Can someone explain how this all "plays out"? Trump is planning on Tariffs which are inflationary. There are also multiple articles today saying he is about to go after Powell about lowering rates. Also, if you look at the M2 money supply graph, it is back up and still climbing. Is the end game here to just make the American public "poor people" by continuing inflationary pressure and devaluing the dollar? That's what I see. Also, this push of crypto seems to be setting up many people to lose their savings. If I am wrong, please explain this to me. BTW, I am not a liberal. I am just someone wondering what the hell is going on here.

Trump is looking at ways to cause an economic boom by increasing incentives to manufacture goods at home instead of in China and other countries. The tariffs are clearly designed to create job growth in the U.S. at which point the wage base is bigger but the tariffs go away. Now he's also pushing an end to the income tax and, as much as I love the idea, I'm not sure how the maths works for that idea given current spending levels.

During the campaign, JD Vance did say something about devaluing the dollar and increasing exports. The dollar is being devalued because America has spent, borrowed and printed way more dollars than we can ever pay back… or soon even be able to service the interest on the debt. So expensive dollar debt will be serviced with cheap dollars. The dollar has been losing purchasing power since Nixon took us off the gold standard in 1971. The dollar will continue to lose value.

Trump is using the threat of tariffs to get better deals for US exports to sell more US made goods overseas. He wants more things made here in America.

Crypto, gold, minerals, real estate, stocks and businesses are all ways individuals can preserve and increase our wealth. Holding dollars is how to lose your wealth. The dollar will continue to lose purchasing power because of what has been done decades before Trump's second term. LBJ's Great Society was the beginning of the end for the dollar.

After all the different Covid shortages effing up the supply chain, I think any nation who isn't focusing on more self sustainability of their infrastructure is doing themselves a major disservice. I'm not a big fan of tarriffs as an advocate of free market strategies, but I think they are a reasonable tool to encourage self reliance on American labor and innovation.

Definitely Not A Cop said:

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After all the different Covid shortages effing up the supply chain, I think any nation who isn't focusing on more self sustainability of their infrastructure is doing themselves a major disservice. I'm not a big fan of tarriffs as an advocate of free market strategies, but I think they are a reasonable tool to encourage self reliance on American labor and innovation.

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I think the past 30 years has taught us that "free trade" isn't what we thought it would be. What we've seen play out is that nations are willing to subsidize their industries to keep their prices to consumers artificially low which distorts the market. Tariffs are a tool to change the math so that buying from those nations no longer makes sense at which point producing there doesn't either. I think you could argue that tariffs result in a price that's closer to reality if the government of the producing nation didn't subsidize those companies. No way to know for sure obviously.

For my money I'd much, much rather eliminate the income tax and have a sales tax/vat/tariffs than continue to punish the American middle class with this incredibly destructive tax model.

Good discussion above. I do not think the end goal is to erode wealth. But that is exactly what has happened over the past decades and recent years IF wealth has not been invested intelligently. Anyone invested in the overall equities market or real estate has not had their wealth eroded. Anyone in cash NOT intelligently invested has had their wealth eroded. I can only assume the same going forward.
The past is easy to see and it's simple to understand. Which investments going forward from today will prevent the erosion of wealth is the question we all ask.

One thing I don't understand about the economy is how we can legitimately make things competitively in the US. I understand tariffs used to leverage on better pricing on exports. But, for instance, I am a huge fan of buying USA made stuff. My work boots are Made in USA. Sometimes by union labor. They also cost about $300 compared to a similar Chinese made boots at 150 or less. So, how does it work knowing that US made products are so much more expensive? Won't that just make the costs go up? Educate me. It's not like you can just "make them cheaper" here.

Jason_Roofer said:

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One thing I don't understand about the economy is how we can legitimately make things competitively in the US. I understand tariffs used to leverage on better pricing on exports. But, for instance, I am a huge fan of buying USA made stuff. My work boots are Made in USA. Sometimes by union labor. They also cost about $300 compared to a similar Chinese made boots at 150 or less. So, how does it work knowing that US made products are so much more expensive? Won't that just make the costs go up? Educate me. It's not like you can just "make them cheaper" here.

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It has to be a long term commitment with full buy in from the government, to the FED, to the people. It would require a deleveraging, as the dollar rising against other currencies would make it tougher for countries like China to sell into our market. This would also allow salaries and wages to come down, as cash would rising in value and lower and middle class strength would be rising as each paycheck is more valuable than the last. But in the process, everything priced in dollars would lose value. Significantly. At the same time, there would have to be a massive commitment, through the pain of recession and possibly depression that is destroying wealth tied up in retirement accounts and real estate, to focus all funding and incentives toward growing our manufacturing base, deregulating significantly, lowering taxes, and advancing industrial technology. This commitment would have to sustain over 10-20 years before we would even start to see the fruits of the labors.

While it's the best thing we could do long term for the health of nation and future prosperity of younger generations, it's the worst thing we could do for the health and prosperity of anyone over 30 years old, as they would lose almost everything and go through a couple decades of one of the worst times in history.

So do we choose our future? Or maintain our present? Eventually, our future will be chosen for us by the laws of economics. If that happens, it will be even worse than it would be now.

The issue is, 4 years of Trump wouldn't be enough to make this shift if they are followed by anything less than a complete continuation of what he started.

How is America going to make everything if America is already at full employment doing higher value-added labor to begin with... Is planning to deport labor... and planning to cut immigration? A majority of employed Americans are doing much more valuable work than manufacturing... Or are supporting the people doing the much more valuable work.

Also tariffs are much more likely to increase the value of the dollar as long as the currency is the standard for global trade. A reduction in America's trade deficit INCREASES the value of the dollar across the globe because access to dollars needed for global trade decreases (hence why the strong dollar came about as as a function of increasing oil and nat gas exports). This has the side affect of making our labor less competitive all while introducing inefficiencies to trade from tariffs. The net result is a reduction of access and quality of life. So inflation and wealth erosion are coming if things continue on this path.

Tariffs on China are one thing. Tariffs on Canada and Mexico are absolutely terrible ideas because the integration is deep, Canada is a key supplier of hydrocarbons and this is tied to physical constraints like pipelines that are not easily changed, and because Mexico is a key source of labor for manufacturing lower on the value add scale than we can compete with.

So are we moving to a more isolationist approach?

Also, I'd like to commend the board and posters thus far for being respectful, informative, and engaging in discussion without being combative. It's awesome and I appreciate it as someone that isn't as well versed in global economies as I probably should be. Obviously Trumps policies affect my business (as it does everyone's) directly and I like to attempt to stay somewhat up to speed with what's going on and why.

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if America is already at full employment

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we aren't at full employment. plenty of unskilled or lower skilled workers have taken themselves out of the market

one safe place said:

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I do not think Trump's goal is to erode wealth.

If, as a result of tariffs, there is a significant rise in prices from where we are currently, then some serious spending decisions are going to have to be made by most Americans. Discretionary spending will definitely decrease. Pitching lessons for Penelope, traveling for youth sports, lavish vacations, eating out more than a time or two a month, cable tv with 47,000 channels, shopping hard for reducing the cost of various insurance policies and changing coverages, keeping vehicles longer than has been the historical norm, and on and on.

Though we might not want to have to change the manner in which we live, there is likely enough that can be cut from current household spending levels to more than offset price increases due to tariffs and such.

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This seems wholly inconsistent with how this and other boards on here have judged price increases over the last several years.

JDCAG (NOT Colin) said:

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one safe place said:

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I do not think Trump's goal is to erode wealth.

If, as a result of tariffs, there is a significant rise in prices from where we are currently, then some serious spending decisions are going to have to be made by most Americans. Discretionary spending will definitely decrease. Pitching lessons for Penelope, traveling for youth sports, lavish vacations, eating out more than a time or two a month, cable tv with 47,000 channels, shopping hard for reducing the cost of various insurance policies and changing coverages, keeping vehicles longer than has been the historical norm, and on and on.

Though we might not want to have to change the manner in which we live, there is likely enough that can be cut from current household spending levels to more than offset price increases due to tariffs and such.

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This seems wholly inconsistent with how this and other boards on here have judged price increases over the last several years.

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Right? Has anybody looked at the price of eggs lately? https://tradingeconomics.com/commodity/eggs-us
Everyone was talking about awful life was when egg prices were lower than this and how inflation was killing Americans. Now it's just a small hit to discretionary spending that's probably wasteful anyways.

Of course egg prices aren't really about politics. They never were. They are a function of bird flu more than anything else. But that wasn't the story or how people discussed the issue a year ago. It was a story about how Americans couldn't afford anything anymore. Meanwhile airport travel (the epitome of discretionary spending) was at an all time high - especially around the holidays. Now tariffs are worth not having discretionary spending I guess.

I was assured that it is a negotiation tactic and if you don't believe that then you're dumb. https://texags.com/forums/57/topics/3507128#69131277

IowaAg07 said:

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I was assured that it is a negotiation tactic and if you don't believe that then you're dumb. https://texags.com/forums/57/topics/3507128#69131277

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One thing I've noticed about Trump is that he has some really bad ideas, and a lot of people realise that. But he does a lot of incoherent rambling such that everyone can kind of pretend that Trump's plans align with some broader strategic goal that they agree with. But then when it comes time, it becomes clear he has no coherent plan he's just being a bull in the china shop because it gives the illusion of doing productive things... Even if they are counterproductive. He is a true believer in tariffs because he thinks it creates leverage. But he has no multilateral strategy or strategic vision for how bullying your friends and allies actually will help America. He's just a WWE character that nobody really is sure how focused and calculated he is on anything. Which is counter productive in a broader strategic sense. In his first term he had smart people in his cabinet to redirect and focus his energy in a handful of productive ways. This time I think a lot of his cabinet is incompetent or at best a slave to the Trump machine.

I'm sorry but manufacturing mutual economic destruction and then threatening people who should be aligned with you is not a good negotiating tactic. It's the opposite of strategic genius. But I will say he is a genius for convincing Republicans that tariffs aren't tax increases since lower taxes are a core tenent of the conservative movement that I knew.

Jason_Roofer said:

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One thing I don't understand about the economy is how we can legitimately make things competitively in the US. I understand tariffs used to leverage on better pricing on exports. But, for instance, I am a huge fan of buying USA made stuff. My work boots are Made in USA. Sometimes by union labor. They also cost about $300 compared to a similar Chinese made boots at 150 or less. So, how does it work knowing that US made products are so much more expensive? Won't that just make the costs go up? Educate me. It's not like you can just "make them cheaper" here.

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You can't have free trade when the USA is paying $30/hr and up to make boots and Vietnam is paying $15/day for the same work.

A good example closer to home that affects us, is that you can purchase Doug Fir lumber and plywood in Texas that is shipped from Western Canada at an equal and lower price than lumber from East Texas. This is caused by Canada supporting their industry with the goal of full employment.

I somewhat disagree that his coalition includes the middle class. He's done more to erode the middle class than any other group. I would argue that his coalition is the ultra wealthy and the working class. He's found his message - there are a lot of people angry about globalization and he's going to make sure he amplifies that message any which way he can. Globalization has generally kept prices low for a long time as we squeeze efficiency out of the global supply chain, until it all started catching up in very tangible inflation that everyone can see in the day to day. And to bring it back to the topic at hand - tariffs are going to exacerbate that problem even further, and I would much rather see policies that incentivize the industries and goods that really matter rather than broad, sweeping, punitive policies that are being pushed at the moment.

Trump is interested in enriching himself, his family and those that fawn over him. If those goals align with your political preferences, then good deal. But let's not pretend the guy spends any time considering how he can make life better for the average American. The greatest political feat I've seen in my lifetime is him getting people to believe he cares about them while he backlines himself at his inauguration with 3 of the wealthiest people on earth.

IowaAg07 said:

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I somewhat disagree that his coalition includes the middle class. He's done more to erode the middle class than any other group. I would argue that his coalition is the ultra wealthy and the working class. He's found his message - there are a lot of people angry about globalization and he's going to make sure he amplifies that message any which way he can. Globalization has generally kept prices low for a long time as we squeeze efficiency out of the global supply chain, until it all started catching up in very tangible inflation that everyone can see in the day to day. And to bring it back to the topic at hand - tariffs are going to exacerbate that problem even further, and I would much rather see policies that incentivize the industries and goods that really matter rather than broad, sweeping, punitive policies that are being pushed at the moment.

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Everything I've seen says the ultra wealthy vote Democrat and have for years. Polling ahead of the election showed Harris winning with people making over $200k and under $30k and Trump winning everything in the middle. For at least 30 years the Democrat platform has been the wealthy and the poor fleecing the middle class. Trump's tax policies are pro middle class, particularly those around small business owners which are near universally middle class. There's two sides to every coin and the Democrats have zero to offer the middle class which is why that group largely doesn't vote Democrat. The working class has largely abandoned the Democrats which is why so many labor unions didn't endorse Harris this time around.

Globalization is dying and it has nothing to do with Trump. It's dying because the U.S. doesn't need it anymore and the rapidly changing demographics both domestically and globally are changing the economics of labor everywhere. All his policies have done is emphasize the problems with the system due to the unwillingness of our global "partners" to compete on a level playing field. China prints money at a significantly faster pace than the U.S. and they do it to suppress the cost of Chinese labor so that the rest of the world can't compete and that's what he's trying to show. His tariff policies are designed to encourage producers to increase domestic production which is good for the working class, the group most hurt by globalization.

To be clear the issues we're seeing are structural and I'm in no way saying Trump is right. I am saying the political factions in the U.S. are rearranging and Trump is a big driver of that. The middle class is pro-Trump and relative to the competition his policies are much friendly to that group than anything coming from the Democrats who promote policies that lead to higher crime, higher taxes, higher energy costs and lower wages due to unfettered immigration. There's a reason the middle class doesn't vote Democrat.