From Graham Stephan.
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THE US DOLLAR DECLINE:
Back in 1913, the value of $1 had the the SAME purchasing power as $100 has, today. Even though the US dollar is seen as the “World’s Reserve Currency,” there are currently three factors causing it to fall:
1. Money Printing.
In this case, our national debt has recently surpassed $37 trillion dollars, and we’re now in the point of no return, because – as government debt gets bigger, investors’ concerns increase that their money will eventually get devalued, causing them to demand higher rates, causing government to issue MORE debt, causing investors to demand even higher rates.
2. Political Instability.
Fewer countries are buying US Debt because they’re concerned about the long term strength of the dollar – partly due to growing government debt, but also due to tariffs. In this case, the head foreign exchange researcher of Duetche Bank said that: “The damage has been done. The market is reassessing the structural attractiveness of the dollar as the world’s global reserve currency and is undergoing a process of rapid de-dollarization."
3. Money Is Flowing Elsewhere.
Since the US abandoned the gold standard: the dollar has lost over 85% of its purchasing power, while gold prices have increased 85x. On top of that, Bitcoin is also gaining dominance, and when other options are available, less money flows into the dollar.
THE STOCK MARKET:
For the first time in more than two decades, international stocks have started outperforming the United States by more than 12%. As you can see – throughout the last 50 years, there are repeatable cycles where the US begins to lag behind – of which, some argue we’re due for a total market reversal.
FALLING DOLLAR = HIGHER STOCK MARKET PRICES?
The stock market just hit a brand new record, at the exact same time that the dollar fell to its weakest level in roughly 3½ years – are they related? No.
Fisher Investments also analyzed this phenomenon going back to the early 1970s, when the dollar was taken off the gold standard. They found that “the correlation between the trade-weighted dollar index and the S&P 500 returns is only about –0.15…which, is essentially zero.” On top of that, they also found that “global stocks were up ~76% of the time, whether the dollar was rising or falling.”
That’s not to say that the dollar can’t have SOME effect on the stock market, short term – although all of the data shows that, historically the dollar’s moves alone haven’t reliably predicted U.S. stock market performance in the long run.
This all suggests that the stock market is genuinely expanding, it’s actually boosting purchasing power, and it’s fueled by solid earnings and liquidity… – not excess money printing.
Sure, some people could argue that more money printing can be a factor for increased spending, which helps stocks – but it’s not the money printing itself that’s causing the stock market to go higher.
TARIFFS:
Overall, global risks have the largest effect on the US dollar, above and beyond anything else. When you have global uncertainty (like upcoming tariffs, deadlines, etc), companies delay spending, hiring slows down, and consumers pay higher import prices, which slows growth.
JP Morgan believes we could see a “10%–20% decline over the medium term against major peers such as the euro and Japanese yen”…and many analysts expect this trend to continue throughout 2026, especially as the FED lowers rates, thereby making treasuries less enticing to buy.
HOW TO PROTECT YOU RMONEY:
One: Don’t hold too much cash for too long.
Two: Diversify your investments throughout as many sectors as possible.
Three: Ignore the “negative news” – and keep investing consistently.
Four: Keep a steady income.
Five: Stay out of margin / debt / leverage.
Six: If you NEED money in the next 3-5 years – it’s probably not a good idea to invest it short term.
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