Trump close to success on tax changes

Trump close to success on tax changes, by Robert Gottliebsen.

The US and therefore the world last night moved a step closer to an entirely different financial architecture — one where both US interest rates and the US dollar rise.

And by definition that puts downward pressure on the Australian dollar and upward pressure on our interest rates. …

For some time now I have been alerting readers that the Donald Trump of the second half of 2017 is entirely different from the bumbling leader we saw in the first six months of his presidency.

Trump and his supporters are shepherding his tax package through the Congress and last night made great progress when long time opponent Republican Senator John McCain signalled his support for tax cuts and the broad Trump package.

The lead indicator of the Trump tax package’s progress, the US ten-year bond rate, quickly responded and bond prices fell, pushing the yield up to 2.43 per cent. Back last March, when Trump euphoria was raging, the 10-year bond yield hit 2.63 per cent only to fall back to 2.03 per cent in July when the Trump wheels seemed to be falling off. …

The latest Republican Party plan is a watered-down version of the plan Donald Trump used in the election campaign to become US President. It is designed to start unprecedented investment in America and benefit those US states that were ravaged by globalisation. …

Trump believes that, longer term, the only way the US can overcome its debt problem is to inflate its way out. And given that US unemployment is low that’s exactly what will happen if the money flows back and is invested.