What could Trump do to the economy?

Following from yesterday's post, what could Trump do to the economy?  The economy really is in pretty damned good shape.  Not best-ever shape, as Trump would have people believe.  That's just Trump-ian bragging, but pretty good.  Is the economy idiot-proof?

No.  The economy is insulated from the president, but there is plenty that a bad president could do to tank the economy.  Let's just run through a few possibilities.

1)  Escalating trade war.  This one is obvious to anyone whose economics education includes anything written post-1776, the year in which Adam Smith published The Wealth of Nations, founding modern theories of capitalism and debunking mercantilism.  Of course, Trump is an economic flat-earther-- a mercantilist.  Or, he would be if he were smart enough to understand what mercantilism is.  Mostly, he's just a moron who sees everything in zero-sum terms, and hence thinks that a trade deficit means we're "losing."  So, he's trying to start a trade war.  There are plenty of ways that this can tank the economy.  It can tank individual industries, creating knock-on effects.  It can raise consumer prices, and choke off economic activity.  Remember that consumer prices are the biggest component of GDP.  And, if everyone else responds in kind, the world enters a vicious cycle in which everyone else does the same, and...  This is so monstrously stupid that our best hope is that others around the world don't rise to the bait.  The tariffs so far are limited, and other countries are responding by increasing their incentives to do business with each other rather than choking off business with us.  That minimizes the risk of reciprocal escalation.  Smart.  Why?  Because every other world leader right now is smarter than Donald Trump.  Risk?  Non-zero, but low given how other countries are responding.  This will drag us down a bit, but not tank the economy, in my estimation as an economically-trained political scientist.  I'm reading the political choices of other world leaders here rather than the economics.

2)  Refusing to raise the debt ceiling.  This would be a simple way to bring everything down, but there doesn't seem to be any interest in it.  Yay (?)  Hey, if some jackass goes on Fox & Friends to tell Donald not to sign a debt ceiling increase, we could be fucked, so for now, let's rejoice that this doesn't seem to be a problem.  I really wish that weren't a serious statement.

3)  Listening to John Bolton.  George Carlin had a great line about war.  He had great lines about everything, but today, I reference his philosophy on war.  "What?!  They have bigger dicks?!  BOMB THEM!"  John Bolton must have the tiniest penis in history because there isn't a country on earth he doesn't want to bomb.

Is war good for the economy?  This is an interesting piece of politico-economic lore that has been floating around since WWII.  Unemployment peaked at around 25% during the Great Depression, and didn't really resolve until WWII.  Ergo, war is good for the economy, right?  Sounds vaguely like a Ferengi Rule of Acquisition:  War is good for business.  That would be Rule 34, frequently confused with Rule 35 (Peace is good for business).

Sort of.  Why did WWII resolve the Depression?  Government spending to restart factories, and such.  They just flat-out gave people jobs to start production of goods that the military needed for the war.  Suddenly, everyone either got shipped off to the European or Pacific theater, or had a job.  It isn't that war, per se, is good for the economy.  It was simple Keynesian economics as a response to a depressed economy.

Can war hurt an economy?  A couple of things.  First, what happens here?  If we start a war needlessly, depending on what happens, you have interruption of economic activity.  Shoot off a few missiles and nothing changes here, but a larger war changes more things.  It all depends on how insecure John Bolton feels.  You have potential economic responses from around the world.  And... other potential responses from other countries, depending on what Bolton tells Trump to do.  There are plenty of bad scenarios.  War has no definitive economic consequences.  Everything is contingent.

So, let's put this together.  Can Trump tank the economy, so to speak?  Or, should I not write, "tank?"

Most economic policy is set by the Federal Reserve, and Trump made a reasonable appointment.  Powell isn't John Taylor.  Taylor is a smart economist.  Creative, intellectual, provocative, and...

Completely off his fucking rocker.  You know where such people belong?  The Hoover Institution at Stanford is a great place for him.  Remember Herbert Hoover?  Of course, as a Berkeley guy, I love to bash Stanford anyway, but academia in general is a good place for smart but wrong people.  It defangs us.  (Hi!)  Powell?  He's fine.  Replacing Yellen was dangerous, stupid, and probably misogynistic, but Powell is fine.

Regardless, the Fed can tank the economy.  Will they?  Not likely.  Congress, in principle, could.  Will they?  Not in the short run.  They'll continue doing stupid things, but they won't do anything that can tank an economy in the current condition.

What's left?  What do I keep saying?  Responding to a crisis.  That's the real danger of Trump.  Imagine the 2008 collapse of the financial sector under a dipshit like Trump.

Fun thoughts...

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