When the state has a hand in the means of production, or when a president assumes he can spend money on "anything I want"… that, dear reader, is precisely socialism, or as in China, state-sponsored capitalism.
Government picking winners is the downfall of an industry or, at a larger level, a country's economy.
Trump has made it clear he despises the Federal Reserve's current chairman, Jerome Powell, who refuses to lower interest rates. Trump claims lower rates are warranted because, counterintuitively, the economy is strong. (A weak economy elicits lower rates; a strong economy demands steady rates, maybe even rising rates to keep it from overheating.)
But here's the real problem: Trump wants complete control of the Fed, an organization designed to operate independent of political control.
As Trump announced in a recently televised cabinet meeting, "We'll have a majority [on the FOMC—the Fed's Federal Open Market Committee] very shortly. Once we have a majority, housing is going to swing, and it's going to be great. People are paying too high an interest rate."
A president crowing about having his own majority running a supposedly independent body that serves as arbiter of the economy is going to be a national disaster. Period.
This is the exact playbook that sent Venezuela and Zimbabwe into hyperinflation: leaders who think they're smarter than they really are when it comes to how the economy works.
A sycophantic Fed is bad news for America and for the world. If this comes about, and if we see a Trump Fed cutting interest rates to appease Dear Leader, the world will flee US financial markets, the dollar will plunge, inflation will rage, the Fed will print new currency at an historically insane pace, and Americans will see their financial life rapidly devolve.
Trump has taken a wrecking ball to long-standing US alliances all over the world as he tries to bend other countries to his will.
It's not working.
Trump, for instance, recently imposed a 50% tariff on Brazil because the country had the temerity to prosecute a former strongman president—a friend of Trump's—who failed in a coup attempt. Brazil shrugged at the Trump tariffs and found other buyers for its products elsewhere.
The result: Brazil's exports actually rose 4% in August, the first full month of Trump's Brazilian tariffs. Early September data indicate continued momentum. (Note: The tariffs are hurting American consumers. Brazil is a major exporter of coffee and beef to America, and retail coffee prices in the US were up 21% year-over-year in August, while beef prices are at record highs.)
As alliances fall away, demand for US products and US financial investments falls away, leading to a collapsing dollar and increasingly higher inflation in America… which undermines the economy and family finances… leading to higher market interest rates, which the Fed doesn't control… culminating in home prices in decline, an extreme debt crisis, and a US economy that would slip into a deep recession, maybe even depression.
Each of these alone is an outlier. But taken as a whole, they collectively represent an existential threat to the America we know.
We could very well see states cleaving off, or at the very least "soft seceding" in which they withhold state dollars that would go to the federal government and deploy that money at home (leading to a massive, potentially volatile standoff).
We could see the economy collapse.
We're almost certain to see the US dollar sink to record lows.
In short—America is going through an existential crisis… in part due to economic decisions that make no logical sense. We face the risk of the Federal Reserve losing its independence, and countries backing away from American financial assets.
Have we reached the breaking point? Is there a path back to normalcy?
Hard to say.
Even harder to see what that path would look like.
But I do know it's past time any forward-thinking American had a Plan B in case the worst happens.
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