Trumps Economic Revolution: Unraveling A Blessing And A Curse
Posted by freedomforall 2 weeks, 2 days ago to Economics
Excerpt:
"As World War II raged and Britain suffered significant financial stress, the allied forces signed the Bretton Woods Agreement. As part of the pact, the US dollar would replace the British pound as the world’s reserve currency. Since then, many of the original commitments have gone away. However, friends and foes of the US remain heavily dependent on the US dollar as its reserve currency. With it, they accept the blessings and curses that come with it. The unwritten US dollar reserve pact is and always has been unsustainable. Nevertheless, every US President since 1944 has fully supported it. Donald Trump may no longer be willing to pass the buck as his abrupt economic and foreign policy reversals signal economic revolution.
This article’s conjecture is based on speeches from Trump and his administration, as well as economic policy actions. We do not think that Trump truly wants to end the reign of the dollar as the global reserve currency. But, as we bullet below, he’s trying to change some of the key remnants of the unwritten Bretton Woods agreement:
End or sharply reduce trade imbalances
Greatly limit military assistance and make countries pay for military support
Reduce the debt burden
Onshore manufacturing
The current tariff situation is incredibly complex and fluid, with immense long-term ramifications. Thus, this article will likely be the first of many to convey how changes to long-standing economic policy may impact the economy and markets. Stay tuned!
Before continuing, consider the following paragraphs from a speech on April 7, 2025, by the Council of Economic Advisers (CEA) Chairman Steve Miran. LINK to full speech.
Today I’d like to discuss the United States’ provision of what economists call “global public goods,” for the entire world. First, the United States provides a security umbrella which has created the greatest era of peace mankind has ever known. Second, the U.S. provides the dollar and Treasury securities, reserve assets which make possible the global trading and financial system which has supported the greatest era of prosperity mankind has ever known.
Both of these are costly to us to provide. On the defense side, our men and women in uniform take heroic risks to make our nation and the world safer, preserving our liberties generation after generation. And we tax hardworking Americans mightily to finance global security. On the financial side, the reserve function of the dollar has caused persistent currency distortions and contributed, along with other countries’ unfair barriers to trade, to unsustainable trade deficits. These trade deficits have decimated our manufacturing sector and many working-class families and their communities, to facilitate non-Americans trading with each other."
"As World War II raged and Britain suffered significant financial stress, the allied forces signed the Bretton Woods Agreement. As part of the pact, the US dollar would replace the British pound as the world’s reserve currency. Since then, many of the original commitments have gone away. However, friends and foes of the US remain heavily dependent on the US dollar as its reserve currency. With it, they accept the blessings and curses that come with it. The unwritten US dollar reserve pact is and always has been unsustainable. Nevertheless, every US President since 1944 has fully supported it. Donald Trump may no longer be willing to pass the buck as his abrupt economic and foreign policy reversals signal economic revolution.
This article’s conjecture is based on speeches from Trump and his administration, as well as economic policy actions. We do not think that Trump truly wants to end the reign of the dollar as the global reserve currency. But, as we bullet below, he’s trying to change some of the key remnants of the unwritten Bretton Woods agreement:
End or sharply reduce trade imbalances
Greatly limit military assistance and make countries pay for military support
Reduce the debt burden
Onshore manufacturing
The current tariff situation is incredibly complex and fluid, with immense long-term ramifications. Thus, this article will likely be the first of many to convey how changes to long-standing economic policy may impact the economy and markets. Stay tuned!
Before continuing, consider the following paragraphs from a speech on April 7, 2025, by the Council of Economic Advisers (CEA) Chairman Steve Miran. LINK to full speech.
Today I’d like to discuss the United States’ provision of what economists call “global public goods,” for the entire world. First, the United States provides a security umbrella which has created the greatest era of peace mankind has ever known. Second, the U.S. provides the dollar and Treasury securities, reserve assets which make possible the global trading and financial system which has supported the greatest era of prosperity mankind has ever known.
Both of these are costly to us to provide. On the defense side, our men and women in uniform take heroic risks to make our nation and the world safer, preserving our liberties generation after generation. And we tax hardworking Americans mightily to finance global security. On the financial side, the reserve function of the dollar has caused persistent currency distortions and contributed, along with other countries’ unfair barriers to trade, to unsustainable trade deficits. These trade deficits have decimated our manufacturing sector and many working-class families and their communities, to facilitate non-Americans trading with each other."
