Trump the new John Kerry?
John Kerry was known as the king of flip-flops. What’s happened in the White House this week?
By now, the stories are finally starting to get out: Trump is flip-flopping on his campaign promises and positions. While it may have become obvious to hardcore political observers early on, at this point even the Associated Press is publishing stories. In what must come as a body blow to Trump voters, the phenomenon cannot be ignored:
President Donald Trump is abruptly reversing himself on key issues. And for all his usual bluster, he’s startlingly candid about the reason: He’s just now really learning about some of them.
The reversals began with the reversal of Trump’s decision to place Steve Bannon on his National Security Council. Afterwards, the reversals have only been piling up. The article itemizes them:
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Over the past 48 hours, the outsider politician who pledged to upend Washington has:
— Abandoned his vow to label China a currency manipulator.
— Rethought his hands-off assessment of the Syrian conflict — and ordered a missile attack.
— Turned his warm approach toward Vladimir Putin decidedly chilly and declared U.S.-Russia relations “may be at an all-time low.”
— Decided NATO isn’t actually obsolete, as he had claimed.
— Realized the U.S. Export-Import Bank is worth keeping around.
Is Trump wrong about China, for example? Was candidate Trump wrong, and now President Trump has realized the error of his ways?
China manipulates its currency to stimulate US demand for Chinese exports. This is an old policy called mercantalism.
The process works like this: China inflates its money supply, and then uses the inflated money (“money out of nothing”) to purchase US Treasury debt. But China can’t purchase US Treasury debt with yuan, the official Chinese currency. So, it must exchange yuan for dollars. The Chinese government sells yuan to buy US dollars, and then it uses the US dollars to buy US Treasury debt.
By inflating its currency, China is increasing the number of yuan for every dollar in existence. That’s because it is increasing demand for US dollars in relation to its own currency.
As demand rises without a corresponding supply increase, then so do prices. The dollar becomes more valuable than the yuan. This is especially true since the Federal Reserve is maintaining a stable monetary policy. China’s policy of intentional currency devaluation is literally a currency manipulation.
So, yes, China is a currency manipulator. But so are most nations of the world. The central banks want to lower the value of their currency in relation to the dollar to stimulate their export industry. Since dollars can get more bang for their foreign buck, currency devaluation stimulates US demand for a country’s exports.
Japan does the same thing. It actually became the world’s largest holder of US Treasury debt in October.
Trump was right: China is literally a currency manipulator. It’s incorrect to say they aren’t, though it may be more diplomatic to avoid bringing up the issue. After all, what they do to their economy is their business, not ours.
But as the man who stood in front of the Establishment in his inauguration speech and gave them the proverbial middle finger, how is it that he’s now moving his foreign policy back in line with the Bush-Obama policies?
As the man who tweeted to President Obama in 2013 not to attack Syria, what makes him think anything has changed?
Who’s giving whom the middle finger, now?