Anxiety over the economy is soaring. It is higher now than any time since the Great Recession. Economic uncertainty means that the economy is in danger of entering into a recession or worse. Supply chains and trade agreements have been jeopardized by Trump’s global economic war — Does that make it a world war? Is this World War III: The Economic Boogaloo?

Even though nations and companies are “negotiating” — <cough> bribing <cough> — with Trump for tariff relief, no one can be certain of what is happening right now, much less in the near future. One day the Penguins of McDonald Island are paying a 10% tariff on all of their exports, the next it is 20%, and the third, well, just because they’re penguins doesn’t mean they don’t have to pay their fair share, right? They don’t call it moistening Trump’s beak for nothing.

Everyone and everything is in an uproar, and then Trump announces a ninety day delay in implementing at least some tariffs. Before you let the flop sweat dry in your pits, you should know that much damage to the world’s economy has already been done. And, Trump has inflicted such damage to our trade partnerships and standing in the world that it will be difficult to repair.

The Chaos and Confusion of Trump’s Tariffs

Trump has always surrounded himself with chaos and confusion. He believes that behaving erratically and unpredictably gives him an advantage. If no one knows what he’s going to do next, then everyone is left hanging on his every word and cannot be prepared for what he’ll be doing. He thinks he’s being crazy like a fox. In reality, he’s just causing the US to be isolated from its allies and ceding economic and diplomatic territory to its enemies like China and Russia.

Like all of Trump’s other beliefs, this one is wrong.

Why does lying work in politics?
Seeing is Believing

Predictability is necessary for human societies to exist and thrive. The larger the society, the more predictable things need to be, especially where the economy is concerned. When things are predictable, they run much more smoothly and successfully.

Predictability walks hand in hand with believability in that you have to believe that something will happen in the future. If you can confidently predict a future event, you will trust (believe) that it will happen, and then act accordingly.

Belief and the Economy

Here’s how it all works according to historian, Yuval Noah Harari:

Money, a Cognitive Construct

Tariffs Begin Impeachment
  • Money is a cognitive construct that systematically represents the value of goods and services to facilitate trade.
  • It allows us to easily and quickly compare the value of disparate goods and services.
  • It allows us to store our wealth conveniently — as long as it the hard-drive with all of our cryptocurrency stored on it doesn’t go out in the garbage, right?
  • Along with everything else, it has made the jump to computers with 90% of money — more than $50 trillion — only existing on computers somewhere in the world.
  • As long as everyone wants money, then your money has value. There’s a reason the Cambodian rial is impossible to exchange outside of Cambodia, no body wants it!

The Belief of Money

Is the Republican end strategy to default on US debt to destroy the economy and create a US oligarchy?
The Republican Party Means to Destroy the World Economy to Create a US Oligarchic Dystopia

The economy only works because we believe in the future. Here’s how that works:

  • I work five days a week, four and a half weeks a month to get paid at the end of the month. I believe I will get paid.
  • The bank gives me my mortgage — half a million euros — because they believe I will give them my monthly payment every month for the next twenty years!
  • I take the mortgage — did I mention it was half a million euros? — because I believe I will have a job that will pay me enough money every month to pay my mortgage.
  • The grocery store buys a ton of groceries to stock their shelves with because they believe they will be sold at a profit before they rot.
  • The farmer plants their field with a crop and tends it all season long believing that it will be sold to a food company.
  • The bank lends the grocery store and farmer money to invest in their stores and farms believing that they will make the sales that will allow the loans to be paid back.

We all see how this works. You have to believe that the future will pay out for your hard work today. If I thought my employer was going bankrupt — and I’ve personally worked at an establishment that went bankrupt and we all knew it was coming — you think twice and even three times about going in to work. The bank can call the loan and take possession of your home if you forfeit your mortgage.

If we stop believing that goods and services will be bought, we stop providing the goods and services. We start looking for other ways to provide for our daily needs. We need to trust that the economy will keep working.

Trump’s Tariffs and Believing in the Future

A man bending over the forceful stream exiting a fire hydrant attempting to take a drink from it.
The Firehose of Falsehood: Drowning Trust and Destroying the Foundation of Our Democracy, part 1

Trump’s tariffs are making all of that belief in the future difficult. When the metrics that are used to measure economic uncertainty spike, economists start worrying about recession. Right now, we’re seeing the greatest jump in uncertainty in like ever. And economic uncertainty is rivaling that of the pandemic.

With this kind of uncertainty, everyone gets conservative: businesses slow down on the amount they invest and the number of people they hire. Consumers delay big expenditures, especially the ones requiring credit.

Firehose of Falsehood: How Consistently Departing from Reality Breaks Trust and Truth, part 2

Did you know that while the stock market is crashing and weaving more than a drunken frat bro in rush week, no one is buying US bonds? Usually when the stock market is in turmoil, bond sales go up, but no one wants a US bond. That’s crazy. Bonds are what fund our government deficit.

Is Trump going to follow through with his tariffs? Are individual countries and companies going to be able to bribe their way to exceptions? Does it matter? Who owns most of the US debt? China, and China is dumping its US bonds. Who is going to be foolish enough to buy them?

Our closest trade partners and allies are actively seeking new trading partners and allies to insulate themselves from the damage this erratic and irrational person is can cause them. They are abandoning us like rats on a sinking ship because they no longer believe — tariffs today, tariffs removed tomorrow, tariffs returned the next day — that the US is a good economic partner. They will vote with their feet and take their business elsewhere. And who could really blame them?

Image Attribution

This image was found on History.com using a DuckDuckGo Creative Commons search.