The good news is that these economic problems are entirely the result of bad policies and can be reversed.
If we were to also raise broad based taxes, it would allow the Fed to cut interest rates, stoking long term investment, loosen up the housing market (which would allow more people to move), lower the Federal deficit, and improve the trade balance (as if that actually mattered).
The effect of a bad policy doesn't necessarily end when the policy does. The economy has inertia so some effects, such as inflation, are self-reinforcing and need active undoing even when the policy is relaxed.
At least on the US tariffs thing, congress can put Trump back in his box and revert to normalcy any time it wants to; the threat of stagflation might make it do that. The previous stagflation incident was more driven by outside forces.
I've honestly wondered this too. But we cannot obey in advance. If they're going to try and take it from us, then there should be a fight every step of the way. That means our cynical perspectives, as right as they may be, could lead us into a self-fulfilling prophecy.
I tell myself if there weren’t going to be elections or if the admin had a sure fire way to compromise them, they wouldn’t be trying so hard to push through redistricting in every single state there’s a Republican-controlled state house/senate.
I think it's likely that if there was a rapid reversal, with Congress taking away the power to mess with tariffs and making it clear that it was permanently gone, there'd be some damage, but things would largely go back to normal. Not enough time has really passed for things to change _that_ much; many of the tariffs aren't _actually_ in place yet.
I have some bad news. It's already some 8 months too late for "rapid".
> Not enough time has really passed for things to change _that_ much
Here in Brazil we are in a mini economic boom because every single country is willing to pay a premium on anything that didn't come from the US. The EU is shutting up internal racist and protectionist dissidents (strong on their 2 largest economies) so that they can diversify from you. Most of the world is discussing independent payment systems... Nato countries are organizing to defend against the US and China and Russia are promising military protection to Latin America.
I wonder if things changed that fast when WWI started, but it absolutely never changed that fast in my lifetime.
I'm European, not American. I think that if given strong guarantees that Trump had been declawed, the EC would be happy enough to return to prior arrangements (though probably move ahead with the Mercosur deal and other trade treaties at an accelerated pace, granted).
The world has seen how unreliable the US is. Its not even just the tarrifs, its the tarrifs applied at random, based on how happy the Don is. The world has seen the "checks and balances" don't exist, a populist leader can do whatever they want for any reason and has no accountability.
In this case, there are laws which he claims allow him to do what he's doing (some disagree, and that's moving through the courts, though with the current Supreme Court who knows). Those laws _can be revoked_, though. The meme that congress is powerless against him is not really entirely correct.
The supereme court seems quite happy to do whatever the president wants through the one-two punch of fake emergency declarations and shadow docket decisions...
And then we have Japan, which has spent 30+ years in the economic doldrums.
What I'm saying is that these types of systems have "inertia" and can be exceptionally long lived in their 'bad' state, regardless of the policies used to try to get them out of that state.
I want you to think about, for a minute, the notion that you can have a number bigger than all of the atoms in the universe :-). From that, you can see that its possible to have more 'dollars' than there are atoms in the universe. Specifically, without defining 'growth' you can't reason about the limits on that growth.
The other point that simplified analysis fails to consider is that you are inside the system so as it "grows", it also "changes". If you lived in the 70's with the tales of how we're going to run out of fossil fuels by 2000, looking back you can see how things changed (cars got more efficient, other sources were discovered, etc).
My macroeconomics professor had a funny saying that you could take any segment of a sinusoid and use that to extrapolate forward and get the wrong answer about what the waveform was going to do. In my differential equations class we got to see how you could predict some things if you new both the initial conditions and you continued to refine your model. But to predict all things your model needed to take into account all variables and their impact, and it was the unknown variable problem that messed up predictions using that method.
> its possible to have more 'dollars' than there are atoms in the universe
We are absolutely not printing money fast enough to realize this dream, unfortunately. I propose we mint a new bill, the 100 trillion non-Zimbabwe dollar, and 10x our printing speed.
Yeah, that would do it. Actually though it's important to remember that 'dollars' and 'currency' are two related but very different things. :-) I'm gonna guess you already know that too.
The Trillion Dollar Coin[1] was a real thing oddly. And I have always wondered if was the inspiration for Sam Bankman-frieid's crypto scam with FTX to mint your own crypto token that you could claim was worth billions so that your ledgers added up "in theory."
That implies that economic activity is confined to this planet. Even today we can see this doesn't hold true as we already have activity in orbit. Also, economic activity is less and less tied to physical constraints as technology progresses and digitization spreads.
If I sell you a banana for $1, and you sell it back to me for $1, we have just created $2 of GDP. The trick is we need to repeat this process faster and faster over time. Luckily computers also get faster every year due to Moore’s law, so growth shouldn’t be an issue.
In fact, every person in the country could take turns with the banana for a brief period of time (provided they quickly sell it to the next person) which should enable broad prosperity for all.
Yeah but there is no actual value generated by passing the banana through the population. It's fictional growth, backed by nothing, the same sort of swindle that shitcoin creators do to pump up their shitcoin's value ("wash trading").
There will be no broad prosperity for all from that banana trading, all it serves is to further pump the inflatable house, and it will eventually pop and leave people to realize they've been conned by "financial engineers". And then, the pitchforks will come out.
I agree. And if landlords decide to hike rents by 10% this year and people pay it, the GDP contribution from rent rises 10% despite the actual quality of the housing stock being worse due to being a year older. So you can see why GDP is a kind of silly metric of productivity or well-being.
I understand this set of comments is a digression but there is an interesting subtlety here. There is a structural connection between economic activity (in particular 'innovation') and wealth inequality. Economies that are 'stable' and 'unchanging' become stratified and people living in those economies find themselves getting slotted into 'classes' from which they cannot change.
Since I tend to be interested in systems, especially emergent ones, this is something I find interesting but recognize that the world generally considers economists more boring than accountants :-). When one discusses the 'graph going up' or 'growth' is that prices? GDP? Employment? Opportunity? I've been in conversations where several different definitions of 'growth' were being used that got confusing because there wasn't an agreement on what the y axis was measuring.
Most boomers I know don’t deny the climate is changing — they can (quite literally) feel it in their bones.
What they’re less convinced about is what to do about it. I agree with those who say we need to do practical preparation for the inevitable consequences rather than try to turn back the clock in a fit of fear and futility.
Norway can exit oil today and return its entire population to pre-WW2 poverty and last time I checked the effect on the world’s climate would be a .1% reduction in Co2 emissions, rounded up.
Meanwhile nobody, and least not a western country, is going to tell India and China to reverse course back into the obscurity of underdevelopment.
So any sane conclusion is that oil will eventually run out, so let’s use it as efficiently as possible to prepare for the inevitable change in climate we’re already seeing, regardless of its cause because it’s an unstoppable object.
And a lot of other things that are never going to happen
It will take a decade to dig out of this hole
And then there will be 11 million people "disappeared" from labor market
They are on a crime-spree, you don't do this much damage without malice
Look at what they are doing to the WhiteHouse Oval Office, Rose Garden, ballroom, look at the BILLION dollars stolen from nuclear missile maintenance for a personal jumbo jet, etc. etc.
> This means people are okay with whatever is happening
Or it means the game has been rigged which is exactly the point of all the gerrymandering going on right now. Tons of people are not okay with what is happening but their power to replace their government representative has been or is currently being effectively stolen from them.
We survived with 30% inflation ok key goods during the Biden years due to endless spending, we’ll survive this one too. You’re welcome to short the market though if you feel strongly otherwise
"Biden years" is doing even more work. The suicide cultists generally ignore the trillions in helicopter money that was dumped into the economy under Trump's "watch", right when we were also dealing with supply shortages. It took a few years for the economy to start moving and that new money to go from asset prices into consumer prices, right in time for short memories to blame JOEBIDEN.
If a new face can reverse policy on a dime, then that reversal can be reversed a couple of years later.
It's amazing how few people seem to understand this. Countries are oil tankers, they take years to turn even a little - and that's a good thing. In 2000 the world broadly knew what was going to happen, Gore and BushII would implement pretty much the same policies. Same thing in 2008 when it was McCain and Obama.
Sure you get some minor tweaks to policies which don't really affect much in aggregate.
Even in 2016 Trump was unable to make massive changes, because the state is built to prevent that from happening. The US does not elect a monarch. Things take forever by design, and it's really frustrating when you want it, but it also means one person or one administration can't make a major impact, it takes a generation of pushing the overton window in the direction.
Once you break that, you have a jetski zipping around, then you can't rely on stability, it becomes riskier to invest than investing in a country with a dictator.
It is a constitutional monarchy with an elected, time-limited king.
Monarchies generally have (and had) lots of checks on the king's power. Not necessarily the kinds of checks we would like, of course. The rights of the nobility were well-protected, the rights of landless commoners were not.
No, it's really not. The Executive does not have these powers in the constitution. They made it up and assigned it to themselves by loosely interpreting things how they wanted.
Executive orders are memos, not laws. The President has no power for legislation or budget or tariffing. We're supposed to require legislative review of any emergency actions, like using the military.
This is what’s so dangerous about the game the Republicans are playing. They are perpetuating a belief that American society is broken by breaking it themselves. If the blinders ever come off their base the violent impulses will be directed at them the same way they were directed at Mike Pence. It’s phenomenally stupid to wind up an ignorant mob and think you can control it. The only way to maintain control is to make the mob angrier and angrier but there’s always a breaking point.
Somehow you’re wrong somewhere between two and 3 times in one sentence.
> It is a constitutional monarchy with an elected, time-limited king.
> Constitutional monarchy, also known as limited monarchy, parliamentary monarchy or democratic monarchy, is a form of monarchy in which the monarch exercises their authority in accordance with a constitution and is not alone in making decisions.[1][2][3] Constitutional monarchies differ from absolute monarchies (in which a monarch is the only decision-maker) in that they are bound to exercise powers and authorities within limits prescribed by an established legal framework. A constitutional monarch in a parliamentary democracy is a hereditary symbolic head of state (who may be an emperor, king or queen, prince or grand duke) who mainly performs representative and civic roles but does not exercise executive or policy-making power.[4]
> but does not exercise executive or policy-making power
This is largely but not entirely true. It's also largely true by convention/Realpolitik ("try and exercise your powers and see how long you stay king!") and not by law.
> absolute monarchies (in which a monarch is the only decision-maker)
The monarch was essentially never the only decision maker in absolute monarchies. Nominally, yes. In practice, not at all. Going against too many established interested was seriously bad for the monarch's health.
Zoning is the bigger issue than interest rates with the housing market. Most hand over fist growth happened in our cities when there were higher interest rates but also plenty of zoned capacity. Zoned capacity is barely ahead of present population in cities with exorbitant housing prices today.
For starters we have cancelling and ripping up clean energy projects, introducing serious uncertainty about tarrifs, increasing unease for any immigrant (and even non-white citizens).
Avg monthly "clean energy" jobs so far:
- 2023: ~3.38M
- 2024: ~3.45M
- 2025: ~3.42M
Any impact to the economy due to "green job project cancellations" wouldn't have surfaced yet.
Uncertainty about tariffs: it was already on the books to earn $2.3T (conventional) / $1.5T (dynamic) over the next 10yrs, and inflation is far more under control than it was last year despite the tariffs. Of course legal challenges have disrupted it now. This is also completely ignoring the massive investment foreign countries/companies are making on US Soil to employ US employees.
Edit: having said that, "these economic problems are ENTIRELY the result of bad policies". That's a very bold claim, which warrants some strong evidence. No one has provided any strong evidence that it's ENTIRELY from bad policies.
I don't the current economy is "entirely" the result of bad policy, but I do think it is the primary contributor. I read/listen to a lot of economic commentators as an interest of mine, and there is pretty broad agreement that tariffs are the main cause of inflation failing to tick down to target this year. There also seems to be consensus that the manufacturing sector has been harmed by tariffs and immigration policy rather than helped.
In my opinion, the AI hype cycle has temporarily buoyed the economy from more serious pain. If significant economic gains aren't realized from it soon I think we'll begin to see that pull back.
I do, however, think a return to ZIRP by the Fed would result in a significant economic boost. Psychologically, everyone remembers how advantageous low interest rates are and I think it could result in real investor/borrower optimism, temporarily, if we go back to that. Unfortunately, that would likely mainly stimulate the demand side of the economy, and not as much supply. I don't have high hopes for how that would affect inflation.
Yes, no major disagreement here. You can also point to the Us debt/deficit as another major storm cloud on the horizon. Trump is the worst offender on that, but far from the only one.
I'm as anti-trump as anyone. He's doing tremendous harm to our economy and our society. Your anger is making you see things that aren't there. All I did was question the assumption that our economic problems are ENTIRELY the result of bad policy. Some how you jumped to some very wrong conclusions based on that tiny shred of information which wasn't even about Trump.
You coyly suggested that there were other contributors at play to multiple people who suggested what bad policies are causing the economic issues and then didn’t provide them until called out.
You’re running partisan defense when you act that way
> The good news is that these economic problems are entirely the result of bad policies and can be reversed.
I think one danger for western countries is having governments that just move from one bad policy of one kind to a bad policy from the other end of the political spectrum. Look at what’s happened recently with resignations at the highest levels of government in multiple countries. And in America, if Trump gets replaced by someone who is put forth as a reaction to him, are they going to really do any good? Even if they had great policies, they’d be in danger of being undone a few years later. There isn’t the same guarantee of consistent forward progress that a country of China seems to be enjoying.
There will be no "reaction" to Trump, because all such policies would be struck down by the SCOTUS. This version of America is the one we're going to live in for a while.
If we were to also raise broad based taxes, it would allow the Fed to cut interest rates, stoking long term investment, loosen up the housing market (which would allow more people to move), lower the Federal deficit, and improve the trade balance (as if that actually mattered).