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Economics 250
3/5/2018
Analysis
The Trump Administration will face challenges between balancing the growth of
Main Street, primarily through tax incentives, while sustaining the growth of Wall Street,
which relies on low interest rates. However, the growth of Main Street pressures
interest rates, and Wall Street is sensitive toward the threats inflation poses toward low
interest rates. Their concern is that the growth of Main Street will generate inflation that
The Trump Administration cannot afford to raise interest rates anyway, as it will
have sensitive impacts on the interest of the national debt. Also, it is in the interest of
the Trump Administration to keep the value of the dollar up by the relatively low interest
rates that are associated with dollars. Other nations will want to borrow funds in
dollars, with low interest rates, which increases the value of the dollar, sustaining its
purchasing power.
Sustaining the purchasing power of the dollar is one way that the Trump
Administration may negate the impacts of inflation. This will help resist the pattern of
raising interest rates in the face of inflation. It will also support bond markets measured
in US dollars. The growth of the U.S. dollar may hurt exports, but the analyst suspects
that the growing middle classes in emerging markets will be willing to absorb the
The Trump Administration is well aware of the fiscal impacts of its tax incentives.
The analyst suspects that the Trump Administration may pursue a two pronged attack
against this problem. First, the Trump Administration will seek to aggressively tax
corporations earning profits overseas. These proceeds could be used to address the
national debt.
Secondly, the Trump Administration will pressure nations that have resisted
foreign trade to open up their markets to investment from U.S. based corporations The
long term effect of these trade policies is to hopefully encourage the growth of middle
classes in developing nations, who can better afford U.S. goods produced in dollars. It
Finally, the Trump Administration will also seek ways to controll the costs of
basic goods that contribute toward inflation. The primary way of addressing this
as well as seeking alternative sources of energy that support U.S. manufacturing in the
long term.
Works Cited
Racanelli, Vito J. “Seat Belts Fastened.” Barrons, (Vol. XCVII, No. 7).”