Putin loves a joke. So, he’s surely getting a giggle over the way Trump proclaims, “America First,” while promoting policies that are highly destructive, supportive of totalitarian regimes, and potentially enriching to oligarchs like himself. For Russia, Trump’s election was tantamount to a coup that erodes our economic stability by the day.
The key word here is inflation, the culprit in the Great Depression of the 1930s that fomented fascism and, ultimately, World War II. The classic definition of inflation is: Too much money chasing too few goods.
As the former KGB head, Putin knows first-hand how hyperinflation contributed to the fall of the Soviet Union and dogged Mikhail Gorbachev’s goal of promoting democracy and free markets thereafter. In his essay, “The Role of Inflation in Soviet History: Prices, Living Standards, and Political Change”, Steven M. Efremov writes, “…the early 1990s, brought prosperity only to the very few, while the vast majority experienced poverty, chaos, and immense hardship.” In words that evoke today’s world, he continues, “This has led many of inflation’s victims to desire stability, even if it means a partial return to authoritarian politics and a managed economy.”
Today’s accelerating inflation — manifested in higher prices, growing scarcity, and increasing delays in delivery — is the upshot of the Trump administration’s tactics. These range from lowering taxes (putting more money in circulation) to barring immigrants (curbing production of goods and increasing costs) to fomenting a trade war (reducing availability of goods and raising prices).
To fund Trump’s massive tax cut; pay for expanded military and ICE operations; and, now, cover the red-state farmers affected by his ill-conceived trade war with China, our government is borrowing more and more. In an April 9th article entitled, “Cracks Appear in Global Growth Story”, the Wall Street Journal reported, “…the U.S. government has been ramping up borrowing to fund a widening budget deficit and a $1.5 trillion tax overhaul, recently drawing concern from credit raters.”
Meanwhile, like the court of Louis the 14th, the Trump administration spends flagrantly on luxury travel, expensive furnishings, and obsessive security for cabinet members, as well as unproductive assets, such as, over $200 million to “modernize” Guantanamo, including a $12 million state-of-the-art medical facility and a special $69 million facility for 15 “high value” prisoners of the 40 some presently housed there according to NPR.
Besides serving Russia’s scheme to undermine our democracy, such upheaval plays into the hands of Trump and top cabinet members, like Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin. Specialists in profiting from distressed properties, all three built their fortunes by taking advantage of opportunities arising from economic downturns. If they are really lucky, like Trump, they might even get the government to forfeit taxpayer dollars to bail them out.
Suddenly a “protectionist,” Ross aggregated multiple failing US steel companies before selling them to a UK-based, Indian-owned firm, ArcelorMittal for $4.5 billion, making a $300 million profit. Ross later assembled a consortium to invest $1.6 billion in 2011 to buy 35% of the Bank of Ireland, nearly failing based upon its wanton practices, and similarly led a bailout group of 30 investors, who pumped 400 million euros into the Bank of Cyprus, following the 2013 banking crisis there. Ross went on to become vice-chairman of this bank, known for its Russian clientele.
At first giddy over Trump’s loosening of regulations and enormous tax cut, investors pumped the stock market to new highs. But, their joyride has begun to careen, as seen by the recent market volatility and faltering economy. Referencing the Wall Street Journal’s “Global Growth” assessment:
In the U.S., gauges of manufacturing and services activity have been pulling back. Retail sales have fallen for three straight months [although rose in March], construction spending decelerated at the start of the year, and auto sales have largely plateaued. …government data show a sharp slowdown in U.S. jobs creation last month, reversing some of the labor market’s recent momentum.
Looking ahead, when Democrats and Progressives boot this administration, we will be left with the task of cleaning up a Trump-magnitude mess. This is nothing new. For, much as Bill Clinton took on Reagan’s horrendous deficit and turned it into a trillion dollar asset, Obama also eked out a steady, if not robust economy when faced with the ashes of Bush’s Economic Meltdown. So, it will fall upon us to take the prudent, but unpopular, steps necessary to salvage our nation’s economy. That means raising taxes and, most likely, reducing benefits still further. Such measures may only lead to more unrest, rally the alt-right, and result in the same kind of political turmoil we see in Hungary, Poland, and Romania.
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