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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Catastrophe or Chaos…

 

…or both.

Roger Mitchell has written a post, The Warlord of my Dreams.  I want to focus on one aspect of this.  He notes that many look to the fall of Rome for a comparison to the current situation of the US Empire.  He believes looking at Tsarist Russia before the Bolshevik Revolution is a more appropriate analogy.  He offers several characteristics of the situation in Russia that can be compared to the situation with the US today.  I offer several of these that ring especially true for me in our current situation:

·         A tone-deaf elite which held virtually all the wealth of the country and which held the common people in contempt.

·         Huge philosophical and political differences among the populace.

·         A large number of factions at grassroots level who were willing to battle with each other at a moment’s notice.

·         Inability of the State to maintain control and order.

I think it is pretty straightforward to find history, if not repeating, at least rhyming, with these points.

Yet the one I wish to focus on is the following:

·         A vivid memory of a major military defeat in 1905 vs. Japan.

Following is an expanded version of my comment at the post; I am not going to attempt to delineate what was original vs. what has been added:

Roger, the comparison to Tsarist Russia is very good. I think the point of losing the war against Japan may line up very nicely with what is happening in Iran today. 

Would Russia have lost if they had nuclear weapons and Japan didn’t? In this case, would Russia have humbly slithered back home, or used nukes? A thought experiment worth considering in our current circumstance.  Iran is fighting a war against two countries with nuclear weapons.  Can we believe at least one of these two is not crazy enough to use their nukes in order to get what they want?

The choice facing the United States today: destroy the world economy, or slither back home.  If the choice is to destroy the world economy, the US would lose, but the rest of the world will lose much more. So, relatively speaking, yay for our team (sarcastically); we come out of the catastrophe still on top (like at the end of World War Two).  Assuming we come out of it at all.

To explain my fundamental understanding of the geopolitical world: as I have written often, it is based on the ideas of Halford Mackinder.  Whoever controls the World Island will be the primary power in the world.  The world island is basically Russia, western and central China, and Central Asia – eastern Europe would be a nice-to-have, but not necessary.  We see this World Island coming together via mechanisms such as BRICS and the Shanghai Cooperation Organization.  We see it in China’s Belt and Road Initiatives. 

Now, I see no way for the United States Empire to control this World Island.  The objective for the Empire, then, is to cause chaos in it and around it.  Sure, it would be great if Iran had a puppet government doing whatever the US wanted, but it isn’t necessary.  Just turn Iran into a hell-hole, cause chaos; this will be enough to reduce the possibilities of developing the World Island.

You will note: I am not saying that the US is doing this for Israel.  The US didn’t need Israel to fight in Korea, Vietnam, or Afghanistan (countries useful for their proximity to the World Island); it didn’t need Israel to expand NATO to Russia’s borders; it didn’t need Israel to ring China with bases throughout the Far East and Southeast Asia; it didn’t need Israel to destroy the economy of Germany or Germany’s economic relationship with Russia (which would have been beneficial to both Germany and the World Island); it didn’t need Israel to poke the Russian bear via Ukraine.

There are ongoing conflicts of various degrees of heat in Myanmar, Kashmir, Pakistan, India, the Philippines, or Bangladesh – none of these anywhere close to Israel and all of these in proximity of the World Island.  In these cases, I am not claiming an overt or even covert US involvement (although with hundreds of military bases and countless CIA assets around the world, well…), yet these serve the purposes of disrupting the advancement of the World Island.

The US would love for Japan or South Korea to be as rabid in the Far East as Israel is in the Middle East.  It would be of great benefit to the Empire.  But with or without, Empire rolls on.  The objectives for the Empire are clear: if I can’t have you, no one will; if I can’t control you, I will ensure you are uncontrollable.  In other words, the World Island cannot be allowed to develop. 

Simple enough.

Conclusion

I see no offramp in Iran – yes, maybe in the short-term, but not in the medium term.  And sooner or later, nuclear weapons are most likely involved here.  Whether it’s the US or Israel is irrelevant. 

It is interesting to me how calm I remain in this circumstance. When I truly can do nothing about the geopolitical situation, all I have is Christ. Yes, that’s all I always have, but there is something about my total impotence in the face of this current evil that in a way brings me calm and peace.