Decline of US Dollar

For over 60 years, the dollar was the world's central reserve currency. The reserve currency, also known as a fixed currency, is a large amount of money that government and institutions possess as part of foreign exchange reserves (Carbaugh, 2011). As the world's reserve currency, the US dollar is used as an exchange medium all over the world and it is used as the world currency for trading goods in world markets. Recent status of the United States

As the dollar rose and peaked in 2002, the trade deficit in the US worsened (Scott, 2004). As the governments of Asian countries intervened to artificially lower the value of the dollar, the 7% dollar decline since 2002 has not reduced the trade deficit (Scott, 2004). This will expand the trade gap, not narrow the gap. Meanwhile, the depreciation of the dollar made importing of the US more expensive. If competition in the domestic manufacturing industry is not intense, this will increase consumer spending on imports and worsen the trade deficit. Is there a trade deficit in US goods, services, or both?

Let's assume that the trade balance of goods is important. Since 1976, the United States has experienced a huge trade deficit. This means that the net outflow of the dollar is big. As the supply of dollars in the global market increases, the value of the dollar is expected to fall compared to other currencies. The figure below shows that this is not happening. The value of the dollar here is the trade weight of other currencies. Over time, the value of the dollar has declined slightly. Mr. Trump insists that other countries buy dollars and other US securities to raise the exchange rate of the dollar against other currencies. This will make export products cheaper for potential US buyers. This happens, but another reason foreigners buy US securities is their intrinsic value. Foreigners believe US debt and capital are attractive investments with less risk. In fact, it is reasonable to think that they are one of the most attractive "export products" in the United States.

If the US dollar loses its value in foreign currency, the main impact is import and export prices. Because dollars are widely used as an account unit, the impact on domestic goods will be less. Much of the input we buy is also denominated in US dollars. For example, even if the value of the dollar declines, wages will not change. With the CPI, you can better understand the price stability of bit coins. CPI tracks the price of the item's basket to measure inflation. In order to evaluate the stability of the bit coin price, I examined the monthly fluctuation of the consumer price index. I got the average bit coin price for that month and converted the CPI for that month to bit coin price. It is undeniable that there is a limit to this method. It is not a rigorous analysis, but it is a rough indicator of price stability.