- Fox News Sunday
- Treasury Secretary Steve Mnuchin did not voice support for a strong US dollar while speaking at the World Economic Forum this week.
- Markets hated it.
- Consider this example No. 1,437 of the administration taking something that should be simple and turning it into a gong show.
If the Trump administration excels at anything, it’s in turning something that should be easily manageable – if not completely benign – into an unmitigated fiasco. Treasury Secretary Steve Mnuchin’s performance in Davos, Switzerland, serves as a perfect example.
“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin said Wednesday at a panel at the World Economic Forum.
That was not the right answer. In the name of global economic stability (and attracting investment to the US), the answer to any question about the dollar should be automatic, a no-brainer for any US Treasury secretary: “The US supports a strong dollar.” That is what the guidebook says you should say. Very simple.
But apparently Mnuchin, an alumnus of Goldman Sachs, is not one for no-brainers.
On his words, the dollar – which had already been falling for weeks – fell to a three-year low at one point on Wednesday, and markets roiled. Wall Street, up to that moment, hadn’t been concerned about the dollar slide. Last week, one top money manager told me the slide was due to “petrodollar rebalancing” and shrugged it off as if it was the last thing the US government should, or could, be worried about.
But after what Mnuchin said, billionaire investors started freaking out about it in online blog posts. Thanks to him, what should be an afterthought is now a matter of international scrutiny and dismay.
So Mnuchin tried to backtrack that statement. On Thursday he said that he was not concerned about a weak dollar in the short term and that of course the Trump administration preferred a long dollar in the long term, and so forth. President Donald Trump himself had to go out and make a statement in support of dollar strength.
That’s fine, but it’s all too late. Now investors will vacillate between wondering whether the Trump administration has a weak-dollar policy (bad for anyone wanting to buy US assets, which would lose value) and whether it has no policy (bad for anyone wanting to sleep peacefully at night).
None of this had to happen, especially not at the hands of someone who spent years in banking. It’s just another example of this administration’s talent for making pandemonium out of something that should be simple. That is truly what it excels at.