Euros, Dollars, and Selective Concern

One of the things that always strikes me about Lawrence Summers’s occasional Washington Post op-eds is how selective his concern is. In his most recent offering he’s concerned about the value of the dollar relative to the euro:

One of the many surprising aspects of financial market performance since the start of 2017 has been the weak performance of the dollar, which has fallen by close to 10 percent on a trade-weighted basis and by about 17 percent against the euro.

This has occurred despite a variety of factors that might have been expected to push the dollar up. These include upward revisions in economic forecasts, expectation of monetary tightening, rising real and nominal long-term interest rates, fiscal stimulus on a huge scale in a full-employment economy, rising protectionism that should choke off import flows and tax reform directed at reducing capital outflows and increasing capital inflows.

Here’s a graph of the exchange rate between the euro and the dollar for the period 1999 to 2017:

Okay, when did the exchange rate become a concern? The value of the euro was at a historic high in 2008 and has been trading higher in 2018. Is there some arbitrary number or set of conditions when it becomes a concern?

Also, the purchasing power of the dollar has been declining longer than any of us have been alive. In 1900 it was 100 times what it is now. When graphed along a long enough timeline a 17% drop is barely discernible.