A (not so) rhetorical question. Would the financial elites, who earn big incomes from the stock market, manipulate it for biased political reasons?
The wheeler-dealer denizens of the financial industry make a profit whether the market goes up, or down. So it’s doubtful the “dramatic drop in the market”, which is supposedly an organic reaction to Trump’s new tariffs, actually cost them anything.
In fact, I suspect some of them profited handsomely by “shorting the market”. If you don’t know what that is, here is a brief explanation. The 2015 movie “The Big Short” relates the true story of how a few clever investors made fortunes from the 2007 market collapse.
If you doubt the elites would manipulate the market to make a profit, I have a unicorn for sale you can buy at a great price.
Making a profit by shorting the market, and trying to hurt President Trump politically at the same time, would be a bonus for members of an industry who contributed overwhelmingly to his opponents in the last two elections.
“Wall Street donated heavily in favor of Biden over Trump”
“Kamala Harris outspends Trump 3-to-1 as Wall Street floods her with cash”
Institutional investors in the market are positioned to intentionally crash it — to pressure Trump to lift the tariffs for the benefit of multi-national corporations. And they can profit from doing so by “shorting the market”. Those same institutions are heavily invested in the stock market – and the multi-nationals that benefit from no tariffs.
It wouldn’t be the first time ‘big finance’ crashed the market for their own, and their friends, benefit.
How could that be done? By “dumping” stocks to trigger panic selling, which then drives prices down, after they have “taken short positions”.
In 1767, the British Parliament imposed a tariff on goods imported into the American colonies (The Townshend Act). It effectively imposed tariffs on ALL trade, because an earlier series of laws by Parliament (The Navigation Acts) allowed only goods carried on English shipping to enter the colonies. The proceeds of the tariffs all went to the British government.
According to historian Joseph Ellis, in 1769 George Washington (then a plantation owner and member of the Virginia legislature) publicly declared the response to the tariff was simple: don’t buy imported goods. Washington wrote that by “starving their trade and manufacturers” Parliament would be compelled to repeal the tariffs.
Washington called for a colonial-wide boycott of imported goods not only to protest the tariff, but to also encourage colonial self-sufficiency. Short-term austerity, he argued, would ultimately improve the economic lives of the colonists.
He believed Parliament’s economic policies were intended to keep the colonists perpetually indebted to English financiers. The current financial system in the United States does the same thing.
In a previous column I’ve explained:
“We ‘commoners” — by which I mean those of us referred to as ‘the middle class that includes ‘blue collar workers’ (who used to be called the ‘working class’); those who own or work for small businesses; the rank and file of large corporation employees; and the great mass of government employees — are becoming ever more economically separated from (and subject to control by) the ‘elites’ through their ownership of the largest financial institutions, collectively referred to as the ‘finance industry’…
“The financial industry is designed to keep you in debt — and to get you to put whatever extra money you manage to save, not into a savings account, but rather into a form from which the industry can make a profit.”
President Trump is merely trying to level the playing field by using tariffs on imported foreign products to protect and promote American manufacturing. Don’t believe me? Well… (and I can’t believe I’m writing these words)… here’s a video of former Democratic Speaker of the House, Nancy Pelosi, to explain it.
The trade imbalance Pelosi referred to in 1996 pales in comparison to what it is now. Trump is trying to do something about it — as Pelosi unsuccessfully implored her colleagues to do thirty years ago.
More recently (2008) Senator Bernie Sanders said that having ‘free trade’ without tariffs destroyed America manufacturing jobs — because manufacturers would move their plants overseas to take advantage of cheaper labor costs.
Trump was elected by the middle class to do what Pelosi and Sanders complained of, but did nothing about — to bring those jobs back. That is the objective of the tariffs.
The economy of the United States was built on manufacturing. From Stacker.com:
The world’s population can be broadly categorized into two groups: those who live in industrialized nations and those who do not. The manufacturing revolution that evolved over more than two centuries is the force that created that divide. Manufacturing—the process of converting raw materials into usable goods—launched the United States as a superpower at the turn of the 20th century just as it launched China’s economy into the 21st. There is a direct correlation between a country’s ability to produce quality goods quickly and cheaply and its ability to wield power on the world stage.
Today, manufacturing comprises just over 10% of the United States’ GDP — which is less than what is derived from “financial” (which includes investment banking and the stock market), “insurance, real estate, rental and leasing” (20.7%); “professional and business services” (that includes bankers and stockbrokers) (13%)…
…and “government” (11.4%).
Yep… government, which produces nothing, accounts for a higher percentage of our GDP than does manufacturing. To save this country, we need to increase manufacturing and reduce government. Does that sound familiar?
DOGE, and tariffs on imported goods?
According to the usual suspects in the media, I’m supposed to be upset with what’s happening in the stock market. They tell me it’s all because of the “Trump tariffs”.
First, I don’t believe that. Second, I don’t care. Tariffs will help the us in the long run. Like George Washington, I’m willing to deal with short-term austerity to achieve long-term benefits.
While it’s true that many in the middle class are invested in the stock market through retirement plans, they can only contribute to those plans if they have a job that pays enough to leave some to sock away for retirement.
Distributions from my 401k retirement plan are a part of my current income. This ‘crash’ in the stock market has taken my retirement plan with it. I’ve got skin in the game.
But the market will go back up. It always does. In the 2007 crash, called the worse since the Great Depression, my plan lost over 1/3 of its value. A decade later as a result of the Trump economy it had recovered what was lost — and a lot more.
Opponents of Trump, and the media, also tell me the tariffs will lead to higher prices. Not if I don’t buy imported goods! Trump, like George Washington, understands that if you don’t want to pay tariff-inflated prices…
Buy American!