Thursday, December 28, 2017

Unintended Consequences

Two of our current president's goals are to lower immigration and renegotiate NAFTA and he just got a tax bill that greatly reduces taxes for corporations and the wealthy.

But in this world everything is interrelated.  NPR reported a drop in the Mexican peso.
"The fear south of the border is that with corporate taxes lower in the U.S., Mexico won't look as attractive to businesses. A possible drop in foreign investment here sent the peso tumbling this week to its lowest level in nearly 10 months. Mexico's central bank tried to perk up the peso by selling off an additional $500 million in a foreign currency auction. The tactic usually gives the peso a boost, but there was no such rally this time."

If unemployment in Mexico rises and the value of the peso drops, there will be much greater incentive for unemployed Mexicans to come to the US and work for US dollars that they can send back home where their value will be much greater than working for pesos.

1 comment:

  1. Not sure it is unintended: if more Mexicans come to the U.S., the justification for that honkin' great wall is higher. More support for Trump.


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