The value of the American dollar saw its biggest drop in over three years yesterday because Secretary Steve Mnuchin strongly implied that the Trump regime will favor a weak dollar moving forward.
Mnuchin made the remark, seen by markets as a departure from traditional U.S. currency policy, at the World Economic Forum in Davos, where other world leaders have made swipes at what they see as U.S. protectionism. [...]
“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told a press briefing.
Shortly after Mnuchin spoke, causing the value of the dollar to tank, Commerce Secretary Wilbur Ross appeared on CNBC where he said the administration has not made any moves to promote a strong or weak dollar.
Ross said in a "Squawk Box" interview from Davos that Mnuchin "was not advocating anything" in terms of the dollar. "I think what he exactly said is the dollar, just like the Treasury bond market, is a huge market, a very liquid market. It's not something we worry a lot about day by day," Ross argued.
After Mnuchin spoke, the dollar index against a basket of major currencies hit its lowest level since December 2014.
Having seen two members of his cabinet offer contradictory sentiments, it was inevitable that Trump himself would also talk out of his ass.
Trump spoke to CNBC this afternoon when he said he wants to see a very strong dollar.
WASHINGTON (Reuters) - U.S. President Donald Trump said on Thursday he ultimately wants the dollar to be strong, contradicting comments made by Treasury Secretary Steven Mnuchin one day earlier.
“The dollar is going to get stronger and stronger and ultimately I want to see a strong dollar,” Trump said in an interview with CNBC, adding that Mnuchin’s comments had been misinterpreted.
There's a 99 percent chance Trump doesn't even know what this means, but it has the word "strong" in it.
Strong is good, right?
It's complicated. A strong dollar gives Americans more purchasing power and lowers the price of imports, but a weak dollar lowers the purchasing power of Americans and lowers the price of American exports. You may say Trump's preference for a "strong" dollar is another notch in his incoherent economic policy given that it leads to more imports but, like I said, he probably doesn't know what that means.
Former Treasury Secretary Larry Summers read Steve Mnuchin for a fool in the pages of the Washington Post this morning.
Mnuchin spoke without a script, began with near-term commercial considerations, and was apparently contradicted by the Commerce secretary. None of this can be reassuring to those looking to judge the competence and credibility of the Trump administration.
This all may matter very little in the short run. But credibility is a crucial asset for any treasury secretary given that financial panics or crises can come suddenly and the secretary’s words can come to be needed for reassurance. If such a moment comes, a secretary will regret previous false claims, highly political forecasts or unsound financial assertions.
I'm pretty sure "unsound financial assertions" is Harvard-speak for saying Steve Mnuchin is fucking idiot.