Trump slams China, Japan for currency manipulation: 'Biden has let it go'

All right, first up, let’s talk about Donald Trump calling out Japan and China for currency manipulation. Anyway, we’ve got Kevin Hassett, former chair of the Council of Economic Advisors. There he is out there in Stanford University. Here’s Trump’s Truth Social posting. The dollar has just hit a 34 year high against the yen, a total disaster for the US. When I was president, I spent a good deal of time telling Japan and China in particular, you can’t do that. I put limits on both of them, etcetera, etcetera. Only the whole thing we will put up on the full screen. The dollar’s worth now over 155 yen, something like that, which is remarkable. And actually the Chinese yuan not quite as bad, but it’s gone from, I don’t know, 6640 to seven 40s. So question here is, Kevin, is it that that dollars too strong or that they’re too cheap? Let’s start there, right? Well, the president is 100% correct. There’s an academic literature that shows that the Japanese especially have been like the most guilty of currency manipulation of any country on earth for a really long time. And so the fact that even with that, that we’re looking at a value of the yen that we haven’t seen since I was an undergraduate, Larry, is really stunning. And it’s I think the way to think about it is it’s a failure of the Biden administration and specifically Janet Yellen at Treasury, because the job of the Treasury Secretary is to pick up the phone and talk to people when things like this are happening and say, hey, you need to support your currency. It’s really getting out of line with fundamentals. And they’ve utterly failed to do that, just like they’ve utterly failed to do just about everything other than send their top Justice Department people to work for Alvin Bragg and then naughty, naughty. Good work, Heather. But of course, Japan has near 0 interest rates. That’s part of the story. And our rates are much higher. That’s also part of the story. I mean, I, I think Japan is kind of getting, they’re our friend and they’re our ally, but they’re getting away with it ’cause you have cheap exports. And that will come back to her to. I don’t think China is clean either in this OK. I think China always knows. Now, China does like to manipulate its currency. We know that from our experience in the government and dealing with the Chinese. So you’ve got them. It’s maybe not quite as bad as the end, but the yuan has fallen quite a lot. I think, as I said, from 164 to about 174, I’m sorry, from 6:40 to about 7:40, if I get my numbers right, we have a picture of it on the full screen. So what happens there? The Chinese don’t listen to anything, Kevin, right. Well, one of the things that’s going on, I, I called up one of my friends, Wall Street friends, You know, it’s part of my job for you, Larry, is to talk to the people that in the middle of it and say, what do you think is going on in this currency market? And, and my friend is actually saying that one of the things that’s going on is that because of the AI revolution in the US, that there’s incredibly surging demand for USAI services and that so the US economy is actually going to surprise on the upside. I know we’re talking about that next. While everybody else is doing kind of weak get, it’s making people very bullish on the dollar. And so the people who are trading this think that it’s actually related to fundamentals. As you said, the interest rates are low in Japan, for example, but also their inflation is actually high for them. And, and so there are actually some fundamentals that are driving this. And it could be that our massive increase in export of digital services is in part, you know, creating a boom in the US that’s driving this factor as well. So the hotline of Fed is saying that the 4th, the first quarter which ended March 31st, that GDP will be released on Thursday. They’re guesstimating 2.9%. So be another strong quarter. What do you think? Yeah, I’m actually above that. I think I’m sort of almost 3 1/2. And so I think it’s actually going to surprise the upside. And again, one of the things that I think is going on is that the AI revolution is showing up in productivity. It’s showing up in in services demand and exports of services. And so odd. And so my expectation is that the number is going to surprise on the upside by quite a bit. Inflation may also surprise on the upside. I mean, a lot of this GDP stuff, I grant you, the AI applications are helping productivity and so forth, profit margins. But you know, they’re spending, the government is spending a fortune. They’re stimulating consumer demand, not business. And that shows up as a big GDP. But inflation was, I don’t know, the CPI was 4 1/2% at an annual rate in January, February, and March. That’s a bad number, right? And that’s what happens when you spend like a drunken sailor, right, is that you get a short term boom and then you get inflation. And the problem, of course, is that this massive increase in spending by Joe Biden is ultimately going to have to be paid for by somebody. And at the point that you try to pay for this in subway, unless you do it with the big supply side tax cut and lots of growth, then there’s going to be a big cost to it. And, you know, my estimate of the Biden spending, like again, is that it’s about a trillion dollars higher than you and I thought it would be this year. And I think that that’s a major, major factor that’s sort of keeping the economy afloat, but also driving inflation higher and higher. And it’s a real incomes are declining because inflation is surprising on the upside. And that’s really what Bidenomics is all about. Well, I think we should have big supply side tax cut and more growth. Oh, wait a second. You just said that. Yeah. I don’t know where you got that. I don’t know where I got that either. Kevin Asset, the best, the best. Thanks, buddy. Appreciate it. Talk soon.