Answer to rxbond's post:
Message 32067907
rxbond,
I agree with many of your rhetorical questions. I think Trump is doing many things right, even though the press gives him zero credit for it. However, I think you give way to much credence to the idea that our Executive Branch has as much power as you say to move our economy so much. I think there are larger forces that act on the economy, including the business cycle. We agree on Trump's favorable policies and their short term impact. But some of his actions are very short term in nature.
For example, you talk about $7 trillion coming back to the US. I assume you are talking about the repatriation of US companies investment holdings overseas. First of all, where do you get that number? The highest estimate I've seen was that US companies held about $3 trillion overseas, of which $500B was brought back last year with the pace of repatriation declining a lot. Keep in mind that these are international companies and taxes aren't the only reason for holding cash overseas. They also need working capital for running their businesses and making capital investments, and buying other companies. So they will continue to hold at least 50% of that overseas money outside this country.
Second, although I think buybacks are great for stocks and investors, they don't really stock the fires of economic growth. I'm not against buybacks. In fact, I think Congress should stay out of it, because it is a return to shareholders who have invested in those companies. However, let's not delude ourselves on what this does for short term bumps to the economy. It does very little.
Having said all that, Trump is definitely more of a CEO than a Politician, but he's done quite alright as a politician as well. He has his finger on the pulse of the people. I think he would be a far better steward of our economy than the previous two Presidents. So I will vote for him again in 2020. But one big worry I have about Trump is that he seems to have bought into the idea that deficits don't matter. They do matter for the long term of our standard of living. Too high of deficits for too long will increase our interest expense to the point it crowds out all other spending. It is already happening and the inflection point of 100% Debt to GDP has been reached. This could impact Inflation in the long run, which is what this thread like to think about. That has me worried. |
