The Greenfield Report with Henry R. Greenfield

Episode 12- Trump's Economic Blink

• Henry R. Greenfield • Season 1 • Episode 12

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Donald Trump's sudden tariff reduction for most countries (while maintaining them on China) wasn't strategic policy, but a moment of panic that nearly triggered a 2008-style financial crisis. At stake was the bedrock of American economic power: the U.S. Treasury bond system and global faith in America's creditworthiness.

The Treasury bond market—representing trillions in federal debt—depends entirely on international confidence in America's stability. When Trump relentlessly attacks his own government institutions while implementing erratic economic policies, foreign investors (particularly China, holding enormous U.S. debt) grow nervous. As they pull investments, interest rates rise, dramatically increasing the cost of financing America's debt. This dangerous cycle explains why Trump and his Treasury Secretary "panicked" when markets began tumbling.

Economic warning signs are flashing: the dollar down 10% since Trump took office, stock markets plunging as tariffs hit 145% on Chinese goods, property markets destabilizing, and consumers seeing "tariff surcharges" on everyday purchases. While inflation remains temporarily contained—thanks to the strong economy Biden left behind and businesses stockpiling inventory—the structural damage to America's economic foundation grows daily. Trump has turned a $21 trillion economy that was attracting record foreign investment into a volatile, unpredictable environment where even his supporters admit they're "worried."

The Greenfield Report offers not just analysis but practical solutions for stabilizing America's economic future. Join us as we cut through political spin to reveal the economic reality behind the headlines, exploring how America can preserve its prosperity while navigating these turbulent waters.

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Speaker 1:

Welcome to the Greenfield Report with Henry R Greenfield, your gateway to understanding today's geopolitical landscape. With 50 years of experience across 10 countries, henry shares expert insights on world affairs, offering practical solutions and engaging guest perspectives. Dive into the Greenfield Report for lively discussions on the issues that matter.

Speaker 2:

Report for lively discussions on the issues that matter. This is Henry R Greenfield for the Greenfield Report, with a special commentary on what happened yesterday, when Trump blinked and reduced the tariffs not took them away, but reduced for most countries, but kept them on China. What I'd like to focus on is not actually what happened vis-a-vis China, which we all know is going to be a big problem for the average American consumer and, of course, while there was a bounce back on Wall Street, which everyone is lauding and Trump and all of his advisors are saying it was all part of a big plan, I want to make this commentary very clear for everybody to understand. What we had yesterday was very close to what happened in 2008, when George Bush said if there is not money put into the economy, this sucker is going to go down. What does that mean? At the end of the day, what the United States entire economy is propped up with is because of US Treasury bonds. This is based on the so-called full faith and credit of the United States federal government.

Speaker 2:

Now, what has happened in the two months since Trump has been in office? Trump has relentlessly and I want to say relentlessly attacked his own federal government. He has made the entire world freak out about. Is the United States going to be a reliable partner in the future? It's not just a matter of taking away some aid for starving children in Africa, or Musk in his constant saying about the West's big problem is having empathy. None of these things are really the critical area. What the critical area is that if people do not trust the United States, especially if it's like China and, as JD Vance called them, the so-called peasants of China those peasants have literally trillions and trillions of dollars invested in US treasuries. They are beginning to pull them out. It's not a joke. When they pull them out, what happens, mr and Mrs America? The price of those bonds go up, not the price. The interest rate goes up because the actual value goes down. Remember that inverse relationship between the price of the bonds and the actual interest rate. What that means is it's going to cost more money to finance the US debt. Let's flip this forward to what this is all about.

Speaker 2:

Of course, yesterday Trump panicked because that bond market was shaking and he has this guy called Besant who is his so-called treasury secretary, a hedge fund manager who's done nothing but making money ripping people off with hedge funds. Even he panicked yesterday. So everybody was panicking. They were all running around, as Trump said later. Well, people got yippy. Well, what panicking? They were all running around, as Trump said later. Well, people got yippy. Well, what was the yippy really all about? What they got yippy about was is this thing going to be a full run on the US economy? Was it going to be not just the stock market, which a lot of people can handle in terms of, like it, dropping a bit, at least globally?

Speaker 2:

But the US government cannot handle and I need to put this very clearly. The US government cannot handle higher interest rates for the US debt, as we spoke about in several episodes of the Greenfield Report, in particular episode nine, where we talked about fixing the US debt and deficit. There are ways to actually fix that and there are ways to get that US budget into the surplus without doing any of the stuff that Trump is doing Now. If Trump wants to play around with tariffs, it's one thing, but to go up down freaking out the market, driving that market down and then losing the faith in the US federal government because he's blowing up the US federal government Now. So think about that all in totality. What does that mean what? If you are somebody who's investing in the United States? Do not forget that under Biden, actually what's called the Foreign Direct Investment FDI was up all four years during the Biden time, and on top of that it was much higher than what was going into China. So Biden had the economy on a roll.

Speaker 2:

You can agree or disagree, but what you cannot disagree with is the panic that is about to happen, or was about to happen yesterday, when Trump put a pause on the tariffs. All means is as George Bush Sr once said about Ronald Reagan with voodoo economics you can only play around so long before the markets begin to panic. Now a lot of people are not very happy with the way the global economy has gone. I'm not going to debate that one way or the other. I'm only going to say that if you have the economy that the United States has, which has grown from 21 trillion under Biden to over 30 trillion in four short years, if you have an economy like that and you want to protect that economy and you want to remain number one, you do not do what Trump is doing. That is the point.

Speaker 2:

The point here is, while we also talked about this in episode three, does Trump have a plan? Yes, trump has a plan, but Trump is not actually working his own plan. If he has a plan on tariffs, well then do it. If he has a plan on trying to reshore manufacturing to America, well then do it. But he's not doing that. What he's doing is just creating chaos Chaos in the federal government, chaos in people's lives, chaos in their 401ks dropping and yesterday was about to have chaos in the bond market, which is US Treasuries, and once again, I'm going to say the only way to finance the US debt. Because what else is Trump doing? He's going to keep his Trump tax cuts and he wants more tax cuts Again.

Speaker 2:

As we outlined in Episode 9 of the Greenfield Report, this is economic suicide. So I'm going to conclude on this special report today by saying this what Trump is doing is he is messing with everyone's lives, not just in the US, but also outside. However, the chickens may be coming home to roost, and he knew that yesterday and he had to put a stop to it. Will this actually change Trump's behavior? Of course not. Trump is going to do what Trump is going to do.

Speaker 2:

The key here is that we all need to get the message out to the economic folks, who are all sitting there lying for Trump or on the other side all panicking. No one should panic and no one should lie. What people need to do is to start being realistic and also enact some of those changes that we have put in to Episode 9 on saving the US economy as well as saving the US health care system. So in my view, and what I am trying to do here for all of us, is to keep this real as we move along and not allow Trump or any of his lying sycophants to be out there every day, every hour, lying as he changes his mind every 10 minutes, that we cannot allow this to keep going on without pushing back. And this does not mean it's about Bernie Sanders talking about. Trump is the king. Bernie's a nice old guy, but Bernie is not offering any solutions. Neither is AOC, neither is anybody else in the Democratic Party. Why, I have no idea, but we are offering solutions here.

Speaker 2:

On the Greenfield Report this is Henry R Greenfield, with an additional commentary on yesterday's discussion with the bond market and how that has hurt the United States and made the entire economic system wobbly. Let's look at a few factors that have happened in the last 24 hours. First of all, the US stock market is down again over 1,000 points as Trump put the China tariffs up to 145%, while China retaliated with over 100% tariffs on US goods. Secondly, the US dollar continues to go down. The US dollar has lost 10% since Donald Trump came into office and if you think about that, that's an additional cost to Americans buying everything from overseas, which are in the trillions. The US property market is now wobbly. Unemployment is starting to go up. The middle class is feeling the pinch. When you go on Amazon or any other website, you're seeing a tariff surcharge.

Speaker 2:

So when the Trump team says, well, look, inflation is still down, of course it is still down. Why is that? Because Biden left it in a very good position to start with and people pre-bought from Amazon to China in the billions and billions of dollars. So inventories are up. In fact, actually, these inventories should hold up for some period of time. Does that mean that Trump is winning? Of course not. What it means is is that the US when they run out?

Speaker 2:

And if Trump does not change? And he says he won't change? But of course, do we know if Trump will actually ever hold the line on anything? We're not sure, but the US economy right now is again wobbling. One final note to add here is what does this mean for the Americans and the American consumer when you add up all of these areas? The weakening US dollar, a property market which is not improving, imports, of course, are now going to be completely shut down from China, except for the bare minimum for some time to come, and China now feels that they are on the ascendancy in terms of this tariff war. All in all, if you looked at Trump today, even Trump is worried. Trump says he is worried, and he should be worried, as he has taken the US economy into a dangerous zone with no way out. This is Henry R Greenfield, concluding with our second part of this commentary, beginning with the bond market, but also now the continuing developments with Donald Trump that are making the US economy wobble, and who knows what is going to happen in the future.

Speaker 1:

Thank you for joining us on the Greenfield Report with Henry R Greenfield. We hope today's insights into the ever-shifting geopolitical landscape have sparked your curiosity and broadened your perspective. Stay connected with us for more in-depth discussions and expert solutions. Until next time, keep exploring the world beyond the headlines.