In Biblical contexts, War, Death, Pestilence and Famine. Well, with the Trump administration, check, check, check, and check!
War? Trump set the stage for capitulation in Afghanistan, and is ready to do his own Manchurian Candidate imitation for Ukraine.
Source: ISW, 13 March 2025.
Death? See below (remembering “bleach” and Mr. Trump’s approach to the covid pandemic).
Figure 1: Current hospitalizations (blue, left scale), 7 days moving average of deaths (brown). Source: Covid Tracking Project, accessed 11/6/2020, author’s calculations.
Pestilence. At least measles, if not bird flu.
Famine? Cutting off USAID funding is definitely going to cause starvation in developing countries.
Source: CRS.
Anyone else notice that the dollar is no longer the darling of the FX market? Early to mid-January appears to be the turning point. Of course, that’s what one would expect when asset prices and interest rates – realized and expected – begin to fall and uncertainty begins to rise. Both he safe-haven value and investment return of the dollar are off a bit these days.
One exception is the C$. Canada and the U.S. are so entangled that their mutual exchange rate is in a world of its own.
For now, the inflationary implications aren’t great. Keep reducing investors’ appetite for U.S. assets, though, and the dollar could add considerably to inflation.