President Donald Trump regularly boasts about the strength of the American economy -- but Rolling Stone columnist Matt Taibbi thinks that cracks are starting to form that will soon plunge the United States back into a recession.
In his latest column, Taibbi says that three factors -- rising interest rates, the GOP's massive tax cut and Trump's own love of tariffs -- are likely to send the U.S. economy heading downward in the near future.
When it comes to interest rates, Taibbi notes that the Federal Reserve has been signaling that it will finally be running a tighter monetary policy after it spent most of the past decade pushing interest rates down to effectively nothing.
"The Fed is taking about $50 billion out of the economy every month, and now raising rates not just above zero, but close to (and perhaps even beyond!) neutral," he writes. "The free money era is over... Trump must be cursing his bad luck."
The GOP's tax cuts, meanwhile, have massively slashed the amount of revenue coming into the federal government, as the deficit of $488 billion in the first quarter of 2018 broke the nominal quarterly deficit record -- which was originally set back in 2010, when the United States was in the middle of the worst recession in decades.
Combined with the Federal Reserve's actions, Taibbi speculates that Trump will be forced to "pay interest on the giant sums he will inevitably have to borrow to pay for his idiotic tax cuts."
And finally, Taibbi notes that the president's trade war with China could be particularly disastrous given that China holds so much of America's debt.
"But what if Trump’s big populist gambit announced in September — slapping 10 percent tariffs on $200 billion of Chinese products — hurts the Chinese economy to the point where they can’t afford to keep subsidizing our exploding debt?" he asks. "Even smart people are fully capable of driving the American economy off a cliff. What happens when the dumbest administration in history gets a turn at the wheel? Maybe last week wasn’t the time to start panicking. But that moment can’t be far."