Where Trump is failing to fix the economy with monetary policy

(Elite E Services) 10/17/2017 — Dover, DE — It’s no secret that the US economy has diverged into a massive 2 world system where there is also a massive gap in between; the employed and the wealthy have increasingly good lives while the poor and unemployed have a deteriorating quality of life.  As we have explained in Splitting Pennies, it is monetary policy that ‘Trumps’ all else.  Using The Gini Coefficient we can visualize what this means:

In economics, the Gini coefficient (sometimes expressed as a Gini ratio or a normalized Gini index) (/d?ini/ jee-nee) is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation’s residents, and is the most commonly used measure of inequality. It was developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper Variability and Mutability (ItalianVariabilità e mutabilità).

Taking a look at basic 2013 data (it’s worse since then) we get a picture of reality vs. what is said in the media.  Using Russia as a good example to stay with the Trump theme, USA (41) has roughly the same Gini as Russia (40.9):


Remember that Russia is the unfair system that is a top-down Byzantine oligarchy, right?  Then why Russia and USA share almost identical Gini, being surpassed only by the Banana Republics in South America?

Everyone in finance knows there are several things that Trump can do to fix the economic problems of USA in about 5 minutes:

  • Surprise increase interest rates to 5% or 10%
  • Import tariffs on Chinese crap
  • Unwind USA’s Petro Dollar system (drink it!)
  • Repeal the Dodd-Frank Consumer Rip-Off Fraud Act that has caused billions to flow out of USA.  Make America the world’s banker once again.  (This is our industry – FX – we know that this alone would create thousands and thousands of jobs and be a huge boost for the economy – billions would flow into USA and we’d again be the world’s banker.  But this same approach likely applies to many industries.  Dodd-Frank regulations killed FX and have cost millions of jobs.)  We’ve outlined this in previous articles.

It’s not really practical to bring factories back to USA, however we have robot technology and the financial sector is a great example of how we can create high skilled high paid white collar jobs.  But Trump seems to be more obsessed with form not essence (and his form is not good).

Oh – you’re thinking that a President can’t do that, right?  President is a figurehead, only Congress can pass laws.  That’s true.  But Nixon did it.  Somehow, Nixon was able to accomplish all these things in 1 day and created the floating FX market as it exists today.  It was not Nixon’s only genius move, there were many.  Was Nixon’s real genius just listening to his advisors like Henry?  Either way, in practice, it fixed the problem – only to be unwound by future administrations.  Was it a temporary fix?  Of course – but that’s what we need.  We need to unwind QE which is practically impossible, so jacking up rates is a first good start.  Wall St. and the stock market will suffer.  But they’ve had a long bull run.

Winter is coming – it’s bear time.

For a primer on how the global money markets shape reality, checkout Splitting Pennies or for a Bitcoin Twist, Splitting Pennies 2.0 – Splitting Bits.


NickPeeMe Wed, 10/18/2017 - 05:58 Permalink

It is not where is Trump failing but where isn't he failing? If being an obnoxious asshole that makes weak as water Obama look good well I guess Trump has accomplished that.

ReturnOfDaMac Xena fobe Wed, 10/18/2017 - 11:11 Permalink

Nah, I'll take a bite at that apple, being white is all right. How 'bout these for starters

  • Where's the fucking wall
  • Where's the great health care
  • Where's the ObamaCare repeal
  • Where's the Currency manipulator tag for China
  • Where's MY fucking tax cut
  • Where are the fucking jobs?  Real jobs, not purple squirrels
  • Why are the troops not back home

I could continue, but you get the point.  This aint the fucking apprentice. I don't give a shit about kneeling football players, Rosie O'Donalds hair, Mikas facelift or any of that shit.Get serious, Mr.President.

In reply to by Xena fobe

Ntoxic8ingWave NickPeeMe Wed, 10/18/2017 - 11:00 Permalink

There is no fixing this... The only way to fix it would be to declare all debts null. Otherwise, this market is going to have to correct and it will be massive, if not a collapse altogether. Trump was never able to fix it. What he has done is taken credit for the rise since his election, and is now claiming that if his tax reform is not installed, the market will correct, while the Fed is saying that if the tax plan is implimented, the market will collapse. Who will win out?

In reply to by NickPeeMe

NickPeeMe Wed, 10/18/2017 - 05:58 Permalink

It is not where is Trump failing but where isn't he failing? If being an obnoxious asshole that makes weak as water Obama look good well I guess Trump has accomplished that.

Honest Sam NickPeeMe Wed, 10/18/2017 - 09:03 Permalink

Butt, look what he has done for the whole world, or more specifically, what we who voted for him have done. Hillary Clinton is one step away from entering a Nunnery, and gettting out of our lives forever.  He appointed a Supreme that is at least somewhat not a lefty.Those two accomplishments are more than I asked for. And there is the luminous Ivanka Trump to look at instead of Malia, and her mother. AND his sexual innuendo and behavior is now pale as a ghost compared to Biggie Democrats, especially Jewish ones, who are leading the charge to disembowel our votes. So fuck off and die. WADR.The glass is more than half full. 

In reply to by NickPeeMe

DEMIZEN Wed, 10/18/2017 - 06:33 Permalink

it makes sense but elites, retires, and .gov mooches/contractors will never sacrifice world currency for the real local growth. doesn't matter how many wars it takes.

doctor10 Wed, 10/18/2017 - 06:10 Permalink

Traditional currencies really aren't worth all that much in a surveillance society -which essentially all big governments are today. All opportunity for arbitrage is stolen by the sociopsyopaths pre-occupied with going through everybodies bank accounts, real estate holdings, telephone and email records, tax returns and health records seeking "opportunity". Not much business can be done profitably. At the end of the day its why interest rates -at least in 100% traceable accountable taxable regulatable and ultimately takable currencies are basically 0% give or take a few fractions of a percent-worldwide. FWIW if you want to borrow BTC now interest rates can be 12-13%!! "value" is anonymity and privacy in conduct, thought and action-one of the consequences of which is enhanced ability to keep the fruits of your own labor. It also is the ONLY means through which individual productivity can increase-and thus increase productivity across an entire nation. Electronic/digital currencies actually fulfilling those needs will be the most valuable-there is yet to emerge one that clearly does so. Ask East Germany and the Soviet Union exactly how well a surveillance society worked out during the 20th century. The 21st is no different in that regard-except that surveillance is cheaper and more intrusive and consequently more deleterious.

yvhmer Wed, 10/18/2017 - 07:07 Permalink

Interesting was to see the response to the exchange rate on the EUR/ Dollar market, as soon word got out Trump is considering John Taylor as FED chair.I find it quite extraordinary when people, like the writer above, start whining about failure, when in essence the man has not even been in office for 2 years. When looking at how the hares are running, one has to wonder at the sheer size of the job Trump has said he would do. Granted, that may be rethoric and all talk out of a mouth stirred by delusions of grandure.But shouting fail before the game has reached the final stage ..... seems to me a bit premature.And besides: using 2013 data to support the notion that a 2017 administration is a fail ....Economy takes time to rebound, especially when all the players and their manipulation  are still celebrating in their dance of fate. Wage growth, not only for the poor, but for the average middle class income, has been flat / shrinking. To undo policies that have lead to this disparity is a task of gargantuane proportions.But as always, the best helmsmen are standing on the quay instead of behind the wheel.

Honest Sam yvhmer Wed, 10/18/2017 - 09:31 Permalink

re: your first point and last about time in office and ramping up in a new admenstruation, theBamster's first 2-3 years were rife with negative economic news, lest we all forget, especially those now critical of Trump, an admitted nephyte with even less political governmental experience than that corrupt first black man who got a pass by media for all his crimes. https://www.wilsoncenter.org/event/obama-office-assessing-the-first-two…

In reply to by yvhmer

JailBanksters Wed, 10/18/2017 - 07:27 Permalink

SeriouslyHow do you fix an economy that is based on Corruption, Fraud, Deception and WarsEspecially when all the people that benefit from the Corruption, Fraud, Deception and Wars are the same ones that would have to fix it !!Oooo Oooo, I know, you just keep repeating the catch phrase: Time to Drain the Swamp. ROFLSeriously

Honest Sam JailBanksters Wed, 10/18/2017 - 10:58 Permalink

Just to be contrary, what specifics can you point to that the economy is, regardless of its impetus, source of thrust or other mover not doing well?  What I see in a relatively vibrant geographic area has been nothing but encouraging for years.  Clinton's loss hasn't seemed to hurt anything but the monstrously diseased egos of those who demanded her victory and are now attempting to cover their agony, jealousy, shame, humiliation, embarrassment and criminality with a coup d'etat.

In reply to by JailBanksters

Ace Ventura Wed, 10/18/2017 - 09:17 Permalink

Not really practical to bring factories back? WTF? Yeah....all those unemployed factory workers will make totally awesome wall street paper-pushers. Great idea and just what we needed. More non-producing digital money crunchers in Wall Street. Cuz THAT certainly can't be done by robots, right?Who the heck is this author?