The recent WSJ column by Greg Ip ('Economists See More Inflation Under Trump', p. A2, July 13-14) ought to be a 'shot over the bow' for every voter now inclined to vote for Trump - for whatever reason. As Mr. Ip has written:
"Trump has proposed a 10% across-the -board tariff on imports and a 60% or higher tariff on imports from China."
Contrary to Dotard's brand of
misapplied "economics" tariffs aren't paid by foreign
governments. That’s a myth too many gullible ‘Muricans believe. They are
paid initially by U.S. companies that import whatever goods - whether baby
formula or HDTVs - and then these are passed on to American consumers. Result?
Higher cost, more inflation. Thus, Trump's tariffs would push costs up on just
about everything and increase inflation dramatically.
These increased costs will hit the low income people the
hardest, most of whom are rural Trump supporters. This is because
they spend a larger share of their income on goods. Thus, if baby formula
goes up 25% low income people - laborers, family farmers, etc. will feel it
much more than Wall Street mavens.
And it may be even worse, because as Ip notes, Trump wants to target the labor supply too, writing:
"He has also promised the largest deportation of unauthorized immigrants in history which might reduce the supply of labor"
Of course it will reduce the supply of labor, especially in the agricultural sphere, thereby rendering fewer workers to harvest crops- whether lettuce, cabbage, green onions, tomatoes oranges, apples or other - raising their prices considerably. Between the reduced labor move and Trump's proposed tariffs (which will almost certainly emerge if the GOP wins both Houses of congress) inflation will soar. Ip's survey of "more than 68 professional forecasters from business, Wall Street and academia" confirms this - as he writes:
"Of the 50 who answered questions about Trump and Biden, 56% said inflation would be higher under another Trump term than a Biden term versus 16% who said the opposite."
This is serious but not the end of the story. The news of Trump’s selection of Ohio Senator J.D. Vance to be his vice-presidential nominee pairs him with a kindred spirit on trade, taxes and a shared affinity for a weak dollar. That could have the most sweeping implications for the United States and the global economy especially if Trump & Co. also impose their massive, across the board tariffs.
The MAGA cult's argument here is that if the dollar is too strong it makes it harder for American manufacturers to sell their products abroad. This is especially to buyers that use weaker currencies. So because their money is worth so much less than the dollars that they need to make those purchases.
Let’s be clear here that a devaluation or significant depreciation of the dollar, in concert with Trump’s plan to increase tariffs on imports, could also reignite inflation when price increases are finally easing. And we are talking reigniting inflation to historic levels, i.e. 15-20% or not seen since the immediate wake of the pandemic in 2020-22. As I wrote in a previous post,
Seriously? These forlorn MAGA maniacs are
actually considering devaluing the buck as well as setting interest rates to
suit Trump? Do any of his munchkins have any idea how much more misery
they will be in if he goes through with it? How much more they will pay at the
grocery, given how much less their greenbacks will be worth - not to mention
the hurt from the 10 percent tariffs the twit plans to impose on all foreign
goods (which is really a tax on Americans.)
Histrionics? No. According to Mark Sobel, a former longtime Treasury Department official who is now the U.S. chairman of the Official Monetary and Financial Institutions Forum:
“Depreciation would add to inflation. So would tariff hikes. Plus, a highly expansionary fiscal policy would add to demand pressures.”
One wonders if all the people now hankering for Trump – because they view Biden as too old, or enfeebled- are aware they may also be hankering to jump from frying pan into the fire. Think eggs, bread, milk and other staples are breaking your pocket books now, wait until they are 15-20% higher this time next year. $6 for a carton of a dozen eggs? $5 for a loaf of bread? It coold happen so buckle your seat belts, kiddies.
As also reported in the NY Times, Robert E. Lighthizer, Trump’s
former trade adviser, and could be a candidate to be his next Treasury
secretary. This guy has been mulling
ways to devalue the dollar if Trump wins, Politico reported earlier this year.
Brad Setser, a fellow at the Council on Foreign Relations who served in the Biden administration’s trade office, has also noted another worrisome aspect. That is, Trump’s proposed new round of tax cuts would probably widen the fiscal deficit and push up interest rates, also adding to inflation. It would be the worst of both worlds, but it seems too many voters are ok with it so long as Joe Biden doesn’t come back as a geezer for 4 more years.
As the WSJ's Grep Ip also notes (ibid.):
"Larger deficits tend to put upward pressure on inflation and interest rates."
The problem is that combined with Trump's insane dollar devaluation plan and across the board tariffs, inflation could spike to levels not seen since the early 1970s. We are looking here not just at one, but a confluence of factors propelling inflation to all time highs.
If the swing voters such as I saw Wednesday - being interviewed on CBS Mornings - are really fretting over 'bread and butter' issues it seems irrational to me they'd vote for a guy that would make the pain much worse. Why would you do that? Biden's age infirmities? As NY Times Thomas Friedman wrote, he'd rather take those any day over a malignant narcissist who's already proven he doesn't respect norms or laws. And if the orange reprobate gets in again he will make the 4 years of his previous term in office look like a Sunday picnic.
So what would you rather have, 4 more years of Biden's verbal jumbles or exploding inflation and deficits? To the extent you will have to split all your meds or do without groceries? The answer ought to be easy, as Mr. Friedman put it:
"The decisions we make in the next 4 months may be our last chance to avoid the unmanageable".
That includes how an election of Trump, including the MAGAs grabbing the House and Senate, will lead to the gutting of Medicare and Medicaid too. See e.g.
by Sonali Kolhatkar | July 18, 2024 - 5:36am | permalink
Conservatives have done the United States a huge favor by explaining in detail what they’ll try to do if Donald Trump is reelected.
Project 2025, a “presidential transition project” of the Heritage Foundation, helpfully lays out how a group of former Trump officials would like to transform the country into a right-wing dystopia where the rich thrive and the rest of us die aspiring to be rich.
Declaring in its Mandate for Leadership that “unaccountable federal spending is the secret lifeblood of the Great Awakening” (really!), the plan focuses heavily on reversing social progress on the rights of racial and sexual minorities.
It also promises to decimate the most popular benefits programs in the U.S.: Medicare and Medicaid.
See Also:
Donald Trump & GOP "Better For Economy" ? This Delusion Is Belied By The Facts
Donald Trump routinely claims he “built the greatest economy in the history of the world.” It is a claim rarely challenged in the mainstream media. If true, it would be at least part of a possible claim for re-election. But is it true?
There are five things we need to know to evaluate Trump’s claim to economic wizardry.
The first is that rather than “building” a strong economy, Trump hitched a ride on the one that was handed to him by Barak Obama and Joe Biden. When Trump took office, the economy had already been growing for 90 straight months. It would go on to grow for another 38 months before Trump drove it into the ditch. It was the longest U.S. economic expansion since data was first collected, in 1854. But Trump didn’t “build” it. He inherited it.
The second thing to know is that Trump’s stewardship of the economy has been far less effective than that of many other presidents over the past 60 years. In 2018, Trump’s best year for growth, the economy expanded 3.18%. That is the 29th best year for growth since JFK took office in 1961. For 2017, growth clocked in at 2.22%, 44th best in the last 59 years.
Best ever? It’s not even close to being close.
What about median income? That is a reliable measure of economic well-being. According to the House Joint Economic Committee, “During the last two years of the Obama administration, annual median household income increased $4,800. This is three times more than the $1,400 increase during the first two years of the Trump administration.” Best ever? Hardly.
Job growth? That, too, is a reliable indicator of a strong economy. The same Joint Economic Committee reported, “During the last 33 months of the Obama administration, nonfarm job growth averaged 224,000 per month. During the first 33 months of the Trump administration, the average was 34,000 jobs per month less.” Best ever? Please.
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