Meraglim Blog

Trump’s Shots at Russia and China Are Really Aimed at the Fed

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

On Monday, April 16, President Trump sent the following tweet: “Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!” The tweet received widespread media attention as shown in this article. But, let’s unpack Trump’s tweet a bit.

Superficially it reads like a criticism of China and Russia for cheapening their currencies to promote their own exports and to make U.S. exports more expensive to local buyers. That’s what the currency wars are all about, and that’s what countries do when they want to steal growth from their trading partners by making their exports cheaper and imports from abroad more expensive.

There’s no question that China was a world class currency manipulator from 1994 to 2012. But, in recent years, China has allowed its currency to strengthen appreciably against the U.S. dollar. China has raised interest rates in lockstep with the Fed to keep their currency from devaluing against the dollar.

It’s true that the Russian ruble has devalued recently against the dollar, but that’s because of U.S. sanctions against Russia, not because of any deliberate policy of the Central Bank of Russia. In fact, Russia has been running a high interest rate policy, which was making the ruble stronger until the most recent round of sanctions. So, Trump’s criticism of Russia and China doesn’t really fit the facts. But, there’s a third party involved in the tweet that Trump does not mention by name.

When Trump says, “…the U.S. keeps raising interest rates” that’s obviously a slap at the Fed. This tweet should be seen for what it is: an attack on Fed independence and a plea for a slower pace of rate increases and a weaker U.S. dollar. The Fed is on track to hike rates in June, but they may be overdoing it and growth may slow significantly by the late summer. In that case, the Fed may take another “pause” in rate hikes in September. If that happens, the dollar will weaken and gold prices will soar.

Presidents tend to get the kind of dollar they want. Trump wants a weaker dollar and the Fed is beginning to get the message.

 

 

Accredited investors interested in learning more about Jim Rickard’s private placement in the world’s first predictive data analytics startup that combines human and artificial intelligence with complexity science should check out his offering at Meraglim HoldingsClick the link to learn more.

IF THE SCIENCE IS NOT ON YOUR SIDE, JUST TRY THREATS

It’s clear that good science does not support the extreme claims of the climate alarmists. Yes, there is such a thing as climate change, but it’s slow, difficult to predict and almost impossible to model because of the complexity of the process. The climate alarmists have grabbed most of the headlines for the past ten

Read More »

WHY TRUMP WILL WIN REELECTION: NOT POLLS OR PUNDITS; JUST COMMON SENSE

Political analysts use polls, betting odds, historic trends and other inputs to make their (usually wrong) political predictions. We all remember that “experts” said Hillary Clinton would win the presidency in 2016 (they gave her a 92% chance on the morning of the election), and that the UK would vote to “remain” in the EU

Read More »

HERE’S ANOTHER ELITE WITH ANOTHER PLAN TO TAX AWAY YOUR WEALTH

The elites never rest when it comes to devising new ways to take your money through taxes, inflation or outright confiscation. The latest Trojan horse the elites are riding to take your money is climate change. The climate does change over long periods of time for reasons that are not well understood except that they

Read More »

KRUGMAN SHOWS HE KNOWS LITTLE ABOUT ECONOMICS AND LESS ABOUT FINANCE

We already knew that Nobel Prize winner Paul Krugman knows almost nothing about economics. Now, we see from this article that he knows nothing about banking either. Krugman claims that the repeal of Glass-Steagall and the actions of banks in general were not the cause of the 2008 financial crisis. The conventional wisdom is that Lehman Brothers,

Read More »
Scroll to Top