E Trumponomics: Increase Exports, Slow Imports, Bludgeon The New Normal

This is the only mention of the new normal in the entire article. The authors make no attempt to describe the pitfalls of trying to bludgeon the new normal.  Donald Trump wants an inflation/reflation component to his policy through both the trade war and also through infrastructure spending not covered by this report. While we all want to pick ourselves up off the zero lower bound, doing so too quickly will bust open a Pandora's box of dislocations, in my view. Even Jamie Dimon agrees with this assessment.

There is a permanent aspect to the new normal. If you break the conundrum, the nation will pay a heavy price in a credit crisis of monumental proportions.  Is Trumponomics prepared to allow all the collateral in the derivatives markets and systemically essential clearing houses to go bad, in order to get past the new normal? Trumponomics has nothing to say about that. That is totally irresponsible to just say the new normal is not permanent and then not comment on the conundrum, the foundation of structured finance.

It is true that hitting main street America hard with economic malaise, when main street carried the world on its shoulders with its purchasing power, was not such a smart policy on the part of big business. Most everyone acknowledges this is a big problem. So the authors of Trumponomics believe in the necessity of structural reforms. But those reforms are certain to start a trade war. The isolation of America could occur if these so called reforms are implemented. These reforms are wanted even though companies are starting to return to the USA to find workers. And the Donald seeks to apply these reforms as the business cycle is coming to a close. Bad idea. Helicopter money done right is a much more fiscally responsible idea.

And Trumponomics wants us to compete in industries where our wages are generally higher than other nations' wages, specifically in China and Mexico. We have not earned the right to complete in those industries. Unless we are prepared to cut wages and cut housing costs and the cost of living to the bone, it makes no sense for us to try to make things that others can make more cheaply. Trump wants to introduce lack of competitiveness into the world economy and also he wants to raise wages at home in industries where we do compete at a technological advantage. We could price ourselves out of the world markets in multiple ways. We would have to subsidize industries that couldn't make it on their own. 

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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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