EURUSD
The euro holds back despite seller attacks.
The key level for moving up is 1.1200.
We keep purchases from 1.1035.
About Trump and the wrong politics:
The most important issue of Trump's policy is the reduction of business taxes. Of course, this decision has added to Trump's popularity. However, this creates a large budget deficit. This is evident only because the US public debt grew by $2 trillion, that is, from $20 trillion at the end of 2017 to $22 trillion in 2019.
A budget deficit is not a disaster, but the context must be understood.
It is written on the front page of any economics textbook that the government should pursue a counter-cyclical policy. This means that in a period of strong economic growth, as it is now in the USA, it is necessary to reduce government spending and have no deficit, as well as in the budget profit. This is in order to have a reserve for saving problem sectors of the economy during the next crisis, which will surely come.
The Trump Government, as we see. violates the basic rules of economic security. It inflates the deficit and public debt in a situation of growth. What is he going to do in a crisis situation?
The role of the budget:
Any state levies taxes on business and citizens to fulfill its functions, and sometimes just at the whims of the authorities. These funds, in general, are returned to the economy in the form of costs for the purchase of goods and services for state needs which is for the defense, police, construction of infrastructures which are in the form of public sector salaries and social benefits.
If government spending and taxes are too high, this has a depressing effect on GDP growth. It is clear then that the state as a whole is an inefficient economic entity.
The balance is important for the rest, the ratio of funds withdrawn from the economy and those that are returned. If the state spends taxes more than what it collects, then it is increasing its debt and is pursuing a pro-active policy. This stimulates growth to a lesser extent in the United States and Europe.
If the state takes more money out of the economy by increasing reserves, this stops the growth of GDP. As it is now in Russia, where the government has a surplus.
A situation as it is now in Ukraine is still possible, where 40% of the budget goes to pay the public debt, this is too much and negative for the growth of the GDP.
The situation is affected, not less, or even more, by the Central Bank's policy. If the loan is cheap, as it is now in the USA, Europe, and Japan, then an inexpensive loan stimulates economic growth. In Russia and Ukraine, a loan is very expensive which is almost inaccessible to citizens and businesses. This is the result of the policy of the Central Bank. It is believed that credit is expensive due to high inflation, however, when the Central Bank rate is above the inflation rate for a long time, then the high Central Bank rate itself increases inflation.
