Diary of a Money Manager, ep. 46
The Trump T(i)rade
1.20.2025
Today I viewed the inauguration from the once popular ambition desert known as Applebee’s. Which seemed totally inappropriate given the loftiness of the incoming president’s speech (“The Golden Age of America begins right now.” sayeth he); though less so when compared to its substance.
As I noted yesterday, the US debt ceiling will be breached tomorrow. The possibility of default, which would be catastrophic for interest rates and therefore asset prices, has become a progressively more fearsome event as the deficit has ballooned and interest payments have soared even faster. But there was no mention of abandoning our national delusion that we can borrow our way out of our debts in the President’s Speech. And the words “shared” or “sacrifice” went unspoken. According to the President, awful, corrupt people are responsible for our ills and they will finally be dealt with (“You’re fired!) returning power to the people who elected them in the first place. Or something.
Now I do sympathize with the awful people bit. Indeed, I was looking forward to some meaty “Daddy’s Home” moments. For example, I wanted to be admonished that we Americans need to stop suing one another every time something unpleasant happens to us. And scolded hat we must take some ownership for our health, say, and for falling behind in what has become a very competitive world, because the last American car I drove looked like it was made out of giant Legos and drove like it was made out of giant Legos. Also, I wanted to be told that we spend too much time on TikTok, not that TikTok must be saved(!)
Instead, the President was all empathetic, like one of those billboard attorneys. We have suffered and he will make everyone else pay, a lot! Except that countries are not insurance companies. They do not have infinite wealth; they don’t even have line items in their budgets for aggrieved customers.
Here is some math. Last year the trade deficit fell to $773 billion, which is about one-third of the budget deficit. In other words, the United States would have to assess a 300% tariff on our net imports, to be paid entirely by the exporters, in order to make up the difference between what we spend and make in a single year. But thhat understates the challenge, because many of those exporters are American companies, like Apple and Ford.
As it turns out, Cheatin’ China is kind of a paper tiger in this respect. The Middle Kingdom’s total industrial profits last year were only around $900 billion—of which about $150 billion came from trade with the United States. Therefore, even if the Chinese were willing to sacrifice all of their American profits to help us balance our budget, which they’re not, that largesse would only contribute about 7% of what we need to balance our books.
So (spoiler alert!) no one is going to dig America out of the hole that we Americans have created over the past half-century or so. This means that the debt ceiling—which, unlike China, Trump did not mention—must be raised or obliterated (and soon!) as we borrow (and roll over) trillions of bonds, which will keep prices and interest rates stubbornly high, because of simple supply and demand. (See: mortgage rates, consumer loans, credit cards, T-Bills, etc.). This, inversely, will depress asset prices as soon as the animal spirits vanish, which they inevitably will, kind of like Vivek Ramaswamy disappearing from DOGE. Animals have short attention spans.
As for the bulk of Trump’s speech, people will make up their own minds as to whether it was inspired or bombastic or somewhere in between. What I think doesn’t matter in the least, though I will say it was nice to hear the word “corrupt” said out loud, “rigged” was always too mild a word, in my opinion. But no matter how good its intentions and how sincere Trump’s grievances, the Speech was doomed by Trump’s own contextualizing. Because two days earlier, rappers and others in the “get rich quick or die trying” cohort had gathered to celebrate the first Crypto President with a “Crypto Ball,” which sounds a bit like “Predator’s Ball” but with weed instead of cocaine maybe?
The next day Trump crapped in their digital cereal by selling a brand new invisible coin backed by WINNING, which is not a joke, and less than 24 hours later, his wife did the same. Which means that while Trump was waxing poetic about the new Golden Age and building more cars in America, the media was breathlessly reporting on the billions he’d created from a single social media post. Which may explain why TikTok had to be saved, I don’t know, I’m not that cynical yet, just dispirited and repulsed.
Because if the new Golden Age means that factory workers pay taxes on their wages but TikTokkers and OnlyFans “content” creators and their friends get to keep 100% of their “tips” well, good luck finding factory workers or any workers at all.
Speaking of TikTok, Trump reportedly wants to visit China very soon, maybe for Valentine’s Day. Of Xi, Trump wrote over the weekend:: “It is my expectation that we will solve many problems together, and starting immediately, including balancing trade…President Xi and I will do everything possible to make the World more peaceful and safe.”
Like the vast majority of Americans, I would like a more peaceful and safe world. I want the President and his administrators to find those solutions, and maybe even a little sneak preview is in order before then? Then let’s have a real Golden Age this time rather than a Gilded One that ends in a stock market calamity and a Great Depression, say. Godspeed to China, Mr. President Dealmaker, I’m happy to pay for your fuel and security but you won’t find $2 trillion dollar stuffed into a red envelope there.
Snakes, maybe.
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