Will Trump’s Economic Policies Lead to Far Reaching Stagflation?

[RSD1]

If Trump’s anticipated wide-reaching import tariffs and mass deportations cause inflation in the USA to spike again, wages to rise considerably because of low cost labor shortages, which eventually leads to a large economic slowdown where unemployment rises (together with already high inflation), and you end up with a situation in the US of sustained stagflation, then will this affect you at all?
 

And will even higher interest rates, reminiscent of the Volcker era, together with even more bankruptcies, more people defaulting on their car loans, credit cards, and mortgages, and companies having to shut down and lay off workers because of shrinking demand related to Trump's unsustainable economic policies, then do you think this will have far reaching consequences even for people living outside the USA?

[TheAppletons]

Is this the fan fiction sub-forum?  

 

I'll contribute:  If Jupiter falls out of the gravitational pull of the sun and affects the Earth's gravity by 2.5 x 10^-5N/kg, (which is about 0.00025% of Earth's gravity), then will this affect you at all?

[John Drake]

More inflation means a higher cola on my SSA. Fine with me.

[DarthChuckler]

14 hours ago, John Drake said:

More inflation means a higher cola on my SSA. Fine with me.

Suppers!  As long as the nut jobs don't break my SSI, and I don't spend much time overhear, I'll be OK. Only other thing that would hurt is major devaluing of the dollar.  But might be good still as I ha e moved my investments out of the states.

[RSD1]

2 minutes ago, DarthChuckler said:

Suppers!  As long as the nut jobs don't break my SSI, and I don't spend much time overhear, I'll be OK. Only other thing that would hurt is major devaluing of the dollar.  But might be good still as I ha e moved my investments out of the states.

The dollar will likely strengthen if interest rates continue to rise in the USA and decline in other countries at the same time. 

[bkk6060]

Haha.  Well, Trump is a business man not a peanut farmer.  But, guess all you want it is a wait and see situation my best estimate is nothing you predict will happen to the degree you describe.

[iaminwa]

All I know is the US is the laughing stock of the world after they voted in this clown and his First Lady Elon.

 

Share market crash coming after the in inauguration in Jan - convert to cash now!

[HappyExpat57]

7 minutes ago, iaminwa said:

All I know is the US is the laughing stock of the world after they voted in this clown and his First Lady Elon.

 

Share market crash coming after the in inauguration in Jan - convert to cash now!

The market crash is already warming up after the longest losing streak since 1946.

 

https://www.fool.com.au/2024/12/18/the-dow-jones-is-on-its-longest-losing-streak-in-46-years-whats-going-on/

[nauseus]

16 minutes ago, iaminwa said:

All I know is the US is the laughing stock of the world after they voted in this clown and his First Lady Elon.

 

Share market crash coming after the in inauguration in Jan - convert to cash now!

 

Markets are topping and the Dow is down. Less to do with Trump and more to do with 16 years of M2 printing and mostly low rates.

[RSD1]

14 minutes ago, HappyExpat57 said:

The market crash is already warming up after the longest losing streak since 1946.

 

https://www.fool.com.au/2024/12/18/the-dow-jones-is-on-its-longest-losing-streak-in-46-years-whats-going-on/

Yes, that is true about the Dow, but that Index is only made up of about 30 companies. It's almost become irrelevant now and not really a true indicator of the breadth of the market anymore. You need to look more at the S&P 500, which is also now weighted about 30% in the Mag 7 stocks and not really crashing. 
 

But if you want the really shocking news about the US equity markets, its insane valuations and P/E ratios, and how right now looks so much like the .com bubble of 2000, then watch the following video:

 

 

[jas007]

3 minutes ago, nauseus said:

 

Markets are topping and the Dow is down. Less to do with Trump and more to do with 16 years of M2 printing and mostly low rates.

 In partial agreement, but I think the whole Trump thing adds a new dimension that might just change the typical course of events.  Of course, Trump probably won't be able to accomplish all that he's promised. Politics doesn't work that way ands congress is already balking at some of his proposals.  Plus, Biden has deliberately created stumbling blocks on his way out the door. 

 

Bottom line: even if Trump is only partially successful, people looking for a near term stock market crash might be disappointed.  If Trump gets his tax cuts,  is able to cut unnecessary spending, abolish worthless agencies, and cut back on the regulatory environment, business might just boom for a few years, at least. The consumer will be hurt, but in Trump's mind, that's a necessary part of the process.  The country cannot afford business as usual and he has a mandate for change. 

 

I won't speculate about Canada, Greenland, ands Trump's stated desire to reacquire the. Panama Canal and I'm also assuming the warmongers won't succeed in their desire to incite WW III.

[HappyExpat57]

13 minutes ago, RSD1 said:

Yes, that is true about the Dow, but that Index is only made up of about 30 companies. It's almost become irrelevant now and not really a true indicator of the breadth of the market anymore. You need to look more at the S&P 500, which is also now weighted about 30% in the Mag 7 stocks and not really crashing. 
 

But if you want the really shocking news about the US equity markets, its insane valuations and P/E ratios, and how right now looks so much like the .com bubble of 2000, then watch the following video:

 

 

I'll take your word for it, it's depressing enough knowing what I already know. I don't need to heap more downer evidence than there already is.

[RSD1]

20 minutes ago, HappyExpat57 said:

I'll take your word for it, it's depressing enough knowing what I already know. I don't need to heap more downer evidence than there already is.

In a nutshell, you've got multiples and valuations of growth companies at levels that hasn't been seen in over 20 years and the last time it happened, it ended in total disaster. It's not sustainable forever. Billions being pumped into all these AI companies and none of them are making any money. Eventually, the money for investment into AI will dry up unless it becomes profitable and then all these empty companies that aren't making anything will collapse. Same thing happened in 2000. 

[Mavideol]

Opinion - Congress has the power to block Trump from taking office, but lawmakers must act now

https://au.news.yahoo.com/opinion-congress-power-block-trump-130000458.html

 

[Mavideol]

After Trump Said He Might Not Be Able To Lower Grocery Prices, These 19 People Got Real About How They're Managing The Rising Costs

 

https://www.yahoo.com/lifestyle/19-people-shared-things-theyre-113102110.html

[jas007]

1 hour ago, RSD1 said:

In a nutshell, you've got multiples and valuations of growth companies at levels that hasn't been seen in over 20 years and the last time it happened, it ended in total disaster. It's not sustainable forever. Billions being pumped into all these AI companies and none of them are making any money. Eventually, the money for investment into AI will dry up unless it becomes profitable and then all these empty companies that aren't making anything will collapse. Same thing happened in 2000. 

Palantir is making money. Tesla is making money. And they've both been making me lots of money. And while Tesla is is viewed mainly as a car company, a large portion of its current valuation is premised on its future in robotics and Full Scale Driving, both of which will come to fruition sooner rather than later and both of which are plays on AI.  At this point, you might as well view Tesla as an AI company that happens to make cars.

 

As for Palantir?  Some say it's not technically an AI company, and that's fine. but let's just say its software will be crucial to any company moving into the AI space.  Ditto for the plans to streamline the government.  Trump will be in office in a few weeks, and you can bet the D.O.G.E. people will make every effort to streamline the government and the military, in particular, using software developed by Palantir.  It's just a matter of time. And that's why we're seeing the crazy Palantir valuations.  

 

Anyway, the AI thing is in its very early stages and can't be stopped.  Companies that don't adopt it will be losers.  It's just that simple.  So, sooner or later, the AI industry will begin generate profits for more of these companies.  Not all will go out of business. 

 

Is the market currently over-extended? Sure.  Everyone knows that.  But artificial intelligence isn't the the same as the dot.com thing.  We all know how that ended for some companies.  And yet some did survive.  Amazon, for example.  

 

[Presnock]

Only for the less than the super rich that donated to his re-election coffers

[jas007]

3 minutes ago, Presnock said:

Only for the less than the super rich that donated to his re-election coffers

It really does look like Trump won't be worried about inflation, and that will be a big problem for a lot of people who already can't make ends meet.  Tax cuts and tariffs may well equal more money printing and more inflation.  Perhaps a recession will damper some of the inflation?  And AI will, over time, make for cheaper products.  I think people will just have to wait and see what happens. Don't forget the bond market vigilantes.  

[Red Forever]

3 hours ago, bkk6060 said:

Haha.  Well, Trump is a business man not a peanut farmer.  But, guess all you want it is a wait and see situation my best estimate is nothing you predict will happen to the degree you describe.

The president who you sneeringly refer to as “a peanut farmer “ doesn’t have a multiple bankruptcy history . 100 year old ex President Carter was, into his 90s, building affordable housing around Chiang Mai. He and his wife physically and financially contributed to the project.

Somehow I can’t imagine the orange grifter being quietly involved in such philanthropy.

[nauseus]

44 minutes ago, jas007 said:

Palantir is making money. Tesla is making money. And they've both been making me lots of money. And while Tesla is is viewed mainly as a car company, a large portion of its current valuation is premised on its future in robotics and Full Scale Driving, both of which will come to fruition sooner rather than later and both of which are plays on AI.  At this point, you might as well view Tesla as an AI company that happens to make cars.

 

As for Palantir?  Some say it's not technically an AI company, and that's fine. but let's just say its software will be crucial to any company moving into the AI space.  Ditto for the plans to streamline the government.  Trump will be in office in a few weeks, and you can bet the D.O.G.E. people will make every effort to streamline the government and the military, in particular, using software developed by Palantir.  It's just a matter of time. And that's why we're seeing the crazy Palantir valuations.  

 

Anyway, the AI thing is in its very early stages and can't be stopped.  Companies that don't adopt it will be losers.  It's just that simple.  So, sooner or later, the AI industry will begin generate profits for more of these companies.  Not all will go out of business. 

 

Is the market currently over-extended? Sure.  Everyone knows that.  But artificial intelligence isn't the the same as the dot.com thing.  We all know how that ended for some companies.  And yet some did survive.  Amazon, for example.  

 

 

Good for you. But the main markets are not comprised of just two stocks.

[jas007]

1 minute ago, nauseus said:

 

Good for you. But the main markets are not comprised of just two stocks.

Sure.  I was just responding to the assertion that  "Billions being pumped into all these AI companies and none of them are making any money." 

 

Anyway, everyone should know how the markets work. They go up, they go down.  The business cycle is always there.   So, when there's a draw down in the markets, there will be opportunities.

 

The people who will be hurt in the coming months are those who are highly leveraged and who are playing with money they can't really afford to lose.  Or people who are playing with money they might need six months from now.  

[WDSmart]

Trump's economic policies, like all of his policies, will lead to a catastrophic crippling of the USA's economic system. 

[jas007]

11 minutes ago, WDSmart said:

Trump's economic policies, like all of his policies, will lead to a catastrophic crippling of the USA's economic system. 

I'm willing to bet the damage may have already been done.  If there's a crash coming, it's already baked into the cake, so to speak.  As for Trump and his economic policies?  They might just help.  Or, in a worst case scenario, they can't hurt, as the damage has been done.  It took forty years, but the country is now on the verge of bankruptcy.  Blame both political parties. Blame the Fed.  Blame Nixon and the fact that the gold window was closed in 1971. I don't however, see a complete shutdown of the system.  It can be fixed.  

 

My current operating assumption is that everything will be OK for those who can ride out the next year or two, assuming the war mongers don't end the world with a global thermonuclear war.  

 

 

[HappyExpat57]

7 minutes ago, jas007 said:

I'm willing to bet the damage may have already been done.  If there's a crash coming, it's already baked into the cake, so to speak.  As for Trump and his economic policies?  They might just help.  Or, in a worst case scenario, they can't hurt, as the damage has been done.  It took forty years, but the country is now on the verge of bankruptcy.  Blame both political parties. Blame the Fed.  Blame Nixon and the fact that the gold window was closed in 1971. I don't however, see a complete shutdown of the system.  It can be fixed.  

 

My current operating assumption is that everything will be OK for those who can ride out the next year or two, assuming the war mongers don't end the world with a global thermonuclear war.  

 

 

Their "fix" is to rob from those who can least afford it and give it to the billionaires via tax breaks. They spent months denying/lying about any association with Project 2025, and now that the election is over, they don't need to hide/lie about it any more. If any of the Republicans had a spine, they'd fight against it, but that ship has obviously sailed.

https://www.cbpp.org/research/federal-budget/house-republican-agendas-and-project-2025-would-increase-poverty-and

[jas007]

30 minutes ago, HappyExpat57 said:

Their "fix" is to rob from those who can least afford it and give it to the billionaires via tax breaks. They spent months denying/lying about any association with Project 2025, and now that the election is over, they don't need to hide/lie about it any more. If any of the Republicans had a spine, they'd fight against it, but that ship has obviously sailed.

https://www.cbpp.org/research/federal-budget/house-republican-agendas-and-project-2025-would-increase-poverty-and

 Do you really believe all that?  How does robbing "those who can least afford it" fix the economic system?  The billionaires don't need tax breaks, and even if you took all their money, nothing would be "fixed."  The system is broken and has been broken for a long  time.  There's no free lunch. 

 

The simple fact is this: the country cannot continue to operate on a "business as usual" track. Borrow and spend is not the answer. Deficits do matter. The country is over 35 trillion dollars in debt. Interest rates are rising and the debt is going exponential. Something has to change. More taxes are not the answer.  One of two things needs to happen, long term: the country must spend less than it produces, or, it needs to produce more than it spends.  All those jobs that the globalists were so eager to export need to come back to America.  The's part of what Trump is trying to do with tariffs. Perhaps some of hose jobs will return. 

 

Or would you rather see America, the newest Third World country? 

 

Currently, much of the current government spending is non-discretionary.  Social Security and Medicare, for example.  

 

I should probably just stop.  Some people are too brainwashed by Democrat talking points to understand. 

 

[HappyExpat57]

4 minutes ago, jas007 said:

 Do you really believe all that?  How does robbing "those who can least afford it" fix the economic system?  The billionaires don't need tax breaks, and even if you took all their money, nothing would be "fixed."  The system is broken and has been broken for a long  time.  There's no free lunch. 

 

The simple fact is this: the country cannot continue to operate on a "business as usual" track. Borrow and spend is not the answer. Deficits do matter. The country is over 35 trillion dollars in debt. Interest rates are rising and the debt is going exponential. Something has to change. More taxes are not the answer.  One of two things needs to happen, long term: the country must spend less than it produces, or, it needs to produce more than it spends.  All those jobs that the globalists were so eager to export need to come back to America.  The's part of what Trump is trying to do with tariffs. Perhaps some of hose jobs will return. 

 

Or would you rather see America, the newest Third World country? 

 

Currently, much of the current government spending is non-discretionary.  Social Security and Medicare, for example.  

 

I should probably just stop.  Some people are too brainwashed by Democrat talking points to understand. 

 

Jeezuz, talk about brainwashed.

Let's just see a year from now how well your spew of Fox rhetoric ages.

[Thingamabob]

On 12/26/2024 at 3:34 PM, RSD1 said:

If Trump’s anticipated wide-reaching import tariffs and mass deportations cause inflation in the USA to spike again, wages to rise considerably because of low cost labor shortages, which eventually leads to a large economic slowdown where unemployment rises (together with already high inflation), and you end up with a situation in the US of sustained stagflation, then will this affect you at all?
 

And will even higher interest rates, reminiscent of the Volcker era, together with even more bankruptcies, more people defaulting on their car loans, credit cards, and mortgages, and companies having to shut down and lay off workers because of shrinking demand related to Trump's unsustainable economic policies, then do you think this will have far reaching consequences even for people living outside the USA?

Far too early to say.

[jas007]

57 minutes ago, HappyExpat57 said:

Jeezuz, talk about brainwashed.

Let's just see a year from now how well your spew of Fox rhetoric ages.

OK. I'll mark my calendar.  

 

Part of me hopes Trump actually puts his plans in place. But the other part of me knows those plans will be blocked, one way or the pother, and that's the real danger.  As I've said, business as usual is not a solution, so you had better hope Trump succeeds.  

 

And I'm not parroting Fox rhetoric.   I don't usually even watch it, except once in a while when snippets appear on YouTube. I do, however, have a pretty good grip on politics and economics and the big macro picture.