Okay, so there will be rate cut soon and the USD will become even weaker, right? Then with those tariffs, which are consumption tax on imports, will become even more pronounced as US added value part will be smaller percentage of the overall final price tag. So everything will be quite expensive if people still have money to pay, if not the margins and as a result the profits of businesses will go down.
Is this an attempt to reduce the infamous American consumerism?
Also maybe force companies to build more in US but wouldn't that require strong immigration as the unemployment is actually still quite low and those who lost jobs wouldn't be plug-n-play employees for manufacturing jobs that didn't exist before.
You have the chart in front of you, yet you cherry pick to confirm your bias. Look at the entire chart. The DXY is at a higher level than it has been for most of it's history (going back the the 1960s). Yes, it's down 10% this year. Guess what? It was up 22% in 2022, putting it at an extremely high level. There is nothing unusual about the dollar's strength at the moment. That could change given that the current administration is hell bent on destroying faith in the US, but as of right now, there's not much of a reaction.
Markets react to differences not historical averages.
The US did quite well economically compared to the rest of the world when dealing with COVID and its aftermath. So some reversion to the mean should be expected, but the timing here suggests it’s policy changes responsible for these trends.
Just eyeballing the all-time chart there, it looks like ~30 of the last 39 years had similar or lower levels. So the "even weaker" = "an increase in existing weakening" reading is supported while "even weaker" = "an increase in existing weakness" is not. Presumably the former was the intention.
Right, based off this phrasing I was expecting USD to be at 5-year lows compared to JPY, CHF, EUR, RMB, BRL, etc. but that does not seem to be the case
Trump is a populist president elected on the back of disparaged unemployment-belt blue collar workers.
That's why he hates fentanyl (these places have insane opiate use rates), that why he loves coal (symbolic of the "great days"), that's why he hates immigrants (undercutting wages), why he hates china (that's were the factories went), and that is why he loves tariffs (American manufacturing protectionism).
Watch a video showcasing what West Virgina is like today, listen to what the people who live there say, and you can totally understand what Trump is trying to do, and why these people treat him like a messiah.
I'm not saying Trump is a messiah, or a good leader, or that the people in west virgina (or categorically adjacent places) are level headed. But simply that his plan is coherent if you put yourself in the shoes of the people who are clinging to the past and were left out of the future.
Completely agree. And anti-immigration policies are suprisingly popular even in non-blue collar circles, because you can sell it as "fighting foreign cultural influence", and a lot of people (globally) are quite convinced that their culture/values are superior (this is true across the political spectrum, too, however lots of groups will only admit to this indirectly).
Coherent like tarifs on everything, including resources, without legislation to bolster local manufactoring. Or how do his tax cuts fit in the big picture of the good'ol days? Or the dismantlement of public infrastructure? IMO, those 3 things are the bigges impacts he made and they are all negative.
Sorry, but this justification of trumps actions sounds delusional. The only thing that interests him is spineless loyalty to serve his will and looking like the toughest guy at the top of his incompetent boot lickers.
Damn if that's your work account I'd love to read what your other accounts say. This is the most coherent picture of what that guy is doing that I've ever read.
Which sucks, because I know people like Biden tried to pave a way to the future for folks like those in West Virginia by migrating jobs from coal to solar and stuff like that, but I can imagine how that went over.
This is an attempt to do repeat what countries like Turkey like tried. They often think cut interest rates -> increase demand -> better employment.
But often they find that combination of worsening inflation and unemployment matched with cutting interest rates is a bad situation to be in. There is often no good way to come out of this. You end up in a cycle of : High unemployment -> cut rates -> employment improves but causes hyperinflation -> increase rates to cool markets -> high employment.
Blunt tariffs is playing a large part. and once Jerome Powell leaves and replaced by a crony is when the real problem will start.
JPow has to be annoyed. He was about to stick the perfect soft landing after killing inflation, then Trump showed up and through a tariff grenade into the economy. And, ironically, the fed was already on track to cut rates until the tariff nonsense. Now when rates are cut it's going to be because we're heading into a self inflicted recession instead of the soft landing we were headed towards before. The growing worry now is stagflation again with rising prices and slowing economy. I guess one bright spot is that we won't really know how bad it gets since it seems anyone who reports real numbers is getting fired. Fun times!
That is, like, ninth on the list of things Powell is concerned about. The Trump administration is literally trying to put fed officers in jail to purge the department. Powell himself faces an essentially fake allegation of perjury over (I'm not kidding) his testimony about a building renovation, though it seems they may have walked that back for now after Trump personally tried to make the accusation at a press conference and stated it incorrectly.
Worry about one's legacy being tarnished is a very not-banana-republic kind of thing.
But wasnt JPow's slow reaction to initial inflation one of the main problems to begin with? Although the data was signaling rising inflation he kept saying it's "transitory". Now he says we need to look closely at the data which is what he should have done in the first place.
The data then wasn't quite so clear or simple. Supply chains were hosed so transitory seemed reasonable at the time along with dealing with pandemic after effects. Of course hindsight is 20/20, but when it became clear the inflation was beyond supply chain issues they pivoted hard and got things back under control.
I fixed housing prices by moving to a place that was completely deregulated then building a shack for $60k. Deregulate and you can make things very cheap even with barely building anything, because the replacement cost to build another livable house is far lower, so now current home owners are bidding against cheap competition.
The actual problem is that voters in municipalities are overwhelmingly homeowners, and their home is overwhelmingly the golden-goose of their wealth, so they do everything possible to protect that, including voting for town leaders who will weaponize regulations to make new builds near impossible.
Right, and we managed to destroy that where I live. Deregulated ("opt-out") houses don't get a certificate of occupancy, so you cannot easily get a mortgage, or easily get insurance. So the house is essentially highly valuable to you but not worth a lot to anybody else. We have no real incentive to regulate because the whole structure of the house paperwork makes it pretty much impossible to use as a goose egg.
What did you actually end up avoiding that would cost so much? Architect/plans/structure permitting? Minimum space/setbacks? Grid hookups? Merely skipping inspections, or did you skimp on actual code compliance?
Also curious where you're at, if you don't mind my asking. The biggest blocker I see here is the concentration of job markets into metropolitan areas (near the centralized money troughs).
One thought that comes to mind is if you could keep remodeling/adding on, and eventually get it to a place where it could get a CoA and become a bubble-worthy house. Kind of an incremental self-mortgage. Not that I don't personally wish to see the bubble smashed to a million pieces, but as long as it isn't, then it is still an attractor.
Minimum space/setbacks? avoided square foot requirements, but there were required setbacks that were legally meaningless since they were smaller than the road easements.
Grid hookups ? yes
Merely skipping inspections, or did you skimp on actual code compliance? skipped inspections and code compliance was not checked.
Have you done any analysis of your biggest sources of savings?
It sounds like the main cost savings was the square foot requirement? Literally just building less structure?
Then maybe followed by grid hookups, the cost of which would have been higher due to being in a less-developed area with cheaper land? With alternatives these days, grid hookups shouldn't really be required for any house, but the state walks on individuals with all the care of a human walking on ants.
Of course there's also the builder overhead, in that professional developers are making a profit based on what the market is willing to pay over the actual cost to build (due to cheap money loans).
To be clear by "code compliance" I meant building things still to code such that they would pass a hypothetical inspection, as opposed to "good enough works for me". Like for example I'd guess that an electric kitchen range will work just fine off of a 12-2 NM. The code has a large margin of safety because over time problems tend to multiply. I tend to do a lot of DIY electrical (legal here), but I make sure to follow the NEC so that an unexpected inspector would have a harder time declaring it "unsafe", so insurance doesn't have any argument that the work was derelict (not that this really matters), and primarily because I accept that I've got unknown unknowns and I don't want to die in a house fire.
Everything is as close to code as possible. I wouldn't wire a range 12-2 willingly but then again I wouldn't hesitate to use one on a 12-2 and then put a 20 amp breaker on it if I had to, and only use one or two burners at a time until I figured out what I could get away with without tripping the breaker :) The NM-B I use is rated for temps well above the steady-state temp at the breaking amperage so the normal 20% derate wouldn't be much a concern.
Not having plans meant I was able to figure out how to do everything, including framing etc on the fly. This made it possible to do the project without having to know everything up front which in my mind would be pretty much impossible for a newcomer. I did not even know how I was going to frame the roof until the walls were already framed.
I believe pretty much everything on my house meets code but it was almost entirely built to the absolute IRC minimum.
I believe part of the savings are the fact I took a lot of risks a builder would never take or at least not without a premium, including buying an unproven well share that worked out perfectly and saved me $~50k over havign to drill my own, doing all my own utility extensions ( DIY underground 200 amp power extension and water main are big ones), and buying unproven land without utilities. It took me 6 months to even get electric connected and it was fortunate I was an electrical engineer who was able to work with the power engineers to get a solution to get power for cheap. I worked with the utility to get exempted from their inspections too so they let me wire the secondary side service entry myself and install the service entry hardware myself.
The lack of inspections though are what made it all possible, because I was able to work a day job and do work on the house on nights/weekends and not have to quit my job to be around during the day for a bunch of inspections.
Square footage definitely a big one. The width of the house was the max size of off-the-shelf dimensional lumber so I was able to build the entire house with no engineered lumber and no load bearing structures anywhere in the interior of the perimeter of the house. I also used 6" grouted cmu foundation which is extremely rare (well normal in latin america) but meets code.
But the biggest savigns were probably just that I was able to do everything DIY without worrying about it getting inspected and then having to do it all over again because an inspector disagreed with something. If it were inspected I probably would have had to hire someone to help me.
Completely not true and in fact dangerously (willfully?) misleading.
Housing is much more complicated than supply and demand - for a start houses are not fungible. Local conditions are extremely important.
A lot of high house prices is due to financial engineering - for example long mortgage periods at low interest rates. Just one of many mechanisms to make the rich richer by making the poor poorer. Any momentary affordability benefit is soaked up by higher prices, and those mortgages have to be paid off for longer with much higher total payments.
High house prices are also caused by demand elasticity - things like AirBnB, 2nd, 3rd, 4th homes for the super rich, and housing as a place to park funny money (regardless of whether the house is actually being used to home people) mean that normal people can't compete with this non-home demand.
That's not true, not if your regulations are sufficiently strict.
For instance, if you tax second homes (or third homes, or homes not occupied at least 8 months out of the year, or whatever specific condition you want to use) at 100% of the value per year, you're going to end the purchase of empty real estate to park money, without directly affecting ordinary middle-class people who just want a place to live.
Unfortunately, such a measure would be politically untenable—frankly, even in the 2024 environment, and exponentially moreso now.
> For instance, if you tax second homes (or third homes, or homes not occupied at least 8 months out of the year, or whatever specific condition you want to use) at 100% of the value per year
Many locales already charge much higher yearly property taxes on homes not owner occupied [1]. Where I used to live my property taxes were ~2k/year or closer to 10k/year if not owner-occupied. Of course most of that increase will just end up passed on to renters.
Well, I think there are two slightly different things we're talking about here:
1) Homestead exemptions, where the extra tax is on properties that are not owner-occupied
2) Taxing vacancy, where the extra tax is on properties that are unoccupied more than a certain amount of the year. (This is the one I was describing.)
Both are worth considering; both have their own pros and cons.
Correct, you do that by building more housing, which naturally makes investments in property less appealing.
There is no other approach. You can follow these paths of taxing, regulating, minimum waging, but none of them create more houses and all of them just push the same air around the inflated balloon.
Eliminating AML controls would probably help. Real estate is a haven asset to exchange value away from the grips of a tightly controlled and monitored banking system, although this is something normally transparent to the middle class.
Correct me if I'm wrong, but if interest rates went up 10% tomorrow, housing prices would have to come down if people wanted to actually sell their homes.
I think the biggest challenge you will come up with then, is that if interest rates go up 10% you also just increased their opportunity cost to exchange a house up 10% interest for current owners, and now you have to buy them out of the differential between the ZIRP loan they got and the new interest rate to make it worth their time to sell it.
The 30 year mortgage on ZIRP basically created a ratched effect that locked up the market for 30 years, the only way to unlock it I can think of is to drastically reduce the cost to build a house, you don't even need to hardly even actually build any, just force the hand of current owners by making the replacement cost radically lower.
Housing prices would come down (although many sellers would back out, crushing supply), but mortgage payments would skyrocket. Interest rates and housing is kind of like squeezing a balloon. Building new homes is like letting air out.
They managed to nearly kill inflation without sending the economy into a recession. Housing prices were also slowing though tariffs and increased construction costs are not helping.
No this is an attempt to shift the burden of taxation to the middle class and poor. It is a consumption tax pure and simple. If you tax everything like sneakers and toothpaste the tax burden shifts to the middle class and poor because a billionaire can make income 100 times larger than a middle class person but he does not use a hundred times as much toothpaste and does not buy 100 times more sneakers.
This of course will depress consumption which will seriously damage the economy but the current administration just does not have the brains to consider these effects.
Furthermore, the immigrant chasing is seriously reducing jobs openings. This seems quite the opposite from the intended effect. But it is done so chaotically and with such cruelty that it is flat out destroying businesses rather than allowing them to hire citizens to replace illegal immigrants.
Most people don’t want the jobs done by immigrants—not at the pay levels that the immigrants are willing to take. This idea that getting rid of the “illegals” frees up jobs for locals is complete rubbish.
If you really want to free up jobs for locals, get rid of the HB1 program.
Ron Vara's book actually outlines a whole bizarro universe where devaluing USD constitutes a strength, from some idea that the best way to compete with China is by putting ourselves where China was 30 years ago. So yes, an outright goal of theirs is to weaken USD. I have no idea if they earnestly believe this nonsense, or if they are just getting paid by our adversaries to sell it to the public.
It occurred to me that tariffs are really a backdoor way of introducing consumption tax (aka sales tax, VAT, etc). It has been a conservative policy goal for many years, as the conservatives believe that income tax penalizes entrepreneurship, but the politics make it virtually impossible to switch to because consumption tax is regressive, and it is a huge change. The tariffs debate and the general political atmosphere created a misdirection: voila, we have both income and consumption tax! The next development will be the politicians discovering to their horror the high levels of taxation, and abolishing the income tax. Brilliant!
You should have. The last time around, the price of oil literally went negative. And these gremlins had four years to prepare all the ways they were going to break things this time around.
Overarching goal seems to be increasing the ratio of capital to labor.
Labor is decreased by launching immigrants down the garbage shoot.
Capital increase by tariffing foreign goods which hypothetically might spur domestic production investments.
Labor being rare relative to capital should increase employment.
But really, no guarantee the capital doesn't just flee to the other 95% of the world where they can import capital equipment needed to make stuff for much cheaper, create a cascade effect, and gut the USA even worse. Especially since we have absolutely no clue what the tariffs will be 1/5/10 years from now.
>But really, no guarantee the capital doesn't just flee to the other 95% of the world where they can import capital equipment needed to make stuff for much cheaper
To do that though requires security/stability, supporting infrastructure, and favorable trade policy. For many years that meant China, but this is obviously changing. SE Asia still fits the bill but is under the spectre of expansionist CCP and shrinking US influence. Few places in the world now have the combination above as well as minimal worker protections and low wages as the poor interior of the US south and midwest.
This makes no sense. Capital increase? The tariffs just generate government revenue. It's not like the money supply is expanding. It's being paid by US citizens and businesses. The money supply is dropping, not increasing.
It shows about $100 billion in tariff revenue growth since May, '25. Interestingly your chart shows an overall growth of $232 billion in the same date range. IOW if both charts are right the slight majority of overall supply is coming from somewhere other than tariffs (though tariffs are adding a lot). I wonder where that money is coming from?
Capital used for domestic production. The theory with tariffs is that companies will move capital investments stateside rather than exporting those investments and then importing the final product. The theory anyways.
That will never happen because (1) the Trump Administration has created nothing but uncertainty by making illegal changes to tariff policy via executive order and changing their mind literally several times per week and (2) they have also made imports of raw materials prohibitively expensive, meaning that it's still cheaper to produce overseas and pay the tariff.
Is this an attempt to reduce the infamous American consumerism? Also maybe force companies to build more in US but wouldn't that require strong immigration as the unemployment is actually still quite low and those who lost jobs wouldn't be plug-n-play employees for manufacturing jobs that didn't exist before.