In this report, I cover the early market action from London on Friday, May 31st, 2019. I look briefly at the precious metals, the stock market, the dollar, the bond market and the price of WTI and Brent crude oil.
After looking at some of the major headlines this morning concerning President Trump's Trade Wars and the Federal Reserve's monetary policy I look into the term called Triffin's Dilemma.
Triffin's Dilemma says that if the World Monetary system is dependent on one national currency then that leads to other countries trying to build currency reserves of the country in charge of the system. So under the current Petrodollar system countries around the world need to sell to the U.S. in order to accumulate dollar in order to trade with other countries. It is this mechanism, in my opinion, that has led to the huge imbalances in international trade that has resulted in the current Trade Wars.
In my opinion, President Trump is going after the symptom of the problem by imposing tariffs on the U.S.'s major trading partners. I would say that a classic gold standard in which gold serves as the international money would virtually eliminate imbalances as it would be very difficult for countries to inflate their currencies in order to gain an advantage in international trade.
The other point I make is that the Central Bankers are to blame for the next big economic slowdown that is becoming even more inevitable as the credit cycle turns down. I think the Central Bankers are having a good chuckle about the current Trade Wars waged by President Trump.
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"Trump Threatens Mexico": https://www.ft.com/content/ebc854f8-8321-11e9-9935-ad75bb96c849
"Fed Open to Rate Cuts": https://www.ft.com/content/2d5f6610-82f3-11e9-9935-ad75bb96c849
