Trump Inflation 2.0

 

We all remember these stickers, plastered on gas pumps everywhere.

 

 

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It was fun to blame Biden for the very high inflation we suffered through his presidency, and there is no doubt that his policies, along with the Fed’s view that price inflation was “transitory,” contributed to the significant price increases.

As a reminder, the Year-over-Year CPI increase in 2021 – 2022 hit a high of 9.1%, with 26 straight months (from April 2021 to May 2023) of 4.0% or higher. 

We called this the Biden inflation, but it was driven by policies which were initially implemented during Trump’s last year in office – money pumping and lockdowns (remember those?): in other words, plenty to spend and little to buy equals price inflation.

Let’s begin with federal government expenditures.  The following are seasonally adjusted annual rates, per quarter.  So, Q1 2020, basically before the lockdowns, the annual rate was $4.9 trillion.  In Q2 2020, that jumped to $8.9 trillion (keep in mind, this is not for the prior four quarters; it is annualizing the current quarter).  In other words, the rate of federal spending almost doubled in one quarter under Trump.  Thereafter it ranged from $5.9 trillion to $8.4 trillion.  So, note: the drastic increase in federal spending initially and primarily occurred during Trump’s last year in office of his first term.

Next, let’s look at the balance sheet of the Federal Reserve.  This balance sheet both helps to finance government spending, but also provides base money to support fractional reserve banking.  Following are the balances at specific points in time:

·         January 2017: $4.5 trillion (when Trump 1.0 came into office)

·         September 2019: $3.5 trillion (the low of Trump’s first term)

·         March 2020: $4.2 trillion (before lockdowns and the explosion of federal spending)

The increase from September 2019 to March 2020 should be noted: recall the overnight Fed market was frozen in September – federally insured and guaranteed banks wouldn’t lend overnight to one or more of their brethren.  I still hold (as I wrote at the time) that this issue was one of several which drove covid mania by the government – to fund the banks without another 2008 type populist revolt.

Continuing:

·         Jun 2020: $7.2 trillion (within three months, a $3.0 trillion increase, and more than double the September 2019 balance)

·         Jan 2021: $7.3 trillion (Trump’s last month in office)

·         April 2022: $9.0 trillion (the Biden peak)

Now, my point isn’t that the price inflation we experienced from 2021 – 2023 was all Trump and not Biden, but it was begun by Trump and would have still been significant even if Biden hadn’t done anything to advance it.

Which brings us to Trump Inflation 2.0.  He’s done it again, this time via the Iran war.  Since the start of the war in Iran ten weeks ago, Year-over-Year CPI went from 2.4% to 3.8%, and few see any end in sight, at least regarding oil, gas, and dependent or related products (which means pretty much everything we buy).

But look: the Dow, the S&P, and the Nasdaq are all at record highs!  So things are great!

Understand, inflation is great for the wealthy.  It increases asset prices, first of all.  Second, it doesn’t matter to them if price inflation costs them an added $20,000 or $200,000 per year for food and gas when their asset values are going up ten or one-hundred times that.  Anyone with even $10 million in assets will have made at least $1MM in net worth gain in the last year; anyone with $10 billion in assets would have made $1 billion.  Do you think they can’t cover a gas price increase of a few dollars a gallon?  Do you think they don’t like the tradeoff?

Trump has instigated a great wealth transfer of the covid years, and he is presiding over another great wealth transfer via the Iran war.  No wonder the oligarchs love him.

Slight change of subject, but while I’m at it.  “How have I failed thee?  Let me count the ways.”

·         DOGE

·         End Ukraine war “in one day”

·         No new wars

·         If I was president, that war wouldn’t have started

·         Release the Epstein files

·         Iran

·         Considers himself God

 

Besides this, he hates or has alienated all those who were the strongest supporters of MAGA: Thomas Massie, MTG, Rand Paul, Tucker Carlson, Candace Owens, Megyn Kelly, Alex Jones.

Conclusion

“I did that!”  They already have the stickers.

 

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Some Clarity

Observations and thoughts about how things are going with MAGA.

Whatever the Reason

Whatever the reason that Trump isn’t get most of what he said he wanted to do get done, he isn’t.  Whether he wants to but can’t, or if he doesn’t want to and never wanted to, it doesn’t make a difference.  It just proves, perhaps more powerfully than ever – given the wave of support Trump had – nothing meaningful will change based on who you vote for.

The best way to kill a movement?  Give it what it wants.  Trump, with a majority in both houses of congress; some of the best anti-war / pro-transparency people in his cabinet.  Then prove that nothing important changes; they laughingly put your impotence right in your face.

But, a reminder to not forget what has changed.  Yes, the border seems to be reasonably closed – except for more H1-B visas and more foreign college students.  And yes, we don’t hear as much openly about how terrible you are if you are a straight white male.  So, that’s something.

Civil War

It was clear all along: supporting genocide was sure to split the republican base, just as it did the democratic elite from their base.  Note the difference: on the democrat side, the split is fundamentally between the elite and the base.  On the republican side, the split is in the base.  For both the democrat and republican elite, there is no split – they are all in.

It is tough to keep in mind, but while the people vote for revolution (e.g. Trump three times, Bernie Sanders in 2016, Mamdani today), the elite want civil war – keep the plebes fighting against each other, and that way they won’t revolt against the elite.

Problem Solved

In the first few months of Trump’s presidency, I wrote something about not being sure what to make of Trump 2.0.  The answer has become clearer to me, and not because I have deciphered his 17-D chess moves or anything like that.

When you want Thomas Massie out, and when Marjorie Taylor Greene is a traitor and resigns (read her resignation statement here, and see if this isn’t more like what people thought they voted for with Trump), and throw Rand Paul in there as some other kind of bad guy, there is no cause for confusion.  The most “America First” people in congress are enemy number one for Trump.

Need more be said?

Quo Vadis MAGA?

Which way are you going, MAGA? 

Trump is the most confusing president in my lifetime (just see my last post, and compare it to several of my earlier posts).  Some people see him playing 4-D chess or call it his negotiation strategy, others just see it for chaos.  He regularly says things the opposite of each other and regularly does things at least seemingly the opposite of each other or opposite of something he just said three minutes before.  I won’t rehash these here, I think the evidence is clear enough.

I have been thinking through how I might best understand what is going on.  At times like this, I think it is best to go back to some fundamentals; call these the lenses through which I see the political world.

There are two fundamental lenses through which I see the geopolitical landscape.  Now, I often forget these, and when this happens, I find myself swaying because of allowing myself to be unrooted.  Having said this, I am not completely married to these two lenses – these may not play at all.  However, until I see actions clearly in contradiction to the lenses…well, the lenses stand for me.

So, what are these lenses?

The Geographical Pivot of History

Also known as the Heartland Theory.  Halford Mackinder gave a talk in 1904 to the Royal Geographic Society in London.  A picture is worth a thousand words, so let’s start with a picture.

 

 

To summarize his thesis: whoever controls the Pivot Area controls the world.  Britain at that time, and the United States certainly since World War Two, have controlled the seas – the Lands of the Outer Crescent.  But this will be irrelevant to whoever brings under control and tames the Pivot Area.

I ask you, therefore, for a moment to look upon Europe and European history as subordinate to Asia and Asiatic history, for European civilization is, in a very real sense, the outcome of the secular struggle against Asiatic invasion.

For a thousand years, Europe dealt with hoards coming from Central Asia – the Pivot Area, or Heartland. 

To the east, south, and west of this heart-land are marginal regions, ranged in a vast crescent, accessible to shipmen. 

The margins, or Inner Crescent, are key.  A buffer for the Pivot Area and a source of chaos for the Outer Crescent to use against the Pivot Area.  And, guess what?

 

 

Mackinder identifies the key players of his time.  Little has changed:

Outside the pivot area, in a great inner crescent, are Germany, Austria, Turkey, India, and China, and in an outer crescent, Britain, South Africa, Australia, the United States, Canada, and Japan.

I would only comment that western China is certainly in the Pivot Area, making China a key Pivot Area player.  Otherwise, take a look at the list: the Outer Area was at the time all allies of Britain (with South Africa more recently becoming iffy).  Those in the Great Inner Crescent are seen as where the game is to be played.