Capital Markets
Performance during 2018

Why The Stock Market Is Tanking. Why Things Are Going To Get Worse Unless We Reverse Trump's Damage

Burgess COMMENTARY

Peter Burgess

Why The Stock Market Is Tanking. Why Things Are Going To Get Worse Unless We Reverse Trump's Damage


The Dow Jones Industrial Average for the last 365 days. This is scary.

Back in June of this year, I wrote a diary called 'We All Need To Be Prepared For The Coming Economic Disaster'. In it, I wrote about how the stock market was no longer going up, as it had under Obama, but was instead going sideways. This is what the market tends to do when it is going to switch from a long-term upward trend to a long-term downward trend.

When I wrote the diary, I was a bit apprehensive that other people with financial knowledge here on DailyKos.com might say that I was crazy. The thing is, NO ONE DISAGREED WITH ME. Instead, I got a lot of great and insightful comments from a lot of financially knowledgeable Kossacks who also could see what was happening to the economy. In other words, a whole lot of Kossacks could see six months ago that the stock market was going to tank. This is, of course, because so many people on DailyKos.com are smocking brilliant.

If I might be allowed to quote myself from my article, I wrote:

This why after twelve years of Reagan-H. W. Bush the U.S. suffered a bad recession, and after eight years of George W. Bush, the U.S. suffered a massive recession. Now, Donald Trump is following the same course, but it is much worse with him. Why?

1. Trump's massive tax cut for the rich and the huge deficit increases that, according to the CBO this will cause, will greatly slow the economy.

2. Trump's economically insane trade war will also hurt the economy

3. Trump’s gutting of programs that help working Americans, and older Americans will greatly hurt workers, who in turn will have less to spend, so the economy will slow further.

Note that six months ago, the CBO was saying that deficit increases (which had greatly accelerated due to Trump’s Tax Cuts) will eventually slow the economy. This is because as the deficit increases, the Government must pay more and more in interest, which means it has less and less money to stimulate the economy. According to the CBO, by 2028, our Federal Debt will approach 100% of our Gross Domestic Product (GDP). That is insane.

Not only did Trump’s massive tax cuts for the rich not stimulate the economy long term. It actually had the opposite effect. His tax cuts poured more money into the economy, and that money was not invested in things like wages or infrastructure. This means that the money from the tax cuts caused inflation to rise, which is why The Fed will end up raising the Prime Rate four times this year. The increased debt is also slowing the economy because the increases in debt payments both minimize how much the government can stimulate the economy and also increase the trade deficit with other countries.

This, along with Trump’s insane Trade war, and his gutting of programs that help the poor and middle class, is killing the economy.

So, what do we need to do?

1. First, we need to Kill Trump’s Tax Cuts For The Rich. This will reduce the total amount of money in the economy and help minimize inflation. With the money from the Rescinded Tax Cuts, we can launch an infrastructure program like Hillary Clinton (and also Donald Trump) promised. This will grow the economy.

2. We need to Kill Trump’s Trade War. This is causing other countries to buy elsewhere, causing things like Soybean farmers to have to destroy their crops.

3. We need to restore the cuts to Obamacare. A lot of people do not realize that Obamacare helped pull us out of the recession by stimulating the health care field.

This is what needs to be done. Unfortunately, what we really need is a DEMOCRAT in the White House who believes in Keynesian Economics. What we have instead is Economic Moron Donald Trump who has been trying to follow Supply Side Economics/Reaganomics/Voodoo Economics. Save your pennies, Kossacks. It is going to be a bumpy ride.