Why Trump will have to trash the dollar to create jobs

If Donald Trump really wants to Make America Great Again, he’s going to have to Make the Dollar Weak Again first.

So argued hedge fund manager Mathew Klody of MCN Capital Management at this week’s Grant’s investment conference in New York.
He made an intriguing case.

If Klody’s right, Trump may just be blowing smoke when he talks about tariffs and border-adjustment taxes.

And, most importantly, if Klody is right, we should also buy foreign currencies, especially those issued by emerging markets. Sooner or later, the president will need to drive down the dollar, and for those based in the U.S. that will drive up foreign currencies.

Market Watch — Opinion
Why Trump will have to trash the dollar to create jobs

Brett Arends, columnist

Dirk Ehnts — Goodhart on pegged exchange rates

One wishes that the creators of the euro would have read this text-book before the creation of the euro. The TARGET2 system has worked properly, but as mentioned by Goodhart “such financing of itself does nothing to correct the imbalance caused by a divergence between the pegged and the ‘equilibrium’ exchange rate”. The imbalance bothers not because it has to be financed – TARGET2 takes care of that – but because employment is low in those areas where the ‘equilibrium’ exchange rate is not correct.

econoblog 101
Goodhart on pegged exchange rates
Dirk Ehnts | Berlin School for Economics and Law

Dean Baker — Correction to Mankiw: Economists actually agree, just because you call something “free trade” doesn’t make it free trade

In principle we could get back to full employment with large government budget deficits, but that is not going to happen for political reasons. Aggressive use of work sharing leading to shorter workweeks can also move us toward full employment, but this is also not something we are likely to see any time soon.

This means that if we want to get back to full employment, we have to reduce our $500 billion (@ 3 percent of GDP) trade deficit. (This is the intro econ on which all economists agree. It can even be found in Mankiw’s textbook.) Reducing the trade deficit means taking steps to lower the value of the dollar against other currencies. These trade agreements would be the obvious place to have currency rules. If we don’t address the currency issue here, where exactly are we going to do it?

Real-World Economics Review
Correction to Mankiw: Economists actually agree, just because you call something “free trade” doesn’t make it free trade

Dean Baker