Jim Middot; O'Neal
Now, when people ask me well, I will always answer jokingly that I am all right, as long as I don't care about Trump's presidential term in the United States, Brexit, the crisis of major political parties in the UK, and the Manchester United Union teamPerformance.
However, recently this kind of unfortunate list has become so long, so that I can't even say this joke.It is also necessary to add Hong Kong's political crisis, the rapid expansion of diplomatic and economic disputes between Japan and South Korea, the Indian government revoked the autonomy of the Jammo and Kashmir regions, as well as a wider tension in India and Pakistan, as well as the South African ruling party in Africa.The increasingly severe internal turmoil of the conference.
To make matters worse, as far as the weather is concerned, this is a particularly difficult summer: the heat waves in Europe and the United States strongly remind people that the impact of climate change on our daily life is increasing.Coupled with the chaotic situation and antibiotic resistance caused by social media under the leadership of the Middle East and Putin, these continuous global uncertainties will make you desperate.
If it is a normal period, the recent development of the global situation will show the risk premium of a sharp rise, especially considering that global growth has slowed significantly during 2019.But now it is not normal, this is mainly due to the current monetary policy formulation.Here, people can't help wondering whether Trump will constantly upgrade the threat to China's extra tariffs as a means to force the Federal Reserve to reduce interest rates.After all, shortly after the Fed decided to reduce its policy interest rates by 25 basis points, he immediately tweeted a furious.From the perspective of Trump and the market, the division of this down reduction is obviously not large enough.
Sometimes I think, is Trump a villain like James Bond's movie, pondering a secret but too complicated rule of rule all day.Behind he did most of his things, there was obviously no obvious logic.To be sure, the populist posture he put on foreign policy may be intended to stimulate other leaders from all over the world to take similar actions.
The Indian Prime Minister Modi's moves against Kashmir and the Japanese and Korean government's strategies for each other seem to be directly from Trump's script.There is no doubt that politicians around the world are telling themselves that if this behavior is acceptable for American leaders, it is the same for them.
However, the political logic of Trump's domestic strategy is more difficult to explain.His strategy is largely to consolidate his voter foundation in the 2020 presidential election.But to win the second term, he needs to win the support of more marginal voters, and it is unknown whether his current domestic policy can impress those who have not supported him for a long time.
Like many previous presidents, this depends to a large extent on economic conditions.Although the unemployment rate in the United States is still very low, the growth cycle has slowed and it is becoming more and more fragile.To make matters worse, the US economy seems to have a broader financial situation, that is, short -term interest rates, bond yields, stock prices, US dollar value and house prices, forming one -way relationship.If these financial situations are gradually tightening, the US economy will be affected, but if they are loosened, the economy will hardly benefit.
It is unclear whether Trump has popularized its consultant to pay special attention to these financial situations.These situations seem to be urgent to relax, but the threat of Trump's additional tariffs on imported products in China has disrupted the global market, including the stocks of many American multinational companies, and led to the continuous appreciation of the US dollar. As a result, the financial situation in the United States is even more acceptabletight.To offset this impact, the short -term and long -term interest rates in the United States must be significantly reduced.It is certain that sometimes the financial situation will indeed relax due to the prospects of new tariffs and the higher consumer prices triggered by it, prompting investors to pour into the bond market, thereby offset the strong US dollar and the stock market weakness housesThe tightening effect brought.
In addition to the daily trend of the market, Trump may want the Fed to become the hostage of the financial situation, especially if the yield rate of bonds declines and the yield curve is upside down.This may prompt the Fed to implement a larger interest rate reduction than previously implied.However, the role of further relaxing monetary policy on reducing economic risks is very small, because these risks are not derived from monetary sensitive factors.
In addition, the unpredictability of Trump's words and deeds increases the risk of exporters and other long -term investment makers.Therefore, the only way to relax monetary policy is to allow consumers to play a greater role in promoting economic growth.However, consumption has accounted for 70%of the GDP of the United States (GDP), and the trade war is pushing up consumer prices and may cause an increase in unemployment rate.
This reminds me of a argument that I have proposed many times before: the global economic growth of these decades and the next decade will depend on China (not the United States) consumers.Under the leadership of Trump or others, the United States has to accept this fact for one day and see it as an opportunity.
The rise of Chinese consumers may help solve many economic problems in the United States, as long as the United States no longer hinders.
Author Jim Oneill is the former chairman of Goldman Sachs Asset Management and former Minister of Finance in the UK. He is currently the chairman of the Chaotham House Institute of Chartham.
Original English: Trumps One-Way Economy
Copyright: Project Syndicate, 2019.
