When it comes to the economic future, a Trump presidency could bring either a shitstorm or salvation. Regrettably, the odds of the former are immensely the higher.
That’s because Trump is
a welcome, but extremely unguided missile. On the one hand, his great
virtue is that he is a superb salesman and showman who has captured the
GOP nomination and has a serious shot at the White House with absolutely
no help whatsoever from the Washington/Wall Street establishment.
So
unlike any other candidate in recent memory, he owns his own talking
points; is not saddled with a stable of credentialed advisors schooled
in three decades of policy error and failure; and has the hutzpah to
trust his own instincts——many of which, especially on foreign policy,
are exactly the rebuke that Imperial Washington and its legions of
parasites and racketeers so richly deserve.
On
the other hand, the Donald’s policy thinking, if you can call it that,
is thoroughly inchoate. His policy pronouncements amount to little more
than spontaneous eruptions of sentiment, prejudice, hearsay, bile,
applause lines, wishful thinking and disconnected non sequiturs. That’s
where thoughtlets like Muslim bans, mass deportations, a Trump Wall on
the Rio Grande, paying off the national debt, 40% tariff barriers,
obliteration of ISIS and numerous other stray verbal hand grenades come
from.
Yet occasional wild
pitches are not really the problem, and the cynics are surely correct in
predicting that Trump will excise most of them from his patter
even before the GOP convention. The real problem is that Trump has no
detectable economic philosophy or policy framework, and it is in that
arena that he could go careening off into a cacophony of misfires,
mistakes and statist mayhem.
To
wit, Trump has already said that he likes the Fed’s low interest rates,
is considering a minimum wage hike, thinks social security and medicare
should remain untouched, will rebuild the military, intends to
drastically increase spending for veterans, wants to slash income taxes
on corporations and individuals, thinks a big infrastructure program is
warranted, plans to spend tens of billions on border security and the
Wall and will drastically hammer $2.2 trillion of imports in order to
bring jobs back home.
Not only
is most of that unaffordable, counter-productive and wrong. More
importantly, Trump’s mish mash of economic policy utterances thus
far fails to address why the Washington/Wall Street/Bicoastal/Bubble
Finance status quo is failing main street so badly and causing 90% of
Americans to realize that they are not winning economically anymore.
The
heart of what went wrong is the lethal combination of free money and
free trade that has been practiced ever since Greenspan panicked after
Black Monday in October 1987. That is what has gutted the fly-over
economy while gifting casino prosperity to Wall Street, Washington and
the bicoastal elites, as I documented in Part 1. (click here for Part 1)
But as I indicated yesterday, there is a sliver of hope if Donald
Trump does not capitulate to mainstream policies and is willing to set
aside his potpourri of shibboleths and panaceas in favor of a
disciplined and coherent game plan that builds on his bedrock political
insight that American families are losing the economic battle. To
repeat, there is a way forward for the self-proclaimed world class deal
maker to move the whole mess out of the hopeless paralysis of
governance that now afflicts the nation.
A President Trump would need to make Six Great Deals.
A Peace Dealwith
Putin for cooperation in the middle east, defeat of ISIS, withdrawal
from NATO and a comprehensive worldwide disarmament agreement.
A Jobs Dealbased on slashing taxes on business and workers and replacing them with taxes on consumption and imports.
A Federalist Dealto
turn back much of Washington’s domestic programs and meddling to the
states and localities in return for a 4-year freeze on every single
pending regulation and statue.
A Health Care Dealbased
on the repeal of Obamacare and tax preferences for employer insurance
plans and their replacement with wide-open provider competition,
consumer choice and individual health tax credits.
A Fiscal Deal
to slash post-disarmament spending for defense, devolve education and
other domestic programs to the states and cities and to clawback unearned social security/medicare entitlement benefits from the affluent elderly.
And a Sound Money Deal
to end the Fed’s war on savers and retirees, repeal Humphrey-Hawkins
and limit the central bank’s remit to providing last resort liquidity at
a penalty spread over market interest rates based on good
commercial collateral.
Under
what would in effect be a restoration of the original vision of Carter
Glass, who was a storied financial statesman and author of the 1913
enabling legislation, the Fed’s authority to conduct open market
operations and unlimited money printing would be eliminated. And its
liquidity backstop would be limited to “narrow banks” which just take
deposits and make loans, and have nothing to do with Wall Street
trading, underwriting, hedging, derivatives and other forms of financial
gambling.
Needless to say,
this all sounds like radicalism relative to the prevailing system of
Casino Capitalism and the Big Government status quo. But all of that is
in for a rude awakening, and soon.
That’s
because the Bubble Finance status quo as we know it is on its last
legs. With each driblet of “incoming data” it is evident that a new
recession is just around the corner. With each limpid trading session on
Wall Street it is also evident that most carbon units have vacated the
casino and that the robo-machines are running out of chart points to
chase. That means a big market dive is coming soon.
In
fact, a recession, a market crash, an explosion of deficit projections
and, for good measure, double digit increases in next year’s health
insurance premiums and copays will be hitting the headlines before the
final Hillary/Donald debate duals of the fall campaign. It is this
impending perfect storm that offers Trump the chance to hang 30-years of
failed policy on Hillary Clinton as the insider totem, and
to bombastically demand in the patented Trumpster style a clean sweep of
the Washington/Wall Street/Federal Reserve policy mess.
I
know from personal experience and long observation that it has to start
with a Peace Deal. That’s the secret to unlocking the entire
Washington policy gridlock and the resulting drift toward national
bankruptcy, which otherwise will prove unstoppable. Indeed, nothing can
change until at least $200 billion is whacked out of the defense budget,
and under the circumstances ahead that could easily be done.
That
propitious opportunity for peace is the emerging worldwide Great
Deflation. It is taking down the Red Ponzi in China already and
is administering the coup de grace to Russia’s third rate, New York
SMSA-sized oil, mineral and wheat based economy. At the same time,
the next US administration will be grappling with recessionary trillion
dollar annual deficits while the socialist enclaves of European NATO
will face fiscal burial in a renewed eruption of public debts that
already average nearly 100% of GDP.
The
key to a global Peace Deal is renunciation of Washington’s encroachment
on Russia’s backyard in Ukraine and the former Warsaw Pact nations; and
a Russian/Washington/Shiite alliance to encircle the Islamic state and
enable Muslim fighters from Syria, Iran, Iraq and Hezbollah to finish
off the butchers of the mutant Sunni Caliphate.
The
NATO renunciation part of the deal is already in Trump’s wheelhouse
because he thinks he can make a deal with Putin anyway, and has had the
common sense to see that NATO is obsolete. What he needs to further
understand is that Russia is incapable of threatening Europe and has no
designs to do so.
Moreover,
it is Washington, not the Europeans, who insisted on the pointless
expansion of NATO. And it was Washington which betrayed George HW Bush’s
sensible promise to Gorbachev in 1989 that in return for his
acquiescence to the reunification of Germany NATO would “not be expanded
by a single inch”.
There is
even a bonus presidential debate point for the Donald on the latter
matter. The betrayal of the elder Bush’s pledge was initiated by none
other than Bill Clinton in the midst of his political crisis during the
blue dress affair. Do not doubt the Donald’s capacity to put that one
straight to Hillary.
Likewise,
Trump is already half way there on the ISIS threat. Unlike the neocon
adventurists of Washington, he has welcomed Putin’s bombing campaign
against the jihadist radicals in Syria and recognizes that the enemy is
headquartered in Raqqa, not Damascus.
God
willing, it is to be hoped that he somehow comes to understand that the
Iranians have a justified grudge against Washington for its historic
support of the Shah’s plunder and savage repression; for CIA aid to
Saddam’s brutal chemical warfare against Iran during the 1980s war; and
for Washington’s subsequent demonization of the regime and false claims
that it is hell-bent on nuclear weapons—–a charge that even the nation’s
top 16 intelligence agencies debunked more than a decade ago.
To
wit, the way out of the bloody mess in Iraq, Syria, Yemen and
Libya—-all of which are projects bearing Hillary’s support and even
inspiration—–is a rapprochement with Iran’s able and moderate statesman,
President Hassan Rouhani, who has just received another wave of
political reinforcement in the recent elections.
Someone
needs to tutor the Donald on the great General Eisenhower’s pledge to
go to Korea and make peace immediately after the election in 1952, which
is exactly what he did. Likewise, the presumptive GOP candidate should
pledge to go to Tehran to “improve the deal”, and this time Trump even
has the plane!
Yes, “improving”
the deal might be positioned as somehow strengthening Obama’s
“bad deal” on the nuclear accord, but that would be the diplomatic fig
leaf for domestic political consumption. The far broader purpose would
be to bury the hatchet on the general bilateral relationship between the
US and Iran, and to secure Rouhani’s agreement to a leadership role
in the above referenced Muslin-led ground campaign to extinguish ISIS
and liberate the territories now controlled by the Islamic State.
An
“I will go to Tehran” pledge by Trump could electrify the entire
mideast policy morass and pave the way for early US extraction from its
is counter-productive and wholly unaffordable military and political
intrusion. The fact is, the Islamic State is on its last leg because
of US and Russian bombings, $30s oil and its own
barbaric brutality. These forces are rapidly drying up its financial
resources, and without paychecks its “fighters” rapidly vanish.
Indeed, ISIS is
now so financially desperate that its fighters are literally
disappearing. That is, it is shooting its wounded and selling their
organs on the black market.
Needless
to say, no army of fighters has ever prevailed or even survived
by harvesting its own flesh. And especially not when confronted by an
opposing force of better trained, better equipped, air-power supported
fighters motivated by an equal and opposite religious fanaticism.
Accordingly,
a Trump-Putin-Rouhani alliance could very readily celebrate the
liberation of Raqqa and Mosul by July 4th next year, along with an
history-reversing partition agreement to cancel the destructive
Sikes-Picot boundaries of 1916. The latter would be superseded
by Shiite, Sunni and Kurdish states, respectively in their historic
areas of Iraq and a shrunken state of Alawites, Christians and other
non-Sunni minorities in Syria , with protectorates in the north and
east for Kurds and Sunnis.
At
that point, Trump could put on his own “mission accomplished” pageant by
bringing home every last American military personnel now stationed in
the middle east, either overtly or covertly and wearing boots on the
ground or not. And he could do so from the deck of an aircraft carrier
that had been withdrawn from the Persian Gulf as part of the
comprehensive Peace Deal with Putin and Rouhani. The Persian Gulf would
be an American Lake no more.
The Donald might even be positioned to collect his Nobel Peace Prize on the way home.
Before
then, however, he would also be in a position to collect some giant
domestic political plaudits that could be married with the defeat of
ISIS and peace in the middle east and Europe. To wit, Trump should
promise to sign legislation day one permitting families of the
victims of 9/11 to suit the Saudis for their losses.
Nothing
could better bring closure to the vastly exaggerated
domestic terrorist threat than the simultaneous eradication of the
Islamic State and mutli-hundred billion lawsuits against the
alleged 9/11 puppeteers hitting the headlines day after day.
Also,
nothing would do more to provide political cover and impetus for the
balance of the Peace Deal. That’s because the indigenous terrorist
threat in Europe is not sponsored, supported or funded in any manner by
the nations of the Shiite Crescent. Instead, it is an extension of the
mutant jihadism of radical Sunni and Wahhabi clerics.
Needless
to say, even the unspeakably corrupt and arrogant princes of the House
of Saud would get the message when the 5th Fleet leaves the Persian Gulf
and the Trump/Putin/Rouhani alliance takes out its proxies in Syria and
the Islamic State itself. In short, the financial lifeblood of
terrorism would dry up—-whether the Saudi royals remained in Riyadh or
decamped to Switzerland.
The
essence of the great Peace Deal required to save the American economy is
an end to procurement and R&D spending by the Pentagon and a
drastic demobilization of the 2.3 million troops in the regular armed
forces and national guards. And that can happen under the auspices of a global military “build-down” agreement and freeze on all further weapons exports.
Bankrupt
governments in a world where NATO has been decommissioned, the Jihadi
terrorist threat quelled and the middle east stabilized will absolutely
be interested in a defense “builddown” and global arms reduction
agreement. And there is no one better qualified to lead a sweeping
military cost “restructuring” deal among bankrupt nations than the well
experienced Donald Trump.
Regards,
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