At some point in time, one decides, as a writer or journalist, or even as a mere citizen, that there is nothing to say that has not already been said. Given the great kindergarten in which we now find ourselves, with giant plastic toys being tossed around by a septuagenarian child, one decides, even more so when embroiled in the newsfeed, that it is time to just keep one’s mouth shut and watch the show go on.
However, in a Fox News interview with US President Donald Trump on March 9 regarding the impact of his tariff policies, there was one particularly pertinent question posed by the interviewer, Maria Bartiromo, that made it through the general morass and moraine and multitudinous objects flying within the stream of cognitive dissonance that has become ubiquitous in what was once known as the “news”. “Are you expecting a recession this year?” she asked. Trump answered vaguely: “I hate to predict things like that. There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing.”
Bartiromo continued by asking whether Trump thought his tariffs would fuel inflation. He immediately moved to shift the blame onto Joe Biden’s administration, before pivoting to downplay the role of inflation entirely by commenting: “You may get it. In the meantime, guess what? Interest rates are down.”
It was in that moment that, despite wishing to stay out of the bedlam of this new Trump narrative, I could not help but think: how is it possible that a person who does not understand that the reason interest rates went up in the first place was because of inflation, is in charge of the largest economy on earth? And how is it that he does not understand that monetary policy is set independently of the state?
“Inflation is back. I’m only here for two and a half weeks. And they said, ‘Oh, Trump’, and I had nothing to do with it,” he stated in an interview in February. “These people have run the country. They spent money like nobody’s ever spent. They were given $9-trillion to throw out the window.”
While this may be true, the current US president appears not to understand that the Federal Reserve operates independently of the US government, and has done so since its establishment in 1913. In fact, if anyone should be blamed it should be Jerome Powell, not Biden.
But, even more importantly, not only does Trump appear to not understand fundamental monetary economics, the sycophants circling him like helicopter moms around their nursery school infants, appear not to understand either. Even those in charge of important stuff, like the Securities and Exchange Commission, or the US Treasury, for that matter. Otherwise, surely, they would have corrected him. Surely? Or perhaps, like helicopter moms, they have long ago given up even the appearance of trying to raise well-behaved children, and have simply succumbed to his infantile tantrums.
Later on Sunday, Trump took questions from the press while aboard Air Force One, and he was again asked about the possibility of a recession, with the journalist commenting that when Bartiromo had asked earlier, “you kind of hesitated”. Trump again deflected, stating: “Who knows? All I know is, is we’re going to take in hundreds of billions of dollars in tariffs, and we’re going to become so rich, you’re not going to know where to spend all that money, I’m telling you. You just watch.” He then abruptly ended the Q&A session, claiming that the plane was about to land.
The cost of uncertainty
To be sure, there will be a recession in the US, not because of inflation, nor because of Covid, nor the war in Ukraine nor any other reason except for the uncertainty and pandemonium that Trump has created for businesses, large and small, across the board.
When you tell business managers that there will not be stable prices because you are busy gyrating and switching and cat-fishing the rest of the world, to “become so rich”, in a kind of real-life postmodern performance of the 1980s stereotypes embedded in “the art of the deal”, then you have forgotten that businesses need to plan ahead, to make orders, to stock-take, to price their products, and to sell to customers at fair prices. A few loose remarks, gob-smacking tariff rates, and completely unrealistic timelines, will, for definite, lead to businesses simply waiting to see what happens, and not ordering. That will have a whiplash effect that will be very unpleasant for the US economy, even as soon as the end of the second quarter.
But by then, three months from now, Trump will probably be standing on an icy mountain in Greenland, the sun glistening golden across the glacial horizon, his hand resting peculiarly on the shoulder of Marco Rubio – his ultra right-wing wingman from Florida, who previously ran against him and who is now secretary of state – watching the aurora borealis, the same obnoxious smirks on their faces.
David Buckham is founder and CEO of Joburg-based international management consultancy Monocle Solutions, and is the author of six published books.
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