We Have Seen This Play Before

The American economy is based on consumerism. Americans buy things and the economy continues. It is a rather delicate balance that can be manipulated for political purposes. We are currently watching an attempt to manipulate that economy for political purposes–President Trump’s strongest positive for re-election is the impact his administration has had on the economy. If the Democrats can ruin the economy, they might have a chance to win the presidency in 2020. After watching their behavior for the past two years, I am not surprised by any tactic they might use. So how are the Democrats and their friends in the media attempting to impact the economy?

The Associated Press reported today:

The threat of a recession doesn’t seem so remote anymore for investors in financial markets.

The yield on the closely watched 10-year Treasury fell so low Wednesday that, for the first time since 2007, it briefly crossed a threshold that has correctly predicted many past recessions. Weak economic data from Germany and China added to recent signals of a global slowdown.

That spooked investors, who responded by dumping stocks, sending the Dow Jones Industrial Average into an 800-point skid, its biggest drop of the year. The S&P 500 index dropped nearly 3% as the market erased all of its gains from a rally the day before. Tech stocks and banks led the broad sell-off. Retailers came under especially heavy selling pressure after Macy’s issued a dismal earnings report and cut its full-year forecast.

The article goes on to list things that the writer is convinced are evidence of an imminent recession. But let’s step back a minute. The American economy is cyclical. We have been in a growth spike for the past two years due to tax cuts and deregulation. Those factors are not changing. Unemployment is at historic lows. There are more jobs than workers. There is no evidence of that changing. We might be due for a correction in the stock market, but it’s not time to panic.

This tactic has been used before. In 1990, President George H.W. Bush agreed to a tax bill with the Democrats. The agreement broke his pledge of ‘no new taxes’, but it also did something else. The tax increase on luxury items worked its way through the economy causing a recession. Workers in industries making ‘luxury items’ lost their jobs are sales of these items decreased due to the tax increases. As those workers lost their jobs, they stopped going out to dinner, traveling, and doing the things that people do when economic times are good. People in service industries and tourism lost their jobs. The impact trickled through the economy, and we were in a recession. We were coming out of the recession during the campaign, but the media failed to note that.

In the coming days, watch for a media narrative of ‘the sky is falling’. That narrative will be in play for the next year in order to convince American voters to vote Democrat.

The only way to crash this economy is to panic the public. Large investors in the market with a political agenda can begin that process. The media can fan the flames.

The fundamentals of the American economy are strong. If Americans refuse to play along with a media-created financial panic, all will be well.