Trump's economic plan.

 THERE REALLY IS A PLAN

NAVIGATING THROUGH OPPOSITION AND GLOBAL POLITICS

I recently watched a speech by Jim Rickards, a well know investment analyst and commentator, which was given at Hillsdale college. He articulated an outline of the Trump administrations economic policy. While only a basic outline, it indicates that this is the plan that will be attempted by the this administration. 

Relaying this information by myself, is not an endorsement, but just an attempt to understand what is happening, concerning economic policy.

The primary long term goal is to move the nation to economic self reliance and reduce dependence on foreign imports. This will translate to increasing jobs at home, particularly manufacturing jobs. 

The first thing Rickards pointed out is the reduction in the price of oil and gas. If successful in reducing the cost of energy, it will eventually help to reduce the cost of all goods, as they are all highly based on energy costs, this applies to all goods, agricultural costs and transportation. There seems to be some progress in this.

The next big problem is the debt and deficits which may be the biggest threat to the nations future. The debt is now 123% of the Gross Domestic product a unsustainable number. The plan is to control increased spending and increase revenues, he emphasized that any dramatic cuts in spending or increase in taxes will lead to reduced economic activity. It is hoped that a combination of tariffs and increased investment to manufacture in America will hopefully bring that about. Tariffs will not be implemented on companies that build plants in the U.S. as an incentive. There is some indication that there is some progress in that area. The hoped for result is not necessarily a reduction of the debt but a reduction of the debt to GDP ratio to 121% in the first year. It is hoped that this progress will become more each year to bring the ratio down to an acceptable ratio without damaging economic activity.

It seems it is a long term plan to control spending and increase revenues by increased economic activity. 

While of course this is a very brief outline of the plan, my observation is that Tariff's, while a good bargaining tool to address abuses in trade policy by partners, as in Trump's first term, seemed to be productive. I also believe the idea of a flat 10% tariff on all imports could be effective, particularly if that revenue or at least the majority of it is designated for infrastructure improvement, ports, rail lines and interstate highways all a cost of moving imported goods.

The move to use tariff's as punishment's for political purposes undermines this strategy. The U.S. Senate has passed a resolution to impose massive tariffs on nations that trade with Russia. I expect this effort will cause more flight away from America and undermine any effort to use tariffs to increase revenue.

While it it is obvious that increase in taxes or dramatic cuts to domestic spending can cause a decrease in economic activity, there is no reason not to cut any spending in foreign counties, including the reduction of the 750 military bases and foreign aid and military hardware to numerous countries. Cuts to foreign spending will not negatively effect the domestic economy.

A reevaluation of the foreign policy of the last 30 years may be the answer to solving the long term economic problems, while it seems we are reducing the aid to Ukraine, we are still sending many $100's of billions out of the country in aid, military hardware and intervention schemes not to mention financial lubrication of foreign leaders in an effort to continue political support for these schemes. 

I suspect that there is tremendous pressure by many factions to keep the funds flowing and funds spent overseas seem to be the easiest to launder, often back to parties here in the U.S. Sadly I am not optimistic that any effort to right this ship by Trump or anyone else can be successful. Far too may are now addicted to federal money.