I think, it is definitely the third one. However, like you are hinting in your paragraph about using dollar emission to buy Euros, monetary inflation's price altering effect is never uniform (except in fairy tales, election campaigns and economics textbooks), depending on who receives the freshly emitted currency. For example, throughout the past few decades M2 inflation was averaging around 7% annually, while consumer price inflation was around 2.5%. Capital asset price inflation was a lot higher than that.
Because of this, high consumer price inflation invariably makes exports cheaper, despite the prices in the local currency also increasing; it is never the same amount. I have been exploiting this for decades by doing "inflation tourism": traveling to countries experiencing high inflation with some hard(er) currency in one's pocket always allows one to buy goods and services cheaply compared to the prices one would see where that same hard(er) currency is used by everyone.
However, and it must be emphasized, such "export boosting" policies invariably decrease the living standards. If one disregards the money and just looks at the exchange of goods and services, reducing a trade deficit actually means getting less stuff in exchange for the same amount produced. Having one's income in inflationary garbage currency is not very pleasant. In small countries, it often results in the entire economy working for exports and the local inflationary currency not being used for anything serious and often even abandoned altogether. Montenegro uses the Euro, has no central bank, is not part of the Eurozone and almost everyone is either providing goods and services to tourists from the Eurozone or exporting industrial or agricultural produce to the Eurozone; they export everything they make and import almost everything they consume. There is very little internal economy beyond basic services.
They would shift to corporate stocks and bonds. Possibly land, which, at least in the case of Chinese, Trump would be even more against. They would presumably take a little money out due to having one investment option closed, so it would reduce the deficit a little — possibly a lot the year the ban was passed, very little thereafter.
I interpret that as a public signal to the Fed not to hold back from inflating due to FX reasons: if they want to inflate because of their mandate, they would feel free to do so without regard to the FX effect.
Inflating is unpopular and doesn't reduce the trade deficit, so actually doing it would make Trump's term, assuming he wins, less successful, less likely to result in electoral success in future elections.
That brings us back to my first explanations of the position. I can believe that Trump really doesn't understand the economics but would be a little surprised if Vance doesn't. Judging by his book and his life so far he is bright and he knows people such as Thiel who almost certainly do understand the economics. Possibly Trump doesn't understand it, Vance does, but Vance isn't free to disagree with Trump.
Maybe this is too postmodern of an outlook but I had thought politics had more to do with word salads than anybody understanding anything. Campaign advisors finding out that tariffs were popular in 1901 could have had as much to do with it as anything else. I think there was also a faddish China-imitation wave that swept popular economics a few years ago, arguing that neoliberal development models didn't work and that what was needed was communist-style forced industrialization.
Now that I think of it, the fad explains a lot; especially the way both parties, the Democrats with Biden's tariffs and the Republicans promising more, started offering to the electorate to try to solve deindustralization by means of dekulakization at around that time.
Could there be some secondary consequences of government's deliberate move to devalue dollar ?
For example, SGD and SAR are pegged to dollar. How will the economies of these two nations be impacted ? Will they move away from such pegging ? What happens to dollar value if that happens ?
I think, it is definitely the third one. However, like you are hinting in your paragraph about using dollar emission to buy Euros, monetary inflation's price altering effect is never uniform (except in fairy tales, election campaigns and economics textbooks), depending on who receives the freshly emitted currency. For example, throughout the past few decades M2 inflation was averaging around 7% annually, while consumer price inflation was around 2.5%. Capital asset price inflation was a lot higher than that.
Because of this, high consumer price inflation invariably makes exports cheaper, despite the prices in the local currency also increasing; it is never the same amount. I have been exploiting this for decades by doing "inflation tourism": traveling to countries experiencing high inflation with some hard(er) currency in one's pocket always allows one to buy goods and services cheaply compared to the prices one would see where that same hard(er) currency is used by everyone.
However, and it must be emphasized, such "export boosting" policies invariably decrease the living standards. If one disregards the money and just looks at the exchange of goods and services, reducing a trade deficit actually means getting less stuff in exchange for the same amount produced. Having one's income in inflationary garbage currency is not very pleasant. In small countries, it often results in the entire economy working for exports and the local inflationary currency not being used for anything serious and often even abandoned altogether. Montenegro uses the Euro, has no central bank, is not part of the Eurozone and almost everyone is either providing goods and services to tourists from the Eurozone or exporting industrial or agricultural produce to the Eurozone; they export everything they make and import almost everything they consume. There is very little internal economy beyond basic services.
A more likely proposal, given who we're talking about: ban non-Americans from buying federal debt.
They would shift to corporate stocks and bonds. Possibly land, which, at least in the case of Chinese, Trump would be even more against. They would presumably take a little money out due to having one investment option closed, so it would reduce the deficit a little — possibly a lot the year the ban was passed, very little thereafter.
Sounds like a success from Trump's perspective.
I interpret that as a public signal to the Fed not to hold back from inflating due to FX reasons: if they want to inflate because of their mandate, they would feel free to do so without regard to the FX effect.
The converse is probably not the case.
Inflating is unpopular and doesn't reduce the trade deficit, so actually doing it would make Trump's term, assuming he wins, less successful, less likely to result in electoral success in future elections.
That brings us back to my first explanations of the position. I can believe that Trump really doesn't understand the economics but would be a little surprised if Vance doesn't. Judging by his book and his life so far he is bright and he knows people such as Thiel who almost certainly do understand the economics. Possibly Trump doesn't understand it, Vance does, but Vance isn't free to disagree with Trump.
Maybe this is too postmodern of an outlook but I had thought politics had more to do with word salads than anybody understanding anything. Campaign advisors finding out that tariffs were popular in 1901 could have had as much to do with it as anything else. I think there was also a faddish China-imitation wave that swept popular economics a few years ago, arguing that neoliberal development models didn't work and that what was needed was communist-style forced industrialization.
Now that I think of it, the fad explains a lot; especially the way both parties, the Democrats with Biden's tariffs and the Republicans promising more, started offering to the electorate to try to solve deindustralization by means of dekulakization at around that time.
Could there be some secondary consequences of government's deliberate move to devalue dollar ?
For example, SGD and SAR are pegged to dollar. How will the economies of these two nations be impacted ? Will they move away from such pegging ? What happens to dollar value if that happens ?