Richard Duncan, a macro economist and author of MacroWatch, dives into Trump's radical economic strategies aimed at reshaping the U.S. landscape. He reveals how Trump's three-step blueprint—high tariffs, military leverage, and a coordinated dollar devaluation—could reverse de-industrialization. Duncan emphasizes the potential consequences, including inflation and economic instability, and discusses the necessity for Trump to control the Federal Reserve to implement these changes. He also touches on the strategic race against China in technology and the risks of aggressive monetary policy.
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The Deficit Changed The World
The US current account deficit since the 1980s has been the dominant macro trend that financed global growth and aided US disinflation.
Reversing that deficit would upend globalization, raise US inflation, and increase interest rates, says Richard Duncan.
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Blueprint To Restructure Global Trade
Steven Moran's paper outlines a three-step Trump strategy: high tariffs, military threats to force compliance, then a coordinated dollar devaluation.
The goal is to re-industrialize the US and isolate China behind global tariff walls.
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Why Lower Deficits Hurt Asset Prices
US trade deficits recycled dollars into foreign surplus countries, which then bought US assets, lowering yields and boosting asset prices.
If the deficit shrinks, less reinvestment will push bond yields up and asset prices down, Duncan warns.
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Richard Duncan, a macro economist and author, discusses his views on the economic strategies proposed by former President Donald Trump, particularly focusing on Trump’s potential influence over the Federal Reserve and his plan to re-industrialize the United States. Duncan argues that Trump’s strategy aims to reverse the massive U.S. current account deficit, which has fueled global economic growth since the 1980s but has also led to de-industrialization and a hollowed-out middle class in the U.S. Trump’s plan, as outlined in a paper by Steven Moran, involves three steps: imposing high trade tariffs, threatening to withhold military defense unless countries comply, and convening a global accord to devalue the dollar and isolate China.
Duncan highlights the potential consequences of this strategy, including reduced global economic growth, higher inflation, and increased interest rates. To mitigate these effects, Trump would need to take control of the Federal Reserve, which Duncan believes is Trump’s ultimate goal. Duncan explains that by appointing or influencing key Federal Reserve governors, Trump could gain control over U.S. monetary policy. This would allow him to implement aggressive quantitative easing, driving down long-term interest rates and potentially sparking an economic boom and a surge in asset prices. However, this approach also carries significant risks, including high inflation, a crashing U.S. dollar, and potential economic instability.
Duncan also discusses the geopolitical implications of Trump’s strategy, particularly in relation to China. He argues that China’s rapid technological and economic advancements pose a significant threat to U.S. national security. Duncan advocates for a U.S. sovereign wealth fund to invest in future technologies, ensuring that the U.S. remains competitive and secure. The conversation also touches on the potential challenges and opportunities that could arise if Trump’s economic strategy is implemented, including the risks of increased income inequality and the potential for a future economic bust. Duncan concludes by emphasizing the importance of U.S. investment in new industries and technologies to maintain its global competitiveness and national security.
Timestamps: 00:00:00 – Introduction 00:01:43 – Emergence of US Trade Deficits 00:05:30 – Globalization’s Benefits and Drawbacks 00:06:45 – Trump’s Reindustrialization Strategy 00:10:40 – Reversing Deficit Economic Impacts 00:13:30 – Inflation Risks and Fed Control 00:18:26 – Quantitative Easing for Rates 00:22:15 – Fed Structure and Governors Power 00:31:08 – Timeline for Fed Takeover 00:36:18 – Dollar Devaluation and Policy Effects 00:43:19 – AI Race Against China 00:52:00 – Geopolitical Risks and Necessity 00:56:18 – Concluding Thoughts
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Richard Duncan is a renowned economist and author of four books analyzing the causes and effects of economic crises. His work, including “The Dollar Crisis” (2003, updated 2005) and “The New Depression” (2012), accurately predicted global economic disasters and were international bestsellers. His latest book, “The Money Revolution: How to Finance the Next American Century” (2022), discusses the transformation of the economy from Capitalism to Creditism and offers opportunities for growth.
Duncan has a diverse background, having worked as an equities analyst in Hong Kong, global head of investment strategy at ABN AMRO Asset Management, financial sector specialist for the World Bank, and headed equity research departments for various firms. He currently publishes Macro Watch and has appeared on major news channels. His books have been taught at Harvard and Columbia, and he’s spoken at prestigious events like The World Economic Forum East Asia Economic Summit. Duncan studied literature and economics at Vanderbilt University and international finance at Babson College.
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