SUMMARY

The bill seeks to re-balance the international financial position of the United States. Currently the Net
International Investment Position, or NIIP for short, of the United States stands at -$10 Trillion, meaning
that the rest of the world owns $10 trillion more of us than we own of them. This puts the United States
in an unacceptably precarious financial position where our economic security is in large part in the
hands of foreign nationals and governments.

The bill seeks to put a charge of 0.5% on qualified transactions, which include most purchases of
domestic physical and/or financial assets and obligations by foreign nationals and entities. The bill
leaves this transaction tax subject to alteration based on how it will affect the current account balance
of the United States, with the goal of altering the current account of the United States to 0.5% of GDP
within balance.

The bill also seeks to grant expanded powers to the Fed by giving them specifically increased powers to
intervene in the FOREX market with the narrow intention of re-valuing the Dollar in a way that moves
the country’s current account closer to balance. It is believed that the Dollar is overvalued relative to
other internationally traded currencies and that allowing the central bank the same powers that many
central banks of surplus countries have will help even the field.

The FOREX intervention mechanism, assuming it is used properly, is especially important for the United
States simply because we hold the reserve currency. This status necessitates built-in demand for Dollars
due to its primacy in international transactions, especially its exclusivity in the oil trade. This status
means that permanent upward pressure is applied to the Dollar by the very nature of the Brenton
Woods System, which makes the Dollar permanently overvalued absent constant and proactive
intervention by a federal monetary authority.

VERDICT: RNR approved

During debates, it will be important for proponents of the bill to remember that the Dollar’s reserve currency status is what makes this legislation desirable. Using examples of other countries such as Switzerland who have strong currencies as well as healthy current account surpluses as a refutational example by opponents of the bill are not applicable. No other country has to deal with the destabilizing effects that reserve currency status has on domestic industry. Most capital inflows into the United States are used to either purchase nationally strategic assets, which drive up asset prices artificially, or provide dangerous amounts of credit to American consumers which will undermine the overall household balance sheet of the country.

While certainly far from a panacea, this bill represents an incredibly good precedent in economic policy that is explicitly focused on protecting the American people even if it might be at the expense of foreign nationals.

The Republicans for National Renewal therefore approves S. 2357 “Competitive Dollar for Jobs and Prosperity Act” to level the playing field against unfair globalist rules. The Senate Committee on Banking, Housing , and Urban Affairs is where this legislation is currently active in as of the last action on July 31st, 2019 when the bill was read twice.