Harry Dent Blog | Trump’s Magic Wand: I Simply Don’t Buy It! | Talkmarkets
Founder, Dent Research
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Harry S. Dent Jr. studied economics in college in the 1970s, receiving his MBA from Harvard Business School, where he was a Baker Scholar and was elected to the Century Club for leadership excellence. Harry grew to find the study of economics vague and inconclusive and became so disillusioned by ... more

Trump’s Magic Wand: I Simply Don’t Buy It!

Date: Tuesday, January 24, 2017 1:32 PM EDT

As Trump was inaugurated, it seems most people are feeling better about the economy. Even a more liberal analyst said yesterday in an interview that he thought Trump should raise the minimum wage to $15 to stimulate demand!

Seriously?!

A Bernie Sanders, far-left strategy in a Republican Congress?

How delusional can you get?

The problem, as usual, is that economists, analysts and politicians don’t understand the real causes of our economic malaise since 2007, including Trump.

It’s not primarily business regulations, or higher taxes. Altogether, U.S. personal and business taxes combined are less than any major country in Europe, or Australia or Canada!

The problems are…

  1. Slowing demographic trends (a factor even more prevalent in Europe and East Asia);
  2. And unprecedented levels of debt and entitlements (here and everywhere else).

And there’s nothing near term President Trump can do about either of those things!

I think Trump is setting himself up for a massive disappointment in the year ahead.

Since we’re not in a supply-side crisis like we were in the late 1970s and early 1980s when Ronald Reagan came in, those solutions aren’t the answer. They worked then. They will NOT work now. And who are Trump’s chief economic advisors? Larry Kudlow, Stephen Moore, and Art Laffer – all zealous supply-siders.

Instead, we’re in a demand-side crisis like what we saw in the early 1930s with global oversupply. In such a situation, cutting taxes will only create even faster growing deficits and debt, not investment in new capacity and jobs.

Besides, does Trump really think a Republican Congress is going to just approve of massive tax cuts and infrastructure investments that raise our already out of control public debt, just as the debt ceiling has to be raised above $20 trillion?

No way!

It’s been doubling every eight years in Republican and Democratic administrations and, at this rate, will be nearing a cool $40 trillion just eight years from now.

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