I realize that not all of my readers are happy about the election results. Sadly many people believe the lies about Trump being a Nazi (false) , a racist (false), having some kind of anti-LGBT agenda (not sure why they believe that one), being anti-women (eye roll), or that he wants to make abortion illegal (not true). I really wish these people would get out of their echo chambers and find out why so many democrats have left the party.
We all know that the economy is the biggest concern for most Americans. Peace and safety are also important. LGBTQ glorification and celebrating abortion are way down on the list of priorities. Thankfully the voters have spoken loud and clear that they trust Donald Trump more than Kamala Harris when it comes to making the economy better.
However I think we have to be realistic. While the stock market had an immediate positive reaction to Trump’s victory, that doesn’t mean Trump can wave a magic wand and make wages go up. And that is what will have to happen for people to really feel like things are getting better. The focus on inflation obscures the fact that inflation can improve while leaving prices still high.
Prices can only go down so much and so fast without triggering a recession and unemployment. The best solution to helping people with high prices is for other business expenses to go down so businesses can raise wages. The other option is for corporations to take lower profits, reduce executive salaries and pay less to shareholders, which would require a change in perspective.
Obama was elected on a promise of hope and change in 2008 when the economy was wrecked by greed and bad policies. But the biggest change was that the government took a huge step forward in economic interventionism. Some might even say that was the plan all along.
While these reforms have protected the economy from immediate collapse, they can create a moral hazard by reinforcing expectations that the government will always step in to prevent financial failure. This perception can encourage banks, corporations, and individuals to take on more risk, potentially leading to future instability. It’s a challenging balance for policymakers, who want to stabilize the economy without fostering over-reliance on government support.
We are now in a similar spot where the economy is good for the rich but not the working class, with wealth accumulating in the hands of a few groups, tech entrepreneurs, investors, bankers, and the companies who get federal subsidies for specific industries. Another group that is doing okay are the recent retirees who have paid-off houses and pensions. The rest of us, young and old, are struggling to cope with extreme inflation.
The democrat plan for this cost of living problem was to give more and new kinds of tax credits which is basically a new type of welfare program for the working class. But by doing this, they are essentially subsidizing ALL businesses. Tax credits for individuals act as indirect subsidies for businesses by increasing consumer purchasing power and encouraging spending in specific sectors, such as healthcare, child care, education, energy efficiency, and electric vehicles.
Rather than risk a recession and letting market forces slowly cause businesses to lower prices to where people can afford them, they can keep prices high since the government is supplementing the incomes of millions of people through tax credits. Plus they have been dishing out federal grants left and right to make it look like the economy is doing well. But this is unsustainable .
Unfortunately there is no quick fix for this screwed up situation. Trump will have to use wisdom and courage to say ‘No more’ to demands for money from both corporations and individuals. But he can’t cut it off too quickly or the economy will crash. And some investments actually do pay off in the long run.
What is needed is fiscal responsibility. Call in the bean counters and set them to reducing waste, not wages. Trump has not always done well at reducing spending. While Covid was not Trump’s fault, his rescue plan and vaccine policies were part of the $6 trillion spent on Covid that helped create the inflation we are currently experiencing. The Covid dollars directly created inflation and the supply chain problem made it worse. Trump’s 2017 tax cuts were helpful, but they also reduced revenues right before Covid happened. Spending cuts needed to happen, too, but that is never easy. He has a tough task ahead of him and it will take time.
Blue Skies and Green Pastures 
Of course greed contributes to prices. I’ll admit that, and I voted for Trump. I don’t know how you would eliminate greed, other than by lobotomizing every human being on Earth. I think it’s facile to blame “greed” when poor monetary policy, and heavy regulation, seem to be the biggest causes of inflation. You can’t eliminate greed, but you can change monetary policy and relax regulations.
As for subsidies, when I was shopping for a hybrid car a few years ago, the government was offering a $5,000 subsidy for buying one. At the same time, car dealers were charging exactly $5,000 above sticker price for hybrid cars. So I definitely agree with you about subsidies contributing to inflation.
When I say greed I’m referring to the way prices rise exponentially after the Covid trillions were created, but wages didn’t . I’m a capitalist, but I think there are reasonable limits . People gotta live.
I guess there were a lot of people who got rich off of Covid, but much of that was with the government’s help. This was a classic case of government picking the winners and losers. For instance, restaurant owners lost and vaccine makers won.
By vaccine makers one should say poisoners.
Could be. There’s a lot of wariness people have had over vaccines that were not thoroughly tested, that they were forced to take.
The vaccines are being thoroughly tested, only those who are being tested were not told this. It has been a Great Vaccine Experiment on the world to prove once and for all that injecting toxic substances into people is not a good idea for health, only big pharma wealth.
What a sad thing, that’s been perpetrated.
Paula, I was surprised you didn’t mention energy. When asked in interviews how he would help the economy, Trump immediately answered, “Drill, baby, drill.” Just today I heard him say we have more “liquid gold” than any other nation in the world, and once we’re energy independent – when we stop depending on foreign oil from countries that hate us – the price if transporting goods will go down, lowering the prices of virtually everything else. I’m not economist, but that makes sense to me.
Oil prices dropped today . 👍
Let the ripple effect begin! 😃
The current inflation is the result of two things (for almost every country):
Because of Covid lockdowns and insane covid regulations the econpmies of the countries that implemented these insane policies would have crashed and they would have fallen into recession. To prevent this these countries artificially juiced up their economies by printing money like crazy. In the Eurozone alone money supply grew within three years by a whopping 25%. In the US it was even more.
As soon as the lockdowns ended and people started to spend more money again, inflation
went up sharply.
The other thing that was a big factor was energy production:
For instance, global oil production was pre-pandemic 84 million barrels/day.
Post-pandemic it was 80 million thanks to “build back better” and “green new deal”.
US prodcution drooped by roughly 2 million.
The Ukraine war and economic warfare against Russia didin’t make things better.
Just by increasing production of oil/gas and by ending the costly war in Ukraibe and by ending economic warfare alone, prices cam be brought down substantially.
Falling prices do not cause recession but they are symptoms of recession which means a decrease in economic activity and a decrease in demand which naturally leads to falling prices.
Making goods cheaper by producing more of these goods has never caused recessions.
Yes, we shouldn’t expect miracles and yes. government spending needs to be reduced but making energy cheaper and ending costly wars is a good and effective first step.
Corporate profits are at an all time high and so is the stock market. While a good economy is good for everyone, it’s very good for investors and CEOs. One reason people want to deport immigrants is because they depress wages. Let’s not let the corporations off too easily. I’m a capitalist but greed is real.
Illegal immigrants not only depress wages, they also are costing the taxpayer who has to pay for their housing, healthcare education etc.
While corporations are reaping the benefits of cheap labor the tax payer carries the burden of illegal immigration.
By no means am I suggesting that we should shed tears for corporations but the problem is not greed per se.
Greed has existed since the beginning of mankind and it will continue to exist.
The question is whether a system, a civilization can channel it in ways that ultimately benefits all.
In socialism the only way to please one’s greed is to steal from other people.
In capitalism one can please one’s greed by providing something other people are willing to pay for volontarily.
The problem is what is called crony capitalism where corporations in collusion with corrupt politicians eliminate competition and enrich themselves at the expense of the tax payer and at the expense of harming the country.
Markets bring only the greatest benefit for all if there is competition, competions which corporations and monopolists hate.
There is also a moral component but that would be outside the scope of my comment.
Free markets can only function if there is not this corrupt, incestious relation with politics.
Exactly . Moral hazards have created a huge problem.
I think President Trump’s energy plan could really impact the economy quickly. In my state, we have some of the highest gas prices in the nation, in part because of our state gas taxes. This causes groceries to go up and impacts the cost of just about everything. This is now the 3rd most expensive cost of living state in the nation, after Hawaii and California. If gas were to become plentiful and not so controlled by government, our cost of living would drop.
I’m hopeful! Gas is cheap here , but groceries are expensive.
It’s interesting to note that nearly every word can also be related to England’s current situation. It seams that greed is the current trend.
Very nice post…Sorry I’m late to this. To me it was about 4 things. Economy, Immigration, Ideology and that Harris was a bad candidate. I don’t mean that in a bad way but she would not say why she suddenly went moderate out of the blue except it was to get elected. Personally I feel good about the election.
Plus the media just tilted too far left and middle America are not ok with all of the political correctness (equality = racism now). Plus I think America is more secure than it was in October…just by countries knowing he is about to take over.