The Future of the US Dollar: Trump's Policies and Global Implications
As Trump's tax and spending bill faces hurdles, economists warn of a potential shift in the US dollar's role as a global safe haven.
In this episode, Alice and Lewis delve into the economic implications of Donald Trump's new tax and spending bill and its potential impact on the US dollar's status as a global safe asset. The Republicans barely secured the votes to start debating the 'big, beautiful bill,' but the bill still faces significant hurdles. Economists are deeply concerned about the US dollar's role as a safe haven, with over 90 percent of economists surveyed by the Financial Times expressing concern. Trump's attacks on the Federal Reserve's independence have raised red flags, with some experts warning that it could change their level of concern from 'somewhat' to 'very, very.' The Congressional Budget Office estimates that Trump's policies could push US federal debt past its previous post-World War II high later this decade. The dollar's weakening after Trump's aggressive tariffs in April and the rise in US Treasury yields during market turmoil indicate a potential shift in the dollar's dominance. Evi Pappa from the University of Madrid warns that US Treasuries might no longer be considered safe assets, with some pointing to the Swiss Franc and gold as new safe havens. As the bill remains in the Senate, the future of the US dollar's dominance is being tested in a way we haven't seen in a long time. The consequences could be far-reaching, potentially reshaping global finance.
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