The U.S. dollar is strong – really strong. It’s already become a major headwind for big tech companies that earnrn a boatload of their profits overseas.
For one, a strong dollar makes U.S. exports more expensive for foreign buyers. It also means that U.S. companies make less when they convert that revenue back into dollars.
But while the dollar is strong, it has even further to go.
As the chart shows, even though the dollar has shot up over the past year and a half, it could get much, much stronger in the next global financial crisis.
As deflation sets in around the globe, many think the U.S. dollar will suffer. But like John said, it has the advantage of being the world reserve currency. Or as Harry and Rodney like to say: “It’s the best house in a bad neighborhood.”