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A plausible scenario for how Trump will spark a hyperinflation crisis in the US, and end the dollar's role as global reserve currency. (self.futurology)

submitted 2 months ago by Lugh to c/futurology

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Ambrose Evans-Pritchard lays out the likely steps in how this will happen in this article.

He says Trump will take direct control of the Federal Reserve to lower interest rates. This, and his global tariff war, and tax cuts for the rich, will stoke huge levels of inflation in the US. Think of Erdogan's Turkey for comparison.

By this point, the foreigners who finance US government debt by buying Treasury bonds will start to lose confidence in the dollar as a currency.

This crisis will force money printing (quantitative easing) and capital controls, both furthering the currency crisis and perhaps leading to hyperinflation.

I hope there are sunny uplands for the world ahead, and the transition to get to them isn't too long. We were always going to have to endure economic pain as we transitioned to a world where robots/AI can do all work. I suspect that pain is going to start sooner than we expected.

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[–] FuckyWucky@hexbear.net 3 points 2 months ago* (last edited 2 months ago)

I really hope Trump's Treasury stops coordinating with the Fed, this will show the central bank 'independence' losers that Fed and Treasury must cooperate to ensure that the effects of spending and taxing doesn't mess up the Fed's interest rate target. Fuck central bank 'independence'.

Also, the likely result will be that after a spike in inflation, the U.S. experiences deflation and the economy shrinks. Stagflation of the 1970s occurred in part because workers and capitalist fought to maintain their share during the oil price spike. The author dumbs it all down to interest rates and monetary policy.

[–] rimu@piefed.social 2 points 1 month ago

At this point just about anything is plausible.

But surely doing that would hurt Trump pretty bad (along with everyone else) who must have a lot of stuff denominated in USD.

[–] just_another_person@lemmy.world 1 points 2 months ago (1 children)

He won't be able to just take control of the Fed without Congress, and he's already broken the majority support there over this dumb tariff bullshit. Hopefully he's already broken his support line in just two months. We shall see.

[–] Lugh 3 points 2 months ago

He won’t be able to just take control of the Fed without Congress,

Perhaps, but they've abdicated responsibility on everything else so far. I understand that people have hope the normal times will resume, but autocracy has a trajectory. So far, almost nothing has stopped it in the US.