Links: De-dollarization, top down US policy and the new Cold War

As Trade War Heats Up, Biggest Currency Whales Make Their Move – Great article. Central banks are starting to diversify away from the US dollar. Many Wall Street strategists now see the euro as a viable alternative. My view: this shift reduces the need for countries to accumulate dollars and, therefore, should have a negative impact on the currency. That should weaken the current account deficit and increase inflation.

Before expulsions, a brick-by-brick hardening of U.S. stance toward Russia – The US stance toward Russia is becoming increasingly hostile. And this is despite Donald Trump’s desire to maintain a positive dialoge with the Russians.

When Fiscal and Monetary Policy Collide – Scott Minerd, Guggenheim Partners – I linked to a summary of this piece yeserday. Here is the original. “At this stage of the business cycle monetary and fiscal policy would normally be utilized to cool off the economy, but with the huge fiscal stimulus coming online, the Federal Open Market Committee (FOMC) will feel obliged to play the role of creating economic headwinds.”

Inflation and unemployment – David Andolfatto – He works at the St. Louis Fed. “The FOMC decided on March 21 to increase the target band for the federal funds rate by 25 basis points, to a range of 1.50-1.75%. This despite inflation running persistently below the Fed’s 2% target, only moderate wage growth, and inflation expectations firmly anchored. What is the FOMC thinking here? To be more precise, what is the dominant view within the FOMC that is driving the present tightening cycle?”

Notes, emails reveal Trump appointees’ war to end HHS teen pregnancy program – I note this item because it reveals what I believe is a widespread phenomenon. Trump appointees want civil servants to fall in line with policies that support their political view. With John Bolton coming onboard, that’s significant regarding foreign policy.

On Bolton, here is one link where you should note the following: “But more important, he seemed ill-suited for the role of interagency arbiter. “John Bolton does not have a reputation for consensus building within the administration or with allies,” says Michael Green, a senior Asia advisor in Bush’s NSC, now at the Center for Strategic and International Studies. Rather, Green says, Bolton has “a reputation for being an aggressive advocate of his (or in this case the President’s) position. The best national security advisors are usually considered honest brokers, so that would be a different approach from his past M.O., but perhaps one he recognizes is necessary. We’ll have to see”” – Donald Trump Just Hired John Bolton. Here’s Why That Makes Some Nervous

Also see What to Know About John Bolton, President Trump’s New National Security Advisor and Trump’s New National Security Advisor John Bolton Has Links to Cambridge Analytica

Speaking of Cambridge Analytica, there is a firestorm over the organization now because of foreign nationals running US election strategy. See this here, for example: New details suggest Cambridge Analytica played bigger role in helping Colorado Republicans win in 2014

The same issue is at the heart of new stories out of Canada. Here the issue is a company called AggregateIQ. Whistleblower says Canadian firm built software to identify Republican voters in 2016. Canadian news is also reporting that AggregateIQ was also involved in Brexit: Canadian firm AggregateIQ used to sidestep Brexit campaign spending limits, whistleblower alleges. The CBC article title is even more stark: Whistleblower says ‘cheating’ changed Brexit vote outcome.

I intend to have a whole different discussion about Facebook later today. Again, this may be a tempest in a teapot that blows over. At the same time, I think the regulatory risk is high. At a personal level, I take privacy seriously. And I don’t think US privacy laws are adequate. They are certainly less robust than they are in the EU. People who think like me will want to see Facebook held in check. And I think this also has ramifications for Google and Apple in particular.

I have a lot more links, especially on financial markets. And I probably will add a few later. But I want to get this post out. So I am going to stop here for now.

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