When a Trump appointee realizes the facts contradict his boss, he either misrepresents the facts or hides them.
The facts are the facts. They never change, but for a Trumper, it’s the perception, not any fact, that matters.
Thus, when Trump claims Ukraine invaded Russia, the lie doesn’t change the facts. But Trump and his MAGAs care only about public perception.
The economy is measured by a statistic known as Gross Domestic Product (GDP), calculated using the formula: Federal Spending + Non-federal Spending + Net Exports.
In the U.S., the National Bureau of Economic Research (NBER)—a nonprofit, nonpartisan organization dedicated to economic research—determines when we are in a recession by examining indicators of prolonged economic decline across various sectors.
It analyzes data points including real income, which reflects individuals’ purchasing power after adjusting for inflation; employment levels; industrial production output; wholesale and retail sales; and gross domestic product (GDP).
Mathematically, imposing high tariffs on imports, while deporting millions of workers and consumers, must raise prices and decrease GDP. Neither of these is a hypothesis or a prediction. It is a statistical certainty.
When GDP declines over several months, it is referred to as a “recession.” Conversely, when GDP decreases significantly and/or extensively, it is known as a “depression.”
Trump’s advisors must have realized that Trump’s plan to levy import duties and cut federal spending must result in inflation and recession or depression.
Rather than trying to correct Trump’s flawed policies, and actually prevent the depression, MAGAs prefer to change the measure.
Imagine selling a 2,000-square-foot house and wanting to tell the buyer it’s bigger than 2,000 square feet. Instead of physically enlarging the house, you simply change the measurement and decide that from now on, a foot will be eight inches long.
So your 2,000 foot house suddenly would be listed as 4,500 square feet. The house didn’t change, but by arbitrarily changing the measure, you could claim it was bigger.
Sounds ridiculous, even fraudulent, doesn’t it? But that is exactly what the Trump administration wants to do with GDP, in a futile effort to hide the inevitable recession and depression.
“A more accurate measure of GDP would exclude government spending,” Musk wrote on his social media platform. “Otherwise, you can scale GDP artificially high by spending money on things that don’t make people’s lives better.”
Is Musk asserting that federal spending on bridges, roads, dams, flight control, disaster recovery, anti-poverty efforts, medical research and development, Social Security, Medicare, Medicaid, and countless other initiatives the government undertakes to enhance our lives “doesn’t create value for the economy”?
That’s such nonsense.
Due to Musk’s budget cuts, GDP will decline. This presents a significant issue that Musk is well aware of. He is scared silly that when people see the decrease in GDP, they will accurately conclude that he is responsible for causing a recession.
The argument as articulated so far by Trump administration officials appears to play down the economic benefits created by Social Security payments, infrastructure spending, scientific research and other forms of government spending that can shape an economy’s trajectory.
“If the government buys a tank, that’s GDP,” Lutnick said Sunday. “But paying 1,000 people to think about buying a tank is not GDP. That is wasted — inefficiency, wasted money. And cutting that, while it shows in GDP, we’re going to get rid of that.”
Is Lutnick paid to come up with such a nonsense objection? His salary could be considered a waste of money. Thinking about war strategy is as important as building tanks.
The Commerce Department’s Bureau of Economic Analysis published its most recent GDP report on Thursday, showing that the economy grew at an annual rate of 2.3% in the final three months of last year.
The economy will drop like a stone under Trump, no matter how hard he tries to fake the numbers. While he remains in office, we will fall deeper and deeper into a depression.
The report makes it possible to measure the forces driving the economy, showing that the gains at the end of last year were largely driven by greater consumer spending and an upward revision to federal government spending related to defense.
Still, the federal government’s component of the GDP report for all of 2024 increased at 2.6%, slightly lower than overall economic growth last year of 2.8%.
Thus, even eliminating Federal Spending from the GDP equation won’t save Trump. His economy is doomed and everyone will know it. Fudging the figures won’t save him.
Lutnick’s false claim that federal spending doesn’t “make people’s lives better” is evident. Cutting federal spending will reduce personal income.
The government is not always a contributor to GDP and can subtract from it, which is what happened in 2022 as pandemic-related aid expired.
Lutnick said that the Trump administration would balance the federal budget with spending cuts, saying that would help growth and reduce the interest rates paid by consumers.
Historically, balancing the federal budget has led to depressions.
“When we balance the budget of the United States of America, interest rates are going to come smashing down,” Lutnick said. “This is going to be the best economy anybody’s ever seen. And to bet against it is foolish.”
Under Biden, the economy grew massively. Under Depression Don Trump it will sink. My advice: Do what I have done. While Depression Don remains in office, convert a significant part of your asset portfolio to Treasuries.
That will help you ride out the coming storm.
Rodger Malcolm Mitchell
Twitter: @rodgermitchell
Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell;
MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell;
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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
I’ve been aware of your work for well over a decade and appreciate everything you do.
I apologize if the answer to my question should be obvious…
What happens if “they” choose or decide not to repay Treasuries on maturity?
I’m aware this would be unprecedented but the people in charge nowadays are insanely dumb or malevolent.
Thank you.
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Tough question. I’d imagine something among World War III (many nations have our Treasuries), a monumental depression, and/or a civil war. It surely would be the end of America’s current trading ability, and the end of the dollar as an internationally accepted currency.
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This is not an idle speculation. Trump has stiffed private contractors repeatedly in his private businesses and is currently doing that to 1,000s of contractors domestically and abroad, e.g. by closing USAID without notice, mid-contracts. Good luck trying to sue; there’s a long line ahead of them, and besides, the supreme court has granted the president “absolute immunity.”
Further, Trump has actually said he wants to abolish the debt ceiling (good, it’s unconstitutional anyway) and that creditors “will see” how much they collect on Treasury debt owed them, comparing it directly to his business debts.
Trump may think he can strong-arm creditors the way he does in business, but countries are not like private contractors. They can just stop doing business with America, degrade our credit rating internationally, and cause a loss of status America will never regain. Once the world moves on, America would become like Argentina or some other repeated unreliable trading partner. The dollar won’t be worth a plug nickel then.
This hasn’t happened yet because the rest of the world is already in recession or the competing currencies aren’t sovereign (e.g. the Euro) or don’t trade freely (e.g. the Yuan), or are still forming (e.g. the proposed basket currency of the expanding BRICS+ consortium), but he’s gambling with America’s future by alienating everyone. I wonder if we even have any allies left. Seriously, what country is going to do anything for America anymore, given the tariffs on “friends” and foes alike? Maybe Russia?
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Blame the Republican party, a group of useless, spineless, slugs, collecting salaries for no reason whatsoever.
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A not-as-tough question: If tariffs aren’t lifted, can you predict the immediate future based on that speech last night? I know traders aren’t happy.
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The purpose of tariffs is to increase prices. The answer to your question is that prices would go up, i.e. inflation.
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I thought of something else too – while struggling to see what, if anything, Trump meant by “the country selling us stuff pays.” It doesn’t, of course, but maybe he means the providing country would lose jobs because they can’t sell us goods we can’t pay the tariff (tax) upon? In that case, both governments would make money on the tariffs, but both groups of citizens and companies would feel inflation and be less able to purchase imported goods.
So, Mr. shrink-the-government is actually squeezing American citizen spending power to collect tariffs (taxes) so he can sorta pay for his tax cuts, while foisting the tariffs onto the middle and working classes, who are least able to pay for them, because the wealthy mainly invest in assets. Some of the companies whose profits will be hit by the tariffs would see their share price go down, but maybe the Ponzi scheme of wealthy people buying stock will offset that, for a while anyway.
Right now, the markets are tumbling, but that may reverse if the tax cuts go through…for a while.
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Yes, maybe Trump is playing 3-dimensional chess while the rest of us are playing blind-man’s bluff. Nah.
There are several factors at work. Import duties. Tax cuts for the rich. Social Security cuts, Medicaid cuts. Mass deportations. Global warming. Possible pandemics. Wars (Ukraine/Russia; Israel/Islam; China/Taiwan; all of Africa; others we don’t know about). The potential Panama, Canada, Greenland absorption attempts. Growing Christian nationalism. The anti-democracy, pro-dictatorship Supreme Court. Republican contempt for judges, the law, and the Constitution. Abortion. State’s rights.
Trump will mishandle each of them while blaming Biden and various Democrats for all the bad that happens.
Chaos is not good for business as the markets have been demonstrating. Much of what we thought would be impossible in America now is happening. Another civil war is a distinct possibility, as is WWIII.
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With Trump threatening to stiff federal contractors – and actually doing so both privately in his businesses and now publicly with the closure of agencies like USAID – can Treasuries really be considered safe any more? Trump has shut down the government for a month in his first term, and made threats to do so again.
This will negatively effect our credit ratings and ability to sell Treasuries to foreign and domestic buyers. Prices will go down while yields will go up, which sounds good until it becomes clear that those yields may not be paid under Trump.
There are lots of examples of less reliable countries, like Argentina, where national bonds have been defaulted upon.
It can’t happen here? Lots of things that couldn’t happen here, have already happened.
I’m keeping a significant portion in cash, and even shorting a little of the market. I don’t know if holding Treasuries is reliable anymore.
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What commonly is termed “cash” in the U.S. actually is a Federal Reserve Note, backed by the full faith and credit of the U.S. government — just like T-securities.
With T-securities you have reached the ultimate in safety. There is no safety beyond that, not even gold or land. Every type of “safe” investment ultimately revolves around the government and often an intermediary like a bank. The government could devalue your cash, tomorrow, if it chose to. Many nations have done that.
While shorting may be a good gamble, it nevertheless is a gamble. Who handles your short? Where do you keep your cash that you think is safer than Treasuries?
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