Like it or not, President Trump was elected on a platform of major economic reform; disrupt the status quo. The daily frenzied media tariff melodrama (trying to keep score) is wearing me out!

Chuck Butler regularly reminds readers about the Smoot-Hawley tariffs causing a major trade war deepening the Great Depression. Hoover thought tariffs would help protect American jobs – didn’t listen, and wasn’t interested in trade renegotiations.

What is certain?

In times of uncertainty, there are certain things we can count on….

Forked-tongue politicians of all flavors are a constant. Politicians create problems, then scream it’s their opponent’s fault; elect them and they will fix the problems they created. I give zero credence to politicos historically championing tariffs now screaming about Trump’s tariffs.

Spike Cohen nails it:

“Government is a collection of some of the dumbest and most dishonest people among us, empowered to make decisions that they exempt themselves from, and pay for all of it by running up debts for the rest of us to pay off.”

The media goes crazy. If you want to raise your blood pressure, channel surf the nightly news. <Click> “THE SKY IS FALLING – TRUMP IS DESTROYING THE WORLD! <Click> “THEY DON’T GET IT; TRUMP IS SAVING THE WORLD!”

They’re both wrong while screaming the other side is corrupt, dishonest, stupid – whatever names and talking points are the flavor of the day.

Mark Twain warned:

“If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re mis-informed.”

The market overreacts. Market greed and fear is being deliberately fueled by media hype. Traders capitalize on panic selling, shorting the market, and then buying back at lower prices. Sadly, too many politicians want to jawbone us into another Great Depression to enhance their political power.

There are plenty of opinions. The challenge is trying to separate logic from political propaganda. In 2016, anticipating a Hillary Clinton presidency, political hack economist Paul Krugman wrote how deficits didn’t matter. When Clinton lost, he wrote, “Deficits matter again.”

All opinions are a guess, perhaps some more educated than others. Investors have to hedge our bets. Generally, things never turn out as well as we hope or as bad as we fear.

Thinking things through

Since the tariff roller coaster began, I’ve been flattered when readers asked my opinion. I’ll share my feelings, however, I’m not an economist (a good thing????), and didn’t spend last night at a Holiday Inn Express.

I’m not pushing any political agenda, so here’s – one man’s opinion….

We’ve got a major spending (political) problem

The Federal Reserve continually warns that our current spending and debt level is unsustainable. The interest on the national debt has now surpassed the military budget.

The Social Security Administration’s annual report consistently warns the system is unsustainable; it is going to run out of money – and soon.

Politicos pay lip service, doing nothing to fix it. The solution is a combination of raising taxes, cutting waste, spending and government benefits; which politicos are unable/unwilling to do.

Tariffs & Trade

The North American Free Trade Agreement led to significant US job losses. In 2017, Citizens.org calculated:

“More than 950,000 specific U.S. jobs have been certified by the U.S. Labor Department as lost to NAFTA outsourcing and import floods under just one narrow program. This is a significant undercount of the job loss,…excluded many categories of workers during NAFTA’s first decade of damage. …. The mass outsourcing of American jobs was the outcome about which NAFTA opponents had warned.”

Let’s not debate numbers; NAFTA changed the game.

The bottom line –

• Our country outsourced a lot of manufacturing jobs and closed factories.
• Politicos spent us into oblivion.
• Government promises on medical care and social security can’t be kept under current circumstances.

Something has to change quickly or we will see a total economic collapse.

Everyone agrees we have a problem. Our elected officials are more concerned about their personal well-being; fiddling while our economic ship is sinking.

While Trump campaigned on cutting waste, spending and apparent political corruption, there is no guarantee his solutions will (or will not) work. If we continue on the same path, we are screwed anyway; he is trying something different. Trump’s margin of victory is razor thin and the DC swamp is doing all they can to fight meaningful changes.

Meanwhile, we’re all trying to figure out how to survive, now and in the future.

What are we trying to accomplish?

The goal appears to bring manufacturing jobs back to the US and protect our national security, with critical industries within our borders. When the tariff games began, China immediately stopped “rare earth” shipments to the US. That should send up a red flag. National Defense requires self-sufficiency.

 

My personal journey

On a lark, Jo and I went to see presidential candidate Ross Perot. He was entertaining and educational – talking about the “Giant Sucking Sound” of jobs leaving the US if NAFTA got passed.

At the time I felt he was right; particularly in the auto industry. Labor unions pushed their wage and benefit packages to outrageous levels as compared to the rest of the world. Contract negotiations between Ford, GM and Chrysler followed the same pattern – it seemed like a big game. The union would strike at one plant. They would finalize a deal, and the other two automatically followed.

The big three automakers had the majority of the US car market and never really dug in – they gave in – knowing their competition would follow. Their competitors wouldn’t have an advantage; the additional costs would be borne by the consumer.

After NAFTA was signed, several auto and peripheral supplier plants closed; midwestern states became known as the “rust belt.”

If other countries could produce quality goods cheaper and save us money, why not? I became a believer in free market capitalism – with some controls:

• Anti-trust laws protect us from monopolies. Fair, healthy competition keeps prices down and fuels innovation. Monopolies gouge and make outrageous profits.
• “Predatory pricing” is illegal. It’s a strategy of selling goods or services at a very low price, to bankrupt competitors, giving the survivor a monopoly.

Both Trump and Biden regularly accuse China of “dumping” their goods into our market. It’s predatory in nature, designed to either drive companies out of business, or force their manufacturing out of the US.

It’s estimated that 50% of the goods on the shelf at Walmart and Costco are made in China. Big box stores with lower prices have driven many small businesses to bankruptcy. Might their low prices be too much of a good thing?

Pew Research tells us:

“The middle class, once the economic stratum of a clear majority of American adults, has steadily contracted in the past five decades. The share of adults who live in middle-class households fell from 61% in 1971 to 50% in 2021….”
 

 

The upper income bracket has increased by 50% and the lower income by 16%. Should we be concerned? What made America great was creating a huge middle class, raising the standard of living for the entire world.

If we don’t change course, is this a preview of the future? 87% of the countries in the world impose some sort of tariffs.

Is this time different?

The WITA explains:

“The Tariff Act of 1930 (aka the Smoot-Hawley Tariff Act), started out as a bill that would only raise tariffs on some agricultural products, but a host of other special interests piled on and before the legislation finally reached President Hoover’s desk it represented one of the largest tariff increases in U.S. history.”

The Corporate Financial Institute explains:

“The Hoover administration experienced protests from 23 trading partners following news of the higher tariffs. However, the U.S. ignored the retaliation threat.

…. U.S. imports and exports with Europe fell by two-thirds between 1929 and 1932.”
 

Politicos, trying to please everyone, did the opposite. Trump appears to be selectively negotiating. Blustery demands, countries agree to negotiate, Trump cuts tariffs back, Tit-for-tat, negotiating – one country at a time.

As expected, the media, political opposition and market is going nuts. Yes, a worldwide trade war hurts everyone. Meanwhile many new US factories are being announced. I hope the US middle class starts growing again.

One side says Trump is crazy and the world is coming to an end. The other side reassures us everything is under control. They are probably both wrong.

What about inflation?

Tariffs may add to the cost of goods, increasing inflation. Making goods in the US in highly automated factories eliminates tariffs. I feel it’s much too soon to determine the inflationary effects.

I’m more concerned about the “One big beautiful tax bill.” While I’d like to see the last tax cuts made permanent, I am not in favor of Trump cutting taxes further.

If spending and the deficit isn’t brought under control, the system is unsustainable.

Theoretically, we can grow the economy out of a recession and inflation. Perhaps, but it didn’t work for Reagan, Congress wouldn’t allow it.

We have to do something differently; continuing with the current system will bankrupt the nation. Market gyrations and tariffs won’t destroy the world.

Please, everybody calm down! We need clear thinking, trying and adjusting the dials along the way.

One man’s opinion.

On The Lighter Side…

This week I turn 85 – wow! I probably speak for many when I say, as a younger person, the idea of reaching 85 was hard to imagine. The Washington Post explains:

“In 1900, only 4 percent of Americans were older than 85. Today, it’s more than 10 percent — about 3 million in all.”

As a young marine at Parris Island, the drill instructor called us 10%-ers; but it had a negative connotation.

When I was diagnosed with cancer in 2019, I had my doubts about 85. I am truly blessed….

I’ve decided to take some time off. All is well health-wise. We are getting ready to head across the country to Indiana and also have a lot of cool family things going on. I’ll fill everyone in with some exciting news when I return.

In the meantime, I’ll ask our webmaster to publish some of his favorite articles from weeks past.

Thanks to all for your support and I’ll see you soon….

Quote of the Week….

We will go with two this week:

“Happiness is achieved when you stop waiting for your life to begin and start making the most of the moment you are in.”
— Germany Kent

“I’ve learned from experience that the greater part of our happiness or misery depends on our dispositions and not on our circumstances.” — Martha Washington

And Finally…

Good friend Chuck Butler’s recent email was very timely:

12 COMMANDMENTS FOR SENIORS

#1 – Talk to yourself. There are times you need expert advice.

#2 – “In Style” are the clothes that still fit.

#3 – You don’t need anger management. You need people to stop pissing you off.

#4 – Your people skills are just fine. It’s your tolerance for idiots that needs work.

#5 – The biggest lie you tell yourself is, “I don’t need to write that down. I’ll remember it.”

#6 – “On time” is when you get there.

#7 – Even duct tape can’t fix stupid, but it sure does muffle the sound.

#8 – It would be wonderful if we could put ourselves in the dryer for 10 minutes, then come out wrinkle-free and three sizes smaller!

#9 – Lately, you’ve noticed people your age are so much older than you.

#10 – Growing old should have taken longer.

#11 – Aging has slowed you down, but it hasn’t shut you up.

#12 – You still haven’t learned to act your age and hope you never will.

And my favorite – for extra credit:

“One for the road” means peeing before you leave the house.

Until next time…

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