Trumpflation

Categories: Econ, Tax

It seems fitting that a person who likes to see his name up in lights on hotels and casinos (wouldn't you?) now has inflation named after him. Trumpflation refers to the expectation that the U.S. will be experiencing a rise in prices and deficit spending as a result of his policies on immigration, income taxes, and tariffs. Sophisticated financial people laugh at a lot of the prognostications of the Left who generally hate Trump.

For most of the history of the world, inflation was brought on by hot economies. Lots of inputs create a hot economy and sure, some of the issues will have some effect on the money flows around the world. But as part of the blame-Trump-for-everything-bad that the extremely liberal New York Times promulgates, few point out that the world needs at least modest inflation to allow debts to be paid off more gently. Obama tried to create inflation for 8 years and failed to be able to change economic trajectory as it relates to inflation other than by lowering the Federal Funds Rate post the banking crisis.

Unless you’ve been living in a cave, you’ve most likely heard about his immigration policy for those trying to illegally enter the U.S. from Mexico and other Central American countries. Left wing economists rightly note that if there are fewer workers available from these areas, the laws of supply and demand will kick in and force wages to go higher, whether or not those workers came into the United States legally or not. Economists from the RIght focus their questions on clarifying what is legal and what is not in immigration laws so that a kind of economic order can exist in planning for unskilled labor volumes.

The tax cuts enacted in 2017 will put more money in many consumers’ wallets, which could increase spending and in the hearts of most pension fund owners (about 80% of American adults), drive up prices. President Trump wants to “make America great again,” and believes the right way to go about it is to substantially increase tariffs on goods from countries that manipulate their currencies and underprice their exports as well as steal our copyrights, patents and other protections and then make cheap knock-off goods which, because of our 'open door policy' in importing, end up ironically bankrupting the U.S. companies who actually created the products in the first place, in the process. The Left has made great noise about the fear of retaliation of these countries regarding their export policies because they feel, presumably, that a certain amount of theft is, well, just ok.

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