Filenews 30 January 2026
By Steve Forbes
President Trump said on Wednesday that the dollar's decline is positive. Wrong. It means that problems await us.
The U.S. economy is in pretty good shape, especially compared to the rest of the global economy. But this increasingly beautiful economic picture will suffer disastrous consequences if we do not support the sinking dollar. A volatile dollar means inflation in the future. And that means political disaster for President Trump and the Republican Party. The definition of inflation is the fall in the value of a currency.
The devaluation of the dollar destroyed the presidencies of Richard Nixon, Jimmy Carter, and George W. Bush. The price hike undermined Biden's presidency.
So why does Trump applaud the dollar's decline? Because of the erroneous but persistent belief that the decrease in the value of a currency stimulates a country's economy, since its exports become cheaper and its imports become more expensive. According to this logic, more exports mean more sales for domestic exporters. More expensive imports mean that domestic buyers will buy more domestic products. Here is prosperity!
In the real world, such an advantage – if it happens – quickly disappears. At best, it is a very short equivalent of "overstrain" in commercial activity. Prices – and market patterns – are being adjusted. So is the cost. The devaluation turns out to be a hidden tax.
Does President Trump want to leave the Oval Office in 2029, as George W. Bush did in 2009?
Don't get carried away by the bullish trend of the stock market. Stocks initially rose after President Richard Nixon's decision to decouple the dollar from the "golden rule". The economy has grown. Then everything collapsed, leading to the worst economic contraction in decades. The same pattern was repeated in the first decade of the 21st century. President Trump knows what kind of economy he inherited from Joe Biden, largely thanks to the less reliable dollar.
What most political leaders, military officials, and economists fail to understand is that a stable, reliable currency is a source of national power. Strong, reliable currencies played an important role in making Holland and Great Britain world powers. The same happened with the once weak United States, after it gained its independence and the dollar – in turn – gained a prestige similar to gold.
Instead of supporting the weak dollar, President Trump could fulfil his desire for a strong America, both in the short and long term, making the dollar the undisputed king of currencies. This would dismantle the ambitions of the BRICs, especially China and Russia, to replace the dollar in international trade.
How? Overturning the disastrous way of operating the Federal Reserve. The Fed believes that prosperity causes inflation, and so it sets its policies with an anti-growth bias: pernicious and irrational.
It's unbelievable, but when the Federal Reserve sets its monetary policy, it ignores the value of the dollar and the impact that taxes and regulation have on economic activity. It's like ignoring the meteorological conditions when piloting an airplane. The Fed's goal should be the stability of the dollar, not trying to manipulate the economy by setting interest rates. The situation on the planet is precarious, with huge debts, insufficient growth and weak currencies everywhere, as evidenced by the price of gold.
The person Trump chooses to lead the Fed should understand the need for a reliable dollar and how to achieve this.
