Want a Smaller Government?

Elect a Republican. Right?

President-elect Donald Trump announced the establishment of the White House National Trade Council, to be headed by Peter Navarro, a hard-line critic of China.

The announcement on Wednesday called Navarro a “visionary economist” who will develop policies to shrink the US trade deficit, expand growth and stop the jobs from going overseas.

  RT

Is he a billionaire?

The National Trade Council will also be in charge of the “Buy America, Hire America” program that will apply to government spending ranging from infrastructure to national defense.

But will not be applied to Trump's business interests.

I'm not sure a "hard-line" critic of China, which by all measures seems to be putting it mildly, is a good idea for a trade relations director.  China holds a shitload of our debt.  What if China (the other largest economy in the world) decides to start trading in Euros instead of dollars?  Or, say, the yuan?

he U.S. debt to China is $1.157 trillion, as of September 2016. That's 30 percent of the $3.901 trillion in Treasury bills, notes, and bonds held by foreign countries.

[...]

It reduced its holdings to allow its currency, the yuan, to rise. It's loosening its peg to the dollar. That will make the yuan more attractive to forex traders in global markets. Long-term, China wants the yuan to replace the U.S. dollar as the world's global currency. [...] For more, see Currency Wars.

  The Balance

The PBOC [People's Bank of China] now has the freedom to allow the yuan to slowly evolve toward a floating exchange rate. That will give the bank more flexibility with monetary policy. It's another step toward promoting the yuan to replace the dollar as the world's global reserve currency.

  The Balance

Even if China wished to “call in” its loans, the use of credit as a coercive measure is complicated and often heavily constrained. A creditor can only dictate terms for the debtor country if that debtor has no other options. In the case of the United States, American debt is a widely held and an extremely desirable asset in the global economy. Whatever debt China does sell is simply purchased by other countries.

[...]

China’s large U.S. Treasury holdings say as much about U.S. power in the global economy as any particularity of the Chinese economy. Broadly speaking, U.S. debt is an in-demand asset. It is safe and convenient. As the world’s reserve currency, the U.S. dollar is extensively used in international transactions. Trade goods are priced in dollars and due to its high demand, the dollar can easily be cashed in. Furthermore, the U.S. government has never defaulted on its debt.

  China Power

That was before Trump became president.

"Whatever debt China does sell is simply purchased by other countries."

If they're sure of our future stability.  And if they have any money.

Sadly, I don't know enough about finance to make any sound prophecies. The Guardian has no such restriction. Who knows if their economic analyses are correct, but here they are:

[US growth] will almost surely accelerate above the 2.2% average annual rate during Barack Obama’s second term. This is because the Republican aversion to public spending and debt applies only when a Democrat like Obama occupies the White House. With a Republican president, the party has always been glad to boost public spending and relax debt limits, as it was under Presidents Ronald Reagan and George W Bush. Thus, Trump will be able to implement the Keynesian fiscal stimulus that Obama often proposed but was unable to deliver.

[...]

[G]rowth and inflation will both increase. As the US economy runs into the limits of full employment, additional growth will push inflation higher, but that bad news can wait until 2018 and beyond.

  Guardian

Well, that'll be swell, won't it?

The Republicans’ hegemony will enable easy agreement on tax cuts financed mainly by higher public borrowing, rather than by facing down special interest lobbies’ resistance to the elimination of exemptions and loopholes. These tax reforms will create even bigger budget deficits, which in turn will stimulate more growth and inflation.

Something tells me the knobs who voted for Trump are not going to see inflation as their friend.

A third boost to economic growth will come from deregulation. While battles over energy and environmental laws may dominate the headlines, the biggest economic impact will come from reversing bank regulations. As banks are encouraged to loosen lending standards, especially for middle-income households, an upswing in residential construction and debt-financed consumption should add further growth impetus. Excessive deregulation could cause a re-run of the 2007 financial crisis, but that, too, is a risk for 2018 and beyond.

Oh, swell.

Will banks really loosen their lending standards for middle-income households? The TARP money was supposed to do that, and look where that went: the pockets of the banksters.

Trump’s election could force Americans to recognise flaws in their own democracy, even as they abandon global “democracy promotion.”

Well that's a laugh. Besides, Americans are not going to acknowledge any flaws even if they do recognize them.

Now for the bad news.

Yes. That was the good news.

For the first time since the 1930s, the US has a president who views trade as a zero-sum game.

[...]

US global leadership is therefore bound to shift away from free trade, globalisation, and open markets. Nobody can predict the full effects of the biggest regime change in global economic management since the 1980s; but they will surely be negative for emerging economies and multinational companies, whose development models and business strategies have assumed free trade and open capital flows.

A second, more immediate, threat stems from enacting large tax cuts and boosting public spending in an economy already nearing full employment, which implies accelerating inflation, higher interest rates, or probably some combination of the two.

Wait a minute. We're approaching full employment? That's going to come as news to a lot of people. And, in what area are we approaching this wonderful point? Fast food service?

With the US economy growing faster than expected and long-term interest rates rising, excessive strengthening of the dollar is a third major risk.

[...]

[T]he combination of a dollar squeeze and protectionism spells big trouble for developing countries, with the possible exception of some relatively closed economies such as Brazil, Russia, and India, whose development strategies are less reliant on free trade and foreign financing.

[...]

Just as Britain’s referendum proved uncannily predictive of Trump’s win, Trump looks like a leading indicator of populist upheavals in Europe, which could trigger another euro crisis and threaten the breakup of the European Union. The next anti-establishment victories, according to opinion polls, will be in Italy’s constitutional referendum and Austria’s presidential election.

Well, the Guardian was wrong about Austria. They rejected the far-right candidate. They haven't forgotten WWII. In fact, the Green Party candidate won that election.

Italy, however, did make the move to the right and toward the possibility of leaving the EU. Apparently, they HAVE forgotten the war.

The result was [...] lauded by one of Italy's leading right-wing politicians, Matteo Salvini, whose anti-immigrant party will seek to make gains in a general election.

The conservative leader of the Northern League is known to be a vocal supporter of Italian fascist leader Benito Mussolini.

  CNN

The EU hasn't stopped rocking.  The Big Short set off a huge shock wave.  And we may be fast approaching the aftershock.

...but hey, do what you want...you will anyway.