President Trump, in his blockbuster speech yesterday, told the Davos crowd that “the USA is the economic engine of the planet. And when America booms, the entire world booms.” So reminiscent of Ronald Reagan. Including Mr. Trump’s tried and true observation that economic security at home is the fountainhead of national security abroad. Again, ditto Reagan. I’ll tell you, if Ronald Reagan was the greatest president in the 20th century, right now Donald Trump looks like the greatest president in the 21st century.
That Davos crowd yesterday should have been sitting there taking copious notes on yellow legal pads, that they could go home and use to deliver some prosperity to their stagnant European countries, that haven’t grown in years and years. They’ve made every economic mistake in the book. Confiscatory taxes, regulatory strangleholds, phony climate change, and unfair trade practices. Four years into the Ukraine war, the Europeans are still buying oil and gas from their supposed arch-enemy Russia. And their extreme climate change policies nearly ended their industrial development. The most popular European economic policy today is bashing American companies, especially our tech companies through unfair trading practices, digital sales taxes, and the like.
Mr. Trump has completely rejuvenated American capitalism with his supply-side prosperity program of tax cuts, deregulation, “drill, baby, drill,” and reciprocal fair trade. He may step on some toes to make a point for a year or so, on things like a 10 percent credit card interest rate, or jaw-boning defense companies, but Mr. Trump is a capitalist who believes in the incentive model of economic growth.
To quote my pal Art Laffer, if it pays more after tax, you will get more work. Or investment. Or risk taking. Or deregulating. Or putting the private sector back to work and stuffing the big government socialist model into tiny little moth balls. Mr. Trump has always believed in rewarding success, not punishing it. He knows, say, that today’s strong economic growth will be putting people back to work, building new factories, and producing more of virtually everything. And that can’t possibly be inflationary.
In fact, more production will bring inflation down. He knows that. He said it several times at Davos yesterday. And he’s made it clear that this old root-canal, no-growth, austerity model has to be scrapped and ended at the Federal Reserve with new people in charge.
Just a cursory look at the numbers released today enhanced the Trump boom. For the three quarters of his second Presidency, the first year, last year, thus far, GDP is on a run rate of 4.4 percent and when all the other incentives, including energy, kick in this year, you could be running 5 percent, 6 percent, or 7 percent economic growth.
For some reason, people don’t want to talk about it, but inflation is coming down. The Fed’s allegedly most important indicator is the core Personal Consumption Expenditures Price Index deflator, which is now running at two tenths of a percent per month, or only 2.3 percent annually for the past three months.
Durable goods are running at 2 percent. And the obsessively feared tariff inflation has never materialized, even with modest Trumpian 15 percent tariffs that have already significantly reduced our trade deficit. Adding even more to economic growth.
You know, if the Europeans had any common sense, they would follow Mr. Trump’s economic lead, and bring prosperity to their people, because the truth is, the president is trying to save them from themselves.
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