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How can money be both devalued and expensive? (lemmy.ml)

submitted 2 months ago by [email protected] to c/[email protected]

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An acquaintance who works in finance said that the USD was devalued during COVID but hasn't yet experienced much inflation except in household goods because money is still expensive. What does that even mean? How can money be expensive? And how does that differ from being valued/devalued?

I would think "money is expensive" means something along the lines of "there isn't much liquid cash", but I thought the money injected into the economy was liquid cash.

Would someone more into finance/trading than me explain how this is possible? Thanks!

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[–] [email protected] 2 points 2 months ago

Hard to know without more context.

However, one thing people have not mentioned yet is exchange rates and foreign trade. The republican candidates have reportedly been talking about devaluing the dollar in order to increase exports and reduce the trade deficit. A strong dollar makes US exports more expensive for people overseas, and imports cheaper in the US. Devaluation runs a big risk of creating huge inflation domestically even if it props up exports.