'Trumpnomics' Is Working
Thomas Carlyle once described economics as a, "dismal science."
Historically, it has forced us to choose between risking recession and taking a chance on inflation. The classic choice of between a rock and a hard place.
The only real remedy to inflation has always been to cut the buying power of the average shopper by slashing wages or destroying jobs.
And the cure for recession has always been to pump money into the economy until too much money pursues too few goods and prices rise.
The market giveth and the market taketh away.
But Trump is exploring another option, one born not from the practical observations of a businessman.
First, however, a bit of history.
When COVID-19 hit in February-March 2020, the economy had to completely shut down.
No one could shop or buy so no one could produce or sell.
We were facing not a slowdown, but death.
To meet the problem, President Donald Trump worked with Congress to pump massive amounts of money into the economy.
Budget deficits topped one trillion per year.
Everyone received a check to create artificial buying power in the hopes of restarting production. It worked.
The massive unemployment we all feared never arrived.
Businesses and households survived by cashing large and continuing government checks.
It was one of the greatest economic rescues in history.
As the coronavirus began to come under control, Joe Biden replaced Trump in the White House.
Our nation's 46th commander in chief decided not to wind down the economic stimulus Trump had passed but . . . to continue it and, indeed, redouble it.
Biden was elected by the skin of his teeth — amid widespread alleged election irregularities.
Thus, Biden was determined to avoid a recession because he didn't have the base of popular support to survive one.
So Biden piled up spending and surplus stimuli, printing massive amounts of money just as the supply chains that would have produced the goods people could buy with the extra money dried up, also disrupted by COVID-19.
Too much money chased too few goods, the classic cause of inflation.
On taking office, Trump faced the classic dilemma of the dismal science: whether to risk inflation by more economic stimulus or to risk recession by cutting back.
Instead, he is choosing no neither course.
He’s not printing money through ever larger deficits and he’s not starving the economy of money and stimulus.
Instead, he is using his vast power, political capital, and his reputation as a tough guy who never backs down to attract massive amounts of foreign investment in the American economy.
By bullying, enticing, persuading, or cajoling, he has succeeded in inducing trillions in foreign and domestic investments in American businesses, in effect, stimulating the supply side of our economy.
Tariffs are playing a huge part in his economic strategy.
By making it more expensive to access the vast American market from abroad, he is encouraging businesses to amp up their production in the United States.
By protecting our industries through tariffs, we're green lighting business expansion.
From auto manufacturers to large technology companies, businesses are investing in production in the U.S. as the Trump administration continues to push its America First agenda with tariff threats.
But who will buy the output these new facilities churn out?
Foreigners.
Rather than hype domestic purchasing power further and risk inflation, Trump is forcing open foreign markets through tariffs, making them buy American products.
Won’t foreign countries retaliate?
Yes, but it won’t matter.
We buy so much more from them than they buy from us that there’s not much we need to fear from retaliation.
By importing job creation and economic stimulus through foreign investment and by using foreign buying power to purchase our products, we can have our cake and eat it too.
Economic growth and no inflation.
In the first two months of Trump II, that’s exactly what we have seen.
The factory sector has come roaring back during President Trump’s first two months in office. Industrial production in the United States surged in February, rising 0.7%, more than triple the 0.2% increase economists expected.
The latest data from the Federal Reserve marks a significant expansion in industrial activity, with total output reaching its highest level on record.
Beyond autos, business equipment, and construction supplies also posted gains, indicating broad-based strength across key segments of the economy.
Meanwhile, reports on retail sales and business sentiment have suggested a more sluggish start to the year while the industrial sector appears to be gaining momentum.
But never fear, foreign purchasers are stepping into the breech.
So a combination of massive foreign and domestic investment on the supply side and tariffs that pry open foreign markets on the demand side, we are experiencing economic growth without inflation.
'Trumpnomics' at work!
Dick Morris is a former presidential adviser and political strategist. He is a regular contributor to Newsmax TV. Read Dick Morris' Reports — More Here.
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