Wealth & Money Quote by Martin Feldstein

A currency doesn’t “begin a sharp decline” by accident; it does so when policy, psychology, and geopolitics collide. Feldstein’s phrasing reads like a clinician noting the moment a fever breaks, but the numbers carry a quiet indictment: the strong-dollar era of the early Reagan years wasn’t a triumph so much as an imbalance that had to be unwound.

The specific intent is documentary and diagnostic. By anchoring the turning point to April 1985 and quantifying the drop in trade-weighted terms, Feldstein is steering readers away from anecdote and toward lived macroeconomics: not the headline exchange rate against one rival, but the dollar’s broad purchasing power in global trade. The subtext is that this wasn’t a minor correction. A 23 percent slide in a year is the kind of move that rewrites business plans, reshapes inflation expectations, and reassigns blame inside Washington.

Context matters: 1985 is the Plaza Accord moment, when the U.S. and its major partners effectively agreed the dollar was too high and coordinated to push it down. Feldstein, a prominent conservative economist and former chair of Reagan’s Council of Economic Advisers, had argued that large budget deficits were feeding the strong dollar and trade deficits. So this passage doubles as evidence in a broader case: policy choices have exchange-rate consequences, and those consequences arrive on a lag, with force.

It works because the prose is restrained while the data is dramatic. Feldstein lets the magnitude do the persuading, implying that the market (and allied governments) delivered the verdict politics wouldn’t.