<p>If a dollar depreciates then:</p>
<ul>
<li>Financial assets and liabilities (loans, bonds) denominated in US dollars are still worth the same number of US dollars.</li>
<li>Financial assets and liabilities (loans, bonds) denominated in foreign currencies are both worth more US dollars (because it costs more US dollars to get a foreign dollar).</li>
<li>Tangible assets (e.g. real estate) are worth more US dollars because each dollar is worth less &quot;real stuff&quot;.</li>
<li>Tangible liabilities (e.g. an obligation to produce widgets) are worth more US dollars because it will cost more US dollars because each US dollar is worth less.</li>
</ul>
<p>Essentially, if a currency depreciates, it means <em>everything</em> goes up when measured in that currency... except for contracts that refer to a specific amount of currency (like bonds). The foreign real estate is still worth one piece of foreign real estate, but now one piece of foreign real estate equals more dollars.</p>

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2021-09-23T11:32:40.677Z
2021-09-23T11:32:40.677Z
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<p>My thought here is that if the dollar were to depreciate, then the value of US liabilities would decrease while the value of their assets would increase. Moreover, the US trade balance would become less negative in that their debts would be &quot;cheaper.&quot; Is this intuition on the right track?</p>

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2021-09-23T05:33:20.173Z
Value measured in what? USD?
Giskard
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2021-09-23T07:32:48.397Z
@Giskard Yes, USD
James
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2021-09-23T11:23:29.703Z
What are the assets and liabilities denominated in? USD or foreign currencies?
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2021-09-23T11:29:30.267Z
What kinds of assets and liabilities?
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<macroeconomics><international-economics><debt>
How is the United States net foreign wealth affected by a depreciation of the US Dollar?
James
# How is the United States net foreign wealth affected by a depreciation of the US Dollar?

(Asked by: username_0 on 2021-09-23)

My thought here is that if the dollar were to depreciate, then the value of US liabilities would decrease while the value of their assets would increase. Moreover, the US trade balance would become less negative in that their debts would be "cheaper." Is this intuition on the right track?

**Tags:** macroeconomics, international-economics, debt

> **Comments:**
> **username_1**: Value measured in what? USD?  
> **username_0**: @username_1 Yes, USD  
> **username_2**: What are the assets and liabilities denominated in? USD or foreign currencies?  
> **username_2**: What kinds of assets and liabilities?  

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## 1 answers

### Answer by username_2 on 2021-09-23. Score: 1 | Accepted answer

If a dollar depreciates then:

* Financial assets and liabilities (loans, bonds) denominated in US dollars are still worth the same number of US dollars.
* Financial assets and liabilities (loans, bonds) denominated in foreign currencies are both worth more US dollars (because it costs more US dollars to get a foreign dollar).
* Tangible assets (e.g. real estate) are worth more US dollars because each dollar is worth less "real stuff".
* Tangible liabilities (e.g. an obligation to produce widgets) are worth more US dollars because it will cost more US dollars because each US dollar is worth less.

Essentially, if a currency depreciates, it means *everything* goes up when measured in that currency... except for contracts that refer to a specific amount of currency (like bonds). The foreign real estate is still worth one piece of foreign real estate, but now one piece of foreign real estate equals more dollars.


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