Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
Gold Price During Hyperinflation - 12th May 21
Stock Market Extending Phase Two? - 12th May 21
Crypto 101 for new traders – ETH or BTC? - 12th May 21
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Does Trump Have a Magic Wand? I Simply Don’t Buy It!

Politics / US Politics Jan 25, 2017 - 10:51 AM GMT

By: Harry_Dent

Politics As Trump was inaugurated, it seems most people are feeling better about the economy. Even a more liberal analyst said yesterday in an interview that he thought Trump should raise the minimum wage to $15 to stimulate demand!

Seriously?!

A Bernie Sanders, far-left strategy in a Republican Congress?

How delusional can you get?


The problem, as usual, is that economists, analysts and politicians don’t understand the real causes of our economic malaise since 2007, including Trump.

It’s not primarily business regulations, or higher taxes. Altogether, U.S. personal and business taxes combined are less than any major country in Europe, or Australia or Canada!

The problems are…
  1. Slowing demographic trends (a factor even more prevalent in Europe and East Asia);
  2. And unprecedented levels of debt and entitlements (here and everywhere else).

And there’s nothing near term President Trump can do about either of those things!

I think Trump is setting himself up for a massive disappointment in the year ahead.

Since we’re not in a supply-side crisis like we were in the late 1970s and early 1980s when Ronald Reagan came in, those solutions aren’t the answer. They worked then. They will NOT work now. And who are Trump’s chief economic advisors? Larry Kudlow, Stephen Moore, and Art Laffer – all zealous supply-siders.

Instead, we’re in a demand-side crisis like what we saw in the early 1930s with global oversupply. In such a situation, cutting taxes will only create even faster growing deficits and debt, not investment in new capacity and jobs.

Besides, does Trump really think a Republican Congress is going to just approve of massive tax cuts and infrastructure investments that raise our already out of control public debt, just as the debt ceiling has to be raised above $20 trillion?

No way!

It’s been doubling every eight years in Republican and Democratic administrations and, at this rate, will be nearing a cool $40 trillion just eight years from now.

Debt bubbles always create over-supply in business and falling demand from excessive consumption and debt burdens. They also create bubbles in financial assets that will always burst.

Donald himself said we have a big fat, ugly bubble… what is he thinking?!

He’s walking into a world of ever-increasing geopolitical conflicts, increasing threat of trade wars – especially created by him – declining demographic trends and crushing debt burdens.

And you’re going to fix that by cutting some regulations and reducing taxes? Reducing taxes just shifts the pie from government to business – and larger businesses more typically.

Of course not!

All that will do is make that top 0.1% and 1% even richer and do nothing for the average worker that elected Trump.

I recently wrote to you about the jobs market, which is a lagging indicator, not a leading one. We’ve simply been hiring back workers that lost their jobs massively in the great recession, and now we’re nearly done on that at 4.6% unemployment.

Do you know what the natural rate of workforce growth is once we hit full employment? NEGATIVE into 2023 and then only around 0.2% after that for decades.

Since older workers don’t get more productive, we have gone back to just 0.4% productivity rates. That’s nearly as low as at the bottom of our last long recession in the 1970s and early 1980s when the Bob Hope generation was retiring rapidly.

Baby boomers have been retiring predictably since 1998. With that has come declining workforce participation rates. It peaked at 67%. It’s now at 62%. It’s heading towards 58% by 2024 – over Trump’s potential two terms.

So how do you create 4% growth from a declining workforce, with declining productivity?

YOU DON’T!!!

There’s no question in my mind that Trump’s promises will lead to the biggest economic disappointment this side of the Great Depression.

The only questions I DO have is how long it will take the markets to figure out this out for themselves…

Anytime now, Italy and southern Europe could default.

China’s massive bubble could blow – maybe even triggered by Trump tightening their trade with the U.S.

Or, what if we suddenly saw job growth drop from that 150,000 to 200,000 each month to just 100,000 or even much less? (Never mind that payroll tax data already suggests job growth is lower than reported.)

President Trump was inaugurated today. I sincerely wish him the best of luck. But I have serious doubts that he’ll last his first year without a major debacle and backlash.

At this point I would give the Trump rally through about July and then we could see one of those first, devastating bubble crashes that sees the markets down 30% to 40% in a few months.

I’ll reserve judgement on that until I see some divergences build in the markets, and small caps are likely to be where that happens because they’ve rallied the most irrationally since the election.

But I just don’t buy all the Trump euphoria. And am surprised at how many intelligent people do.

God bless America… or maybe that should be, God help America.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2016 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in