Forward Guidance Breaking Down Trump's Potential Trade & Economic Policies | Stephen Miran
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Nov 13, 2024 
Stephen Miran, a senior strategist at Hudson Bay Capital and veteran of the Trump administration, shares keen insights on potential future trade and economic policies. He discusses how Trump's tariff strategies could shift global dynamics, the complex role of the dollar as a reserve currency, and the implications of a Mar-a-Lago Accord aimed at currency manipulation. Miran also analyzes the balance of trade and national security, and speculates on how deregulation and energy policy could drive economic growth while avoiding inflation.
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Dollar Reserve Status and Trade Imbalances
- The dollar's reserve status creates persistent trade deficits by attracting inelastic demand for dollar assets.
- This prevents exchange rates from balancing trade, hurting the US manufacturing sector.
Impact of Declining US GDP Share
- As the US share of global GDP declines, distortions from reserve currency status increase.
- This exacerbates trade imbalances and impacts the manufacturing sector.
Financial Extraterritoriality vs. Trade-offs
- The dollar's reserve status grants the US financial extraterritoriality, the power to impose policy globally without military action.
- This power comes at the cost of an overvalued dollar and damage to domestic manufacturing.