🔮   The Trump Trade Should Not Work In Theory, But Does In Practice

politics

I am generally of the view that risk can not be destroyed, but it can be transferred. Or in other words, you can protect one asset, but normally at the cost of another. There are lots of versions of this type of thinking in economics - beggar-thy-neighbor devaluation currency policies, helps businesses but reduce domestic wages. Central banks and governments can control either the exchange rate or the interest rate, but not both. Fiscal deficit spending, should be accompanied by higher interest rates, and a weaker currency. Emerging market investors are very familiar with the trade off - what the government gives you in spending, the currency markets take away with currency weakness.

ZeroHedge Opinion     Dec 05, 2024