The American economy is so bad that even Trump appointee Walsh has to raise rate

Trump initially was not happy that the former Fed Chief, Jerone Powell, did not cut interest rates fast enough and was removed by Trump. Now his own chosen appointee, Kevin Maxwell Walsh, instead of cutting interest rate, is doing just the opposite. Trump is riled and caught in a bind for November, with inflation rising. The Fed is even talking about another rate hike by the end of this year. Will Walsh outlasts Trump is the question.

Trump is now gloating about imposing 100% tariffs on China and India for buying Iranian oil in a bill to be passed, a sanction that had already been used against China and India for buying Russian oil and trying to add Iran into the picture. Have we gone through that already?

I was not wrong to say that any measures taken is all to target China, while India is also affected. But India needs US$ as its rupee is not widely in demand by others for doing trade. Its rate of depreciating makes it toxic to hold. Even close allies, like Russia, does not want to sell its oil in rupees, preferring the Chinese Yuan or ruble, which is an affront to the Indians. How much rupees Russia still holds selling oil to India in the past is not known.

As I always say, Trump and his administration can increase those tariffs to 1,000% and it will not make any major difference if China just continue to cut its exports to the USA, making de-dollarization even more beneficial for China and BRICS. If there is little trade between China and USA, what is the point of a 100% tariff? Impose more secondary 100% tariffs on countries trading with China? Go ahead.

China can just sell more to the Global South at the same price, make the same profit, keep the same factories humming, increase its trade surplus without any economic consequences.

Who suffers? The USA consumers of course, which goes without saying. Sure, they could source for alternatives from elsewhere, but at what price and quantity that only China can produce. For me, I am clapping that USA goes ahead with secondary sanctions on China that is getting less and less detrimental, just like the primary sanctions over the decades. Imagine exporting to the Global South and using the Yuan as the intermediary, without the need for US$. Honestly, the USA is cutting its nose to spite its face. But it is in desperate straits, so anything goes.


Anonymous