Trump Has Won! What to Make of It?

The earthquake has happened: Donald Trump is president-elect of the United States of America. Quite an enormous “black swan”! What should we expect now?

On the one hand, Trump’s victory seems like a formidable denial of the economic lies being spread since the 2008 financial crisis: no, unemployment isn’t 5%, but rather 15%; no, there isn’t any hiring in industries; no, there has never been any recovery and growth has been anemic; no, the Fed’s lax policy isn’t useful... middle class is shrinking and poverty is on the rise. Americans have clearly shown that they don’t believe the optimistic narrative sold by the media and the authorities anymore. This may give hope that things could change, that the new administration could be more lucid and stop relying on budgetary spending and monetary laxity for a sounder economy.

Trump, by the way, has attacked the Fed’s chair, Janet Yellen, quite a few times. Is there a change coming to monetary policy? Will there be a return to normal interest rates, an end to zero rates? That would be quite an earthquake as well, putting the whole financial system in jeopardy.

On the other hand, Trump has never indicated that reducing federal debt was a priority and his program includes big tax cuts for individuals and businesses. Though he is committed to curtailing public spending, he doesn’t want to cut into social and military programs, the two most important ones... how can he do it, then?

We shall see also how he will redirect the country in international trade. Several experts say he’s a protectionist, but his main beef is, above all, against impediments to free market economy like, for instance, when he accuses China of manipulating its currency in order to benefit its exports or of subsidizing the steel industry to get rid of excess production – can anyone deny that? He doesn’t want unconditionally open customs for all – he doesn’t want businesses to go bankrupt because of imports that benefit from subsidies in the country of origin.

Above all, he’s been a vociferous critic of crony capitalism, those incestuous relationships between big business (especially banks) and the State which are perverting real capitalism. Wall Street, where those big companies are quoted, reacted very badly to his election... can one say “Well done!”? There again, a return to true liberalism would mean an amazing progress.

Anyhow, there will be changes coming to the current policy, with the Republicans in control of the House of Representatives and the Senate. Uncertainty is prevailing today – and gold is rising strongly – but there is hope that an economy based on sounder rules may see the light of day. Donald J. Trump will officially become president of the United States on January 20, 2017: it promises to be an exciting year.