, 13 tweets, 6 min read Read on Twitter

"Federal Reserve is pegged to the Wall Street Economy.
President Trump’s policies are pegged to the Main Street Economy.
There is a disconnect; a new dimension in U.S. economics;
and very few people understand what happens in this space between them."
When monetary policy became controlled by multinationals (Wall Street influencers purchasing politicians), capital investment moved to generate purely higher profits. Businesses, specifically manufacturing, went abroad. As a consequence the determination of prices, ie
‘inflation’, was no longer influenced by the Fed because the actual economic activity was/is outside the U.S. borders.

We see this today.

President Trump’s middle-class policy, through tariffs, is intended to bring manufacturing back to the U.S. China and the EU are trying to
keep their manufacturing foothold by devaluing their currency and subsidizing their industries.

This action by China & the EU lowers the value of their currency, increases the value of the dollar, & simultaneously lowers the prices of their exports.
This OFFSETS the U.S. tariffs, and the China/EU stuff costs less to import. In essence, we import DEFLATION.

No action by the U.S. Fed can change this pricing mechanism because the price determination is outside the reach of the Fed. Hence, the disconnect."

Currently multinational investment is in a holding pattern, waiting to see what happens w/President Trump’s global trade reset. Manufacturing multinationals don’t know exactly where to put their investment money b/c they are waiting to see what happens with trade and tariffs.
They don’t want to invest in a new China factory only to see the end product become subject to POTUS Trump tariffs.

The Fed views those stalled investment dollars through the prism of a global economy/their historic reference. Financial pundits have also been selling the global
economy model for 35 years; so they too mistakenly view stalled (unappropriated) investment dollars as a sign the U.S. economy might be weakening. IT AIN'T.

We are in the aforementioned flux space where Trump is favoring Main Street…. and all trade policy is shifted therein.
U.S. Fed Reserve lending rates won’t make the multinationals move their investment money until the geopolitical trade reset is worked out. Ergo, lower Fed rates won’t currently help Wall Street…. Nor will lower Fed rates have much impact on Main Street because
internal U.S. economic influences are larger and stronger than the Fed influence.

Because the Fed cannot influence prices of manufactured goods, the Fed cannot influence inflation. The U.S. worker wage rates are stronger than any inflation; again the disconnect
that CTH has noted for three years that will work in favor of the middle-class.

When? Once the USMCA is ratified, President Trump will trigger tariffs on China. This will move all of the multinationals who are in a ‘holding pattern’ b/c they will see what areas are safe.
Capital investment will flow very fast.

Where? The China exodus will benefit North America (USMCA) & those ASEAN nations who have partnered w/Trump & made proactive trade agreements. That’s where the capital investment will flow.

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