Is this time different?

[FoxtArt]

Fox:
I do genuinely respect you, mainly due to the fact that your objections over Trump are atleast based on some logical defined reasons, but we clearly disagree on things.
On the subject of Tariffs, this was announced today:
https://www.foxbusiness.com/politics...cks-home-goods
So let me guess, all that additional monies coming in has already spent- for lack of better words?
And when they dropped interest rates on the 24th, that WILL mean an "interest deduction," and there will be another in the fall, so maybe you are mistaken?
https://www.usatoday.com/story/money...s/86324993007/

Finally No, Tariffs aren't a "Colorado-style backdoor tax on regular citizens" its a fee paid by Importers on goods they bring into the US. And No, we wont "feel it" mainly due to the fact that we have such a huge economy that we can produce everything we need with out Imports.
Thats one of the main points to Pres Trump implementing these tariffs. He's forcing foreign companies to build plants here for US jobs, taxes and wages. And they are doing just that, TRILLIONS of dollars in investment. And buying American for the same reason.

Fed rate reductions have nothing to do with Tariffs, and are usually cut to help bolster a weakening economy at the risk of increasing inflation even more. They are primarily raised to counter inflation. Rates are cut to prop it up and bolster lagging investment. That's just how our economy works, it's not a "win" for any POTUS.

Make no mistake, I'm not anti-tariff, but it is important to understand them. They aren't free for the end consumer. And while they do drive US based investment into some things, the tariff has to be significant enough to do so. Otherwise, it's just the end-user eventually soaking up higher costs on products that nevertheless continue to be imported.

The reality of our country is that we'll never be manufacturing at scale the crap that China and India produces, nor do we want to. Further, the tariffs are driving investments in other nations, but most of it isn't here. When China has higher tariffs, companies move manufacturing to Malasyia or Vietnam for the time being. They aren't making shoe and toy factories in the USA.

Lets say they did bring all manufacturing to the US. Your product costs would be 500% more expensive for mundane items - shoes, toys, furnature, curtains, that kind of garbage. You'd argue that wages would increase, but they wouldn't. Unemployment would lower, but most people don't want to be minimum wage factory workers anymore.

Where would the labor come from? Lax immigration policy, once again. That doesn't increase your wages.

So Tariffs are not a magic "made in the USA" blanket solution. They work to an extent on things like lumber or vehicles, things we arleady domestically produce and continue to. For other things, they just add inflationary pressure, and it is ultimately the end customer that is actually paying for that in every case. It drives US investment in some industries (and potentially economic growth in those set areas), but still at a much higher cost to the end user.

An interesting thing is if you study the history of Tariffs in the US - and I don't remember everything about it, been a minute since I've touched those history books - but I do recall the prior periods in the 19th century that we heavily turned to tariffs as a solution, it backfired.

Sarah Paine has studied all of this in great depth, fascinating source for history. While I haven't seen this video myself, I suspect it covers everything I've said here but with much better facts/knowledge:

https://www.youtube.com/shorts/jv3RZBdT34o

[BushMasterBoy]

China is going full speed ahead on solar. It takes about 2/3 of an oz of silver to produce a square meter of photovoltaic panel. Going solar will greatly reduce China's dependence on foreign oil for energy. Their cities will have clean air again. Supposedly China now has the worlds largest Navy.
I believe our only chance at maintaining sovereignty is maintaining superiority in space and technology. Just my opinion, don't crucify me for it.

https://www.kitco.com/charts/silver#ny

[FoxtArt]

China is going full speed ahead on solar. It takes about 2/3 of an oz of silver to produce a square meter of photovoltaic panel. Going solar will greatly reduce China's dependence on foreign oil for energy. Their cities will have clean air again. Supposedly China now has the worlds largest Navy.
I believe our only chance at maintaining sovereignty is maintaining superiority in space and technology. Just my opinion, don't crucify me for it.

https://www.kitco.com/charts/silver#ny

You're not wrong. Also need power for data centers. I'd argue electricity isn't political either and we should be improving all of it, but no, we're subject to political extremes on either end.

"Clean" energy isn't anti-maga, but it's a great headline generator and a target to cut to get cheers from ill informed. Likewise, it's great when the pendillum swings for cheers from just the opposite. We don't have a baseline of decision making based on rational outcomes anymore.

As an aside, China's spending on Aerospace for the foreseeable future greatly eclipses ours. I chuckle everytime everyone scoffs at their latest tech like G6 fighters etc as if they are still in the 90's. They aren't far away from having both superior technology and weapons... as well as production capacity, numbers deployed, and the manpower behind them.

We're the setting sun.

[BushMasterBoy]

China is launching satellites from ships. We have boosters that land vertically and can be relaunched in a few weeks. I think the US is more of a rising star than a setting sun.

[Oscar77]

Fox:
Yes, you are right "......Fed rate reductions have nothing to do with Tariffs...."
But that wasnt the point I was making.
We have a national deficit. That deficit which you and I have been discussing. How a deficit develops is the Govt spends more than it has in revenue. The money they spend (but dont have) is acquired by loans of different means but they Govt doesnt get the extra money for free. They pay interest on the loan. Those interest payments are included in the deficit amount and is what you and I are discussing. For example in FY 2024 those amounted to 879.9Billion dollars or 13% of the Federal expenditures.
So it's in, actually all of our interests, not just the Presidents, if interest rates lower.
But instead of soley to counter inflation, it, (reduced interest rates), not only reduces the deficit but make credit card rates cheaper, allow homes, cars etc to be bought.
Not to mention all the businesses that benefit from lower rates- they borrow money too- buildings, trucks, etc etc.

Thats the main reason why they also increase rates, if the economy becomes too hot or more correctly inflation rises too quickly or employment rates drop too low.

Take Care.

PS: While certainly appreciate theoretical statements by Scholars, unfortunately my experience has been lately they have been horribly wrong. I prefer to look at the at the actual numbers or just look around.
Foreign Investment in the US is at an all time high- Why would they risk all that money and time if they felt it would fail?
You say Tariffs will increase costs to the consumer or ultimately fail, well they haven't.
You say bringing jobs back to the US will increase costs, well it hasn't.
So you say well, those things are coming........ but that's a guess, grant you a well thought out guess, and you could be wrong.
But those things, like increased consumer costs, could easily be off set by dropping interest rates or better production capabilities here.
Thats a guess too.
I think I'm right............ you think you're right.
No worries.

PSS: To clarify part of my concern over relying on Scholars is this: I believe, but could be wrong, that your scholar reference goes back to 1930 when Pres Hoover signed the Smoot-Hawley Act.
(Yes I had to remind myself of it thru google).
But immediately I'd argue that any comparison to the US then vs now is sheer folly. There is no realistic way to compare the condition and strength of the US now vs then. Just one example: Then we were basically nothing more than an agricultural based economy. Now we are the World leaders in Tech, Defense, Education and finance.

So for a current observation, watch this, it's short:
Larry Kudlow: Jerome Powell's Fed wrong about growth and inflation 'as usual' | Fox Business Video

[Clint45]

Math isn't political.

The thing is, there are other factors involved which typically are not included.

I make zero premise of understanding stocks or crypto, so will address neither, but both seem artificially inflated.

We do need to consider the amount of US currency in circulation, as well as the actual amount of our gold reserves (even though we're long off the gold standard).

Biden had the presses at the Mints printing USD 24/7 for 4 years... and China was sending us CONEX containers filled with pallets of "super bills"... so there is WAY more currency in circulation than there should be. This effects wages, food prices, energy prices... and then there are shortages and shipping issues. MANY things effect the actual realistic value of the USD, which has dropped sharply since the 1980s.

Some very well informed sources claim that value is but a small fraction of what official sources claim... and it could collapse at any time, as it's all held together with duct tape and lies, because "We can just borrow more money, print more bills, and use Social Security as a slush fund."

[rfenster]

Speaking of gold reserves, what ever happened to reporting on what is in Fort Knox?

And yes, US currency in circulation is a concern.

[Aloha_Shooter]

FoxtArt, the hate for Trump is really derailing the value of your posts. I get it, there are a lot of things that piss me off about him too but my post wasn’t directly about the deficit (although there’s potential for a secondary effect there). It was about how the Democrats are threatening a shutdown and they don’t seem to realize they aren’t in a position to manipulate this particular shutdown into maximizing the pain on the American public.

In past shutdowns, this is precisely what they did which left the less informed citizenry with the idea that reduction in government spending equals pain and inconvenience in their daily lives. Trump seems to be preparing to show the citizenry that a significant reduction in the size and scope of government will be minor if any pain and inconvenience. Government spending has grown 30% in the last 5 years. The first year of that was all on Trump although he had the COVID spending as a partial excuse but the last 4 years of it was all on the Dems. Regardless of who pushed that spending increase, it’s not healthy for the nation or the economy so I think getting the public to understand it can be trimmed and programs can be terminated is a good first step.

Hell, I’d have given Clinton or Obama credit if either of them had done this but they didn’t — they did precisely the opposite, inflicting the maximum possible damage on the public to keep the spending flowing.

[Oscar77]

The thing is, there are other factors involved which typically are not included.

I make zero premise of understanding stocks or crypto, so will address neither, but both seem artificially inflated.

We do need to consider the amount of US currency in circulation, as well as the actual amount of our gold reserves (even though we're long off the gold standard).

Biden had the presses at the Mints printing USD 24/7 for 4 years... and China was sending us CONEX containers filled with pallets of "super bills"... so there is WAY more currency in circulation than there should be. This effects wages, food prices, energy prices... and then there are shortages and shipping issues. MANY things effect the actual realistic value of the USD, which has dropped sharply since the 1980s.

Some very well informed sources claim that value is but a small fraction of what official sources claim... and it could collapse at any time, as it's all held together with duct tape and lies, because "We can just borrow more money, print more bills, and use Social Security as a slush fund."

You make some well founded points but consider this:

We arent remotely close to a financial collapse. And collectively noone is concerned that we are. The proof of that is that we remain the Economic and Financial leader of the World. And Foreign companies and countries continue to invest in us and yes, loan us money because they know that. They wouldn't do so if they didn't trust our future stability. I mean would you loan someone money if you believed you wouldn't get it back? Even with our large deficit, we are still capable of repaying our debts.
If somehow, thru a bizarre set of situations, one or both of these happen, then yes, we might be in trouble: we begin to default our debt loans or people/govt's refuse to "buy" our debt (provide us with loans) then yes, we are in trouble.
But we are SO FAR away from that right now.

A Govt manipulating it's countries money value is a long accepted and used tactic. We do it though indirectly. And yes, one way to affect it is literally by how much paper money is in circulation. Simply put, keeping a check on its value helps with imports (they remain cheaper) and exports (our goods don't become too expensive).