r/investing • u/Hot-You-7366 • 2d ago
With a $5 trillion increase in deficits from tax cuts who is going to buy US treasuries abroad in a tariff war? Are we risking the Dollar global reserve currency status on tariffs?
Peter Thiel has long been saying globalism was bad in the Clinton era fueling growth in a bad way. To what extent sure, I dont agree with everything Clinton did at the behest of the GOP Senate and House. But sometimes once you do something there is no going back.
Corporations are already flatly saying they cannot (will not) build the infrastructure and find the labor pool to do what the mega manufacturing cities of China and other Asian countries can do even if you tariffed them 1000%.
Thiel (especially for an immigrant) seems fixated on bringing us back to the 1960s, I suggest watching any of his interviews over the last 10 years he says the same every ime any way. He wants innovation in industry and jets for some reason (he always talks about the flight time to London). And, he says it will be bad for a big percentage of the population. At least he doesnt lie about it, a generation or two are gonna get sent to the cleaners.
Who buys american debt in this scenario? Banks wont touch it. Internationals wont touch it, With the tariffs completely screwing up FX and countries use of treasuries to make trade work. Whos buying treasuries when your gonna get smoked on your 4% 10 year when it goes to 1981 18% again?
Please explain how we are not witnessing, unless some rabbit is pulled out of a hat, the death of America Global Capitalism?
edit: for those who dont know Peter Thiel is the billionaire tech investor who is alt right. He funded JD Vances campaigns and employed him at his VC for a non-job, just a fake rubber stamp when JD says hes from VC its bullshit.
edit: Trump also saying today tariffs worked in 1700-1800s lol. America was a back country, poor relative to Europe, barely regional power even in the late 1800s. We want to go back to that? We doing the cotton gin again to make clothes? We got rid of tariffs in 1918 or something so we could income tax the robber barons
last time a President controlled a Fed chair - Nixon-Arthur Burns... Nixon forced expansionary policy (like what trump wants). The result was stagflation.
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u/brothersand 2d ago
Please explain how we are not witnessing, unless some rabbit is pulled out of a hat, the death of America Global Capitalism?
That's exactly what it is.
Did you really think Vladimir Putin wanted to make America great again? It was always about weakening the USA. Trump doesn't care about this country at all.
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u/Flat_Baseball8670 2d ago
Yup. The 0.1% can just live in any country they want to. Anyone that needs a job to survive isn't as lucky.
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u/buried_lede 2d ago
That’s the demarcation -literally anyone with a job is the target, we will be paying for all of this and it’s not set up to benefit us at all. There’s nothing in it for us
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u/subydoobie 2d ago
Also small businesses. Global multinationals just shift operations. Small businesses (I have one) will go under - at least those of us who are tied to the US.
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u/buried_lede 2d ago
There are such a shocking number of people who support the conservatives it’s overwhelming. Most of them can’t benefit from this, so that’s a wonder that they vote for it. Breitbart News is chock full of ads for camper trailers and tiny homes for seniors, so, their readers are living a fantasy.,
One big weakness of this government is that its parts sort of hate each other and that is going to break at some point. Musk/oligarchs versus Christian nationalists, versus Trump. They are going to undermine each other and maybe even collapse.
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u/ApplesAreGood1312 2d ago
The issue with this whole thing (among others, obviously) is that large-scale manufacturing takes major time and investment to build out. Knowing a new administration will be in place within 4 years and that anyone else would almost certainly drop the tariffs, doing so carries unacceptable levels of risk. That's not even considering the pattern he has of changing his mind every time the wind blows. So we get massive uncertainty on top of a lose-lose situation. Down we go. See y'all at the bottom.
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u/restform 1d ago edited 1d ago
Even musk was saying this to rogan during the election campaign. Something along the lines that tariffs need to be done in a strategic and intelligent/careful way because bringing manufacturing back, or upping capacity, takes years.
I'd be curious to hear what he has to say about it now but I'm pretty sure he hasnt/wont have the balls to talk about it (happy if I'm wrong, havent followed that close)
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u/Cool-Double-767 1d ago
Well, Tesla won't be impacted by tariffs, you can expect Tesla sales to skyrocket in the US market, even considering the bad publicity. If I had spare cash (I don't, darn it), I'd buy Tesla stock now.
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u/restform 1d ago edited 1d ago
That's fair, they are still impacted, especially from their batteries, but probably impacted less than the competitors. Not sure it would inspire me to buy tesla stock though, as the tariffs will still impact them, not to mention the massive sales regression in the EU/canada/australia and the Chinese competition outside the US. Doesn't seem like a healthy recipe for a 130PE growth stock.
They will undoubtedly be protected by the govt in the US probably forever but can the US market justify the market cap? Imo not really, especially since they're alienating a significant chunk of their core audience in the US. Will be interesting to see if MAGAs change their opinions on EVs though, could see sales boost from that.
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u/Specific_Award_9149 1d ago
Here's the thing though, Trump will be the next term
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u/It_is_not_me 1d ago
There is no next term, just an indefinite second term with no election in 2028, because reasons.
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u/i-love-freesias 2d ago
Well, if they want cheap labor without unions in their new American factories, they might have to rethink immigration.
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u/mtd14 2d ago
Nah, they’re just trying to make the general population desperate. If they bring the American worker to their knees, they’ll take a low salary at a factory.
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u/SidewaysAcceleration 2d ago
Not at a factory, at a war. This may be learned from Putin, who benefits from low income people volunteering for war at a very low price to get out of hopeless stagnation and poverty.
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u/skycake10 1d ago
Will they though? Rotting fruits in American fields when immigrant labor isn't available to harvest it is pretty strong proof that the vast majority of Americans won't do that sort of work no matter how desperate things are.
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u/buried_lede 2d ago
You know, this doesn’t answer your question about the dollar reserve currency, but I marvel at how such maladjusted troubled personalities managed to gain such a foothold in this country. Trump, musk Thiel and so many more in their networks, plus the Christian nationalists.
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u/burnbabyburn711 2d ago
It’s a mortifying and shameful reflection on the character of the American people.
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u/zennsunni 1d ago
The fact that the conservative evangelicals said, "This is our guy" will never cease to amaze me. He's the actual, non sneaky, very literal and direct antithesis of everything they claim to believe in.
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u/misterferguson 1d ago
They only stuck to their so-called "principles" when they were a convenient cudgel to use against liberals. As soon as they were forced to choose between their principles and political expedience, they folded like a house of cards.
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u/iKill_eu 1d ago
American swing voters and conservatives are the political equivalent of someone who wants to quit smoking but folds within a day, again and again. Zero backbone. It's always the easy way out, hoping that this time the irresponsible, fun choice will somehow not be bad for them.
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u/buried_lede 1d ago
There is a similar cozy relationship in Russia between church and Putin.
The churches here blasted into politics in the 1980s
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u/patchyj 2d ago
As a European looking in, America rewards such sociopaths. There is nothing more precious, more powerful, than the almighty dollar. It's heroin and sex and so much more. Anyone and anything that stands in their way of hoarding more is an enemy and must be treated as such. It's been this way for a very long time and we are witnessing the final stages of pure, unchecked neoliberalism
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u/JayDsea 1d ago
Yeah, it’s only an American problem. We must be responsible for things like Brexit and the far right rise in Germany too.
You’re describing the effect of social media and the result of monetizing the worst aspects of humanity. It’s hardly an American issue and the problems from it will not be isolated to or stop at our borders. Social media is a disease that affects everyone.
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u/jackflash223 1d ago
I’m American and I completely agree. I’ve been watching it for decades. The erosion of morality from the general populace and replacement of belief in humanity with the worship of a dollar is what got us here. I guess it could only go on so long.
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u/Codydog85 1d ago
Even the American Protestants and evangelicals have embraced prosperity gospel and the sin of empathy theories. Gold = g-d.
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u/misterferguson 1d ago
It's a cult of personality around Trump. Plain and simple.
I agree that America rewards greed, but what we're seeing this week actually runs counter that because it's just going to inflict a ton of economic pain, even on the wealthiest people.
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u/Skidpalace 1d ago
I am quite sure this is what Putin wanted Krasnov, I mean Trump, to do. All of Putin's objectives are being accomplished. Divide America, destabilize/dismantle NATO, capturing Ukraine and much of Europe and unseat the US dollar as the world's reserve currency.
Donald Trump is destroying America right in front of our eyes.
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u/mvw2 2d ago
Here's the core problem.
US debt = $36.68 trillion
Sure the yearly deficit is more manageable, but the end goal is to
How does that get paid down?
How is total US population wealth held?
Well, the top 0.1% holds nearly 13.5% of all US wealth.
The remainder of the top 1% holds 16.7% for a combined 30.2% of all US wealth being held by just 1% of the population.
The top 10% (excluding the 1%) holds another 36.5%. So the top 10% holds 66.9% of all US wealth, 2/3rds of all US wealth is held by just the top 10%, two thirds of all wealth.
The top 50% (excluding the top 10%) hold another 30.8%. Combined, the top 50% in total hold 97.7% of all US wealth.
The bottom 50%, both HALF of all US people, hold just 2.5% of the wealth.
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u/mvw2 2d ago
To scale this to income:
The top 0.1% averages $2,800,000 of income per year.
The top 1% earns an average of $819,000 per year.
These two groups own about 1/3rd of all US wealth.
Top 10% earns $191,000 a year.
If you're at this level, you're part of the group holding 2/3rds of all US wealth.
Now here's where it gets scary.
The top 50% earner in the US is making $80,600 a year.
EVERYONE, I'll repeat, EVERYONE making less than $80,600 a year represents the bottom 2.5% of the wealth pie.
Again, I will repeat:
If you are making under $80k a year, and a LOT of people are, you, ALL of you together own less than 2.5% of the wealth in the US population.
That is INSANE!
But here's the bad part. Tariffs are flat sales tax. Tariff related tax on that toaster at Walmart is $5 to the guy making $15k a year, and it's $5 to the guy making $500,000 a year. Flat, dead flat. And general buying is roughly even independent of wealth.
So tariffs are burdening everyone, let's say $3000/yr from now until Trump leaves. You pay $3000. I pay $3000. The guy making a billion dollars a year pays $3000.
Now we tie that to % of population making less than $80. Well...that's 49%.
So...49% of the population under $80k/yr income, who collectively own 2.5% of all US wealth is burdened with 49% of all tariff induced costs.
Bottom 50% pays 49% of the tax, losing part of their 2.5% wealth.
The Bottom 10% (up to $191k income), excluding the bottom 50%, pay 35%, so 1/3 of the US wealth is paying 35% of the tariff taxes.
The Top 10%, excluding the top 1%, own 6.3% of the wealth and pay 15% of the tariff taxation.
The top 1% who own 30% of all wealth pay less than 1% of the tariff taxation.
The top 0.1% who own 13.5% of all US wealth basically pay 0% of the tariff taxation.
THE GOAL of Trump is to net $9 trillion dollars over the next decade.
The bottom 50% own, IN TOTAL, about $4 trillion dollars, all wealth, all assets. They are asked to effectively got to debt, negative dollars, to cover their 49% of the tariff. That's half the nation is debt, own nothing, zero assets on this planet, and indebted. That's the only way the numbers work. You kill half the nation, broke, starving, dead, gone, in the ground dead, 50% of the population, 175,000,000 people no money, no assets, no food, no home, no car, no nother, in debt or dead. That's the number. That's tariffs. That's Trumps tariffs.
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u/mvw2 2d ago
I will repeat for clarity one last time.
Trump's tariffs, as they are designed and intended to perform, aka HIS goal, is to make $9 trillion dollars. To do that, the bottom 50% of this nation has to give up 100% of their wealth. 175,000,000 people no money, zero, broke, staving, dead, HALF the nation. That's the only way the numbers hit $9 trillion.
Now we know this doesn't happen. This CAN'T physically happen.
So what happens instead?
Purchasing goes WAY down. The bottom 50% can't burden $4,000,000,000,000 in NEW tax, not existing tax, NEW TAX ADDED. So they don't buy. Everyone just doesn't buy.
Tariffs are ineffective. The goals are impossible.
But what does it do instead?
It kills companies. No sales, no revenue, no profits, bankrupt. Companies die. US companies die.
Worse, the trade war forces foreign companies to defy the US, to not buy US exports. So US companies also can't sell foreign either. No domestic cash, no foreign cash. The US companies choke and die.
PEOPLE DO NOT HAVE THE MONEY TO AFFORD THE HIGHEST TAX INCREASE IN AMERICAN HISTORY (maybe, well at least for anyone living today).
This tariff BS KILLS the US. It makes everyone poor. It kills US companies through loss of sales.
You can not, I repeat CAN NOT push manufacturing domestic at a massively increased sell price into an already cash poor market. We've been in a near recession for 3 years now. We're in a lull now, pre tariff taxation. People already don't have money. US population debt is at record highs right now. Defaults on loans right now are at record highs. Now you add tariffs, massive, massive taxation to a population with no money.
It doesn't matter of manufacturing comes home. It doesn't matter when nobody has money to support that. You will kill US manufacturers. You will wipe them off the face of this planet because no one can buy any of it.
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u/FightOnForUsc 1d ago
You are conflating net worth with income. You used income and wealth as though they are the same people.
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u/GnoiXiaK 1d ago
Net worth and income are largely fungible.
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u/FightOnForUsc 1d ago
Definitely not true. There are plenty of retired people with high net worth’s. Your age is huge indicator of wealth. It’s also an indictor of income but less so.
Also there are lots of young people with high incomes, doctors, software engineers, etc. that don’t have high net worth yet.
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u/geneel 2d ago
What does sovereign debt have to do with wealth? Dollar reserve status means that USA debt is fundamentally different from nay other country.
The wealth gap is due to the extractive nature of the usa economy, domestically. We could have the same amount of debt and a more equitable society if we embraced tax and spend economics
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u/jackflash223 1d ago
This is beginning of the “trump crashed the economy so everyone could have a fair shot” narrative.
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u/mvw2 1d ago
A fair shot implies you have means to take that shot. Tariffs, specifically, syphon wealth of out of the bottom half of the population of this nation. If you're making less than $80k, you're the bottom half. The very wealthy pay basically 0% of the tariff burden. Low all of the top 10% of this country pay statically around 15% of all $9 trillion dollars of the tariffs. And their percent change in wealth is collectively 2% with the top 1% at statistically 0% net wealth change. Meanwhile if you're making under $80k a year you're part of the group who owns just 2.5% of the national wealth, pays 50% of the $9T tariff, and is expected to lose in average - 113% of your wealth. The math of Trump's tariffs put the bottom half, HALF of the nation into debt.
How does one "get a fair shot" while the top 50% owns 99.7% of the wealth. The top 10% owns 2/3rds. The top 1% alone owns 1/3rd of the wealth. When the market crashes, THEY, not you, not 50% of this nation, has money to throw into the fire sale of a market. The bottom 50% will be in debt with no money to utilize.
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u/OddlyFactual1512 2d ago
Read about the Mar a Lago accord. One of their goals is to significantly devalue the USD.
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u/oberwolfach 2d ago
The question to ask when pondering these issues is what is the alternative? The US can be beset by a large variety of problems, but there needs to be a viable other reserve currency and safe asset in order for your concerns to come to fruition. Otherwise, the current state of affairs will persist by default. The euro is the currency of a sclerotic economy that goes into recession when poked gently, the yuan is associated with China's many issues and has become less attractive to most developed economies over the past decade, and no other currency is even in the running. Similarly, when you think about what might replace Treasuries, you draw a blank: Germany on its own is not big enough, and Europe as a whole includes too many economies that are in worse shape on debt and deficits than the United States.
When the US took over as the global hegemon from Britain after the World Wars, it had already been the stronger economy for decades. There's nobody in a similar position relative to the US now.
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u/Notcooldude5 2d ago
Gold is hitting eye watering levels because the US is increasingly being seen as an unstable economy. So while there is no other currency yet, the writing is on the wall.
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u/OddlyFactual1512 2d ago
Your statement about Europe is factually incorrect. In fact given the factual debt circumstances on the EU, the euro looks much more attractive as a reserve currency than the USD.
EU debt to GDP: 81.5%
Euro area debt to GDP: 88,1%
https://ec.europa.eu/eurostat/web/products-euro-indicators/w/2-22102024-bp
US debt to GDP: 123%
https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
The EU nations with a higher debt/GDP than The US: Greece, Italy
Europe nations with a higher debt/GDP than The US: Greece, Italy
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u/oberwolfach 2d ago
Going purely by debt to GDP, you are correct that only Italy and Greece are higher on that metric than the US. If it were Italy alone that would already present a massive problem since it's one of the three largest eurozone countries.
But my statement is not based solely on which country has a higher debt to GDP. I'd argue that even if a given European country has slightly lower debt to GDP than the US does (e.g. France and Spain), it still has a worse debt situation considering what lies ahead. If the US pulls back from its global role over the long term, Europe will have to significantly increase defense spending, while at the same time suffocating on ever-rising pension provision needs as the population ages. The US doesn't have to massively ramp defense spending from its current level and, despite the severe problems presented by entitlement programs, has a more tractable welfare state. So 112% debt to GDP in France is, in my view, substantively worse than 123% for the US.
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u/OddlyFactual1512 1d ago edited 1d ago
Again EU debt to GDP: 81.5%. US debt to GDP: 123%. Italy Debt to GDP 135.3%.
Notice, Italy isn't much worse than the US. So, on a debt to GDP basis, you cannot formulate a sound argument that the USD is more stable than the euro.
The EU GDP is north of $18T euro, or ~$20T USD. If they spent 1/4 of their current GDP on defense this year, it would be $5T USD or over 6 times annual US defense spending. 6 times the US defense budget would boost the power of a EU joint military (with that kind of spending, it would be under a joint agreement) far past the US military. Add to the fact that the rampant corruption in defense spending isn't present in EU nations, and they would get 3x+ the bang for their buck. They would need to spend far less than that 25% of GDP to adequately boost their military to eschew The US entirely. What would that outrageously exaggerated 25% of GDP spending boost the EU debt to GDP to: 106.5%. That is still significantly below the US debt to GDP of 123%. In other words, the US military backing of The USD as the global reserve currency doesn't hold water on its own. Add that The US no longer has a stable political system and that argument degrades further.
The US has a rising pension obligation itself in SS and Medicare. However, the US spends more than double per capita than nearly every other nation on healthcare. EU doesn't have that problem.
The US pushing itself out of the world economy will reduce its GDP and exasperate the other economic challenges it faces.
There isn't a single argument that the USD is a more stable currency than the euro. Stability is the core requirement of a reserve currency.
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u/No-Organization-6071 2d ago
Alternatives:
Post-covid wealth tax.
Any cash that is sat on deposit not invested in the economy should be taxed.
Legislation to stop share buy backs.
High income tax rates last seen post war.
Clamp downs on international tax havens, trust funds and offshoring.
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u/Organic_Morning_5051 2d ago
The question to ask when pondering these issues is what is the alternative? The US can be beset by a large variety of problems, but there needs to be a viable other reserve currency and safe asset in order for your concerns to come to fruition. Otherwise, the current state of affairs will persist by default.
The problem with this logic is that it undermines itself.
The U.S. Dollar as a reserve currency emerging is, by definition, impossible under this very scrutiny. Was it not so that GB was the world's biggest and baddest empire at a point in time such that the world was literally 25% colonized by them and decolonization was actually chosen, rather than forced, in general as the world moved forward?
You're gravely underestimating the power of your fellow man to organize and change the world. The U.S. is as transient as anything else, a mere 250 years old amongst countries that have sat at the table for 10,000+ years, and China has absolutely shown that it can change from a rural farming nation to an industrial powerhouse in a very short amount of time. I would venture that whatever the "default" is it is not something that only one place decides.
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u/oberwolfach 2d ago
As I mentioned, the US had been a stronger economy than Britain for decades before it decisively assumed global reserve status after World War II, when Britain's resources were completely exhausted by fighting. There is no country in a comparable position to the US now. This does not mean one can't emerge, but it's a process that will almost certainly take decades if it happens at all. I'm not at all underestimating the ability of things to change; what I am saying is change doesn't come out of vapor.
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u/Organic_Morning_5051 2d ago
There is no country in a comparable position to the US now.
In a nutshell that's the problem with your position. This is basically just an argument of tradition but not an actual explanation of why this wouldn't or couldn't simply change. I mean here's the rub:
This does not mean one can't emerge, but it's a process that will almost certainly take decades if it happens at all.
First, it will happen, but second, you have no idea where in that process the world actually is. The emergence of the rest of the world has always been happening for decades and the U.S. as a superpower is hardly an age old position. You cite WWII, yes? That was just 80 years ago. The idea that this is a long period of time in the greater scheme is laughable. The fiat USD dollar isn't even that old.
If the basis of your position is that this change will start when you think it'll start you have a long, painful life ahead of you. The U.S. didn't rise to prominence after WW2. The U.S. just happened to be in the right place at the right time after rising to prominence for decades prior. The dividends finally came in but the groundwork for that placement needed to be there, because you said, it didn't come out of vapor.
Let me shorten: Trump's presidency was written into stone probably 30 years prior to the vote. The perfect storm conditions for his power needed to be in place to begin with. A protectionist president? You don't get that in a few short years of confusion. That's a generation at least.
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u/Dalewyn 1d ago
Trump's presidency was written into stone probably 30 years prior to the vote.
Way too many people do not realize this, both Americans and others.
What we are seeing now is a response from the people against policies which ran for the better part a century that destroyed American industry and thus the economy. No, not "the economy" as in the service economy or the market, I'm talking about the economy where Americans make a living. America doesn't make anything anymore as a result of long-running policies that disincentivized it. That's why Americans are angry, the Rust Belt isn't a meme and ignoring that boiling frustration for so long is what led to Trump not once but twice.
Everyone who thinks that Trump is the problem does not understand what the problem even is.
I also have the impression that the world outside of America has a particularly bad time grasping it; the world benefitted greatly at America's great expense without really understanding it, and now they still don't understand why America is saying this can't go on anymore.
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u/throwaway939wru9ew 1d ago
That’s 2 posts are actually quite insightful.
While it doesnt help my anxiety over what is happening, it does help me understand my fellow American a little bit more.
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u/Ok-Recommendation925 2d ago
there needs to be a viable other reserve currency and safe asset in order for your concerns to come to fruition.
The Swiss Franc?
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u/Spinoza42 2d ago edited 1d ago
Thiel is the one pushing for a US default right? So there's your answer... the dollar will crash and the US will default. Technically those two things can't happen at the exact same time, but they will happen close enough to each other that it doesn't matter. And Thiel and Musk will be happy because they got their revenge. This is the whole point of the tariffs... they're not stupid, they're intentionally destructive.
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u/davidtcf 1d ago
Trump doesn't want to read, check history of 1930s tariffs, or listen to economists and experts. He thinks he's so smart! Most dumbest president ever!!
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u/charvo 2d ago
Stock market investors are selling stocks and buying US treasury bonds. We will see under 3% on the 10 year yield. There was a massive lack of demand for US treasuries during the Biden admin. The 10 year yield was at decades high prior to inauguration. $40 trillion in treasury debt refinancing takes priority over the stock market.
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u/goodbodha 2d ago
I could see this being the plan.
- Dollar value plunges.
- Recession fears push bond yields down
- Fed steps in with QE and buys bonds from banks and hedge funds to provide liquidity. This sounds reasonable since they won't lower rates over inflation fears but want to support the market.
- Those institutions then buy up the market plus buy more of the national debt.
- Trump stops the tariffs talk and declares victory.
- Dollar recovers a bit.
- Life goes on but a bunch of people sold their stocks out of fear.
Perhaps US loses global reserve status a few years later, but in the here and now the debt crisis was averted. We still will likely have a short recession and our allies will have little to no trust in our government.
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u/jb_in_jpn 2d ago
Trump has been on about tariffs for decades at this point. This isn't some bait and switch.
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u/pnw_sunny 2d ago
no one will buy treasuries, the country is doomed. thanks for all your politic speak in the subreddit, super insightful, helpful, and of course, actionable...
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u/Apprehensive-View583 2d ago
thats not true, most US debt are held by fed. so us cant default on its debt. the treasuries are already not selling, and fed just went in and buy it all up. so basically all of us holding that debt.
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u/Organic_Morning_5051 2d ago
Please explain how we are not witnessing, unless some rabbit is pulled out of a hat, the death of American Global Capitalism?
Simply put the engine will not stop and one man cannot stop it.
Poor economic policy is not new to the U.S. and it has always been temporarily tolerated. Trump did tariffs before in his first presidency and they're basically erased from history. Bigger effect =/= lasting effect; the powers that be under the table will simply veto this nonsense after a while. The reason why Trump's Admin has to work in the dead of night so quickly to implement all of these policies and activities is because it's a race against time and against power and power is not "slow".
I fear that you are wrong but for a different reason:
American Global Capitalism will survive Trump, and like surviving a virus, will build "antibodies" against people like him. Remember that he's effectively the last president of that generation and everyone else will have to be younger because that generation will simply be dead. Thiel will be 62 or so when this administration is up and, despite himself, will be old enough to fit into the "not relevant" bucket anymore. His power is waning even as we speak and his name is not seeded like it was in the mind's of the coming generations.
With the new version that survives it will just become even more ruthless.
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u/MiskatonicAcademia 2d ago
What “powers that be” are you referring to?
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u/BlueSonjo 2d ago
All the agressive steps Trump took on changing relationship with NATO and Ukraine, there was a chorus in the internet every step of the way on how it is all bluster because the military-industrial complex would block and reverse it any minute now.
With tariffs the same thing has been going since he first promised them on campaign - a mythical all powerful and fully rational shadow government will stop him if he goes too far.
Most of Trumps wilder policies are enabled by people thinking these mythical adults in the room pull the strings, not Musks and Thiels but these reasonable statesmen smoking cigars in a room.
I don't think they exist at all.
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u/Organic_Morning_5051 2d ago edited 2d ago
With tariffs the same thing has been going since he first promised them on campaign - a mythical all powerful and fully rational shadow government will stop him if he goes too far.
I think that the one thing that makes this interesting, even though it is incorrect, is that the idea of the "shadow" is required. There's no secret superman. Revolutions are not required to be orchestrated in the dark. Rejections are absolutely public.
What did happen during his first term is that he was stopped in a lot of ways and without P2025 he'd still be facing those radical problems. The whole premise of Trump's current presidency is that he is, rather than being above the law, the law incarnate, and therefore while he has to currently act within weird boundaries (i.e. Alien and Sedition Act of 1798 for his immigration cause) the ultimate goal is to remove those chains.
This is just flat out not going to work. His tenure is running short even after a mere 80 days and ultimately the odds of his success in his speaking actually working out won't work. He stated the U.S. would exit NATO. They haven't. He stated the U.S. would exist the Paris Climate Agreement. The U.S. can't because of the requirements of the agreement. The fact of the matter is that this is all people without a shadow in the broad daylight constantly shutting him down and resistance to him is not secret.
The idea that "someone will stop him if he goes too far" is true. The idea that this won't be someone just like you is false.
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u/BlueSonjo 2d ago edited 2d ago
Trump didn't say he was leaving NATO, Trump introduced the notion the USA honoring the pact was optional based on his assessment if the country deserved it, and explicitly not valid for those who didn't spend 2% on defense (which was a statement of principle in a later conference and in no way a requirement of the treaty itself to validate it).
This has manifested into the very real reality nobody in Europe, both in government and street level, currently believes Trump would actually enter a war on our side if certain members are attacked by an inconvenient hostile.
Which means NATO is alive as an interoperability platform and capability sharing, but dead as a security guarantee. Which is by itself one of the biggest geopolitical shifts in last 50 years.
Most notably, as much as the US internal audiences can be all sportsmanslike about Trump's hilarious annexation claims on Canada and Greenland, NATO territories, the rest of the world takes it very seriously which has been already resulting in very real new legislation and programs in Europe.
A critical aspect I believe is also lost on a casual take of "he won't be there forever" is that the rest of the world has become aware of the fact someone can get elected in the USA that does deeply fundamental change in the foreign policy of his predecessor, not by some elusive trick but actively campaigning on that platform. And even if Trump drops dead and two Democrats get elected in a row, there is a voter base of tens of millions of voters in the USA who absolutely loathe Europe, Canada and the collective west and can put a candidate in at any future point.
This is not reversable and it is a huge change in the world.
While the economy is much more flexible than the geopolitical status quo, it is also being plagued by the same lack of perspective that anything he does overnight, can be done overnight again even if it gets undone, and thay changes the premises in the long term.
Where you build things, shipping routes, trade legislation, sector policies, foreign investment are not something you change the way you just go to another supermarket. The notion this happened, and happened quick, is a fundamental change in itself, regardless of reversals and blocks.
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u/Seref15 1d ago
I don't think there's adults in the room, but I do think that there's people, individuals, not just in the US but around the world, who stand to lose billions off these tariffs. And I think those individuals are the kinds of people Trump should really avoid pissing off, because they have the money to afford a guy who knows how to sabotage a helicopter.
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u/Organic_Morning_5051 2d ago edited 2d ago
Pensions.
To be frank the financial system has only two players in it.
- Pensions. They are the cause of the positive drift. They only make money when the market goes up. They ensure the market goes up. The amount of lobbying by pensions is huge. They are the open secret where no one bats an eye at their existence but they are anything but quiet.
- Corporations. These are the people who tow the line for the pensions since, under shareholder capitalism, pensions are the largest players and corporations are their medium to rise to sufficiency. Any economic policy that is bad for corporations over the long term will be eliminated through lobbying as well.
Keep in mind that market resilience is ridiculously powerful even in places where markets are depressed. It's not some weird shadow cabal illuminati that keeps things going; it's the fact that shareholder capitalism is now the paradigm and the people who have the greatest number of assets are all governmental entities. Private pales in comparison much like the bond market makes the stock market look like a drop in the bucket at 140T vs 116T. Keep in mind that every trillion is exponentially harder to acquire so you can't simply take a ratio; it needs to be logarithmic.
For clarity: Retirement Funds Are The Largest Holders of Stock Assets
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2d ago
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u/dewhit6959 2d ago
The debt. the DEBT .
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u/Hot-You-7366 2d ago
true but deficit spending means no debt paydown meaning more debt. but yes, i used the wrong word
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u/watch-nerd 2d ago
I plan to buy the 2035 10 YR TIPS auction in July if the real yield is positive. But I'm not an overseas investor.
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u/Powerful_Reward_8567 1d ago
Who buys american debt in this scenario? Trump wants Quantitative Easing from Federal Reserve again like 2020. I think thats who.
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u/Hot-You-7366 1d ago
A real example of political interference with monetary policy occurred in the early 1970s. Taped recordings of Richard Nixon provide clear evidence that Nixon pressured then-Fed Chair Arthur Burns to adopt expansionary monetary policies to improve his reelection chances. For instance, before Burns was confirmed by Congress, Nixon told him: “I know there’s the myth of the autonomous Fed … and when you go up for confirmation some senator may ask you about your friendship with the president. Appearances are going to be important, so you can call [Nixon economic advisor John] Ehrlichman to get messages to me, and he’ll call you.” Nixon met with Burns frequently and tacitly pressured the chairman to keep policy loose. The FOMC transcripts indicate that many Fed members had doubts about the policy decisions but voted for them anyways.
Nixons controlling of the Fed led to Stagflation....
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1d ago
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u/buried_lede 1d ago
The way I feel under this regime is how I felt on 9/11. I feel like we are under attack.
And shame on Lutnick and Bessent, (and others like them who should know better) for legitimizing it
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u/ChipDriverMystery 1d ago
I found this interesting. Basically, they want to remain a reserve currency but expect a pay to play - essentially a protection racket.
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u/capt_jazz 1d ago
The federal reserve is the buyer of last resort, they'll have to throw QT in reverse just like they did in fall 2019 during the repo crisis. As I understand it, foreign buyers were slowing their Treasury purchases, and domestic banks basically were running out of cash to buy them, bumping up against their Dodd-Frank liquidity limits.
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u/runmeupmate 1d ago
even if the dollar depreciates massively it won't lose reserve status; it was far weaker 20 years ago and was still reserve, and that was when europe was much stronger.
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u/Every_Tap8117 1d ago
Hopefully all the countries will FINALLY wisen up stop ALL oil and gas contracts in USD (IE the petrodollar) and stop buying any US weapons systems. Its about time the USD goes to where it should be about 1 USD -1.40 Euro.
Hopefully the world can thank trump and finally turn its back and better off for it.
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u/Helmidoric_of_York 1d ago
US debt is about to become downgraded by the rest of the world. No doubt Trump will use the falling dollar to claim a state of emergency and try to weasel out of repaying the debt we already have. He'll try to negotiate it to pennies on the dollar. I'd be dumping US debt if I were a country holding any of it. MMW, as US Bonds crash, Trump will use it against them when they try to sell, just like he does with his vendors.
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u/skilliard7 2d ago
Corporations are already flatly saying they cannot (will not) build the infrastructure and find the labor pool to do what the mega manufacturing cities of China and other Asian countries can do even if you tariffed them 1000%.
Maybe they won't, but someone will, and steal customers from them by offering lower prices due to avoiding tariffs. That's how capitalism works.
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u/what_the_actual_luck 2d ago
Yall need to realize the difference in manufacturing costs in the developed world and the non industrial countries.
Not even a 200% tariff will bring back clothes/shoes/basic chemicals/pharma.
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u/fuckelhead 2d ago
No, they won't. It would make no sense. Nobody is going to make that big of a long term investment with the extreme whims and inconsistency of the American electorate
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u/skycake10 1d ago
You literally cannot manufacture basic goods in the USA for cheaper than even the tariffed prices from cheap labor countries.
Even if you get rid of minimum wage laws and labor regulations, now you have an underclass of workers who can't afford to buy the things they're making and you've still fucked up the American consumerist economy.
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u/UpDown 2d ago
You can’t kill the US in two months of shenanigans. Revisit this in two years
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u/MiskatonicAcademia 2d ago
No, but he has done more to upend not just the US but the entire world since he first rose to power in his first presidency.
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u/ITCHYisSylar 2d ago
Maybe the government should cut $5T from their budget....
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u/subydoobie 2d ago
or maybe not give the richest a $5t tax cut?
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u/ITCHYisSylar 2d ago
I prefer the government waste $5T less. That affects me a lot more directly than someone else's tax cut, when they are still likely paying a shit load.
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u/fedstongueme 2d ago
>Corporations are already flatly saying they cannot (will not) build the infrastructure and find the labor pool to do what the mega manufacturing cities of China and other Asian countries can do even if you tariffed them 1000%.
where you shill? All I see is honda, chevy tmsc and the like commiting trillions in building in the US.
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u/Fair-Emphasis6343 1d ago
The companies are just virtue signaling like republicans do all the time
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u/Silent_Elk7515 2d ago
Trump says tariffs rocked the 1700s—yeah, when we were a backwater nobody.
Now it’s like using a musket to fight drones.
US debt’s a dumpster fire, and Thiel’s cheering from his billionaire bunker.