[ExI] Presidential overstep

[Dylan Distasio]

John-

I'm not going to share an opinion on the merits of Trump's policies (or
lack thereof), but this analysis as a root cause of the USD's continued
strength is too simplistic, and not accurate IMO.  Interest rates have not
been rising in the US.  The US 10 year yield has fallen extremely far from
4Q of 2018 forward.

The dollar remains very strong against other currencies for a number of
reasons including there is really no alternative to it right now.  Europe
and China have not participated in the strong economy that has occurred in
the US since Trump took office (I am not implying he is responsible for all
of it, just mentioning the timing) and are arguably already indicating
recession (the weaker nations are already there in Europe).   There remain
very real structural problems in Europe, and their overall economy has been
lukewarm at best.   China has also been struggling in many ways that are
not apparent based on just looking at their GDP numbers.   Energy is cheap
and abundant as an input in the US which is also playing a role.

The US has (temporarily?) decoupled from most of the major other economies
on the world stage, and in relative terms has been very strong compared to
them.

All of these things have created a virtuous cycle in the USD that is
causing it to remain strong against other currencies, and all of this is
without a rise in interest rates on US debt.


On Thu, Mar 7, 2019 at 1:27 PM John Clark <johnkclark at gmail.com> wrote:

>
>
> The $1.5 trillion tax cut for the super crazy ulta rich had to be paid for
> and that was done  by borrowing, and that increased interest rates, and
> that strengthened the dollar, and that made it easier for the US to buy
> stuff from China and harder for China to buy stuff from the USA.
>
> America’s Trade Deficit Hits Record $891 Billion
> <https://www.nytimes.com/2019/03/06/us/politics/us-trade-deficit.html>
>
>
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