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Is Trump crashing the economy in order to devalue the $USD? (lemmy.today)

submitted 1 week ago by goofus@lemmy.today to c/economics@lemmy.world

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Devaluing a currency is a well known strategy to boost exports. But it might also be useful to reduce imports and build up a local economy. I am wondering if anyone has heard of any discussion of plans to manipulate the future value of the $USD? Will the government print money to reduce the cost of its debt?

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[–] naeap@sopuli.xyz 1 points 1 week ago (1 children)

There was this article recently, which kinda goes into the same direction:
https://unherd.com/2025/02/why-trumps-tariffs-are-a-masterplan/

Although, I'm not really inclined to think of Trump as one with an actual master plan.
He seems just to destabilise the market and although the dollar will fall because of that, there are still much international markets using the dollar - like oil, where the USA even fought wars to keep it that way

But I have to admit, that I didn't completely understand the linked article.
I'm not an economist, but it sounded a bit far fetched for what currently seems to be happening.

[–] goofus@lemmy.today 1 points 1 week ago

So the goal of tariffs is to cause an increase in the value of non-US currencies, which will balance out the trade deficit.

I suspect it will split the world into trading blocs.

The classic way to devalue a currency is to print money (increase money supply). But what Trump seems to be doing is reducing government expenditure, which will have a deflationary effect. Tariffs might cause more demand for US products in the US??? which might offset deflation?

I don't really understand how central bankers in non-US countries use $USD. I suppose they buy T-bills and hold them. ??? Apparently this is the underlying problem keeping the $USD high???