Thursday, November 17, 2016

Trump's Election May Strain The Euro To The Breaking Point


Submitted by Thorstein Polleit via The Mises Institute,

Many would not have discounted the notion that financial markets would take kindly to the announcement that Donald J. Trump won the election. But when the news broke on 9 November that he will indeed be the 45th president of the United States of America, prices on international stock exchanges climbed, the US dollar exchange rate soared, and interest rates went up.

All this suggests that international financial markets’ take on Trump’s presidency is much more cheerful than the gloomy outlook many would have predicted. Mr. Trump has made no bones about his thoughts on US foreign and economic policy, but it remains to be seen if and how he will put these thoughts into action. 

It seems Mr. Trump has no truck with the ranks of the globalists who, in their efforts to establish a new world order, have entangled the US in one ill-fated overseas adventure after another. Perhaps US foreign policy will change on his watch; it may well become far less aggressive. If Mr. Trump strikes a conciliatory tone in particular in his dealings with Russia, a more cooperative relationship could help deescalate conflicts in hotspots, say in the Middle and Far East.

In terms of economic policy, Mr. Trump’s top priority appears to be boosting economic growth and creating jobs at home. How would his administration achieve this? Basically there are two options.

    First: The new president may focus on the supply side, cutting taxes for firms and income earners, while curbing government spending.


    Second: He may zero in on the demand side, encouraging more credit-financed spending on infrastructure and the like, while pursuing an overly easy monetary policy and taking up a protectionist stance on trade.

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