The longer and higher the dollar soars above the rest, the greater the risk of more prolonged global stagflation, debt problems in the developing world, more restrictions on the free flow of goods across borders, greater political turmoil in fragile economies and greater geopolitical conflicts. All of this would affect the US economy sooner or later through some combination of lower demand for its exports, more uncertain supply chains, financial losses and greater national security concerns.
The US cannot do much to directly counter the drivers of currency weakness elsewhere. But it can — and in fact should — do two things in response.
Russian President Vladimir Putin move to strangle gas supplies to Europe is strengthening the US dollar against the euro. Credit:AP
First, it should intensify the domestic policy effort to ensure that the (highly likely) outperformance of the US economy is accompanied by safeguards against…
