Incredibly, but the fact: Trump is fighting for the de-dollarization of the world economy
The President of the United States decisive strokes of the overworked owner of the dollar cuts the branch on which it sits America. The currency war he started will end with the destruction of the dollar system
The need to combat the dominance of us dollar in the world today is spoken of by all politicians, even those who are considered allies of America (primarily Europeans). But the most significant contribution to the emancipation of the world from the «green» currency makes… us President Donald Trump.
It sounds paradoxical, but only at first glance. Yes, of course, nowhere and never has Donald trump directly stated that it is necessary to end the hegemony of us dollar in the world. But all of its specific proposals and requirements, directly or indirectly related to the economy, international trade, and monetary policy of us Federal reserve, are aimed precisely at this. The position of the American President is very simple, it can be expressed in several theses.
1. The American economy (its real sector) has been slowly but steadily deteriorating for many decades. Today she is in a deplorable situation. One of the main manifestations of this situation is its lack of competitiveness: domestic needs are increasingly being met through imports.2. It is necessary to restore the American economy, improve the competitiveness of the national industry and other sectors of the real sector. One effective way to do this is to lower us dollar against the currencies of competing countries.
3. Such a decrease is possible through the impact on the monetary policy of both competitor countries and the US Federal Reserve. Donald Trump from the first day of his tenure as President of the United States accused other countries that they artificially undervalue their currencies against the dollar. China, which allegedly is waging a «currency war» against America, has been subjected to special criticism. Recently, even Russia was accused of underestimating the exchange rate of the national currency.
4. For two and a half years of trump’s stay in the White house, he failed to achieve much success in forcing other countries to abandon the so-called «currency manipulation» (ie, undervaluation of national currencies). Now Trump directs his main energy to force the US Federal Reserve to weaken us dollar against other currencies.
The strong dollar was essential for the fulfillment of the role of world currency. Trump’s demands to make the dollar a weak currency mean that the dollar will cease to dominate the global financial system. We can only guess whether trump will have time for the rest of his stay in the White House to cut down the bitch on which America sat for more than forty years. I count from the Jamaica conference of 1976, which decided to abandon the key principle of the post-war monetary and financial order — fixed currency rates.
However, the tireless trump said that he will participate in the presidential elections in 2020 — he expects to extend his stay in the White House for another four years and in this case, will be able to cut down this very bitch. Resembling to say that this bitch sits wall street banks and «owners of money» (the main shareholders of the US Federal Reserve), so they will do everything possible to prevent the victory of trump in the upcoming elections.
This has never happened
As you know, not without trump’s efforts, the new head of the US Federal Reserve was appointed by Jerome Powell, whom the President considered «his man». He succeeded Janet Yellen at the beginning of last year. This lady is very annoyed Donald trump that began to tighten the monetary policy of the fed, raising the key rate of the fed, which for several years was at the level of «plinth» (0-0.25%). Plus, since the autumn of 2017, it has launched a process of gradual unloading of the Fed’s balance sheet from the huge volumes of securities (Treasury and mortgage bonds), which us Central Bank bought during the implementation of three programs of «quantitative easing». Trump hoped that the new fed Chairman Jerome Powell will return everything to normal and at least stop the further increase in the key rate and the sale of securities from the fed portfolio. Money, according to trump, should be in the American economy in sufficient quantities and possibly cheap or almost free. In addition, the continuation of the «pigeon» monetary policy of the Federal Reserve system will weaken us dollar against the yuan, the Euro and other currencies, and therefore increase the international competitiveness of American goods. To trump’s surprise, «his man» in the Federal reserve continued Janet Yellen’s course to tighten monetary policy. At first, it caused surprise at the President of the USA, then — irritation, at last — anger.
Such a conflict between us President and the Chairman of the fed was not, perhaps, in the history of the Federal Reserve (it was established in December 1913). In December last year, when the indices in us stock market collapsed record for nine years, Trump threatened to fire Jerome Powell, whom he himself appointed less than a year ago. A little later, the President was literally indignant when the data on us trade balance for 2018 were published: it turned out that the deficit reached an unprecedented 621 billion dollars. In the two years of trump’s presidency, no visible success has been achieved in restoring the competitiveness of the American economy, at best, running on the spot. And now trump calls the main threat to us economy is not China, but us Federal reserve.
And then suddenly in unison, many banks on wall street began to assent officials fed and to emphasize that the U.S. dollar is overvalued. Thus, economists from Bank of America said that the current dollar rate is 13% higher than the effective real exchange rate and that the fed intervention is needed to lower it. The bankers were supported by Elizabeth Warren, the Democratic presidential candidate, who proposed to «actively manage» the exchange rate to support exports and domestic industry.
In early June, the head of the Federal reserve Jerome Powell already quite articulately declared his readiness to give the economy an incentive in the form of cheap money. Feeling the weakness of the head of the Central Bank, trump, even more, intensified his attacks on him. «They do not think anything,» Trump wrote on Twitter on June 11, referring to the leadership of the fed. «The Euro and other currencies are devalued against the dollar, which puts the US at a disadvantage. The fed rate is too high, it has added a ridiculous quantitative tightening,» continued Trump. And by quantitative tightening, he meant the withdrawal of $ 550 billion from circulation as a result of the sale of securities from the Fed’s portfolio.
In General, in June there was a radical turn in the monetary policy of the US Federal Reserve. Started Janet Yellen and continued by Jerome Powell monetary «tightening» was completed. Us Central Bank has resumed the policy of «quantitative easing» (QE), which lasted for a number of years (2008-2014). It is possible that such a continuation will be formalized in the form of a regular, fourth, COP program, and the main purpose of such a «pigeon» policy will be determined by the depreciation of our dollar against other currencies. For many years, Washington has accused other countries of «currency manipulation», «currency dumping», «currency war». Now Washington itself is on the path of the currency war. And such military actions on the part of Washington will only accelerate the collapse of the world dollar system, which was born 75 years ago at the Bretton Woods conference.