George W. Bush Lit The Dollar Fire On Which Trump Throws A Match

Forbes

11-05-2025

WASHINGTON - DECEMBER 20: U.S. President George W. Bush answers questions during a news conference ... More in the White Hosue Brady Briefing Room December 20, 2007 in Washington, DC. Bush urged Congress to work on important legislative matters and not be distracted by the fact that it's an election year. (Photo by)
Presidents get the dollar they want, and George W. Bush wanted a weaker one. Bush's departure from the Reagan/Clinton era of a largely strong, stable dollar as a measure of constant objective value was one of his worst policy decisions, and it's one that no president subsequent to Bush has chosen to reverse.
When Bush entered the White House in January of 2001, a dollar was worth 1/260th of a gold ounce. When he exited in January of 2009, a dollar purchased 1/874th of a gold ounce.
To be clear, gold itself doesn't move as much as the currencies in which it's measured do. Gold's constancy explains why it's long been used to define money. Against the dollar, gold rose over 230 percent during Bush's presidency.
That Bush failed economically as president is vivified by the dollar's decline. Investment drives economic growth, and when money is trusted there's a greater incentive to put it to work in pursuit of the discovery of new forms of wealth. If new ideas come to fruition, investors are rewarded with dollar returns that well exceed the initial dollars committed.
That explains why a weak dollar is so inimical to economic growth. Precisely because investors seek returns in dollars, there's reduced incentive to put wealth to work since any returns in dollars will exchange for fewer and fewer goods. That's why periods of currency devaluation (in other words, inflation) coincide with slower growth: rather than putting money to work in pursuit of wealth that doesn't yet exist, investors hedge the decline of money with consumption of hard assets representing wealth that already exists: think oil, gold, rare art, stamps, land, housing, etc.
Wall Street thrived in the '80s and '90s as investors matched money with talent on the way to huge leaps borne of investment, M&A, IPOs, etc. Yes, a strong, stable dollar correlated with wealth creation. Under Bush, a falling dollar coincided with substantial declines in investment as precious capital flowed into existing wealth. By the time Bush left office, major banks and investment banks were struggling to stay alive, and that was just the ones that didn't die in 2008.
Unsurprising about the dollar's decline under Bush is that Republicans were silent about it at the time. They're still silent about it. This is notable in consideration of how Republicans became obsessed with 'inflation' under Joe Biden, and worse, redefined inflation as rising prices (which is like saying suntans cause the sun). Yet the dollar was largely stable versus gold when Biden was in office, and rose against foreign currencies. Unknown is why Democrats conceded inflation that wasn't, all the while remaining quiet about the dollar's collapse under Bush.
Thankfully an economist from the left by the name of Rebecca Patterson is writing what's true, that between 2001 and 2008, the dollar 'lost 40 percent compared to its major peers.' In Patterson's case the economist in her means she's unwilling to add that the dollar's 40 percent decline against the pound, euro, yen and other major currencies masked the fact that they all were falling with the dollar, just not as much. See the earlier discussion of gold.
Which brings us to Donald Trump. Though minor league relative to Bush on the devaluation (inflation) front, since the beginning of his second term gold is already up 23 percent against the dollar. That's the Trump plan, to revive U.S. industry by wrecking the dollar. Except that investment revives industry.
Oh well, readers get it as do some close to Trump. Unknown is if those close to Trump and who get it are willing to risk their standing with the president by alerting him to the fire that Bush started, that no one subsequent to Bush stopped, and that Trump is fanning the flames of.