A large percentage of the friction we have with China is due to American concerns. If we drop those, because worrying about them now appears to be counter-productive, a great deal of the friction disappears. How exactly is (Chinese) Tik-Tok so much more toxic than (American) Twitter?
The broader point is that we have conflictual relations with damn near half the planet between China and India, and the US has been steering us into those conflicts. Ironic that you would complain about the lack of brass from our PM, Trudeau is a twat yet hasnāt avoided those conficlts. No matter who the PM is, if the US doesnāt have our back (and is in fact stabbing it), we really cannot be picking fights with everyone.
I dont think that enters Trumps mind. He doesnāt give a monkeys or probably doesnāt understand. Iām just trying to get my head around basic economics and asset prices etc.
Inflation is good to reduce debt, as is high GDP and low interest rates.
So I think Iām right (more than happy to be corrected) that the US would ideally like a decent rste of inflation and low interest rates for the short term to refinance their short term debt. Thereafter, they would work to drop inflation. Low interst rates and low inflation would start to push asset prices higher.
@Arminius has quoted that the market has some nerves about Trumps plans and how it relates to the above cycle.
What, you thought he would actually live up to his campaign promises?
Already hearing stories of voter remorse. Ya know what? Fuck right off! Itās not like nobody told you. Shit, he told you himself, and you still pulled that lever.
US Central Bank is currently independent so doesnāt act under Trumps orders. If Inflationary pressures are high, they are likely to keep rates high, or even start raising again to try to squash that.
Trumps campaign indicated wide use of tariffs (expected to push prices of imported goods up) and unfunded tax cuts (i.e paid by more heavy borrowing) that would also be likely to be inflationary given the underlying strength of the economy.
The plan against inflation was partly through lower energy prices by expanding domestic production but there is some thought this may be more difficult than first thought as costs to bring new fields online may be higher than the existing ones. Energy companies are also currently going through a phase of reducing investment and returning that cash to shareholders instead, with the shareholders not keen on giving that cash up.
If Trump is seen to interfere with CB independence, investors in US debt may look for a higher premium to convince them to buy it.
Tariff related increases in price are not technically inflationary because it is more of a one time hike. Because it lacks the feedback loop element of supply shocks or increased monetary supply interest rates hikes are unlikely to be used as a strategy to address it.
Thatās fair - prices are likely to go up successively with additional rounds of tariffs, but this is still a series of one time price hikes with a mechanism that doesnt make them a good target for interest rate hikes.
It is a cost of living increase that is entirely self inflicted that we have almost zero ability to address. The thought of ābuilding it in Americaā as a viable response is utterly fanciful for a variety of reason, not least because even the most simple low risk manufacturing factory takes the best part of half a decade to get up and operational
The Federal Reserve is the CB. Debt is largely (totally?) refinanced by the Treasury Dept issuing bonds and other similar instruments. The head of Treasury is one of the key members of the presidentās cabinet and so is a role you can probably equate to the UK chancellor
