Why the Dollar Is Strong
Since 1980, the exchange value of the dollar has increased nearly 50 percent relative to the other major currencies of the world after adjusting for differences in inflation. Why has the dollar risen so much? There is no single reason, but I believe that the primary cause has been the mix of fiscal and monetary policies: the large projected budget deficits combined with the expectation that the Federal Reserve will not permit the deficits to increase the rate of inflation in the United States.