect a person.
Canadian's have seen a large drop in their purchasing power in the US recently with much smaller changes than your imaginary 20 orders of magnitude fluctuations, what every that actually means. Regardless of what you are trying to convey, I'm pretty sure you don't mean 20 orders of magnitude:)
Many of us have US property and visit for the winter, the 30% rise of the US dollar against eh Canadian has a profound effect on us. We also import food from the US, this has had an inflationary effect on our food prices.
or put another way, for Canadians, alot of things just got 30% more expensive over the course of the past year. That's a pretty big deal!
Similarly for American's who come to Canada frequently, things just got much cheaper! If you are American and in manufacturing where you sell your goods to other countries, your prices have gone up recently due to the currency fluctuations, making you less competitive and lowering your profit.
The only part of your answer that I'd consider partially correct is the last sentence, and even then there is a huge caveat, that it really depends on what you do for a living, what you buy and where you travel.
Truth to be told, I had no idea you were talking about 30% fluctuations. I had something like 0-5% in mind. My bad.
> If you are American and in manufacturing where you sell your goods to other countries
The average American is not a manufacturer who exports goods abroad, so the impact is minimal.
I live in a country with currency A and my parents in a country with currency B. I send them every month the same amount of money from my salary, but they get 20% more than two years ago. Also, I'm saving in currency A to buy property in currency B. A few years ago the difference with the current exchange rates was 40% of what's now... 40% of a few thousand is actually a lot of money for me, so I have to pay attention to the forecasts (should I move my money to currency B before A loses its current power?).
So yeah, it does make a difference for a person with average earnings that doesn't play with Forex.
Just like with investing, the more knowledge you have on why the recent changes have occurred, the more prepared you are to predict whether now is the time to "cash out" on the difference. This assumes, of course, that you have solid awareness on the future of those factors driving the recent changes.