To many rational people in the world, the popularity of Trump makes little or no sense. Why would the “Land of the Free” be so enamored by a man who many believe promotes hate, allegedly encourages violence at his own rallies, offering to pay legal fees for people who attack protesters.
who stand against him and is most infamous for his desire to build a wall on the US/Mexican border to keep the Mexicans out. But popular he is, despite most strategists thinking he was a laughing stock only a few short months ago. The reason for this, I believe, is down to simple economics. By jumping on the bandwagon of bigotry and his slogan “Let’s make America great again“, he is appealing to middle class Americans who have not enjoyed the gains of the last couple of years, despite a bull market in US stocks that is now in its 7th year.
If you are very rich in the US today, your life has never been better, but look at the charts and you can see a US economy that has not benefited the masses. The one picture that best sums this up is the median family income chart, which shows that, despite record cut in interest rates and gargantuan monetary easing, income levels today are still 8% below their peak in 2007. Is it any surprise that disenfranchised voters feel that they are worse off today than they were eight years ago?
This is summed up well by the writer Paul Theroux, as he travelled around the US for his most recent book. He emphasises that 20% of southerners (black and white) are living below the poverty line and need help. “Manufacturing has been outsourced. Their jobs have been taken away, so there’s nothing for them to do. They sit crowded together in their shacks and watch a jumbly picture on a TV set. It’s very distressing.”
“You don’t see that in many other countries. The level of poverty, and the level of despair, too. Of people thinking, ‘Nothing’s ever going to happen to me. I will never go to college, I will never get healthcare’.”
Love him or hate him, Trump speaks a language the poor understand. It’s time for governments to start programs to get the middle class back on track again. The problems of the US are not just an American issue, they are playing out globally. Central banks need to stop making the rich even richer – monetary policy has had its day.
The Rise of Trumpanomics
