Not much to report this week. It was kind of boring. Everyone knew that Donald Trump would win and that the Republicans would keep the house and senate. They knew that many of those who neglected to vote would riot and that Kaepernick would just take a knee.
Seriously, WOW!! What a week.
The repercussions of the election could be amazing. The problem is that they could be amazingly good or bad. It depends on how much of what was said on the campaign trail remains in play over the next year. Trump inherits an economy with the following characteristics: The expansion is old. The cycle has seen the slowest rate of growth in American history. Deficits are very high. Interest rates have only one way to go. Health care insurance costs are spiraling out of control. Medicare costs are up 40%. This, combined with unsustainable increases in other social programs, is busting a budget that, under Obama, was covered up by declines in military spending.
But, at least we are growing.
As I have said before, the way to stimulate an economy is straight forward:
1. Lower taxes
2. Lessen burdensome and capricious regulation
3. Limit legislation that creates quasi-monopolies (crony capitalism)
4. Reduce barriers to international trade
5. Reduce barriers to credit creation
Trump's economic program lowers and simplifies personal taxes. It lowers corporate taxes and creates incentives from corporations to repatriate money from overseas. It reduces regulation. It limits the ability of former members of the cabinet and congress to lobby. It will make credit creation easier. And it will create massive infrastructure spending as well as open up oil, gas and coal production. The one uncertainty, in my mind, is how he deals with international trade. If he simply wants a level playing field with countries that now have protectionist tariffs, that would create only minor problems. If it is much more than that, it could be problematic. That would hurt international trade and make it hard for the program to bare the fruit he is looking for. Thus, it is his approach to international trade that warrants the closest attention.
Yet, overall, the basic concepts are sound. Indeed, this is the best chance to get back to a more normal rate of growth we have had in a long time. The potential for more jobs, more productivity growth, higher incomes, higher corporate profits. We should all hope that it works.