economy

Here’s Why Trump Wants a Weaker Dollar and How It Will Help Our Economy

Written by adminAugust 7, 2019

It was but just yesterday when the stock market took a major dive and at one point was 900 points in the hole. News of China’s currency manipulation really struck a chord with American investors. They hate the trade war more than anything. What should have been good news for the US when it came to cutting interest rates, the stock market went down instead of up.

That’s because president Trump has announced even stronger tariffs $350 billion worth of Chinese goods. Is no doubt that the trade war hurts our economy, but the president is out for blood. He’s tired of the Chinese manipulating the currency. He’s tired of how they steal intellectual rights and technology.

As a result of yesterday’s events, now the Treasury Department has weighed in and also called China a currency manipulator. They took action to lower the value of their yuan, which makes Chinese products much cheaper in the foreign market. This means that more countries are able to trade with China because goods aren’t as expensive as they would be trading with the United States.

This essentially gives China an “unfair advantage,” forcing the International Monetary Fund and the Treasury Department to look for ways to counter this move by the world’s #2 economy. This is the first time Trump has made comments about another country’s manipulation of their currency. In fact, he accused the EU of doing the same. They deflate their currency while the value of the dollar remains really strong.

What a Strong Dollar Means

You might think having a strong dollar is a good thing. Yet, there’s a reason why other countries are devaluing their currency. Having a strong currency is not a good thing for trade. Consider exchange rates and how they would play a part in a country buying goods from another. If a country has a strong dollar like the US currently does, and your currency is weak, who would other countries rather trade with?

Surely, they would rather trade with someone currency is weak because that means they get the same products for much cheaper. This is the type of game that China’s playing. As the US increases the amount of tariffs that they place on China, their figuring out ways of getting around it by lowering the value of the yuan.

“China and Europe playing big currency manipulation game and pumping money into their system in order to compete with the USA,” President Trump wrote on Twitter. “We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many years!”

“Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.”

Benefits of Weakening the Dollar

The value of the dollar impacts so many things here in America. If the US dollar is weakened, that means more countries can buy more U.S. goods. When we have that open trade relationship with other countries and their buying up all of our stuff, that gives a boost to many industries in our country.

They like to buy agriculture which is great for farmers. They’ll buy our cars and steel, giving a boost to manufacturers and factory workers. But when other countries manipulate their currency, it gives them an unfair advantage and takes jobs away from American workers. Trump has been displeased throughout his own presidency with the high value of the dollar.

“I want a strong dollar, but I want a dollar that does great for our country, not a dollar that’s so strong that it makes it prohibitive for us to do business with other nations and take their business,” Trump said during a speech in March, before launching into criticism of Fed Chairman Jerome Powell. “We have a gentleman that likes a very strong dollar in the Fed,” he added, referring to Powell.

Written by adminJuly 18, 2019

Real life

You may look at the title of this article and wonder how hamburgers prove that the value of the dollar is way too high. But when you look at it, the value of a dollar is what determines how expensive things are comparative to their worth. For this reason, you’ll find products that are cheaper or more expensive in other parts of the world. Burgers are yet one indicator to show exactly what we mean.

The Economist put together what they called “The Big Mac Index.” This index was their way of showing exactly how high the dollar is valued compared to other currencies. It looks at what it costs to buy a Big Mac burger in other countries and how much we would pay for that same sandwich here in the United States. The Big Mac Index is quite revealing.

The exchange rates we see with the dollar versus other currencies really reflect the value of goods across the spectrum. It allows us to see which currencies are over or undervalued. The indicator put together during the Big Mac Index revealed that the dollar has been growing increasingly stronger over the past few months and it was pretty strong to begin with.

The Cost of a Big Mac

With the Big Mac Index, we can see how different currencies stack up against each other. For example, the Euro has fallen in recent months. You can get a Big Mac at McDonalds in Europe 19% cheaper than you can in the states. Just 6 months ago, it was 17% cheaper, so you can see how the currency has lowered in value. It’s also a good indicator of just how inflated the U.S. dollar is comparatively.

In Russia, you can buy a Big Mac for $2. That’s because their ruble is 65% undervalued compared to the dollar. The cost in the U.S. is about $5.74, so you can start to see the differences and how much the value of our money can impact prices. We wonder why prices seem to continue to go up, and this is why.

The U.S. dollar is so overvalued that there is only one country that is higher currently. The Swiss franc is 14% higher than the dollar, which makes the cost of a Big Mac there $6.60. It’s quite interesting to see the disparity of prices around the world for the same burger. There’s no wonder why President Trump and 2020 Democratic candidate and Senator Elizabeth Warren have both come out in favor of lowering the value of the dollar.

If goods are more expensive here in the states, it really hurts the economy. Wages and jobs are still growing each month, but if goods become too expensive, it can really damper how much we are able to buy. Quite frankly, when the always reliably cheap McDonald’s starts bumping up their costs, more families are going to think twice about eating out there.

We Can Expect a Lower Dollar Soon

One debate currently raging right now is whether the Fed will cut interest rates later this year. The higher dollar makes it difficult for the U.S. to continue their dominance on the world market. It gives us a disadvantage and allows other economies to catch up. That’s why politicians across the spectrum believe a weaker dollar is good for the country.

During his campaign and even as president, Trump has long accused several countries of being currency manipulators. Russia and China are two of the worst ones, but even Europe has been deploying the tactic as of late.

Written by adminAugust 28, 2018

Student Loan Consolidation

Student loan debt has long passed being an epidemic and has entered crisis territory. It was just announced that the amount due hit a record $1.5 trillion and continues to climb rapidly. A lot of it has to do with the increasingly higher cost of college, but students aren’t paying their bill.

The problem is, they can’t pay their debt and their rent at the same time. This is why a lot of young adults are living at home and working two jobs just to keep up with their bills. Depending on how much they owe, students pay as much monthly as it costs to rent a cheap apartment.

Repayment often begins as soon as the student graduates. This forces them to use payment adjustment schemes that might offer short-term relief by cutting monthly payments, but it doesn’t do the trick. You still owe the entire amount that you borrowed. This “strategy” only ensures that young adults carry student loan debt longer than they would normally.

Student Loan Debt Rising

Overall, the US student debt has grown by $500 billion since the 2010 to 2011 school year. It’s interesting to see that while the amount of debt piles up, actual lending volumes have been falling. The number of people obtaining student loans has been declining as well. This is causing a major problem.

Because students answer this repayment program that make monthly payments smaller, they don’t realize they’re not lowering the interest rate at the same time. That means they’re stretching out the life of their loan while even more interest keeps piling on. On top of that, if they miss a payment, additional fees are added.

Also: http://financialhelpers.com/5-student-loan-debt-statistics/

John Anglim of S&P agrees that the interest rates are what’s allowing the banks to make a killing off interest.

“By reducing the payments, they allow borrowers to stay current, but the balance keeps growing. That’s what we’re seeing now,” he said. “If the government is serious and concerned about growing student debt, then we need to come up with a broader plan rather than one that just helps a select few.”

Student Loan Debt Hurting the Economy

It’s easy to understand how debt can be a drag on the average U.S. household. Paying towards student loan debt takes money out of your pockets that can go towards your life. Because so many young people have debt, it has become a major drain on the economy. If more people are paying towards something, it’s not being reinvested back into the economy.

This is causing everyone from the poorest American to the highest-paid politician worried about the future of this country. How much more expensive will student loans get? Vincent Deluard, a strategist for INTL FCStone, sees it as a growing danger towards future economic growth.

“A significant portion of the millennial generation has gone bankrupt before it could start building wealth, which is a — still-unaddressed — threat to the long-term health of the US economy,” he said in a report.

In January, a report came out from the think-tank Brookings, revealing that the number of graduates who default on their student loans could reach as high as 40% by 2023. Overall, the government has to do a better job at creating student loan forgiveness programs.

Some currently exist, but no one knows how long they’ll be around. President Trump tried to cut these programs in his first budget, but had to give in to pass this year’s budget. Eventually, this problem will have to be passed to the government to figure out, as the amount of debt continues to climb.

Written by adminAugust 13, 2018

Life Style

The economy is back, Jack! The dead malls and skittish buyers afraid to spend their money due to the economic downturn of just a years ago has reversed itself. Unemployment is down at record levels for Americans thanks to President Trump’s tax and regulation cuts. You can say what you want about the guy, but he has shown he knows how to get the economy going.

Even though not everyone is happy at this point, tariffs still threaten several industries. The average American is taking advantage of the current economic climate. They are spending money again, which is good news for the retail stores. 2/3 of our entire economy is spending via retail, so if you want a good indication at how we’re doing, just look at their health.

According to the Commerce Department, American spending was up 4% for the second quarter, with the early summer months showing significantly strong signs as well. Those reports will be coming out soon.

The next big hurdle to jump through to seal the deal on an amazing year of spending is predicting how the holiday season will shape up. As we edge into September, the spending blitz between Halloween and Christmas holidays is about to begin. Despite the big year so far, higher inflation could dampen holiday sales.

Wages have remained stagnant as prices in nearly every market are climbing higher. Gas, food, and the tariffs impact everything from soft drinks to cars and motorcycles.

A Second Beginning

Despite tempered expectations for the holidays, there is one mega-superstore making a comeback. It’s all due thanks to its new approach to ecommerce. No, we’re not talking about Walmart, but the nearly-defunct Macy’s.

In fact, Macy’s was the second-best performer behind Amazon on the S&P 500 so far this year, their shares up 60%! Shuttering several brick-and-mortar locations seems to be allowing Macy’s to do well.

Also: http://financialhelpers.com/trump-now-sets-his-sights-on-the-eu/

Walmart also seems to be attempting to challenge Amazon for online supremacy, but has revealed they’re not quite ready to reign supreme. Their digital sales have declined a bit as more Americans do appear to be shopping in-store as of late.

Other stores are competing well with Amazon, as Lowes and Home Depot don’t see much competition with the online retail leader. A lot of this extra money in people’s paychecks have been going towards rebuilding and remodeling their homes…an extravagance they couldn’t afford during the recession.

Most of the Americans who buy things like faucets, wood, paint, and other necessities for fixing things up would still rather go into the store and get it in the moment of need rather than purchasing online and waiting for delivery.

Overall, this is amazing news for every American. The economy is churning, more people have jobs, and the spending craze continues. That is more money getting poured into the economy, which often opens up even more jobs. The cycle continues. Here’s to a great, and profitable, holiday season.

Written by adminAugust 1, 2018

Life Style

For months, we’ve been hearing that the tax cuts implemented by President Trump weren’t good enough. Last December’s vote was only for the wealthy. Only mega corporations and the wealthiest top 1% had any chance of seeing benefits. Small businesses be damned!

Well, tell that to small businesses all over the country who are now thriving under the new tax code. It’s not just the taxes either, but the removal of numerous job-killing regulations. Combined, they’ve allowed small business in Main Street USA to soar.

Shark Tank Star Says Small Businesses Thriving

Kevin O’Leary of Shark Tank fame spoke on regulation cuts.

“The reduction of regulations has been remarkable in how it has accelerated small business,” he said. “These things are quietly being changed, and I really — I credit the administration for doing this. They’re making it easier to run a small business in pretty well every state I’m involved in. So that’s working.”

Wettlin Treppendahl, owner of Treppendahl Super Foods and 4th generation store owner, spoke to Congress on July 25th.

“The new tax law has had an immediate positive impact on my family business’ ability to invest in our store and local community,” he said.

Also: http://financialhelpers.com/why-are-millennials-still-struggling-to-buy-a-home/

And invest they have. Job numbers are through the roof, and part of that has to do with small businesses reinvesting their money back into their business. Treppendahl said he was able to upgrade his store and hire new employees.

Thankfully, this has a ripple effect throughout whole communities. Not only do more people get work, the act of upgrading his store provided work for local contractors and a refrigeration company. He was able to replace 12 sections of the frozen food aisle. Surprisingly, he also gave raises to his full-time workers.

Growth is Everywhere

Still, we see this unprecedented growth all over the country with similar stories everywhere you look. It is even forcing the big companies to reevaluate their plans to leave the U.S. and decide to reinvest here. Thankfully, Ford was one of those companies who chose to reinvest money into their plants in Michigan.

Gary Ellerhorst, CEO of Crown Plastics in Harrison, OH is ecstatic by the boost in business.

“The recent tax reduction in and of itself will have a positive impact on our employees and our business in 2018 and beyond. Yet, when augmented by reduction in regulation and, most importantly, the hugely positive outlook by business leaders and consumers. Which started the day after the 2016 election, the resulting booming economy takes that positive impact of the tax bill and increases it exponentially,” he said.
Tiberiu Czentye is a Romanian immigrant and CEO of All Pro Solutions. He says the tax and regulation cuts have improved the outlook and optimism of business owners everywhere.

“Until last year, many companies, including us, didn’t want to spend their money,” he said in a statement to Congress. “Because of this big tax cut, any entrepreneur can see the opportunity to invest in its company with the goal to make more money for the company and its employees. Good feeling.”

There is a small concern. These provisions will extend through 2025. Still, the hope is that the tax and regulation cuts will remain permanent, but these issues change with the weather (and with whoever is in office at the time).

Written by adminJune 28, 2018

Politics

As countries across the world continue to play a nasty game of tariff tug-of-war, industries in nearly every sector are crying for mercy.

We reported last week that not everyone suffering, as steel industry in the U.S. is now booming. But what about the companies that use steel in their products? Mid-Continent Nail in Poplar Bluff, Missouri, decided to lay off 60 workers to help fight back against sluggish sales directly linked to Trump’s tariff that put a 25% tax on imported steel.

The company says orders for nails dropped and astounding 50%. Mid-Continent Nail is now pleading with the Commerce Department for an exclusion on paying tariffs if they hope to stay operational by Labor Day. They feel their only options at this point is to get an exemption, move operations to Mexico to stay afloat, or shut down altogether.

Now that President Trump is looking to retaliate against China’s retaliation of the first tariff, he’s eyeballing foreign-made cars as the next plan of attack. The problem is, automakers in the U.S. are trying to convince Trump that such a move would be horrible for the already fragile auto industry here in the States.

A 25% tariff on imported cars would be equal to taxing them $45 billion, increasing the cost of a new car by nearly $6,000. This higher cost would undoubtedly lead to job cuts and even plant closures.

“Tariffs will lead to increased producer costs, increased producer costs will lead to increased vehicle costs, increased vehicle costs will lead to fewer sales and less tax receipts, fewer sales will lead to fewer jobs, and those fewer jobs will significantly impact many communities and families across the country,” said the Alliance of Automobile Manufacturers in a letter.

Right now, Trump is waiting on word from the Commerce Department to determine if foreign cars can be considered a national security threat, giving him the justification he needs to slap a hefty tariff on imports.

President Trump has also threatened to do the same to the EU if they retaliated against U.S. tariffs.

Trump said in a tweet: “Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20 percent tariff on all of their cars coming into the U.S. Build them here!”

Of course, it wouldn’t be easy for any company or industry to just pull up stakes and move to the U.S., especially when the labor costs are much more expensive to run a plant here. Rather, the automakers are hoping they can convince the president NOT to start a trade war over cars.

The Peterson Institute for International Economics released a report revealing that such tariffs would go deeper than a few jobs lost. We would be looking at a 1.5% decline in overall production over a 3-year period, which could cost nearly 200,000 jobs.

That’s only if Europe and China don’t retaliate with tariffs of their own. If that happens, the job losses could soar to nearly 625,000 in a scenario that would completely devastate the auto industry.

All we can do now is wait on the Commerce Department’s findings on the issue. It’s difficult to understand how foreign cars could be considered a national security risk, but that didn’t stop them from coming to that same conclusion with foreign steel

We will continue to cover this story as it develops.

Written by adminJune 4, 2018

Politics

Just when we thought we had a happy ending to this story regarding China and a potential trade war, both sides seemed to have hardened their positions and waiting for the other side to move.

President Trump has continued his talk of tariffs, which is really angering a lot of our allies, who all threaten to retaliate with tariffs and taxes of their own.

To ease tensions and prevent a trade war, China agreed to purchase billions of dollars of American products, including agriculture, and lower the trade deficit between the two countries. But, as of right now, it would appear Trump is not happy with the deal. He’s still threatening the Chinese with a tax on billions of dollars of imports from China.

“Both sides appear to have hardened their negotiating stances and are waiting for the other side to blink. Despite the potential negative repercussions for both economies, the risk of a full-blown China-U.S. trade war, with tariffs and other trade sanctions being imposed by both sides, has risen significantly,” said Cornell professor Eswar Prasad.

Is President Trump really willing hurt our relationship with a prominent ally in China, who has the second largest economy in the world? The answer appears to be yes. He seems more than willing to wreck whatever relationship is necessary to keep American industry at the forefront and recover some of the billions of dollars lost in unfair deals.

Peter Navarro, who is the director of the White House National Trade Council, confirmed as much on Fox News when he stated China hasn’t been that good of a friend to us.

They’ve been aggressive in the South China Sea, threatened to steal intellectual property, went behind our backs to supply North Korea with goods after committing, in public, to join in the sanctions, and according to the president, has raked us over the coals in regard to trade for many decades.

“That’s a relationship with China that structurally has to change. We would love to have a peaceful, friendly relationship with China. But we’re also standing firm that the president is the leader on this,” said Navarro on “Sunday Morning Futures.”

Trump is still considering more tariffs on $50 billion worth of China’s exports and another $100 billion they would consider taxing to make up for the massive deficit. If this goes through, China threatens taxes and tariffs of their own and to cancel any of the new trade deals that have been hammered out.

It appears to be a tit for tat stare down between the two world’s economic superpowers. No one knows if Trump is serious about imposing tariffs or is just using the tactic for positioning. So far, he has been able to successfully get many countries to come to the table willing to renegotiate deals just to stay in the good graces of the U.S.

President Trump has long believed that other countries have taken advantage of American industry and reap far more benefits from trade than we get in return. It was one of many economic promises he made during the campaign.

Tariffs and a trade war would be bad for the world’s economy and for consumers, who would be required to pay more for tariffed items to cover the increased cost.

We’ll continue to cover this story as it develops.

Student Loan Debt Rising

Student Loan Debt Hurting the Economy

A Second Beginning

Shark Tank Star Says Small Businesses Thriving

Growth is Everywhere

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