Tuesday January 24, 2017 - 14:17:28 GMT
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The Perils of a Weak US Dollar Policy
The following is a post by a highly valued member of the Global-View.,com community
I think the simplistic euphoric acceptance that going down the nationalistic road of protectionism, rebuking of globalism with resultant reduction of global trade, weakening of ex-American trading powerhouses like China, Japan, Mexico, Canada and even Europe would somehow not accompany lower Global GDP, heightened geo-political risk and further destabilising mountinous reserves risks.
Trump's "America First" inauguration speech confirmed that this President has abidicated from being "Leader of the free world" in a petulant, reactionary "call to arms" for dust bowl true believers. America has so much too lose. One of the benefits of being LOFTFW means yours is the global reserve currency. While whining about Asian CBs intervening in their currencies he omits to admit or comprehend that their mountainous reserves have resulted in QE (Japan's Trillion 2001-2006 new (China's 4.5 Trillion 2001-2006, 2008-2015). Thrown in Asian CBers and SWF and you realise without them US rates would have been much higher and US Treasury's turbo charging would have been a "shock and aww shucks" damp squib.
I really think that people are misinterpreting this event. The mind boggling "animal spirits" BS when we have the most unpopular divisive administration in history following the most popular and profitable market conditions in history beggars belief. China and co have been dumping (profit-taking) Treasuries after 35 Year rally which is putting pressure on rates. The more this knucklehead poke's their benefactors eye the more this will continue IMHO (I am awaiting to see what BOJ/MOF etc have been doing this month). The political risk is too high to do nothing. No matter what bonehead plan he had, LOTFW GWB had the backing of almost every leader on the planet (remember the coalition of the willing??). Tump is persona no gratta and has made the US rudderless unilaterists making up foreign policy to please lobby groups and welded on populist slogans (e.g. moving US's Israeli foreign office to Jerusalem - should be quite the target).
Making Inflation Great Again, while driving up the price of capital, while weakening global growth, while relinquishing their previously unquestioned geo-political leadership and resultant incentive to protect its strategic global assets and capital providers.
Trump is squandering America's greatest asset which is a century of hard earned political capital held unquestionably in the the four corners of the world. That analysts can suggest a policy of protectionism and provincialism after a generation of unequalled largely uninterrupted growth due to free market capitalism and globalism just astounds me. It confirms that these financial lobbying sheep haven't a original thought amongst them.
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