“The existing model of international economic relations is in crisis today.”
So said Vladimir Putin, the 67 year old still ruler of Russia, in an address where he spoke of trade war, currency wars, tech war, which can all potentially even lead to real war.
Stark statements in a time of general peace when guns have stopped sounding in much of the world except perhaps Yemen.
Some even think there’s a unique window to secure peace for a century, but racing in parallel there’s that old devil’s game of geopolitics with even the left now beating the drums of nationalism in America.
“Today I’m announcing that, as President, I would pursue an agenda of economic patriotism, using new and existing tools to defend and create quality American jobs and promote American industry,” said Elizabeth Warren, a presidential candidate for the Democratic party.
She says she would “more actively manage our currency value to promote exports and domestic manufacturing.” That being, she would pursue a policy of dollar devaluation.
A weak dollar would benefit bitcoin and other assets quite a lot because people will want to get rid of fiat as it falls in value.
Inflation would also rise as America mostly imports. All those imports would become more expensive because the dollar would be buying less.
The devaluation moreover would probably be done by people and the government, federal and state level, taking on more and more debt. If debt grows too fast, the game of chairs collapses.
On the other hand, it isn’t clear whether America has much choice as their government debt is now 105% of the GDP. That’s at the levels of third world countries. Meaning Trump is apparently thinking of cutting NASA’s budget:
Obviously these tweets are not really from Trump himself. The above, for example, is a masterclass in PR. Clearly Trump knows the Moon is not part of Mars, but the haha finger pointing means everyone hears what whoever is this PR guy wrote.
And although this is written in a sort of “NASA should be thinking bigger,” he is actually arguing they’re not spending the money very well… so presumably no more money for them.
Again they’re pretending this Tweet is from Trump because obviously he is too stupid to know it should be products. He didn’t go to Wharton or anything and finished with a first class degree.
That facade is now down as he was somehow tweeting while meeting the queen, which is obviously nonsense. Meaning all of this, and all the stuff he says as well, is probably his advisors who seem very happy to announce they have managed to successfully bully Mexico.
The tariffs are now out, but the circa 5% fall in the value of the Mexican Peso is still there. The real loser from a dollar devaluation, however, may be Europe:
After down and down for some time, the euro is slightly up because traders are betting on a Fed rate cut while ECB decided on no cut.
That was the decision, but the comments that followed later made the picture a bit more complex:
A race to the bottom may well be on the cards as countries try to maintain the stability of their money and try to counteract cheating.
Europe, however, is not quite playing so far, mired in fending off nationalism while moving at snail speed towards an actual United Europe.
Some suggest it is Putin stirring up these nationalists, but Russia would benefit more from a strong Europe as on its own Russia is very weak.
Steve Bannon on the other hand has been going around the continent advising nationalists in Italy, France and UK.
America, arguably, would rather have a weak Europe which it can order around. Trump, for example, has suggested tariffs on Germany. If there is a European response, rather than just a German response, that would presumably change Trump’s calculations.
Meaning perhaps there has never been a greater opportunity for peace lovers in our lifetime to secure general global peace by strengthening Europe which then can lead in tech, culturally, economically, and politically.
In an alliance with America, of course, but as a sovereign able to stand up to anyone if necessary.
Otherwise, if Trump’s nationalist and/or neocon advisors, like John Bolton, think mercantilism is a good idea and so devalue their money and drive everyone else towards devaluing their money, then well… bitcoin may well go up there and find out if the moon is indeed part of Mars or otherwise.
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