Hey, how's it going everyone? I hope things are good for you. I want to share some thoughts with you all. I was actually trying to understand about what is going on with the economy of the world. And more importantly, I was thinking how dumb the American administration is as they are going about putting on tariffs on every country and making the financial markets more unstable than ever. For a lot of time. I personally believed that the American president personally benefits from all this instability. Now that opinion comes from my bias of hedge fund related shows such as ‘Billions’. But since then I have watched and read the opinions of many economists and my thoughts have been changing.
I have read in many places that the American economy will benefit from a weaker dollar. This opinion has been floating around for many months now. And it comes from the narrative of American manufacturing jobs being undercut by Asian markets and American exports being less competitive because of the higher price of the dollar. But at the same time during this dollar valuation, the average American found it easier to buy different things from different countries and that is how the consumer economy really took off. But if any one of you actually took a look at the numbers then you will see that this consumer spending is mostly done by the rich Americans. Whereas the working class are struggling as usual and struggling more because their manufacturing jobs are now being handed to people in Vietnam or Cambodia or other Asian undercutting nations. So this time when the American administration is putting out tariffs, it is putting out outrageously huge tariffs. What it did is essentially to destabilize the market. Which means lower investor confidence and lower investor confidence often means that people are not betting on the dollar. They are betting on other things such as gold or Euro or the Chinese currency. And if this shift goes on for a while, eventually the dollar will come down in price. And American exports will become competitive again.
So this is completely different from what I used to think. But I still think that my previous thought is true to some extent, but this new one is also coexisting with the old one. That is the currency devaluation which the USA is on about is primarily to drive back jobs into America and investments towards actual infrastructure and manufacturing instead of speculative markets such as tech and finance.