The likely result? Weak economic growth but not a recession; Trump defeated anyway. Turns out he was never spreading the wealth around.
I’d want a recession solely because one is definitely coming, and I’d like to see the President who created the most damaging economic policies be blamed for it. Unfortunately, most people blame/praise the sitting president for the current economic climate when, if anything, it’s typically the former president who shaped the current economy. Trump cut taxes during full employment and engaged in trade practices that have been discredited since the birth of our country. Hell, when told how his policies would negatively impact the economy in the long run, Trump actually said it wasn’t his problem because he’ll be out of office by then. My biggest fear is that a Democrat will win and be blamed for a recession exacerbated by Trumps policies, thereby guaranteeing a republican win in 2024.
Inflation panic, like fear of killer bees, should go back to the 70s and stay there.
This country has disappointed me before, but somehow I refuse to believe it all comes down to Bread and Circuses. “You keep the trains running on time, you can shove whoever you want into the ovens!” I like to think we are better than that, evidence to the contrary notwithstanding.
Inflation panic? You don’t have to be ‘panicking’ to worry about inflation. Younger people who have never lived through it may think it’s just a bogeyman, But I remember the first mortgage on our house, at 13% interest. There has been recent hyperinflation in Zimbabwe and currently in Venezuela. It’s a real thing, and it’s dangerous.
I also remember before the last financial crisis, when we were told that central banks had a handle on the global economy and their scientific management of global money supplies meant that such crises were no longer possible.
I don’t think inflation in coming years is a likely problem unless either (a) employment-hawk lackeys are appointed to the F.R.B. by a nitwit President, or (b) a nitwit President frightens the world (e.g. by bragging about his business bankruptcies) so much that the U.S. Dollar and U.S. Treasury bonds lose their safe-haven prestige.
Hmmm. So devaluation of the dollar should be a concern now. :eek: So why is the yield curve inverted? Why isn’t the price of gold soaring?
Part of the reason, I think, is that other major economies have even worse problems. Aren’t some central banks still setting negative interest rates? Brexit has paralyzed Europe’s hopes for the future. And with huge paper wealth floating around the world looking for a home, asset prices (e.g. stocks and bonds) remain high. Thus, asset price inflation creates (false?) confidence that, almost paradoxically, keeps the dollar strong.
There was a big stock market correction during the last few months of 2018, but now the market is leaping back toward record levels. But these high prices are due in part to stock buybacks — buybacks sometimes tend to be self-congratulatory masturbation when stock prices are peaking! Is this a house of cards waiting to collapse? If left-wing progressives seem likely to win U.S. elections will the markets worry that wage hikes or coming? Or that corporations will be hit with tax hikes?
How will this all play out? I hope the Board’s economists will map out a few of the likeliest scenarios, but AFAICT most people are as mystified as I am.
It won’t be an issue in time for 2020, but by 2024, there’s going to be severe strain on the budget, which will force congress to cut something. Republicans will advocate cutting entitlements and social spending; Democrats will advocate trimming the military and raising taxes. Independents will advocate all the above. But probably nothing will get done, which will result in chaos eventually. Markets will begin to bend to the pressures of uncertainty.
A lot of economic policies don’t kick in until 4 years afterwards - which is just long enough to ensure that Party A gets the blame/credit for what Party B did, and vice versa.
So, yes, if a Democrat wins in 2020, there’ll probably be a recession in 2020-2024. Which helps pave the way for a Republican comeback. Whereas if Democrats lose in 2020, Trump will eat the blame for the recession in his second term.
I don’t like recessions but I don’t like economic booms, either. Because they will always be followed by a bust. And they play havoc with small business. I’ve seen it my whole life. There is an economic boom caused by short-sighted policies and lack of regulation. Everyone has money to spend. Small businesses need to expand rapidly to keep up. They borrow to expand their facilities and increase inventory. Which totally screws them when it all comes crashing down.