Exceprted from One River Asset Management's Eric Peters,
“We have created new tools to determine whether an economy may be pursuing foreign exchange policies that could give it an unfair competitive advantage against the United States,” announced the Treasury, late Friday.
“China, Japan, Germany, and Korea will be closely monitored as a result of a material current account surplus combined with a significant bilateral trade surplus with the United States."
"Taiwan will be monitored as a result of its material current account surplus and its persistent, one-sided intervention in foreign exchange markets,” continued the Treasury, bending to the stiff winds of political change sweeping the nation.
The 2016 election has laid bare the deep insecurity of America’s ageing working-class, their resentment toward foreigners, competition, change.
While America’s youth clamor for fairness, a future free from crushing student debt, the oppression of a government owned by and run for big business, the US Treasury is responding, warning our trading partners against artificially weakening their currencies, stealing our growth, depressing our wages, destroying our jobs.
But by singling out the countries with the world’s largest current account surpluses, they’re also demanding they spend their national savings, unleashing fiscal stimulus.
Japan’s central bank chief surprised markets, holding stimulus measures unchanged, announcing they, “Want to take more time to assess the impact of negative interest rates.” The Yen soared 3.6%, the Nikkei sank 5.2%, struggling to adjust to the possibility of a new reality; a less trade-friendly world, pressed up against the political limits of extraordinary monetary policy.
Of course, America is Earth’s greatest currency manipulator, and as long as we retain the power that comes from minting the world’s reserve currency, we always will be. Naturally, no one likes a hypocrite, particularly one barking orders, making threats.
Which is why this new chapter in the great monetary experiment will be so fascinating. Unpredictable, volatile.