The objectives of the central banks of the major economies of the world<\/strong><\/strong><\/p>\n\n\n\n The European Central Bank (ECB) is always aimed at maintaining inflation in\nthe Eurozone below the 2% annual limit. So, all its policies are aimed to\nmaintain the Eurozone inflation rate at low level.<\/p>\n\n\n\n At the same time, however, such a monetary policy, and given that the\nfundamentals of the Eurozone economy ‘ justify ‘, the ECB is venting any\navailable weapons to deal with a strong demand-side shock, through the\napplication of continuously renewed quantitative easing programs. <\/p>\n\n\n\n At the same time, these quantitative easing programs create the basis for\nthe perpetuation of a weak euro in relation to the US dollar. This chronic monetary policy of\nthe ECB creates the preconditions for global trade and monetary disputes, given\nthat a weak euro makes the euro area’s exports very competitive.<\/p>\n\n\n\n The FED (Federal Reserve System) has more clear objectives in terms of the\nexercise of its monetary and interest policy, which always considers the\nmaintaining a low level of unemployment that does not trigger inflation. <\/p>\n\n\n\n Essentially, the FED lowers its basic borrowing dollar interest rate when\nthe fundamentals of the US economy show signs of slowing down and always taking\ninto account the relationship between the annual percentage unemployment and\ninflation, respectively, and increases its basic borrowing dollar interest rate\nwhen it believes that there are valid signs of overheating of the US economy.<\/p>\n\n\n\n The People’s Bank of China (the Central Bank of the PRC) also implements China’s economy conservation policies within specific contexts without affecting the growth rates of the Chinese economy, but at the same time it uses its huge reserves in US dollars to devalue or to rise, according to the conditions that laid down in the foreign exchange markets, the value of the yuan-its national currency. <\/p>\n\n\n\n The US economy<\/strong><\/strong><\/p>\n\n\n\n In general framework, the US economy remains in good condition, maintaining\na ten-year period of continuous expansion with the unemployment rate to be just\nbelow the annual limit of 4% (we are not currently considering the qualitative\nstructure of the created new jobs, i.e. whether the majority of these new jobs\nare part-time or full time employment status).<\/p>\n\n\n\n However, some signs of deceleration in the US economy are observed.<\/p>\n\n\n\n Could these indications justify a partial reduction of the FED’s basic borrowing dollar interest rate? They could, but the main\nreason for the recent reduction of the FED ‘s basic borrowing dollar interest\nrate by 0.25%, was the constant pressure exerted by President Donald Trump on\nthe FED<\/p>\n\n\n\n The President of the United States considers that the FED ‘s basic\nborrowing dollar interest rate was high and intercepted the growth of the US\neconomy.<\/p>\n\n\n\n Essentially US President Donald Trump and as part of his strategy to reduce\nthe trade deficit between the US and China through the trade war with China, he\nbelieved and continues to believe that the FED should be responding vigorously\nto the interest rate reductions that China makes every time, so that it\nachieves its goal of being China being forced to accept its economic\nconditions. <\/p>\n\n\n\n The Global Monetary War<\/strong><\/strong><\/p>\n\n\n\n A day later from the FED ‘s announcement of 0.25% reduction in the basic\nborrowing dollar interest rate, US President Donald Trump announced the\nimposition of new 10% tariffs and 01\/09\/2019 on all remaining Chinese imports\ninto the US totaling $300 billion, which had not been charged to date. <\/p>\n\n\n\n In the coming days China, in response to US tariffs announcements, caused\nthe deep devaluation of the yuan’s national currency against the US dollar,\ncausing even more disruption to the foreign exchange markets, while are\nexpected further reactions from the United States.<\/p>\n\n\n\n A country to win a monetary war should have huge reserves in US dollars (of\nthe world currency reserve) and at the same time its basic\nprinciples-institutions in its economy which in this case are the country’s\nMinistry of Finance (treasury) and its Central Bank to coordinate flawlessly\nand in such a way that when the Ministry of Finance intervenes in the foreign\nexchange markets to have the full support of the central bank which has the\nhuge funds available in US $.<\/p>\n\n\n\n China currently has reserves in US dollars amounting to $3.1 trillion. At\nthe same time, due to the communist regime and the authoritarian type of\ncapitalistic system, the coordination of its two basic principles-institutions,\nnamely the Ministry of Finance and its Central Bank, People’s Bank of China\n(China\u2019s Central Bank) may be impeccable in a world monetary war.<\/p>\n\n\n\n On the other hand, the FED is unlikely to agree to a series of consecutive\nreductions in the US basic borrowing dollar interest rate, putting into\npractice the weak dollar strategy that US President Donald Trump urges with aim\nto increase the competitiveness of the American businesses and to continually\ncreate new jobs in the American economy in order to win the elections in 2020.<\/p>\n\n\n\n This element shows us that U.S. President Donald Trump will have a problem\ncoordinating the basic principles-institutions of the US economy, namely the\nMinistry of Finance and the FED in case he wants to get involved and win a\nworld monetary war. Since the FED resists in the US President’s wish to\nparticipate in a global monetary war, which would in such a case will bring the\nFED against the ECB and the Bank-of-Japan, then the President’s choices shrink\nand rely on the decisions of Congress.<\/p>\n\n\n\n More specifically, in a monetary war and as I mentioned in the first\nparagraph of this section, the U.S. Ministry of Finance and aiming to create a\nweak dollar and always without its support from the funds of the FED, should\nuse all the funds which has available in its custody by interfering in the\nforex markets to sell dollars and buy other foreign currencies thereby causing\nthe further weakening of the dollar.<\/p>\n\n\n\n In addition to further deregulation of the American economy in such a case\nand always based on the fundamentals of the US economy, the U.S. Ministry of\nFinance (Treasury) has a limited amount of funds in dollars, totaling $126\nbillion, which they are placed in the Exchange Stability Fund.<\/p>\n\n\n\n Since the FED may not agree to apply a series of reductions in the basic\nborrowing dollar interest rate, in this case the only option that US President\nDonald Trump will have in his hands to find the available funds that will\nsupport the unlimited massive sale of dollars for the purchase of other major\ncurrencies in the foreign exchange markets with aim to create a weak dollar, it\nshould appeal to Congress and ask for approval for greater access to capital. <\/p>\n\n\n\n This means that he will ask Congress to approve the debt increase of the US\nfederal government and whatever that it means, with aim to use more funds in\norder to win the monetary war against all.<\/p>\n\n\n\n But will this Congress approve? Or the President of the United States will\nbe involved in a global monetary war without securing the participation of the\nmain “players” of his country that will secure the unlimited funds to\nwin the world monetary war, causing an uncertain outcome of this war that would\ncause damage to the prestige of the United States?<\/p>\n\n\n\n Thanos S. Chonthrogiannis<\/strong><\/p>\n\n\n\n It is prohibited by intellectual property law or in any way illegal use of this article, with heavy civil and criminal penalties for the offender.<\/em> \u001f\u0006\u0003\u0004<\/p>\n","protected":false},"excerpt":{"rendered":" At the FED ‘s meeting last week it was decided for the first time, after nearly eleven years, to reduce the basic borrowing dollar…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[859,5],"tags":[901,161,655,62,779,61,899,243,897,900,898,902],"class_list":["post-880","post","type-post","status-publish","format-standard","hentry","category-economics","category-economic","tag-bank-of-japan","tag-china","tag-donald-trump","tag-ecb","tag-elections","tag-fed","tag-foreign-exchange-market","tag-inflation","tag-monetary-policy","tag-peoples-bank-of-china","tag-unemployment","tag-us-congress"],"_links":{"self":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/880","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=880"}],"version-history":[{"count":2,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/880\/revisions"}],"predecessor-version":[{"id":883,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/880\/revisions\/883"}],"wp:attachment":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=880"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=880"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=880"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2019\/08\/320px-President_Donald_J._Trump_and_President_Xi_Jinping_at_G20_July_8_2017.jpg\")
Photo by Author: The White House from Washington DC\/Shealah Graighead
Source: President Trump’s Trip to Germany and the G20 Summit
licensed, Public Domain, https:\/\/en.wikipedia.org\/wiki\/Public_domain
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