The conservative Wall Street Journal editorial board warned Wednesday that President Donald Trump is playing with financial fire.
This week, Trump declared a weaker dollar "great," but the Journal warned "he should be careful what he wishes for," as experts have sounded the alarm on what could become a catastrophic miscalculation.
"Many politicians over the years have contemplated a weaker greenback as an economic miracle cure. They often discover that a weak dollar is a liability," the editorial said.
The dollar is hemorrhaging value, plummeting roughly 8% over the past year against a basket of global currencies, while losing a staggering 14% against the euro. Gold has soared past $5,300 an ounce, signaling deepening currency weakness that's destabilizing foreign-exchange markets worldwide.
Other politicians for decades have chased the fantasy that a weaker dollar magically boosts exports and jobs. The Journal said reality tells a different story. Modern economics shows that exchange-rate swings produce only fleeting economic shifts before inflation and deflation erase the gains.
"This should set off alarms for Mr. Trump, since a weak dollar risks inflation he can ill-afford before the November midterms," the Journal warned.
Treasury Secretary Scott Bessent worked to stabilize markets last week, directly contradicting Trump's dollar-weakening cheerleading.
"Credit Treasury Secretary Scott Bessent for understanding this and engaging in moral suasion with foreign-exchange traders last week to help Tokyo stabilize the yen. Credit to him as well for saying Wednesday that the U.S. has always had a 'strong dollar policy,' which countered Mr. Trump’s comments a day earlier. The greenback rallied on the news," the Journal noted.
