Since the value of the dollar has been a topic in the news as of late, I thought I’d revisit the topic myself. Here’s the value of the dollar, as measured by the Fed’s Price adjusted broad dollar index for June of each year starting in 1973, when the dollar was decoupled from gold:
The dollar declined in value during the Nixon/Ford and then took a tumble when Carter was elected.
It rose precipitously in the first few years of the Reagan administration – it really was morning in America. Why the huge drop at the end of the Reagan administration? My guess is that the specter of the enormous debt was starting to make a dent on people’s psyche. At the end of GHW’s term, it was essentially unchanged from the end of Reagan’s administration.
Under Clinton, it declined slightly at first – it would be hard not to, what with the Wall Street Journal and the various think tanks in Washington explaining how Clinton’s economic policies were going to destroy the economy. When that destruction failed to happen, the dollar jumped quite a bit.
The rise continued through the early years of the GW administration – but eventually reality began to sink in.