Trump Faces An Economic Catch-22 His First Day In Office – What Can He Do About It?

This article was written by Brandon Smith and originally published at Birch Gold Group

For the past several months I’ve been discussing the high probability of Donald Trump’s return to the White House. Specifically, I have warned that the Biden/Harris Administration along with the Democrats have been using data manipulation to hide the growing threat of a stagflationary collapse within the US within the next couple of years.

In my article ‘Smoke And Mirrors: What Happens After Biden’s Economic Manipulations Disappear?’ published in September, I outlined the specific tricks Biden’s team has been using to obscure the decline in the labor market, hide the true inflation problem, marginalize the exploding national debt issue and manipulate the CPI while artificially propping up GDP with government spending. In that article I noted:

“If someone was to ask me what I predict, I would have to say Trump will be president again. From all the evidence I’ve seen the Harris campaign is an astroturf movement with a limited voter base. She’s obviously not very bright and I don’t think the theatrical “joy” strategy is convincing very many people of her competency. Her economic policies (including price controls) are full bore communist and would be devastating to any form of US recovery. Her fiscal plan will be even worse than Bidenomics has been…”

“I suspect that if Trump enters office once again there will be a multitude of changes to our economic data and they will happen quickly. Some of the rigging is already being exposed, just not on a level where the majority of the populace is aware of it…”

Now that the election outcome has been decided and Trump is the clear winner by a landslide in the electoral college and the popular vote, we should keep in mind that the real fight for the future of America starts in 2025. We should also consider the fact that the fate of the conservative ideal (and perhaps the ideals of all western civilization) are now inexorably tied to the success or failure of the Trump Administration.

Meaning, when Trump enters office again the establishment will seek to blame every negative event not just on Trump, but on ALL conservative and liberty minded principles. This is a problem because Trump is about to inherit perhaps the worst economic time bomb in American history.

I call it a “Catch-22 trap” and I predicted this dangerous outcome back in 2021. Here’s how it works…

Because of dollar overprinting and government overspending the US is now in a stagflationary death spiral. It took decades to produce this financial singularity but it is finally upon us and it will be very difficult to reverse.

When the government and the Federal Reserve were finally forced to acknowledge the stagflation crisis in 2022, the Fed had to be seen as at least trying to stop the bleeding. So, they launched interest rate hikes. The problem is, the US is also suffering from exponential national debt and each rate hike greatly increases the amount of interest the nation has to pay per year. For now, the US pays around $1 trillion in gross interest every three months. This means our national debt will skyrocket while rates are high.

But the Fed has entered a process of rate cuts, you say? Inflation is defeated, you say? The whole calamity has been conveniently solved by Joe Biden and friends right before Trump takes over, you say? No.

The problem is that the inflation threat has not been solved, it has been hidden. CPI is not a measure of cumulative inflation, it is a measure of monthly inflation diluted by tens of thousands of goods and services, most of them not necessities. For the past couple years Biden has been dumping US strategic oil reserves on the market in order to bring energy prices down and artificially reduce CPI, but this has not lowered cumulative inflation. And, as the Fed cuts rates through 2025, the inflation panic will return.

That is to say, if the Fed keeps rates high the national debt climbs to disastrous levels. If they cut rates, then inflation returns and monthly inflation will continue to accumulate. Damned if we do and damned if we don’t, and guess who gets the blame? That’s right, Trump and conservatives.

And for those who argue that Americans won’t blame Trump because they’ll know that the decline was caused by Biden, I would note that public patience is quickly reduced in tandem with people’s shrinking bank accounts. They will blame whoever is in power at the moment the collapse strikes.

The Democrats already tried to blame Trump for the majority of the stagflation crisis and the covid crisis (even though it was Democrat states that attempted to keep lockdowns in place permanently). You know they’ll keep the propaganda pumping constantly for the next four years. But what can the Trump Administration do to defuse the situation? I could write an entire book on this but here are the first few actions I would take if I were in his shoes:

Expose Biden Admin Data Manipulation

The first thing Trump needs to do is set up an economic advisory board (Ron Paul would be a great candidate to lead such a project) and one of their primary tasks should be to expose how the Biden Admin has been hiding the real economic data from the nation at large.

The temptation will be to keep this data under wraps for fear that it will destroy the country should everyone know the facts. I think the country has voted in great numbers for an end to the status quo and that they want transparency. We can handle the truth.

If Trump doesn’t educate the public on how the Democrats and the establishment have been rigging the numbers, then the populace will ultimately blame conservatives for any eventual crash. Also, when the public knows the truth, they will also understand why dramatic changes to policy need to be made.

Backstop Tariffs With Incentives For Quality Domestic Production To Fight Inflation

A major pillar of Trump’s economic plan includes tariffs on foreign goods as a way to pay off the national debt, reduce taxes and fund the government. Leftists claim tariff’s are actually a “tax on the American consumer” and will end in disaster as prices rise. They’re ignoring the fundamental point.

Tariffs cause an increase in prices on foreign-made goods, not American made goods. We simply need to manufacture more in the US. Why does the US need to remain in stasis as a consumer nation? Why can’t we also produce? Because the globalists say we can’t?

Tariff’s are not just a tax, they are leverage. Europe is already talking about buying more commodities and goods from the US in order to avoid high tariffs and China is likely to do the same. The US is the biggest consumer market in the world with 30% of global share. No other nation comes close. Producer nations would face economic disaster without access to US consumers.

That said, it’s not enough. There needs to be a backstop of domestic production and I think this could also help reduce inflation. How? If the US focuses on what I would call a “quality economy” then prices will be higher for a time, but in the long run inflation will drop significantly. The key is that we produce goods with a high quality standard that last for many years and have a significant warranty attached.

If our goods are better made than foreign products and they last longer, then people will buy less stuff over time. This means reduced spending, more savings, lower demand and ultimately less inflation. There’s a number of ways Trump could subsidize this domestic manufacturing boom while also greatly increasing American wages and the standard of living. Biden pretended he was going to do this with his faulty “Inflation Reduction Act” and his green energy “revolution”. Trump could do it for real.

Issue A Gold/Silver Backed Treasury Bond – Offer Metals Backed Savings Accounts

Currently, US bond markets are in decline with foreign enthusiasm in long term debt purchases waning. In order to stop the death plunge of national debt and the fast accumulation of interest, radical measures need to be taken.

The inflation and debt issues are not going to solve themselves and the Federal Reserve does not have the tools to fix the situation even if they wanted to. However, Trump does have the power to issue special treasury bonds backed by the gold and silver holdings of the US government, and this allows him to bypass the Fed.

(Some people theorize that the US gold reserves are secretly empty.  Even if this is true it’s irrelevant to the plan.  The US has over 15,000 tons of gold identified and ready to be mined and an estimated 18,000 tons yet to be discovered.  All we have to do is return to mining.)

A maturity of around 5 years or more would be ideal and the government could set the bond’s return according to the true market value of gold and silver (a federal investigation into gold and silver ETF paper market manipulation would need to be pursued in order to stop price suppression by major banks). The bonds would have to be exchangeable in dollars OR physical gold/silver in order to instill trust.

A similar idea would be to create a savings account option backed by US gold and silver reserves, like a CD account but not dependent on the Fed Funds Rate. Upon maturity, the account can be cashed for physical metals or dollars, or a debit card or cryptocurrency can be issued for those savings.

I believe this could solve the national debt issue by reviving foreign enthusiasm for American T-bills and solve the inflation problem by offering all Americans easy access to a gold and silver hedge for protecting their savings from inflation and making a little extra money on the side. The more people who participate, the higher the value of metals will go.

I’m sure there’s a lot of Mises Libertarians out there arguing that people should just buy physical gold and silver and throw it in a safe somewhere. Or we should just issue a gold backed currency and be done with it. Americans can and should buy physical, but lets be honest, gold and silver coins don’t spend in most consumer situations. We need an intermediary system that offers people liquidity. And, shifting directly into a metals backed currency would indeed cause significant chaos in US and global financial systems for a time.

We can’t go cold turkey on the Federal Reserve note. We need to wean the nation off the fiat heroin.

I’m also sure there’s plenty of Keynesians out there that will claim any metals backing is impossible and it will destroy the country, but Keynesians are always wrong. What I’m proposing here is a middle ground option that could lead to a commodity backed currency system in the future. We must deal with our immediate debt crisis and inflation crisis, but it’s not impossible.

A Moratorium On Debt Ceiling Increases Until Spending Is Under Control

The Gold/Silver bond measure and tariffs would allow the federal government to continue funding while also cutting taxes and putting a stop to deficit spending by removing waste.

Every time there’s a debate over the debt ceiling and conservatives call for a stop to the madness, Democrats (and Neo-Cons) accuse them of putting the country in peril. They hold the nation hostage with tales of collapse until conservatives inevitably give up and the debt continues to rise. No more. We cannot keep consuming debt poison and expect our national health to improve.

When Elon Musk took on the ownership of Twitter he fired over 80% of the existing workforce. Leftists said the website would implode within months. They were wrong (again) and the site now functions better than ever despite far higher user traffic. The federal government is a lot like the old Twitter – It’s a bloated and obese bureaucracy loaded with self-serving dead weight that needs to be torched before it causes a systemic heart attack.

This is the only way things will get better, not just for us, but for our children and their children.

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