What’s Going To Happen To The U.S. Dollar In This Decade?

So… we’re starting the ‘20s. Before we consider what this new decade might look like, let’s take a look at the ‘10s and what they brought.

At the start of last decade, offshore and investment gurus were calling for the collapse of the U.S. dollar. The Chinese were going to make their yuan the global currency or the Swiss were going to step up, but, one way or another, the demise of the dollar was nigh.

The U.S. dollar saw its last-decade low (based on the U.S. dollar index) in July 2011, at 80. From there it was up, up, up for most of the rest of the ‘10s.

It finished the decade at 101 in December 2019.

That’s not disappearing. That’s tremendous appreciation over 10 years.

The biggest winners in the stock market as a group last decade were the FANGs and tech stocks in general. While the S&P 500 was up 189% during the ‘10s, the FANGs were up 335% to 4,181%. Yikes.

The ‘10s also brought a continuance of the various wars in the Middle East. Most conflict had calmed in relative terms by the end of the decade only to take a turn in the last few months. We enter this new decade with new and increased tensions.

One final trend to consider from the ‘10s was the growth of the gig economy. I’m still not quite sure what that means beyond becoming an Uber driver, but Uber, Airbnb, WeWork, and other similar companies made it easier than it’s ever been to generate income on the side and to work remotely or independently. Traditional jobs became less available for older workers and less interesting to millennials. These side hustles helped keep food on the table and provided alternatives to the conventional 9 to 5.

As we enter the ‘20s, my prediction is that each of these aspects of the ‘10s is likely to reverse.

The gig economy will have to reinvent itself. This is happening already. Airbnb is negotiating with countries and cities to become regulated. In Barcelona, for example, they’ve agreed to give the city access to their landlord database so it can confirm if the people renting apartments and rooms have the required licensing. Barcelona’s government suspects it’s being cheated out of tax income.

Uber has pulled out of many cities due to regulation requirements, and their safety issues have been broadly publicized.

WeWork is closing offices, sometimes not long after they’ve opened them, trying to manage operations in the face of $3 billion losses. And California has recently passed a law limiting people’s ability to work freelance.

The Middle East continues to be a hot spot despite the United States trying to pull out of its decades-long wars there. It wasn’t terrorism that brought the United States to Iraq but oil. Now that it’s petroleum self-sufficient thanks to shale oil production, the United States could leave Iraq. But I don’t see how that happens, and, despite Trump’s new plan for peace in the region, I don’t expect any such thing. Whether it’s a regional war or world war III, I believe we’re going to see serious conflict in the Middle East this decade.

Now for the two most important predictions for our new decade. What will happen to the U.S. dollar… and where should you invest your money…

I answer both of those questions in the current issue of my Simon Letter advisory service. If you’re a subscriber, the first edition of this new decade is in your inbox. Go have a look for it.

If you’re not yet a subscriber, why not?

Fix that here now.

Lief Simon