Jimmy Carter II

Tue, 2017/08/08 - 1:08pm | Your editor
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Russell Jones writes from London:

The dollar has depreciated by some 7% so far this year. The US currency’s weakness coincided with a growing sense of chaos and ineptitude where the Trump Administration is concerned. This has evoked a previous episode of dollar decline that went hand-in-hand with poor policy-making, low Presidential esteem, and fading respect for the US – the late 1970s, during the Carter Administration. How close are similarities between the ‘Carter Dollar’ and the ‘Trump Dollar’?

The macroeconomic circumstances facing Donald Trump today could not be more different to those which confronted Jimmy Carter. Rather than stagflation, the US economy is today in reasonable balance. Growth is running around potential; employment is near-full; inflation is a little below the Fed’s 2% target, but expected to return to it before long; and the external deficit is modest and stable. The Misery Index is historically low.

What is similar, is Trump’s positioning of himself as a disrupter of the Washington conventional wisdom; the President’s increasingly dysfunctional relationship with Congress and his own party; the sense of policy and personnel mismanagement that surrounds the White House; the maladroit manner in which new initiatives are communicated; and the damage that inflicted on the US’s global reputation and leadership by the impulsiveness and controversial tone of US economic and foreign policy. Once again, the talk is of the US losing its way and the demise of the Pax Americana.

For all his failings, Carter had redeeming features that Trump lacks. Carter had a proven track-record as a successful politician, serving as Governor of Georgia from 1971-75. He was a compassionate, hard-working, dedicated, and God-fearing man; qualities that often seem anathema to Trump. Carter was a respecter of the office of President, of the other institutions of government, and of the 4th estate. He was a fiscal conservative, who eschewed large budget deficits, and acted to veto pork-barrel projects favoured by his own party.

Even as the economy collapsed back into recession and his chances of re-election evaporated in 1980, he refused to resort to protectionism, turning down the pleas of the major automakers for restrictions

on the importation of foreign cars, while declining to bail out Chrysler and beginning the process of deregulation since associated with his successor, Ronald Reagan.

Vivian adds: and of course he appointed ultra-hawk Paul Volcker to the Federal Reserve. Jones writes for Llewellyn Consulting, www.llewellyn-consulting.com

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