Quantcast
Connect with us

An economic crash is looming, and it could determine the fate of Trump — and the country

Published

on

If he times it right, Donald Trump might set back the Democratic Party for a generation or more; if he misses, he’ll go down in history along with Herbert Hoover as the guy who brought the nation an economic disaster.

Back in 2007 and early 2008, many of us were convinced that an economic crash was coming, and that George W. Bush and his Treasury secretary, Henry Paulson, and Fed chairman, Alan Greenspan, knew it.

And we also thought that they were doing everything they could to hold it off so it would happen after the 2008 election, so if a Democrat was elected they could say the crash was because people were “worried about the incoming Democrats,” and if McCain won it would be his problem, not Bush’s.

It appears that Trump may be doing the same thing, only, as with so many of his High Crimes (a phrase that includes “serious misuse or abuse of office”), he’s being much more public about it. On June 15, he tweeted, “if anyone but me takes over… there will be a Market Crash the likes of which has not been seen before!”

The question now is whether he’ll have the same bad luck Bush did in not being able to forestall it by a year or so.

ADVERTISEMENT

Bush knew the business cycle that had cranked up during the late 90s was coming to an end, and he, Greenspan, and Paulson did everything they could to hold it off.

Between 2001 and 2003, he pushed through Congress and signed fully three major tax cuts for wealthy people and businesses, including massive cuts to dividend and capital gains income. This poured hundreds of billions in borrowed money into the economy, wiping out the $236 billion budget surplus Bill Clinton had left him and throwing us into a $458 billion annual deficit in 2008.

To further goose the economy, Bush and Cheney illegally got us into two wars, raising defense spending from the $290 billion ceiling it had hit during the 1990s to over $595 billion in 2008, pouring literally trillions into the defense industry.

ADVERTISEMENT

In particular, the old Ayn Rand cult member and acolyte Alan Greenspan got into the act by lowering the Fed funds rate—the basis of U.S. interest rates—from 6.5 percent at the end of 2000 to below 2 percent in 2002. Greenspan kept the interest rates below 2 percent right up until just after the election of 2004, when he let them float up slightly. Bush rewarded his good efforts by reappointing him as Fed chair in 2005, which many speculate was why he’d jacked up the economy so hard leading up to the election of 2004, giving Bush a credit-fueled “feel good economy.”

And it was insanely credit-fueled. Between 2000 and 2006, housing prices in the United States doubled because the low interest rates, combined with repeated Republican deregulation of the banking and security sectors, allowed millions of unqualified new home buyers into the marketplace, driving demand toward the sky.

Trump, Steven Mnuchin, and Jerome Powell have virtually cloned the process, from tax cuts to defense spending to low interest rates, and the inevitable result is increasingly obvious to financial publication opinion writers. Op-eds in staid publications like the Financial Times and the Economist are, with growing frequency, somewhere between, “The sky is about to fall!” and, “There’s a meteor coming the size that wiped out the dinosaurs!”

ADVERTISEMENT

And with good reason.

The entire “supply side” scam that if the rich people get richer it’ll help us all is totally discredited, but, in deference to their billionaire donors, the GOP still clings to it. Their policies, true to their proclamations, have raised the wealth of the top 1 percent by a total of $21 trillion just in the years since Reagan’s last months in office, leaving them sitting on over $30 trillion in assets and cash.

In fact, though, demand is what drives economies. And, while rich people might buy a few yachts and fancy mansions, it’s the purchasing power of the bottom 99 percent that is known by economists as “aggregate demand” and actually moves marketplaces.

ADVERTISEMENT

Reaganomics—the neoliberal economic system we’ve been living under continuously since 1981—has wiped out the purchasing power of the bottom 99 percent. In the same time that the rich have gotten $21 trillion richer, the bottom 50 percent of Americans have lost—vanished, gone forever, lost—over $900 billion.

Cheap credit is the only thing that’s keeping most Americans buying anything beyond groceries and medicine, and both of those are exploding in price because of climate change, monopoly, and fraud. It’s not a question of if, but when the working people of America will stop going deeper and deeper in debt simply to maintain their current lifestyles.

And as more and more Americans downsize their housing or even become homeless (we’re the only developed country in the world to have homeless teachers, nurses, and fast-food workers), their ability to keep the American economy afloat will collapse even with 1.5 percent interest rates. Right now, half of us would get wiped out by a medical or car expense of just a few hundred dollars, having to turn to friends, family, a new credit card, or GoFundMe to stay afloat.

ADVERTISEMENT

Back in 2007, I started refusing to read advertisements on my radio/TV show for banks and subprime lenders. It infuriated our advertising sales team, but I was openly warning people on the air that an economic winter was coming, and couldn’t in good conscience then tell them to take on more debt.

We’re there again. In some very real ways, in fact, we never got out of it.

Over the past five years, if there had not been a multitrillion-dollar increase in government, corporate, and individual borrowing, the U.S. economy would have contracted, rather than grown.

ADVERTISEMENT

All of our national economy’s growth has been on borrowed money for all of Trump’s presidency: there’s quite literally no “there” there.

This is not how a healthy economy is supposed to work; instead, Trump is maintaining and inflating an economic Potemkin village, a pretend economy made out of cardboard, chicken wire and bubble gum that will collapse in the face of the first stiff economic wind.

If Trump and his collaborators can hold back the winds until November of next year, the GOP has a chance in the elections.

ADVERTISEMENT

And, as a bonus for Trump, if Democrats sweep the 2020 elections and Powell and Mnuchin pull out the economy’s temporary props right afterward, crashing the economy, Republicans will blame Democrats for the ensuing economic disaster for the next generation or two.

On the other hand, if Trump can’t pull it off, get ready for some epic tiny-finger pointing.

And a crash before the election could offer our nation an opportunity, should Democrats nominate an actual progressive who will take us off the neoliberal Reaganomics we’ve suffered under since 1981.

ADVERTISEMENT

A 2021 return to New Deal Keynesian economics, which rescued America after the Republican Great Depression and built the strongest middle class in history between 1933 and 1980, could return working-class Americans to opportunity, life, liberty, and the pursuit of happiness.

In either case, winter is coming, and we all need to be prepared, both politically and economically.

Thom Hartmann is a talk-show host and the author of The Hidden History of Guns and the Second Amendment and more than 25 other books in print. He is a writing fellow at the Independent Media Institute.


Report typos and corrections to [email protected].

Send confidential news tips to [email protected].
READ COMMENTS - JOIN THE DISCUSSION
Continue Reading

Facebook

Trump’s racism is ‘disqualifying’ for him to remain as president: former White House lawyer

Published

on

Former acting Solicitor General Neal Katyal explained on MSNBC on Thursday why he viewed President Donald Trump's racist attacks on four women of color in Congress as disqualifying.

Anchor Brian Williams read a quote from Susan Glasser of The New Yorker.

"Half of the country is appalled but not really sure how to combat him; the other half is cheering, or at least averting its gaze. This is what a political civil war looks like, with words, for now, as weapons," Glasser wrote.

Continue Reading

Facebook

Lawrence O’Donnell reports on the growing movement for the impeachment of President Donald Trump

Published

on

Anchor Lawrence O'Donnell reported on the growing movement for the impeachment of President Donald Trump during Thursday evening's "The Last Word" on MSNBC.

"The House of Representatives conducted a symbolic vote on a hastily written impeachment resolution by Democratic Congressman Al Green in reaction to the president’s tweeted comments that the House of Representatives voted to condemn as racist," O'Donnell reported. "The impeachment resolution had nothing to do with the [Robert] Mueller investigation and referred only to the president being unfit for office because of the language that he has used recently about members of Congress and immigrants and asylum seekers."

Continue Reading
 

Facebook

Video proves how far the Trump’s GOP has gone from the era of Ronald Reagan and HW Bush

Published

on

The immigration policies of Donald Trump’s presidency would have no room for his GOP predecessors Ronald Reagan or George H.W. Bush—who both embraced work visas, family unification, easy border crossings and a better relationship with Mexico.

That counterpoint can be seen in a very short video clip from the 1980 presidential election where Reagan and Bush—who became Reagan’s vice president for two terms before winning the presidency in 1988—were asked about immigration at a campaign debate in Texas. Their responses show just how far to the right the Republican Party’s current leader, President Trump, and voters who have not left the GOP to become self-described political independents, have moved on immigration.

Continue Reading
 
 
 

Copyright © 2019 Raw Story Media, Inc. PO Box 21050, Washington, D.C. 20009 | Masthead | Privacy Policy | For corrections or concerns, please email [email protected]

Join Me. Try Raw Story Investigates for $1. Invest in Journalism. Escape Ads.
close-image