TRUMP NEEDS TO SET UP A HOTLINE TO TALK DIRECTLY TO CEOS TO ENSURE THE LIQUIDITY CRUNCHES DO NOT RESULT IN BANKRUPTCIES
FATALLY FLAWED ANALYSIS IN US MEDIA LIKE ZEROHEDGE CAN LEAD TO THE CRASH OF THE US ECONOMY
SUCH BASIC ERRORS ARE MADE, THE QUESTION ARISES WHETHER THERE IS A DELIBERATE ATTEMPT BY WEF FINANCIAL ENTITIES TO CRASH THE US ECONOMY WITH FAKE INFO FOR THEIR PERSONAL PROFIT AND TO OUST TRUMP
PLUS, THE DRAG EFFECT OF RECORD CONSUMER AND BUSINESS DEBT SEEMS TO BE IGNORED
CONSTRAINS CONSUMER SPENDING AND INVESTMENT
WE HAVE TO HOPE TRUMP S TEAM IS READY BECAUSE THE MID TERMS AND RE ELECTION DEPEND ON GAIN WITHOUT PAIN
Zerohedge has featured a report downplaying the problems with tariffs which makes basic economic mistakes.
https://www.zerohedge.com/economics/economic-pain-market-concerns-about-us-economy-may-be-exaggerated
For example, it is claimed that tariffs do not create inflation.
Tariffs do create inflation.
Inflation is created by either too much money or too little stuff, products, things on the market.
The two different causes for inflation are called two different things.
They are called
1 demand pull (too much money in circulation)
and
2 cost push ( too little stuff or too costly stuff)
https://www.rba.gov.au/education/resources/explainers/causes-of-inflation.html#:~:text=As%20their%20names%20suggest%2C%20'demand,supply%20side%20of%20the%20economy
So, the tariffs can cause inflation unless US and foreign manufacturers start making stuff, things, products in demand domestically and selling them at the pre tariff prices.
This is such basic, simple economics, you have to wonder if Zerohedge is trying to crash the economy for Wall St to be able to make opportunistic purchases...In general, Trump has to look out for fake economics promoted by WEF financial entities, their media and advisors, who may not want to see American production coming back.
But if the stuff they make requires stuff which is more expensive due to tariffs, the stuff becomes either more expensive as the extra costs are passed on to the consumer or the profit margins must shrink.
Therefore if there are not enough products, stuff in the market because of tariffs, it can cause inflation, massive inflation, in fact.
Furthermore, the plan seems to underestimate the drag affect of the record amounts of personal credit card, business debt as well as national debt.
The debt problem is not just unsustainable for the government. It is unsustainable for businesses and consumers who are the foundation of government revenue and taxes!!!
Before 1913, when there were still tariffs, there was no similar levels of debt burndening businesses and consumers with interest and draining away their capacity to spend, save and invest.
How many businesses today can afford to invest large amounts now for gain which may come in 2 or 3 years if at all due to volatile markets?
What if a bank does not give them a loan?
What if the loan is at very high interest rates making the investment unprofitable.
For example, let s take a car manufacturer who decides to make ball bearings and screws to fill a gap left by tariffs.
Supposing the costs are calculated at 100 million to start up the factory and fixed costs of 40 million (the land, permits, construction of the plant, machinery, skilled workforce, wages, raw materials, energy) and the income for the first years is estimated to be 30 to 50 million.
Now supposing the maunfacturer has to pay 5% interest on the 100 million loan and makes a loss of 10 million because the cost of steel or energy causes higher prices and lower demand.
That car manufacturer has lost 15 million.
How long can that be sustained?
Another major error concerns consumption.
Consumption is not a little detail. It is the basis of wealth.
High wage workers with purchasing power buying products create the virtual upward circle Trump wants.
Without consumer spending power, companies cannot sell enough stuff.
They must downsize or go bankrupt.
The result is unemployment.
The government losses tax revenue.
Cuts in government spending, especially the massive DOGE cuts, have to be offset by giving cash to consumers to keep demand strong.
For sure, government waste should be cut because it is inflationary
But government salaries and contracts also prop up DEMAND and consumption.
If a huge chunk of DEMAND leaves the market, then companies find it hard to SELL their stuff, creating a RECESSION.
Cash can be given in the form of higher wages, bonuses etc.
But for the demand in the USA to remain about the same, the massive government cuts have to be offset.
Otherwise consumers do not have enough money to buy products.
In shot, cutting government spending and introducting tariffs can lead to a crash in the market, inflation and increase the deficit.
Without the Treasury printing money out of thin air, it may be impossible for Trump to ensure companies get cash grants to cover start up costs without expensive bank loans, production costs for a year, wages for training, for employing a skilled workforce, to subsidize expensive importts etc etc and keep them afloat until the profits start to roll in on the one hand.
On the other hand, he has to give money to consumers to buy stuff in the form of higher wages, tax cuts, interest rate cuts.
Plus, he needs to ensure companies can get building permits quickly etc
May even need to call on the army engineers to construct buildings, roads to get plants up and running.
From media
What are the main concerns from investors? Cutting spending and tariffs. However, reducing government spending is essential to reduce inflation and slash the deficit. In 2024, government spending rose by 10%, a completely abnormal figure that elevated the federal deficit to almost $2 trillion, leaving the U.S. economy with the worst GDP growth adjusted for debt accumulation since the 1930s. This unsustainable spending and indebtedness path was leading America to a debt and inflation crisis. Inflation was caused by elevated government spending leading to exceedingly high money supply growth and destruction of the purchasing power of the US dollar. The MIT concluded that federal spending was responsible for the 2022 spike in inflation and subsequent increases in government outlays and money supply growth perpetuated the inflationary pressures and created an unsustainable debt problem, with interest expenses rising to close to $1 trillion. With this trend, the US debt to GDP would rise from an alarming current 122.3% to 156% by 2055, according to the Congressional Budget Office. Thus, cutting government spending is essential to reduce inflation and avoid a debt crisis. A slowdown of GDP growth coming from a reduction in government spending is not a negative but a signal of strengthening of the productive economy.
...
Tariffs do not cause inflation, as they do not generate an increase in the quantity of currency or the velocity of money. Tariffs are a tool to level the playing field and address the excessive trade deficit of the United States, which is not caused by competitive and open market means but due to all the barriers lifted against U.S. exporters in other nations. Many countries seem to have a view of free trade that means being able to sell as much as they want in the United States while, at the same time, placing increasingly tough trade barriers against U.S. exporters, including tariffs, legal limitations, and regulatory and fiscal burdens. The U.S. trade deficit has tripled from $43 billion in March 2020 to $131 billion in January 2025.
...
Markets may be spooked by tariffs, spending cuts and inflation concerns because those may mean less money supply and fewer rate cuts. However, tariffs are a negotiation tool aimed at improving the trade balance. Eliminating barriers and negotiating better terms is positive for all markets. Furthermore, the history of trade negotiations and the use of tariffs have proven to have a much smaller impact on the United States economy than initially feared. The 2016-2019 period also proves it. Furthermore, the United States economy is significantly more dynamic and powerful than many believe. Supply-side spending cuts and debt reduction, tax cuts and balancing trade are not negatives for the economy. They are all essential tools to recover real wages, financial strength, and a thriving productive sector.
Short-term pain for long-term gain.
https://www.zerohedge.com/economics/economic-pain-market-concerns-about-us-economy-may-be-exaggerated
