Sunday, December 31, 2017

Trump's Cover

When the shit hits the fan
I'll be sitting on the can
When the whip comes down
--The Rolling Stones

It must irritate dedicated statists to no end to hear Donald Trump constantly take credit for stock market performance since his election. Sure, many of Trump's first year actions such as regulatory cutbacks and the recently signed tax law are friendly to markets. But the past year's performance is merely an extension of a multi-year bull market of historic proportions that precedes Trump.

Smart statists realize that the seeds of this uptrend were sown during the depths of the credit collapse in 2008 when some of their own--central bankers and other policymakers--began implementing the most radical set of monetary and fiscal policies that the world has ever seen. Since then, markets around the world have been floating ever upwards on an ocean of liquidity.

Trump's pro-growth policies are being enacted at a time of peak central bank lunacy, thereby lending a parabolic shape to financial markets of all stripes.

Alas, statists can take comfort in the notion that Trump has given them an out. The president's policies and boastfulness serve to cover several years of radical interventionary actions by the State. Trump's actions create a diversion of sorts. And because the president has taken ownership of market performance, statists can offload blame to him when the whip inevitably comes down.

No comments: