> effect of the money printer slowing down
Sort of? Rising rates are cooling aggregate demand. But they also make the dollar stronger, which should increase the trade deficit.
Sort of? Rising rates are cooling aggregate demand. But they also make the dollar stronger, which should increase the trade deficit.
So if the volume of goods and services stayed the same, their dollar value would be expressed in a smaller number.
The dollar is stronger, which means that imports are cheaper and exports to other countries are more expensive for those that are buying American goods.
This leads to a larger trade deficit.
But the point is still correct that you would have to adjust for the relative change in currency prices to know whether the amount of stuff we are taking in from abroad has really changed or not.
One is comparing it to goods and services (consumer prices). The other is comparing it to other currencies (DXY). I guess these two factors have varying influence on imports and exports, but I suspect DXY is the more relevant in this case.
So, I suspect my focus has been wrongly on the money supply, as opposed to the supply relative to other currencies, with DXY having almost reached the 2002 maximum in October 2022. So, I thank you for insisting.
Wat [1][2][3][4].
[1] https://www.investopedia.com/ask/answers/040315/how-do-chang...
[2] https://www.kansascityfed.org/documents/443/1986-Interest%20...
[3] https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp548.pdf
[4] https://www.investopedia.com/carry-trade-definition-4682656
I think this is the first time I've ever heard someone try to claim that printing money does not, ceteris paribus, impact the exchange rate.