Gongol.com Archives: July 2018
He tweets: "[Monetary] Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates - Really?" His policies (like intervening in specific industries and with specific companies, pulling out of multilateral trade agreements, and imposing import taxes) are not working as imagined because they are bad policies, but instead of acknowledging that they are bad, he's doubling down and demanding more. And the further steps he might take -- like trying to pressure the Federal Reserve using the power of his office, or threatening to default on the Federal debt -- are things that would be unimaginable under any sensible President with a basic grasp of economics. But those basic assumptions are completely in error with President Trump. And he is at a most basic level incapable of admitting error, so he'll likely make many more bad decisions before he is through. He is obsessed with bilateral agreements and thinks that we somehow need to be in trade balance (or surplus) with each individual country around the world. That's nonsense, and his refusal to learn is an ongoing threat to the economy. In Federalist 53, they anticipated the damage that could be done by government powers that didn't understand what they tried to control: "How can foreign trade be properly regulated by uniform laws, without some acquaintance with the commerce, the ports, the usages, and the regulations of the different States?"
Unpredictability, inconsistency, and reckless communication have conspired to potentially create a worst-case scenario of perverse incentives: Trade war leading to a kinetic arms race. Chinese leaders are wondering if the President would take them more seriously on trade issues if they had an arsenal of weapons more like the one possessed by Russia.
Photographic evidence, should anyone have needed it
Dwight Eisenhower: "The doctrine of opportunism, so often applicable in tactics, is a dangerous one to pursue in strategy." In other words: Take advantage of every lucky break you get, but never count on getting them.
Three cheers for dedicated local journalists, documenting the damage and the cleanup even when their own resources are depleted