This is the unintended effect of Donald Trump's "Make America great again". His policies will lead to the collapse of financial and real estate assets. Emerging countries will be in difficulty.
Milan (AsiaNews) – Most of the world's economic commentators are giving their public a deeply flawed view of the effects of the current "trade wars", sparked too by trade sanctions against Russia and Iran, and last but not least by Trump's tariff policies towards China and Europe (actually against Germany’s car industry).
Most commentators, I am convinced, are in perfect good faith, but they are wrong. Mots are, in fact, journalists who have never studied economics (political economy, not business economics - management - which is quite another thing – nor finance, which is another thing altogether). Few really understand what is going on.
The net effect of Trump's economic policies is not to rectify the trade imbalances between the world’s different economic regions. The US foreign trade deficit is currently at its highest in ten years and it is more than obvious that the US economy is in a period of great expansion, with high growth and a sharp reduction in unemployment. With such premises, how could things be different!
Those who praise Trump for such successes, however, make a big mistake. This apollonian phase will be followed by a Dionysian and destructive one, in the most classic of the most highly predictable Hegelian scheme: thesis, antithesis, synthesis. Quantitative Easing (QE) is coming to an end for no other reason that easy money cannot last indefinitely. This is where the so-called sovereigntists are wrong, like some Italian economists – who are in fact Keynesian and leftist without realising it, with their stress on statism in the economy – since deficits through public spending must be paid sooner or later.
Let me recommend an article by Brandon Smith in Alt-Market.com that I rely on for what comes below, because it clears away a lot of purposefully created confusion.
The end of QE, worldwide, involves primarily the collapse of financial assets and so-called capital assets, stocks and bonds but also, although probably to a lesser degree, real estate.
Raw materials should benefit from this, but the fall in industrial output caused by the end of the never-ending QE, makes one to think that perhaps some raw materials, such as non-ferrous metals, will not fare well. Only safe-haven assets, such as precious metals, will see high demand and price rises. Above all, however, the combined effects of trade wars and various sanctions will result in difficulties for emerging countries who will be pushed to dump the dollar.
The consequence will be the rise of alternative payment systems in world trade. It will be the end of the dollar as the world’s reserve currency. This will mark the end of a system that has ruled in the last decades, indeed the last 70 years, from Bretton Woods up to now.
Such is the paradox: Trump, who wants to make America great again, will end up sinking the dollar-based financial system. I do not know if Trump is aware of this. Undoubtedly, the Fed is, because it has people who really understand the economy. But they are all Keynesians and therefore their ultimate goal is a single world currency, the Special Drawing Rights, SDRs. This is what Keynes, a progressive, “secular” and libertine intellectual was hoping for.
A single world currency will result in a form of global "governance". We must prepare ourselves for this and such a world government will be "secular", progressive, libertine, without national borders, tolerant of deviations but totally intolerant towards any true opposition.