From what I know, if a country prints a lot of money, the value of it’s currency falls, and thus inflation increases.
But I am not able to understand the following.
USA printed a lot of money during covid.
Then there were reports that because of all this money printing the inflation will happening. and we are seeing high inflation in USA right now.
BUT the value of dollar is increasing compared to other currencies (EURO, YEN, INR, etc).
Thus, we can see that printing money increased the value of money. this is opposite to general understanding (what I wrote in first line).
can someone please explain why this is happening ?
Because this way, USA can keep printing money without worrying about the value of their currency going down.
One reason could be that, the black money ( and proceeds of criminal activities ) of the entire planet is stored in as physical dollar notes, as seen in hollywood movies and netflix shows.
The more dollar notes gets printed, the more it get absorbed for storing such illicit wealth of the planet.
Higher denomination dollar notes are sold for more than its face value in the black market.
Previously Gold bars was an option for storing such illicit wealth. Now since the new generation gold bars are getting mixed with tungsten ( it is becoming more and more difficult for these halfwit dons and dealers to identify a fake gold bar at the time of purchase ), Physical Dollar notes are high in demand.
I believe it is because during uncertain geo political environment, people tend to go for safer haven currency and USD is one such currency. When everyone wants USD, dollar becomes stronger. Oil/Crude is mainly bought and sold in USD (same with Gold) and when price of Oil/Crude increases, there will be a demand for increase in USDs.
Disc: These are my personal views and I could be totally wrong…