Commentary: Donald Trump is making America scary again
The more the US president deploys weapons of economic destruction, the more trust in the US is undermined, says Financial Times' Gideon Rachman.
(Updated: )
Danny Lum
(1) Trump fail to understand the mechanics of Macroeconomics.
(2) Trump has make use of tariff (Economics) as weapon to achieve his other objectives eg. geopolitical influences, global leadership and tech leadership.
Both of the above - will have the effect of messing up US economy as well as the Global Economy because :-
(1) He mess up his fiscal policies (by ballooning US public debt) - through tax cut into a huge unsustainable public debt of US$23 trillion.
Note :- a large portion of the debt are external debt owe to foreign countries.
Serviicng this debt and repaying the capital loan - will lead to mass outflow of capital away from US economy.
(2) Trump mess up the trade policy and derail the global supply chain - that provide the most cost effective and optimal production input - that will fuel US domestic economy.
(3) As import price increase - due to high tariff impose by Trump, as well as disrupting the global supply chain that provide the least cost - it will cause the US production cost to increase.
(4) As a result, business cost go up, demand go down, consumption go down, job got loss due to lower business activities, busienss investment go down, tax cut that flood the US financial market will be neutralise, US economy go into recession - US Treasury coffer with high debt, high debt interest to service - will have no more bullets to prop up the US economy.
This is known as "demultiplier effect" to the Circular flow of Income in US economy --- through Trump's "Boom and Bust" economic cycle --- by artificially inflate the economy through unsustainable tax cut for immediate gratification to please his voters - but will lead to a recession later.
(5) There are already sign of economic slowdown coming out from the US economy :-
(a) Many US tech companies reported lower earnings and slower sales.
(b) Many small US agriculture selling their assets and farms - as they are unable to sell to China.
(c) US$1 trillion investment have been wiped out from the Global market.
(d) Many US businesses and CEOs are projecting US recession in 2020 - as they face difficulties in exporting their goods to other Countries and face high import cost due to tariff impose by Trump.
(e) Job growth has come down in US.
(2) Trump has make use of tariff (Economics) as weapon to achieve his other objectives eg. geopolitical influences, global leadership and tech leadership.
Both of the above - will have the effect of messing up US economy as well as the Global Economy because :-
(1) He mess up his fiscal policies (by ballooning US public debt) - through tax cut into a huge unsustainable public debt of US$23 trillion.
Note :- a large portion of the debt are external debt owe to foreign countries.
Serviicng this debt and repaying the capital loan - will lead to mass outflow of capital away from US economy.
(2) Trump mess up the trade policy and derail the global supply chain - that provide the most cost effective and optimal production input - that will fuel US domestic economy.
(3) As import price increase - due to high tariff impose by Trump, as well as disrupting the global supply chain that provide the least cost - it will cause the US production cost to increase.
(4) As a result, business cost go up, demand go down, consumption go down, job got loss due to lower business activities, busienss investment go down, tax cut that flood the US financial market will be neutralise, US economy go into recession - US Treasury coffer with high debt, high debt interest to service - will have no more bullets to prop up the US economy.
This is known as "demultiplier effect" to the Circular flow of Income in US economy --- through Trump's "Boom and Bust" economic cycle --- by artificially inflate the economy through unsustainable tax cut for immediate gratification to please his voters - but will lead to a recession later.
(5) There are already sign of economic slowdown coming out from the US economy :-
(a) Many US tech companies reported lower earnings and slower sales.
(b) Many small US agriculture selling their assets and farms - as they are unable to sell to China.
(c) US$1 trillion investment have been wiped out from the Global market.
(d) Many US businesses and CEOs are projecting US recession in 2020 - as they face difficulties in exporting their goods to other Countries and face high import cost due to tariff impose by Trump.
(e) Job growth has come down in US.
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Danny Lum
(1) Note :- US economy is only 250 million consumers --- it can't be the largest Economy in the World - if their businesses don't sell their products and services to the World (the World population is 6 billion consumers).
(2) Imagine if US cannot sell their boeing planes, weapons, cars, IT products, financial services, crops etc to the World --- US economy will shrink phenomenally.
(3) Now Trump offended all his trading partners and harm all external consumers relationship --- does anyone really think they will buy more US products and services?
(4) So Trump indeed has shoot himself on his own foot - and cause long term harm to US - when the World start to move away from the US economy.
(2) Imagine if US cannot sell their boeing planes, weapons, cars, IT products, financial services, crops etc to the World --- US economy will shrink phenomenally.
(3) Now Trump offended all his trading partners and harm all external consumers relationship --- does anyone really think they will buy more US products and services?
(4) So Trump indeed has shoot himself on his own foot - and cause long term harm to US - when the World start to move away from the US economy.
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