tariffs = falling USD. Double inflation

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Jon Freise

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Apr 5, 2025, 10:01:34 AMApr 5

to Transition Twin Cities

Hi Everyone,

Economist Paul Krugman had an interesting article on the effect of the tariff announcements in pushing the value of the dollar down.

https://paulkrugman.substack.com/p/how-a-con-man-president-is-destroying?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F31c1129f-08b2-47d0-918b-d319e51c0057_2190x926.png&open=false

From a consumer point of view this causes double inflation: you pay the increased cost of the tariff AND your money is worth less so you pay again.

The US Dollar is the reserve currency of the world. Everyone uses it. You can purchase just about anything if you can get dollars. But that may be changing. It is risky to hold as a stable reserve a currency controlled by those out for personal gain rather than currency stability.

If Trump does press the Federal Reserve chair to lower interest rates or forces him out of office, that will be another telling blow that the US cannot provide effective economic leadership.

Normally a country with the world's largest economy is slowly eclipsed the way the UK was eclipsed by the United States after WWI. The dollar replaced the GB Pound as the world's reserve currency. But this time it might happen because of US internal conflict. Essentially the Confederate and fossil fuel industry counter revolution against the US may destroy enough of the US federal government function that the US internally collapses. It is becoming clear the US is unwilling to remain in either US aid, nor in NATO. And now we are ceding the world's reserve currency.

From a consumer point of view this means the cost of everything will rise. The cost to install solar power or a heat pump, as examples, will rise.

Sadly, these tariffs do not even make sense from a relocalization point of view. If you were planning to create an economic sphere near the US, then you would penalize countries in the other spheres and give favors to those nearby. Canada and Mexico and South America would have no tariffs and the rest of the world would have higher tariffs. Or you might put in tariffs that penalize dictatorships and support democracies. But no. This is just Nero playing fiddle while Rome burns. Well, our founding father's had direct experience with the joy's of Monarchy and inherited power. "Meritocracy"? Uh, no. Maybe, after 250 years, Americans need to experience the disaster that is Monarchy first hand.