Trump Can’t Save The Crashing Economy & His Reelection Chances Get Slimmer

President Donald Trump’s one shining moment during his time in office was the economy.  With that crashing and burning, his reelection chances are also going up in flames.

Trump has a last-ditch effort, however.  He and the Federal Reserve chairman may even agree on something: tax cuts.  But to make any effect on his reelection, he’d have to do this swiftly and noticeably: not like last time.  And the tax cuts would be paid for with “helicopter money.”

Veteran Wall Street strategist Ed Yardeni of Yardeni Research has also proposed this a very controversial option.  “Former Fed chair Ben Bernanke many years ago suggested that if things really get bad, there’s always helicopter money,” Yardeni said on Thursday on Yahoo Finance’s The Final Round on Thursday. “Helicopter money would be actually something that both [president] Trump and [Fed chairman] Powell… could agree on. Because the president wants tax cuts. And if the tax cuts are paid for with ultra-easy monetary policy, guess what? That’s helicopter money.”

Trump needs major tax cuts, however.  These should be so deep that almost everyone immediately feels relief from their tax burden.  Anything less will be as well-received as his last round of tax cuts that were said to only help the rich by his opponents.  Deep middle-class tax cuts could have a bigger effect on the economy than any amount of promises and money-printing schemes could ever hope.  People will notice there’s more money in their wallets.

If Impeachment Fails, Will The Elite Crash The Economy In Order To Prevent Four More Years Of Trump?

“Helicopter money” was first coined by economist Milton Friedman in 1969 as a thought experiment where a helicopter drops cash over a community. In theory, people may assume it’s just a one-off event, and they may find themselves just spending it. Economic activity would spike suddenly.Yahoo

Former Fed chair Bernanke later referenced this concept in a 2002 speech. Then a Fed governor, Bernanke (a Keynesian economist) discussed using an ultra-loose monetary policy (via money printing) to finance stimulative fiscal policy, which could come in the forms of tax cuts or government spending. From his speech:

A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman’s famous “helicopter drop” of money.Ben Bernanke, 2002

But too little of a tax cut could be a huge problem. If Trump doesn’t make this tax cut one for history, people won’t notice and all they will focus on is the falling stock market.  Yardeni says this is such a crisis because the central banks cannot do anything about a global health crisis, such as an outbreak or pandemic.

“I’ve been keeping a diary of the selloffs in this bull market, and there’ve been seven corrections, including this one,” Yardeni said to Yahoo Finance. “Altogether, I’ve counted what I called 66 panic attacks. This one really is the worst of them, because in the past, we can always count on monetary policy to save the day.”

“This one, it’s very obvious that there’s nothing central bankers can do about the global health care crisis,” he added.

Trump has often taken credit for the economy, tying it to himself. Because of this, he’ll also take the blame when/if it crashes (which it’s been doing.) A suggestion for Trump: stop pushing for lower interest rates. They are low enough. Cut taxes. Cut them deeply and cut them swiftly. Make sure as many people as possible feel that financial relief and then there’s a chance a reelection still and the economy may recover.

Milton Freidman’s book Capitalism and Freedom: Fortieth Anniversary Edition, explains how economic freedom (lower taxation, fewer regulations, etc.) translates into general freedom. How can we benefit from the promise of government while avoiding the threat it poses to individual freedom? In this classic book, Milton Friedman provides the definitive statement of his immensely influential economic philosophy—one in which competitive capitalism serves as both a device for achieving economic freedom and a necessary condition for political freedom. The result is an accessible text that has sold well over half a million copies in English, has been translated into eighteen languages, and shows every sign of becoming more and more influential as time goes on.

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