In a currency war, everyone loses

Kai Ryssdal and Sean McHenry Dec 2, 2019
HTML EMBED:
COPY
A U.S. dollar and Brazilian two real note. Christophe Simon/AFP via Getty Images

In a currency war, everyone loses

Kai Ryssdal and Sean McHenry Dec 2, 2019
A U.S. dollar and Brazilian two real note. Christophe Simon/AFP via Getty Images
HTML EMBED:
COPY

In a series of tweets, President Donald Trump blamed a strong dollar for a number of economic concerns, including data out today that the manufacturing sector may be slowing. And the president called on the Federal Reserve to weaken the dollar by lowering interest rates.

While the Fed does not directly control the value of the dollar, the president’s announcement begs the question: What happens when countries compete to devalue their currencies in order to gain an edge?

“The last big currency war we had was in the interwar period,” University of Michigan professor Kathryn Dominguez told “Marketplace” host Kai Ryssdal. “And basically all countries tried to undercut each other between World War I and World War II to get a trade advantage. None of them, of course, achieved that since all of them were doing the same thing, and it led to high inflation rates across the world.”

Click the audio player above to hear the interview.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.