“All I do is run the country — well.”
—Donald Trump
MAGA forces are up against a brick wall of unrelenting reality. No free lunches. No easy fixes. And no non-problem that can’t be turned into a real problem with the forceful application of a MAGA solution.
We remind ourselves that the empire is slipping…and has been for the last 25 years. Donald Trump was elected to try to turn it around.
If he were to succeed, it would change the Primary Trend, which would cause us to change our long-term investment outlook. So, as if gleaning through a dumpster for a half-eaten sandwich, we keep studying the Trump agenda, looking for something we missed.
So far, nary a crust.
Donald Trump’s pensée is win-lose xenophobia; there are problems everywhere…and every one of them is caused by someone else. In order to win, we need to make him lose.
Without so many immigrants in the labor pool, for example, wages for US citizens would rise. And without so many imports, made by foreigners, consumers would Buy American. Then, sales, profits, and jobs — furnished by US-based companies — would increase.
Such a simple problem. So ready for a solution.
What to do? Just round them up — the ‘illegals.’ Send in the ICE…all suited out in battle gear. Deport those lawbreaking SOBs. And ban immigration from the places we don’t like.
Trump plans to deport ten million ‘illegals.’ He’s got $70 billion in the Big, Beautiful Budget Abomination (BBBA) set aside for that purpose.
Hold on…here’s brick number one. ABC with more math:
A new report from the American Immigration Council, an immigration rights research and policy firm, estimates that to deport even one million undocumented immigrants a year would cost over $88 billion dollars annually, for a total of $967.9 billion over more than ten years.
That’s nearly $100,000 for each deportee…and a trillion dollars to be added to US debt. Is that a good investment? Fortune:
According to a Deutsche Bank analysis of data from U.S. Customs and Border Patrol, the number of encounters at the Southwest border has plunged to 12,000 people per month since Trump’s inauguration from an average of 200,000 during the year-and-a-half period between January 2022 and June 2024.
Remember, the pool of homegrown labor is stagnant. There has been no increase in the number of jobs going to native born workers in the last five years. Without the foreigners, the US economy would scarcely have grown at all.
Remember too that the ‘we think, they sweat’ vanity took root in US soil more than twenty years ago. Now, it covers the ground. So, who among our ‘thinkers’ will do the work that these ten million sweaty immigrants were doing? Maybe, someone who just got a degree in DEI counseling from a local university? Or someone who just got out of jail and decided to go straight?
American consumers will have to pay to deport someone and then pay more for someone else to do what he had been doing.
Not only that. The Democrats’ ‘Joint Economic Committee’ tried to tally the costs. Its conclusions:
Depending on how many immigrants are deported, these mass deportations would:
- Reduce real gross domestic product (GDP) by as much as 7.4% by 2028
- Cause labor shortages in key industries, removing 225,000 workers in agriculture and 1.5 million workers in construction
- Push prices up to 9.1% higher by 2028, and
- Cost 44,000 U.S.-born workers their jobs for every half a million immigrants who are removed from the labor force.
What are those estimates worth? Probably not much. But if you stop foreigners from depressing wages in the US, they’ll depress wages back at home. And then…brick number two:
As prices for American-made products go up, foreign made products become more attractive! In other words, by getting rid of millions of low-wage workers in the US, lower-wage economies overseas will have a larger price advantage…and Americans actually have an incentive to NOT Buy American.
Those damned foreigners! Ripping us off again. As of last year, about $25 trillion worth of merchandise was crossing borders every twelve months…at tariff charges averaging below 3%. But Team Trump sees trade deficits heading toward $1 trillion per year; they’re ‘ripping us off,’ they say
The solution is obvious — impose tariffs… trade barriers… right? Importers can ‘eat’ the extra charges, right? Maybe for a little while. But soon, sellers will restore their margins by raising prices. Then, the ‘tariff tax’ will be included in the prices that US consumers pay. And with less purchasing power, Americans will be poorer.
But wait, here’s another brick in the wall: Reducing trade deficits also means reducing the number of US dollars that end up in foreign hands. Those dollars are typically recycled into US bonds. That’s the way the fake money model works. The US ‘prints’ the money. Americans borrow it. They buy foreign-made products (often better or cheaper than their Made-in-America competitors). And then the overseas dollars are used to buy US debt.
It was always a scam…but it helped fund US deficits, keep interest rates low and US asset prices high.
And now, the Trump troupe makes it even scammier.
We’ll see where it leads. Stay tuned.
Regards,
 |
Bill Bonner,
For The Daily Reckoning Australia
