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Thread: Trump hopes to escalate a tariff war — with a currency war

  1. #1

    Trump hopes to escalate a tariff war — with a currency war

    https://finance.yahoo.com/news/donal...204900785.html

    A new race to the bottom?

    President Donald Trump has called on the U.S. Treasury and the Federal Reserve to weaken the U.S. dollar, arguing that American exports are being hurt by other countries’ efforts to devalue their own currencies.

    But some are warning that the president’s efforts could negatively impact GDP growth in the short-term, and start a currency war that could backfire in an even stronger dollar.

    “Historically, however, attempts to weaken the dollar have met with mixed success and there are good reasons to believe that any intervention now would fail,” Capital Economics wrote in a note July 8.

    Over the past few weeks, Trump has accused China and Europe of manipulating their currencies by easing monetary policy and weakening their currencies. On July 3, Trump tweeted that countries abroad have been “playing [a] big currency manipulation game and pumping money into their system in order to compete with [the] USA.”

    Trump argues that a stronger dollar is hurting U.S. exports by making them more expensive for buyers abroad — damaging the administration’s efforts to reduce the trade deficit. Boosting exports have been the center of Trump’s game of chicken on tariffs with longtime trade rival China, but also close neighbors Mexico and Canada.

    His proposal? Get the Federal Reserve to “match” the actions of the European Central Bank and the People’s Bank of China by lowering interest rates and taking some steam out of the U.S. dollar.

    Trump has repeatedly called on the Fed to ease policy.

    The idea of manipulating the U.S. dollar is not limited to the White House, or even the GOP. Massachusetts Democrat and 2020 presidential candidate Elizabeth Warren has proposed “actively managing” the U.S. dollar to boost exports and domestic manufacturing.

    “We should consider a number of tools and work with other countries harmed by currency misalignment to produce a currency value that’s better for our workers and our industries,” Warren writes in her economic plan.

    But there are two concerns: the consequences of intervening in currency valuation, and whether or not the Fed would be willing to help out.

    Backfire?
    Some worry that manipulating the U.S. dollar would simply push other countries to further devalue their currencies, spurring a currency war that could exacerbate the trade spats between the U.S. and other nations.

    “More broadly, Trump's penchant for verbally intervening in the foreign exchange market, and now implicitly threatening intervention may risk weaponizing the currency market,” Bannockburn Global Forex’s Marc Chandler wrote July 7.

    Over the past few months, the U.S. dollar has appreciated against major currencies like the Euro, the Chinese yuan, and the British pound. The U.S. dollar index has fluctuated over the last six months, but has risen from 95.90 as of January 8, to 97.31 as of Monday afternoon.

    Capital Economics wrote that weakening the dollar would be countered by other countries and could “backfire” if long-term interest rates spiked as the central bank sold assets to stabilize the dollar. In the short-run, they warn that a weaker dollar would increase import prices and reduce the purchasing power of U.S. households and businesses.

    “[W]e would view any action to deliberately weaken the dollar as negative for near-term GDP growth,” Capital Economics wrote.

    But the question remains about whether the president could spur any action on weakening the U.S. dollar in the first place. The key is whether the Fed would get involved.

    Will the Fed play along?

    The Federal Reserve has not acknowledged interest in pulling the strings on the U.S. dollar.
    The problem is that if you want to weaken the dollar, stimulating the economy will have the opposite effect. To weaken the dollar it is best to weaken the economy.
    Last edited by Zippyjuan; 07-09-2019 at 12:16 PM.
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.



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  3. #2
    Quote Originally Posted by Zippyjuan View Post
    https://finance.yahoo.com/news/donal...204900785.html

    A new race to the bottom?



    The problem is that if you want to weaken the dollar, stimulating the economy will have the opposite effect. To weaken the dollar it is best to weaken the economy.
    So this 1393.00 Gold may be a bargain .
    Do something Danke

  4. #3
    Trump knows the Fed won't give him what he asks for so he asks for the opposite.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  5. #4
    Quote Originally Posted by Zippyjuan View Post
    To weaken the dollar it is best to weaken the economy.
    Trump wants a strong economy because he loves his country, zippy wants a weak economy.......................................
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  6. #5
    Quote Originally Posted by Swordsmyth View Post
    Trump knows the Fed won't give him what he asks for so he asks for the opposite.
    Like on immigration and trade? He doesn't really want that wall?
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.

  7. #6
    Quote Originally Posted by Swordsmyth View Post
    Trump wants a strong economy because he loves his country, zippy wants a weak economy.......................................
    Strong economy means a strong dollar. Strong dollar means imports are cheaper and exports more expensive giving a trade advantage to our trading partners.
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.

  8. #7
    Quote Originally Posted by Zippyjuan View Post
    Like on immigration and trade? He doesn't really want that wall?
    He doesn't have to manipulate the Fed on those issues and his actions prove his intent.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  9. #8
    Quote Originally Posted by Zippyjuan View Post
    Strong economy means a strong dollar. Strong dollar means imports are cheaper and exports more expensive giving a trade advantage to our trading partners.
    And?
    Trump objects to trade cheats and hits them with tariffs but he wants a strong economy.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



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  11. #9
    Quote Originally Posted by Swordsmyth View Post
    And?
    Trump objects to trade cheats and hits them with tariffs but he wants a strong economy.
    His goals conflict. He wants a weak dollar to try to help the economy but a strong economy gives us a strong dollar. A weak economy can lead to a weak dollar.

    Maybe he should ask for a refund from that Wharton School of Finance.
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.

  12. #10
    Quote Originally Posted by Zippyjuan View Post
    His goals conflict. He wants a weak dollar to try to help the economy but a strong economy gives us a strong dollar. A weak economy can lead to a weak dollar.
    I keep telling you he doesn't want a weak dollar.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  13. #11
    Quote Originally Posted by Swordsmyth View Post
    I keep telling you he doesn't want a weak dollar.
    Yes, he does. He wants the Fed to cut interest rates because other countries weakened their currencies that way. He want to keep up.
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.

  14. #12
    Quote Originally Posted by Zippyjuan View Post
    Yes, he does. He wants the Fed to cut interest rates because other countries weakened their currencies that way. He want to keep up.
    He doesn't.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  15. #13
    Quote Originally Posted by Swordsmyth View Post
    He doesn't.
    So he is lying. Just like he is lying about wanting a border wall. Says one thing when he really wants the opposite. Or you are just making things up again to boost the post count.
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.

  16. #14
    Quote Originally Posted by Zippyjuan View Post
    So he is lying. Just like he is lying about wanting a border wall. Says one thing when he really wants the opposite. Or you are just making things up again to boost the post count.
    He is lying about a weak dollar and not about the wall, he is building the wall.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  17. #15
    Quote Originally Posted by Swordsmyth View Post
    He is lying about a weak dollar and not about the wall, he is building the wall.
    You know this how?
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    "There is always a tweet. That has become accepted fact in the Trump presidency: For every pronouncement the President makes, there is at least one tweet from his past that directly contradicts his current view." -CNN

    I am Zippy and I approve of this post. But you don't have to.



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