The Contrarian Investor Podcast Tariffs Have Changed 'Plumbing' of Global Finance: Axel Merk
May 6, 2025
In this engaging discussion, Axel Merk, Founder and CIO of Merk Investments, reveals how Trump’s tariffs have disrupted the global financial system. He explains the fragmented shift away from US dollar assets and the potential for stagflation due to supply shocks. Axel also emphasizes historical precedents for navigating economic challenges and the growing case for gold amidst uncertainty. He highlights concerns for both Europe and China, and speculates on the risk of recession while addressing misconceptions about economic data.
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Tariffs Disrupt Global Finance Plumbing
- Trump's tariffs have disrupted the global financial "plumbing" by affecting trade balances and financial flows.
- This leads to higher deficits financed domestically, potentially raising rates and increasing pressure on the Federal Reserve.
Tariffs Cause Stagflation Supply Shock
- Tariffs act as supply shocks, causing stagflation with rising prices and stagnant growth.
- Central banks cannot easily combat this with traditional monetary policy, leading to prolonged economic tension.
No End Game, Always Adaptation
- There is no ultimate "end game" in global economic disruption; the world continuously evolves and adapts.
- Societies adjust mentally over time, even amid instability and political upheaval, to new economic realities.
