The world’s leading foreign exchange benchmark is going to take a beating from the Trump administration’s tax plan.
But one thing is for sure: the world’s most valuable asset isn’t going anywhere anytime soon.
In the latest issue of the New York Times Magazine, author and hedge fund manager Jonathan Rauch argues that the U.S. will be able to withstand a global economic slowdown for decades to come, despite the economic meltdown and political uncertainty that has gripped the country since the election.
The article, entitled, “The Trump Era Is Not Over,” argues that while global stocks and bonds will likely lose value over time, the U,S.
stock market will rebound.
It notes that the Trump economic policies have made the U more competitive in the global economy, which is the core purpose of the global financial system.
It also notes that foreign investments will still be more valuable than domestically made investments, despite Trump’s crackdown on immigration and trade.
“The U.s. economy is the engine of growth in the world and has always been,” Rauach writes.
“If you think that Trump’s trade wars are going to hurt U. S. growth, think again.”
“The global economy is not in the doldrums and it won’t for the foreseeable future,” he continues.
“The economic fundamentals of the world economy will remain strong, and global stock markets will remain more valuable.
But the Us economy is going through a slow-motion crash.”
He goes on to note that the world has experienced an unprecedented level of uncertainty in the last four years, but there are still many reasons for optimism.
“In the coming years, many of the uncertainties will fade as the global recovery progresses.
For example, China’s economic growth will pick up and the U S. dollar will strengthen,” he writes.
As of last week, the Dow Jones Industrial Average had reached a record high of 25,564, which represented a 14.4% gain over the previous week.
That’s the largest gain in more than 50 years, according to the New Dow Jones Index, which measures the average price of the S&P 500 index of stocks and commodities.
The Nasdaq Composite is up about 9% over the past week, which Raucher argues is a sign that the global market is poised for a rally.
However, the Trump era will likely not be the last.
He cites the fact that the Fed, the Federal Reserve, and the Treasury have all increased the amount of debt they are printing to buy more dollars.
“When you add all these new money printing operations to the Federal Government’s ongoing efforts to print more dollars and the Fed’s efforts to raise interest rates, you’ll see that the economy will continue to grow,” Rucch writes.
The Trump administration has made it clear that it wants to get out of the U-turning world economy.
He has repeatedly said he will not be raising interest rates and the central bank has made repeated promises to reduce interest rates.
Rauch says the Trump team will try to maintain the status quo as long as it has the ability to keep inflation low, which means keeping interest rates low for the short-term.
“As long as inflation is low, then the Fed is going be able in a few years to keep interest rates near zero and the Federal government will be in a position to avoid having to raise them,” he explains.
“If the Fed can’t raise rates quickly enough, then Trump will keep the status as president, which will put the Fed on the back burner and the global economic system will continue as normal.”
He concludes: “The global markets are now well in place for a strong return to stability.
In the long term, the world will be much more resilient.””
America’s economy has been in a great slump, but this recession has been largely due to the economic policies of President Trump,” Raulch writes in his article.”
We have the potential to recover, and we do.
The question is whether the Trump regime is prepared to act in the interest of the American people and in the interests of the long-term stability of the economy.
If we don’t, the global stock market may not recover for decades.”
Follow Michael A. Grunwald on Twitter @MichaelAGrunwald