Should retirees be grateful to Trump?
A year into the Trump presidency the continued rise in the stock market—actually a continuation of a bull market and economic recovery that had begun under Obama—has fattened our retirement portfolio handsomely. And the Republican tax cuts—a wet kiss to corporate America—can't help but propel the continued rise in the stock market, and even the world economy, a few more years.
Here's a question liberals may not want to raise above a whisper: Should we be grateful to Trump for the money he's making us despite his repugnant social policies? Are we faced with a choice between greed and principles?
I'd say not so quick. The Republican tax cuts are bound to push the federal deficit further into the trillion-dollar stratosphere. Republicans who call themselves "deficit hawks" suddenly are not so worried about the debt, deficit or federal borrowing, and instead invoke the usually alchemy that tax cuts will pay for themselves as a result of the increased economic growth. That sounds plausible but it's never materialized in real life.
Tax cuts for the rich and the corporations also are likely to aggravate the income inequality and the wage stagnation that supposedly fueled the rage among the working classes and their support for Trump. The latest Republican tax "reform" package, which is skewed toward corporations and the very wealthy, has little in it for the Mr. and Mrs. Working Joe. Expect further political and economic frustration and acrimony rather than a Pax Republicana sweeping the land. In fact, when today's working class retires I doubt it will have much of an retirement investment portfolio to worry about.
Still, I suspect the fallout of huge federal deficits won't be felt for several years and fall on future generations. Then again, Stew and I don't have any children, and quite frankly we don't spend much time worrying about future generations. For the duration of our lifetimes, however long they may be, one of our main concerns is to enjoy our money, the more the better, and to the fullest extent possible.
It's the old après nous le déluge attitude—cynical as hell, irresponsible, even amoral, but I'd be lying if I professed to feel otherwise much of the time. There are only so many things, from climate change, North Korea and race relations, to name a few, that we can worry about when we fall out of bed each morning.
Except the déluge might come much sooner than that, or did we already forget the debacle of 2008 that followed uncontrolled federal spending during the George W. Bush years—trillions for the ill-fated wars in Iraq and Afghanistan— coupled with a fanatical belief in deregulation? The government in effect had surrendered its oversight responsibility over the mortgage and lending industry. When I hear Trump and the Republicans trumpet deregulation of everything that moves, and even repealing some of the legislation passed to avert another 2008, that is something to worry about in the short term.
So is Trump's ignorance and mental instability, particularly in foreign affairs. We're told he is generally under adult supervision, but when he goes off on Twitter rampage comparing the size of his nuclear button to Kim Jung-un's, I do worry that the man is just plain nuts and that the current prosperity might be cut short by another war, possibly of a nuclear variety.
Most depressing of all is the degradation of civic discourse, bipartisan comity, race relations, even the very concept of truth and empirical reality—reformulated as "alternative reality"—that has taken place under Trump's first year. Qualms about decency in public life among Republicans, and their usual cheering section of evangelical preachers, seem to have been put on the back burner too, as they stand by Trump regardless of his horribly corrupt character. How does Stormy Daniels fit in their "family values" platform?
Barring Trump's impeachment or resignation, this circus has three more years to go, even if Democrats retake one or both houses of Congress this year. A more likely outcome will be the continued politics of gridlock and mutual partisan destruction that Trump has exacerbated immeasurably. If not the worst president—remember George W.—Trump will go down as the most destructive to the civic and political fabric of the country.
So fear not, Stew and I are not letting avarice dampen our contempt Trump. We'll just use the extra money to take a couple of bonus trips abroad and—perversely—send more money to the Democrats, above all for fierce voter recruitment and registration efforts across the country, in preparation for 2020.
That strategy worked in the senatorial race in Alabama and in other places and it's far more productive that just cursing Trump over our daily morning coffee—tough as such restraint may be.
Here's a question liberals may not want to raise above a whisper: Should we be grateful to Trump for the money he's making us despite his repugnant social policies? Are we faced with a choice between greed and principles?
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| Is what's good for Trump and his billionaire friends good for the country? |
Tax cuts for the rich and the corporations also are likely to aggravate the income inequality and the wage stagnation that supposedly fueled the rage among the working classes and their support for Trump. The latest Republican tax "reform" package, which is skewed toward corporations and the very wealthy, has little in it for the Mr. and Mrs. Working Joe. Expect further political and economic frustration and acrimony rather than a Pax Republicana sweeping the land. In fact, when today's working class retires I doubt it will have much of an retirement investment portfolio to worry about.
Still, I suspect the fallout of huge federal deficits won't be felt for several years and fall on future generations. Then again, Stew and I don't have any children, and quite frankly we don't spend much time worrying about future generations. For the duration of our lifetimes, however long they may be, one of our main concerns is to enjoy our money, the more the better, and to the fullest extent possible.
It's the old après nous le déluge attitude—cynical as hell, irresponsible, even amoral, but I'd be lying if I professed to feel otherwise much of the time. There are only so many things, from climate change, North Korea and race relations, to name a few, that we can worry about when we fall out of bed each morning.
Except the déluge might come much sooner than that, or did we already forget the debacle of 2008 that followed uncontrolled federal spending during the George W. Bush years—trillions for the ill-fated wars in Iraq and Afghanistan— coupled with a fanatical belief in deregulation? The government in effect had surrendered its oversight responsibility over the mortgage and lending industry. When I hear Trump and the Republicans trumpet deregulation of everything that moves, and even repealing some of the legislation passed to avert another 2008, that is something to worry about in the short term.
So is Trump's ignorance and mental instability, particularly in foreign affairs. We're told he is generally under adult supervision, but when he goes off on Twitter rampage comparing the size of his nuclear button to Kim Jung-un's, I do worry that the man is just plain nuts and that the current prosperity might be cut short by another war, possibly of a nuclear variety.
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| Who's worried about facts and the truth? |
Barring Trump's impeachment or resignation, this circus has three more years to go, even if Democrats retake one or both houses of Congress this year. A more likely outcome will be the continued politics of gridlock and mutual partisan destruction that Trump has exacerbated immeasurably. If not the worst president—remember George W.—Trump will go down as the most destructive to the civic and political fabric of the country.
So fear not, Stew and I are not letting avarice dampen our contempt Trump. We'll just use the extra money to take a couple of bonus trips abroad and—perversely—send more money to the Democrats, above all for fierce voter recruitment and registration efforts across the country, in preparation for 2020.
That strategy worked in the senatorial race in Alabama and in other places and it's far more productive that just cursing Trump over our daily morning coffee—tough as such restraint may be.
You are entitled to your opinion, but everyone else is also entitled to their opinions. This is mine.
ReplyDeleteWhile Mr. Trump was not my first, second or even third choice to head our party, I voted for him, and I will do it again. He was a way far better candidate than Ms. Clinton.
He recognized that our country was in trouble, and he promised to do something about it. He is now doing it. The tax cut is working. While it will not solve the looming problem of the national debt, it will temporarily stave off the inevitable currency collapse. The seeds of that disaster were sown during the Johnson years.
To me, the tax cut seemed to be opposed mostly by people that never paid taxes any way. They said they did, but then they filed and got it all back. Some even got the earned income credit.
We have a problem with the immigration system as it now exists. He promised to fix it, and he will. Criminals will be deported, but good people will get to stay. We just need the cooperation of the Democrats to do this.
We can no long afford to fund corrupt governments that are our enemies. He will cut them off.
We need to put our people back to work; we need to re industrialize our nation.
Let me ask you, just what do you see as the eventual goal of the Democratic party, and how is it going to be paid for?
Robert Gill
Phoenix, AZ
Robert: I respect your opinion and comments, and in this instance we agree on a couple of issues. Neither one of us was thrilled with the presidential choices in the last election. Each of us picked the better of two evils and your choice was different than mine. I agree the country was, and still is, ready for a "reset" not only with regard to policy matters but the way business is conducted in Washington. My problem with Trump is only partly related to his policies; it's just that the guy is a degenerate with little regard for the truth. I often think his policies would not sound half as bad if they came from Romney, Kasich or some other decent person. Right now both parties seem to be on a course of either gridlock or mutual destruction, with the rest of us just sitting on the sidelines watching. I don't understand what you mean by "inevitable currency collapse," or how that started with LBJ. The percentage of criminals among immigrants is no higher, and probably lower, than among the general population. I don't think the chief problem with immigration is criminals. I don't understand either what you by with funding governments that are "our enemies." I am afraid too that "re-industrializing" America is not going to happen any time soon because the American consumer is hooked on cheap stuff made wherever: check the labels on our clothes and you'll find the stuff is made in Turkey, Laos and places we've never heard of.
DeleteThanks again for your comments.
My concern about the currency crisis is centered around the new Chinese gold backed renminbi, or the new Petro Yuan.
DeleteThe Bretton Woods Agreement was the landmark system for monetary and exchange rate management established in 1944. It was developed at the United Nations Monetary and Financial Conference held in Bretton Woods, New Hampshire, from July 1 to July 22, 1944. Under the agreement, currencies were pegged to the price of gold, and the U.S. dollar was seen as a reserve currency linked to the price of gold.
As a reserve currency, the US dollar was used in the settlement of international debts. So, everyone needed dollars, but starting in 1968 problems developed. It seemed as if the dollar was too strong. Then, in 1975, the silver and gold backing of the US dollar was removed. It became a fiat currency.
To give it value the Nixon administration convinced the Arabs to price oil in US dollars rather than British sterling. Thus was born the Petro Dollar. The US in exchange would basically protect them. We became their attack dog.
Now it seems as if the Arabs will price gold in the new yuan. It is backed by gold. Yes, the same gold I sold to the dealer down the street.
If the new gold backed Yuan becomes the new reserve currency, then all of those dollars floating around abroad will come home. There is about six times as much US dollars held abroad than that held in the USA. That will produce a massive inflation that will destroy the value of our savings and retirement incomes. That really worries me.
Robert Gill
Phoenix, AZ
Robert: I follow your argument about the dollar being backed by gold and I trust you have your facts straight, though I'm sure some people would dispute your projections. Problem is, how do you fix this problem?
DeleteAl
BTW I welcome your comments but in future submissions please use a name, even if it's a pseudonym, because I'm getting a lot of spam comments submitted under "Anonymous" and I'm going to start eliminating those. Al
Many of us retired, myself included, live our lives strictly on our Social Security income. So the stock market does not affect our lives a bit. In fact the pollsters recently acknowledged that most middle class people have hardly $400 set aside for emergencies. Believe me, I did not plan on living this way and others did not either, but circumstances in my life changed my saving plan to 0. C'est la vie. I hope Trump goes SOON.
ReplyDeleteYou're not alone Barbara; I know quite a few people here who live on Social Security and who literally couldn't afford to live back home. And there are a lot of Americans too who face retirement with little or no savings. You've told me of the circumstances that depleted your nest egg, and that was really tragic. As for Trump, I agree, the sooner he leaves, the better.
Deleteal
Democrats as well as Republicans have had years to fix the immigration system but have failed for multiple reasons. My observation is that the president is allowing the existing laws to finally be enforced, hopefully to the notice that some needed changes might be accomplished to immigration and other issues. Sadly we didn't have much of a choice in who was running between parties, I was kind of rooting for Bernie, which was railroaded by Hilary and the DNC, in a example of exactly was is wrong with the system.
ReplyDeleteMany Mexican friends do not like Trump, but when asked exactly why have no reason other than it is because he sending back people back to Mexico. I then ask what would the Mexican immigration do, if someone did that in Mexico, then they say that is different.
You can't have it both ways.
There is no easy answer to equalize all the people that are in power, the guy in the middle is always going to get screwed, the guy in the bottom will also never be happy.
The last election offered pretty poor choices, I agree. And I haven't seen or read a grand immigration proposal by anyone, who deals with the structure and what our immigration goals ought to be, rather that patchwork stuff to deal with the latest crisis, like the Dreamers or Haitians being sent back.
DeleteMexico sends back any undocumented Central Americans they get they their hands on, without much due process or consideration, so you're right, they shouldn't be pointing fingers.
I'm with you in feeling that the guy in the middle always seems to get shafted, no matter who is in power. I certainly don't feel that Trump and his cabinet of billionaires has my best interests at heart.
Thanks for your comment.
al
Congratulations on your retirement portfolio, however...be afraid when others are greedy and be greedy when others are afraid might be something to think about these days (Warren Buffett). Don't feel guilty about your fortune, but do remember those who have less.
ReplyDeleteI believe that the tax cut has affected the stock market, but it has done so due to stock buybacks and dividend possibilities, not so much due to the prospect of increased aggregate demand since most of the increased income goes to people who won't spend it on newly produced goods and services.
As for the increased deficit, have no worries. Public debt will not burden children and grandchildren. It never has and it never will. This is a fairy tale told by conservative (selfservative?) deficit hawks when it suits their purposes, and unfortunately swallowed by too many progressives. What does cause financial crises, as in 2008, is not public debt but private debt, and there are some worrying trends to watch there, I'd mention student loan debt and a recent reduction in the private savings rate.
Here in rural Mexico we're surrounded by poverty and we're well aware of it. So we're not smug about our money which, hey, is not as much as you seem to think. LOL We're constantly giving stuff away. Tomorrow morning we're trying out a PA system we donated to the local church, so the parishioners can understand or hear what the priest is talking about.
DeleteIf I understand correctly, you're right that the tax cuts won't be spent by the rich on increased manufacturing or industrial investments but bigger yachts.
The 2008 debacle was indeed created by private rather than private debts—credit cards and houses bigger than people could afford. But the federal government failed to control the situation. Canada was not affected because it had regulations and laws governing mortgages etc.
Thank you for your comments.
I should apologize in advance for being a little obsessive about fiscal policy and how money works, but most people badly misconstrue it ("money -- it's kinda like gold only made out of paper...or something") and consequently believe government can't implement obviously beneficial policies because of financial constraints that don't actually exist. It drives me crazy.
DeleteIncidentally, I've been enjoying your old house-building posts...
Thank you for your observations, though economic was never my strong point! Al
DeleteCreigh: take a look at the Federal budget, and look at how much money is spent on interest on the Federal debt and then ask yourself: aren't there better uses for $350 billion a year?
DeleteThat's real money, and that figure is going to rise stratospherically in the coming decades as both the debt and interest rates rise.
This is real money, representing real resources, that has to be paid to real bondholders.
How does that not affect any one? And if you truly believe that deficits don't matter, then why pay taxes at all?
Saludos,
Kim G
Kim, here’s how money works in a very tiny nutshell (but first a bit of historical context):
DeleteIn the bad old days when the King needed sailors for his warships he sent out press gangs, and when he needed quarters for his troops he put them up in your bedroom, board included. And if you refused there were draconian consequences.
Today we do things differently. The Federal Government first prints up a bunch of things they call dollars and then offers them to the private sector as military and civilian salaries, and as payment for weapons and bases and for public infrastructure of all kinds. The Government motivates people to accept these dollars by requiring them to pay taxes with those same funds. And if you refuse there are draconian consequences.
What this ridiculously simplified but 100% accurate model tells us is that taxes don’t finance the Federal Government, money printing does. The private sector’s need to acquire dollars for tax remittances is what gives those dollars value. Preventing inflation, not financing Government spending, is the purpose of taxes.
The obvious next question is why a Government that can print money at will would bother to “borrow”. (It’s not really borrowing, it’s actually a swap of one kind of Government issued financial asset--currency--for another kind of Government issued financial asset--Treasury bonds.) There are arguably obsolete historical and legal answers to that question, but the economic one is that the sale of T bonds to the private sector drains currency from the banking system, and affects short-term interest rates on that currency.
Oi. Hate offer a detailed reply to your comment because my knowledge of economics is rather thin. But I tend to think that deficit borrowing is not intrinsically bad, even if you include interest payments. The question if what for? Capital expenditures on infrastructure, and scientific researh and such that help grow the economy are productive, whereas military boondoggles (Iraq, Afghanistan and possibly Korea) not so much. Maybe Kim can take up your argument and you two can enlighten the rest of us. Thank you for writing.
Deleteal
Al, you're absolutely on the right track. Most people think money is a limited resource. I argue that it isn't, for a government that prints money. But peoples' time, energy, and ingenuity is a limited resource, and the question to ask about a government's purchase and use of that resource is does it promote the general welfare, and is it an efficient use of that resource.
DeleteIn my experience, most Mexicans detest Trump for many reasons and not solely because he wants to deport undocumented people. As far as how Mexico treats undocumented people here, you need to put aside the disgusting extra-official treatment of the Central Americans and look at official immigration policy. A good example are the two posters directly above this post that immigrated with relative ease to this country. Mexican government also frowns on breaking up families and makes it relatively easy for undocumented spouses and parents of Mexican citizens to live here legally.
ReplyDeleteMexico treats undocumented immigrants from Central America pretty shabbily, who are also abused by authorities with impunity. I didn't know what Mexico's policies are regarding undocumented spouses of Mexican citizens, I hope you are right on that one. Thanks for writing.
DeleteYou'll get no argument from me on the treatment of poor undocumented Central Americans. My point was it is not official government immigration policy but the ill-treatment of individual immigration and law enforcement officials usually in extortion attempts. But then again many of Mexico's own citizens are victims of systemic corruption by law enforcement.
DeleteAs far as the INM policy on family members, here is a link that provides the requirements: https://www.gob.mx/inm/articulos/residencia-por-vinculo-familiar?idiom=es
"Si eres extranjero y aún no te regularizas ¡también hay una opción para ti! Si tienes algún familiar mexicano o extranjero (con estancia regular) en nuestro paÃs podrás regularizar tu estancia por vÃnculo familiar."
For us, “the degradation of civic discourse, bipartisan comity, [and] race relations” began some time prior to the Trump campaign and election. Trump may be the loudest but he has not been the first to shout down reasonable disagreement. We saw the storm clouds gathering in 2010 and made our way to Canada in 2013 (my spouse is Canadian). I completed my interview for citizenship today and will be a new Canadian citizen in the spring. I could not be more grateful.
ReplyDeleteCongratulations. I envy you. We both love Canada and have made many Canadian friends here in San Miguel. Except for that climate, eh?
Deleteal
I just read an article this morning about the many factors which effect the stock market... factors which are beyond any President's control. If Trump is going to take all the credit for the bull market, is he also going to accept responsibility for yesterday's Dow Jones drop of over 600 points?
ReplyDeleteYou couldn't be more prescient. The day after this post came out there was a sharp drop in the Dow. And today the Washington Post has a story of how federal borrowing is projected to go up by 87 percent over last year. That can't be good. Here's the link: https://tinyurl.com/y8ookfo4
Deleteif his past style is any indication, Trump will take credit for any good news (Dow going up) and keep mum on any bad news (Dow going down)
DeleteThe central banks of the world have been pushing money into the system through their quantitative easing programs. This money is not going into consumer financing, but into the stock market and the real estate market. Everything is over valued. Interest rates are so low, there is no incentive to save.
ReplyDeleteBut, the banksters are getting rich. This will not last. When it comes apart, just who gets the blame? The correction will be hard and fast. Hang on!
Robert Gill
Phoenix, AZ
You forgot to credit Trump with crashing the USD/MXN exchange rate. That's a huge benefit for you too.
ReplyDeleteAs for partisan bickering, I'll have to call you out. You write, "If not the worst president—remember George W.—Trump will go down as the most destructive to the civic and political fabric of the country.
So the Democrats sitting glumly and refusing to applaud a list of Democratic priorities during the State of the Union Speech -- job training, infrastructure, citizenship for "Dreamers," and a host of others -- isn't what's dividing us? Their refusal to take Trump's offer (anathema to his base) of two million amnesties for Dreamers isn't the problem? The Dems' refusal to acknowledge the fact that: a) many of them voted for the 2006 Secure Borders act which authorized "Trump's" wall (Schumer included) and; b) that they refuse to acknowledge that the existing fences work pretty well? This is their contribution to political comity and any discord is solely Trump's fault?
Seriously, I absolutely hated how the Republicans treated Obama (for whom I voted twice), and I considered McConnell's goal of making him a failed president to be bordering on treason. But the way the Democrats are treating Trump is far worse, IMHO. The Republicans never cooked up some kind of fake "Russian collusion" story to waste the country's time. (They found less egregious ways to do so.) And despite Adam Schiff's bloviating, the facts remain. Mueller's investigation has been going on for a year and a half, and is now far afield of its mandate. Mannafort was indicted for tax fraud committed well before the election. And the remaining "lying to the FBI" indictments wouldn't exist absent an investigation. And if there were genuinely serious crimes committed by either Flynn or Papadoupolos, then they'd have been indicted for them. So to date, this investigation is a big nothingburger. Yes, that could change, but so far the narrative is crumbling, especially in light of the Nunes memo. (Which I believe is neither a nothingburger nor the beginnings of the next Watergate scandal.)
So I'm sorry, but I think the Democrats are far more divisive here, and the polling data would suggest that Trump's views are more widely shared than Nancy Pelosi's.
As for the stock market, it has little to do with Trump and everything to do with the Fed and the rest of the world's central banks. Though the Fed has stopped aggressively creating money, the BOJ, ECB, SNB, and BOC continue apace. That money has to land somewhere, and stocks and bonds are where it lands. When that stops, things will get ugly. And IMHO Trump is stupid to take credit for both the stock market and the unemployment figures, as both are likely to go into reverse some time in the next year or two.
As a final note, you've lamented the discussion of politics that erupts on your blog. But aren't you enabling it?
Saludos,
Kim G
Redding, CA
Where we'd like to see a Ross Perot type get elected president. Or maybe Michael Bloomberg.
Trump with his continuous race-baiting (Mexican as rapists and criminals; 'really fine people' among white nationalists; Islamophobia; etc. etc.) has done more to inflame inter-group hatred than anyone in recent memory. To repackage him as a "uniter" requires an imagination close to magical realism. I'm sorry, but with Trump his very persona is so vile and offensive that I have trouble taking any of his policy positions seriously. Call it ad hominem arguing if you will. Coming from Romney, Kasich or someone serious I think I would be able to discuss them more dispassionately. Trump is all about Trump all the time, not about a particular economic or political philosophy. Let's have a military parade and jack up military spending. Why? Because that is the last bit of lunacy to enter this guy's head. You see what you made me do? Start talking about politics again.
DeleteRegards to your mom.
al
You should note that I never said that Trump was a uniter; clearly he's not. But I did argue that the Democrats were extremely divisive, a point which you entirely overlooked in your response.
DeleteAlso, see this blog post by Scott Adams, which I believe puts things into a better perspective. The news media have more than done their part to divide us too.
http://blog.dilbert.com/2018/02/21/news-reported-facts/
Saludos,
Kim G
Redding, CA
Where the local media is basically the PR department of various police agencies.
Sorry, but any president that is not a creature of the Deep State will receive the same horrible treatment that is being dished out to President Trump. I am afraid there is no way out of this mess.
ReplyDeleteRobert Gill
Phoenix, AZ
That is the nice thing about tax cuts, we get to choose how to spend our money rather than the central government telling us how it will be spent. As you may suspect, with my tax cut money, I am going to buy a Hobby Lobby concealed rhinestone weapon holster kit complete with a pro-life card holder and photo slot for my selfies with Scott Baio. ;-)). Enjoy the beach.
ReplyDelete