Why is the US dollar so strong?
By Simon Dawson US markets have been enjoying a rare period of stability.
Investors have had enough of the US Federal Reserve’s aggressive easing.
They are buying US Treasury bonds, US government bonds and other assets that the Fed has bought in recent months.
The result is a strong dollar that has helped the US economy rebound from a global recession in the last year.
But the US has also been struggling with inflation, a huge fiscal burden, low oil prices and a slowdown in China.
It is hard to believe that the US central bank, with all its extraordinary powers, is the cause of all this.
The US economy is much more closely linked to the broader global economy than is often realised.
It has much more to do with the US manufacturing sector than the manufacturing sector.
In fact, the US is the world’s largest manufacturer of cars and planes, which are all manufactured in the US.
It also has the world most productive farm land, a major export sector and a large manufacturing base.
But if the US were to falter, that could damage its economic future.
The global economy is already heavily reliant on the US for raw materials and services, and the Federal Reserve is the key driver of that dependence.
The Fed is the largest player in the global monetary system and the world is dependent on it for financial stability.
US economic growth has been so robust for decades that the Federal Government has used its leverage to reduce the deficit and fund other priorities.
And it is now increasingly dependent on foreign capital and investment.
But that dependence could change if the Federal government stops its aggressive easing programme.
The world has seen this before.
When China became a major world economic power, it was only a matter of time before the US began to feel the pinch.
It took a long time to recover from the 2008 financial crisis and China has been growing steadily ever since.
The Federal Reserve started to cut interest rates in 2009.
It then decided to raise them again.
This time, the Fed did not act quickly enough.
As a result, China lost $500bn in real terms over the next three years.
That has not been the end of the world for the US since then.
But it has been the start of a new era in the history of the Federal reserve.
US manufacturing output fell during the Great Recession, and now that China is doing better, the manufacturing industry is growing.
There are still a lot of jobs lost in the American economy, but these are not the jobs lost because of the Fed’s actions.
The real jobs lost during the economic crisis have been in other sectors such as the construction industry, which was badly hit by the collapse of the housing market in 2007.
But those sectors are now doing much better than the US car and construction industries.
The economy in the United States is also very resilient.
Its growth is much higher than that of China.
The recession that began in 2008 has been far less severe than in China, but it has left many people unemployed.
In a country of one billion people, the unemployment rate in China is far higher than in the USA.
The unemployment rate for Americans is more than double that in China and more than three times that of Brazil.
This is partly because Americans are so much more well educated than the Chinese.
They have more options when it comes to careers and careers are a much bigger part of their lives.
But there is also another reason for the success of US manufacturing.
It depends on US manufacturing to provide cheap, high-quality goods for export around the world.
That is what has fuelled the US exports to the rest of the global economy.
In many ways, this is what made the US the world leader in manufacturing during the 1980s and 1990s.
The manufacturing sector in the UK and other countries was a relatively small player in those early years.
But by the 2000s, it had become a major player.
That led to a boom in the industry that has since grown to about $300bn a year.
There is no doubt that the global manufacturing sector is the driver of the American recovery.
But its future is dependent upon the global financial system.
If it does not stabilise, the recovery will be slow.
It will also be difficult to reverse the trend in the international financial markets.
The market for US exports will suffer if the Fed stops its easy money policies.
The biggest risk for the global economic recovery is the weakening of the dollar.
The dollar has weakened by about 5% against the euro since the end and by about 4% against a basket of currencies.
It looks like the US would be a big loser if the dollar were to weaken further.
This would be bad news for the rest, especially the UK.
The pound sterling is a major trading currency in the European Union.
It trades at a premium over the euro, and there are concerns that it could fall even further against the dollar in the coming years.
If the US falls further, it would be more difficult to convince other trading partners to move away from the euro.
That could have a devastating impact