Maury Obstfeld at PS says it better than ever (with the best graphic *ever*):
Trump advisers are reportedly considering two complementary policy changes. A proposal would have involves increasing direct presidential control over the Fed’s interest rate decisions and rule-making. At the same time, Trump’s trade team, led by former U.S. Trade Representative Robert Lighthizer, apparently wants weaken the dollar exchange rate.
While some Trump advisors denied any plans to devalue the dollar, Trump’s preference for lower interest rates and a weaker currency was evident during his first mandate. The proposed policies would make it easier for him to override the Fed’s independence and achieve both goals. The result would be a powerful inflationary cocktail.
Trump’s desire for a weaker dollar is driven by his belief, shared by Lighthizer, that the dollar is “too strong.”
