President Trump is doing major damage to his presidency. And no, this opinion piece is not about tariffs. Much more economically damaging than tariffs is a falling currency. Gold is at all-time highs, meaning the dollar is at all-time lows.
Those closest to President Trump owe him blunt talk about the dollar. This means Scott Bessent, Larry Kudlow, and other economic advisers not Stephen Miran and Peter Navarro must tell Trump what he doesn’t want to hear: on the dollar’s present course he risks going the failed economic route of presidents with names like Richard Nixon, Jimmy Carter, and George W. Bush.
All three failed presidents are examples of what Kudlow knows intimately: no nation can devalue its way to prosperity. There’s no getting around this ironclad truth of economics rooted in the not-quoted-nearly-enough Henry Hazlitt observation that “what is harmful or disastrous to an individual must be equally harmful or disastrous to the collection of individuals that make up a nation.”
A falling dollar is harmful and frequently disastrous for the U.S. exactly because it’s harmful and frequently disastrous for individuals. And for obvious reasons.
For one, Americans earn dollars. Meaning they earn what dollars can be exchanged for. As the dollar’s exchangeable value shrinks, Americans are deprived of the fruits of their labor. It’s basic.
For two, it can’t be said often enough that there are no companies and no jobs without investment first. No economic school of thought can evade the previous truth. Consider it with investment top of mind: when investors put wealth to work they are in pursuit of future returns and income streams in dollars.
Which means a devaluation of the dollar is a rising tax on investment, one that causes those capable of putting wealth to work (yes, the rich) to increasingly park their wealth in hard assets least vulnerable to devaluation (wealth that already exists: land, gold, rare stamps, art, etc.). The latter comes at the expense of investment in stock and bond income streams representing wealth that doesn’t yet exist.
Those of means have a choice: they can either create wealth or they can protect it. A weak dollar instigates wealth protection at the expense of wealth creation that reveals itself in rising innovation, businesses building on that innovation, and the inevitable jobs that spring from all the progress.
Trump wants to be a president known for creating the conditions that associate with rising opportunity, but in pursuing a weak dollar on the faulty supposition that it makes U.S. businesses more competitive, he’s placing himself on the path toward the economic stagnation that associated so clearly with the presidencies of Nixon, Carter and Bush. Kudlow once again knows all this.
Always willing to compliment either side if doing the right thing, Kudlow articulated the economic success of President Clinton much more effectively than Clinton’s team did. He knew well that a sound dollar benefited Americans twice: they were getting more in return for their work and they were getting better and better work because a sound dollar was a magnet for the very investment that instigates ever-improving and compensated work conditions.
President Trump isn’t unique. No one is vis-à-vis the most important price in the world, the dollar. A falling dollar is the path to failure. Always and everywhere. Who among Trump’s closest advisors thinks enough of Trump and his legacy to tell him what he doesn’t want to hear, but that he must?
