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The Trump Triumph Challenges Economic Predictions for 2017

Wednesday, February 22, 2017 10:29
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by David Haggith, The Great Recession Blog:

The triumph of Donald Trump as the champion of a revolution against the status quo assures huge economic changes in the coming year, which I’ll list below. His victory struck a shocking upset to the globalists who have steered the last sixty or more years of world history, as I reported in an earlier story about George Soros mourning over the damage Trump will bring to global governance by unelected elitists.

For a short time, we should see some improvements. However, numerous structural flaws in the US economy ultimately assure economic collapse because those flaws have not been dealt with for decades, are not being dealt with in any of the Donald’s plans, and are most likely too far gone now to ever deal with. Trump’s plan will even make some of those structural flaws much worse in the long run.

What I describe in these economic predictions has considerable contagion possibilities for the rest of the world. While emerging economies have grown to where the US does not have the near-total economic dominance it once had over the world, it is still the world’s greatest economy (at least, in size). So, it is still true that, when the US sneezes, the rest of the world catches a cold … if not pneumonia.

What Trump’s victory changes most is the timing of economic collapse because his economic plan is bound to bring temporary lift, even as it worsens some of the structural flaws. The effect of the flaws I wrote about will take more time to develop than the improvements, but probably not much more time.

Let’s start with the positives:

Positive economic changes that are certain to result from the Trump triumph

Here is a list of economic changes, which I think are certain to bring some boost to the US economy in 2017 and will likely delay my epocalyptic predictions:

It is certain that Trump’s tax plan will happen. While it may not happen entirely, something very close to it will certainly happen because Republicans have never seen a tax-reduction plan they didn’t like. Republicans hold certain economic convictions as tightly as religious dogma: they believe tax cuts will pay for themselves and so will not create huge worsening of the national debt. Every time they make tax cuts, they claim the cuts will stimulate investment, which will stimulate the economy, which means more businesses will produce more revenue, which means there will actually be more tax revenue, not less. They have never been right about this yet. We have NEVER made tax cuts without increasing the federal deficit under any president. That fact, however, never kills this dogmatic belief. Republicans also believe with religious fervor that targeting tax cuts to the rich in the form of corporate breaks and particularly capital gains cuts will create new jobs and trickle wealth down to the middle class and the poor. The fact that real middle class wealth has stagnated or even shrunk during every past episode of trickle-down economics never matters. Belief trumps truth. Since Republicans control the entire legislature and the executive branch and will be changing the balance of the Supreme Court, it is absolutely certain we will see major tax reductions that will come as our third and greatest round of trickle-down economics. The plan coauthored by Larry Kudlow has all of his support with conservatives and Republicans, too. Even if Trump were removed from office, most of his plan would become law.

The stock market will rise … for awhile, at least. What we know from trickle-down economics is that it certainly does stimulate the stock market. The money that is saved on capital gains and corporate income and that is repatriated in corporate income from overseas largely goes into speculative gambling in stocks. Very little of it goes into capital construction or business expansion. Even before any of Trump’s proposed changes have happened, we are witnessing how the mere hope of such changes has caused a huge increase in stock-market speculation (both volume and prices) as investors try to reposition for this new reality. There was a brief stock market slump right when I said there would be once people started to question whether Trump’s plans would be enacted, but it didn’t last long because, as soon as Trump got into office, he moved rapidly via serial executive orders to start implementing many of his promises, quickly building faith that he will carry out most of them rapidly and with great determination.

It is unlikely that Trump’s infrastructure stimulus plan will make it off the ground in 2017. While Republicans are certain to approve tax breaks, they are not big on massive government spending increases. Trump will find some strong resistance among Republicans to his increased spending; at the same time, Democrats remember well how Republicans battled against Obama’s plans to increase infrastructure spending in order to stimulate the economy. According to junior Republicans who eventually came out against Speaker of the House John Boehner, this was partly because Boehner and the Republican guard didn’t want Obama to get the credit for economic improvement. They put the good of their party over their nation’s good. So, Trump will likely find a lot of resistance there, too, as Democrats return this tactic.

Spending will certainly increase in one area — the military. Republicans have proven for decades that no deficit is too big if it is going toward building a stronger military. They find support among Democrats for this, who have just as many wealthy donors in the military-industrial complex as Republicans have. They also find a lot of support among the general public — particularly conservatives — because conservatives like for America to be the strongest nation on earth. Besides being macho, defense and security have a strong argument behind them in a world full of terrorists. While Trump seeks to improve relations with Russia, he is also antagonizing relations with China. The US, under Obama, was already acting more aggressive in the South China Sea in order to keep China from controlling secondary trade routes. Trump will build on Obama’s lead there, and his trade battles with China may intensify conflict with China overall. Trump has stated loud and clear that the US military will be ready to look out for Japan’s national interests. At the same time, North Korea is picking a fight in order to beat its chest, which presses Trump to take some action against them. That may come about just as sanctions, but could involve some military saber rattling or countermeasures from the US that could escalate. Trump will take a greater lead than Obama did against terrorists in the Middle East, as he was critical of Obama’s restrained and somewhat ineffective efforts. Expect a more aggressive anti-terrorist policy. That means, as under Reagan, increased military spending will be more important than increased infrastructure spending, but military spending also stimulates the economy by creating jobs and boosting a number of major stocks.

Regulatory changes will also lubricate the economy to move forward with less friction.

Economically, those are all strong short-term positives, regardless of what they bring further down the road.

Economic collapse will happen on Trump’s watch, probably later this year

In spite of these certain positive economic changes for 2017, there remains a countervailing globalist force that has already presided over numerous economic failures of its own making. These people will relentlessly attack Trump, and they will seek to pin their own failing recovery on him. Such an entrenched counterforce makes it impossible to say how much temporary good Trump’s economic policies can bring. Trump starts in a world where globalists have long ruled the nation’s central bank, which they have positioned to create US economic hegemony. Trump can change that over time, but probably doesn’t have time enough. Also, his lineup of Goldman Sachs executives in all financial offices of the US says that he won’t. Gobalists are also deeply entrenched in US intelligence agencies and the military leadership, where they have engaged in relentless nation building as they seek to shape the world toward the interests of their own political and financial establishment while also working in alliance with the interests of the UK and the rest of Europe.

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