This resulted then in a seriously overvalued dollar. The strength of the dollar since the Trump election is justifiably based on that historic analogy. It seems that there are two differences, however, between the Reagan administration and the Trump one. Reagan was fortunate in taking office in 1981 just after the second oil crisis tipped the economy into recession.
As well as a strong cyclical recovery, the economy received a windfall as the oil price collapsed. As inflation came under control, policy interest rates came down, laying the foundation for a 35-year bond bull market. President Trump, by contrast, makes his entrance at the tail-end of a mature, though fragile, expansion. Wages are rising and there is little slack in the economy.