E Bannonomics, Not Trumponomics Will Crush The Economy
Steve Bannon threw major confusion into the markets with an interview at Hollywood Reporter where he said:
"I’m the guy pushing a trillion-dollar infrastructure plan," said Bannon in the interview. "With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks."
This is essentially a call for the New Normal on steroids. The problem with this is that it is the opposite of the euphoria pushing the markets up, a strong dollar and higher interest rates! It is the opposite of the Trumponomics analysis given by Wilbur Ross. But Bannon would have to allow the recession that is expected as we are at the end of the business cycle, in order for stimulus to work in its aftermath, because there may not be enough slack in the economy. And Bannon would likely have to turn it into a major depression!
The Republicans actually made a mistake as to timing, and probably should have allowed Obama a bigger stimulus package when there was slack in the economy in 2009. But they were selfish and determined to destroy Obama from the start, wanting him to be a one term president. An additional stimulus, at the beginning of Obama's second term, still prior to the end of the business cycle would have been more effective than now.
So now, at the end of the business cycle, where there is little slack, that fiscal stimulus could be a big mistake. Steve Bannon appears to understand this in a diabolical way. But for his plan to work the dollar would have to crater and rates would have to plunge and the stimulus would have to be delayed! Millions of people could lose their jobs and a credit crisis of epic proportions would be the result. This would be Bannonomics, not Trumponomics.
The question is, are Bannon and Trump on the same page as to the timing of the stimulus? Would Donald Trump sanction a massive economic depression?
Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.
Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.less