How about that stock market!

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I think there are a few very important things happening here people don't understand regarding inflation, tariffs, interest rates and the economy.



This was a question I asked my Econ professor some time ago back in college.



"Professor if we have a trade deficit with most of the world why don't we simply tariff them to make it even or establish a surplus? Doesn't that make sense?"




Professor would reply with text book answer that while this is true it would drive prices up and in turn and Econ 101 bring demand down and this is true and has always been the case.


And normally it would have a bad effect on the economy but the funny thing here Trump and no one really realizes is that he has a unique opportunity in history where he can bend the conventional laws of economy that no President or few Presidents had before him and that is high inflation. A lot of the inflation isn't just tied to the money printed but also the stupid high demand and a "hot" economy......People forget that......





This is why the Fed raised interest rates stupid high to fight high demand and high inflation and it's still not enough......




High inflation has been bad and will be bad always but in this instance due to higher inflation and slightly higher interest rates than is normal for modern times and high demand the economy can not only withstand this but also needs it in a way higher interest rates and the Fed can't provide given inflation. This kind of allows for a transition that normally wouldn't be allowed with tariffs to bring manufacturing back to the US without causing recession or drastically affecting demand and also lowering inflation in return and interest rates.
 
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The~Kid said:
"Professor if we have a trade deficit with most of the world why don't we simply tariff them to make it even or establish a surplus? Doesn't that make sense?"




Professor would reply with text book answer that while this is true it would drive prices up and in turn and Econ 101 bring demand down and this is true and has always been the case.


And normally it would have a bad effect on the economy but the funny thing here Trump and no one really realizes is that he has a unique opportunity in history where he can bend the conventional laws of economy that no President or few Presidents had before him and that is high inflation. A lot of the inflation isn't just tied to the money printed but also the stupid high demand and a "hot" economy......People forget that......
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DT has to transition this fake economy into a legitimate one.

The idea is to force manufacturers to build here, so the population will be productive and not just living on goberment helicopter money.

There will be pain and complaints especially from the non productive part of population but, we have to stop just printing and consuming.
 
the are some great deals out there.
I just bought more HD, MMM and PG
 
MadAsAHatter said:
Okay, I'm no market expert or anything so maybe I'm missing something with all this stocks are tanking thing. The one thing I do understand is in general markets fluctuate and investing is playing the long game. So yeah stock prices may have taken a somewhat rough downturn from where they were a month ago, but even going back only a year they're still up overall. I would consider it a complete crash like certain people are trying to claim if they dropped lower than where they were say 5 years ago. That's obviously not the case.

Maybe one of you intellectuals who are proclaiming doom and gloom can explain to me why I should be panicking.


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Historically, the current drop is a blip.

The market is forward looking and relies on dot plots that show weakening consumer sentiment driven by policy uncertainty. Because of the uncertainty, consumers are pulling back. Businesses follow by less hiring, less capital expenditures and weaker guidance. Inflation is in check, but that could change quickly if it's triggered by tariffs or labor shortages. Reduced economic activity coupled with higher inflation is the big concern--that's when I would start to panic.
 
This is what we need to keep an eye on. It seems the dollar is no longer the worlds safe haven.

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Everyone is worried about the stock market, yet are mostly oblivious to inflation and how much it erodes the value of all of their money...not just what is invested. Look at what you were paying for items 5 years ago vs what you pay today.
 
Good points but, do keep in mind, DT is managing the bankruptcy of America.

He is trying to make it less painful for everyone. It's the "soft landing" that's being bandied about.
 
Geo said:
This is what we need to keep an eye on. It seems the dollar is no longer the worlds safe haven.

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Weak dollar would actually be good because it would bring in even more investment. It's actually good because IMO it only makes it easier to bring in more investments through the tariffs too.
 
The~Kid said:
Weak dollar would actually be good because it would bring in even more investment. It's actually good because IMO it only makes it easier to bring in more investments through the tariffs too.
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True but, if we can't sell our debt, we will default.

28 Trillion in treasuries mature by 2028. Better have a printing press with a Hemi.
 
JackTheBear said:
What about a collapsed dollar? 🤔
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Yeah that would be bad but the economy is nowhere near that.


Weak dollar is just a result of Fed interest rates taking effect bringing down inflation and combine that with the tariffs this helps weaken the dollar more and lower inflation too.



So you get two for one with Trumps tariffs here. You weaken the dollar to attract even more investment and you also help bring down inflation at the same time aside from the Feds higher interest rates.



As said he isn't aware of it and no one really is but that's essentially what's happening. Since inflation is still high it allows him to do what no President before him but for a few had the opportunity to do and actually make it work.



Traditionally the Euro has been stronger than the dollar too so it only means things are going more and more to pre Covid conditions in regards to a normal economy.
 
psychodave said:
Everyone is worried about the stock market, yet are mostly oblivious to inflation and how much it erodes the value of all of their money...not just what is invested. Look at what you were paying for items 5 years ago vs what you pay today.
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According to quite a few sources including Fed data......

Wealthy individuals and powerful investors hold staggering shares; the top 10% own 93% of all stocks while the top 1% controls a jaw-dropping 50%.

https://finance.yahoo.com/news/wealthiest-10-americans-own-93-033623827.html
 
psychodave said:
Everyone is worried about the stock market, yet are mostly oblivious to inflation and how much it erodes the value of all of their money...not just what is invested. Look at what you were paying for items 5 years ago vs what you pay today.
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I think most people are keenly aware of inflation. The number of people living paycheck to paycheck increased fairly substantially from 2022-2024, pushing close to 1 out of 2 households identifying. And I think inflation/buying power was probably the biggest factor for voters last November.
 
This goes back to Econ 101.......and elementary school stuff......



What do you do when inflation is high?!??!?!?



The Fed raises interest rates...... to bring down inflation...... this a part of their tool set......



The Fed can also reduce its purchase of Treasury Bonds and this also helps fight inflation and another part of their tool set for Quantative Tightening vs Quantative Easening.




And since inflation is stupid high while traditionally tariffs aren't used for such purposes without knowing that's what Trump is doing and it's essentially another tool set to bring down inflation as the tariffs push demand down.




The stupid high inflation unknowingly gives the power to the President to raise tariffs where traditionally and conventionally under a normal economy at 2% inflation he wouldn't be able to really.




It's being done unknowingly but pretty brilliant in that it can be done and how it is working given circumstances.
 
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The Stock Market has been addicted to Quantitative Easing since 2008 and has only built bubble after bubble since........the real economy for main street has been declining ever since. Meanwhile 0% interest rates for over a decade benefited the 1% and kicked the can down the road with more debt.......

The interest on the US debt now exceeds what the country spends on National Defense as May 2024........

https://www.google.com/url?sa=t&sou...sQFnoECBkQAQ&usg=AOvVaw3QzFT4zDmk7uMoshAruQNm
 
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The~Kid said:
The stupid high inflation unknowingly gives the power to the President to raise tariffs where traditionally and conventionally under a normal economy at 2% inflation he wouldn't be able to really.

It's being done unknowingly but pretty brilliant in that it can be done and how it is working given circumstances.
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Not a bet I'd make.
 
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