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While giant QE programmes have left many analysts speculating about the collapse of the dollar, economic data suggests otherwise
In the 3 month period between March - June in 2020, the Federal Reserve Bank of America printed more money during the early stages of COVID-19 than throughout the global financial crisis of 2008-2012. Marking the largest stimulus programme in its history, the Fed committed over $4 trillion worth of fresh cash into capital markets in response to the pandemic.
Such is the scale and ‘limitless’ resources of the US Central Bank that many speculators are now warning of a potential dollar depreciation and risks to inflation should these stimulus programmes continue. Economic theory states that as the money supply increases, the demand for money falls causing a depreciation in the exchange rate and potential currency devaluation. When this happens, imports become more expensive and the result is higher inflation.
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