"BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!"
"THIS IS A GREAT TIME TO BUY!!!"
President Trump on Truth Social this morning
This morning the trade war with China escalated.
Trump just placed a 104 percent tariff on goods imported from China, with threat of another 25 percent hike if China buys oil from Venezuela. Venezuela owes Chinese banks $10 billion and the only way Venezuala can pay it back is by selling it oil, so that hike may come soon.
China just announced that tomorrow tariffs on U.S. goods will increase from 34 percent to 84 percent.
Trump might be right, that this is a great time to buy, meaning buy stocks. Maybe he predicts that eventually companies will have built efficient factories in the U.S. and will be selling profitable goods into world markets.
More ominously, maybe he is telling Americans that now is the time to buy cars, washing machines, and the plastic household products sold at Walmart, because the inventory is just about to be marked up in price.
JPMorgan CEO Jamie Dimon said that we are headed for a recession. That seems plausible. Working people may be getting a prudent fear of layoffs, shorter hours, and lower incomes and are cutting back spending. Their self-protective action, multiplied millions of times over, means demand for everything falls, which justifies the self-protective decisions of everyone else to pull back as well. Caution snowballs.
There is another source of weak demand. Fully 50 percent of consumer spending is done by the wealthiest 10 percent of Americans.
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| March 21 post |
Most of those people own stock assets, and those assets have dropped about 20 percent. Two months ago they might have been spending in a mood of abundance. They have lost money. On the average, I expect them to be more cautious about spending.
But things could work in the opposite direction, with intractable inflation. That would be the "good" outcome. Nearly every manufactured good has foreign content and businesses that stay in business and retain reliable supply chains will be forced to pay those taxes, and if possible, get customers to pay higher prices. One cannot build factories in the U.S. on a moment's notice. Amid the uncertainty of tariff levels, who would dare make expensive long-term investments in a U.S. factory when Trump might "make a deal" and remove the tariff that had been the justification of the new factory. If Trump's plan does, in fact, have a happy ending of a prosperous America with well-functioning, prosperous businesses in a high-tariff environment, then, in fact, tariff taxes will be paid. American-made goods will be widespread and more expensive as they partially replace foreign-sourced goods. That is inflationary, but theoretically good inflation for a good purpose and a payoff. Americans would benefit from new income to the treasury, which would finance tax cuts to Trump's targeted beneficiaries.
Do voters really want this? I expect not, but it is what Trump campaigned on and a plurality of Americans voted for him. Trump seems adamant. He had said he loved tariffs, that he wanted to use them to penalize companies that imported goods, and that he wanted to re-up the 2017 tax act.
The U.S. may stumble through this period with little distress. It is possible. If so, the story Trump will tell is how a powerful American president dominated the rest of the world and made America great. But Trump will not be able to hide a very plausible alternative outcome of this moment: stagflation. The stagflation we experienced in 1973-1982 was miserable and unmistakable. We could have a recessionary drop in demand, with layoffs and high unemployment, along with a simultaneous increase in prices for the goods due to tariffs embedded in the cost of goods.
Trump is bragging about the success of his tariff policy. MAGA-oriented media is treating it as an impending victory for the U.S.
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| NY Post |
"I know what the hell I'm doing," Trump said last night at a black tie dinner with Republicans. "I'm telling you, these countries are calling us up, kissing my ass. They are. They are dying to make a deal.” He mocked foreign leaders: “Please, please, sir, make a deal. I’ll do anything. I’ll do anything, sir!”
Trump is enjoying himself: Foreign presidents kiss his ass.
The foreign media is reporting on the story as well. What could go wrong?
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5 comments:
Why is Peter Sage's blog published with about four different font sizes? Does Peter just cut-and-paste blurbs out of different newsletters he subscribes to? Why does the font size change every three paragraphs?
Good question. Blogspot has unstable fonts. Part of the effort of writing this is going back and reformatting the jumped-up from "large" to "largest, back to "medium" text size. I write it all myself, unlike some commenters who do, in fact, plagiarize. I don't publish plagiarisms from commenters.
I don't like Anonymous writers. It's like they are afraid of showing their faces. I think of them like gun owners...cowards.
Please sir, I’ll do anything is the reason for the tariffs. He likes the power of having his ass kissed.
I've been using the Internet for a long time. Most valuable is the ability to learn much about the issues of the day, locally, within the US, and as well, the rest of the world. And more important, the pros and cons of the several sides of the many issues of the day.
I have a retired friend who worked in the federal government, and still does some consulting with them. He's also the author of the Mandarin-English / English-Mandarin Technical Dictionary. And no, he is NOT of Asian descent.
He taught me a lot about reading, writing, and speaking Mandarin. I've been to China quite a few times since the '80's and have seen the rapid modernization of the PRC; I was also a frequent visitor to Taiwan and Hong Kong for business. Quite a change over 50 years. My son was also fortunate to visit China with his high school class; he could speak Mandarin and French a bit.
My key memory of China is a Mandarin phrase my friend taught me:
我們生活在有趣的時代
We live in interesting times
I have that in my email signature, along with the following:
Stay safe and healthy
M2 computer - ᛗᛁᚴᛖ or 𓅓𓇋𓈎𓅂 aka Mike
PS As for posting "anonymously", I use a different identifier, M2inFLA. I also sometimes use M2inOR. The clever people will actually be able to find my real name, location, and other pertinent information.
PPS, and yes, I am yet another "Mike"...
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