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The Trump Triumph Challenges Economic Predictions for 2017

Trump's corporate tax cut is a gift to himself like his corporate jet.

The triumph of Donald Trump as the champion of a revolution against the status quo assures huge economic changes in the coming year, which I’ll list below. His victory struck a shocking upset to the globalists who have steered the last sixty or more years of world history, as I reported in an earlier story about George Soros mourning over the damage Trump will bring to global governance by unelected elitists.

For a short time, we should see some improvements. However, numerous structural flaws in the US economy ultimately assure economic collapse because those flaws have not been dealt with for decades, are not being dealt with in any of the Donald’s plans, and are most likely too far gone now to ever deal with. Trump’s plan will even make some of those structural flaws much worse in the long run.

What I describe in these economic predictions has considerable contagion possibilities for the rest of the world. While emerging economies have grown to where the US does not have the near-total economic dominance it once had over the world, it is still the world’s greatest economy (at least, in size). So, it is still true that, when the US sneezes, the rest of the world catches a cold … if not pneumonia.

What Trump’s victory changes most is the timing of economic collapse because his economic plan is bound to bring temporary lift, even as it worsens some of the structural flaws. The effect of the flaws I  wrote about will take more time to develop than the improvements, but probably not much more time.

Let’s start with the positives:

 

Positive economic changes that are certain to result from the Trump triumph

 

Here is a list of economic changes, which I think are certain to bring some boost to the US economy in 2017 and will likely delay my epocalyptic predictions:

 

  • It is certain that Trump’s tax plan will happen. While it may not happen entirely, something very close to it will certainly happen because Republicans have never seen a tax-reduction plan they didn’t like. Republicans hold certain economic convictions as tightly as religious dogma: they believe tax cuts will pay for themselves and so will not create huge worsening of the national debt. Every time they make tax cuts, they claim the cuts will stimulate investment, which will stimulate the economy, which means more businesses will produce more revenue, which means there will actually be more tax revenue, not less. They have never been right about this yet. We have NEVER made tax cuts without increasing the federal deficit under any president. That fact, however, never kills this dogmatic belief. Republicans also believe with religious fervor that targeting tax cuts to the rich in the form of corporate breaks and particularly capital gains cuts will create new jobs and trickle wealth down to the middle class and the poor. The fact that real middle class wealth has stagnated or even shrunk during every past episode of trickle-down economics never matters. Belief trumps truth. Since Republicans control the entire legislature and the executive branch and will be changing the balance of the Supreme Court, it is absolutely certain we will see major tax reductions that will come as our third and greatest round of trickle-down economics. The plan coauthored by Larry Kudlow has all of his support with conservatives and Republicans, too. Even if Trump were removed from office, most of his plan would become law.
  • The stock market will rise … for awhile, at least. What we know from trickle-down economics is that it certainly does stimulate the stock market. The money that is saved on capital gains and corporate income and that is repatriated in corporate income from overseas largely goes into speculative gambling in stocks. Very little of it goes into capital construction or business expansion. Even before any of Trump’s proposed changes have happened, we are witnessing how the mere hope of such changes has caused a huge increase in stock-market speculation (both volume and prices) as investors try to reposition for this new reality. There was a brief stock market slump right when I said there would be once people started to question whether Trump’s plans would be enacted, but it didn’t last long because, as soon as Trump got into office, he moved rapidly via serial executive orders to start implementing many of his promises, quickly building faith that he will carry out most of them rapidly and with great determination.
  • It is unlikely that Trump’s infrastructure stimulus plan will make it off the ground in 2017. While Republicans are certain to approve tax breaks, they are not big on massive government spending increases. Trump will find some strong resistance among Republicans to his increased spending; at the same time, Democrats remember well how Republicans battled against Obama’s plans to increase infrastructure spending in order to stimulate the economy. According to junior Republicans who eventually came out against Speaker of the House John Boehner, this was partly because Boehner and the Republican guard didn’t want Obama to get the credit for economic improvement. They put the good of their party over their nation’s good. So, Trump will likely find a lot of resistance there, too, as Democrats return this tactic.
  • Spending will certainly increase in one area — the military. Republicans have proven for decades that no deficit is too big if it is going toward building a stronger military. They find support among Democrats for this, who have just as many wealthy donors in the military-industrial complex as Republicans have. They also find a lot of support among the general public — particularly conservatives — because conservatives like for America to be the strongest nation on earth. Besides being macho, defense and security have a strong argument behind them in a world full of terrorists. While Trump seeks to improve relations with Russia, he is also antagonizing relations with China. The US, under Obama, was already acting more aggressive in the South China Sea in order to keep China from controlling secondary trade routes. Trump will build on Obama’s lead there, and his trade battles with China may intensify conflict with China overall. Trump has stated loud and clear that the US military will be ready to look out for Japan’s national interests. At the same time, North Korea is picking a fight in order to beat its chest, which presses Trump to take some action against them. That may come about just as sanctions, but could involve some military saber rattling or countermeasures from the US that could escalate. Trump will take a greater lead than Obama did against terrorists in the Middle East, as he was critical of Obama’s restrained and somewhat ineffective efforts. Expect a more aggressive anti-terrorist policy. That means, as under Reagan, increased military spending will be more important than increased infrastructure spending, but military spending also stimulates the economy by creating jobs and boosting a number of major stocks.
  • Regulatory changes will also lubricate the economy to move forward with less friction.

 

Economically, those are all strong short-term positives, regardless of what they bring further down the road.

 

Economic collapse will happen on Trump’s watch, probably later this year

 

In spite of these certain positive economic changes for 2017, there remains a countervailing globalist force that has already presided over numerous economic failures of its own making. These people will relentlessly attack Trump, and they will seek to pin their own failing recovery on him. Such an entrenched counterforce makes it impossible to say how much temporary good Trump’s economic policies can bring. Trump starts in a world where globalists have long ruled the nation’s central bank, which they have positioned to create US economic hegemony. Trump can change that over time, but probably doesn’t have time enough. Also, his lineup of Goldman Sachs executives in all financial offices of the US says that he won’t. Gobalists are also deeply entrenched in US intelligence agencies and the military leadership, where they have engaged in relentless nation building as they seek to shape the world toward the interests of their own political and financial establishment while also working in alliance with the interests of the UK and the rest of Europe.

They will do anything they can to restrain Trump’s plans to drain the swamp in Washington and as well as his plans to align with Russia and his plans to diminish nation-building efforts. How far and how quickly he can push against their resistance depends entirely on his and his followers’ ability to overcome deeply entrenched globalist powers that have steered the nations of “the West” for decades. All globalists in the world will oppose Trump.

Globalist are first trying to groom and massage Trump into their ways. They are also trying to thwart him through fake news in the media, slanted stories, political attacks, and by stirring up chaos and counter-revolution wherever possible. Even Obama has formed a foundation to try to muster as many protests against Trump as possible. To the extent those efforts fail to stop or change Trump, the financial establishment will, in the very least, try to make him the scapegoat for the failure of their past eight years of badly misguided recovery efforts.

If they cannot impeach him, as some are already working toward, the ultimate risk for Trump and his supporters is that the establishment will assassinate him. This risk is real enough that, for the first time in the history of the US (that I am aware of), we witnessed the nation’s largest mainstream news source (CNN) decide that one of the most important non-news stories it could trump up during the inauguration was a “what-if” story about how US leadership roles would be assigned if  Trump was assassinated on the day Obama’s leadership expired but just before Trump got inaugurated.

That such a concern made it as a main CNN story shows there are many mainstream thinkers who see assassination as a realistic possibility, not as  some hysterical conspiracy theory. CNN  saw it as enough of a likelihood already in the public mind to make it useful fake news (fake in the sense that it filled news time but is not news at all, but (for the moment) pure fiction that teases liberal minds with a kind of “final solution” hope). Trump is Hitler, according to liberal mass hysteria (just as much as Hillary Clinton was Hitlery to conservatives). Both sides routinely demonize their opposition. As the flagship of the liberal media, CNN planted deep the implied seed of hope that Trump might be taken care of with a final solution aimed just at him. Of course, they would deny that they were raising incendiary hopes among liberal Trump haters.

Now that the revolution and counter-revolution have begun, there is no way I can say which force will dominate by the end of 2017, given the immensity of the forces, the entrenchment of the old guard, the resolution of the Trump revolutionaries, the huge flaws existing in the US and global economies, and the economic headwinds that I’ll lay out in my next article. What I can point out is that the globalists clearly begin with the upper hand by far, and they are certainly not going to give up. In fact, they are only beginning to implement their strategies to overcome Trump because they did not believe they would lose the election.

One of the things I said throughout the past year was that my many predictions about the Epocalypse (the epic and epochal, economic collapse into apocalyptic times) for 2016 might be pushed back until after the election because the Federal Reserve and the Obama administration would do anything and everything possible to avoid having their “recovery” fail on their watch, lest their failure should assure a Trump victory and destroy their own legacy. If that meant using Fed funds to buy up oil through banks to manipulate oil prices upward or meant the Fed would influence or coerce proxies in other countries to buy up US assets to support the stock market — whatever it might take — they would do it all … behind the scenes.

Shortly after saying that, I pointed out in early 2016 how the Federal Reserve board held two back-to-back “emergency, closed-door meetings” (as described on the Fed’s own published calendar) followed by an immediate “emergency meeting” between Fed Chair, Janet Yellen, and the president and vice president of the United States. After those meetings, the stock crash that had begun in January and somewhat recovered in February evaporated, and stocks moved continuously toward recovering all lost ground. We were never told what any of those meetings were about, but meetings between the Fed chair and the president rarely happen, and meetings including the V.P. almost never happen. That indicates some level of emergency that the vice president also needed to be fully informed on.

It has also been my stated belief all along that, if Trump did win (which I gave a better likelihood than Hillary), the Federal Reserve would capitalize on it. I have no doubt that globalists have plans for every contingency. With their recovery failing again (as we saw GDP cascade in the final quarter of 2016), the establishment would be more than happy to let it crash after the election, but most likely not until after Obama was out of office and Trump sat in the oval office.

I have said for years that the Fed’s “recovery” during the Obama administration can only live as long as artificial life support continues. That support still continues intensely through the Fed holding indefinitely the huge expansion of its balance sheet (which leverages out to an historically enormous pool of new money continuing to float the economy) and through the Fed’s continuance of extremely low interest rates. (While rising now, interest rates still remain the lowest they have been in modern history, outside of the Great Recession.)

I’ve believed that, if globalists faced a Trump victory, they would even collapse the economy on purpose, if it were not already failing, because they would love to decapitate their newly risen opposition by making people believe that the entire global economy collapsed because of Trump’s interruption to their plans. They would hope that would slam a lid on revolutionaries against globalism, teaching them once and for all that their individualism and nationalistic, anti-socialist ways bring only rapid calamity.

I think they recognize that, if a global collapse happens on Trump’s watch, many people will look desperately for a global solution from those who appeared to be having success with restoring the economy before he came into office. Many people do not see that the Fed’s recovery was only kept alive by endless and massive administrations of artificial life support. Many people also do not see or believe that the economic flaws of the US and many other nations are fatal or even important — such as the size of national debts, the vanity of fiat currencies, the dangers of financing national debts with massive infusions of such currency. They don’t believe that expanding personal debt to individual limits leads to enslavement as does national debt — enslavement to bankers. They even believe that banks and government have done the right things to reduce the risks of another economic crisis like we had from 2007 to 2009 in the Great Recession.

Therefore, it will not be hard to find a majority of the populace that will join the mainstream media and the establishment politicians in blaming Trump when the entire global economy goes down. Trump’s provocative mouth, his brazen plans, his sometimes brash execution of those plans, along with his narcissism and often clownish behavior, make him a ripe target as a grand scapegoat. (I think even most conservatives would have to admit to themselves here that, if Trump were carrying out a totally liberal agenda, they would find plentiful stock for ridicule in Trump’s showy, boastful, and brash behavior. It won’t be hard for his opponents to do the same.)

So, if the establishment doesn’t assassinate him (now a mainstream idea), they will likely make him a scapegoat to carry away their own sins. All of that places the likelihood of economic collapse sometime in 2017.

 

 

  • QEternity

    Trump has been “sounding the alarm” about the “great big mess” he inherited. If it all goes in the crapper, he has plenty of soundbites and dates on which to refer when pressed by the presstitutes about it being all his fault.

    For now, I believe the collapse is off a ways as we have all the EU fun ahead of us. And if the Eu does actually break up, the flight to the dollar and Us will accelerate.

    • I think that flight to the dollar could be a saving grace for the US, at least for a bit; but it’s hard to say because Europe’s breakdown will hurt us in other ways, even as it possibly sends money into US stocks and bonds.

      We’ll lose trade. The euro will devalue, making our own exports harder and our own domestic purchases will be challenged by cheaper products from overseas. Our own banks are likely interwoven enough to be damaged. Maybe even the Federal Reserve since all central banks have worked in consort to bail out each other’s nations (where they are not allowed to buy certain assets in their own country but can elsewhere.) We don’t know because the Fed is never investigated. The richest bankers in the world are just endlessly believed at face value for anything they report to congress.

      The fall of Europe won’t do anything to boost our own housing market unless European money also flees into real estate, which is certainly possible. And the US could stumble first at any minute, which would end its safe-haven possibilities.

      It’s really hard — probably impossible for anyone — to say how it will all come down because so many different kinds of markets in so many nations are involved, as well as banks and government treasuries. A flight to the dollar in the form of treasuries and stocks is likely to be part of the chemistry, but I lean towards thinking the entire thing is such an interwoven mess that everything comes down and money just evaporates as easily as it was created out of thin air. I think the pending crash is going to be more complex than anything the world has ever experienced.

      On the other hand, it could just slough away one chunk at a time over a period of years. We could see a few big jolts down in various places and then see things stabilize for a short period and then fall much further. There are just so many pieces ready to slide (begging to slide) all over the world that it’s hard to say how it all gives way, especially since each piece depends somewhat on other pieces for support; so a total systemic collapse is not unlikely.

  • Hi, Dave. I haven’t commented in a while, but thought you should see this link of David Stockman predicting that the end is near … https://www.youtube.com/watch?v=7xgNncFHAng

    I found it on ZeroHedge: http://www.zerohedge.com/news/2017-02-26/stockman-after-march-15-everything-will-grind-halt

    Regards,
    DE

    • Glad to see you’re still hanging around, Eye. I thought maybe I had lost you because of missing my timing on the big crash.

      I watched the Stockman video shortly before you sent this. It is quite a lot more cataclysmic and definite in time than he usually is, and I found it reassuring in terms of my own revised post-election estimates that he sees the same scope and timing I see coming. Though he puts the start right in March when I though things might still be getting along on continued hopes, he puts the real fall-apart in June, which is where I am inclined to think things will finally build to the point that they just cannot be held together … even by Trump’s big plans.

      While Stockman has long seen the end coming, this is the first time I’ve seen him place it in the year that it current to when he is speaking and with such assuredness.

      I think the electioneering efforts have all run their course, so we won’t likely have attempts by the Fed to band-aid things together.

      Definitely the strongest warning I’ve ever heard Stockman give.

      –David

  • Kyle Thomas

    Trump must know that a collapse is inevitable, and that the enemy would like to pin it on him, so it’s clearly in his interest to precipitate a crash sooner rather than later. The enemy, on the other hand, need to hold the system together for as long as possible so that they can pin the collapse on Trump. My guess is that Trump needs the crash to occur before the summer, and the enemy needs to hold it together for the rest of the year. Do you have any thoughts on the optimal timing from Trump’s point of view? What is he waiting for?

    • Well, those are good points, Kyle, but I really don’t know what Trump knows or what is thinking is. He clearly believed the economy was on a path toward crashing when he was campaigning. However, he may also believe that his plans are so great they can save it. If the latter is the case, I’m surprised very much that he and congress both APPEAR to be putting changes to Obamacare ahead of tax changes. Congress doesn’t plan to do any thing on the tax issue until August, and Trump can’t make any of his tax changes without congress.

      I have been wondering why Trump was not pressuring them to get with his tax plans first since they are far more important than Obamacare. So, your suggestion here helps me make sense of that delay. Maybe, as you say, they are delaying the promised tax changes because the are certain the economy is going to crash anyway, and they don’t want it to look like their changes failed or EVEN CAUSED the crash.

      As you say, the sooner it crashes, the more Trump has some hope that Obama and all who came before him will get blamed, instead of him. (I don’t think that will help him skirt the blame even though it should because all Democrats will blame him entirely, regardless, by saying it was his big mouth that spooked everyone and caused a crash, and the media will certainly blame him entirely. The NEVERTRUMP Republican establishment will certainly blame Trump. But it is his best hope, if he believes as I do that the economic crash at this point is unstoppable. We have dilly-dallied away eight years, totally to the blame of BOTH parties, that we could have used to restructure the economy; but no one in the political-financial establishment wants the kind of restructuring the is needed.

      If Trump and his fellow Repubs actually intend to delay the tax revisions until August, the economy could crash sooner than I have indicated, but I am leaning toward June or later.

      –David

      • Kyle Thomas

        I guess we have to consider the possibility that Trump is deranged enough to believe he can fix America’s problems. He has personally done very well out of debt and bankruptcy, and he does seem to think he can run the show as if it were just another big company totally under his sole control. Even if we can’t figure out if this is the case, the enemy will certainly have figured it out. And if it is the case, they will want to trigger a crash before it occurs by accident. Either way, I don’t think we will have to wait much longer.

  • Roxy Lewis

    Sooo… what are your predictions on precious metals price? Thought you would have made your accurate post predictions since you were published on a gold website.

    • Can’t help you much on that front, Roxy. Nor can I direct you as to where to go because I haven’t found anyone whose gold-price predictions seem dependable. Two big reasons for that are as follows:

      1) The market is so rigged by central banks. One thing I have written about gold from time to time is that central banks claim it is not worthy of being a standard, and yet they literally own tons of it. One of the reasons I suspect they own so much is so they can control the price of the one resource that is the greatest competitor to their own proprietary stock-in-trade, which is money. When people flee money, it is often to gold. In such instances, central banks need a LOT of it in order to be able to throw enough of it off like ballast to suppress the price of gold and make it less attractive as a competitor.

      2) Many of the people predicting gold prices have some they want to sell you. So, they always lean toward saying it is going to be going up. If it was really going to be going up, wouldn’t they want to hold onto all that they have? Many, of course, are brokering gold, so they may own as much as they can, but they still make money convincing you to buy so they can broker a deal for someone else. So, it seems to me that most of the gold price prediction I see runs way overoptimistic. When they are right, #1 above kicks in.

      I can’t tell you how many different people I’ve read in the past seven years who have said “gold is going have a huge rise … maybe to $5,000 in the next 1-2 years.”

      Predicting a single commodity like gold is like trying to predict a single stock — harder in my opinion to do than to predict the general direction of the stock market. Thus, I’ve never tried predicting the direction of any one stock. Even predicting the general direction of the stock market is harder than predicting the general direction of the economy. As we’ve seen many times, the stock market no longer faithfully tracks the economy. It often ignores all economic news out of euphoric hope, or it even runs counter to it because the downfall of the economy now causes central banks to print money and give it to their member banks to buy stocks. During the past decade central banks have manipulated the stock market even more than they’ve manipulated the gold market.

      –David

      • Roxy Lewis

        Up, up and away? Is that where this market is going as it makes almost daily new highs. It feels like everyone is drunk in Trumpania and the economy is doing really nothing but appearing irrational while the populace is exuberant and diving back in. The little guys all were burned in 2008, lost their homes, businesses and 401k’s and are sitting on the sidelines again feeling taken by the few that run and ruin the world. I can’t wait for the markets all to crumble and burn but can see it WILL not happen and if it does only the latecomers and little people like myself are the ones that again will get squashed like the bugs to the few.

        • I understand your frustration and wrote about it in the following article: http://thegreatrecession.info/blog/2017-stock-market-predictions/

          In that December article, I predicted the stock market would slump in January but probably not crash. It did slump for the better part of January, but not as much as I was thinking it would, and then rose quickly toward the end of the month.

          The main thing I talked about in that article was the Trumpmania (or irrational exuberance), and refer in the article to an even earlier one I wrote in the fall stating the market was in a state of irrational exuberance because it was rising on wild hopes, which could easily fail to come through. It was NOT rising due to any economic reasons for a rise. The economy, argued, was actually getting worse. (Subsequently GDP data showed us how much worse it got.)

          So, if Trump’s tax plans get enacted quickly enough, the exuberance will likely continue, and the market may keep rising; but there are so many things that can delay his tax plans or counteract them that it is hard to say if his plans will have much chance to do anything. In an article I am still working on, I’m laying out the many things that are likely to assail Trump’s best-laid plans.

          Overall, my take in both of the articles mentioned is that the rise is irrational because it is running completely opposed to the way the overall economy was running in the fall and is facing a lot of headwind in the year ahead, so that I think the economy will start falling apart in an unstoppable manner later this year, and I suspect that will finally create enough concern to break the irrational exuberance in the stock and turn it into panic — the economy and the stock market being two very different things that are often confused because the stock market at one time was a fair gauge of the overall economy.

  • Recyvuym

    US GDP

    January 2017: 1.9%
    April: negative or neutral
    July: neutral or middling
    October: negative

    January 2018: negative
    April: negative
    July: negative
    October: negative

    January 2019: negative
    April: negative
    July: negative
    October: negative

    January 2020: negative…

  • jakartaman

    Agree with a lot of what you stated
    I was for a long time believing we were on the verge of Economic collapse.
    I now believe that collapse is inevitable, however it is going to take awhile.
    We will first see south America go under, Europe is on the ropes and will be next all this will take time like watching a slow train wreck.
    If I had a crystal ball i would say at the end of Trumps first term.
    All bets are off if we have a black swan event – N. Korea – Iran etc

    • Just working now on the rapidly increasing likelihood of war with Iran. Many factors are synchronizing rapidly in that direction. It will be part of the “Headwinds” article I have been pulling together.

      • jakartaman

        Good – looking forward to it!