What Scares So Many Americans?

Popular Economics Weekly

"The only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance." FDR

President Roosevelt understood in his 1933 inaugural speech, “The only thing we have to fears fear itself…” the horrific fears of Americans at the beginning of the Great Depression; the paralyzing feelings that things could only get worse.

I believe many Americans are just as scared today. It’s not only because of the worldwide COVID-19 pandemic that affected the world in many similar ways to the Great Depression. And it explains why American voters could twice elect Donald Trump, a convicted felon and known sexual predator, as president.

Our government is based on a capitalist system that generated a 25 percent unemployment rate and long bread lines. It failed to care for the many Americans who couldn’t adopt to a new industrial world of mass production and mass markets that caused the Great Depression

Such overwhelming fear pervades much of American life today—that has generated our record number of gun holders and incarcerated citizens, as well as record income inequality with the top 1% income earners owning as much as 90% of the population. The gap between haves and have nots is the worst in the developed world.

Roosevelt’s New Deal was the answer in the 1930s by literally putting Americans back to work on the government’s tab who couldn’t find work on their own in programs that would benefit all Americans, such as the WPA that built many of our dams and bridges, and CCC that preserved our national parks.

It protected those who worked with workman’s compensation when they lost their job, the 8-hour day, and gave labor unions the right to negotiate with their employers.

But Donald Trump, because of his innate cruelty and utter disregard for the laws and constitution, was able to convince many Americans that immigrants, gays, a weak military, inferior races were to blame for their poverty.

Perhaps Democrats today would have better understood how much such events as the COVID-19 pandemic had paralyzed Americans and the world in a similar way—if there had been another Roosevelt instead of Donald Trump.

FREDUMichsurvey

The FRED graph of the University of Michigan sentiment survey shows when Americans became most fearful; in the sharp decline in positive feelings that began in January 2024 at the beginning of Trump’s second term; when he began to almost completely ignore the laws of the land and the constitution.

How do ordinary wage earners that comprise most Americans conquer their fears,“convert retreat into advance” without another Roosevelt?

Reverse the economic policies that took away so much of their wealth and driven so many into poverty, for starters. Raise the national minimum wage $7.25 per hour that hasn’t changed since the 1990s.

Then reverse the massive tax cuts enacted that began in the 1980s for both the highest earners and corporations that have saddled American taxpayers with $40trillion in national debt. It’s been done before.

It can be done by understanding Americans’ dreams, instead of exploiting their fears.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

"The only thing we have to fear is fear itself." Roosevelt

 Popular Economics

FREDpayrolljobs

The job market is shrinking, to no one’s surprise. But July’s catastrophic unemployment report tells us the loss of -23,000 payroll was particularly horrific. Yet +214,000 jobs were created in March, and the economy was perhaps on its way to decent growth this year.

It’s been downhill ever since. More workers are leaving the workforce than are being hired—and 234,000 left the workforce in July—because companies are leery of Trump’s anti-growth policies.

In fact, the sharp drop in payroll hiring began with Trump’s start of the Iran War, as can be seen in the FRED chart. There may have been other factors, such as higher tariffs and threats to invade other countries as well.

But economies don’t like wars begun with no advance notice or preparation, nor does congress, or employers, or most Americans. Tolerating such an ongoing war tells us that many Americans are now living in a country ruled by almost constant fear, under a president who is a convicted felon acting like a mob boss who is ignoring laws and the congress while making decisions through threats and intimidation.

Why did this happen? President Roosevelt faced much larger fears that he addressed in his famous 1933 inauguration speech when 25 percent of Americans were unemployed. And because of such conditions, created the modern social safety net—including social security, union protections, and unemployment insurance—to recover from the Great Depression.

But many of those guarantees have been watered down or eliminated for many Americans since then. We are the only developed country without universal health care, tuition free public college, mandated paid vacations and paid child leave, among other benefits, all major indicators of social well-being.

And Americans suffer from the greatest income inequality in the developed world, engineered by successive conservative governments who have made a concerted effort to roll back President Roosevelt’s New Deal.

They have been so effective, particularly since 1980 and Ronald Reagan’s trickle-down economic policies, that many Americans no longer feel safe, have lost faith in democratic government, and have elected to live in an autocracy—particularly in red states ruled by Republicans—in desperate fear of not only losing their vocations, but their health care and retirement pensions, including social security.

Fear is contagious, but as President Roosevelt knew, was faced down when our government reclaimed its role as a public service that protected all Americans, not just the privileged few.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

“The economy hasn’t lost its mojo.” MarketWatch

 Financial FAQs

“Advance estimates of U.S. retail and food services sales for June 2026, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $768.6 billion, up 0.2 percent (±0.4 percent)* from the previous month, and up 6.7 percent (±0.5 percent) from June 2025.” Census.gov

FREDretailsales

Headlines, such as that consumers “haven’t lost their mojo” have popped up when retail sales rose 0.2 percent in June. It’s a sign of consumers are willing to ‘shop until they drop’, which may keep the U.S. economy growing for some time.

It also means that same level of irrational exuberance of the 1990s is back once again, with the major market indexes at record levels, and consumers seemingly oblivious to the conditions that prevailed during the late 1990s.

 Nobel Laureate Robert Shiller first presented the term irrational exuberance to Alan Greenspan’s Federal Reserve Governors in 1996 to evidence how overvalued stock market levels had become at the time. But it wasn’t until 2000 that the dot-com asset bubble burst that many market commentators and some economists are comparing to the current record market rally.

The MarketWatch headline portrays most of the media’s reaction to the latest Advance Retail and Food sales report by the U.S. Census Bureau. The slightly hysterical headline is really a sign of relief because of the slight drop in monthly gas prices that prevailed during the 60-day cease fire agreement.

But the cease fire has ended. And it reveals how badly the Trump tariffs and Iran war have hurt consumer spending, still the backbone of U.S. economic growth. We have been a consumer-driven economy since the 1950s and end of World War II.

And since retail sales are not inflation adjusted, when adjusted for inflation, gas and food in particular have become less affordable. Retail inflation is still above 3 percent. Retail sales have fluctuated wildly, as per the above graph, rising 6.7 percent in 12 months because consumer bought more in earlier months to get ahead of the rising inflation—i.e., before the Iran War began to jack up everyday prices.

Though sales at car dealers and online merchants both jumped about 2 percent in June, sales fell at grocery, clothing and healthcare stores, says MarketWatch.

So, consumers are still shopping because they must, putting them further in debt. The Consumer Price Index for basic necessities like gas and food is still above 3 percent, as I said, and the wholesale (PPI) price index for raw materials that go into retail goods is 5.5 percent annually, the U.S. Bureau of Labor Statistics reported. It’s still the largest rise in more than three years.

We don’t have to look at just the dot-com bubble to compare, either. I see an unsettling resemblance to the ‘roaring twenties’ of an earlier era from the recovery of another pandemic, the Spanish Flu pandemic of 1919 to 1920 that killed what would be millions of Americans if at our current population level.

It was a long recovery—until 1929 and the Black Friday stock market crash that led to the Great Depression, caused in part by another era of high tariffs that led to product shortages.

How long may this era of irrational exuberance last that has driven the financial markets to record levels with so much wealth pouring into a new space age that will take us years to return to the moon, much less turn a profit?

We are at another turning point in what currently looks like an A.I. revolution, much like the Internet’s introduction that took decades to adopt, and recovered from a Great Recession, let’s not forget.

So the best way to survive another bout of irrational exuberance is to be patient, in my opinion, rather than listen to the crowd that promises the next big thing.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Consumers' Confidence Sinking

 Popular Economics Weekly

“Consumer confidence edged downward in May as the inflationary impacts of the war in the Middle East intensified,” said Dana M Peterson, Chief Economist, The Conference Board. “Consumer appraisals of current business conditions and the current labor market were moderately less positive compared to last month.” Conference Board

Conference-Board

American consumers are more worried than ever. The Conference Board and University of Michigan’s surveys are at historic lows; back to levels not seen since the COVID-19 pandemic.

Confidence then peaked in 2021 during the pandemic recovery and has been declining ever since. This is while financial market indexes are reaching unsustainable levels on the hope that the next big thing (A.I.) may bring in another Age of Enlightenment.

But beware, we have had such periods before. It looks like another period of mass hysteria over the possibilities of A.I. as companies invest $trillions, mostly in borrowed money, that is creating another asset bubble like the Dot-com and housing bubbles.

We called it Irrational Exuberance in the 1990s. It’s over enthusiastic investors over-investing in artificial intelligence.

The U. of Michigan reported,“Sentiment is now just below the previous historical trough seen in June 2022. The cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month.”

And consumers know why finances are eroding. Inflation can only go higher with the Iran war shortages, and tariff levels settling at 1930 pre-Great Depression levels with no formal treaties (which choked supply chains at the onset of the Great Depression).

There is no relief for either consumers or producers in sight amid the chaos that is being generated. The biggest worry is the rank naivete of a Republican Party that won’t hold its leader’s craziness to account. Americans are beginning to realize that the Trump administration has lost the Iran war, and the tariff hikes were illegal. It’s also showing up in the record lows in the polls.

In wanting to play the autocrat, Trump has booted the intelligent advisors who gave him intelligent advice. Iran can now keep the Hormuz Strait closed, while intelligence agencies are reporting Iran has enough missiles and drones to decimate the infrastructure of the other border countries, if the U.S. should try a land invasion to open the Strait.

A.I. is beginning to alarm economists, such UC Berkeley Professor Brad Delong in his Grasping Reality blog:

“The current $1.5T AI arms race: are hyperscalers building utopia, building dystopia, building digital god, or simply lighting trillions of dollars on fire in a dollar auction?”

Said $Trillions are chasing the next big thing, in other words, which happens when our government holds too much debt instead of paying it down. This results in an excess money supply sloshing around the economy looking for the next big deal, instead of investing in what Americans most need that Republicans have been intent on abolishing: (e.g, , programs to improve healthcare, environmental protection, education, climate prediction, alternative energy).

So consumers are right to be worried. This is the time for such programs that were created in the Biden administration to prepare Americans for the future, rather than a return to the past.

Can we do it without bursting another (A.I.) bubble that turns into another recession?

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

What, Another Great Recession?

 Financial FAQs

 “The conflict with Iran has already put fresh stress on the U.S. economy, as businesses are reporting rising prices, fewer orders and a decline in employment. A survey of service-oriented companies — the sector that employs most Americans — fell to an 11-month low of 51.1 in March from 51.7 in the prior month, S&P Global said Tuesday.” MarketWatch

FREDpayrolls

Maybe we shouldn’t be looking at the 1970’s era of stagflation for the kind of economic damage from the Iran War and closing of the Strait of Hormuz to oil shipments. There is a short-term spike in oil prices, though oil from other sources than the Gulf can eventually make up the difference in supplies.

The war’s damage may take longer to materialize but look more like the Great Recession, which we shouldn’t forget was a worldwide recession that occurred in 2008-09, the worst since the Great Depression of the 1930s.

We shouldn’t forget that the Great Recession Bush/Cheney and their oil barons ultimately spawned with the ill-planned invasions of Iraq and Afghanistan was based on lies about the weapons of mass destruction that Saddam Hussein didn’t have.

And now Trump and his Robber Barons are taking the Gilded Age dreams of William Mckinley one step further with lies that Iran is preparing nuclear weapons to justify the ill-prepared war with Iran while aliening the allies that would help them succeed.

This is even though Trump’s just-resigned Counterterrorism czar Joe Kent said Iran posed no imminent threat with nuclear weapons.

The Great Recession was caused by more than the Bush wars on terror, of course. It was caused by putting too many regulation-cutting foxes in the Bush/Cheney hen house that literally resulted in the failure of nonbank banks like Bear Stearns and Lehman Brothers to fail.

Trump is following the same playbook by gutting the government’s regulatory agencies that could prevent the blatant fraud occurring with the Trump administration’s Bitcoin investments that have no regulations or backing with assets.

This time negative GDP growth could come from the faltering labor market, which is frozen in place with almost no net new job creation at all in 2015 as highlighted in the above FRED graph. Fed Chair Powell remarked at his latest press conference that they were torn over whether to cut interest rates or raise them because Trump’s immigrant deportations were causing a labor shortage.

Economic growth ground to a halt as well in 2008, even when Fed Chair Greenspan anxiously began to cut interest rates to prevent the near failure of our banking system.

Powell’s Fed Governors also predicted overall GDP growth of 2.4 percent in 2026, even though Q4 2025 Real GDP growth slowed from 1.4 to just 0.7 percent. So I don’t understand the Fed’s optimism over economic growth.

And history has shown that no job growth will ultimately lead to no economic growth,

The frightening truth is that both Republican administrations have made bad decisions for the same wrong reasons.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why Make America Weak?

 

Financial FAQs

“This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” Franklin Delano Rooselvelt

theguardian.com

The Democrat’s election sweep on November 2 is proving that American voters  heeded President Roosevelt’s famous warning at his first inaugural address, that the Democrats' paralysis after the loss to Trump II is over and fear, the greatest enemy of Democracy, can be conquered.

The November 2 elections showed just how illusory were those fears that Donald Trump and Republicans wanted Americans to believe, that the largest, most prosperous country in the world had grown weak. Americans were now in danger and only he and his oligarchs could save US.

In fact, Donald Trump and the Republican Party have been attempting to weaken everything that makes America the oldest constitutional democracy since his first day in office.

He began by slashing of essential government services via Elon Musk’s DOGE computer hackers (such as social security, Medicare, Medicare) that benefit all Americans, the attempt to eliminate the the Department of Education that supports our basic universal K-12 and early childhood educational systems, while picking the most unqualified to run the FBI, Department of Homeland Services, and Health and Human Services so that they are no longer fully functional. 

The brutal roundup of undocumented immigrants, whether they have a criminal record, are decimating the ranks of workers that fill agricultural, manufacturing, and service sector jobs needed to maintain economic growth.

The biggest financial threat to ordinary Americans are the rising prices on basic necessities that most Americans depend on due to tariff rates now at Great Depression levels, impoverishing the majority of Americans that live from paycheck-to-paycheck.

It’s become obvious that the Trump administration’s intent has been to instill as much fear as possible in the most vulnerable Americans that the federal government won’t work for them and only Trump and his oligarchs can same them.

But the recent election and huge protests at the last No Kings rallies are a sign that millions of Americans haven’t been cowed or paralyzed.

In fact, they have said, as did Howard Beale, the News Anchor in the movie Network, “I’m as mad as hell and not going to take this anymore!”

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

The Return of Stagflation

 The Mortgage Corner

“From the same month one year ago, the PCE price index for June increased 2.6 percent. Excluding food and energy, the PCE price index increased 2.8 percent from one year ago.” BEA.gov

FREDpceinflation

President Trump hasn’t succeeded in convincing the Federal Reserve to cut interest rates or fired Chairman Jerome Powell just yet. So he fired the head of the Labor Department’s Bureau of Labor Statistics without cause that published the weak July unemployment report instead.

It is heralding another era of stagflation that has destroyed the wealth of too many Americans.

It now looks like he wants to recreate what happened to two other Republican Presidents—manipulating the data to disguise the fact that looming inflation can be a big problem as it was in the stagflation of the 1970s and housing bubble and Great Recession of 2008 that was the worst economic downturn since the Great Depression.

President Nixon first tried it when combatting the looming oil price-inspired inflation from the Arab Oil Embargo by fixing prices to keep them artificially low, then pushed his Fed Chair Arthur Burns to keep interest rates low in the face of slowing economic growth caused by the OPEC embargo.

It resulted in 14 percent inflation in 1980 that caused then Fed Chair Paul Volcker to raise the Fed Funds rate to 20 percent, resulting in two recessions early in President Reagan’s tenure.

President GW Bush also tried it in 2000 by pushing then Fed Chair Alan Greenspan to keep interest rates low to finance his wars on terror. Greenspan held interest rates too low for too long, which resulted in the housing bubble and Great Recession that followed.

And now Trump is looking for a successor to the Senate-vetted BLS official, Dr. Erika McEntarfer, who will manipulate employment statistics for him. The result will be less trusted unemployment reports, masking the effects of historically high tariffs that will again create product shortages and slow economic growth.

The Labor Department’s unemployment report understated what happened in the past three months, as I said last week. The U.S. economy created 73,000 nonfarm payroll jobs, but just 19,000 and 14,000 payroll jobs in revisions to May and June totals when more data came in (see graph).

The change in total nonfarm payroll employment for May was revised down by 125,000, from +144,000 to +19,000, and the change for June was revised down by 133,000, from +147,000 to +14,000, per the BLS.

Trump’s main reason for wanting to manipulate economic facts? He also wants to hide the damage to the employment numbers from what could be the loss of one million immigrants leaving the adult labor force, many of them running for cover because of the Gestapo tactics of Trump’s Homeland Security masked Storm Troopers breaking into homes and businesses to round up as many undocumented immigrants as possible, as I said last Friday.

It’s really the first indication of the immigrant’s importance in our economy, and why most of July’s hiring was in healthcare (55,000) while government employment lost 12.000 jobs and -87,000 jobs this year.

The next economic shoe to drop will be the changing of the guard at the Federal Reserve. Trump could not bully Fed Chair Powell to lower interest rates sooner, but that will soon change when he appoints a new Fed Chairman.

He will want to politicize the Fed as he is doing to the rest of the federal government when Powell steps down next year, so that he can enact more Republican ‘trickle down’ economic policies first initiated by President Reagan: in particular the tax cuts + deregulation that supposedly increases efficiencies and productivity, but instead increased corporate CEO pay to more than 300 times that of their employees while weakening union collective bargaining laws.

The results of ‘trickle-down’ economics have been frightfully obvious for decades. The Reagan-era creation has succeeded in maximizing profits of the owners of capital and corporate CEOs while suppressing incomes of salaried workers via right to work laws and low minimum wages, mostly in the poorest Republican controlled red states.

It’s why economists are now calling this the second Gilded Age. We are seeing the results—higher inflation and slowing economic growth once again unless a majority of Americans can be convinced to stop the steal of the worst robber baron of all.

Harlan Green © 2023

Follow Harlan Green on: https://twitter.com/HarlanGreen

A Better Jobs Report?

 Popular Economics Weekly

“Total nonfarm payroll employment increased by 147,000 in June, and the unemployment rate changed little at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in state government and health care. Federal government continued to lose jobs.” BLS.GOV

FREDpayrolls

We have one more month of employment data to give us an idea where the U.S. economy is headed during the Trump administration. There were 74,000 private payroll jobs and 73,000 state and local government jobs added, and more federal government job losses.

The results of the June unemployment report were strong enough to perhaps discourage any Fed rate cuts until the fall. Trump is outraged at the Fed’s intransigence because he hopes cutting interest rates will boost growth in combination with his big ugly bill that takes attention away from the huge boost in tariffs he requires to help pay for it that will slow growth and raise inflation—i.e., equals stagflation.

An average 130,000 private payroll jobs per month were created in Trump’s first six months (last six bars in above graph). Whereas President Biden created 15.2 million jobs during his four years, or 327,000 jobs per month and GDP growth averaged 3.2 percent over his four-year term.

Democrats have always been better with the budget math, since President Biden focused on recovering from the COVID-19 pandemic with his New Deal legislation while Republicans have been obsessed with cutting back the stimulus programs to pay for the tax cuts for their wealthiest supporters.

Jobs were created in state and local jobs while the federal government lost jobs from the DOGE efficiency drive. So, the question is can state and local governments take up the hiring slack from the shrinking of federal payrolls?

Republicans are about to pass the ugliest federal budget in history that that is projected to add at least $3 trillion to the annual budget deficit and create $38 trillion to total federal debt. Medicaid is the biggest loser with the Congressional Budget Office predicting that some 11 million could lose their Medicaid coverage because of state cut backs on payment subsidies and various new regulation requirements.

It is extremely bad economics to use a worldwide tariff war to attempt to pay for huge budget deficits in the name of more tax cuts that mostly benefit the wealthiest. High tariffs not only disrupt supply chains, as happened during the COVID-19 pandemic because countries attempt to evade the tariffs, but it means alienating friends by treating them as enemies and walling off America from the rest of the world.

That last happened in 1930 and led to the Great Depression. No single country can be self-sufficient in our modern, globalized world. Strength comes with alliances, weakness with alienation and isolation that benefits the few at the expense of the many.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

U.S. Already in Recession?

 Financial FAQs

The Conference Board Leading Economic Index® (LEI) for the US ticked down by 0.1% in May 2025 to 99.0 (2016=100), after declining by 1.4% in April (revised downward from –1.0% originally reported). The LEI has fallen by 2.7% in the six-month period ending May 2025, a much faster rate of decline than the 1.4% contraction over the previous six months.

ConferenceBoard

Are we already in a recession? The Fed doesn’t think so, but the Conference Board’s Index of Leading Economic Indicators conjectures we will be in a recession soon, if not already. The LEI is a tricky read because it looks at indicators spanning longer periods, hence its name.

The Conference Board’s index of Leading Economic Indicators is now signaling that a recession might have begun in May 2025, though Fed Chair Jerome Powell and the Fed Governors don’t think so. Powell said after last Wednesday’s FOMC meeting that interest rates will stay on hold for now.

“The economy is in solid shape, so the labor market is not crying out for a rate cut,” said Powell. (Therefore, the Fed has time to “learn” more about the economy.)

However, Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board, said “With the substantial negatively revised drop in April and the further downtick in May, the six-month growth rate of the Index has become more negative, triggering the recession signal,”

The Conference Board creates several surveys, including the Consumer Confidence Index, so it puts the most weight on consumer expectations for business conditions, which has been dropping sharply in its surveys.

And the ISM’s New Order Index as well as private housing building permits have continued to decline as well, thanks to the Fed’s intransigence on reducing interest rates further.

So the LEI is hedging its bets just as the Fed is doing by taking a longer wait and see. “The Conference Board does not anticipate recession, but we do expect a significant slowdown in economic growth in 2025 compared to 2024, with real GDP growing at 1.6% this year and persistent tariff effects potentially leading to further deceleration in 2026.”

Federal Reserve President Chris Waller, one of the Fed Governors, is a dissenter: “I don’t think [the inflation impact of Trump’s tariffs] is going to be that big,” Waller said in an interview on CNBC. “I think we have room to bring [rates] down in July (the next FOMC meeting)”

Almost everyone in congress and President Trump also want lower rates because the new fiscal budget’s annual interest expense could be close to $1 trillion annually on approximately $38 trillion in debt.

This is unsustainable, so everyone is waiting to see if the Republican congress succeeds in driving the U.S. economy over the cliff with their new fiscal budget. Then what good will any amount of import taxes (tariffs) do to fill the debt void?

It’s becoming evident that Republicans will do anything to get their tax cuts, and Democrats don’t seem to be shouting loud enough to win at least two Republican House members to their side that don’t want to bankrupt the U. S. economy.

That’s all they require to block the looming budget disaster. This is while it looks like Trump’s tariffs will ultimately equal those in 1930. And we know the 1930 Smoot-Hawley tariffs that raised prices on imports was one of the reasons for the Great Depression.

Harlan Green © 2025

Follow Harlan on Twitter: https://twitter.com/HarlanGreen

Trump's Manufacturing Scam

 Financial FAQs

“Why? It’s not like we’re a small country or full of stupid people. No, it’s the takeover of the economists and bankers. Simply put, modern American law is oriented towards ensuring very high returns on capital to benefit Wall Street and hinder the ability to make things.” Matt Stoller, American Economic Liberties Project

CBPP.org

Matt Stoller’s cry is a sign that even Libertarians are alarmed at Donald Trump and the Republicans’ scheme to grow the manufacturing sector. It’s another scam that enables them to turn the economic clock back to the 19^th century, the Gilded Age of Robber Barons and rampant corruption and downsize government while ignoring modern laws and even the constitution.

Trump is doing it by raising tariff rates to a level not seen since 1930 at the onset of the Great Depression. But it won’t bring back a manufacturing industry that was lost to a globalized economy over the past 30 years.

The Manufacturing Institute and Deloitte accounting firm have projected that manufacturing will need an additional 3.8 million workers by 2033, in part due to the Biden administration’s $2 trillion worth of projects already invested by the Infrastructure, CHIPs and Science, and Inflation Reduction Acts, according to a recent NPR report.

And the Trump administration’s goal of deporting millions of undocumented workers as well as eliminating DEI programs that develop more skilled minorities will defeat his purpose by hollowing out the required workforce.

Early 19^th century was a time of few laws to protect working folk, and there was no income tax until 1913 when Teddy Roosevelt’s Progressive era began to level the income playing field for workers. Oligarchs had to pay income taxes for the first time.

It was Ronald Reagan and the Business Roundtable of corporate CEOs that began the “takeover of the economists and bankers” that moved whole industries overseas while reducing their income taxes—from a maximum personal tax rate as high as 92 percent in President Eisenhower’s time—transferring $trillions that once went to the 80 percent of Americans earning salaries to the oligarchs that owned the capital and became “rentiers”; i.e., living off the capital created by their workers.

Trump wants a return to the era because it’s how he made his money. Who better than a convicted felon, a “liar and cheat” his whole life in the words of his erstwhile attorney Michael Cohen, to con Americans into believing that a tariff war against the whole world is the best way to bring back our manufacturing industry that has already migrated to Southeast Asia and China?

He has rationalized the economic chaos his tax war is creating with the promised goal of returning to an earlier era when we were a manufacturing superpower. But workers had fewer rights and benefits until Roosevelt’s New Deal.

Are we to believe it justifies more tax cuts for himself and his oligarchs that will grow our record federal debt ever higher, endangering the “full faith and credit” of the U.S. Government, as well as creating another era of stagflation with possible double-digit inflation and interest rates as happened in the 1970s?

Trump is attempting to recreate a time (1900) when we invaded and occupied Cuba and the Philippines. The reason for his nonsensical pronouncements that Canada should become our 51^st state and Greenland a U.S. territory now begin to make sense.

Democrats do have an answer to the huge wealth gap between blue states and red states that might bring US back to present times. Start with small steps such as lobbying to raise the national minimum wage, currently $7.25 per hour to what it is today when inflation adjusted—$10.50/hour. That is already the case in 30 of the mostly blue states, where the minimum wage has risen above $15 per hour.

It will be a terrific struggle that will take time. President Trump and Republicans have erected such a wall of ignorance to protect his administration—officials of such incompetence that they lack the ability to even think for themselves that they will obey his commands without question and even anticipate them beforehand (Pete Hegseth, et. al.).

We aren’t a country of stupid people that can’t see the erosion of rights and civil liberties the Trump administration is justifying that enacts a return to an earlier century. The mass protests and demonstrations against Trump and Musk’s chainsaw tactics are proving it.

It’s a good time to return the Democratic Party to the party that has always supported greater equality for wage-earners and farmers. That is the best way Democrats can block Trump’s impossible time travel back to an earlier century that no longer exists.

Harlan Green © 2025

Follow Harlan on Twitter: https://twitter.com/HarlanGreen

It's Trump's Economy Now

 Popular Economics Weekly

“Real gross domestic product (GDP) decreased at an annual rate of -0.3 percent in the first quarter of 2025 (January, February, and March), according to the advance estimate released by the U.S. Bureau of Economic Analysis. In the fourth quarter of 2024, real GDP increased 2.4 percent.”

BEA.gov

It’s President Trump’s economy now after the first 100 days of his second term.

The U.S. economy contracted in the first quarter of 2025 for the first time in three years, reflecting a surge in imports ahead of President Donald Trump’s tariffs and a slowdown in consumer spending.

The BEA graph of economic growth from Q4 2023 tells us all we need to know to compare President Biden’s economic record and Trump’s misrepresentations and lies of his economic record as president. Biden had an average growth rate of +3.2 percent over his term vs. Trump’s -0.3 percent contraction in the first quarter 2025. And it can’t get much better, because worldwide tariff wars take a long time to settle.

Is this what Americans wanted in re-electing Donald Trump, who has proven once again after failed casinos, Trump University, and countless lawsuits, he has never been a successful businessman?

The real question is how could so many Americans been fooled into thinking Trump knew what he was doing?

Some supporters believed that because economic growth was positive in Trump’s first term he could repeat his performance. But in fact, it followed President Obama’s eight years of investments that boosted the recovery from the 2008 Great Recession, the worst recession since the Great Depression.

How could it have been different, since Trump based his whole economic policy on his most blatant lie, that tariffs were not a tax on imports that would be paid by American importers and consumers, hence were not inflationary when he promised to bring down the price of groceries on ‘Day 1’.

Americans can now look behind Trump’s curtain of lies with the first actual reading on Trump’s economic record. Joe Biden’s economy was one of the strongest since World War Two, aided by the passing of bipartisan legislation that renewed our infrastructure, mitigated climate change and strengthened our social safety net, legislation that was equivalent to Roosevelt’s New Deal.

We can also see clearly that Elon Musk’s DOGE is attempting to tear all of this down by illegally firing the government employees and cutting the funds that congress appropriated to implement Biden’s New, New Deal

The American public can also see Republicans’ real goal in the current budget negotiations—continuing to grow the wealth of its Oligarchs by cutting taxes, while taking away the services that benefit all Americans.

Economic growth will continue to shrink, in other words. The ADP National Employment Report of private job creation just out for April shrank to 62,000 from 147,000 jobs in March, presaging what will happen with the upcoming official U.S. unemployment report for April.

Consumers have also pulled back their spending, a sure indicator of a possible recession. And the Conference Board just reported another record drop in consumer confidence.

“Consumer confidence declined for a fifth consecutive month in April, falling to levels not seen since the onset of the COVID pandemic,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The decline was largely driven by consumers’ expectations. The three expectation components—business conditions, employment prospects, and future income—all deteriorated sharply, reflecting pervasive pessimism about the future.”

We must now face the fact that President Trump has already damaged the most powerful economy and country in the world with his lies and incompetence.

What’s next? He answered in an interview with The Atlantic,“The first time, I had two things to do — run the country and survive; I had all these crooked guys,” Trump said. “And the second time, I run the country and the world.”

Really? The American public is already answering President Reagan’s famous dictum, “Are you better off today than you were four years ago.” with a resounding NO!

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Republicans' Dystopian Dream

 Popular Economics Weekly

“I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” Grover Norquist, Republican.

Grover Norquist, founder and president of Americans for Tax Reform in a 2001 NPR interview intoned above what has been the Republican Party’s dream—a federal government so small that it might one day disappear except for a strong military, with no public services that protect all Americans and bind us together as a nation, regardless of creed or color.

It has been the Republicans’ wish since at least Ronald Reagan’s “government is the problem” declaration as he attempted to downsize government by cutting taxes and ignoring laws (IranContra) when he could get away with it.

Donald Trump has now been chosen to fulfill their dream. He is effectively destroying many of those institutions through a very calculated mismanagement by choosing incompetence over competence, domination over cooperation. The problem is the US economy can’t function at all without a well-functioning central government since at least Roosevelt’s New Deal.

It takes healthy people and businesses protected from the ravages of a catastrophic climate to be productive. Yet Republicans via Trump are eliminating the institutions that protect our environment, healthcare and social services. They even attempted to abolish Obamacare more than 30 times, the only private al health service that insures 30 million Americans even with existing medical conditions.

And now Republicans want to add more tax cuts to our $36 trillion national debt that is 121 percent of our GDP, as portrayed below. Economists are predicting the tax cuts will add an additional $5.8 trillion to the national debt. But they can’t bring their budget hawks who oppose such debt to agree without cutting more social services, such as to social security and Medicaid.

GDP%federaldebt

The legacy of the Republicans’ dystopian dream by Trump would return America to a past century of horrific wars and pestilences, and not only be the destruction of our Democracy and freedoms we take for granted but raises the possibility of another worldwide recession or depression.

The price paid to date has been $Trillions in stock and bond market losses in just the five days as President Trump attempts to bend the rest of the world to his will with a tariff war, which is another, maybe disastrous demonstration of his incompetence and maybe worse, his mental deterioration as he writes countless executive orders that have little validity in law.

Consumers are now beginning to realize the damage Trump is causing. In further bad news, the University of Michigan’s gauge of consumer sentiment fell to 50.8 in a preliminary April reading from 57.0 in the prior month.

And inflation expectations of those surveyed rose to the highest level since 1981, which was the stagflation era that caused the Federal Reserve to raise its Fed Funds rate to 20 percent.

“Consumers report multiple warning signs that raise the risk of recession: expectations for business conditions, personal finances, incomes, inflation, and labor markets all continued to deteriorate this month,” said Survey Director Joanne Hsu.

When will Republicans wake up enough to realize their dystopian dream is becoming the nightmare of Donald Trump’s dog-eat-dog primal world in which ultimately no one can survive?

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why the Shock and Awe?

 Financial FAQs

“White House aide Peter Navarro said Sunday that he expects President Donald Trump’s tariffs to bring in $6 trillion in revenue in the next decade, which could amount to the largest tax hike in US history. CNN

The financial markets are close to panic selling as Donald Trump’s tariff announcements were far more draconian than expected. The Washington Post described Trump’s tariff policies as ‘shock and awe’ tactics to inflict as much pain as possible on the countries Trump and MAGA Republicans consider to be taking economic advantage of the U.S.

But history has shown that such strong-arm tactics don’t work. They create more enemies than friends and more wars.

The most recent example is GW Bush’s ‘shock and awe’ invasion of Iraq on false pretenses (Saddam Hussain had weapons of mass destruction) that brought Iraq closer to Iran, created ISIS, the Sunni rebellion, and ate up the prior Clinton administration’s four years of budget surpluses, costing more than $1 trillion.

Trump maintains his decision to do battle with the whole world will make Americans more prosperous on the presumption that it will reduce our budget deficit lower taxes. Instead, the tariffs will amount to the largest tax increase in history.

Why? “That is a tax,” said Sen. Mark Warner in an interview on Fox immediately after Navarro’s appearance. “That money doesn’t come falling out of the sky. That money comes because (the price of) these products will go up, Americans will pay more. We’re talking a $700 billion tax.”

And small businesses, who thought Trump would bring some relief from regulations as well as lower prices, do not like what they are seeing. The National Federation of Independent Business on Tuesday said its Small Business Optimism Index dropped 3.3 points in March to 97.4, falling just below its 51-year average of 98.

Economist David Rosenberg of Rosenberg Research, cited by MarketWatch’s William Watts, said the three-month drop of 7.7 points in the index is the steepest in more than four years, with drops of that magnitude having occurred only in April 1980, December 2008, April 2020, May 2020, December 2020 and January 2021 in the 50-year history of the series.

NFIB

The NIFB graph illustrates that the biggest dip in optimism occurred during the 2008 Great Recession (gray bar in graph), the worst worldwide recession since the Great Depression.

“The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months.” said NFIB Chief Economist Bill Dunkelberg.  “Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them.”

Why has Trump chosen to punish so many countries, many with no trade deficit at all, as well as islands with no people, just penguins?

David Brooks in Atlantic Magazine has quoted George Orwell’s 1984 novel as an example of what a future government dominated by an autocrat and political party interesting in holding on to power at any cost would look like. It rules by inflicting pain and suffering.

“Obedience is not enough. Unless he is suffering, how can you be sure that he is obeying your will and not his own. Power is in inflicting paid and humiliations.”

Trump acts like a thug who only knows how to inflict pain to get what he wants, which is more power. He extorts rather than negotiates when he believes he has the upper hand. It is becoming obvious that he believes that by inflicting maximum economic pain on ally and enemy alike, countries will submit rather than retaliate out of fear that it will sink their own economies.

But why would they when they can negotiate with each other rather than Trump?

Trump’s problem is that he is already breaking his “Day One” promise to lower prices and taxes, and it will take years to repatriate manufacturing jobs and businesses to find alternate supply chains to avoid the tariffs.

We will soon see the reactions of most of the 180 countries he has targeted as they retaliate with their own tariffs on American exports. Shock and Awe tactics have been shown to create enemies rather than allies, poverty instead of prosperity, war instead of peace.

Most of all, it doesn’t work economically. President McKinley’s Gilded Age that Trump cites as his model economy was golden for the Robber Barons and wholesale corruption, not ordinary Americans.

President Bush created the first $Trillion-dollar federal debt on the lie that cutting taxes while fighting wars created jobs and greater prosperity, when it instead created the Great Recession.

By promising what he cannot possibly deliver, “Starting on day one, we will end inflation and make America affordable again, to bring down the prices of all goods,” Trump risks even more, a greater recession, and maybe another war.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

It's the Law of the Jungle

 Financial FAQs

"Trumpian Incompetence will provoke a counterreaction, which will prove to be an opportunity and rebirth. When that happens people will be ready to hear the truth that Trump will never understand—that when you turn America into a vast extortion machine, you will get some short-term wins as weaker powers bend to your gangsterism, but you will burn the relationships, at and abroad, that are actually the source of American’s long-term might.” David Brooks NY Times

I wonder what Republicans expected when they allowed Donald Trump to choose the least-qualified candidates to run his government and carry out their agenda of deregulation, tax cuts and tariffs?

Republicans made the same mistake with GW Bush when his tax cuts and deregulation push led to the first $1 trillion budget deficit, liar loans, the housing bubble and Great Recession.

Why has the stock market fallen 10 percent from its post-Biden high, in what is called a “correction”, and in danger of falling further into recession territory? Because it is becoming obvious to Wall Street that the Trump administration, once again, doesn’t know what it is doing.

Only this time they are doing it on steroids by adding Elon Musk with his chainsaw into the mix. The result has been the destruction of whole agencies that protect us against diseases and pandemics, climate disasters, and health of the economy, since Trump’s tariffs are making no economic sense.

It is the natural consequence of President Trump wanting to destroy our closest alliances with a trade war and allying himself with the Putins and Kim Jong un’s of the world that kill their citizens with impunity, where the only law is might makes right.

He is attempting to bring back the Law of the Jungle in installing a government with those that will only obey him, an impossible situation in the modern world that can only precipitate another Great Recession, or even Great Depression.

President Biden did the right thing with his New, New Deal legislation by working with congress to modernize our infrastructure and manufacturing that has brought back 700,000 manufacturing jobs.

Foreign governments are already retaliating against Trump’s tariffs, creating a trade war that no one can win. The aluminum and steel tariffs will drive a hole in the US auto industry, say their CEOs, when the Great Recession had once before bankrupted them so that President Obama and congress agreed to bail them out.

Trump was able to fool American voters into a second term because of their wholesale ignorance of the US economy and its position in the world. The US is still the world’s wealthiest country that recovered most quickly from the COVID-19 pandemic yet has also the most unequal wealth and income disparities in the developed world.

The Last Tech Age

When I last wrote about our wealth gap in 2017, the U.S. was in 106th place of the 149 countries in income inequality as ranked by the CIA’s World Factbook. The Gini Index compiled by the CIA measures and compares living standards.

The U.S. had a Gini inequality index on the level of Peru and Cameroon. Whereas Finland and the Scandinavian countries are at the top of equality rankings, Germany and France are 12th and 20th, respectively. The higher the index, the greater the income gap between the wealthy and poor citizens of a country.

It is why we have such a partisan divide between Democrat-led blue states and Republican-led red states that Republican tax cuts and record budget deficits most harmed.

Donald Trump has always wanted tax cuts because he has barely paid any taxes himself. But this is only because he has extorted, stiffed and lied to so many people and institutions when running the Trump Organization. Why would he behave differently as president?

We are already “hearing the truth” about the havoc his “extortion machine” is wreaking. When will we be ready for “a counterreaction, which will prove to be an opportunity and rebirth ?“

When the damage is so great that Americans become “as mad as hell and are not going to take it anymore.”

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

What Happened to Animal Spirits?

 Financial FAQs

"We're seeing a strong divergence between animal spirits of the stock market and what we're actually seeing unfold from businesses and business leaders," a White House official told reporters Monday, CNBC reported, adding, "The latter is obviously more meaningful than the former on what's in store for the economy in the medium to long term."

FREDconsumersentiment

The White House admission that the rise in “animal spirits” over Trump’s reelection had waned and that business leaders with were guiding the financial markets lower “in the medium to long term” because of Trump’s on again, off again tariff announcements, thereby doubting the possibility that the Republican campaign promises of lower taxes and fewer regulations will be of much benefit.

Such market enthusiasm couldn’t last when it became obvious that Trump’s contradictory messaging and his lack of knowledge about foreign trade could lead to tariff wars, which in the words of a growing number of business leaders, showed “he doesn't know what he is doing”.

Consumers are beginning to catch on as well, which is resulting in the decline of their own animal spirits. The above chart of declining consumer confidence as measured by the University of Michigan last peaked in January 2024 with Donald Trump’s re-election, when consumers believed in Trump’s promises to bring down inflation on “Day 1” of his second term.

But that hasn’t yet happened, and consumers are not happy about it. In the words of the U. of Michigan’s survey director Joanne Hsu:

“Consumer sentiment fell for the second straight month, dropping about 5% to reach its lowest reading since July 2024. This decrease was pervasive, with Republicans, Independents, and Democrats all posting sentiment declines from January, along with consumers across age and wealth groups.”

The term, “Animal Spirits”, was first coined during the Great Depression to explain why consumer behaved the way they did. Roosevelt’s New Deal that gave workers more benefits, such as the 8-hour work day, workers compensation, and social security, was created to boost their spirits and led to the recovery from the Great Depression.

Nobel Laureates George Akerlof and Robert Shiller even wrote a book about it that was entitled, Animal Spirits; How Human Psychology Drives the Economy and Why It Matters for Global Capitalism.

It was an important book because it refuted the long-held theory that so-called free market, or Laissez Faire, economic theories create more sustained growth with fewer regulations.

But Republicans’ touting of the benefits of sless regulated markets was a giant lie that led to President Reagan’s trickle-down economic theories, because with little or no oversight or regulations of their trades, the wealthiest always prospered the most because they had the time and money to research the markets.

Therefore conservatives that favored less regulation had to create a myth that some of that wealth was bound to “trickle down” to Main Street and benefit ordinary wage-earners to placate voters.

Professors Akerlof and Shiller showed it was a lie. Most consumers in fact do not have the resources or knowledge to adequately research what they buy or invest in. They discovered in their research that most consumers act on hearsay, or word of mouth, in making purchase decisions, including when to buy real estate.

And because consumers didn’t or wouldn’t do the necessary historical research in early 2000 when buying homes, but believed that housing prices could never decline, they pushed up housing prices so much that builders built too many homes, which was a major reason for the busted housing bubble and resultant Great Recession.

History has shown that the tax cuts and market regulations the Trump campaign promised will make the wealthy even wealthier, and 80 percent of Americans that are wage earners, less wealthy.

It’s the real reason Trump has unleashed “Chainsaw Musk”—to terrorize government workers into quitting their jobs and destroy as much as possible of Roosevelt’s New Deal, and the laws and regulations that have benefited most Americans since then.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Record Inequality = Record Debt

 Answering Kennedy’s Call

“Never spend money before you have earned it.” Thomas Jefferson

Thomas Jefferson may not be the best person to quote on the dangers of debt—His slaves weren’t freed upon his death because his estate owed too many debts. And my Italian economics history professor lectured on the cause of the fall of the Roman Empire. Its empire collapsed when it was bankrupted because its armies had run out of territories to invade and loot.

Might our American empire might end up in a similar situation? We have transferred as much of our national wealth as possible to the top 10 percent of American households by lowering their taxes. The other 90 percent of American households are tapped out, having accumulated massive debts as household incomes have stagnated since the 1970s.

FREDdebt/gdp

The FRED graph dating from 1980 shows when our debt-to-gdp ratio began to bulge—in 1980 from 31% to 51% of GDP creating the first $400 billion national debt total.

Our national debt has now ballooned to 121 percent of GDP since because we can’t agree on how to pay for it. We may soon lose our last Aaa rating from Moody’s Investors Services who has already warned it is in danger because “Continued political polarization within U.S. Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability,” as quoted by Barron’s Randall Forsyth.

Graph: Last Tech Age

But the real debt culprit is what the political polarization has led to—our record income inequality, worst in the developed world and many of the developing countries. It is mainly because majority Republican congresses have managed to push through successive tax cuts without the means to pay for them.

The U.S. was in 106th place of the 149 countries in income inequality as ranked by the CIA’s World Factbook with a Gini inequality index of developing countries like Peru and Cameroon when I first wrote about it. Whereas Finland and the Scandinavian countries are at the top of equality rankings, Germany and France are 12th and 20th, respectively. The higher the index, the greater the gap between wealthy and poorer citizens of a country’s population.

Is our bankruptcy immanent? It is becoming increasingly difficult to pay our bills with increasing deficits, since much of the deficit is funded by other countries investing in U.S. Treasuries because the US Dollar is a world currency. But it will become increasingly expensive as foreign investors in US Treasuries will demand higher bond yields for the increased risk of default, as Moody’s Investor Services has warned.

Defaults happened in 1932, when national markets collapsed causing the Great Depression. Americans had borrowed too much and in the words of Roosevelt’s Federal Reserve Chairman Marriner Eccles, “The United States economy is like a poker game where the chips have become concentrated in fewer and fewer hands, and where the other fellows can stay in the game only by borrowing. When their credit runs out the game will stop.”

Part of the solution would be to restore the tax rates for the highest income earners that prevailed before President Reagan cut them to downsize government and enrich his Big Business supporters. The first tax cut (Economic Recovery Tax Act of 1981), cut the highest personal income tax rate from 70% to 50% and in the second tax cut (Tax Reform Act of 1986) to 38.5% among other things, per Wikipedia.

But most of the taxes would have to be paid by those he enriched, maybe even a tax on the wealth they had accumulated, i.e., the wealthiest 10 percent that benefited from all those tax cuts since 1980. Is that possible when the incoming administration wants even more tax cuts?

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why Another Gilded Age?

 Financial FAQs

"I remember '29 very well ... the drugged and happy faces of people who built paper fortunes on stocks they couldn't possibly have paid for. ... In our little town bank presidents and track workers rushed to pay phones to call brokers. Everyone was a broker, more or less. At lunch hour, store clerks and stenographers munched sandwiches while they watched stock boards and calculated their pyramiding fortunes. Their eyes had the look you see around a roulette wheel ...but despondency, not prosperity was just around the corner.”—John Steinbeck

Graph: Last Tech Age

This is what happened in the 1920s that led to the Great Depression and Roosevelt’s New Deal.

Marriner Eccles, Rooselvelt’s New Deal Federal Reserve Chairman was one of the first to characterize the cause of the Great Depression, when he said in testimony before congress that it was the record income inequality of that time:

“The United States economy is like a poker game where the chips have become concentrated in fewer and fewer hands, and where the other fellows can stay in the game only by borrowing. When their credit runs out the game will stop—Mariner Eccles, Federal Reserve Chairman during the Great Depression.”

The current Gilded Age began in earnest with the election of President Ronald Reagan and his credo that “government is the problem.” It has resulted in the huge transfer of wealth from workers to the owners of capital—as much as $1trillion, according to some economists—by cutting their taxes and deregulation of whole industries.

Laws were also enacted to weaken labor unions and monoply laws were not enforced so that corporations could transfer their factories overseas where labor was cheaper, basically gutting America’s middle class industrial base that has been the cause of so much anger and despair of America’s workers.

The U.S. is in 106th place of the 149 countries in income inequality as ranked by the CIA’s World Factbook; with a Gini inequality index of developing countries like Peru and Cameroon. Whereas Finland and the Scandinavian countries are at the top of equality rankings, Germany and France are 12th and 20th, respectively, as I’ve highlighted in past columns. The higher the index, the greater the gap between wealthy and poorer citizens of a country’s population.

It’s had to believe that we have reached that point once again, a time when today’s wealthiest exceed the wealth of the Vanderbilt’s, Rockefeller’s and Morgan’s tenfold that built those massive 5^th Avenue mansions at the turn of the 20^th Century to show off their wealth, before there was an income tax or Federal Reserve.

It was spawned by an economy fueled by oil, railroads, and a banking system that enabled so many consumers to go into debt, until the stock market crashed on Black Friday of 1929.

History is repeating itself with $Trillioners instead of the $Billionaires (and $Millionaires) of that era because of Sillicon Valley and the Internet that have made an Elon Musk, now the richest person in the world.

But it is at the cost of a greater concentration of wealth than ever. Today’s moguls duplicate the 20^th Century robber barons in wanting to share as little of their wealth as possible—instead, they use their wealth to elect conservative policies that lower tax rates and cut government benefits that protect the other 99 percent of Americans.

Is President Biden’s Bidenomics’s spending of $trillions to modernize America’s industrial base, infrastructure, and mitigate disasters caused by a changing climate the last gasp of Roosevelt’s New Deal programs that protect ordinary Americans?

The incoming Trump administration has tasked the richest man in the world to set up a “Department of Government Efficiency”, they say, to downsize or eliminate some of those programs to eliminate waste, but really to shrink or eliminate the health and safety programs; such as the US Environmental Protection Agency, Health and Education department, and even shrink the IRS once again to enable the $Trillionaires to better evade taxes.

Trump is clear about his intentions. He intends to pick a cabinet based on their loyalty to him as he did in his first term. Many have no qualifications; most were lobbyists with blatant conflicts of interest which resulted in many having to resign when their corruption was uncovered.

Such dysfunctional behavoir was a reason President Trump lost the House of Represetatives to Nancy Pelosi and the Democrats in 2018, and Trump lost to President Biden in 2020.

Sadly, the incoming all-Republican congress will probably give him the tax cuts, inflationary tariffs and the mass deportation of undocumented immigrants that will also be a repeat of Trump’s first term.

And many in the working class who voted for him will suffer again, and as they have throughout Trump’s working life; thanks in large part to the Elon Musk’s of the world that don’t believe in sharing their wealth.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

How Do We Fix Inflation?

 Financial FAQs

I said last week that: “Many of us remember when a gallon of gas was less the $2, or a quart of milk less than $1, or housing was last affordable in the 1970s. I remember the inflation surges in housing. What happened?”

So, Shouldn’t we as voters be able understand how to fix inflation such as we just experienced with the COVID-19 pandemic? That didn’t happened on November 5. Trump was able to convince most of his voters to blame someone rather than learn what needed to be done, and had already been done, to cure the problem.

It is now doubly important because if Trump raises tariffs and begins to deport undocumented workers on ‘Day One’ of his presidency as promised, inflation will soar again and the U.S. economy will quickly go into a tail spin.

Why couldn’t Trump voters see this? Their anger was fostered by an out of control social media catering to their own interest groups by elevating conspiracy theories and denigating scientific facts to keep their audience rather than what is good for most Americans and the American economy.

It has always been difficult to pierce the fog of propaganda and obfuscation that has dogged anything related to our economy because the U.S. economy is the most complex in the world with its competing mix of private and public enterprise needed to to make it work.

FREDcpi

The retail Consumer Price Index (CPI) in the FRED graph above dating from 1980 is the eaiest way to understand why we had high inflation spikes and how long it took for it to return to normal.

Simply put, the spikes that hurt most Americans were due to supply shortages mostly out of our control. The 1980 spike was mainly because of an oil shortage that took a decade to reverse. In 2022 the other high spike was the COVID-19 pandemic that shut down supply chains and took approximately three years to recover.

It didn’t matter which political party was in charge—Republicans in 1980 and Democrats in 2022. Both parties had the tools to mitigate the inflation surges that took some time, as I said.

How were they solved? Both political parties used their financial institutions, mainly the Federal Reserve and Treasury Department, and did not disparage them as Trump’s MAGA supporters do as a matter of policy. Because they control the flow of money—regulating whether there is too much (inflationary) or too little (deflationary) money is in circulation to counter the supply disruptions.

But playing the blame game that has enraged so many working class voters doesn’t solve the inflation problem, though it did win enough workers to the Republican side. They now must prove they actually know something about its causes.

What will hinder any good faith effort to tame inflation is the maldistribution of the money supply. Too much of it is in too few hands, a hallmark of what has been called the second Gilded Age that has favored the wealthiest since the 1970s, and not ordinary workers damaged most by higher inflation whose household incomes have stagnated since then.

We have working solutions to the inflation that has plagued the American economy for decades. But deporting undocumented workers and raising tariffs will raise inflation, since tariffs are a tax on imports, and fewer immigrants form the backbone of the supply sector (restaurants, transportation, retail, construction) that has been the mainstay of this recovery. It will cause a labor shortage, which means fewer goods and services will be produced, thus raising the price of things, as well.

This is the most basic of Econ 101 priinciples, but Trump was able to fool his voters because there is a general ignorance of economic principles.

And our capitalist system hasn’t been helping the working class since the 1970s, as I’ve said in past columns. The increasing income inequality created an almost unstoppable anger that grew after decades of income loss for working class voters as more and more wealth was shunted upward creating ever larger budget deficits.

If we are able to reverse the income inequality with more progressive taxation policies that pay for better social benefits, for instance, we might convince more voters to realize government isn’t the problem and inflation is really governed by the common sense rule of supply and demand.

They might then not choose someone who only knows how to blame but rather vote for real economic solutions to mitigate inflation.

Once Roosevelt created the New Deal in response to the Great Depression, governments began to work for ordinary Americans—from social security to a federal minimum wage, to workers rights. Only such a private-public partnership will help to cure our inflation problem.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why the Inflation Problem?

 Financial FAQs

Most of us remember when a gallon of gas was less the $2, or a quart of milk less than $1, or housing was last affordable in the 1970s. I remember the inflation surges in housing. What happened?

Shouldn’t we as voters understand inflation if a majority of voters were so angry about the soaring price of everything that the majority would find somebody to blame (President Biden), and elect somebody else (Donald Trump) who said he will make everything better, even though that didn’t happen during his first term?

It is a peculiar form of American amnesia that caused so many to vote against their own interests—in this case a majority of white women to vote for a sexual predator and abortion opponent, young working class males to support a con-artist who had stiffed or defrauded his own workers and filed bankruptcy multiple times to avoid paying them.

It has to be because everything is happening too fast in our high-Tech driven economy and culture (Internet?) that has left so many people still wanting to live in a world they remember or imagine.

This happened at least once before and signaled how difficult it is for Americans to face forward rather than look backward to a time that never was, even though they crave change. It was first noticed in Thomas Frank’s 2005 best-seller: What’s the Matter With Kansas; How Conservatives Won the Heart of American?

Such nostalgia enabled GW Bush to win a second term, although he started his wars on terror by lying about weapons of mass destruction after failing to anticipate 9/11.

To understand what happened with Trump’s false economic narrative—that Americans were better off financially in his first term—we should understand the complexity of our own economy.

The main priority of Republicans—tax cuts that Bush and Trump Republicans enacted were a giant scam that actually transferred more wealth to their supporters and imp0verished more working Americans, while adding $trillions to the national debt.

But enough Americans remembered an earlier, whiter America that had experienced a victorious, post-World War Two prosperity—until the 1970s and school integration, minorities wanting more rights (including women), the killings of the Kennedy brothers and Martin Luther King, Jr., and a Vietnam War tore our country apart.

It’s hard to imagine such a tumultuous history today several generations later.

Republicans have always favored tax cuts that enriched themselves, but not better healthcare for Americans—especially women and children.

CBPP.org

So how should voters understand the American economy? Firstly, we have been living in what has been called the second Gilded Age that has favored the wealthiest since the 1970s, and not ordinary workers whose household incomes have stagnated since then.

But most Americans probably understand it’s most basic tenet: The Law of Supply and Demand. It’s an economic term, but based on commone sense. The price of things depends on the supply of things. And when there is an abrupt shortage, such as oil and gas because of the Arab oil embargo that cut off OPEC (The Organization of Oil Exporting Countries) oil imports in the 1970s, gas prices soared. And that began the upward cycle of price fluctuations.

Meanwhile, more than 80 million baby boomers became consumers at the same time who wanted more of everything. And the housing industry couldn’t build enough dwellings to satisfy the increased demand.

This is as good a common sense explanation as any to understand inflation. Prices go up or down when they aren’t in equilibrium—i.e., too much supply lowers prices, while too much demand from consumers and businesses raises them.

The same thing happened with the COVID-19 pandemic that killed one million Americans. The worldwide shutdowns and shelter-in-place requirements to keep it from spreading caused massive shortages of everything, which caused the price hikes that infuriated so many.

Consumers couldn’t very well blame COVID-19, a virus like the flu though much more virulent, but they could blame who was supposed to protect Americans from it.

What is most remarkable is that prices had been rising rapidly since the 1970s, but Americans hadn’t reacted as angrily as they did after the COVID-19 pandemic—maybe because of the trauma from so many lives lost—whole families in some cases.

Inflation is like the frog in water that has been slowly coming to a boil. For whatever reason, we have only noticed it since the water (meaning our economy) has come to a boil from the pandemic’s aftereffects that have most hurt our working class, many of whom had lost jobs as globalization moved good paying manufacturing jobs overseas in the name of making everything cheaper.

Most of us remember when a gallon of gas was less the $2, or a quart of milk less than $1, or housing prices were last affordable in the 1970s, as I said. But there was no quick cure. The OPEC oil embargo jump-started the decade-long inflation surge in the 1970s, for instance.

What can be done to cure the current inflation surge? Republicans and Trump’s “Drill Baby Drill” promise can’t do much to lower oil prices because the U.S. already produces more oil than it uses, while adding more CO2 to the atmosphere that is accelerating global warming, that endangers whole parts of the country.

And higher proposed tariffs won’t increase the supply of anything and might lower demand, since it makes imports more expensive because it is a tax on imported goods.

There are two solutions that the Biden administration have implemented, but Republicans don’t like—federal funds to make construction of affordable housing cheaper, and the elimination of loopholes that encourage the profit-taking by cartel-size pharmaceutical corporations that took advantage of the pandemic shortages and continue to raise their prices.

And lastly, we need more comprehensive healthcare legislation that would increase productivity of our workforce because they become healthier. But Republicans have historically opposed that as well, having attempted to repeal Obamacare, the Affordable Care Act, more than 30 times. It is the only private health insurance that insures more than 30 million Americans against preexisting conditions.

Republicans are even talking about downsizing Medicaid and Medicare in the name of increasing efficiency. That will also increase inflation, because M & M keep overall costs of healthcare lower with their power to control treatment and drug prices.

So it’s difficult to know if it was ideology and conspiracy theories triumphing common sense economics that enabled Republicans to win this election.

Inflation has returned to its historic norm, and the American economy is fully employed so everyone’s job is safe. Many voters want someone to blame for their myriad anxieties, as Kansans had done two decades earlier.

We will now have to worry if this Gilded Age will end as did the last one. So much wealth had been accumulated in too few hands that it caused the Great Depression and led to World War Two.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen