Why Trump Wants a Weak Dollar

Trump has been screaming throughout this entire campaign that he wants to make the United States strong however if you actually pay attention to what he said he has repeatedly mentioned the fact that he wants a weak dollar and it's not just about him it's also about his vpj events and his arted team that he got around himself also wants a very weak US dollar so has Trump been lying to us all all this time well that is part of the story because a weak dollar is certainly going to make the United States a bit poorer

in fact it will make every American slightly poorer than he was before so it sounds a bit confusing why would Trump want to make the average American poorer when his entire campaign it was about making America First putting America first so let's try to clarify why exactly Donald Trump wants to make the dollar weaker and how exactly he's going to do that and how will that impact you but most importantly what I want to talk about did the day end of the video is how you can actually take advantage out of that and profit from

that because if you understand how certain policies are going to impact the stock market how certain policies are going to impact for example asset prices you can position yourself in such a way where you can actually take advantage out of it so if you're ready let's just get right into it a strong dollar might sound like a great idea because a strong dollar represents maybe a strong country and a strong country is exactly what everybody wants that that might sound great in theory that might sound great when you say it however if you actually dig

deep into the economics of that you'll find out that a strong currency isn't always good for the country sometimes or pretty often a strong currency can destroy a certain country and if you actually take a look historically you will find out that a strong currency has destroyed multiple countries out there even if you go back for example to 1990s Japan one of the reasons that the Japan bubble actually burst was the reason because the Japanese yet got too strong on the other side if you go to Europe one of the reasons that led for example

a country like Greece to suffer for such a long time is simply due to the fact that Greece was part of the European Union and it adopted the Euro and Euro was too strong for a country like Greece and it took Greece probably over 10 years in order to recover from the 2008 financial crisis a strong currency means that the imports from other countries into your country are going to get cheaper and exports are going to get more expensive for example if you want to buy something that is produced in China they will pay those

people in China in Chinese Yan so they will use the dollar in order to buy that so when the dollar becomes extremely stronger compared to the Chinese uan for example you will use less dollars in order to buy that on the other side if the dollar becomes weaker now you need more dollars in order to buy the exact same thing from China and ship it to the United States so when you have a weak currency Imports are going to get more expensive on the other side if you have a strong currency now you need less

dollars in order to buy the exact same thing from other countries so it might sound very great I mean why would you want a weak currency when you can have a strong currency and everything that is imported from other countries is suddenly so cheap and you can buy everything you can afford a lot of things and that might sound counterintuitive to what Trump actually being proposing because if Trump wants the best for America or the Americans overall why would he actually lead the dollar to become weaker yet again and Americans will actually see prices rise

especially when I'm talking about prices of foreign competitors and foreign Goods just like foreign products are going to get cheaper us products are going to get more expensive to people outside the United States for example if something is produced in the United States and then you take that and you ship it to China when the dollar becomes stronger now people in China will have to use more Chinese yuan in order to buy the dollars in order to buy that product and because United States products are now more expensive in countries like China and the rest

of the world there is less demand for Chinese or there's less demand for us products which means that less people will buy American products and the American economy and the American companies suddenly will start to suffer so there's two sides of it on one one side yes certainly you want to have a very strong currency but on the other side businesses are going to suffer the most and that's one of the most fundamental reasons why most of the companies have no way to manufacture their products in the United States because the dollar is simply too

strong and producing that in the United States you can actually you can actually compete on the price when it comes to when it comes internationally so if you want to bring all those manufacturing jobs from China and Southeast Asia to the United States there is no way you can actually do that if you don't make the dollar weaker if you have been watching the news for example you know that China consistently weakens its currency in order to keep its products price competitive on International markets they're purposely taking their currency because you know when China is

exporting so much products all across the globe to the United States European union and the rest of the world suddenly there is so much demand for the Chinese Yan and Chinese Yan becomes stronger which means that every product that is being produced in China becomes Less Price competitive internationally so the Chinese government purposefully manipulates its currency in order to make it weak so that those Chinese products becomes more price competitive in the international market because otherwise the Chinese economy isn't going to grow as fast as it was in the past and that is something Trump

has been criticizing a lot when he was the president the first time and now because he's again yet again going back to the White House he will probably use the exact same Chinese tactics in in order to compete with China so Trump's whole idea is to make the United States more competitive to the rest of the world and in order for him to do something like that he needs to weaken the dollar so that United States products things that are manufactured in the United States will become more pric competitive compared to other products in the

market and it's one way in order to grow the economy and bring the American dream as he calls it now in the short run that is going to backfire and the US economy could suffer substantially because by lowering down the value of the dollar foreign products will become more expensive which means that prices could actually rise in the United States which means that consumers are going to suffer but in the long run by weakening the dollar it's going to become more competitive globally and the US GDP could actually grow much faster than it was in

the past another reason behind that could simply be the idea that Trump wants to pay off the debt of the United States now everybody knows the global problem of the United States by not paying off its debt because the United States literally owes the rest of the world a lot of money and first of all it owes a lot of money to the people in the United States and at this point if you do the math you will find out that mathematically the United States cannot possibly pay off that debt and a lot of experts

have been pointing out to the fact that there is no way the US will pay off this debt but if the United States is going to devalue the Dollar right now all that debt previously is be is going to become less valuable because all of that debt is in US Dollars it's not in foreign currencies which means that a weaker dollar will make that those previous debts a bit less valuable which will make it easier for the United States to pay off its debts now if you take a look at how the United States spends

it money you will actually be surprised because every single year the United States pays billions of dollars dozens of billions of dollars to foreign countries because those foreign countries have purchased US Government debt for example let's take Japan which is the largest foreign holder of the US debt Japan holds around like 1.1 or 1.2 trillion dollar of the US government bones and let's assume for a second that the interest rate on that debt is around 4% or probably a bit less than that or maybe a bit more than that but that's the average because that

debt has been accumulating over the last 50 60 or even 70 years so some of those debts have high interest rate others of those debts actually have a much lower interest rate for examp example all the debt that's been acquired during the pandemic when interest rates were extremely low around 1 or 2% when it comes to government bones so those bonds had a very low interest rate so because Japan holds around $1.2 trillion of US Government debt the United States has to pay a lot of interest to the government of Japan for holding all of

that debt which is around 40 to 50 billion dollar annually now China is the second largest debt Helder of the United States at around $800 billion it might be slightly more than that but if we also take an average of 4% of interest rate that's around 35 or 33 billion do and if the United States is going to keep this strong dollar it's going to make Chinese products more competitive in the United States and United States will not be able to compete with those foreign companies with those foreign Chinese companies which means that China is

going to keep making more money from the United States and the UN and and you know what this four companies usually do is that they don't take that money back to China they take that money that they make in the United States and they buy a lot of US Government bones and receive interest on that which means that with each consecutive year as the United States dollar is so strong those I mean United States is requiring more and more debt and will owe China and Japan and other foreign countries much more money than it owes

right now which is why which is exactly what Trump hates about and in the long run if you just do the math you will find out that if things continue like that for another 10 years United States can really find itself in a situation where it will have to pay like at least a few hundred billion dollars in interest now the main question that everybody is wondering how Trump can make the dollar weaker so that United States becomes suddenly more competitive on the global stage now number one over the last two to three years the

Federal Reserve has strengthened the Dollar by increasing interest rate you have to understand that any currency in the global market is like any other commodity but because it has no intrinsic value within itself and the value derives from the value that the government actually gives it or the Central Bank in this case then by limiting the supply of that currency in the market that's how you actually make the dollar or any other currency more valuable or less valuable so for example if the Federal Reserve suddenly lowers interest rates to the bare minimum there will be

an inflow of the dollars in the market more dollars in the market makes it less valuable and that's one way to devalue the currency and if you actually be paying attention to what Trump has been saying all this time you know for a fact that Trump I guess in one of the interviews he said that he will literally file the chairman fire the chairman of the FED if he's not going to lower interest rate and I think one of the reporters actually ask J Paul if he's going to resign if Trump actually going to ask

him now I don't really know the conflict between these two people I think it's going to go a bit uh much deeper than that and it's one thing to say something to the Press when you are actually running for a reelection and it's a completely different thing to actually do that in reality when you get into the office but nonetheless J's term is going to end by 2026 so he isn't actually having a lot of time this he's going to be the chairman of the FED for another year and if he's not going to follow

Trump's advises on how to actually manage the feather Reserve I think for a fact that he can actually fire him and replace him with somebody who is going to be much more loyal and is going to pursue the policies that Trump is asking him which is lowering interest rate over the next couple of years now another thing that Trump wants to do and you probably heard this a lot is that he mentions that he wants to impose a lot of tariffs and every product that comes into the United States and that is going to make

the dollar much much weaker than it is right now suddenly all those foreign products are going to become much more expensive in the United States which means that they're going to be less competitive compared to local products that are being manufactured in the United States so the demand for the dollar is going to shrink again which will make the dollar less valuable that is another way to actually weaken the dollar that is another foreign policy that or the economic policy Trump has been proposing throughout his entire campaign now in the short run it is going

to have some really negative impact on the consumers es especially because a lot of good I mean if you take a look at the US economy you realize that I mean it fundamentally is built up the fact that a lot of the products are being imported from foreign countries into the United States so if there will be a tariff on those things prices are going to rise imagine how many things are not being produced in the United States I mean United States has been delegating its manufacturing to Southeast Asia for the last like 50 60

years so if you want to bring that up it's going to take you years these are some of the way ways to do that through capitalism through the free market of course there are some ways to do that directly by literally manipulating the price of the of the currency in the market but that's not something that I mean United States would possibly do because I mean the US can do like directly manipulate its currency just like China does or the China did for the last 20 or 30 years but I don't think it will be

received positively by the rest of the world because you have to understand that United States currency the US is not the Chinese one it's not any other currency out there it is the Global Currency reserve on one side the United States enjoys all the pleasures all the benefits that come out with being the Global Currency reserve on the other side with that status comes a lot of responsibility of course over the last 20 or 30 years United States hasn't been really as responsible as it possibly could and it actually took a lot of that money

and wasted it on things that it shouldn't be for example by waging Wars that shouldn't be waged in the first place which is why right now it's in that position where it has to pay the price for its mistakes so if the United States wants to actually deliberately lower down the value of the dollar it has to go and find a common ground with its Partners in order not to actually demolish or the destroy the reputation of the US Dollar on the global stage and something like that once happened in the past when Ronald Reagan

was the United States President back back in 1985 he actually got the leaders of Japan United Kingdom France and a couple of other countries and got them together in a room and agreed with them to devalue the Dollar by 50% and the reason behind that was exactly the exact same reason that we have today you see if you go back for example to 1970s and 80s you'll find out that the US dollar became extremely strong because there was high inflation in the United States the Federal Reserve hiked the rates to extreme and that made the

dollar so powerful that us products became less competitive and because the United States is this free country that doesn't want tarist but wants to actually have a global free market for everybody guess what happened the Japanese products especially Japanese Electronics Japanese cars flooded the US market and US companies simply could not compete with those Toyotas and Hondas and Sony uh products I mean what what would you buy a Chevrolet that costs an x amount of money or a fraction of the price you can buy a Toyota that is way better and much but uh that

is way better and will last you much longer that's something that Ronald Reagan did not want and did not like because it was destroying the US economy and he realized that if things go like that most of those auto manufacturers in the United States are going to go bankrupt and it's not fair for the United States to let Japanese companies to come to the United States yes the US can do the exact same thing and just sell its cars in Japan for example but because the dollar is so strong Japan us CA cannot possibly compete

in a country like Japan with the local manufacturers so they got together and they agreed to devalue the dollar I mean of course that led to the crash of Japan and it destroyed the Japanese economy it's not something that you should do as a leader for your country because literally that decision destroyed the Japanese economy and even though right now we are in 2024 guess what the Japanese economy hasn't recovered from that crisis yet so is it possible for Trump to pull out something that Ronald Reagan actually did back in 1980s now to be honest

that is pretty much impossible to do because back in 1980s the world was a completely different place the United States was ahead of everyone else and today everybody knows that it was a crucial mistakes for a country like Japan to do something like that and you have to also understand the fact that all of those countries United Kingdom Japan France dependent on the United States for their security so even though they did not really like those policies that were proposed by the United States they had to agree with the US in some way because the

United States is literally paying for their protection now let me ask you a different question do you think China today would agree to something like that that Japan did back in 1980s that it will actually agree to devalue the US dollar well I don't think it is going to do that because China is is the main competitor of the United States China is building up its military and United States and China has a huge conflict that is happening in Taiwan of course that conflict hasn't turned into a hot War yet and I hope that it's

never going to turn into something like that but given the fact that relationship between China and the United States is not the friendly relationship that the United States had with Japan that is why China is not going to agree with that on the other side if you go back for example to European Union back in the days I think Euro didn't exist so United Kingdom and France and all those countries agreed to do something like that but today it's no longer the case Europe has its own currency which is called the Euro and Europe no

longer trust the United States as much as it did back when it trusted for example the US during the era of Reagan especially when you have Trump who came out and said that I'm not going to protect you unless you pay the United United States first so chances that the US will pull something like it pulled back in 1980s is pretty much close to zero but on the other side if Trump actually is going to go and do that whether its allies is going to like that or not it's going to severely damage the United

States position as the world leader it is going to damage the United States dollar as the Global Currency Reserve most people would look at that and will say that listen we don't really want something like that now we have spent hundreds of billions of dollars in some cases trillions of dollars to buy your debt and now you cannot pay off your debt you're devaluing your currency into such a way where your debt becomes less expensive which means that we are going to make less money we trusted you we trusted your currency we purchased your debt

and now you're de devaluing your previous debt by overflooding the market with cheap money in order to make your currency weaker and grow your economy that is not fair so that is going to have a huge damage the reputation of the United States which means that it is going to be harder for the United States to raise money which means that if the United States wants to borrow more money for example in the foreseeable future what do you think is going to happen when you have damaged your financial reputation exactly you will pay a higher

interest it's still too early to say what exactly is going to happen because I don't know to what extent Trump is serious to make the dollar weaker now if you actually think about it logically the United States actually needs to weaken the dollar to a certain extent to become more competitive because we are no longer living like in the 1990s 2000s 2010s we're living in a world where other countries is caught up with the United States just give you a very simple example one of the benefits and advantages that the United States actually enjoy during

all this time is by imposing sanctions on other countries why because it can because everybody uses the dollar and you can actually use the dollar as a weapon and for example it sanctioned Iran for like 40 or 50 years and it crippled its economy over time it sanctioned a country like North Korea but right now over the last couple of years when the United States has been sanctioning Russia those sanctions didn't really work at all they didn't really C the Russian economy and the world has been moving away from the dollar we know all of

those brick Summits we know the trade relationships for example between Russia India China Brazil and this bricks community that has been drifting away from the US dollar so it's time for the United States to actually change its fundamentals and change its focus to the way where the United States will go again back to being This Global competitive country that can compete with the rest of the world but the main question of this video is that how is a weak dollar is going to impact you now in the short run a lot of people suffer like

your real your real wages are going to go down whether you want that or not but in that scenario when the currency is being weakened it doesn't matter what country we are talking about whether it's the United States China India Brazil Argentina whatever the country is when the currency weakens asset prices rise which means that over the next couple of years whether we want that or not Trump has won the reelection now he's going to be the next president of the United States and if he actually weakens the country the currency which is exactly what

he's been saying that he will do asset prices are going to rise so the best way to protect protect yourself and position yourself not just to protect yourself but profit from this weak currency from the weak US dollar is to actually start investing buying stocks buying assets that are going to rise in value now I know that it's very difficult to start investing because you don't know which stocks are great and which ones are not because if you buy the wrong assets if you buy the wrong stocks no matter how weak the dollar is going

to be if that stock if that company is worthless it is going to go to zero so learn how to do that buy the rights assets and you will see and you will actually not just protect yourself but you will profit from the weak currency that's it for today guys thanks for watching and I will see you in the next one