I’m old enough to remember when Republicans use to complain about Obama devaluing the dollar.  Now the GOP is complaining the dollar is too strong…

“China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day – taking away our big competitive edge. As usual, not a level playing field…” @RealDonaldTrump

President Trump is blaming the strengthing of the dollar and the dropping of foreign currencies on currency manipulation.  He is right, but to find the currency manipulator he only has to look in the mirror…

“Fermenting all this uncertainty certainly goes against the goals of the Trump administration,” said Eswar Prasad, a trade professor at Cornell University. “It creates more uncertainty in the global trading environment, and all that uncertainty ends up…putting more upward pressure on the dollar.”

“It is difficult to successfully weaken the dollar through jawboning,” said Brad Setser, a senior fellow at the Council on Foreign Relations. “The administration is between a fiscal policy that supports a strong dollar and trade action that is pushing China to allow its currency to weaken.” https://on.wsj.com/2A1GT3U

Who could have predicted this?  Well, actually, everyone did…

Trump’s desire make manufacturing in the US great again, would also impact negatively on those countries which manufacture and trade the most with the US

Protectionism would probably increase the value of the Dollar, pressurizing those countries with a higher proportion of Dollar denominated debt, such as SGD, CLP, TRY, HUF. http://bit.ly/2NBu4iR

This is basic economics.  A trade war with China hurts their economy.  Hurting their economy leads to the devaluing of the yuan not through administrative action but because of market forces.  The trade war will have a negative impact on the US economy but it is not big enough to have a significant impact on the positive growth we have been experiencing.  This means the US economy is growing while China’s economy is slowing.  Global investors are going to flock to the US while fleeing China meaning the Dollar strengthens while the yuan depreciates.  A stronger dollar makes all Americans wealthier and is far more valuable than the stupid trade deficit that Trump seems to care so much about.  We should be cheering this news, not criticizing it.

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