Obamanomics Is Dead and Trump Killed It

- February 7th, 2018
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The world has become transfixed by the historic ups-and-downs of the stock market over the past few days. The schizophrenic nature of the markets is garnering the same kind of notice one might expect from a sports commentator describing a nailbiter of a basketball game in the final, two-minute stretch. Of course, most of these so-called experts simply do not understand how the market works.

More important, many of the “objective” analysts talking about the “Trump crash” are, in fact, Democratic partisans who hope the market will crash—just as Paul Krugman predicted!—so their party might once again reassume power, as it did during the Great Depression and again during the Great Recession. Bad times for America are good times for Democrats!

Think about it: since 2010, the Democratic Party has been crushed politically. The bulk of the DNC’s domestic agenda (i.e., open borders, so-called “free” trade, and Obamacare) have proven mostly unpopular with voters and most of their foreign policies have been exposed as unmitigated disasters. The fact is, the Democrats simply cannot win an honest election under ordinary conditions. So, the Left needs the political “miracle” of chaos in American life. They need something to fundamentally alter the political calculus of the majority of American voters.  

Given recent events in the stock market, it is clear that the Democrats are counting on a severe (and prolonged) economic downturn (in the same way that many were praying for an American military defeat in Iraq). The Democrats are effectively rooting against America (and you) so that they can return to power, and continue enacting policies that harm America (and you). The great former president, Calvin Coolidge, once quipped, “the chief business of America is business.” Whenever the American economy implodes, the American people understandably are drawn to demand fundamental political change to get things back on track.

During the Great Depression, most Americans blamed Herbert Hoover and the Republicans for that economic collapse (since they were the party in power at the time that it occurred). Americans then voted for a man who turned out to be a radical statist named Franklin Delano Roosevelt, though he couched his statism in language that made it seem consistent with American ideas. In 2008, when the markets tanked again during the Great Recession (coupled with the unpopularity of the Iraq War), the American people blamed former President George W. Bush and the GOP for these twin disasters, and elected the quasi-socialist, Barack Obama, to the presidency.

In most cases, the Democrats only do well when America is in dire straits. And, that’d be all right, if the Democrats were the turnaround party that they claim to be. Yet, when elected, the Democrats rarely change things for the better. Instead, they simply exploit the opportunity to further expand the administrative state, enrich their fellow partisans, and further weaken the country. Keep in mind that FDR’s treasury secretary, Henry Morgenthau, Jr., testified to Congress in 1939 that FDR’s economic policies had done little to reverse the Great Depression. Today, many economists believe that FDR’s programs prolonged the crisis.

Looking at what’s happening presently in the stock market, we see a similar thing happening. During the Obama years, we were told by former President Obama to accept the “new normal” of barely two percent growth rates and chronically high unemployment. For the entirety of the Obama Administration, the economy sputtered along with anemic growth such that the Federal Reserve had to artificially induce economic activity through loose monetary policy. The Fed kept interest rates low, allowed for unmanageable levels of borrowing, and kept printing money. This accounts for how the stock market soared during the Obama years in spite of wages being low, unemployment being high, and overall growth lagging. The eight years of Obamanomics benefited a handful of investors and harmed everyone else.

Since Donald Trump’s election, however, the White House has spearheaded an historic reduction in onerous government regulations; the markets reacted to Trump’s election with great exuberance and anticipation; unemployment has reached historic lows; a massive tax cut has spurred the expansion of businesses (and therefore opportunity unlike anything since the Reagan years), and wages have gone up to their highest point in 17 years. Whenever a White House engages in a strong fiscal policy of the sort that the Trump Administration has implemented, the Fed has to step in and raise interest rates.


Because the Fed is signaling that the fundamentals of the economy are very strong, and there is no longer any need to continue irresponsibly printing money or allowing for unfettered borrowing. If the Fed doesn’t step in, inflation could run rampant, and the country would be in an entirely new set of economic crises. The markets are understandably reacting to the Fed’s announcement that they will begin (modestly) raising interest rates around March of this year.

Unlike 1929 or 2007, the economy is strengthening. There is no recession on the horizon (knock on wood). The fundamentals are strong (and getting stronger) under President Trump. After years of being distorted by Obamanomics, it’s going to take the market a little bit of time before it can recognize how a strong American economy benefits everyone. What’s more, a stable market (even if it doesn’t again reach the stratospheric highs that it did in the last few months), can contribute to making the American economy the most competitive in the world again (and it will share the benefits with more people, as opposed to just a handful of well-connected investors).

The Democrats are grasping at straws and hoping for you to suffer through another economic collapse just so they can get elected. Remember that going into the voting booth in November.

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