The front page of a recent Sun Journal called attention to an article on page A5 explaining "Why Trump has little influence on stocks." I need to rebut that silly idea. President Trump can take almost 100 percent of the credit for the performance of the markets since election night. The recent market volatility created absolutely nothing for which he should apologize. Please let me explain.
On election night Paul Krugman, a New York Times economic expert, said the stock market would never recover from Trump's election. That was the popular opinion of most liberal thinkers. The Dow Jones futures that night showed the market would be down 800 points at the open due to his pessimistic insight. After all, he is a Nobel Prize winning economist. However, the markets failed to collapse as Krugman predicted and instead have soared to historic highs for the past 14 months. So, why shouldn't the President take credit?
But, shouldn't he also be blamed for the huge drop last week? Of course not. He doesn't control the stock market, he influences it! So, the article is a complete misdirection. His positive influence is the key. His policies, the de-regulation, and the tax cuts are what have influenced the markets, so he must take credit where credit is due. But, the Federal Reserve and the folks who created our huge National Debt need to hold the blame for the recent volatility.
Let's look at some numbers. In 2017 the debt reached $20 Trillion. President Trump did not create that debt, he is attempting to reduce it through major tax cuts intended to stimulate our economy. That, by the way, is part of the euphoria that drove the markets up. But, the government accounting office shows the interest paid on that debt was $240.7 Billion. Simple math reveals the average interest rate paid in 2017 was 1.2 percent. Now, some of the debt was in 30-year bonds that paid 3 percent, some in 10-year at 2.4 percent, and even more in 5-year at 1.8 percent. But, if the average rate was just 1.2 percent, then a huge amount of the debt is in shorter term notes that pay 1% or less. That is why the Federal Reserve is to be blamed. If they raise rates substantially, they will undo everything that has been gained in the past year.
So, please let President Trump bloviate about the market. And, do not blame him if the market gyrates. Join me in praying the economy continues to improve and that the markets respond positively. Our only hope is that tax cuts and de-regulation make the nation's GDP and tax receipts rise at a faster rate than the politicians can borrow money to fund deficit spending.
If the article in the SJ is correct and our President is not influencing the markets we are in for a world of hurt. You better hope he is influencing the markets in a good way and keeps right on doing it. Last week it was reported that $8 Trillion of market capitalization has been created since the election. That represents a lot of taxable income for our government. Isn't prosperity a good thing? It seems like most of the media is completely ignoring what is actually happening. And, they are totally out of touch if they believe the President is not influencing the market.
Jim Schout, New Bern