Tuesday, February 14, 2017

having no political representation and economics

Economics is one of the ways that I am conservative. There was a time that economics were discussed within politics. I just don't really see that being true in the last ten to twenty years; outside of vague tax plan "talking points" and promises of "more jobs". I often find myself questioning if Enron or the subprime mortgage crisis would have happened if laymen were more engaged in economic discourse.

Trump recently has unveiled his tax plan (and other economic plans) or what I would call it; a tax disaster (and other economic disasters) .

In the following article, Seth Klarman is quoted as saying, “President Trump may be able to temporarily hold off the sweep of automation and globalization by cajoling companies to keep jobs at home, but bolstering inefficient and uncompetitive enterprises is likely to only temporarily stave off market forces,” he continued. “While they might be popular, the reason the U.S. long ago abandoned protectionist trade policies is because they not only don’t work, they actually leave society worse off.”

Klarman is probably the most famous investors I can think of and his ideas are sought after around the world. His methods of investing are so revered that his books (written decades ago) are sold for  $600 used (Example: Margin of Safety). So, it is not some rando off the streets that is telling us to be wary.

I have already been imagining that his plan is even worse than the Bush tax plan that fueled an economic recession in the early 2000s. Klarman confirmed this notion by writing, “The Trump tax cuts could drive government deficits considerably higher. The large 2001 Bush tax cuts, for example, fueled income inequality while triggering huge federal budget deficits. Rising interest rates alone would balloon the federal deficit, because interest payments on the massive outstanding government debt would skyrocket from today’s artificially low levels.”

I personally know a number of wealthy people who are already pulling their money out of risky investments and hunkering down for the Trump Administration. The consensuses is that Trump's public image actually hurts his acceptance rate globally and that this will hurt the American dollar.

It is definitely food for thought.


Side note: After some light Googling, it is mind boggling that Klarman's books can sell upwards of thousands of dollars.

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