Any Wu-Tang fans in the house? Does cash rule everything around you? 😎💸 Every day we wake up and get that money. You know, the dolla dolla bill, y’all.
Historically, the good ol’ greenback has been a worldwide safe bet. 🌎 However economic uncertainty can make things rocky (and we don’t mean Balboa). Let’s take a look at what makes our American money juice worth the squeeze. 🍋
Here’s Five Fast Facts on the value of the U.S. dollar:
- 🏆 Home Game - How we measure the dollar’s value comes in two flavors: domestic (here at home) and international (everywhere else). Ever hear of the term “purchasing power”? At home, the value of the dollar syncs with inflation. A rise in prices means the purchasing power of the dollar takes a dip. When prices go down, purchasing power gets a boost.
- 🌏 Mr. Worldwide - Now, let’s go international. Outside of the U.S., the dollar’s value is measured against other world currencies…AKA the exchange rate. When compared to another country’s money, if the exchange rate for a buck rises, the dollar’s value goes up. If the exchange rate goes down, value also goes down.
- 🪄 It’s a Fugazi - Remember when the dollar was backed by gold in Fort Knox LOL! Well, that’s no more. Today, the dollar is a “fiat currency,” which means it’s valuable… because the government says so. However, the government doesn’t determine the dollar’s value. Factors like global supply and demand, inflation, trade and monetary policies, and what’s going on with the economy do.
- 🙌 Take My Strong Hand - What does it mean when the dollar is strong? For one, the goods and services we import are cheaper for American shoppers. But it also means U.S. goods are more expensive for the rest of the world. While cheap stuff can be a good thing, a strong buck could cause demand for U.S. imports to go down.
- 🍝 Weak Sauce - When demand for the U.S. dollar goes down, its value takes a hit, too. It means that other currencies are stronger than ours and our purchasing power gets weaker. Imports get expensive for American consumers and U.S. exports become cheaper. It also makes international vacations more costly.
🔥Bottom line: OK, now that we’ve demystified the dollar, it’s time to tackle the housing market. If you’re in the middle class and in the market for a new home, you might not be having a good time. Why are times so tough? In this article, we dive into all the reasons why.
Did you learn something new about the dollar today?
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