Thanks for your comment. I’m kind of just working this out for myself right now. And, as you might already know, the real experts on rates and currencies are in the big global banks, who can run circles around me.

For what it’s worth–

I’m not sure there’s a comprehensive, well thought out, economic plan in the White House. I think there is a cultural agenda that has economic consequences, though. Those consequences are, I think, by and large a drag on growth. And that’s on top of the growth drag from tariffs. Lower growth probably means lower personal income and lower corporate profits–therefore lower tax revenue for Washington.

The most straightforward way of offsetting this shortfall, and especially since Washington seems to always spend more than it takes in, is to pay a lower rate of interest on federal government borrowings. A big problem here is that about a third of the outstanding Treasury securities are held by foreigners, who can arguably go elsewhere, and who have already expressed their displeasure at the current administration by massively selling the dollar after the inaguration–to hedge against an anticipated attempt by Washington to reduce the real value of the bonds they hold.

The biggest domestic problem I see is that if the economy is humming along as best it can right now, given tariffs and ICE’s shrinking the workforce, the economic stimulus created by lowering rates will arguably mostly create inflation–too much money chasing too few goods. I think this is Chair Powell’s point, that lowering rates aggressively might lower the interest bill paid to foreigners, but will make the domestic situation worse, not better. And it’s the first step down a bad road to travel on.

Having said all this, my guess is that Congress won’t do anything to stop the administration from lowering rates once it has put its loyalists the board of the Fed.

Overall, lower rates, lower currency, higher domestic inflation is where I come out. If that’s anywhere near correct, then domestic companies that sell abroad will continue to be winners, as will foreign firms that either have US costs or no exposure to the US. The worst place to be will (continue to) be foreign luxury goods companies with large US exposure.