The first 100 days of the Trump administration have come with numerous policy ideas, plans and executive orders.
And during that time, there’s been great hope for a revival of U.S. economic growth.
But where does the new president stand on the U.S. dollar?
Earlier this month, President Trump indicated that he favors a weaker currency when he commented that the dollar “is getting too strong.”
And, he’s quipped that, it’s hard to compete in the global market with a strong U.S. dollar, especially when other countries devalue their currencies.
President Trump’s willingness to keep Federal Reserve Chair Janet Yellen for another term might also suggest that he favors a weaker greenback.
And why not? She’s considered a monetary dove after years of ultra-accommodative policy. So by keeping her at that post, Trump may seemingly want the Fed to extend the low-interest-rate environment from the Obama years – a policy associated with a weaker dollar.
So, why all the hubbub about a weaker U.S. currency?
For one thing, it’s easier to balance the U.S. trade deficit. America can increase demand for U.S. goods by weakening its currency relative to foreign nations.
But it comes at a cost. Here are the negatives associated with a weaker U.S. dollar:
- Lackluster foreign and domestic investment weighs on job creation.
- Weaker U.S. economic growth.
- Loss of confidence in U.S. markets.
- Decline in real living standards.
That’s why I’m not one bit surprised that, if you read between the lines, Trump’s stance can also be seen as pro-dollar.
In fact, many of Trump’s primary initiatives are associated with a stronger greenback, such as easing financial regulations, bold tax reforms and repealing and replacing the Affordable Care Act ( ACA).
And it’s the pro-dollar stance that fueled the post-election “Trump reflation trade” that the markets applauded.
Other benefits of a stronger U.S.-dollar policy stance include:
- Attracting foreign capital and investment.
- A show of confidence in the United States as investors keep capital in domestic assets.
- Greater American purchasing power.
As you can see, promoting a strong economy and achieving a stronger U.S. dollar is easier said than done. So, it’s no wonder that Trump may be trying to get the best of both worlds.
Once again, I’d like to invite your input on this matter: Should Trump pursue a stronger U.S. dollar? Where should the president stand on the value of the U.S. dollar as compared with other currencies? Where do you think the president’s dollar policy is going to lead us?
In the comment section below, please let me know your answers. I look forward to hearing from you!
Good investing,
Mike Burnick
Al McNal May 3, 2017
Rather than pursuing a strong or weak dollar I believe we should pursue policies that make America more independent and less reliant on other countries and less of the world’s police force. I’m not in favor of One World Government. I think the examples set forth in the Brexit campaign emphasize how poorly large government works for individual countries, the EU being the perfect example of the lack of politics addressing individual countries issues, like excessive restrictions on English fishing or excessive taxes that provide EU leaders with huge retirements and wonderful excessive headquarters or immigration being unrestricted. At the same time the english didn’t even know who their elected officials were. How convenient for those political leaders working in a buddy buddy system. If the US allowed unrestricted immigration we would soon be the most populated country in the world, why would anyone want to remain in these socialistic rules infested nightmares like India, China, Venezuela or Argentina where you might lose your entire savings due to poorly run fiscal policies and endless government promises which these socialists can’t produce.
For me it’s really about these political leaders getting free rides through life while building economies that don’t work and have the wrong dream world motivational systems. These policies have demolished our jobs exactly as Ross Perot had suggested and in fact all developed world countries have suffered the same fate. It’s not that this force wouldn’t have been there had we been less favorable toward world trade but why promote the job loss? The US has many advantages so why not keep those to ourselves and concentrate on taking advantage of our advantages. Why don’t we concentrate on developing our own students in the sciences and technology and concentrate on taking advantage. We need a lot of work here at home, like 45 million unemployed, and we should make the needed skills happen within this country. Why should we put our efforts into saving the rest of the world that wants what we have when there is zero chance of saving the rest of the world? Especially given foolish dream world politicians that want us to pay for the rest of the world’s better life and their foolish motivational systems where we pay and they take and they don’t have the motivation to save and build their own life into a better one, where they can’t even build their own countries into a system that can take care of itself. The primary problem is that dream world politicians don’t understand constitutions and how they provide motivational systems and the basis for an economic system that builds and improves itself. What we have seen is a bunch of leaders who seen have and have nots where they want to take from the haves and give to the have nots. The US constitution provides for Private Property and the right to keep it and hence gives individuals the motivation to work hard save and provide for oneself. Take that away and you have a system that won’t work because any time anyone gets ahead the others want his hard work.
terry carroll May 2, 2017
Close the Fed that will cut of Iran from cashing in all those billions OBUMMER gave just cash the Fed reserve for country’s we want to. Get silver backed ones fives tens twenty. Gold backed fifthtys and hundreds.
Nick Delis May 1, 2017
I am no expert on any of the economic issues you present to us.
That is the reason I subscribe to your expensive letter… to learn!
However knowing you and every
other stock/newsletter have no crystal ball to what WILL happen, your forecasting has improved over the years like the weathermen thanks to AE.
I believe in President Trump. But understand one cannot have his cake and it too. Again he also does
not have a crystal ball.
Dave May 1, 2017
Damed if you do, Damed if you don’t. It’s a dedicate balance obviously, and of course you would like to think that you can control it but that also leads to creating problems and not just solving them. The fed is just one more bureaucracy that needs an adjustment. All this currency manipulation got us where we are now.
Charles May 1, 2017
Trump should put us on a gold standard and eliminate
Federal agencies that control our money or lifestyles.
We do not need the house of Rothschild running our
country. As a matter a fact we do not need
central banks! Nor the EPA, etc. So much
of the country has gone into debt for none essentials
that I wonder if the American public today could
stand the pain of withdrawal and going back to
a sound and rational lifestyle. The end would
be great for America but can the people as they
are today handle the evolution?
Paulette E. May 1, 2017
Hello,
Not sure to understand what you mean by “strong dollar”after you explained in the reviews I read that the US deficit was too strong, which should be known by investors…and yet it remains a leading currency. To my mind, like many presidents, Trump may let economies adapt the dollar and not the other way aaround cause that.s the way you keep your head over the water line ; by saying that I do not mean the dollar wants other currencies to nose dive cause it does not work that way. Strong sectors will find strategies to remain strong by abandoning, definitively or temporarily, fields that take too long to recover ; weak sectors should adopt the same strategy. Regards,
Joe May 1, 2017
Why is the dollar weak? The fed has raised interest rates while the other major economies keep their interest rates low and sometimes, even negative.
Jerry Hutchins May 1, 2017
Yes, we need a strong dollar for that is what benefits the citizens the most. I want to be able to have my money worth something.
Bill May 1, 2017
The value of the dollar is primarily a function of the policy of its issuer, the Federal Reserve. The best thing the Trump administration could do would be to get behind the BAT, the border adjustment tax concept proposed in Congress.
Steve Nellissen April 30, 2017
It should be clear that Trump is clueless about fiscal and monetary policy. I am surprised you are attempting to interpret his ramblings as having an economic purpose.
Stephen Mundwiller April 30, 2017
Based on the information you provide, I overwhelmingly support a strong dollar.
Walter April 29, 2017
I thought the object was who could devalue their currency to reach the bottom first, what ever happened to that idea, are we to see another fiat currency?. Also what happens to the dollar when all those trillions that were printed enters the markets, wont that devalue the dollar and creat super inflation for us ?. Aren’t all those dollars that were given to all the banks and the dollars the fact that all the central banks are driving all markets higher thereby creating phoney values going to give us further inflation. All of the above is going to give us fake values for the dollar don’t you think. This is the government giving us the fumbly bumbly way of operating as usual, don’t you think ?
Lisenbee April 29, 2017
Trump needs to get rid of Janet Yellen. There are more intelligent Economists he can employ. Then next Paul Ryan. He is on the Demoncrats side.
Andre Altinalmazis April 29, 2017
US is no more a safe heaven with devalued US Dollar.
People losing confidence to savings in US Dollars.
David Reid Chenault April 29, 2017
Trump is fashioning himself as the current-day Ronald Reagan. That’s probably a good thing. However, Reagan made a very few critical mistakes during his 8-year run. One of them was conspiring with the Japanese government and its banks to drive down the American dollar. This was achieved by having the Japanese flood world markets with just-sold-off dollars. And it worked. Reagan had reasoned, incorrectly, that the pathetic sales of our junky automobiles (a fact of the era) and other garbage worldwide was the result of a higher dollar. Never mind that Germany, with one of the most expensive monetary units in the world — the mark, was selling their over-priced Mercedes and BMWs and Audis like popcorn at a movie theater. Because they were finger-lickin’ good.
Among Reagan’s other whopping biggies was his inclusion of his #1 republican enemy as his running mate and vice president. (Something Mr. Trump, thankfully, hasn’t done.) After Reagan’s tenure, George Bush, who had coined the term, ‘Voodoo Economics’, went on to undo the Reagan legacy, and to replace it with a ‘kinder and gentler administration’ … which failed. This gave the Marxists among us (about 50%) ammunition to pronounce Reaganomics a faillure.
Nuff said.
Candida Corradini April 29, 2017
I live in Europe and have bought cash dollars in Switzerland. I think a strong dollar for us is a resource if the euro falls. But I am very full of doubts. I do not feel like I’m going to buy actions waiting for a pullback as stated in the real report. Anyone can advise me? I would love you Mike to deal with the situation in Europe and dedicate a news letter to this topic, I would also like to transcribe webinars for those Who do not live in use. Many sites use transcripts, but Weiiss never does them. For this I have written many times without ever answering
Darrin Mann April 29, 2017
Seems challenging to push for stronger dollar, by manipulating only initiatives that inflate it further. I’ve always believed that you do the right things and in the end the best results happen naturally. A stronger dollar to me seems like the best we can hope for. Business investment, job growth, foreign investments increase because their currencies (Euro &Yen) will likely continue to sound less appealing. I don’t like the thought of increase national debt, but hope for American demand and increase in goods producing jobs coming back here can help.
American Abroad April 29, 2017
I agree with Mike’s analysis but there’s only so much Trump can do. Other countries/unions may have their own agenda that weaken or strengthen their currency. Some actions beyond their control. Look at what happened with the euro after the first round of presidential elections in France.
Tomm April 29, 2017
Foreign trade incentivizes foreign nationals to be involved in our government.
Ralph Cecere April 29, 2017
The stronger a currency becomes the less competitive business becomes on a corporate level. The price of commodities will drop and that will lead to unemployment. My answer is no. If he pursues a stronger dollar it will be a very big mistake.
Eyad April 29, 2017
Very important point. But the big question I have is: How far US has control of valuation of dollar, while EU is also trying to manipulate its currency, which reflects on dollar?In other words, weaker Euro has helped a lot in making dollar stronger!!
bryan keeling April 29, 2017
Considering that imports are 2.3 trillion and exports are 1.5 trillion…the higher the USD the smaller the import cost……but alas, it doesn’t work that way does it …so strike a happy medium seems logical..the more stable a currency the less likely-hood the importer will be tempted to build in a safety margin…a more stable currency always engenders greater business confidence.
[email protected] April 29, 2017
SIR,
I THOUGHT LARRY SAID THAT THE FED DOES NOT LEAD INTEREST RATE CHANGES, BUT FOLLOWS THEM. HE SAID INTEREST RATES ARE CONTROLLED BY THE MARKET. THUS, NO MATTER WHAT THE FED DOES, INTEREST RATES WILL GO UP AND FORCE THE FED’S HAND ON THE PRIME RATE, RIGHT?
V/R,
JERRY
Andy Kleboe April 28, 2017
The problem I see is that the Euro will probably fail ,and the fallout from that will start a ‘Dominoe’ effect and take all the currencies down with it , World Debt is the fly in the ointment , and it is out of control.
Bud Wood April 28, 2017
Yes. A stronger dollar will be generally beneficial.
davidmar110 April 28, 2017
A stronger U.S. Dollar?????!!!!! I don’t envy President Trump’s current economic choices. On one hand, the U.S. currently has a tremendous trade deficit, if you make the U.S. Dollar strong again its only going to widen the trade deficit, although this might be debatable, in the sense that almost all world currencies peg themselves to the dollar and will probably continue to do so. Nations would rather absorb the U.S. Dollar’s inflation than to see their economies less competitive. A stronger U.S. Dollar also makes the U.S. current debt obligations more difficult to pay considering the astronomical amount of debt amassed by the U.S. government.
On the other hand, making the U.S. Dollar week, will allow inflation to creep in and maybe even hyperinflation depending on the circumstances, if money printing (QE) and low interest rates aren’t properly administrated, but at least through inflation or even hyperinflation the U.S. could make its current debt more affordable.
At this point I don’t see any other choice for the U.S. government than to continue walking the High Wire Act in the middle of high winds. Any miscalculation at this point and gold is king again, which is good for those invested in gold, but not so good for the world economy.
Its is because of these circumstances that I believe it to be inevitable that there will be inflation and one has to ask, when you invest in gold to take advantage of its upcoming bull market, are you really making money or just hedging massive inflation on the U.S. Dollar?
David
Geoff April 28, 2017
Mr. Trump, all I have to say is “WHO now would be the REAL ‘Currency Manipulator?”
Frank Dombkowski April 28, 2017
Hi Mike,
A strong US Dollar may be something that Trump may have unintentionally helped along by wining the election. The political news from Europe showing a much more conservative leaning of the electorate in upcoming elections could enhance that move more without any dealings by the FED or the Trump administration.
The British Exit Vote, Terrorist attacks in Europe, and a weak Euro has definitely enhanced the dollars strength. Living outside the US, I can see people wanting to hold spare cash in US dollars as other currencies show some instability in value.
In the city here the currency exchange operations are giving better than mid range exchange rate for the dollar, a sign that their dollar demand is high and their supply is low.
As an expat, I obviously am enjoying the fruits of a strong dollar.
Hapuna April 28, 2017
Oh, I strongly support a strong dollar. And so will the swamp critters he has appointed. You see, with a strong dollar U.S. corporations can go abroad and buy foreign corporations on the cheap. And I can buy foreign goods and real estate for less. As the dollars deflates foreign asset purchases will expand. This will expand American influence and power. Mr. Trump will be able to buy real estate (through his proxies) at greatly reduced prices in dollars. When one is talking in billions, every little increment of dollar value increase is millions saved.
So, yeah, I favor a strong dollar. And Mr. Trump does personally also. For those with lots of dollars a strong dollar is a great thing. For those with few dollars, it is a bad thing. China, Japan and others will love a strong dollar. They have bushels of them to invest. And will, just like Trump et al.
It also makes it much easier for China and Japan to sell their stuff abroad.
What Mr. Trump fails to comprehend is that the U.S. must sell stuff abroad to avoid the collapse of our economy.
Selling stuff made in America to Americans is great, but it is just churning money internally. It is not importing foreign funds into our economy. That is what is needed to reduce the national debt. And you better believe that there are consequences to ever greater debt. Ask Greece and others. At some point the whole house of cards collapses on itself.
What we need to do in America is produce tangible goods to sell at a good price offshore. Just like China.
We can not keep buying stuff on credit if we can not even service the debt we already have.
Even if there is no hope of repaying what America has borrowed, we MUST service the debt or credit will no longer be extended to us and our nation and economy will die.
That is coming closer every day. Debt matters very much.
Debt kills empires.
James Hall April 28, 2017
stronger dollar
David Houck April 28, 2017
Mike,
When you use the term “Reading between the lines” that is key. Trump keeps Janet Yellen on, who promotes a weaker dollar but at the same time talks up the Greenback! It’s a brilliant strategy! The weak dollar will keep money cheap but the “flight money” that Larry’s K-Wave predicts will keep the dollar strong. Not because it is, but because it is “perceived to be strong”. This should lower gold prices and juice the market!
ron goddard April 28, 2017
it seems that the us dollar is backed by the ‘military might’ only of your country, not by any of sort value like gold or productive commodities. and you know history…when you can’t pay the soldiers they will not fight. when usa has no credibility who will be her allies? i see a huge trap in the making for your country because of ‘obsolescent’ ideology
that has failed many empires of the past and your current empire. when you run short of ‘dough’ good night honey!!
and that is where usa is somewhat doomed. by its own sword shall it die. your country is preparing a nuclear attack on moscow and beijing via the THAAD missile shield it is deploying in south korea and at other sites close to russia and china. well it is now fact that within days now a nuclear attack by china and russia against usa will result in the deaths of over 70 million innocent people because your leaders will not listen to russian or chinese leaders about the futility of a nuclear war and the stupidity of the slanderous western media in drumming up anti russian propaganda.
if you survive mike you will see the result, but 70million of your countrymen won’t do you really think that russia and china has no intelligence? they are streets ahead of the u.s. in everything, but you ego will not allow that sort of admission. so you will be put to the sword. i have written before of the fact that the u.s.a mainland is one of the few places in the world to not suffer overhead bombing. well its coming!! and your country deserves it having dropped bombs on so many countries we have lost count. i hope that oz stays out of it. our people here are as clueless about the dangers created by our politicians and military as yours, but many people here are now aware of this. cheers, ron from oz
James L. Myers April 28, 2017
Hello Mike Burnick,
This is a great memo. I am a major deal maker in the US and Mexico and I have worked in many other countries for my friend clients.
All of your reasons stated to keep the US Dollar strong are 100% correct.
And all of your negatives on… a weaker US Dollar are also 100% correct.
I know that a weaker US Dollar will destroy the US including Me.
Note: I will be 71 next Monday.. but because I am very healthy ..My doctor tells me that ….
I will live for more than 30 more years… Therefore saving the US Dollar will save my life and also Wife and my great medical daughters with great husbands and 4 very young grandsons. I would like to communicate more with you.
Good Luck… Jim
nikit zdanow April 28, 2017
trump needs to keep the dollar about where it is now. cannot afford to raise interest rates too high because of our huge debt and yet attract more investments to raise the economic rate of growth.
William Melin April 28, 2017
Any problem showing a gold chart two months out every monthly issue??
G Wede April 28, 2017
Trumps a fake and has put lots of 1 percenters in the staff..
America was fooled like usual by a list.
I think Obama was the right answer but once the establishment pulled on his ear and told him how it would be or else
he the became the puppet just like any other president.
We need someone like Kennedy to put his life on the line for his country
Bill in Nuremburg April 28, 2017
how did we do so well for decades with the world’s strongest currency??? does everyone forget that??? apparently…..
Bob April 28, 2017
I’m for moderation on this, leaning toward low interest rate and lower dollar.
Quite the balancing act.
Rick Garnett April 28, 2017
I do not believe that the current Administration has a fiscal policy. It appears at those critics who claim that “the President believes whatever the last person who spoke to him told him” are correct. Do not plan on a sane or stable fiscal policy from the West Wing.
James April 28, 2017
Definitely pursue a stronger dollar and use carrots and sticks to get other nations to strengthen their currencies, such as tariffs against nations for weak currencies and some incentive for nations to make their currency stronger. This is something for U.S. to lead on because of the benefits stated in the article and stronger currencies generally have higher money velocities.
Ronald D. Morrison April 28, 2017
The dollar needs to maintain a constant value.
When I graduated From college in 1963 $100 dollars would purchase about the same as $800 today.
Why this amount of dollar devaluation how can one ever plan for a comfortable retirement?
In my opinion, devaluation of the dollar by our “leaders” is thievery.
Mike April 28, 2017
The best way to maintain a “strong dollar” is to get the Federal Budget into better shape. This will require virtually a complete reversal of most policies. The largest consumer of dollars is the military industrial security complex (Social Security and Medicare have their own tax bases and should be separated from the Federal Budget). This is enabled by our consistently inane foreign policies. Reagan was right in this instance, Government is the problem. All other spending should be examined. Taxes should be raised not lowered. Over the past 36 years the upper 1% has gotten the lion’s share of cuts so that is the logical place to start. Our precious middle class has gotten some tax relief (to make up for being screwed by trade treaties) but they must be given the opportunity to contribute. If nothing else just so they will remember there is no such thing as a free war perhaps a one dollar per gallon tax on gas with Dick Cheney’s smiling face on every gas pump saying thanks.
EUGENE JENNINGS April 28, 2017
THE REST OF WORLD FALLING APARTKEEP STRONG DOLLAR GET MONEY FROM RICH PEOPLE AND COMPANIES AND GET READY FOR WHAT WILL HAPPENS NEXT
Hubert Dyka April 28, 2017
Is there anybody out there who really thinks Trump has any clue or competence to take any informed position on the dollar policy??? Letting alone the fact that it is the job of FED to define currency policy and not a business of uneducated Trump, any message sent by him can only be directed at even greater economic ignorants.
Joe May 1, 2017
You think Yellen has an ounce of knowledge of economics? End the Fed!
John Love April 28, 2017
I would like President Trump to pursue a dollar backed by gold and silver, like the good “old days”
Bill April 28, 2017
We can not compete in the global economy with a strong $. Our trade deficit is unsustainable. Plus our $, while still the world reserve currency is becoming worthless anyway. It is sad to say but I believe the global economy is failing, the debts are unsustainable the derivative market has hidden the world financial crisis that lurks on the horizon.