I have been wondering about the future of the United States for quite some time now, more so after the election of President Trump. While many see a strong possibility of economic growth in the U.S, I see more than just that. I see potential for growth in the immediate future, however, I also see potential for the long term demise of the U.S, that is, if my expectations of Trump and his advisors are proven correct.
Trump being President provides an obvious conflict of interest as he is now in a position to pursue policies that inflate real estate prices, and may well do so. His advisors too, have rather obvious vested interests, as shown by their net worths and business interests. I fear that Yellen’s attempt to raise rates shall be stopped dead in it’s tracks soon, given the vested interests in favour of lower rates. This, combined with a potential for President Trump to dramatically increase the borrowings of the U.S governments(borrowing seems to be among his only talents, along with a knowledge of bankruptcy law) will worsen the U.S’s debt problems. Coupled with the kind of inflationary expenditure it is expected that Trump will undertake, it seems that there will be growth in the short term, but the U.S’s long term potential will be jeopardised with the potential of a real estate bubble, even higher wealth inequality (given the biases of Trump and his advisors,this seems a reasonable assumption), and an erosion of the creditworthiness of U.S debt. As a result, I feel that in the years to come, the U.S dollar will depreciate heavily, even though the trend in the current time frame is appreciation. Treasury bond yields seem set to spike further in the long run, as U.S’s creditworthiness erodes. It should be noted that this is a long term view, an will take time to pan out.