By Zach Scheidt
This post Trump’s New Motto: “Make The Dollar Weak Again” appeared first on Daily Reckoning.
“I like [Janet Yellen]. I like her demeanor. I think she’s done a good job. I’d like to see rates stay low. She’s always been – you know, she’s historically been a low-interest-rate person, a believer.”1
Those are the words of your president when asked if he will re-appoint Janet Yellen as the Federal Reserve Chairwoman, or pursue other candidates.
Trump mentioned that there are a couple of other candidates on the docket.
But one thing is very clear — Trump will definitely appoint a Fed Chair who will favor low interest rates. And that means there is no relief in sight for savers desperate for higher interest payments from their retirement nest eggs…
Fed Loses Independence, And the Dollar Loses Value
The Federal Reserve was designed to be a politically independent body, not beholden to Republicans, Democrats, or any other political party.
That’s the story anyway.
The idea was that the Fed should operate independently of political pressure, allowing the board to make wise economic decisions for the good of the country — no matter which party is in control.
But that’s not how the real world works.
Instead, the Fed is heavily influenced by Washington politics. Janet Yellen, in particular, is under pressure to do exactly what the president wants. Otherwise, she could lose her job when her position comes up for re-appointment in February.
And Trump has made it exceedingly clear that he will appoint a Fed Chair that will favor low interest rates.
Heck, he said it himself in an interview with the Wall Street Journal last month. Here’s a rambling quote from Trump on the issue of the U.S. dollar:
TRUMP: “I do like low interest rates. I mean, you know, I’m not making that a big secret. I think low interest rates are good. I like a dollar that’s not too strong. I mean, I’ve seen strong dollars. And frankly, other than the fact that it sounds good, lots of bad things happen with a strong dollar.”
There you have it… Trump is in favor of low interest rates, and against a strong U.S. dollar.
It makes sense when you think about it…
If the U.S. dollar is strong, that means other international currencies are weak in comparison. If the euro, yen, and yuan are weak, it becomes harder for international consumers to buy American products.
So weakening the U.S. dollar is one of the best ways to make American products competitive in international markets.
And the best way to make the U.S. dollar weak is to lower interest rates.
Low interest rates give international savers less incentive to own dollars. After all, they can’t earn much of a return on those dollars if rates are exceptionally low.
So to make America competitive, Trump is pulling for low interest rates and a weak U.S. dollar.
Fantastic…
How to Protect Your Wealth Against a Falling Dollar
While a weak dollar may help to make U.S. companies more competitive, this is bad news for those of us who …read more
Source:: Daily Reckoning feed
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