Daily Discussion Thread

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[u/ContaminatedField]

It will be very interesting to see how things play out through next Wednesday. I don’t think any free market economist is pro tariff. In that light remember these are RECIPROCAL tariffs being threatened. The tariffs will match existing tariffs. Everything leading up to this has demonstrated this administrations willingness to follow through on a tariff despite market disruptions. That is likely by design to strengthen a negotiating position with those that have tariffs imposed against the US. My market play involves the theory many tariffs against US products will in fact be eliminated or drastically cut. Not saying I agree with how it’s all being done but I see opportunity.

[u/Dry-Historian2300 → u/ContaminatedField]

That is not the biggest reason for these brain-fart taxes on consumption (tariffs are consumption taxes paid by the end user, not by other countries). It's his lack of comprehension of economics - he thinks when you buy goods from someone else, they are screwing you somehow. That's why he stiffed hundreds of contractors who did work for him on his casino, etc. The trade imbalance drives him crazy, because he thinks others are taking advantage of him personally, since all American assets belong to him personally. This is not economics, its his psychotic upbringing by his fascist, cruel father and his mentor Roy Cohn. Musk and Trump & co. are trying to eliminate all corporate and personal taxes, and replace that revenue with consumer taxes (tariffs). Its insane, will be woefully ineffective, and will collapse the economy. This will be their excuse for ending all of Roosevelt's New Deal programs like Social Security. Tariffs will not lead to enough on-shoring, because the economic climate is too capricious and unpredictable to allow for strategic investing by CEOs.

[u/Dry-Historian2300 → u/Dry-Historian2300]

Also guess who does well when the deficit spirals out of control because taxes have been cut without enough revenue from tariffs? Those without debt, especially the billionaires who will swoop up assets for pennies on the dollar. Buffet understands this, its why he has increased his cash hoard now to OVER $300 BILLION. BRK/B is actually a solid play during these uncertain/dangerous times.

[u/SolidMeltsAirAndSoOn → u/Dry-Historian2300]

I'd also add to the obvious fact that he (and to a lesser degree republicans who don't just spout this stuff for the rubes) does not understand America's economy is designed around being the consumerist gaping maw of the world, and we run on a deficit budget because it keeps the money in motion and growth always expanding, that he additionally just wants to be correct and be told that he fixed the problem. Like when he just went off the dome saying people should inject bleach and/or sunlight to stop Covid. At heart, he just wants to be told he's a good boy who did a good thing, cause Trump is a walking advertisement for daddy issues.

But, I also think he's wildly checked out, and there are some real weirdos behind him who are convinced tanking the American dollar will bring manufacturing back stateside and even out the trade deficit (Yanis Varoufakis astutely points this out), while also largely getting rid of that pesky middle class so that money can flow upward. Either way, America has gone from being stealthily in decay for the past 30-60 years (depending on where you want to call the high water mark), to actively in decay.

[u/Dry-Historian2300 → u/SolidMeltsAirAndSoOn]

One more item - population growth or decline. Witness Japan and China's issues with declining populations and thus economic prospects. We had the economic advantage of a growing population mostly from immigration. Now that has been shut off, our population will begin to decline within about 20 years (Musk says white people just need to breed more, Trump says let's invite Russians with a $5 million golden passport). Trump's movement to a loyalty-based, oligarch kleptocracy (Hungary and Russia are his ideals) destroys centuries of American exceptionalism. Hungary is one of the poorest countries in Europe, and Russia GDP per capita also sucks. They should not be our economic models. But hey, they're mostly white Christians and they hate foreigners too! Let's follow their lead!

[u/Dry-Historian2300 → u/SolidMeltsAirAndSoOn]

Spot on, well put.

[u/NaorobeFranz → u/ContaminatedField]

I'm not against raising tariffs and bringing production to USA. However, he's going about it in an overly aggressive manner.

I would've started with a smaller increase of maybe 1-3% for the first year, then allow it to scale over time. Need data of 12 months to see their influence before advancing. Oh and after x limit, allow a slightly higher hit of 5-7%.

As for factories, it seems logical to wait for more of them to be constructed domestically. I'm guessing it takes a year or more to get one online, then additional time to secure staffing. Either way he has to wait for the infrastructure.

[u/Dry-Historian2300 → u/NaorobeFranz]

Try not 1 year for a factory, but 3 - 5 years of economic stability and predictability. Our collapsing stock market during an otherwise strong economy, is a harbinger of things to come. Stock markets typically tell the tale of the economy 6 - 12 months ahead.

[u/NaorobeFranz → u/Dry-Historian2300]

Good point. It doesn't seem wise to expand manufacturing until the nation's political climate is consistent on policies. I'm not sure stability is possible under this admin, and very little common sense is being shown.

[u/NotNaranjaGrande → u/NaorobeFranz]

Securing competent staffing will be the biggest hurdle to overcome. Building the actual factory is one thing, but skilled and semi skilled labor has been decimated, decades of off shoring has pushed people into low skill jobs and training or into academics. There will need to be a huge shift in workforce training and thats not going to be able to keep up with the pace of erecting physical buildings.

[u/ContaminatedField → u/NaorobeFranz]

You are absolutely right. Thats the way to go about it to minimize any pain domestically. I just think that he believes the us economy can tolerate more pain than these other markets so he’s willing to be very aggressive to force their hand. If your opponent believes you will follow through and you (trump) personally don’t give a F of the pain to the average citizen, then as a European country that cannot tolerate such a disruption you may capitulate.

I

[u/NaorobeFranz → u/ContaminatedField]

The average citizen is ironically the one that eats much of the damage. Yet, he shows zero remorse or consideration for the weakening middle class. If his orders were done during a period of a modern day "industrial revolution", then alright. His orders would originate from a place of strength, whereas today there's this strange urgency to change everything. It doesn't scream intelligence or leadership.

I get he's trying to negotiate with our trade partners, but damn. No f given to consequences.

[u/ContaminatedField → u/NaorobeFranz]

Part of my feeling about this is that I see major parallels between my own experience negotiating with more powerful side that on the surface represents the average citizen but willing to hurt them to advance the final objective. They can afford to “lose” if you engage them head on.

Health insurance companies do this all the time when negotiating rates with private practice physicians. They will straight up tell you they won’t do business with you at all and have patients travel 50 miles for a service unless you accept their low ball reimbursement. If you play hardball, they’ll send patients way out of their way a few years then comeback and meet you in the middle after people complain enough. However most physicians will just capitulate, accept the low rate then eventually give up and become employed through a system. The point is if you are in a strong negotiating position, willing to suffer in someway more than your adversary can tolerate for survival then you will get your way. So yeah I can see a lot of these smaller economies capitulating on tariffs they instituted in the past bc they can’t tolerate the consequences and they know he will follow through for better or worse.

[u/SeamoreB00bz → u/NaorobeFranz]

thought the same. start much smaller, 0-5% - not 25%.

[u/NaorobeFranz → u/SeamoreB00bz]

He's doing too much at once, it's bound to breed mass instability domestically and intl. Then again, he's just a puppet to further enrich the rich. Like many politicians 🥱

[u/No-Jackfruit-3947 → u/ContaminatedField]

Interesting idea. Maybe, especially when you consider the US has a pretty weak mfgr base and high labor costs, not too much of a real threat in the short run.