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Okay, so there will be rate cut soon and the USD will become even weaker, right? Then with those tariffs, which are consumption tax on imports, will become even
by mrtksn 1y ago
Okay, so there will be rate cut soon and the USD will become even weaker, right? Then with those tariffs, which are consumption tax on imports, will become even more pronounced as US added value part will be smaller percentage of the overall final price tag. So everything will be quite expensive if people still have money to pay, if not the margins and as a result the profits of businesses will go down.
Is this an attempt to reduce the infamous American consumerism?
Also maybe force companies to build more in US but wouldn't that require strong immigration as the unemployment is actually still quite low and those who lost jobs wouldn't be plug-n-play employees for manufacturing jobs that didn't exist before.
- NicoJuicy 1y agoTrump is a real estate guy. His real estate is worth more with high inflation and low interest rates ( like in 1970) See: Volcker shock.
- toomanyrichies 1y ago> Trump is a real estate guy. I mean, these days it seems like he's more of a meme coin guy. [1] "New crypto token boosts Trump family's wealth by $5 billion" 1. https://www.cbsnews.com/news/trump-wlfi-world-liberty-financial-crypto-wealth/ https://www.cbsnews.com/news/trump-wlfi-world-liberty-financ...
- NicoJuicy 1y agoYeah, but he still has the perspective of 50 years ago. He still thinks banks and a strong dollar works against him. While everyone else got more rich, he went bankrupt.
- zahlman 1y ago> the USD will become even weaker You imply that it is already weak, but this doesn't seem to bear out considering current vs historical exchange rates.
- MangoToupe 1y ago> current vs historical exchange rates. This depends entirely on the time frame you're looking at. The dollar is certainly weaker now than it was at the beginning of the year.
- mrtksn 1y agoIt's weak compared to the last 3 years but sure, USD has seen weaker times. https://www.marketwatch.com/investing/index/dxy/download-data?mod=mw_quote_tab https://www.marketwatch.com/investing/index/dxy/download-dat...
- ToValueFunfetti 1y agoJust eyeballing the all-time chart there, it looks like ~30 of the last 39 years had similar or lower levels. So the "even weaker" = "an increase in existing weakening" reading is supported while "even weaker" = "an increase in existing weakness" is not. Presumably the former was the intention.
- kaycebasques 1y agoRight, based off this phrasing I was expecting USD to be at 5-year lows compared to JPY, CHF, EUR, RMB, BRL, etc. but that does not seem to be the case
- lizardking 1y agoThe DXY is down 10% YTD https://www.tradingview.com/symbols/TVC-DXY/?utm_source=google_ads&utm_medium=cpc&utm_campaign=PPCNONBRAND_GOOGLE_GLOBAL_EN_SALES_GENERIC&utm_id=20367781676&utm_term=dollar_index&utm_content=666074055065&matchtype=e&gad_source=1&gad_campaignid=20367781676&gbraid=0AAAAABUK9i2ifyVI3D74Nw9wJ2jpYL1wi&gclid=CjwKCAjwlOrFBhBaEiwAw4bYDUwHlwtfl4W9BypQDm2MG68D2hE4ad4_8ZaTyxx90r4jq-og_qzFHRoCS2kQAvD_BwE&timeframe=YTD https://www.tradingview.com/symbols/TVC-DXY/?utm_source=goog...
- IAmGraydon 1y agoYou have the chart in front of you, yet you cherry pick to confirm your bias. Look at the entire chart. The DXY is at a higher level than it has been for most of it's history (going back the the 1960s). Yes, it's down 10% this year. Guess what? It was up 22% in 2022, putting it at an extremely high level. There is nothing unusual about the dollar's strength at the moment. That could change given that the current administration is hell bent on destroying faith in the US, but as of right now, there's not much of a reaction.
- mothballed 1y agoOverarching goal seems to be increasing the ratio of capital to labor. Labor is decreased by launching immigrants down the garbage shoot. Capital increase by tariffing foreign goods which hypothetically might spur domestic production investments. Labor being rare relative to capital should increase employment. But really, no guarantee the capital doesn't just flee to the other 95% of the world where they can import capital equipment needed to make stuff for much cheaper, create a cascade effect, and gut the USA even worse. Especially since we have absolutely no clue what the tariffs will be 1/5/10 years from now.
- IAmGraydon 1y agoThis makes no sense. Capital increase? The tariffs just generate government revenue. It's not like the money supply is expanding. It's being paid by US citizens and businesses. The money supply is dropping, not increasing.
- mothballed 1y agoCapital used for domestic production. The theory with tariffs is that companies will move capital investments stateside rather than exporting those investments and then importing the final product. The theory anyways.
- IAmGraydon 1y agoThat will never happen because (1) the Trump Administration has created nothing but uncertainty by making illegal changes to tariff policy via executive order and changing their mind literally several times per week and (2) they have also made imports of raw materials prohibitively expensive, meaning that it's still cheaper to produce overseas and pay the tariff.
- latchkey 1y ago> It's not like the money supply is expanding. Correct me if I'm wrong, but this chart is pretty much only up... https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
- triceratops 1y ago> Is this an attempt to reduce the infamous American consumerism? Ngl I didn't expect degrowth emissions reductions from this administration. But I can dig it.
- mindslight 1y agoYou should have. The last time around, the price of oil literally went negative. And these gremlins had four years to prepare all the ways they were going to break things this time around.
- pluc 1y agoI think your assumption that there's even a plan is pretty optimistic
- treetalker 1y agoPerhaps a concept of a plan?
- matwood 1y agoJPow has to be annoyed. He was about to stick the perfect soft landing after killing inflation, then Trump showed up and through a tariff grenade into the economy. And, ironically, the fed was already on track to cut rates until the tariff nonsense. Now when rates are cut it's going to be because we're heading into a self inflicted recession instead of the soft landing we were headed towards before. The growing worry now is stagflation again with rising prices and slowing economy. I guess one bright spot is that we won't really know how bad it gets since it seems anyone who reports real numbers is getting fired. Fun times!
- ddorian43 1y agoWhat perfect landing? For whom? The house market prices have to be destroyed.
- Workaccount2 1y agoNeither the fed or congress can do any quick fix for housing prices (and the fed can't really do anything). There are only two ways (yes, it's a real life binary system) to lower housing prices. 1.) Build more housing 2.) Make an area less desirable to live in. That's it. There is nothing else besides those two.
- mothballed 1y agoI fixed housing prices by moving to a place that was completely deregulated then building a shack for $60k. Deregulate and you can make things very cheap even with barely building anything, because the replacement cost to build another livable house is far lower, so now current home owners are bidding against cheap competition.
- Workaccount2 1y agoThe actual problem is that voters in municipalities are overwhelmingly homeowners, and their home is overwhelmingly the golden-goose of their wealth, so they do everything possible to protect that, including voting for town leaders who will weaponize regulations to make new builds near impossible.
- Workaccount2 1y agoTrump is a populist president elected on the back of disparaged unemployment-belt blue collar workers. That's why he hates fentanyl (these places have insane opiate use rates), that why he loves coal (symbolic of the "great days"), that's why he hates immigrants (undercutting wages), why he hates china (that's were the factories went), and that is why he loves tariffs (American manufacturing protectionism). Watch a video showcasing what West Virgina is like today, listen to what the people who live there say, and you can totally understand what Trump is trying to do, and why these people treat him like a messiah. I'm not saying Trump is a messiah, or a good leader, or that the people in west virgina (or categorically adjacent places) are level headed. But simply that his plan is coherent if you put yourself in the shoes of the people who are clinging to the past and were left out of the future.
- deleted 1y ago[deleted]
- myrmidon 1y agoCompletely agree. And anti-immigration policies are suprisingly popular even in non-blue collar circles, because you can sell it as "fighting foreign cultural influence", and a lot of people (globally) are quite convinced that their culture/values are superior (this is true across the political spectrum, too, however lots of groups will only admit to this indirectly).
- throwawayqqq11 1y agoCoherent like tarifs on everything, including resources, without legislation to bolster local manufactoring. Or how do his tax cuts fit in the big picture of the good'ol days? Or the dismantlement of public infrastructure? IMO, those 3 things are the bigges impacts he made and they are all negative. Sorry, but this justification of trumps actions sounds delusional. The only thing that interests him is spineless loyalty to serve his will and looking like the toughest guy at the top of his incompetent boot lickers.
- Workaccount2 1y agoIt's an explanation, not a justification.
- hristov 1y agoNo this is an attempt to shift the burden of taxation to the middle class and poor. It is a consumption tax pure and simple. If you tax everything like sneakers and toothpaste the tax burden shifts to the middle class and poor because a billionaire can make income 100 times larger than a middle class person but he does not use a hundred times as much toothpaste and does not buy 100 times more sneakers. This of course will depress consumption which will seriously damage the economy but the current administration just does not have the brains to consider these effects. Furthermore, the immigrant chasing is seriously reducing jobs openings. This seems quite the opposite from the intended effect. But it is done so chaotically and with such cruelty that it is flat out destroying businesses rather than allowing them to hire citizens to replace illegal immigrants.
- insane_dreamer 1y agoMost people don’t want the jobs done by immigrants—not at the pay levels that the immigrants are willing to take. This idea that getting rid of the “illegals” frees up jobs for locals is complete rubbish. If you really want to free up jobs for locals, get rid of the HB1 program.
- mindslight 1y agoRon Vara's book actually outlines a whole bizarro universe where devaluing USD constitutes a strength, from some idea that the best way to compete with China is by putting ourselves where China was 30 years ago. So yes, an outright goal of theirs is to weaken USD. I have no idea if they earnestly believe this nonsense, or if they are just getting paid by our adversaries to sell it to the public.
- h3lp 1y agoIt occurred to me that tariffs are really a backdoor way of introducing consumption tax (aka sales tax, VAT, etc). It has been a conservative policy goal for many years, as the conservatives believe that income tax penalizes entrepreneurship, but the politics make it virtually impossible to switch to because consumption tax is regressive, and it is a huge change. The tariffs debate and the general political atmosphere created a misdirection: voila, we have both income and consumption tax! The next development will be the politicians discovering to their horror the high levels of taxation, and abolishing the income tax. Brilliant!
- Amezarak 1y agoConsumption taxes being “right wing” is very American. In Europe most countries have 20-25% VAT.
- nialse 1y agoHang on a minute, the tariffs mask the devaluation of the USD from actors within the economy?
- joemazerino 1y agoWeakening USD was and is still part of Trump's plan. Paying the deficit back with a weak dollar while raking in tariff revenue.
- rich_sasha 1y agoReceived wisdom of central banking is to worry more about inflation than the economy, so leave rates be. Or increase if inflation gets worse.
- thisisit 1y agoThis is an attempt to do repeat what countries like Turkey like tried. They often think cut interest rates -> increase demand -> better employment. But often they find that combination of worsening inflation and unemployment matched with cutting interest rates is a bad situation to be in. There is often no good way to come out of this. You end up in a cycle of : High unemployment -> cut rates -> employment improves but causes hyperinflation -> increase rates to cool markets -> high employment. Blunt tariffs is playing a large part. and once Jerome Powell leaves and replaced by a crony is when the real problem will start.