# US Dollar strength and Inflation **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [October 24, 2022, 3:26am UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690 "2022-10-24T03:26:09Z")\ **Posts on this page:** 15\ **Page:** 1
**Author:** ![Ssounder](https://avatars.discourse-cdn.com/v4/letter/s/d07c76/32.png) [@Ssounder](https://boards.straightdope.com/u/Ssounder)\ **Post date:** [October 24, 2022, 3:26am UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/1 "2022-10-24T03:26:09Z")
The US Dollar is riding high against most foreign currencies. Much of American consumption relies on foreign goods, which should be cheaper due to exchange rates. Why are prices going up (inflation) on foreign products? Are bushiness just pricing in what the market will bear? ---
**Author:** ![kenobi\_65](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kenobi_65/32/13178_2.png) [@kenobi\_65](https://boards.straightdope.com/u/kenobi_65)\ **Post date:** [October 24, 2022, 3:28am UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/2 "2022-10-24T03:28:31Z")
> [@Ssounder](#): > > Why are prices going up (inflation) on foreign products? The big drivers of inflation in the U.S. this year has been energy prices and wage costs. Importing foreign goods consumes fuel (which is more expensive now), and requires workers (which also cost more). Then, bringing those goods from a U.S. port, to the consumer’s home, requires domestic transport, and employees in the transportation system, which, again, cost more now. ---
**Author:** ![UDS1](https://avatars.discourse-cdn.com/v4/letter/u/e47774/32.png) [@UDS1](https://boards.straightdope.com/u/UDS1)\ **Post date:** [October 24, 2022, 3:34am UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/3 "2022-10-24T03:34:07Z")
Plus, of course, inflationary pressures resulting from higher energy prices operate outside the US too. The manufactured goods that the US imports costs more to manufacture in their home countries because they, too, suffer from higher energy costs, etc. So the effect of the rise in USD relative to other countries is offset by the rise in prices denominated in those other currencies. ---
**Author:** ![JaneDoe42](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/janedoe42/32/14104_2.png) [@JaneDoe42](https://boards.straightdope.com/u/JaneDoe42)\ **Post date:** [October 24, 2022, 3:36am UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/4 "2022-10-24T03:36:50Z")
I’ll take greed for a hundred, Alex. We live out in the middle of nowhere Arizona about 5 miles from a major freeway. Before gas prices got so high, gas prices were pretty much the same between stations and in the hundred mile area. Now gas prices have a DOLLAR a gallon range within 60 miles. ---
**Author:** ![Ssounder](https://avatars.discourse-cdn.com/v4/letter/s/d07c76/32.png) [@Ssounder](https://boards.straightdope.com/u/Ssounder)\ **Post date:** [October 24, 2022, 4:12am UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/5 "2022-10-24T04:12:42Z")
Miss-spelled business in the OP. Time to summon the fat finger excuse. ---
**Author:** ![JaneDoe42](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/janedoe42/32/14104_2.png) [@JaneDoe42](https://boards.straightdope.com/u/JaneDoe42)\ **Post date:** [October 24, 2022, 4:25am UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/6 "2022-10-24T04:25:08Z")
If you self report yourself, the wonderful mods are quick to make the correction for you. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [October 24, 2022, 9:49pm UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/7 "2022-10-24T21:49:44Z")
> [@Ssounder](#): > > The US Dollar is riding high against most foreign currencies. > Much of American consumption relies on foreign goods, which should be cheaper due to exchange rates. One way to look at this is that inflation is high everywhere, but it’s _even higher_ in other countries, which is why the US dollar is strengthening against them. If you think about it like that, it’s not a surprise that foreign goods are rising in price. Foreign markets are experiencing even higher prices for inputs than we are! ---
**Author:** ![eschereal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eschereal/32/18939_2.png) [@eschereal](https://boards.straightdope.com/u/eschereal)\ **Post date:** [October 24, 2022, 10:10pm UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/8 "2022-10-24T22:10:12Z")
Bushiness is why we have hedge funds. ---
**Author:** ![crowmanyclouds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/crowmanyclouds/32/19884_2.png) [@crowmanyclouds](https://boards.straightdope.com/u/crowmanyclouds)\ **Post date:** [October 24, 2022, 10:19pm UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/9 "2022-10-24T22:19:07Z")
> [@JaneDoe42](#): > > I’ll take greed for a hundred, Alex. > “According to this chart, what is the biggest driver of inflation during the pandemic? The blue – the dark blue is the recent period,” Porter pointed out. > “It would be corporate profits,” Konczal confirmed. > “And what is that percentage?” Porter asked. > “It is 54 percent,” Konczal replied, “and that number does stay that level of high if you update that number to more recent numbers as well.” > Porter asked if that meant that “over half of the increased prices people are paying are coming from increases in corporate profits?” > Konczal said that it did and that “the unit price index is reflected in corporate profits as opposed to other costs.” > Porter questioned Konczal, “how does that compare to, historically, other periods of inflation or over other periods of economic time?” > Konczal noted that “it is significantly higher in this recovery – 11.5 percent.” > Porter added, “and what is it today?” > Konczal conceded that it is “53 percent.” > > [Watch: Chart-armed Katie Porter makes the case that corporate greed is the primary cause of inflation - Raw Story](https://www.rawstory.com/watch-chart-armed-katie-porter-proves-that-corporate-greed-is-the-primary-cause-of-inflation/) Link in that cite, > **['The elephant in the room': Top Fed official says corporate price hikes are...](https://www.alternet.org/2022/10/corporate-price-hikes)** > > Progressives on Monday pointed to remarks by Federal Reserve Vice Chair Lael Brainard acknowledging the role of corporate profiteering in exacerbating inflation to underscore their opposition to interest rate hikes and other monetary tightening that... ---
**Author:** ![glowacks](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/glowacks/32/5548_2.png) [@glowacks](https://boards.straightdope.com/u/glowacks)\ **Post date:** [October 24, 2022, 10:24pm UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/10 "2022-10-24T22:24:53Z")
I wouldn’t be too surprised if that were true. Basically nothing that I buy has gone up in price all that much. Groceries a little, but that’s about it. I only spend money I things that I think are worth my money, whether before or after - I don’t go around spending all the money I have on everything people are selling just because I can afford it. Most people seem to actually do that, and so corporate America is keen to raise prices when people feel like prices should be rising. This causes larger increases in prices than those required by input costs, but they can always just blame it on inflation. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [October 24, 2022, 11:41pm UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/11 "2022-10-24T23:41:45Z")
The part of this explanation that always seems to be missing is why this just happened? Were companies not greedy 5 years ago? 10? If they had this kind of pricing power, why did they wait until now to use it? The standard economic answer that there’s lots of inflation due to monetary stimulus, supply and demand shocks due to the pandemic and responses to it, and a war between the western world and Russia makes a lot of sense in comparison. We didn’t have those things 5 or 10 years ago, which is why we’re getting inflation now and not then. ---
**Author:** ![Ssounder](https://avatars.discourse-cdn.com/v4/letter/s/d07c76/32.png) [@Ssounder](https://boards.straightdope.com/u/Ssounder)\ **Post date:** [October 25, 2022, 3:06pm UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/12 "2022-10-25T15:06:00Z")
I’m not an economist. Just an average Joe. But the Dollar has been strengthening for some time. Shouldn’t that translate to less USD to purchase products from a country that has a falling currency? I understand that the rising cost of transportation (and possibly raw materials) are a factor in driving up some prices, but there should be some US consumer windfall from a strong currency on the world market. Is it lower inflation relative to other countries? Or are tariffs artificially keeping the price of foreign goods up? ---
**Author:** ![Ssounder](https://avatars.discourse-cdn.com/v4/letter/s/d07c76/32.png) [@Ssounder](https://boards.straightdope.com/u/Ssounder)\ **Post date:** [October 25, 2022, 3:12pm UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/13 "2022-10-25T15:12:17Z")
If corporate profits are up shouldn’t that translate to higher stock returns? -Not so much in this case. ---
**Author:** ![Ssounder](https://avatars.discourse-cdn.com/v4/letter/s/d07c76/32.png) [@Ssounder](https://boards.straightdope.com/u/Ssounder)\ **Post date:** [October 25, 2022, 4:11pm UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/14 "2022-10-25T16:11:45Z")
> [@iamthewalrus\_3](#): > > The standard economic answer that there’s lots of inflation due to monetary stimulus, supply and demand shocks due to the pandemic and responses to it, and a war between the western world and Russia makes a lot of sense in comparison. We didn’t have those things 5 or 10 years ago, which is why we’re getting inflation now and not then. This^^. Basic low supply and high demand makes sense. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [October 25, 2022, 4:25pm UTC](https://boards.straightdope.com/t/us-dollar-strength-and-inflation/973690/15 "2022-10-25T16:25:42Z")
> [@Ssounder](#): > > the Dollar has been strengthening for some time. Shouldn’t that translate to less USD to purchase products from a country that has a falling currency? So, the thing to remember is that the dollar “strengthening” is relative to other currencies. Both currencies are weakening with respect to real goods, the dollar is just weakening more slowly. There _is_ a US consumer windfall from this effect, it’s just that the windfall shows up as “the price of foreign goods are not increasing as fast as the price of domestic goods” rather than what would have happened in the past when inflation in the US was low and it showed up as “the price of foreign goods is dropping relative to the price of domestic goods”. The price drop is still there, it’s just a smaller drop than overall inflation, so the net change in prices is still up, just less up. > [@Ssounder](#): > > Is it lower inflation relative to other countries? Yes. > [@Ssounder](#): > > Or are tariffs artificially keeping the price of foreign goods up? That’s what tariffs do, but they haven’t in general increased in the last year or two, so they don’t explain a recent _change_ in relative prices.