05 May 2016

I Hate it When the Donald Says Something Sane

He just continued low interest rates and a weak dollar.
Presumptive Republican presidential nominee Donald Trump on Thursday positioned himself on the far left of the political spectrum on fiscal issues, coming out for low interest rates, against a strong dollar and a more aggressive managing of U.S. debt.

“She [Fed Chair Yellen] is a low interest rate person, she’s always been a low-interest-rate person, and let’s be honest, I’m a low-interest-rate person,” Trump added.

Trump shifted to a discussion of the impact that higher rates has on the dollar, and on the impact a rising dollar has on U.S. business.

“If we raise interest rates and if the dollar starts getting too strong, we’ll have some very major problems.”

“I love the concept of a strong dollar, but when you look at the havoc that a strong dollar causes ... it sounds better to have a strong dollar than it actually is.”


One thing Trump advocated that the U.S. Treasury has resisted is a more active management of the debt. The U.S. Treasury hasn’t taken advantage of current low interest rates to issue more longer-term debt.

“I think there are times for us to refinance debt with longer term, we owe so much money,” Trump said.

While at times Trump seemed to link a conversation of refinancing with a situation where “the bubble popped” — at one point even suggesting a buyback of U.S. debt — he also made clear that he wanted to refinance now, to rebuild infrastructure.
This is a coherent and thoughtful, if someone iconoclastic, view of the economy, budget, and monetary policy.

It is also a refreshing departure from the conventional fetish about deficits that tends to promulgate austerity.

The economy remains depressed, interest rates are at historical lows, and it's time borrow cheap and long term and spend on decaying infrastructure and create jobs.

I've said before that Donald Trump was the best Republican in the race,* and this reinforces my initial impression.

*Apart from that Mrs. Lincoln, how was the play.


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