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I've been wondering the same thing about their lowering their dollar but I'm not sure that they (Trump & Admin) fully grasp that they are playing with a wicked fire called inflation that has the ability to kneecap them, coupled with the rising costs of imports.
Here's a decent explanation of what Morgan Stanley identified back in Aug about this issue, and, since then, the USD has fallen further.
Key Takeaways from the article:
- The value of the U.S. dollar against other currencies dropped about 11% in the first half of this year, the biggest decline in more than 50 years, ending a 15-year bull cycle.
- Morgan Stanley Research estimates the U.S. currency could lose another 10% by the end of 2026.
- Despite a recovery of 3.2% in July, the delayed impact of tariffs on growth and unemployment – besides policy uncertainties – are likely to keep negative pressure on the dollar.
- Foreign investors have been adding hedges to their exposure to U.S. assets, which will likely further weaken the dollar.
Adding a link on the US Interest Expense and Interest Rates info page. The US will pay over 1$ TRILLION USD on just the interest on their Federal Debt this year. That works out to be roughly 3.2% of their GDP. In terms of Federal government spending - in5 years interest on the debt will account for 15.6% of Federal expenses....
To give a comparison with us.....total Federal & Provincial interest costs (the US numbers don't include state debt, which typically is substantially lower than Provincial debt), are just over 85$ billion CAD a yearly - using a factor of 9 for population differences, it works out to be about 765$ billion a year in interest payments. In terms of a GDP ratio, by 2029 ours will be about 2.1% - 50% less than the US's now vs 3yrs into the future.
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