Thursday, December 13, 2018

Did President Trump Make A Rookie Mistake With the Economy?

The New York Post senior economics writer, John Crudele, states in a new column:
It seems that Donald Trump has made a rookie mistake on the economy.

While US presidents don’t always have control over business cycles, there is one hard and fast rule: Don’t stimulate the economy too early, because economic growth is likely to fade right at the time you are seeking re-election.

Trump appeared so excited — and maybe surprised — to get elected that he went all out with a tax-reform policy that boosted the economy during his second year in office.

The economy now seems to be weakening despite the government’s largesse to taxpayers. And there is widespread talk of a recession right about the time Trump will be seeking re-election.
This is a decidedly Keynesian view that government deficit spending can boost an economy.

Trump's problem is not that he cut taxes but that he didn't cut government spending. Without his cutting spending in coordination with the tax cuts, he only caused a shift in how government draws money out of the economy, by way of the exploding deficit (exploding government borrowing crowding out private sector borrowing) not anything else,

As for a recession, I am reporting in the EPJ Daily Alert that I am very close to putting out a recession warning for the basic reason of Federal Reserve money supply manipulation taking a downward turn. The thing that always results in the downward phase of the business cucle. (See: Austrian School Business Cycle Theory).


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