"Road to Bankruptcy"
by Bill Bonner
SAN MARTIN, ARGENTINA – "Our review of Donald Trump’s record in office yesterday brought forth a torrent of complaints from readers. No one disputed our arguments. Instead, they merely claimed that there was more to the story. Ruban L.: "In my opinion, no previous modern president has accomplished more good than President Trump has done."
Maybe Trump has done good things… other than those he promised to do. D. M. thinks so: "You failed to include the many good bills he initiated and passed! Typical Trump hater!"
Maybe he has been under a lot of pressure… Give him a break, says Sam A.: "He has been up against a very angry, agitated, and pathetic Democratic House of Representatives, as well as deeply embedded bureaucrats within the Deep State. At least he has made attempts at his chosen goals, which cannot be said of his predecessors, both Republican and Democrat."
Maybe Joe Biden will be a lot worse. Dean A.: "Yes, but what of the alternative right now? Crocked Joe “I’m losing my brain” Biden. And even worse, the new Socialist Hillary to take his place."
And maybe, if Trump gets a second chance, he’ll do better. Loyal subscriber Nick P.: "If Trump gets a second term, he’ll be free to do all of the things he has promised to do."
We could quarrel with any of those points of view. But they’re right… There is more to the story… And we’re coming to it. And it’s why the country is doomed to a hellish breakdown – social, political, and economic. And most likely, Mr. Biden will play a big role in it.
Golden Rule: But first, we’re not finished with Mr. Trump. Yes, Dear Reader, finally, we come to the money… If there was one thing Mr. Trump was supposed to be good at, it was money. After all, he was advertised as a billionaire… and a successful businessman.
We read his book, "The Art of the Deal", and had our doubts. He thinks you succeed in business by making the other guy lose. That has not been our experience. In private life… as in business… it is generally better to help the other guy win. It’s the Golden Rule. And it’s better to believe it, even if it isn’t true. Otherwise, you end up in endless arguments… divorces… and lawsuits. (USA Today counted 4,095 lawsuits involving Donald Trump over the last 30 years.)
Win-Lose View: Win-win deals – millions and millions of them… delicate and robust… obvious and hidden… simple and infinitely nuanced – are how the light, invisible hand of the Main Street economy produces real wealth. Win-lose deals are the stuff of politics – which is probably why The Donald took to it so readily. Politics means battles… fights… confrontations… And this win-lose view led him to make heavy-handed, confrontational decisions that actually hurt the economy, rather than helped it.
The trade wars, for example, were a bad idea from the get-go. So were his constant scrapes with Congress and the media. They endeared him to his base. But they undermined the cooperation and support he would need to put in place meaningful reforms, if he had planned any.
Highway to Disaster: Still, none of this may have mattered very much. Because, when the Big Man settled his big derrière into the Oval Office nearly four years ago… the country was already headed down that long, lonesome highway to disaster. And that, by the way, is the point of today’s Diary… and yesterday’s, too.
Yes, we think Donald Trump is especially incompetent and inconstant. But even a more serious person would have found little purchase in Washington. The whole establishment – the Deep State elite, who actually run the government – are deeply entrenched… well armed… and completely against reform. That said, Donald Trump’s term was singularly catastrophic. Not only did he miss whatever opportunity there remained to turn the bus around… he stepped on the gas.
Yesterday, we described the marginalia… the obiter dicta of Mr. Trump’s term. As we pointed out, most all the trends of the preceding years continued, with little molestation. The country was already on the downhill track… after peaking out at the end of the last century. And we saw how Mr. Trump sped up the decline… and increased the power of the predatory Swamp elite.
Loud and Clear: Today, we look at what made it possible: Money. Fake money. And here, the numbers speak loudly and clearly.
During the nearly four years of Trump’s leadership, America’s public debt grew faster, as a percentage of GDP, than it had under any U.S. administration in the last 40 years. When Obama left the White House, government debt was already at 100% of GDP. After just four years of Trump, it has risen to 135% – the biggest one-term increase in history. Trump added $4.5 trillion to the national debt in four years in office – even without a last-minute $2 trillion giveaway. That doesn’t sound like paying off the national debt. It sounds like the road to bankruptcy.
Good Times: And it is also what supports the Swamp critters and all the parasites and meddlers who are definitely not making America great again. The deficit in 2016, Obama’s last year, was already a disgraceful $585 billion. It was even more reckless and irresponsible than it appeared, because it came after six years of economic expansion. The idea is to make hay when the sun shines. But the sun had been beating down for 72 months… without a single piece of straw saved for tomorrow.
Cometh the Big Man, and the fair weather continued for another 37 months… and still, the barn remained empty. There was no sign of any surplus… or any thought for the future. Au contraire, Donald Trump wanted nothing to do with saving for tomorrow. He wanted to laissez les bons temps rouler today.
First, he pressured the Federal Reserve to cut interest rates. Then, he reduced taxes by $1.7 trillion – mostly for the rich, who were already flush. But rather than cut spending to keep pace, he increased the military budget by $200 billion, which was the last thing the already-overfed Pentagon needed. And he threw another $100 billion into domestic boondoggles, too.
More Debt: His fans said that this would help the economy grow its way out of debt. It would “stimulate” growth, they said. But the only thing it really stimulated was more debt. Like a surly teenager having a growth spurt, Trump’s 2017 deficit shot up to $665 billion; then to $779 billion for 2018, and $984 billion for 2019. By 2020, the kid was knocking his head on doorways… with a deficit of more than $1.08 trillion for 2020.
And this was before the COVID Panic! Then, unable to contradict his own health team… and still eager for lower interest rates and more spending… the deficit for 2020 swelled to $3.1 trillion. So the feds were spending more than $2 for every $1 they collected in taxes.
This deluge of spending (fake money, of course) included hundreds of billions in scammy business loans… helicopter deliveries to the public, the vast majority of whom were still working and collecting salaries… and unemployment boosters that gave many people twice as much as they earned on the job. This was classic sh*thole country finance.
New Driver: And now… speeding down the road faster than ever… the American voters threaten to change the driver. Who would be most careful? Most sober? Most likely to steer us around the Dead Man’s Curve ahead? Stay tuned…"
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