Oct. 1, 2019
Permission to republish original opeds and cartoons granted.
President Trump is right, the dollar is way too strong and it’s killing exports
President Donald
Trump is right. The dollar has never been stronger, and the weak manufacturing
reading from ISM is unsurprising. A strong dollar tends to coincide with drops
in U.S. exports per an analysis of U.S. Census Bureau and Federal Reserve data,
with the correlation long predating Trump’s tenure in office or any trade
standoff with China, including the tariffs currently being levied. The question
is what the Federal Reserve and the Treasury, in tandem, are able and willing
to do about it. The federal government is not powerless. It could wield the
Exchange Stabilization Fund and engage in so-called warehousing of foreign
currencies. And certainly, as President Trump and U.S. Trade Representative
Robert Lighthizer have done, engage in urgent trade talks with our trading
partners and, when necessary, deploy other countermeasures including tariffs
when they refuse to come to the table. For once, the American people have a
President who is not going to sit by idly while foreign governments engage in
economic predation. It’s about time. But if the goal is fair and reciprocal
trade, the currency issue must be addressed. Something’s got to give.
Video: Obama and Biden overthrew the gov't of Ukraine in 2014, now Dems want to do the same thing here
President Barack
Obama and Vice President Joe Biden engaged in a coup in Ukraine in 2014,
overthrowing the government of Viktor Yanukovych to get a trade deal between
Ukraine and the EU ratified. What followed the revolution and the trade deal
was a destructive civil war that tore Ukraine in half, poisoned U.S.-Russian
relations, caused more corruption, Ukraine participated in its own election
interference operations in 2016 in favor of Hillary Clinton and ultimately,
brought about the landslide election of comedian Volodymyr Zelensky on an
anti-corruption platform in 2019. And now House Democrats are threatening the
impeachment of President Donald Trump for simply asking the newly elected
President Zelensky about Ukraine’s potential role with the U.S. in the phony
Russiagate investigation by intelligence agencies and the Justice Department in
2016 that falsely accused Trump of being a Russian agent, and also raising
Biden’s role in the country including having the prosecutor general fired. They
engaged in a coup and caused a civil war in Ukraine, and now they want to do
the same thing here. Can it be stopped?
Newt Gingrich: Don't call it impeachment — Call it a legislative coup d’etat
“I want to talk
about the importance of words and the context they create. And I want to urge
everybody who's fair to never use the word ‘impeachment’ for the current
political process, because it has nothing to do with an impeachment. This is a
legislative coup d'etat. It is an effort by the hard left, the news media, and
the deep state to destroy the president chosen by the American people. This is
a project they've been involved in since election night 2016. So far, we have
had two years of a totally false Russian narrative, which even the editor of
The New York Times had to admit failed with the Mueller report because it
revealed there was no collusion. In those two years, we had FBI agents who were
leaking. We had all sorts of effort by people in the deep state to destroy the
president. We had The New York Times, The Washington Post, and the networks
doing everything they could to destroy Trump and they failed. Now they've come
back with a new effort based on a new supposed scandal — which will turn out to
be as phony as the Russian project was.”
President Trump is right, the dollar is way too strong and it’s killing exports
By Robert Romano
“As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!”
That was President Donald Trump’s reaction on Twitter after U.S. manufacturing had its worst showing in 10 years as the Institute for Supply Management (ISM) manufacturing index came in with its lowest reading since 2009 at 47.8. Readings below 50 signify a contraction.
In the meantime, the U.S. Dollar Index shows that, on a broad trade-weighted basis, it has never been stronger at over 130, despite two consecutive interest rate cuts to the federal funds rate by the Federal Reserve. The strong dollar makes U.S. exports more expensive and imports cheaper.
In his tweet, Trump makes an important distinction between the dollar index relative to a wider basket of currencies, as above, which includes the Euro Area, Canada, Japan, Mexico, China, United Kingdom, Taiwan, Korea, Singapore, Hong Kong, Malaysia, Brazil, Switzerland, Thailand, Philippines, Australia, Indonesia, India, Israel, Saudi Arabia, Russia, Sweden, Argentina, Venezuela, Chile and Colombia, and the more traditional, “major” currencies index of the dollar versus the Euro Area, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden, which appears to show relative weakness compared to prior decades.
As this author noted last month, a strong dollar on the broad index, not the major currencies index, tends to coincide with drops in U.S. exports per an analysis of U.S. Census Bureau and Federal Reserve data. What is telling is that this correlation long predates President Trump’s tenure in office or any trade standoff with China, including the tariffs currently being levied.
Therefore, with the dollar having never been stronger in modern history relative to the wider basket of currencies, the weak manufacturing reading from ISM is not at all surprising. It is what economists predict would happen based on past experience, including the Great Depression, as nations were coming off the interwar gold standard.
In the 1930s, the U.S. remained with the stronger dollar pegged to gold all the way until 1933 even as deflation reigned supreme — Great Britain had withdrawn from gold in 1931 — and the Hoover administration sat by idly as unemployment soared, reaching 11.2 percent by the end of 1930, up to 19.2 percent by the end of 1931, up to 25 percent in 1932 and peaked in March 1933 at 25.4 percent. It was not until after the U.S. departure from gold that the unemployment rate finally began coming down. A brief return to deflation again showed the very real danger of allowing the dollar to get too strong in 1938, when unemployment spiked again, before returning to full employment as the U.S. entered World War II.
Meaning, President Trump is right. The dollar, if allowed to remain too strong for too long by the Fed and, ultimately, the U.S. Treasury, can absolutely make any economic slowdown worse. Much worse. All of which makes the President’s commentary on this topic timely and refreshing.
Unlike his predecessors, Trump is a hands-on President, well-advised and fully aware of the devastating impacts that competitive devaluations have had on the U.S. economy and the American people if they are left unchecked.
In fact, U.S. dollar exchange rates to the Chinese yuan and to the euro and the Mexican peso — some of our largest trading partners — are at or are reaching highs. And throughout the 2000s, comparatively weak currencies overseas led directly to the shift in manufacturing production away from the U.S. as economic growth slowed, not topping 4 percent since 2000 and not topping 3 percent since 2005.
Now, some might look at those developments and simply ascribe them to free market movements and say the solution to a non-problem is to do nothing. But this would ignore, on the yuan, the fact that China does not adhere to floating exchange rates, instead it sets a comparatively weak fixed standard to the dollar.
It would also ignore that all these countries’ central banks are intervening heavily in foreign exchange markets. The biggest traders sometimes can be the central banks, which are government organs, making the competitive devaluations acts of economic war — a dagger pointed at the heart of the U.S. economy and American workers.
The question is what the Federal Reserve and the Treasury, in tandem, are able and willing to do about it. The federal government is not powerless. It could wield the Exchange Stabilization Fund and engage in so-called warehousing of foreign currencies.
In late July, CNBC reported the White House discussed the issue but ruled out — for now — any intervention. U.S. Treasury Secretary Steven Mnuchin told CNBC his preference for a strong dollar: “a stable dollar is very important. And over the long-term period of time — again, the long term — I do believe in a strong dollar.”
But those are not the same thing. The Fed’s dual statutory mandate is to maintain price stability and full employment. The dollar being too strong can run opposite to both. Just as the dollar being too weak can cause inflation, when it gets too strong it can have a deflationary impact on prices and even cause a recession. That’s not price stability, and clearly, it currently is not helping the U.S. economy remain competitive in the near-term.
Moreover, the case that the dollar’s relative strength since the late 1990s compared to prior decades (even as it was weakening from its unprecedented highs hit in 2002 has been helpful to the U.S. economy — following the dotcom bust, the financial crisis, Great Recession and non-recovery of the Obama years — is questionable.
Besides intervening in foreign exchange markets, President Trump and U.S. Trade Representative Robert Lighthizer are doing everything else in their powers including engaging in urgent talks with our trading partners and, when necessary, deploying other countermeasures including tariffs when they refuse to come to the table and deal fairly. But that has its limits, as the U.S. learned in the extreme case of the 1930s. Again, the Hoover administration ignored currency and focused singularly on trade tariffs, and look at what happened. The problem was not the tariffs, it was that the dollar was neglected.
Trump is different. For once, the American people have a President who is not going to sit by idly while foreign governments engage in economic predation, whether on trade or competitive currency devaluations. It’s about time. But at some point — it may not be immediately — if the goal is fair and reciprocal trade, the currency issue needs to be addressed. Something’s got to give.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.
Video: Obama and Biden overthrew the gov't of Ukraine in 2014, now Dems want to do the same thing here
To view online: https://www.youtube.com/watch?v=q00uV404dCs
ALG Editor’s Note: In the following featured oped from Foxnews.com, Newt Gingrich makes the case against the faux impeachment push by House Democrats:
Newt Gingrich: Don't call it impeachment — Call it a legislative coup d’etat
By Newt Gingrich
I want to talk about the importance of words and the context they create. And I want to urge everybody who's fair to never use the word "impeachment" for the current political process, because it has nothing to do with an impeachment.
This is a legislative coup d'etat. It is an effort by the hard left, the news media, and the deep state to destroy the president chosen by the American people. This is a project they've been involved in since election night 2016.
So far, we have had two years of a totally false Russian narrative, which even the editor of The New York Times had to admit failed with the Mueller report because it revealed there was no collusion. In those two years, we had FBI agents who were leaking. We had all sorts of effort by people in the deep state to destroy the president. We had The New York Times, The Washington Post, and the networks doing everything they could to destroy Trump and they failed.
Now they've come back with a new effort based on a new supposed scandal — which will turn out to be as phony as the Russian project was. But this fits the whole attitude of the left because they wake up every morning just certain Trump has done something terrible. They think he must be replaced. We can't wait till the next election, so they just try anything to get rid of him. This is, in constitutional terms, a coup d'etat. It is an effort by one branch of the government to destroy the incumbent president of the United States without any regard for the facts.
Let's look at the current example. One of the questions that must be answered is: When did the intelligence community change the rules for whistleblowers? Up until recently, in order to be a whistleblower, you had to have personal, firsthand knowledge of what you were blowing the whistle about. For some reason, this was changed. Now, was it changed to make it easier to smear Trump? Probably. But the truth is that we don't know who changed it. We don't know why it was changed, but what it produced was somebody who was not in the room, did not hear the phone call, had no personal knowledge, pulling together innuendo, gossip and rumor into a multi-page complaint — much of which is just plain, factually false.
But the minute there was a supposed whistleblower report, the Times, Post, network news channels and Democrats in the House were all horrified to such a degree that House Speaker Nancy Pelosi announced they were pursuing impeachment. Keep in mind, she did this before she met the whistleblower and before anybody had read the transcript of the phone conversation between the president of Ukraine and the president of the United States.
It turns out when you read the transcript, you have to ask yourself — at least I do as a historian — what's the big deal? We have all sorts of records of Franklin Delano Roosevelt talking with Winston Churchill. We have records of John F. Kennedy talking with heads of state. We have records of Ronald Reagan talking with Gorbachev. Presidents do this and there’s no quid pro quo. In fact, the brand new, reform-oriented, anticorruption former comedian-turned president of Ukraine was in a happy, positive conversational mood and was telling Trump that he actually modeled himself on Trump to help break up the old order.
It's a fascinating moment, but what comes out of it? You get the hysteria at the Times, Post, and "Meet the Press." You get the constant chanting of impeach, impeach, impeach — and yet, that's not what was happening. The fact is, it isn’t Trump who brought up Biden to attempt to blackmail the Ukrainians. It was Joe Biden, who in his own speech to the Council on Foreign Relations says he threatened to take $1 billion in loan guarantees unless they fired the prosecutor who was investigating his son’s company.
Now, maybe Biden was not aware that his son was getting $600,000 a year from a company in Ukraine. That strikes me as pretty implausible. I think if one of my daughters had a $600,000 a year job, I'd know it. But you know we've seen Joe have some problems remembering things, so maybe he just forgot that Hunter was involved.
But it's all weird. And it's not Donald Trump, and it's not Donald Trump's tweets. It is a video in which Biden himself says that he threatened them, told them they had six hours to cave and fire the prosecutor. And as he put it, "Son of a b----, he got fired." So, it's legitimate to ask, what was that all about?
And by the way, the prosecutor has said very clearly that he was investigating the company that Hunter Biden was involved in, and he was blocked because of that decision. So, then you get into a fight over whether this guy was corrupt or not corrupt? Part of the answer there is to investigate. Can you imagine the Democrats in the House having a hearing in which the Ukrainian prosecutor lays out the case against Hunter Biden? By any reasonable, normal standards, this is madness.
And it doesn’t stop there. Rep. Adam Schiff, D-Calif., the chairman of the Intelligence Committee — which is normally considered a serious committee charged with monitoring the intelligence community of the United States as a global power — opened a supposedly serious hearing by reading two paragraphs from Trump that Trump never said. They just straight-out lie. In fact, Schiff himself admitted he wrote them as an "interpretation" of how Trump thinks.
Now, I'm only citing all this because no person who has any serious concern about the Constitution should use the word "impeachment" to describe what is closer to a Salem witchcraft trial than an orderly process of seeking justice.
An investigation would be fine. The investigation should include looking into when and who changed the rules for whistleblowing — and who were the sources for the whistleblower? How many of them are in fact liberal Democrats buried deep in the federal bureaucracy who hate Trump? Who leaked it to the news media? This whole thing is a political mugging and should not be honored with the term "impeachment." I hope that people would just recognize this as a coup d'etat.
It is a deliberate effort by the left, both in the news media and in the Congress, to destroy the sitting president of the United States. It should be dealt with as such and we should be prepared to demand that they have to be open and engaged.
No one should be confused by the current phony, one-sided partisan effort. It’s not in any way an impeachment process. It is a denial of the American Constitution, a repudiation of the American people's choice of president, and an effort to impose on the country what the left wants — whether the rest of us want it or not.
