The inauguration was yesterday and the world is pretty much the same. It’s actually sunny in Chicago which is a rarity this time of the year
Meanwhile, the Dow is going crazy…flirting with 20,000. Trumpenomics has got people excited. Small business future confidence indices are off the charts. The enthusiasm has not been this high since the raging Reagan 80s.
Can Trump turn it around? Is he the new Reagan? Who knows. What I can tell you is that he faces substantially more challenges than Reagan did. He did not enter office in the middle of a giant asset bubble as we have now. He had a sluggish economy and high inflation but at least he had monetary policy to work with to get things under control with Paul Volker.
Trump has a massive asset bubble and no monetary policy tools to work with at this point. The fed’s rates in 1980 was 13.35%. Meanwhile, we have been near zero for 8-9 years with several rounds of quantitative easing. The only option he has left is a massive infrastructure project…aka helicopter money. That will stimulate the economy but it will create even more debt and inflation. He’s banking on economic growth making up for the difference and we know he wants to weaken the dollar, presumably to erode the debt.
Maybe it will work.. Who knows. Many don’t think it will though. But then again, I’m an armchair economist at best.
On the other hand, my guest on Wealth Formula Podcast today, Lior Gantz studies the economy very closely and has some very interesting perspectives to share with us and, more specifically, some different ways to invest in this economy. So, when we come back, we will talk to Mr. Lior Gantz from WealthResearchGroup.com.