A Strong US dollar

  People all around the world do know better that Americans get used to strong US dollar with higher purchasing power. In 20 trillion US dollar debt, there has more than 70% in the hand of Americans. A strong US dollar may hurt US corporations, such as agriculture, information technology, airplane and car industries. It doesn't help US export much but bring more unfairly competition to America corporations. A strong US dollar may bring higher pruchasing power but leave more US corporations hard to compete with other global players. It bring more harm to US companies if the US dollar appreciates too much. Mr. Trump should know it better that the old day with lots of manufacturing jobs may come with a lot of unnecessary costs if the US dollar appreciates a lot. A weaker US dollar may help US corporations gain market shares. Of course, too weak US dollar may let other nations take advantage of weaker US dollar, but it is a necessary sin for the globalization of US dollar. US dollar should plays its role to be the most important international currency. A too stong US dollar is not a good idea for a heavily debt United States. The United States may want to build a self-sustained ecosystem. High technology US corporations need foreign markets to make a living. For Mr. Trump, he should know the thing better that the United States should choose what to give and what to take. A balance between a stronger US dollar and the survival US corporations needs to be compromised. People all around the world want the US dollar to be the most important international currency and we do want a prosper United States.  A weaker US dollar may help the world trading and let every nation uses the US dolllar as the tool for clearing. Mr Trump could have to rebalance the role of US dollar and US international corporations. Mr. Trump should keep in mind that the United States needs to let everyone own some US dollars to make trading with each other. A weaker US dollar may help the global trade and help US corporations to gain more market shares in the same industries. A too stong US dollar may harm the competitiveness of US corporations. To dominate the role of world currency, US dollar should be carefully taken care by the Trump administration.

A too high yield rate of US Treasuries

  We all know that the mortgage rate and the loan rate both depend on the yield rate of US 10-yr Treasuries. A much higher yield of US Treasuries may harm American people. It makes people to have higher mortgage to pay and make people have higher burden when they need money to do something. It also hurts the business people when they want to make loans from the bank. Mr. Trump should know that even a well-function fiscal policy needs a lower borrowing cost which depends on a lower yield of Treasuries. A lower burden to develop some business is the basic Mr. Trump should know better. A too high yield rate of US Treasuries bring even higher cost for every business in the United States. It is not a good idea to have such a higher burden for ordinary American people to develop their own business or make a loan from the banking system. People should try hard to let US Treasury yields go down to have a peaceful mind for whole American people.

A self-sustained ecosystem with manufacturing jobs, but.....

  It is an ideal situation that every advanced nation wants but can't have. Advanced nation is an open economy whose currency may be use for global trade clearing. The US dollar is one of them. Trump administration should know that more manufacturing jobs created in the United States should avoid two things, one is the environmental problem and the other is the not-so-good spillover effect. Mr. Trump knows that Red China does get a more than hundred billion US dollars from the trading each year between the United States and mainland China. But Mr. Trump should take care the US domestic issue better than the Red China-US trade issue hereafter. An emerging new ecosystem of US manufacturing may help people of United States have a decent life.  But it needs a careful crafted plan and implemetation. A well functioning financial market of United States would do the rest. A free society has the ability to find the comprimise among all those issues when the Trump administraiton makes the thing happen on the manufactrung jobs creation in the United States. How to make the ecosystem self-sustained is not an easy job. To make people have a full time job in the long run is the core issue Mr. Trump faces. 

The case of RMB internationalization, the meaning behind to Mr. Trump....

   Lately, the international process of RMB doesn't go well due to domestic higher debt. Mainland China could not let local sovereign-owned corporations go bankrupt, therefore the Chinese authority could not stop more RMB issuing to save the financial system. On the other hand, mainland China does worry about a spiral-falling of RMB/US exchange rate. It makes the Beijing central bank uses lots of US dollars to defend the RMB/US exchange rate. Everyone should know the conflict from above statements. The Chinese authority is forced to issue more RMB in the local financial market to help the liquidity of financial system. But the central bank of Red China is forced to use out their precious US dollars foreign exchange reserve to reduce the free-falling of RMB/US exchange rate. The reason is due to the dream of the RMB internationalization. There are two conflict philosophies inside Red China, one is to help the liquidity of local financial system and the other is to help the stability of RMB/US currency rate for the internationalization of RMB. It just could not make both happen. Either the mainland China authority gives up the dream that everyone in the world could have some RMB in their wallet, or the Red China authority has to let sovereign-owned enterprises go bankrupt as those debts could not be paid by more RMB issuing.

A reasonable expectation with proper action

  I do hope Mr. Trump could know the conflict better amid new fiscal policy of United States. A costly fiscal policy may bring side effect to the US economy if the policy could not deal with bad spillover effect or a self-sustained but broken ecosystem. It may bring the likely conflict Red China faces today. A strong US dollar may detract the competitiveness of US corporations even it brings higher purchasing power to the people in the US. A strong US dollar may due to a higher yield rate of US Treasuries which makes people believe the US dollar asset may bring better return to their investments. A vicious circle may be formed on some sense which makes people in the United States even hard to survive in the world. 

Market signaling

  To be honest, Mr. Trump should know the financial market better. The financial market tells the whole world that the United States should not implement fiscal policy as Mr. Trump told before. It is the reason why the market let the Treasuries yield go that high to prevent the new authority doing the stupid thing. Mr. Market tries hard to tell Mr. Trump, "Hey! Man! You should stop doing those silly thing. Don't waste people's money on those lousy fiscal programs. Use the money well just as our fouding father does. Help the people in the United States have a proeper and decent life. Use your brain well on some programs before those ones take place. Evaluate every pro and con before it gets done." People really hope Trump's Team should know the fact better that those programs will not last long if those ones do not have long-term perspectives. People who have been long term unemployed do need a decent life. Those jobs should be a full time and long-term. If the US government doesn't plan well for those fiscal expansion plans, we will see a waste of money instead of a happy ending of those projects. Market does tell Mr. Trump what's happening this time. Mr. Trump should be humble to listen to the voice of market. When the yield goes up, the funding cost of those plans goes up as well. Mr. Market just tells Trump's team the expectation of whole participants.


創作者 Vegetable 的頭像


Vegetable 發表在 痞客邦 留言(0) 人氣()