Donald Trump has some good political instincts. He is brilliant when it comes to marketing, particularly in branding his political opponents.
Think about Trump’s past victims from his ability to brand: Lyin’ Ted, Low-Energy Jeb, Lil’ Marco, and Crooked Hillary. There have been some lesser-known ones such as Sloppy Steve, after Steve Bannon was separated from the Trump team.
Now we get to look forward to the current Democratic candidates. He already has some names, including Senator Pocahontas and Sleepy Joe. Joe Biden actually got off easy. Unfortunately for Trump, much of the country may want someone sleepy in the White House after four years of Trump.
One thing I have appreciated about Trump over the last 4 years (since his campaign started in 2015) is that he helps to expose the deep corruption at the top. He helps to expose that there really is a deep state. It is not always intentional by Trump, but nonetheless, he has helped to slightly weaken the establishment.
Trump has also exposed the establishment media as fake news for anyone paying attention. This has been intentional by Trump because he is so often a victim of their fake news. Even if you don’t think the media is outright lying, there is little question about the bias.
Unfortunately, Trump’s rhetoric has not brought forth any significant change for the better in policies. He has surrounded himself by war hawks. He, along with Congress, is running even more massive deficits, as spending is completely out of control. He continues the invasion of our privacy, even though Trump himself was likely a victim of the NSA and the intelligence agencies. Trump has continued the brutal sanctions and support for war in Yemen, while reenacting sanctions on Iran.
Aside from Trump helping to expose the deep state, about the best you can say about him is that he has yet to start a new major war. It is sad that this is considered success.
Wrong Economic Instincts
Unfortunately, although Trump has some good instincts when it comes to politics and marketing, this did not carry forward to the part of his brain that thinks about economics. He is a complete dolt, which I have known for a long time. At one time, in 1999, he supported a massive wealth tax on the rich.
Now Trump is in over his head with his trade policies, which basically consists of him making threats and hiking tariffs.
There are some supposedly free market people in the Trump camp who say he is playing 4-D chess and that he would be willing to reduce all tariffs to zero if the other side (or sides) would agree. I don’t think this is the case at all.
The Chinese government is pushing back because the political class there feels like they have been pushed into a corner. They are not likely to offer a deal where all tariffs are eliminated. And even if they did, I don’t think Trump would take that deal.
The Chinese are responding the only way they know how, and that is to implement their own tariffs or sanctions against trade. They are intentionally trying to hurt certain sectors, such as farmers, to hit Trump where it counts. It may work.
The ultimate nuclear option for China, at least in terms of economic policy, would be to dump the over one trillion dollars in U.S. Treasuries held by the Chinese central bank. There has only been mild talk of this possibility, but no serious talk by senior officials.
According to the latest data, China still owns over $1.1 trillion in U.S. government debt. This has decreased slightly, but nothing significant, or at least nothing significant in terms of the numbers we are dealing with.
Japan has briefly taken over the number one spot for central banks owning U.S. government debt. But this is more a result of Japan buying than China selling.
Chinese officials could certainly cause a lot of trouble by just credibly threatening to dump U.S. debt. But they show no will to do so at this time. I think they would really have to feel like there are no options left to do this. If China goes into a deep recession, then anything is possible.
On Friday, August 23, 2019, Trump took to Twitter to make more threats about tariffs. He said that U.S. companies should start making plans now to get their manufacturing out of China.
When the left calls Trump a fascist, they typically do not know what they are talking about. In this case, Trump is acting like a fascist. Economic fascism is the state controlling business. This is what Trump is doing. It may not be to the same degree as Bernie Sanders or Elizabeth Warren would promote economic fascism, but it is still very anti free market.
Sanders and Warren are called socialists at times, and Sanders has even referred to himself as a socialist on many occasions. But their economic policies are a combination of state ownership (socialism) and state control (fascism). Even when it comes to healthcare, it isn’t completely clear that they would implement total socialism. The doctors would not technically be employed by the government. The hospitals would not be completely owned by the government. They would just be completely under the government’s thumb.
Trump’s Economy
After Trump’s latest threats, stocks took a dive. The Dow ended the day down over 600 points. This all seemed to be in reaction to Trump and his threats to increase tariffs even more.
Trump’s economic idiocy is impacting his politics. He is shooting himself in the foot on this one. It will be easier for people to pin the blame on Trump when the economy goes in the tank.
Of course, Trump’s tariffs are harming us (the American consumer). They are harming the Chinese people. So I don’t really care about Trump and his politics except that I don’t want someone even worse in the White House. That seems almost impossible at this point, but you should never underestimate the damage that a president can do.
Aside from China, Trump is targeting two parties to blame his economic problems. One is the Fed, but his wrath has really gone in particular to Jerome (Jay) Powell, whom Trump appointed. Powell is Trump’s scapegoat for when things go wrong.
The other party Trump is blaming is – no surprise – the media. Trump says that the media is talking down the economy by mentioning the possibility of recession.
Maybe the establishment media is talking about recession a little more than in the past. But when it comes to a financial network like CNBC, I think they still would have reported on the inverted yield curve and its historical ability to predict recession even if Trump were not president.
Trump is now saying that the media is trying to talk the economy into recession. This is his Plan B. He still brags about how great the economy is. But, if and when things go bad before the 2020 election, Trump needs a fallback plan. He will blame the media and the Fed.
He is right to blame the Fed, but not for the reasons he is blaming the Fed. It was the Fed’s massive monetary inflation from 2008 to 2014 that is to blame for all of the misallocations and bubbles.
I don’t think Trump’s plan is going to work. Voters, at least on the margin, will blame him. If he had continued from his campaign to say that we are in a giant bubble, then maybe he could survive an economic downturn. But since he continually brags about his economy, he will take ownership for the downturn, whether he likes it or not.
Trump’s tariffs will not be the cause of the next recession, but they can trigger these down days in stocks. His tariffs will seem to coincide with the recession.
It is curious that almost nobody seems to question where Trump gets the authority to implement these tariffs on his own. We are supposed to have a Congress that enacts laws.
I know they use some arcane laws that the president can enact tariffs for national security. I don’t think these laws are constitutional, but that doesn’t stop anything. Still, it is quite a stretch to say that these tariffs have anything to do with national security. Most of the reasons Trump gives have nothing to do with national security.
Of course, the left and the media (somewhat redundant) are not going to challenge Trump on this main point. They will complain about Trump all day long, yet they won’t really question his power. They like the presidential power. They just don’t like the president who is currently using it.
In terms of Trump trying to blame the media for a recession, I don’t think it is going to work, except for maybe a small number of naïve people who would support Trump no matter what anyway.
While the general population doesn’t understand economics well, I think there is a basic instinct to know that the media can’t really talk the country into a recession.
Maybe they can make things look worse than they are. This could have a small short-term impact on people spending their money. Of course, with the Fed’s distorted interest rates, we probably need far less spending and more savings and investment than what is taking place.
If the economy were really as strong as Trump says, then it wouldn’t matter what the media says. If people have money with real value in their pocket, then their own personal economy is doing well. If you are not stressed out about money because you are doing well, then it doesn’t really matter what the media says.
Unfortunately, this is not the reality for much of middle class America, including many Trump supporters. Technology keeps getting better, which is a great benefit to us. And it will likely continue, regardless of the economy.
However, middle class America is struggling to keep up with the rising cost of living. Unemployment is low, but the wages aren’t keeping up with the costs of some of the basics in life such as medical care and housing.
Life is expensive right now. We actually need a recession to help correct some of this, although it will be painful to go through.
In this instance, I think the media is right to warn of a recession, at least to the degree that they are actually doing so. It will not be the media’s fault for talking us into a recession when it actually hits. It is just reality.
Trump is great at branding, but his branding of his main opponent in 2020 will be useless if we are in a recession. Trump will deservedly lose in 2020 if we are in a deep recession.