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Understanding the World View of Trump's Big-Picture Economist · Trumponomics

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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
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Speaker 2: Dodor Myron, you are now recognized.
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Speaker 3: My view is that reindustriizing America is imperative, not only
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Speaker 3: for economic reasons, but for national security. Economists must accept
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Speaker 3: that we are a nation with an economy, not merely
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Speaker 3: an economy with a nation to reindustrialize. Policy must focus
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Speaker 3: on making the United States the best place on Earth
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Speaker 3: to do business.
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Speaker 4: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
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Speaker 4: and welcome to Trump Economics, the podcast that looks at
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Speaker 4: the economic world of Donald Trump, how he's already shaped
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Speaker 4: the global economy, and what on earth is going to
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Speaker 4: happen next. Well, this week we're asking just how exactly
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Speaker 4: Donald Trump would like global trade and finance to operate,
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Speaker 4: and how likely is he to get there. In just
1:00
Speaker 4: a few weeks, Donald Trump has turned one of the
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Speaker 4: world's oldest security relationships, the Western Alliance, on its head.
1:05
Speaker 4: He's also unleashed a slew of tariff threats on China, Canada,
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Speaker 4: and Mexico, with more to come. And at the same time,
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Speaker 4: talk has intensified over a so called Mara Lago accord
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Speaker 4: to deliberately weaken the dollar through a grand international bargain. Well,
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Speaker 4: at Trumpnomics, we think all three of these things might
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Speaker 4: be connected. And we think that because we've read a
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Speaker 4: paper written in November by Stephen Myron which first came
1:30
Speaker 4: up with the idea of that Mara Lago accord. Now,
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Speaker 4: back then Myron was a former US Treasury advisor working
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Speaker 4: as a strategist in the private sector, but now he's
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Speaker 4: poised to be the head of President Trump's Council of
1:42
Speaker 4: Economic Advisors. And the currency piece of that paper has
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Speaker 4: been much discussed since then, especially the last couple of weeks,
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Speaker 4: but not so much the grander reordering of the world
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Speaker 4: trade and financial system, which is actually what the paper's
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Speaker 4: mainly about, and I would have thought could be pretty
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Speaker 4: appealing to Donald Trump too. So what is that new
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Speaker 4: world order for trade and finance sketched out in that paper?
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Speaker 4: Does it make any sense intellectually or practically? And how
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Speaker 4: might it change the world If any or all of
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Speaker 4: that were actually attempted To help understand Stephen Moron's worldview
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Speaker 4: and what it could mean for currencies for the global
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Speaker 4: economic order, we've got two brilliant voices, as you'd expect.
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Speaker 4: Welcome back to Sean Donnan, senior writer for Economics with Bloomberg. Shan,
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Speaker 4: thanks again for joining us.
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Speaker 5: Wonderful to be here.
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Speaker 4: And Mark Sobel, the US chairman of OMFIF, which is
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Speaker 4: the Official Monetary and Financial Institutions Forum. He's also a
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Speaker 4: former colleague of mine at the US Treasury who always
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Speaker 4: answered the toughest questions I had, and an International Monetary
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Speaker 4: Fund official. He's been, i think it's fair to say,
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Speaker 4: at the forefront or certainly in the room for international
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Speaker 4: financial diplomacy for twenty years or more. Thanks very much
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Speaker 4: for joining US, Mark Pleasure concent So Sean briefly, how
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Speaker 4: is security and economics interlinked in Myron and potentially Donald
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Speaker 4: Trump's view of the world.
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Speaker 5: Stephen Myron's paper, which came out in November and which
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Speaker 5: reads now, is a kind of very good piece of
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Speaker 5: job interviewing for the job he has now. The title
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Speaker 5: was you know, how to rebalance the Global Trading System?
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Speaker 5: And it laid out this kind of sequence of events
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Speaker 5: that they wanted to go through. And the first was
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Speaker 5: based on a recognition that in their mind, the dollar
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Speaker 5: is overvalued and that that's a problem for the United
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Speaker 5: States and its competitiveness around the world, and they wanted
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Speaker 5: to tackle that in two ways. One was to use
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Speaker 5: tariffs to kind of rebalance trade, to draw more investment
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Speaker 5: to the United States, to rebuild the industrial capacity here
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Speaker 5: in the United States, and it's kind of hard industrial
4:00
Speaker 5: power in the world. But they also recognize that when
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Speaker 5: you increase tariffs, you are going to inevitably cause the
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Speaker 5: dollar to appreciate. That's kind of the laws of economics.
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Speaker 5: Mark can walk you through that and much more than
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Speaker 5: I can. But they're gonna end up with a stronger dollar,
4:17
Speaker 5: and as a result of that, they needed to come
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Speaker 5: up with a plan to then weaken the dollar afterwards.
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Speaker 5: And that's where this mari A Lago accord comes through.
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Speaker 5: Everyone's focused on this mari A Lago accord. Very few
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Speaker 5: people have focused on how Stephen Myron is talking about
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Speaker 5: really erasing the boundary between America and how it uses
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Speaker 5: the economic power and how it uses its national security
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Speaker 5: power and to get what it wants. And this is
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Speaker 5: what we're seeing now. We're seeing Donald Trump use tariffs,
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Speaker 5: use the threat of withdrawing security guarantees. We're seeing that
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Speaker 5: play out in Ukraine, We're seeing that play out in
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Speaker 5: the Transatlantic relationship. There's big questions about what it might
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Speaker 5: mean for the future of Taiwan.
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Speaker 2: And things like that.
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Speaker 5: But that's the new model, and it's all about how
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Speaker 5: do you get what Donald Trump wants? How do you
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Speaker 5: get to his vision of the global economy.
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Speaker 4: That is definitely the question that a lot of people
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Speaker 4: in Washington are asking themselves. Mark just on this piece,
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Speaker 4: if you read the paper, what comes across very strongly
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Speaker 4: is in effect this idea that America has been hugely
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Speaker 4: disadvantaged by being the world's most important country. You know
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Speaker 4: that having this reserve dollar status and being the sort
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Speaker 4: of lynchpin also of the security system, but specifically the
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Speaker 4: currency and the US financial system being at the heart
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Speaker 4: of everything has ended up forcing the currency to be
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Speaker 4: overvalued and made US manufacturing less competitive cost ordinary Americans jobs.
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Speaker 4: The basic idea that the US dollar is overvalued and
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Speaker 4: it has something to do with America's status in the
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Speaker 4: global financial system. Is that true? Would you say that
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Speaker 4: adds up?
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Speaker 1: The dollar is the world's global reserve and financing currency.
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Speaker 1: It is so because of the properties of the US economy.
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Speaker 1: We're the largest economy in the world, we have good
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Speaker 1: rule of law, we've had respect for institutions, We've had
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Speaker 1: kind of decent macro policies. We've got the deepest, most
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Speaker 1: open liquid capital markets in the world, et cetera. So
6:22
Speaker 1: that brings capital into the United States, and in that sense,
6:27
Speaker 1: it pushes up the dollar. So I do think that
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Speaker 1: there is something to the idea that says that because
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Speaker 1: of the attractiveness of the United States and receiving capital,
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Speaker 1: that the dollar is overvalued. Whatever that means.
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Speaker 4: I guess some people would have seen like the Big
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Speaker 4: mac Index and things like that, which you know, but
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Speaker 4: just basically, it means that you're when you compare prices
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Speaker 4: across countries, the US looks out of whag.
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Speaker 1: Yes, of course, there's no precise way to measure that,
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Speaker 1: but and I do believe that you could argue, and
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Speaker 1: I think the advance has made this point that.
7:03
Speaker 2: It's a subsidied.
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Speaker 1: Consumer and attacks on manufacturers and whatnot, and you know,
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Speaker 1: historically it has given rise or further impetist to protectionist
7:15
Speaker 1: tendencies in the United States, which is something that we
7:18
Speaker 1: were always dealing with at Treasury. My big problem, however,
7:23
Speaker 1: with going where you are is there's no reason why
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Speaker 1: all countries should have current account bounces or whatnot. Some
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Speaker 1: countries are going to have deficits, some countries are going
7:34
Speaker 1: to have surpluses. And when you think about it, some
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Speaker 1: countries with deficits, well, it's going to reflect demographics, energy endowments,
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Speaker 1: strengths of institutions, economic policies, et cetera. So the IMF
7:47
Speaker 1: has this calculation. It does, and it says the current
7:51
Speaker 1: account norm of the US should be a minus two
7:54
Speaker 1: percent of GDP deficit. But in fact, if you look
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Speaker 1: at our deficit right now, it's pushing four percent. So
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Speaker 1: four percent isn't two percent? And why is it for
8:05
Speaker 1: or not two? And that gets back down to questions
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Speaker 1: of just bad fiscal policy. For example, and Myron and others,
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Speaker 1: they're all talking about the reserve currency or the financing
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Speaker 1: currency rule the dollar causing problems. They don't talk about
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Speaker 1: fiscal deficits. We have massive, irresponsible fiscal deficits these days.
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Speaker 1: As far as I'm concerned, we should focus on implementing
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Speaker 1: decent policies at home.
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Speaker 4: To go back a little bit on that reserve currency piece,
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Speaker 4: Donald Trump has made clear he wants to keep the
8:40
Speaker 4: dollar's global reserve currency status. He's even talked about punishing
8:45
Speaker 4: countries that start talking about moving away from the dollar,
8:49
Speaker 4: but he also wants to make it weaker. Is there
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Speaker 4: a sort of straightforward contradiction there? Could you force people
8:55
Speaker 4: to keep treating the dollar as a reserve currency while
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Speaker 4: still making it weaker and maybe us using lots of
9:03
Speaker 4: measures to support that.
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Speaker 1: Doesn't it depend on kind of how you weakend. I mean,
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Speaker 1: currency markets. Currencies go up and down. They go up
9:10
Speaker 1: and down all the time, but that's a different issue.
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Speaker 1: Let us say than calling for devaluation, which to me
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Speaker 1: implies official action to conscientiously lower the dollar. And as
9:23
Speaker 1: you mentioned, this idea of one hundred percent tax on
9:26
Speaker 1: those who would shun the dollar. To me, I don't
9:29
Speaker 1: really understand how you can call for devaluation and one
9:33
Speaker 1: hundred percent taxes and say that that is consistent with
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Speaker 1: preserving the reserve currency role of the dollar. So I
9:42
Speaker 1: don't think that it's inconsistent to say we're going to
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Speaker 1: run a decent fiscal policy which may have the result
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Speaker 1: of lowering the dollars value. But I do think that
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Speaker 1: calling for devaluation and taxes on others, and some of
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Speaker 1: Myron's ideas like one hundred years zero coupon bonds or
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Speaker 1: taxes and fees on users. I think those are fundamentally
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Speaker 1: inconsistent with the reserve currency preserving the preserve currency role of.
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Speaker 2: The dour Sean.
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Speaker 4: And say this, having already talked about it for fifty minutes,
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Speaker 4: we just want to get too obsessed with the details
10:19
Speaker 4: of this document. But I think it is interesting to
10:21
Speaker 4: sort of think about how Donald Trump's first few weeks
10:25
Speaker 4: has chimed with what was in that paper. There's quite
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Speaker 4: a lot of areas where Myron's kind of assuming that
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Speaker 4: the things that cause a lot of volatility or uncertainty,
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Speaker 4: like the tariffs will be done gradually. Well, seems to
10:38
Speaker 4: be a greater appetite for volatility and uncertainty from the
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Speaker 4: administration so far in the way it's addressed that. Arguably,
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Speaker 4: you could say the same on the security front. How
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Speaker 4: much do you think is following the script suggested by Myron?
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Speaker 5: I think you can definitely see bits of the script
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Speaker 5: in there, right. I mean, you can definitely see this
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Speaker 5: broad idea of we're going to break down the barrier
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Speaker 5: between national security policy and economic policy, and we're going
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Speaker 5: to use one to reinforce the other, and vice versa.
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Speaker 2: At the same time.
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Speaker 5: What we've seen is the same thing we saw there
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Speaker 5: in the first Trump administration, and that is a pretty
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Speaker 5: chaotic policy making a lot of differing internal voices. We
11:20
Speaker 5: are seeing again, whether it's on tariffs, this kind of
11:24
Speaker 5: the rolling out of really aggressive tariffs on Canada and Mexico,
11:27
Speaker 5: and then within forty eight hours they're kind of rolling
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Speaker 5: back in a big way. And with Ukraine, a live
11:33
Speaker 5: debate playing out via leaks and Oval Office comments on
11:37
Speaker 5: what a peace deal might look like, what a minerals
11:41
Speaker 5: agreement with Ukraine might look like. I would say there
11:46
Speaker 5: is one kind of overarching aim above it all, and
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Speaker 5: that is that Donald Trump wants America to be feared again.
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Speaker 5: And that's his vision of power, and that applies to tariffs,
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Speaker 5: that applies to national security. It's not that he wants
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Speaker 5: America to be this kind of beacon on the hill
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Speaker 5: of democracy and free markets and that the world kind
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Speaker 5: of flocks towards. He wants to be able to dictate
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Speaker 5: how the world runs, and he believes that fear is
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Speaker 5: the most powerful thing to see and we're seeing elements
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Speaker 5: of that clearly in all sorts of policies that have
12:22
Speaker 5: rolled out. But Beneath that kind of broad goal, it
12:24
Speaker 5: all looks pretty messy, and it's not clear that these
12:27
Speaker 5: goals kind of operate or can operate together.
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Speaker 1: Can I come back to the mirone article a little
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Speaker 1: bit and Sean, it's obviously not a zero some world
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Speaker 1: we live in.
12:38
Speaker 4: But to be more granular, I think it's a zero
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Speaker 4: some world that Donald Trump lives in. Genuinely.
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Speaker 1: Well, yes, But the point I wanted to make I
12:45
Speaker 1: want to go back to being somewhat of a point.
12:47
Speaker 1: He had economics type, unlike you guys in this discussion,
12:51
Speaker 1: I wanted to talk more about some things I don't
12:53
Speaker 1: like about the Myron article. Sure, the implication is that
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Speaker 1: the dollar's global role as bad for America. The French
13:02
Speaker 1: always talked about the exorbitant privilege. I believe the dollar's
13:06
Speaker 1: role is a net plus, not exorbitant. You know, we
13:09
Speaker 1: get some maybe interest rates are lower, we're shielded from
13:12
Speaker 1: foreign exchange risk, we can use the dollar for geopolitical
13:17
Speaker 1: leverage via sanctions. The dollars are valued, but on balance
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Speaker 1: net plus, if we're trying to disrupt alliances and everything,
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Speaker 1: I just don't know what is the end goal, the
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Speaker 1: end vision.
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Speaker 4: Donald Trump famously approaches pretty much everything as a bargain
13:37
Speaker 4: is about a deal, and it's about the relative strength
13:40
Speaker 4: of each side in a deal. And by definition, you
13:44
Speaker 4: have most leverage in doing a deal with your strongest
13:47
Speaker 4: partners because they're the ones who are already most have
13:50
Speaker 4: most to lose by damaging the relationship with you. So
13:54
Speaker 4: you could say it may be counterintuitive, but you could
13:58
Speaker 4: say it is a natural place to start if you
14:01
Speaker 4: have the deeply transactional view that Donald Trump has, and
14:05
Speaker 4: if you feel kind of fundamentally that the US shouldn't
14:10
Speaker 4: pay any price for being the strongest economy. Yes, it
14:13
Speaker 4: gets to be the reserve currency, but it should be
14:15
Speaker 4: paid for by other people. If America is the strongest,
14:18
Speaker 4: and they've been clever enough to be the strongest, and
14:20
Speaker 4: by the way, also willing to put loads of American
14:22
Speaker 4: troops at risk that other countries are not willing to
14:24
Speaker 4: put at risk in defending the free world, then why
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Speaker 4: not have everyone else pay for that. It's like America's
14:31
Speaker 4: performing a service and you make your allies who are
14:34
Speaker 4: getting the most value out of you pay the most.
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Speaker 4: I mean mark. It may not be an attractive vision,
14:38
Speaker 4: but it's perfectly rational.
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Speaker 1: First of all, I have to say I've always thought it,
14:42
Speaker 1: certainly in recent decades, that Europe needed to step up more,
14:46
Speaker 1: step up more on defense.
14:47
Speaker 2: So I have no problem with that.
14:49
Speaker 4: He's only one who's got them to do it, though,
14:51
Speaker 4: combination of him and.
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Speaker 1: Putin, well, I guess the more Putin than him. I
14:55
Speaker 1: think the magnitudes the way of getting it done are
14:59
Speaker 1: very questionable. But again, if you're going to tell me
15:02
Speaker 1: that the Trump vision is to get others to pay
15:06
Speaker 1: for the US security guarantee, maybe that's a vision. Of course,
15:12
Speaker 1: it seems now that they're all going their own way
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Speaker 1: and rejecting the US, and this is going to have
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Speaker 1: really harmful of consequences I think for global relations and economics,
15:23
Speaker 1: and it's not going to make us more secure, and
15:24
Speaker 1: it's not going to make us more prosperous.
15:26
Speaker 4: Okay, but take the reserve currency thing. The world benefits
15:29
Speaker 4: from there being a reserve currency. You know, we can
15:31
Speaker 4: denominate the cost of oil in a single currency. Everyone
15:35
Speaker 4: knows what they're talking about when they talk about ten dollars.
15:38
Speaker 4: Why shouldn't the world pay for that? Why does America
15:40
Speaker 4: have to pay the negative of you know, being overvalued
15:43
Speaker 4: or whatever one might identify.
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Speaker 2: The United States benefits from that.
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Speaker 1: The last decades have been remarkable for the history of
15:50
Speaker 1: mankind and prosperity, and so the eighty years of the
15:54
Speaker 1: postwar US hegemony has been nothing to sneeze at.
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Speaker 5: It depends where you're sitting in the US economy right
16:02
Speaker 5: as to how you benefit from the US being or
16:06
Speaker 5: are hurt by the US being a reserve currency. If
16:08
Speaker 5: you're a manufacturer, you can make an argument that you
16:11
Speaker 5: are hurt because your export's are less competitive as a
16:14
Speaker 5: result of a strong dollar, although other people will point
16:17
Speaker 5: out that actually you can buy imported components in intermediate
16:21
Speaker 5: goods for cheaper as a result of a strong dollar,
16:24
Speaker 5: and that doesn't matter as much in terms of competitives.
16:27
Speaker 5: If you're a homeowner or you're looking to buy a
16:29
Speaker 5: home in the United States, you probably benefit from lower
16:33
Speaker 5: interest rates than you would otherwise as a result of
16:36
Speaker 5: demand for US assets from overseas. Likewise, if you're an
16:41
Speaker 5: entrepreneur like Elon Musk, chances are your cost of capital
16:45
Speaker 5: growing up was lower than it might be in other
16:47
Speaker 5: places as a result of the US's reserve currency status.
16:50
Speaker 5: So the issue that we have here now is that
16:53
Speaker 5: it's the manufacturers and the protectionists who are driving the
16:58
Speaker 5: view of the dollar, and and and it's a downside
17:03
Speaker 5: as a reserve currency. And you know, at some point
17:06
Speaker 5: that might shift again. And this gets to a bigger
17:10
Speaker 5: issue which I think we was gonna last beyond Donald Trump,
17:15
Speaker 5: and that is America's power in the world and the
17:18
Speaker 5: place of the dollar in the world is based on
17:22
Speaker 5: decades of trust, right of building trust, It's based on
17:25
Speaker 5: legal certainty. It's based on this idea of America as
17:31
Speaker 5: a kind of having a coherent vision of the world
17:35
Speaker 5: that's changed over the last decade. Right, We've kind of
17:38
Speaker 5: flipped back and forth. We go from a big government
17:42
Speaker 5: paradigm under Joe Biden to now a small government paradigm
17:47
Speaker 5: under Donald Trump. We've gone from a kind of gentle
17:51
Speaker 5: giant view of a superpower under Joe Biden and Barack
17:55
Speaker 5: Obama to one of you know, the big gorilla kind
17:59
Speaker 5: of rampage through the world under Donald Trump. And I
18:02
Speaker 5: think that issue of trust, that issue of certainty, and
18:06
Speaker 5: what America is and what America wants and what America
18:09
Speaker 5: offers that going away is perhaps more damaging to American
18:15
Speaker 5: power than any of these kind of little bits of
18:19
Speaker 5: policy that people like Stephen Meyron lay out in this paper.
18:22
Speaker 4: Okay, so there's a final chunk of things that I
18:24
Speaker 4: just want to get to because all of this sounds
18:26
Speaker 4: a bit ephemeral and sort of we're talking about this
18:28
Speaker 4: paper and is it or is it not relevant for
18:30
Speaker 4: Donald Trump, and we've probably gone as far as we
18:32
Speaker 4: can go on that. What I'm thinking about as a
18:35
Speaker 4: result of this conversation is, Okay, what we have learned
18:38
Speaker 4: about Donald Trump in the last few weeks is when
18:40
Speaker 4: he decides that he really wants something, or he wants
18:42
Speaker 4: to be known for something like finding peace in Ukraine,
18:47
Speaker 4: he will go further than anyone expected to make that happen,
18:52
Speaker 4: including being very tough on very close allies in a
18:56
Speaker 4: way that we wouldn't expect. If he decides that the
19:00
Speaker 4: next big thing he wants is a weeker dollar, then
19:03
Speaker 4: we will probably all be talking a lot more about
19:06
Speaker 4: a mar Lago Accord or some version of that mark.
19:09
Speaker 4: If Donald Trump woke up one morning and decided he
19:12
Speaker 4: wanted a week a dollar as much as he wants
19:15
Speaker 4: to be known for a piece deal in Ukraine, how
19:19
Speaker 4: could it go about that? I mean how much, what
19:21
Speaker 4: might that look like and wouldn't have any chance of success.
19:25
Speaker 1: So this week he's managed to get the dollar down
19:27
Speaker 1: by creating growth fears and undermining our long standing relationships.
19:33
Speaker 1: I've already mentioned undermining the underpinnings of the dollars status
19:37
Speaker 1: would be one way to do it. And more to
19:38
Speaker 1: the point of what I think you're asking, Obviously he
19:41
Speaker 1: can job own the dollar down. He's probably already done that.
19:44
Speaker 1: That's not going to be very effective. The Treasury could
19:47
Speaker 1: sell dollars and buy foreign currency. Treasury doesn't have that
19:51
Speaker 1: many dollars, but they could mobilize the Exchange Stabilization Fund
19:54
Speaker 1: balance sheet in different ways. The Fed can print unlimited dollars.
19:58
Speaker 1: It wouldn't likely play ball, but it could be done.
20:02
Speaker 4: Theoretically, does network When one country does it by themselves.
20:05
Speaker 2: It's certainly less effective.
20:08
Speaker 1: I don't think that central banks and financial authorities and
20:12
Speaker 1: the G three really think that intervention is all that
20:15
Speaker 1: effective absent fundamental policy shifts. Maybe there could be some
20:19
Speaker 1: concerted type of intervention operation these days, but again, central
20:25
Speaker 1: bank's target inflation, not exchange rates.
20:28
Speaker 4: We've already seen in the Ukraine context that he's sort
20:31
Speaker 4: of crossed a lot of lines that people didn't expect
20:33
Speaker 4: to be crossed. And it has to be said, the
20:35
Speaker 4: Ukraine invasion has caused everyone to do that. We've done
20:38
Speaker 4: things like seizing sovereign central bank reserves that we've never
20:41
Speaker 4: done before. We did that to the Russian Central Bank,
20:44
Speaker 4: So I'm sure at the IMF that caused a bit
20:46
Speaker 4: of headaches and head scratching whether or not we should
20:49
Speaker 4: go there. What are the kind of out of the
20:51
Speaker 4: box tools he could use to pressure other countries to collaborate,
20:55
Speaker 4: even if they didn't particularly want a week a dollar.
20:58
Speaker 1: I recently had to speak on this topic, and what
21:01
Speaker 1: I started focusing on is not so much currency action
21:04
Speaker 1: per se, but how to associate currency issues with trade measures.
21:10
Speaker 1: So under Obama and Trump, there were currency chapters as
21:14
Speaker 1: part of trade deals or discussions.
21:17
Speaker 4: I didn't even know that.
21:18
Speaker 1: So TPP made tackling currency manipulation a principal negotiating objective,
21:25
Speaker 1: and there was a kind of a side understanding and
21:28
Speaker 1: TPP before it's derailed that the finance ministers would meet
21:32
Speaker 1: and discuss these issues.
21:33
Speaker 4: That was a trade deal that was negotiated under the
21:37
Speaker 4: Biden of Minnesota. That's right, yes, with Asian economies.
21:41
Speaker 1: But now under USMCA, there was a currency chapter inside
21:46
Speaker 1: the deal. If you remember the Phase one deal with China,
21:50
Speaker 1: there was a currency chapter. Chinese just committed to doing
21:53
Speaker 1: what they were doing, but but whatnot?
21:56
Speaker 2: So there's that. Then there was under.
21:59
Speaker 1: The Trump administration at the very end, there were currency
22:03
Speaker 1: undervaluation countervailing duties a terrible idea as far as I'm concerned,
22:09
Speaker 1: but they did assess currency evaluation.
22:12
Speaker 4: Could you make it harder for countries to access the
22:15
Speaker 4: central Bank the FEDS swap facilities, I don't know. There
22:20
Speaker 4: must be a range of things that the US has
22:23
Speaker 4: within its gift that are beneficial for other countries financially.
22:27
Speaker 5: Look in my senses, he cares about the reputation of
22:30
Speaker 5: the dollar and the kind of branding of the dollar
22:32
Speaker 5: as a reserve currency. And he cares about having a
22:35
Speaker 5: vote of confidence from financial markets, whether that's currency markets
22:40
Speaker 5: or whether that's equity markets or bond markets. There's a
22:43
Speaker 5: kind of branding concern around the dollar. I think what
22:47
Speaker 5: he cares about in terms of the level of the
22:50
Speaker 5: dollar depends a little bit on who the last person
22:53
Speaker 5: he was talking to cares about the easiest way, and
22:57
Speaker 5: Mark pointed to this, the easiest way to bring down
23:00
Speaker 5: the value of the dollar, and also by the way
23:03
Speaker 5: the trade deficit is to have a recession in the
23:05
Speaker 5: United States.
23:06
Speaker 2: And one of the.
23:07
Speaker 5: Things that you've seen creep into markets in recent days
23:11
Speaker 5: is this question of whether the Trump administration is somehow
23:15
Speaker 5: intentionally trying to tank the economy through some of its policies,
23:21
Speaker 5: whether it's tariffs, whether it's immigration, whether it's the kind
23:24
Speaker 5: of austerity campaign that Elon Musk and Doze or are
23:28
Speaker 5: waging on the federal government, but in terms of workforce
23:31
Speaker 5: and spending, and that that somehow is all about bringing
23:35
Speaker 5: the dollar and the ten year yields down to a
23:40
Speaker 5: level that somehow is of more advantage to the US
23:43
Speaker 5: economy in the long term. That seems like a pretty
23:45
Speaker 5: destructive way to go about it. I have no evidence
23:48
Speaker 5: that this is actually what the Trump administration is thinking,
23:51
Speaker 5: but it gets to the point of.
23:53
Speaker 2: The surest way to do some of the.
23:56
Speaker 5: Things that Stephen Myron lays out, other people around Donald
24:01
Speaker 5: Trump lays out is to kind of attack America's place
24:05
Speaker 5: in the world and its growth at home. And it's
24:09
Speaker 5: broader exceptionalism.
24:11
Speaker 4: Well One thing I did learn from spending a few
24:14
Speaker 4: years looking at things from the other side of the
24:17
Speaker 4: journalistic divide as an official US Treasury is people don't
24:21
Speaker 4: even in this administration. I suspect people are not sitting
24:23
Speaker 4: plotting to try and force a US recession. But we
24:27
Speaker 4: shall see. Mark Soble, Sean Donnan, thank you so much.
24:32
Speaker 4: I am struck by the quote actually at the end
24:35
Speaker 4: of that paper by Stephen Myra, and he says there
24:37
Speaker 4: is a path by which the Trump administration can reconfigure
24:40
Speaker 4: the global trading and financial system to America's benefit, but
24:44
Speaker 4: it is narrow and will require careful planning, precise execution,
24:49
Speaker 4: and attention to steps to minimize adverse consequences. Well, we'll
24:54
Speaker 4: wait and see all of that then.
24:55
Speaker 2: Thank you very much, Thank you, thanks so much for
24:58
Speaker 2: having me.
25:09
Speaker 4: Thanks for listening to Trumpnomics from Bloomberg. It was hosted
25:12
Speaker 4: by me, Stephanie Flanders, and I was joined this week
25:14
Speaker 4: by Sean Donnan and Mark Sobel. Trump Andomics is produced
25:18
Speaker 4: by Summer, Sadi and Moss and with help from Chris
25:21
Speaker 4: Martlu and sound design by Blake Maple's Brendan Francis Newnham
25:25
Speaker 4: is our executive producer, and to help others find the show.
25:29
Speaker 4: Please rate it highly and review it wherever you listen
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