Trump Not “Thrilled” With A “Very Strong Dollar,” Analyst Says Bitcoin Solves This “Triffin Dilemma”
- Fed called it wrong at every step of the way – Trump
- USD/CNY trading at 7.085
- The Triffin Dilemma of US, analyst Plan B says can be solved by Bitcoin
US President Donald Trump took to Twitter to voice his disappointment in the Fed, yet again as he said,
“They have called it wrong at every step of the way.”
Trump says by keeping the interest rate level high Fed is making it “difficult” for US companies like Caterpillar and Boeing to “compete on a level playing field” with other countries.
“With substantial Fed Cuts (there is no inflation) and no quantitative tightening, the dollar will make it possible for our companies to win against any competition.”
He further talked about the strong dollar that he is not happy about.
“As your President, one would think that I would be thrilled with our very strong dollar, I am not!” wrote Trump.
As your President, one would think that I would be thrilled with our very strong dollar. I am not! The Fed’s high interest rate level, in comparison to other countries, is keeping the dollar high, making it more difficult for our great manufacturers like Caterpillar, Boeing,…..
— Donald J. Trump (@realDonaldTrump) August 8, 2019
On August 5th, USD/CNY jumped above 7 points, the first time in a decade, only to climb to 7.13 level soon after.
CNY USD Forex Chart, Source: TradingView
After yuan plunged below the 7 point, the US officially labeled China a currency manipulator, accusing it of using yuan to gain “unfair competitive advantage” in trade.
“At some point, we have to take on China. They've been taking us to the cleaners for 25 years, this should've been done long before me as the president,” Trump told reporters.
The currency devaluation had the US market seeing its worst day of the year but Trump is not worried about the slump as he said,
“I think the market reaction is to be expected, I might have expected it a little more,” he said.
“Ultimately, I think the market, it's going to go much higher than it ever would've gone, because China was like an anchor on us, China was killing us with unfair trade deals,” Trump added.
Bitcoin: A Great Hedge against QE and NIRP
On Trump's latest Tweet, popular analyst PlanB talks about how a strong USD without any QE or negative rates is good for the world but not so much for the US economy.
This Triffin Dilemma, he says can be solved by Bitcoin.
Et voila the Triffin Dilemma! A strong and sound USD, without money printing (QE) and without negative interest rates would be good for the world .. but it hurts US economy. #bitcoin solves the Triffin Dilemma, by separating State and Money. #btc a great hedge against QE and NIRP https://t.co/YjwyALXg54
— PlanB (@100trillionUSD) August 8, 2019
The US Dollar is a reserve currency and being one presents a country with a paradox. At one side, the country wants the ability to raise capital quickly and “interest-free” loan generated by selling currency to foreign governments, because of high demand for reserve-denominated bonds.
On the other hand, it wants to be able to use monetary policy to ensure the domestic economy is healthy, has no large trade deficits and industries are competitive in the world market.
But both the ideas, positive trade balances and cheap sources of capital can’t happen at the same time. This conflict of economic interests between domestic and international objectives is the Triffin Dilemma.
The analyst says, Bitcoin can solve it which is a ”great hedge” against quantitative easing and negative interest rate policy. While the trade war intensifies and currency threat looms, Bitcoin is outperforming the traditional markets and increasingly seen as a safe haven.
Bitcoin went from $10,000 to $12,300 on August 6th, surging 23 percent in less than a week, currently trading around $11,700.