QUESTION: How come no person in Trump’s crew can’t clarify to Trump that the Commerce Battle 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 may proceed to dump bonds, and the sale of USA bonds will push charges increased. If they might begin speaking peace and honor the One China Coverage, they may 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 certain. 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 features or how we’re all linked, I’ve encountered unusual forecasts from some analysts. Nevertheless, I can perceive it as a result of they’re purely home and by no means take into account something exterior their very own nation.
Each China and Japan have been promoting US debt, however this was earlier than the tariffs had been imposed. Their economies are declining, and they should deliver money house. 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 international locations holding US debt. You may have a look at the traits 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 considering that he can hearth Powell and decrease charges for politics is with none historic backing.
There may be completely ZERO proof that decreasing rates of interest will EVER stimulate the economic system. Trump is lifeless improper 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 have a look at historical past.
This commerce conflict will trigger STAGFLATION, and Trump appears to be taking us in that route, all on his misguided views that one way or the other China is in charge 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 concept of cheaper labor. After one 12 months, they apologized for not listening to me. They purchased into the idea that they had been Germans in order that they might have the identical work ethic. They admitted that it took practically 3 East Germans to do the identical work as one West German.
Corporations transfer resulting from laws 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 Battle, from 1853 to 1856, in what’s now referred to as Ukraine, halted grain shipments from that area, and wheat costs practically doubled within the USA as a result of conflict in Crimea. There was a crash in 1856 when the conflict ended.
