Trump’s economic policies are reckless

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Trump’s economic policies are reckless

Brett Hodges, Staff Columnist

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To the average American, the stock market is less of an indicator of the economic well-being of our country, and more of a series of intangible, meaningless numbers that win and lose money for people with the consistency of a Las Vegas casino. So why would President Donald Trump consider the bull market this country has been experiencing since the Great Recession one of his largest accomplishments? This is due, in part, to the fact that Trump has been propping up the economy in such as way as to position himself as a smart, sure bet for the 2020 election.

However, in reality, the economy is being held aloft by low interest rates maintained by the Federal Reserve, not by his own “business genius.” When rates are low, as they have been since the market crash of 2008, it is relatively inexpensive for companies to borrow and use money for further investing in their businesses. This is excellent for the economy in times of recession, when the Fed lowers interest rates in order to stimulate business growth, but after 10 years of low interest rates, the economy is in danger of becoming overheated. This occurs when the cost of borrowing is so low that unprofitable businesses can borrow money so cheaply that they can remain in business, propped up by their own borrowing.

One has to look no further than the initial public offering of Lyft to see this overheating in action. According to Reuters, Lyft recently received a valuation totalling more than $24 billion, despite never turning a profit and having no plans of ever turning a profit beyond the all-elusive unicorn that is autonomous driving (which is generally agreed to be, at the very least, five years out from now). In fact, Lyft loses around $1 every time they offer a ride. In essence, the only reason Lyft exists, and the only reason it is a household name, is because it has been using investor money to subsidize each and every ride that it offers.

So what does this have to do with Trump? Trump, knowing that his reelection is largely contingent on the state of the United States economy, is meddling with the Fed in an effort to continue the bull market. One has to look no further than Trump’s Twitter page to see calls against quantitative easing (the increasing of interest rates) and Trump’s praise for Herman Cain, a Republican highly motivated to bring the U.S. back to the gold standard, despite it being an outdated system with a litany of issues.

Rather than accepting the small pullback the American economy could face with this quantitative easing, Trump is willing to gamble away our economic future in order to ensure that he can win in 2020. With interest rates at their current level, the U.S. risks going the way of Japan, reaching negative interest rates should we have another recession. This means that rather than a bank paying you interest for your deposits, you will instead be paying a bank for holding your money so that they can make loans. Such an idea is unfathomable to the American people, and such action by the Fed, though it would be necessary to save the economy as a whole, would likely cause absolute economic chaos.

Instead of allowing our president to gamble away our future for selfish gains, we as Americans must stand up and cast our vote for those candidates with the best understanding of economics, which especially means not Bernie Sanders, even though economic literacy seems to be unimportant in today’s times.