QUESTION: How come no person in Trump’s staff can’t clarify to Trump that the Commerce Conflict with China will push the charges up?
It appears to be like very logical to me that in case you are aggressive to China, they’ll proceed to unload bonds, and the sale of USA bonds will push charges increased. If they might begin speaking peace and honor the One China Coverage, they’ll merely cease promoting bonds, and charges would keep decrease.
Peace means all of us collaborate, and hostility will lastly expose the truth that the FED just isn’t controlling the charges, however markets do.
Is that this appropriate logic?
Regards,
GD
ANSWER: I’m not fully positive. What looks as if widespread sense to me appears to be like like Nobel Prize-winning logic to others. Maybe as a result of they’re simply home and can’t see the worldwide facets or how we’re all related, I’ve encountered unusual forecasts from some analysts. Nonetheless, I can perceive it as a result of they’re purely home and by no means think about something outdoors their very own nation.
Each China and Japan have been promoting US debt, however this was earlier than the tariffs have been imposed. Their economies are declining, and they should deliver money dwelling. Within the case of Japan, that is whereas the Biden Administration was threatening China with sanctions in the event that they helped Russia. One Socrates, we even have all of the nations holding US debt. You possibly can take a look at the developments and see what I’m speaking about. Sure, promoting US debt will ship long-term charges increased which the Fed can not forestall. Trump’s pondering that he can hearth Powell and decrease charges for politics is with none historic backing.
There’s completely ZERO proof that reducing rates of interest will EVER stimulate the financial system. Trump is lifeless fallacious on this. The ECB went NEGATIVE in 2014, and it nonetheless didn’t reverse the financial decline of Europe, and it made it worse, undermining pensions and banks. Trump is a borrower, not a lender. He has to step again and objectively take a look at historical past.
This commerce struggle will trigger STAGFLATION, and Trump appears to be taking us in that path, all on his misguided views that one way or the other China is responsible for us shedding manufacturing. I’ve expertise with multinational firms and have reorganized many. It’s the Democratic propaganda that firms transfer solely as a result of they’ll get cheaper labor. That’s simply socialist propaganda.
I even warned an organization in Germany that when the Berlin Wall fell, they rushed to open a plant there on this silly idea of cheaper labor. After one 12 months, they apologized for not listening to me. They purchased into the idea that they have been Germans in order that they might have the identical work ethic. They admitted that it took almost 3 East Germans to do the identical work as one West German.
Corporations transfer on account of rules and taxation. I helped some get into North Macedonia, which gave them a 25-year assure of no tax will increase. I put Japanese firms in Britain that wanted expert labor, vs Germany or France, as a result of the price of regulation was 40% extra on the identical wage in Germany vs Britain.
Maybe as a result of I’ve handled worldwide points, it’s simply widespread sense to me and our international readers. I despatched a letter final week to the Secretary of the Treasury, and I simply texted another person concerning the tariffs on China. There will likely be shortages in items, and that alone will drive costs increased, even with out the tariffs.
The Crimean Conflict, from 1853 to 1856, in what’s now referred to as Ukraine, halted grain shipments from that area, and wheat costs almost doubled within the USA as a result of struggle in Crimea. There was a crash in 1856 when the struggle ended.
