Policy

’24’s Leftover Mysteries

Dave Davis Commentary, Policy, Uncategorized , , , ,

As we enter 2025, some ’24 mysteries remain unresolved. Donald Trump ran his successful campaign with a variety of seemingly contradictory positions. I was reminded of these when the Cafe Hayek blog pointed to economist Mark Perry’s illustration:

This contradiction made me think of other Trump contradictions. Peace and safety while withdrawing our troops from the Middle East. Without our support, the Kurds overseeing tens of thousands of ISSIS followers may face an attack by Turkish forces, rendering them unable to prevent a resurgence of the deadly group. Remember, Turkish leader Erdogan has territorial ambitions of his own. This possibility doesn’t sound peaceful to me.

We all know that politicians make all sorts of claims that step on each other, but now it’s time to introduce legislation, and conflicts remain unresolved. The idea is to write one or two big reconciliation bills containing the whole Trump program.

Inflation is a paramount issue that accounts for Trump’s victory, yet many of the president-elect’s promises are likely to raise prices. Besides tariffs that, like sales taxes, increase what you’re paying, lower taxes for favored groups, such as those working for tips or retirees, will likely result in higher interest rates or printing money. As I’ve pointed out, either will raise prices.

Unquestionably, the Biden Administration’s wild spending on the Green New Deal, infrastructure, and chips led to the highest inflation in forty years, but will Trump attempt to repeal all of this legislation? Taken together, these acts are an enormous industrial policy. Repeal all since state-directed economies have no record of success.

The question is whether Trump will tackle the problems wholeheartedly or simply piecemeal. The latter will be conflict on conflict. For instance, will Trump’s buddy, Elon Musk, stand still for eliminating his electric vehicle incentives and green tax credit sales? Will members of Congress allow the scrapping of big projects scheduled for their districts? Many businesses have sunk big money based on the Biden-era legislation. Can they continue without the promised subsidies and credits, or must they swallow significant losses on sunk costs? Even major oil companies put big bucks into green projects.

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Donald the Great?

Dave Davis Policy, The Long Journey to "More", The Middle East, Uncategorized , , , ,

Having already written about some things to look for in the New Year, I’d like to take a new approach. Donald Trump’s talk about making Canafda the 51st state, buying Greenland, and repossessing the Panama Canal caused me to think of how leaders who see themselves as bigger than life seem focused on the past rather than charting a future that benefits those they lead.

Our major adversaries, Russia, Iran, and China, are centered on recreating old empires. Turkey may be poised to join this group. Putin in Russia regrets the loss of the Empire, created through centuries of Russian expansion culminating in the vast Soviet Empire, which collapsed under Cold War pressure. Setting up stooges in some adjoining territories and continuing to attack Ukraine, the Russian strongman is expending blood and treasure on a grand scale to reestablish the Empire.

The Histories of Empires from the Persian through the Sasanian, centered in Iran, fuel the Mullahs’ desire to widen their reach across the Middle East. They may, as Shites, even see themselves as rightful ones to bring back the Moslem Empire of the early caliphs.

No nation has a more extended History of Empire than China, going at least back to the Shang Dynasty (221 B.C.). Before the communists, the Ming Dynasty (1368 to 1644) was the last to attempt expansion, sending fleets and armies to gain control of both the land and maritime Silk Roads. However, reversals such as the Tummu crisis caused China to look inward. While Chinese fleets reached the east coast of Africa in the 15th century, they never rounded the Cape of Good Hope. Later in the century, the Portuguese did, and the direction of the history of the world changed. I covered this outcome in my “The 15th Century Came and nothing would ever be the same” post in “The Long Journey to More” series.

Xi Jinping seems intent on succeeding where the Ming Dynasty failed. His Belt & Road Initiative intends to recreate the land and maritime Silk Roads under Chinese control.

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Trump vs. Trump?

Dave Davis Commentary, Policy, The Middle East, Uncategorized , , , ,

Recent events have added credibility to some of my posts. Not long ago, I cautioned that the Federal Reserve’s (Fed) series of interest rate cuts might be at odds with the actual inflation outlook. The Biden spending spree adds to our high national debt, while the Social Security (S.S.) Trust Fund runs dry at best in ten years, with both parties adding to the program woes. Medicare may be in even worse shape.

Biden’s proposals will increase S.S. payouts to government retirees, and with Trump’s plan not to tax any S.S. income, retiree checks could face cuts even sooner. Maintaining the current level of payments will mean even more government borrowing. Already expected to lend trillions more, bond buyers must absorb more extensive offerings in the future. In the face of increasing interest rate risk, they’ll want more upfront.

The first chart is the inflation rate, showing it is still above the 2 % target:

This chart shows the Fed’s interest rate cuts:

While the U.S. 10yr Bond interest rate returned to near its highs:

Mortgage rates stay high:

This week, the Fed cut short-term rates another quarter point but said it would probably cut two times next year instead of the signaled four. The Dow dropped over 1,100 points. Confusion is the only explanation.

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A Look On The Bright Side

Dave Davis Commentary, Policy, Uncategorized , , , ,

As we approach the white house return of Donald Trump, there seem to be two distinct views of what it portends. On the left, it means a mass roundup of illegals and their placement in concentration camps awaiting export—the economy in shreds without adequate labor. Inflation is roaring upward, fed by tariffs and rising prices. Tax cuts add to the flames by producing huge deficits. The resulting high interest rates put homes and much else out of reach.

Inequity will rise, with Trump’s billionaire friends growing richer while the rest of us fall further behind. Efforts to make businesses and institutions more diverse and inclusive are stalled or reversed. According to Washington Post columnist David Ignatius, instead of a progressive, forward-looking society, we’ll be in the hands of the backward-looking “regressivists.”

Ukraine turned over to Russia’s tender mercies while our former friends and allies abandoned us. Belittled by Trump and harmed by his high tariffs, they retaliate, plunging the world into a deeper recession and raising the danger of World War III. Trump claims dictator powers.

While Gaetz withdrew from consideration as Attorney General, others nominated, such as Pete Hegseth for Defense, Robert Kennedy Jr. at Health and Human Services, and Tulsi Gabbard as Director of National Intelligence, confirm the left’s fears that inexperienced extremists will run the government.

In fear of these horrible outcomes, blue states are checking their resistance options. The governor of California has even called for a special session of the state legislature to raise funds for legal action. Others are seeking ways not to cooperate with or impede the federal government.

For those looking at it from this progressive point of view, the future looks bleak. However, the landscape might be more favorable for success from a right-of-center perspective.

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Mirror Mirror

Dave Davis Commentary, Policy, Uncategorized , , , ,

We’ve seen this movie before, or at least something similar. Trump uses his gut feeling to pick those he would support in certain situations. Top of the list of qualifications is loyalty to him. Whether they are up to the job is quite secondary. Gazing at the fawning chosen is like looking in the mirror; the more they ape him, the more he sees himself. The reflection, of course, pleases him. A narcissist likes nothing better than himself.

I’ve pointed all this out before. Who can forget those Trump-backed candidates who used his blessing to edge out people who could win in the primaries only to flame out in the general elections? Herschel Walker, Dr. Oz, Blake Masters, Karri Lake, Doug Maestriano, etc.

Losing winnable contests had dire consequences. Trump put himself first, rather than his party and, if he thought about it, the country, resulting in legislation and actions that brought us inflation and an open border. Control of the Senate in the Biden administration could’ve blunted his leftward lurch.

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