The chart above is curtsy of Let’s Eliminate the Trade Deficit! Yeah, What If?
The short answer is rather simple.
Trade deficits skyrocket in bull markets and collapse in bear markets -OR- it might be bull markets force deficits higher and bear markets decimate them. The chicken and the egg conundrum of sorts.
The cause and effect is not necessarily important here. What is important is that Mr. Trump is hell bent on starting a trade war with anyone and everyone. He believes, mistakenly I must add, that lower trade deficits will lead to some sort of an American prosperity.
Quite the contrary is true. As the chart above suggests lower trade deficits will lead to a global slowdown, higher prices, lower wages and massive job losses in the US. A deflationary spiral of sorts.
Interestingly enough we have tried this exact experiment during the Hoover Administration of 1928-1932. I wonder what happened to the stock market and the US Economy then.
If you must, I wrote about it a few days ago. What Else Do ‘Trade War Loving’ Presidents Trump & Hoover Have In Common??? – Meet The Stock Market Trajectory
WINNING!!!!
