The Trumpian Economy

Discussion in 'Business & Economics' started by joepistole, Nov 20, 2016.

  1. joepistole Deacon Blues Valued Senior Member

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    Now that Trump appears to be the president elect, how will that impact the economy?

    On election night when it first became apparent Trump would become our next POTUS, global markets tanked. US futures declined by almost 900 points in a matter of minutes. But then Trump gave a magnanimous speech which calmed the markets. Trump appeared reasoned. He didn't say anything stupid. That was enough to calm global markets at least temporarily.

    Since then markets have risen based on speculation that since Republicans now control both the presidency and congress, they will suddenly pass a trillion dollar infrastructure spending bill. After 8 years of fiscal hawkishness and after repeated attempts to cause a debt default, Republicans seem to have acquired a case of selective amnesia. Suddenly all this crap about the debt has gone out the window.

    Trump's only coherent tax plan alone would add 12 trillion dollars to the national debt. Add to that Trump's trillion dollar infrastructure spending plan, and you have a lot of money being injected into the economy, and that's very stimulative. That's why the markets have risen. But if this investor speculation turns out to be wrong, and Republicans don't do what Trump has promised, markets will collapse as quickly as they rose. At this point, I think it most likely Republicans will quickly forget about the austerity they have been hawking for these last 8 years and spend like there is no tomorrow.

    That will mean higher US interest rates. It's a virtual certainty that the Federal Reserve will raise interest rates in a few weeks. And it may mean higher inflation; emphasize the word"may". But here is the risk, Trump's trade, foreign, and domestic policies could very well but a kibosh on any economic growth and could very well send the economy into recession regardless of the stimulus. That's the part which worries me. Geopolitical instability isn't good for business, and with Trump I fear increasing geopolitical instability. Trump's policies could very well result in more terrorism and a greater terrorist threat. Going to war with a few thousand terrorists as we have done is very different from going to war with billions of Muslims.

    Trump's trade wars are another immediate threat to the nation's economy. Trade wars benefit no one. It results in higher consumer costs and higher unemployment. Foreign goods become more expensive and people lose jobs. No matter what Trump says, that's not a winning recipe. That's kind of the boat Putin is in. He doesn't need company.

    So the bottom line is it's too early to know where Trump will go. It's too early to know if Trump will fulfill his campaign promises or not. I think most business folks don't believe Trump will cause a trade war. But it's too early to know. Much will be revealed as Trump compiles his cabinet. Thus far he has made some pretty wacky choices, e.g. Lt. General Flynn. Let's home is choices get better.
     

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