Financial markets are signaling a lack of confidence in the Trump administration's policies, as evidenced by the dollar's significant drop and gold's substantial rise. Desmond Lachman, a former IMF official, warns of a potential financial crisis approaching next year unless major changes are made. The U.S. fiscal situation worsened with recent tax cuts, contributing to a growing deficit, while tariffs and pressure on the Federal Reserve have heightened inflation concerns. This combination of factors has led to decreased trust in the U.S. economy and currency.
The dollar's plunge and gold's surge this year are signs that financial markets are not pleased with the Trump administration's policies. Unless there is a major course correction, the U.S. should brace for a financial crisis leading up to congressional midterm elections next year.
The world is losing faith in the dollar, and the U.S. could suffer a financial crisis next year. The U.S. fiscal situation was already shaky before President Donald Trump began his second term.
Trump's tax cuts in the megabill will add trillions to the deficit, while his tariffs and pressure on the Federal Reserve have weakened confidence in the dollar by stoking inflation concerns.
The dollar sank 10% against other top global currencies in the first half of the year, marking its worst performance since 1953, despite tariffs and wider premiums between U.S. rates and those of other economies.
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