The Fundamentals of MAGAnomics….

Against the backdrop of MAGAnomic success, many people (some young some old) are beginning to engage in questions of decades-old economic assumptions.  Consider me thrilled at the possibility of a generational economic awakening.

Toward that end, here’s another repost from 2016 to gain understanding of the fundamentals behind President Trump’s MAGAnomic policies.  God Bless Main Street!

NOVEMBER 2016 – As we all begin to filter the impact of a historic Donald Trump victory, perhaps it is important to remind ourselves what should be the primary filter for perspective..

…the economics.

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For the first time in many decades the chief executive of the United States will walk into office concerned about the long-term financial stability of the United States.  For the first time ever, a titan of American Main Street is going to be in the oval office. Do not downplay the significance of this aspect. Money makes the world go ’round.

Every single global leader and politician is reviewing the U.S. election through their own domestic financial prisms. Rule #1 – Everything is about the money. Rule #2 – Everything is about the money. Rule #3 – when pondering any information broadcast by corporate media about a global Trump effect, refer back to the prior two rules.

Donald Trump is 100% pure MAIN STREET, never doubt that. Trump’s macro economic DNA outlook is compromised of American business interests at a micro-cellular level. Senate Leader Mitch McConnell et al will be dispatched immediately if he attempts to bring his big Wall Street/K-Street lobbying friends into the Trump economic equation.

For the sake of brevity, we’re going to accept that most readers here are familiar with who funds and directs Mitt Romney, Paul Ryan, Jeb Bush, John McCain, Mitch McConnell, and in larger more consequential measures – the DC UniParty legislative team in charge of U.S. Policy, ie. Wall street.

During the January 2016 South Carolina debate, and in response to Trump pointing out a necessary shift in trade position (a shift to put American interests first – a shift to stop the dependency on cheap import goods – a shift to use China’s dependency on access to our market to OUR advantage), Jeb Bush came back with an example of Boeing manufacturing.

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Donald Trump, responded to Jeb’s Boeing example, and pointed out China is forcing Boeing to open a manufacturing plant in China. As would be typical from a candidate who is unfamiliar and poorly briefed on the issue, Jeb Bush looked back incredulously and said:

“C’mon man”…

There we saw it.

Right there was the disconnect.

However, almost everyone missed it.

There, in that exact moment, was the spotlight upon all that is wrong with a professional political class; globalists dependent on Wall Street best interest for their talking points.

Donald Trump was 100% correct.

But the issue is bigger.

Not only is China demanding Boeing open a plant in China, the intent of such a plant provides an opportunity to explain why Trump, and his approach, is vitally important – and time is wasting.

China is refusing to trade with (buy) Boeing products if the company does not move. Why? It’s not about putting Chinese people to work, it’s about China importing their research and development, Boeing’s production secrets, into their country so they can learn, steal and begin to manufacture their own airliners.

This is just how China works.

In time, Comac, a state-owned, Shanghai-based aerospace company will then use the production secrets they have stolen, produce their own airliners, kick out Boeing, undercut the market, and sell cheaper manufactured airplanes to the global economy.

Boeing, the great American company that Jeb Bush thinks they are, becomes yet another notch on the Asian market belt.

All of those Boeing workers, those high-wage industrial skill jobs that support the American middle class, yeah – those jobs lost. And the cycle continues.

Of course Wall Street will be invested in the cheaper Chinese aerospace manufacturing company Comac, as it emerges as a manufacturing power.

This reality within this story is a peek into the future of the fundamental disconnect between Wall Street (grows again) and Main Street (lost jobs/wages). The reality within this example is exactly what has taken place over the past three decades.

Wall Street entities like Goldman Sachs will be fine. Ted and Heidi Cruz will be fine; Jeb Bush, Marco Rubio, Nikki Haley, Carly Fiorina, Mitt Romney, John Kasich will also be fine – it’s middle America who suffers.

The economic consequence, yet again, creates disparity between those insulated by Wall Street and the rest of the U.S. This is how our current oligarchy is growing out of control.

And so they, as professional politicians, will propose solutions – their solutions. However, their solutions are actually the preferred solutions of their campaign contributors, ie. Wall Street. The same Wall Street that funds lobbyists, like the U.S. Chamber of Commerce, to set the economic legislative priorities of congress.

Meanwhile the non-import market, your visit to the grocery store, food, energy etc. sees prices increasing. This is what happens when a production economy becomes a service economy.

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In 1984 a name brand polo shirt would cost around $45, a really good 26″ TV around $600 to $1,000, a decent couch $1500, and a pair of name brand sneakers around $100. However, eggs (.49), milk ($1.79 gal), and store bread (2 loaves for $1).

Electric bill $100, water bill $20, phone bill $50.

In 2016 an imported name brand polo costs around $20, a really good 42″ TV $300 to $400, a couch for $500 and a pair of sneakers $50 – All imported, all Asian, all about half of of what they cost in 1984.

However, eggs ($1.99), Milk ($4.50+), and store bread ($2+ each). All domestic products and all double or triple 1984. Electric bill $250, Water bill $100, phone bill $100+. Again domestic consumables, again double, triple or even more.

egg prices

We consume and spend more on domestic goods such as food, energy, fuel, than we do purchasing imported durable goods. As a consequence, depending on lifestyle, the net out-of-pocket is essentially the same to a little more.

However, the income opportunity, the jobs, the good paying jobs, well, those are gone because the durables are no longer part of the domestic production.

To keep the unemployed pitchforks at bay, government policy (now directed by Wall Street globalists and multinational corporations) subsidize the income gap. Ergo EBT, WIC and food stamp assistance necessarily increasing.

The pitchforks are dropped, but economic independence turns to dependence. With government policy adjusted accordingly – deficits necessarily explode. Stopping those deficits would require an actual budget. There hasn’t been a federal budget since ’07…. “Omnibus”,… Sound familiar?

Yes, under Donald Trump’s proposal the cost of “durable” goods -at least those we import- will increase. Your iPhone might cost $800 instead of $600. However, the North Carolina apparel, clothing and furniture manufacturing market will have an opportunity to revitalize – and with it, jobs, people as the tailors and the custom wood furniture makers would have opportunity to thrive again with their creations.

There’s going to be a period of pain as U.S. manufacturing finds it’s footing and begins to restart. However, in the longer term, it’s a shift from “dependency” to “independence”.

Those who were fully matriculated independent adults prior to 1984 know exactly what needs to be done.

Freedom is dependent upon it.

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Meanwhile, Ben Shapiro was born in 1984 and necessarily views the world through the cost of his next iPhone. Another Wall Street supporter, Ted Cruz, was thirteen.

On Social Security – Unlike many candidates Donald Trump is NOT calling for rapid or wholesale changes to the current Social Security program; and there’s a very good reason why he’s the only candidate not proposing wholesale changes.

With the single caveat of “high income retirees” (over $250k annually), which Trump is open to negotiating on, candidate Trump does not consider these programs as “entitlements”. The American people pay into them, and the federal government has an obligation to fulfill the promises made upon collection.

To fully understand how Donald Trump views the solvency of Social Security, you must again understand his economic model and how it outlines growth.

The issue with Social Security, as viewed by Trump, is more of an issue with receipts and expenditures. If the aggregate U.S. economy is growing by a factor larger than the distribution needed to fulfill its entitlement obligations then no wholesale change on expenditure is needed. The focus needs to be on continued and successful economic growth.

trump hard hatWhat you will find in all of Donald Trump’s positions, is a paradigm shift he necessarily understands must take place in order to accomplish the long-term goals for the U.S. citizen as it relates to “entitlements” or “structural benefits”.

All other candidates are beginning their policy proposals with a fundamentally divergent perception of the U.S. economy. They are working with, and retaining the outlook of, a U.S. economy based on “services”; a service-based economic model.

While this economic path has been created by decades old U.S. policy, and is ultimately the only historical economic path now taught in school, Trump intends to change the course entirely.

Because so many shifts -policy nudges- have taken place in the past several decades, few academics and even fewer MSM observers, are able to understand how to get off this path and chart a better course.

Candidate Trump is proposing less dependence on foreign companies for cheap goods, (the cornerstone of a service economy) and a return to a more balanced U.S. larger economic model where the manufacturing and production base can be re-established and competitive based on American entrepreneurship and innovation.

The key words in the prior statement are “dependence” and “balanced”. When a nation has an industrial manufacturing balance within the GDP there is far less dependence on the economic activity in global markets. In essence the U.S. can sustain itself, absorb global economic fluctuations and expand itself or contract itself depending on the free market.

When there is no balance, there is no longer a free market. The free market is sacrificed in favor of dependency, whether it’s foreign oil or foreign manufacturing, the dependency outcome is essentially the same. Without balance there is an inherent loss of economic independence, and a consequential increase in economic risk.

No other economy in the world innovates like the U.S.A. Donald Trump sees this as a key advantage across all industry – including manufacturing and technology.

The benefit of cheap overseas labor, which is considered a global market disadvantage for the U.S., is offset by utilizing innovation and energy independence.

The third highest variable cost of goods beyond raw materials first, labor second, is energy. If the U.S. energy sector is unleashed -and fully developed- the manufacturing price of any given product will allow for global trade competition even with higher U.S. wage prices.

In addition the U.S. has a key strategic advantage with raw manufacturing materials such as: iron ore, coal, steel, precious metals and vast mineral assets which are needed in most new modern era manufacturing. Trump proposes we stop selling these valuable national assets to countries we compete against – they belong to the American people, they should be used for the benefit of American citizens. Period.

EXAMPLE: Currently China buys and recycles our heavy (steel) and light (aluminum) metal products (for pennies on the original manufacturing dollar) and then uses those metals to reproduce manufactured goods for sale back to the U.S. – Donald Trump is proposing we do the manufacturing ourselves with the utilization of our own resources; and we use the leverage from any sales of these raw materials in our international trade agreements.

When you combine FULL resource development (in a modern era) with with the removal of over-burdensome regulatory and compliance systems, necessarily filled with enormous bureaucratic costs, Donald Trump proposes we can lower the cost of production and be globally competitive. In essence, Trump changes the economic paradigm, and we no longer become a dependent nation relying on a service driven economy.

The cornerstone to the success of this economic turnaround is the keen capability of the U.S. worker to innovate on their own platforms. Americans, more than any country in the world, just know how to get things accomplished. Independence and self-sufficiency is part of the DNA of the larger American workforce.

In addition, an unquantifiable benefit comes from investment, where the smart money play -to get increased return on investment- becomes putting capital INTO the U.S. economy, instead of purchasing foreign stocks.

With all of the above opportunities in mind, this is how we get on the pathway to rebuilding our national infrastructure. The demand for labor increases, and as a consequence so too does the U.S. wage rate which has been stagnant (or non-existent) for the past three decades.

As the wage rate increases, and as the economy expands, the governmental dependency model is reshaped and simultaneously receipts to the U.S. treasury improve.

More money into the U.S Treasury and less dependence on welfare/social service programs have a combined exponential impact. You gain a dollar, and have no need to spend a dollar – the saved sum is doubled. That is how the SSI and safety net programs are saved under President Trump.

When you elevate your economic thinking you begin to see that all of the “entitlements” or expenditures become more affordable with an economy that is fully functional.

As the GDP of the U.S. expands, so does our ability to meet the growing need of the retiring U.S. worker. We stop thinking about how to best divide a limited economic pie, and begin thinking about how many more economic pies we can create.

Simply put, we begin to….

…..Make America Great Again !

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Authors note as shared in 2016: If I absolutely did not believe this economic model was doable, I would never expand the concept and place advocacy upon it. I am an absolute believer that we can, as a nation, reignite a solid manufacturing base and generate an expanding middle class.

Yes, in the short term durable goods may cost more, that’s to be expected. However, these are durable goods, not disposable goods. As consumers we may have to spend a little more on maintenance and repair to offset an increase in durable goods, but that’s a small price to pay to make the U.S. manufacturing base great again.

~ Sundance

This entry was posted in Big Government, Big Stupid Government, Deep State, Donald Trump, Economy, Election 2018, Legislation, media bias, President Trump, Trade Deal, Uncategorized, US dept of agriculture, US Treasury, USA. Bookmark the permalink.

178 Responses to The Fundamentals of MAGAnomics….

  1. TestName7 says:

    Sundance, I read this last evening and was both educated and really impressed. I read this again just now and am so re-impressed I am violating my policy of commenting without substance.

    This is an _outstanding_ presentation. Thank you!

    Your recent Econ posts reflect a deep and developed understanding of the subject matter. I would even wager it’s you’re true comfort zone though clearly you have many. This particular post is extremely clear and, in hindset, prescient. I wish I had found this place sooner and am grateful you are giving focus to this topic and reposting the old cornerstones (for us newbies).

    Speaking as someone for whom Econ doesn’t always “stick” (I find I need to refresh definitions/concepts when I “dive in” – only a few times a year), this article was self-contained, easily readable despite its length, and very clear as to the conclusion. The main graph spoke so much and well at the location it was placed. I would be quite interested to see how the “Econ intellectuals”, like Tom Friedman (I won’t say the bug-eyed guys name cause he is just on another planet), would critique this; but again I’m not an Econ guy.

    ASIDE: I would definatley click on a link to a “primer” at the top of the “further reading” list if there was one – even if only a glossary, but also if it had a quantitative and/or formulaic section for the Econ illiterates like me. As an example, I was reading MAGADJT’s question @10:25pm above and it maybe me think of something I read recently, maybe in the comments here or in an article somewhere else – can’t recall. The author was addressing how tariffs are thought and taught to affect GDP. The, or an, equation for GDP was presented and each term was explained. It was pointed out how export/imports were supposed to cancel at one place in the equation to avoid double counting (please forgive if I am muffing this – I can’t recall it exactly) and it was explained how they are thought to influence terms under the “prevailing wisdom”. It then went on to explain higher order effects, not included/addressed in the prevailing treatment, that would influence these terms and change the picture regarding dynamics. I thought it made sense – at the same time, I always mark a mental asterisk by something which seems clear enough to me but runs against the “wisdom”, or what is taught in text books… anyway, it occurred to me (a non-Econ guy) that MAGADJT may have been referring to this in his question and was wondering if there were actual numbers available to support the idea.

    I don’t often read “Econ” articles because, well, I’m not an Econ guy but moreover, I have found them unuseful. They too often come across to me as either gibberish or pure opinion and making claims either unprovable or uninteresting. Sowell is of course different and doesn’t just do “Econ”, but when he does it is distilled into down-to-earth concepts and unstretched conclusions. I think this analysis of yours is along those lines but it also strikes a wonderful balance of including more data and numbers… not too much, but enough to provide hard evidence for the conclusions.

    As mentioned, the article(s) posted a week or two ago were also _very_ interesting to me. And while I feel I grasped the main concept, I have them all bookmarked with an asterisk, and will return to them. It is a non-trivial “idea” u are proposing/discussing (re: third dimension) and i dunno if it’s the word “dimension” that’s hanging me (more math background) up or just my unfamiliary. Nonetheless, they are like little self-enrichment assignments and I really feel you are doing a great service by re-presenting and not dumbing down the topic too-much; as it is in the challenges one finds reward. The political stuff is super important of course and most urgent but these yield personal, individual, enrichment as well as information.

    So again, thank you sir.

    Liked by 1 person

    • TestName7 says:

      — Oops. I forgot to add something that occurred to me when reading the linked Dec, 17 2016 article “A Third Dimension in American Economics” this am – maybe this qualifies as pseudo-substance:

      As it was being laid out how, for the last few decades, the Wall Street economy was being favored by the people’s government and well surpassing the Main Street economy, I couldn’t help but think of the size of each; not in dollars but in persons.

      I have to imagine that for each (1) member of Wall Street there are at least 100 members in Main Street.

      This is not accounting for globalists but it is also not accounting for Main Street’s 401ks.

      So if President Trump is really championing Main Street over Wall Street in his policies – can it not be said he is the also the true champion of and for the 99% ?

      Just wondering to myself if he could in fact usurp the “1% narrative” of the Left and rightly proclaim the mantle of the “99“.

      Obviously one might not want to use their exact phraseology, necessarily; but the discordant message is already laid for the taking.

      Like

  2. China forcing Boeing to perform final assembly of their aircraft in China is probably just another piece of their technology slurping plan:

    They already have their own indigenous commercial aircraft, the single-aisle narrowbody C919 ( http://www.traveller.com.au/chinas-c919-jet-has-been-made-to-beat-airbus-and-boeing-but-its-not-so-easy-h0v1yr ) and is in a joint venture with Russia to design and build the twin-aisle widebody C929 ( http://www.chinadaily.com.cn/a/201804/29/WS5ae51d80a3105cdcf651b387.html ). This is in addition to their existing regional jet, the ARJ21 ( https://theaircurrent.com/aircraft-production/chinas-arj21-should-scare-boeing-and-airbus/ )

    China’s goal is to capture 30% of the commercial airliner market by 2030.

    Like

  3. CountryDoc says:

    The links to parts I and II at the bottom of the article, link to parts III and IV, respectively

    Like

  4. A Magnum Opus here SD with so much to like. You really grasped early on much of what would transpire. It’s a pleasure to read your seminal work.

    Like

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