The assertion that the U.S. dollar was strong against other currencies throughout 2021 and 2022 and therefore did not experience devaluation is misleading. While it is true that the dollar was relatively strong compared to many other currencies during this period, this strength refers to its value relative to those specific currencies, not to an overall lack of fluctuation in its value. Currency strength is relative and can vary significantly based on which currencies are being compared. For instance, the dollar may have been strong against the euro, but this doesn't negate the potential for fluctuations in value or devaluation relative to a basket of other currencies or in a broader economic context.
Moreover, the concept of devaluation generally involves a decrease in a currency’s value compared to a basket of other currencies or its historical value, not just relative to individual currencies. Even if the dollar was strong against the euro, it could still experience devaluation in other contexts, such as when considering its purchasing power or its value relative to a broader range of currencies. Additionally, the relative strength of a currency doesn’t necessarily correlate directly with inflationary pressures or other economic impacts, as these are influenced by a complex mix of domestic and international factors.
Finally, the presence of a strong dollar does not preclude inflationary pressures or economic issues in other regions. For example, inflation in the eurozone during this period was influenced by supply chain disruptions, energy price spikes, European currency devaluation, and other factors independent of the US dollar's strength. The dollar's strength relative to other currencies did not directly impact inflation in the eurozone. It's entirely possible that the euro was simply more devalued compared to the devaluation of the U.S. dollar.
AI owns you.