Administration’s Economic Policies Leading USA to Recession

By Roger Snyder (10/24/18)

This administration is touting its economic agenda and success but the policy is doomed. My opinion is neither Democrat or Republican it’s just the way economics and markets work.

1.The stock market is essentially where it was at the beginning of the year. With all the tax cuts you’d expect it to keep going up — but the old market adage “buy the rumor sell the news” is rarely wrong. The market soared with the expectation of Trumps tax cuts. Once passed and implemented there’s nothing else to drive earnings higher.

2. Interest rates are rising — they will continue to rise as the government’s need for money increases due to the tax cuts. Money is just another commodity and it has a price — the interest rate. If you are the US GOVT you attract money by offering to pay more for it.

3. Rates also will be effected by the China tariffs — as the major buyer of US TREASURIES they will have less foreign reserves to buy our debt. They already are reducing their foreign reserves to finance their domestic needs of a slowing economy.

4. Unemployment at 3.7% is not sustainable. It can’t continue to fall without economic growth — but in a trade war who will we grow markets with?

5. The dollar is very strong and also hinders our ability to sell products around the world. With counter tariffs against our products and a stronger $ make it even more expensive for those other countries to buy from us. And with their economies hurt by our trade policies many customers lost because they can’t afford to buy from us because of their increasing unemployment (China in particular)

6. The volatility in the equity markets is indicative of a market that is reassessing a future that looks like a recession coming — brought on by trade policies, rising interest rates, federal debt levels increasing at a trillion $ a year pace.

In summary it may be too late. But, to try to mitigate the damage we must immediately do the following :

  1. Resolve the trade war
  2. Stop the tax cuts
  3. Implement fiscal responsibility
  4. Reduce the rate of growth in federal debt to less than the rate of growth in tax revenue
  5. The only way to grow tax revenue is to grow the economy. Trade wars limit economic growth. The 1929 economic isolation policies and rising interest rates and strict monetary policy assured the depression would happen

The market being down for the year means investors are not willing to pay more for future earnings because they think earnings in companies will decline.

Author Bio: Roger Snyder, Oil & Gas Executive, investor, Econ Advisor to former Congressman Nick Lampson

Chinese translation by Ling Luo

美国政府的经济政策将导致美国经济衰退

作者:Roger Snyder(10/24/18)翻译: 丹奇 (Ling Luo)

本届政府正在宣传其经济议程和成功,但其政策注定要失败。我认为既不是民主党人也不是共和党人的功劳,这只是经济学和市场的运作方式。

1.股票市场基本上还是年初的状况。随着所有的减税措施,你会期望它继续上涨 — 但旧的市场格言“买谣言卖新闻”很少出错。随着对特朗普减税的期待,市场飙升过。然而一旦通过并实施见谁,却别无他法提高收益。

2.利率上升 — 由于减税,政府对货币需求的增加,利率将继续上升。货币只是另一种商品,它有一个价格 — 利率。如果你是美国政府,你可以通过提供更多的钱来吸引资金。

3.房价也将受到中国关税的影响 — 作为美国国债的主要买家,他们购买我们的债务外汇储备将会更少。他们已经在减少外汇储备,以满足经济放缓的国内需求。

4.失业率为3.7%是不可持续的。没有经济增长,它不可能继续下降 — 但在贸易战中,我们将以何种方式扩大市场?

5.美元非常强劲,却也阻碍了我们在全球销售产品的能力。对我们的产品征收反制关税,以及强劲的美元,使得其他国家从我们这里购买产品也会更加昂贵。因为我们的贸易政策,他们的经济因而受到损害,许多客户因失业率上升而无法向我们购买(特别是中国)。

6.股票市场的波动表明市场正在重新评估看起来像经济衰退的未来 — 由贸易政策,利率上升,联邦债务水平以每年一万亿美元的速度增长。

总之,这可能为时已晚。但是,为了减轻损害,我们必须立即采取如下措施:

1.解决贸易战

2.停止减税

3.履行财政责任

4.将联邦债务的增长率降低到低于税收增长率

5.增加税收的唯一途径是增长经济。贸易战限制了经济增长。 1929年的经济隔离政策和不断上升的利率以及严格的货币政策导致了萧条的发生。

今年市场下跌意味着投资者不愿意为未来收益支付更多,因为他们认为公司的收益将下降。

(作者简介:Roger Snyder,石油与天然气公司管理人,投资人,前国会议员Nick Lampson的经济顾问,