I want to start out by saying that I am not an expert. I just listen to way too many podcasts. With all the information that I've taken in, I'm hopeful that the way I am connecting the dots may resonate with a few people. Perhaps generate some thoughtful conversation, and confirm or deny whatever thesis comes out of this.

I will start with the fact that the Dollar ($) is the currency of international markets, and what that means for Americans and the world. The theory that I am going with is the one that states that the country whose currency is used for international trade will have to provide enough liquidity to the market to satisfy the demands of trade. Therefore, that country will need to debase their own production in order to maintain an outward flow of currency through trade deficits.

Then comes BRICS; the conglomerate of nations that have joined continues to expand. Their efforts to create a currency backed by Gold and Commodities threaten the dollar as the global currency.

Enter President Trump. A couple of the primary goals of President Trump are strengthening the dollar (whatever that means), tariffs, and trade. Trump has long expressed his dissatisfaction with trade deficits, and has said he would use tariffs to correct those imbalances. Finally, over the Thanksgiving weekend, Trump stated that he would impose a 50% tariff on any country that used a currency other than the dollar for trade. Maybe that's what we meant by a strong dollar?

So the problem as I see it is as follows: increasing our exports will bring home more of those dollars that we send abroad. My understanding is that this would cause inflationary pressures at home, and reduce the global liquidity needed to sustain trade. Tariffs would also exacerbate that effect. Turning on the oil spigots and getting back to being a top oil exporter will surely bring prices down in energy markets, so that may be one example of a deflationary pressure that brings some balance.

In summary, I think there is a real problem that arises from the dollar being the global currency and that conflicts with Trump's desire to restore our manufacturing base. I would rather see him take on the Central Banks.

Bitcoin fixes this.