Trump is an Economic Moron

This just in: Trump has successfully marketed himself as a Deal Maker. I beg to differ. In fact, his sense of deals, business and the economy are all at a level of what I would suspect is a D level student.

Let’s start with his bankruptcies...

Trump has filed for Chapter 11 bankruptcy 6 times. That is 6 times more than I have.

Let’s look at his known taxes from the mid 80’s into the 90’s…

Trump lost over $1 billion. One of his ways of making money back then was to buy a lot of stock in a company and then let it leak out that he wanted to buy that company. This would cause the stock price to rise. When it did, Trump would sell at a profit. This worked for a couple of years until people found out he was conning them. Trump then lost all of the money he’d made through this scam.

Let’s look at his deal making...

So far he has reneged on the Paris Climate Accord, the Russian Missile Treaty, the Iran Nuclear Treaty, the Trans-Pacific Partnership and NAFTA. None of these has been replaced. He claims great progress is being made on all of these….He also claims that he has a plan for great health care so we know what to expect…nothing. How are you going to make a deal when you have a legacy of failure, conning and reneging?

Let’s take a look at his tariffs

Tariffs are taxes paid by the country that is importing goods to the United States. So, if China wants to send us $100 of goods, they have to pay $25 in taxes. Trump claims this is hurting China and making us rich. However, a recent study showed that China is just adding that extra cost on to whatever they sell us. So, what you used to buy from China for $100 is now costing us $125. This means that it is the American Economy that is footing the bill for Trump’s tariffs. At the same time, China retaliates with tariffs on our exports to them. So, American soybeans now cost more in China. what happens? China buys soybeans from someone else. We lose again.

Everyone is welcome to like whatever political person they want. However, If you think Trump is a Deal Maker; if you think he is an economic genius…you are holding the score card upside down.

Time to save the world.

Up, up and away…

Jim

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The Great Moderation

This just in:  Among Trump’s many, many problems, the fact that he is an uneducated child is one of the biggest.

I suspect that a lot of presidents have not been good at economics.  I don’t know this for a fact because they could appear knowledgeable by leaning on the expertise of others.

Trump has shrugged off this idea.  “He speaks his mind” is somehow seen as a strength even if what he says is babble.

For example, trade agreements are often seen as a good deal.  Sure, there is some give and take but in the end, we lock in a trading partner instead of losing them to say…China.  Trump, doesn’t agree with this.  He thinks agreements need to be one-sided where he gets all of the gains and the other gets the “privilege” of trading with us.  He is alone in this as country after country turns away from us in search of other partners.

Another example is the Executive use of tariffs.  Tariffs are a tax on ourselves.  Because Trump is trying to bully China or Canada or the EU, we will pay much more for products from those countries.  He’s pretending that if we make Chinese steel more expensive, we will buy steel from the United States.  It’s as if he thinks there are steel mills that are currently idle and just waiting for prices to change in their favor.  Of course, this is pure nonsense.  But, there is a “being a bully” component that seems to give Trump a woodie.

Now he is picking on the Fed.  To talk about this, I need to clarify a couple of terms.

Fiscal Policy is that policy that covers government expenditures. The government can choose to put more money into the economy, or take it out, based on what they want to do.  A tax cut is a fiscal policy.  It puts more money into the economy and thus stokes the fires of growth.

Monetary Policy is controlled by the Federal Reserve.  This is the policy of raising and lowering interest rates to control how much money is in the economy.  The Fed acts to “cool down” an overheated economy or to keep inflation in check.

From the late 1980’s to the mid-2000’s, the U.S. economy didn’t experience huge swings between growth and recession.  This period, known as the Great Moderation, is in large part due to the active role the Federal Reserve played using Monetary Policy.  They raised interest rates when inflation started to rise and they lowered interest rates if a recession started to look likely.

The tax break is causing inflation.  The Fed is controlling this inflation by raising the interest rates.  Higher interest rates increase savings and decreases borrowing and thus…takes money out of the economy.  Money is more scarce so it is more valuable therefore, the buying power of a dollar is greater and thus…inflation is stopped.

Now, if you read and understand everything I just wrote, you know ten times more about economics than Trump.

Today, Trump is trying to pick a fight with the Fed.  This is like a beaver arguing with NASA about the design of a rocket.

Vote in 2018.  Pick a candidate that knows how to use the talent around him or her to make sound choices.  Or, vote Republican and support the uneducated child that is running our country.

Time to save the world.

Up, up and away…

Jim

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