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I'm sure that you're convinced that John Towfighi is a
Posted on: April 21, 2025 at 21:54:07 CT
JeffB MU
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bedrock of financial wisdom, and rationality since he writes for CNN & all, but not everyone may be as convinced to take everything he says as rock solid truth that everyone should count on.
He did, after all only graduate in 2024, so he doesn't exactly have a lot of experience in advising the world on economic matters. We are pretty much in uncharted waters anyway and his hypothesis is based largely on the fact that the stock market went down.
Other factors he cites, when quoting others:
There have been three catalysts that have shifted focus away from America and toward investing overseas:
"In January, DeepSeek’s low-cost, ChatGPT-like artificial intelligence model caught Silicon Valley by surprise and challenged the narrative that the US had outright dominance in AI."
I would note that this happened BEFORE Trump announced any tariffs, and really had nothing to do with them. If anything is was another shot across the bow from China in their struggle to become the dominant world super power.
"In February, a shift in US foreign policy toward less support for Ukraine spurred defense spending in Germany, a boon for economic growth and investing in Europe."
Again, this happened BEFORE Trump announced the tariffs & it seems to be a rather shallow economic analysis of the situation. Diverting resources to manufacture weapons and ammunition that are blown up are hardly "a boon for economic growth". Sending hundreds of billions of dollars to Ukraine to keep the war going, resulting in the destruction of infrastructure and the death and mutilation of many more thousands of young men &/or civilians is hardly the way to bring prosperity to their nations, or to the citizens of the nations paying for diverting their resources to continue the rains of death & destruction. Believing such nonsense as the "Broken Window Fallacy" which was debunked through common sense by Frédéric Bastiat in 1850. https://oll.libertyfund.org/titles/bastiat-the-best-of-bastiat-3-2-the-broken-window
There is no question that the tariffs were a shock to the system and it was predicted by Trump and virtually everyone else that it would have an adverse impact upon the stock market, especially given the multiple other factors that were already likely to have a negative effect upon the stock market. It been expanding at above average rates for a very long time and PE ratios were already very high compared to historical averages. In similar fashion, the Federal Reserve had been raising interest rates in extremely rapid fashion. Many economists were predicting a drop in stock prices, with some worrying about popping an economic bubble causing something worse than a run of the mill economic downturn &/or recession. Most were thinking that a recession was needed to squeeze out the inflation that had grown at an excessive level.
The tariffs undoubtedly accelerated what was happening or going to happen regardless, and would likely make things stronger than otherwise would have been the case, but as Trump had said, the short term economic pain was like a medicine that was necessary for a healing process.
There is no question that our economy was very imbalanced and was causing pain for consumers, as high paying manufacturing jobs had been leaving the country for decades, the nation's trade imbalance in goods was very unbalanced as well, our debt crisis is at historic levels and is getting worse, the Federal Reserve had been "printing money" at levels that was goosing inflation, with a risk of getting to very destructive levels, with some economists warning of a risk of it spiraling out of control, possibly even to currency destroying hyperinflation levels.
Making things worse, the US was playing "policeman to the world", mostly funded by US taxpayers and consumers, with Europe and Japan enjoying the security of our military umbrella but not having to pay nearly their fair share of the expense of providing it... all while having trade barriers and tariffs designed to impede imports of US manufactured goods heavily skewing trade to favor goods and services from their countries at the expense of US manufactured ones.
There would, of course, be resistance and blowback from them when challenged to level the playing field and to pay their own fair share of the expenses.
One other thing to note is that the huge government expenditures that Trump cut (many of which were rescinded) at the recommendation of DOGE would cause a major drop in cash being poured into the economy from the largesse of the government... again being funded by taking taxes from citizens and via inflated prices for goods and services. It is also noteworthy that that hot money off "the printing presses" also inflated stock prices, though the inflationary aspect is illusory as that money showing up in the market would also purchase less goods and services that prior to the inflation.
He did, after all only graduate in 2024, so he doesn't exactly have a lot of experience in advising the world on economic matters. We are pretty much in uncharted waters anyway and his hypothesis is based largely on the fact that the stock market went down.
Other factors he cites, when quoting others:
There have been three catalysts that have shifted focus away from America and toward investing overseas:
"In January, DeepSeek’s low-cost, ChatGPT-like artificial intelligence model caught Silicon Valley by surprise and challenged the narrative that the US had outright dominance in AI."
I would note that this happened BEFORE Trump announced any tariffs, and really had nothing to do with them. If anything is was another shot across the bow from China in their struggle to become the dominant world super power.
"In February, a shift in US foreign policy toward less support for Ukraine spurred defense spending in Germany, a boon for economic growth and investing in Europe."
Again, this happened BEFORE Trump announced the tariffs & it seems to be a rather shallow economic analysis of the situation. Diverting resources to manufacture weapons and ammunition that are blown up are hardly "a boon for economic growth". Sending hundreds of billions of dollars to Ukraine to keep the war going, resulting in the destruction of infrastructure and the death and mutilation of many more thousands of young men &/or civilians is hardly the way to bring prosperity to their nations, or to the citizens of the nations paying for diverting their resources to continue the rains of death & destruction. Believing such nonsense as the "Broken Window Fallacy" which was debunked through common sense by Frédéric Bastiat in 1850. https://oll.libertyfund.org/titles/bastiat-the-best-of-bastiat-3-2-the-broken-window
There is no question that the tariffs were a shock to the system and it was predicted by Trump and virtually everyone else that it would have an adverse impact upon the stock market, especially given the multiple other factors that were already likely to have a negative effect upon the stock market. It been expanding at above average rates for a very long time and PE ratios were already very high compared to historical averages. In similar fashion, the Federal Reserve had been raising interest rates in extremely rapid fashion. Many economists were predicting a drop in stock prices, with some worrying about popping an economic bubble causing something worse than a run of the mill economic downturn &/or recession. Most were thinking that a recession was needed to squeeze out the inflation that had grown at an excessive level.
The tariffs undoubtedly accelerated what was happening or going to happen regardless, and would likely make things stronger than otherwise would have been the case, but as Trump had said, the short term economic pain was like a medicine that was necessary for a healing process.
There is no question that our economy was very imbalanced and was causing pain for consumers, as high paying manufacturing jobs had been leaving the country for decades, the nation's trade imbalance in goods was very unbalanced as well, our debt crisis is at historic levels and is getting worse, the Federal Reserve had been "printing money" at levels that was goosing inflation, with a risk of getting to very destructive levels, with some economists warning of a risk of it spiraling out of control, possibly even to currency destroying hyperinflation levels.
Making things worse, the US was playing "policeman to the world", mostly funded by US taxpayers and consumers, with Europe and Japan enjoying the security of our military umbrella but not having to pay nearly their fair share of the expense of providing it... all while having trade barriers and tariffs designed to impede imports of US manufactured goods heavily skewing trade to favor goods and services from their countries at the expense of US manufactured ones.
There would, of course, be resistance and blowback from them when challenged to level the playing field and to pay their own fair share of the expenses.
One other thing to note is that the huge government expenditures that Trump cut (many of which were rescinded) at the recommendation of DOGE would cause a major drop in cash being poured into the economy from the largesse of the government... again being funded by taking taxes from citizens and via inflated prices for goods and services. It is also noteworthy that that hot money off "the printing presses" also inflated stock prices, though the inflationary aspect is illusory as that money showing up in the market would also purchase less goods and services that prior to the inflation.
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I'm sure that you're convinced that John Towfighi is a - JeffB MU - 4/21 21:54:07