It's all about the Economy!

"The economy is a very sensitive organism." Hjalmar Schacht

The economy is a very sensitive organism.

One way or another the economy, in whatever state it is in, affects us all. President Trump and his trade war with everybody is plain dumb. Trump is not getting it right, he is just demolishing the economies of his own country and that of traditional ally, Canada. Why is he so set on acting like Canada is an enemy, his tariff war treats Canada as one. His agenda is conspiratorial, his actions demonstrate it by creating a false tariff war. Conspiratorial, you say, I’ll share more later in this series of blogs.

To help us better understand why actions influence the state of the economy; this is my take on what makes an economy tick – or what makes it tank. The core idea, as the old saying goes, is "It's the economy, dummy!" That's the bottom line, the thing most voters care about. My belief is simple: good times call for steady hands, tough times call for bold action.

So, what does that actually mean, what can a government do? Let's see what should happen:

When the Economy is Cruising (Good Times)

The goal here is simple: Don't screw it up! Seriously. A government should:

Maintain Stability:

·Avoid Overspending: Keep government spending in check to prevent inflation and unsustainable debt.

·Resist Radical Changes: Don't make drastic changes to regulations or tax policies   that could disrupt business confidence.

·Don’t Start Trade Wars: What is Trump thinking? Who knows!

Address Long-Term Challenges:

·Invest in Infrastructure: Use the good times to invest in infrastructure (roads, bridges, broadband) that will benefit the economy in the long run.

·Reduce Debt: Pay down government debt to create more fiscal flexibility for future economic downturns.

·Education, Education, Education: Fund good education, both academic and vocational as skilled workers mean a strong economy.

Enhance Existing Strengths:

·Support Innovation: Invest in research and development to foster innovation and create new industries.

·Streamline Regulations: Look for ways to streamline regulations without sacrificing safety or environmental protection.

What Makes an Economy Work Well? – The Core Ingredients

Before we dive into the "bad times" strategy, let's quickly recap what makes a healthy economy in the first place:

·Stable Government and Rule of Law: Businesses need a predictable and fair legal system.

·Skilled Workforce: A well-educated and trained workforce is essential for productivity and innovation.

·Infrastructure: Good roads, ports, airports, and communication networks are vital for trade and commerce.

·Access to Capital: Businesses need access to loans and investment to grow and expand.

·Free Markets and Competition: Competition drives innovation and efficiency.

·Sound Monetary Policy: Central banks need to manage interest rates and the money supply to maintain price stability.

·Open Trade: Trade allows businesses to access larger markets and lower costs.

When the Economy is Flatlining (Bad Times)

Okay, things are slowing down, unemployment is rising, and businesses are struggling. What does a government do? The focus shifts to creating an environment where businesses can recover and prosper:

Stimulate Demand:

·Tax Cuts: Consider targeted tax cuts to put more money in the hands of consumers and businesses.

·Infrastructure Spending: Invest in large-scale infrastructure projects to create jobs and boost economic activity.

·Unemployment Benefits: Extend unemployment benefits to provide a safety net for those who have lost their jobs.

Reduce Regulatory Burdens:

·Streamline Permitting: Make it easier for businesses to obtain permits and approvals.

·Reduce Red Tape: Eliminate unnecessary regulations that stifle innovation and growth.

Support Small Businesses:

·Loans and Grants: Provide access to loans and grants for small businesses to help them stay afloat.

·Tax Breaks: Offer tax breaks for small businesses to encourage investment and hiring.

Targeted Interventions:

·Identify Struggling Sectors: Provide targeted assistance to sectors that are particularly hard hit by the recession.

·Training Programs: Invest in training programs to help workers acquire new skills and transition to growing industries.

What Makes an Economy Fail? – The Warning Signs

Knowing what to avoid is just as important. Here are some factors that can tank an economy:

·High Inflation: Erodes purchasing power and creates uncertainty.

·High Unemployment: Reduces demand and creates social unrest.

·Excessive Debt: Burdens future growth and increases the risk of financial crises.

·Unstable Government: Creates uncertainty and discourages investment.

·Corruption: Undermines the rule of law and discourages foreign investment.

·Trade Wars: Disrupt global supply chains and increase costs. Consumers always pay.

·Lack of Investment in Education and Infrastructure: Reduces long-term productivity and competitiveness.

·Excessive Regulation: Burdens businesses and stifles innovation.

The Takeaway

The key is balance. A government needs to be fiscally responsible, but also willing to act boldly when the economy falters. It needs to create a stable and predictable environment for businesses, while also investing in the long-term foundations of economic growth. There is no magic bullet, but common sense and a focus on the well-being of all citizens are essential.

I've laid out what I believe makes an economy work well and what makes it fail. Governments have a role to play in both maintaining success and mitigating disaster. I want to hear from you, what do you think the key factors for a healthy economy are, and what should a government do during tough times.

Trump Blows The Economy

Who was better for the economy, Trump or Biden? Whatever you may think of Biden's economy, he did not crash the stock market like Trump has done in less than three months. Trump has a history of bankruptcies, unpaid wages and broken contracts. It appears he is pushing the economy of the United States into a major recession, unless he makes a quick about face. It's crazy stuff starting a trade war with traditional allies while offering support to Russia.

Please share your stories in the comments or find me online.