We continue our tradfi media coverage today on the same theme (#1428312): now, Undisc's future employees are writing about the dollar (but mostly monetary policy and central bank behavior):

Over the past year President Donald Trump has bullied America’s allies with tariffs, bludgeoned the Federal Reserve and treated the budget deficit as if it were just a distraction.

"Yet most asset markets blithely carry on as if nothing were wrong.""Yet most asset markets blithely carry on as if nothing were wrong."

Well, almost all...

S&P is fine; Treasuries are chilling (the yield "lower than when Mr Trump took his oath of office"; American growth "is still the envy of the world".

Since a peak in January 2025, the dollar has lost a tenth of its value against a broad basket of currencies. As a result, in foreign-currency terms, the performance of American assets has been poor. When denominated in euros, for example, American stocks have barely risen over the past year.

The euros are what us Europooreans care about OK.

The [Trump TACO] spasms offer glimpses of a topsy-turvy world in which dollar assets are no longer safe. It is an alarming prospect, given that the dollar is the world’s reserve currency and that foreigners own more assets in America than Americans own abroad

"This should give pause to those who think that America’s financial strength is unbreakable.""This should give pause to those who think that America’s financial strength is unbreakable."

...and then some geopolitical nonsense commentary, followed by Warsh-as-Fed-Gov: : Mr Warsh has two main arguments for looser money.

1. AI bring about productivity growth, (so faster growth, inflation down)... below-target deflation is, in Treasury Sec's word this week, "undesirable"
2. offset the stimulus by shrinking the balance sheet.

Now that second thing is veeery tempting. Returning the Fed to a corridor system would be reining in its power somewhat, albeit at the expense of reducing its ability to lower rates -- but whatevs.

[America] is fortunate that investors have few alternatives to holding the greenback. Precious metals are a poor substitute for hard currency, and no bonds rival the volume, liquidity and legal safety of Treasuries. [...] The want of alternatives to the dollar condemns foreign investors to bear losses—and should alert American investors to the risk of an alternative emerging one day. Everyone should mourn how an asset that is an investors’ haven is increasingly tainted by risks the whole world must now bear

I do wish there were another candidate.

archive: https://archive.md/1PuEg