China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many years!
— Donald J. Trump (@realDonaldTrump) July 3, 2019
Foreign exchange analysts are getting concerned.
“The obsession with currency manipulation — a month after the last Treasury report had different conclusions — means we should be prepared for anything,” said Bipan Rai, CIBC’s North American head of foreign-exchange strategy, according to Bloomberg. “The Treasury hasn’t intervened to weaken the dollar for decades, but we wouldn’t be surprised if that changes potentially under Trump.”
An attempt to “MATCH” foreign currency manipulation would require the US Treasury to flood foreign exchange markets with US dollars buy selling them against other currencies and thus pushing the value of the dollar down.
While this would be a plus for US exporters, it would result in upward price pressure on goods imported into the United States with particular pressure on US consumer goods.
Such a weak dollar policy desire is another example of Trump’s confused thinking about international trade, a type of thinking reflected in the centuries-old mercantilist thinking that has been tossed on the ash heap by almost all economists, except apparently Trump’s trade advisor Peter Navarro.
Hug your gold coins tonight.