Insightful post, thank you for sharing. I have a few questions:

1. “China has the power to trigger such selling of Treasuries by devaluing the Yuan”. Could you clarify why devaluing the RMB triggers the selling of treasuries? Intuitively, i thought aggressively devaluing ones currency would make people less interested in holding it and they would move to other currencies (like USD assets). Is it just triggering more destabilization causing people to want to sell Treasury and bring money back home?

2. I agree, and think it is still an understatement, to say allies are worried and want to hedge against the USA. The “reciprocal” tariffs we harshly put on EU, UK, Switzerland, Norway. This demonstrated Trump admin treats them the same as China, Russia, etc. Just an transactional obstacle to overcome. Add in the treatment by Trump/Vance to Ukraine (and borderline admiration of Putin) and I would be shocked Europe is not quickly moving to hedge against the USA and bet on itself. As an American, I am sad to say, it would be irresponsible for them not to.

3. Finally, a major assumption in your bullish dollar view seems to be that when tariffs trigger inflation the Fed will act rationally and raise interest rates (or at the least hold them steady). But with a new Fed chair nomination next year (and Trump openly saying he wants to directly run the Fed) what do you see that maintains your confidence the Fed will remain a rational, independent institution? Looking at who is in charge of other major institutions (Patel, Gabbard, Noem, RFK Jr, etc) what makes you believe this corrosion won’t reach the Fed. I think many people are still underestimating that a lot of Trump 1.0 admin were still professional, mission driven, technocrats (Wray, Miley, Esper, Powell). It is a fact this is not the case in Trump 2.0. I am pessimistic critical institutions can be run by people like that for years without some real loss of independence.

Thanks again for your time. Your posts help me learn and gain more perspective against my own views.