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It is hard to believe but it’s been three years since we first outlined what would happen if candidate Donald Trump’s “America First” policy was implemented. Specifically how the Federal Reserve would essentially become disconnected and functionally obsolescent for a few years. As a result of the evidence visible, we are in a unique position to explain.
Staying in the big picture, a disconnected Fed was very predictable. In the past 35 years the Wall Street multinationals gained as cheap money flowed overseas to start global manufacturing operations; Main Street USA suffered. When you reverse this process by punishing the multinationals (tariffs), shifting the global supply chain, and changing the best location for investment dollars, Main Street USA benefits. President Trump August 7th tweets statement:
Notice - Countries - Part - Statement - Future
Notice the “we are competing against other countries” part of the statement. This is key to understanding what is in the future. The Wall Street ‘multinationals’, corporations making and selling goods, are invested in production within other countries.
One one hand, Wall Street loves cheap money (low fed rates). However, on the other hand Wall Street multinationals are invested in overseas manufacturing; and those corporations don’t want to see the retention efforts of China and the EU undermined with a lower dollar value (lower fed rate). So Wall Street is schizophrenic (check the stock market).
US - Tariffs - Wall - Street - Multinationals
U.S. tariffs hurt the Wall Street multinationals because they want to keep making cheap goods overseas and they have invested in this process. To retain the multinationals, the EU and China are devaluing their currency in an attempt to lower the price of goods they produce.
Lowered currency means their stuff costs less when exported to the U.S. market. They need the U.S. market for their products; AND they don’t want to move their supply chain, or manufacturing into the...
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