Image by Michael Vadon
When it comes to President Trump’s big tax plan, Democrats are worried — not that it will fail but that it will succeed, igniting the U.S. economy and providing so much economic growth that all those low-information voters out there will see the leftist scare talk of the last 25 years has been complete rubbish.
Those fears are shared in Moscow, Tehran, Pyongyang and Beijing. America’s adversaries are worried that the U.S. economy, chained down by Obama, Clinton and Bush globalists for the last several decades, will actually make America great again under Mr. Trump. I’m talking “Ronald Reagan great” again. For just as economic weakness begets military weakness, economic strength produces military dominance.
The Chinese understand this concept very well. They have “managed” their economy for two decades to create better living conditions for their 1 billion-plus population. This has created a vast new middle and upper class of Chinese who are getting used to the good life. The Chinese military is gaining on America in terms of technological expertise and capability. The ruling Communist Party is buying up raw materials and building infrastructure for influence all over the developing world, and now even in Eastern Europe.
The problem with the Chinese miracle is that it is built on a big mountain of debt and misallocated capital, which isn’t sustainable. An economy cannot be “managed” from the top down. The Soviet Union proved that. The difference between the USSR and the People’s Republic of China is that Beijing has just been better at it. Chinese officials have provided just enough capitalism to the lower rungs of society to make the experiment last a little longer.
The dark secret is that the debt bubble in China, which has fueled the growth of “ghost cities” across the Middle Kingdom, is bigger than the one that built up before the 2008 crisis in America. It is common to hear stories of the same collateral used many different times for different loans, or collateral that doesn’t exist at all, or collateral that amounts to claims on other projects that are fraudulently listed as “assets.” In short, it’s a huge Ponzi scheme, one that the Chinese government has to keep going, lest it all come crashing down.
This is why the Chinese government consistently buys equities or other securities in order to support the market, to keep the charade of wealth going. The minute they allow it to stop, stop building the ghosts cities, and let workers be idle, the social unrest will be too much for the Chinese government to handle. They have let the capitalist genie out of the bottle and there is no way to put it back.
The same thing is going on in Russia, albeit on a smaller scale. The oligarchic economy that President Vladimir Putin has allowed to flourish cannot last forever either. Mr. Putin realizes as much and just this week spoke about the need to build a new economy for Russia for the future, one based on high tech, finance and cryptocurrencies.
The hydrocarbon-based economic model is dead. America will be the world’s energy superpower going forward. President Trump will see to that. Like the Chinese, the Russian population has had a taste of the good life in recent years. And although Russians are likely suffer for the Motherland much longer than most, the good times are over so long as this economic model stays in place. Innovation cannot happen, and therefore real prosperity will never take root.
Mr. Trump foresaw all of this of course, and he just shepherded through a bill that will see American growth take off like a Saturn V rocket. The American economy is vast, wide and deep; when unchained, there is no force on earth like it. We are about to see this real miracle in action.
Yes, the Democrats are the proverbial deer in the headlights. Our adversaries are as well.
Sit back and enjoy the ride of the next two American decades. The broad prosperity of the 1980s and a foreign policy of peace through strength are back — this time under Donald Trump.
Originally posted by The Washington Times