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The Fog Of War
Wall Street tried on Tuesday to claw back the worst of the session's tariff-related losses, but the
I am not sure if I agree with McElligot on this one. Would Trump be ok with a recession just to get lower rates and a cheaper USD? I know that is crucial to his broader policy agenda, but he is so egotistical that I doubt he could stomach a recession, even if it’s engineered.
“Engineering” a recession sounds absolutely fraught with peril, even if those in charge were masters of economic policy, and not the utter clown show that we are witnessing now.
H-Man, I agree that any of the events to get rates lower are bad things – like the economy going up in flames. Not sure that I would agree this is an “engineered recession” — looks more akin to a wrecking ball in a glass factory. He hasn’t figured out that his simple populist solutions collide with each other. Tariffs are going to make inflation more sticky than it already is, and sticky inflation does not bode well for rate cuts even if the economy is sinking. Arthur Burns never figured this out, and every time he cut, inflation came back with a vengeance.
Let’s not forget the economic peril that comes from significantly shaking up the social fabric with nearly complete uncertainty via mass layoffs and deportation, increasing inflation, blood letting critical industries, threatening the social safety net, ransacking the bureaucratic state and eradicating science and logic from decision making to name a few. It’s like being surrounded by 10 poisonous snakes where one step wrong could be fatal.
Some of what we are observing is emanating from Trump and some from the 2025 team, none of whom would suffer if we have an engineered recession and increased inflation. I’ve been wondering if high unemployment (the Feds other mandate) would ‘trump’ the fight against inflation. Wouldn’t want to be in Powell’s shoes now. Also, don’t count on his 51% of the voters turning on him at the midterms since he promised they “wouldn’t have to vote again”. Whatever did he mean?
Trump and his junta will take any action to hurt this country to get his way. He really hates America because he feels he is not sufficiently loved by one and all. He will tell any lie, hurt any individual, most of all the poor, whom he considers losers, to get what he thinks is the “smart” outcome.
I agree with Mr. McElligott. I am getting tired of watching Those In-Charge force fit the news cycle to defend actions they would have to take anyway. Take the downturn in Bitcoin for example. Trump tariffs? I doubt it. Economic uncertainty? Not likely. But before you devalue the buck, you had better give it room to run.