Written by Hi, it’s Dre Griggs with Obsidian Wisdom.
Today we answer a question that might be on your mind: Why is the US dollar dropping?
If you woke up this morning, glanced at the stock market, and thought, “Here we go again,” you’re not alone. April has been rough—one of the worst since the Great Depression. And on top of that, the dollar is losing value. So today, we’re going to break this down.
I love economics. So let’s talk about what’s happening, why it matters to your retirement investments, and how you can prepare. We’ll cover four major reasons the dollar is dropping—and what you can do about it.
1. Tariffs and the Trade War
First up—the elephant in the room—tariffs and the ongoing trade war. This is a big driver behind the dollar’s decline.
Let’s zoom out for a second. There are four major causes of inflation:
- Demand-pull inflation: This happens when there’s a surge in demand, like what we saw during COVID-19 with toilet paper and hand sanitizer.
- Cost-push inflation: This is when the cost of producing goods rises, like when lumber prices spike or tariffs increase the cost of imported goods.
- Wage-cost spiral: When businesses raise wages due to higher living costs, they often pass those costs onto consumers by raising prices.
- Excessive money printing: When a country prints too much money, its value drops. Think about Super Bowl tickets—limited supply makes them valuable. Dollars, on the other hand, are being printed like jerseys—you can always get more.
Tariffs fit under cost-push inflation. When tariffs raise the cost of imported goods, your money buys less.
For example, I used to get a 30-piece nugget tray from Chick-fil-A for $12.99. Fast forward a few years, that same tray is $21.99. I’m paying more for the same thing. That means my dollar is worth less—not worthless, but worth less.
2. Pressure on the Federal Reserve (The Fed)
Next, we have the pressure on the Federal Reserve. The President has been pushing the Fed to lower interest rates, but the Fed has resisted.
Let me explain why this matters.
The Fed has two main goals:
- Low unemployment
- Low inflation
But these goals can contradict each other. Lowering interest rates helps stimulate the economy—more people buy homes, businesses borrow more, and money flows. But if rates are too low, it leads to inflation—like we saw with skyrocketing home prices and wages a few years ago.
The Fed raised rates to cool things off. Now, with the President pushing for lower rates again, the fear is that this could trigger hyperinflation—a steep rise in prices that devalues the dollar even more.
And here’s the kicker: the Fed Chair’s term ends in 2026. If there’s concern that a new Chair will simply follow political pressure, the market gets jittery. That lack of confidence can hurt the dollar.
3. Loss of Confidence in Economic Leadership
That brings us to confidence.
Economics has seasons—just like spring, summer, fall, and winter. We have cycles:
- Expansion
- Peak
- Recession
- Trough
If leadership tries to manipulate these natural cycles, the market reacts. If people believe that leadership will push the economy in unsustainable ways, confidence drops—and so does the dollar’s value.
When confidence in economic leadership fades, investors move their money elsewhere. They don’t want to hold onto a currency that feels unstable. And that weakens the dollar even further.
4. Economic Alternatives—Gold’s Rise
Finally, let’s talk about alternatives to the dollar—specifically gold.
When people lose faith in the dollar, they often turn to gold. Gold has hit record highs, around $3,500 an ounce. Why? Because gold is a store of value.
Think about it like this: if I give you the option to hold gold or dollars, and you believe the dollar is going to lose value, you’ll probably pick gold. That’s what’s happening. As the dollar drops, gold rises.
What Does This Mean for Your Retirement Investments?
All this economic uncertainty might have you wondering, “What should I do?”
Let me share one strategy I like—the Golden Butterfly Portfolio. This portfolio balances growth and protection. Here’s how it’s allocated:
- 20% large-cap stocks
- 20% small-cap stocks
- 20% long-term bonds
- 20% short-term bonds
- 20% gold
Why do I like it? Because it performs well across different economic climates. From 1970 to 2024, this portfolio averaged a 6% return—even through crises like 9/11, the dot-com bubble, the Great Recession, and COVID-19.
It’s not about never losing money. It’s about limiting losses and being positioned to grow when things turn around. If the market drops 30% and you only lose 10%, that’s a win. And when the market rebounds, you’re still in the game.
Final Thoughts
Look, we can’t predict every economic twist and turn. But we can prepare.
The key is to have a strategy that works in multiple environments. You don’t want to be chasing headlines or reacting out of fear. You want a plan that helps you protect your retirement while giving you the chance to grow your wealth.
Until next time. Stay safe and enjoy life.
Dre Griggs
P.S. – Worried about how the economy is affecting your retirement?
Don’t leave your future up to chance. Let’s build a plan that protects your wealth—no matter what the market does.
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