Donald Trump carries a remarkable similarity to an evil in action movie, especially in the way he loves to show off his plan to dominate the world. Based on the screaming of social media, his plan begins to seize Canada, Greenland and Panama, while it may reach a new birth of imperialism in the nineteenth century.
This strikes many of us as ridiculous. However, even if his expansion talk is just a sensation, it is difficult to miss the arrogance behind it. Mr. Trump appears to believe that the United States has power and wealth to do what it wants.
Is this correct? There is a good way to start dealing with the tendencies of Mr. Trump in compassionate bonds is by investigating some of the weakest of the American economy. If there is nothing else, this can help us determine the seriousness of his threats.
Crossing alert: It turns out that the American economic tyrant may not be just scary as you think. In fact, in some respects, it looks almost fragile.
Its most obvious weakness is that Americans refuse to pay taxes that come anywhere near covering the value of the benefits they receive from the government. As a result, the joint deficit in federal governments and local governments in the United States will lead 7 percent of economic production this year, according to the projections of international cash funds.
This is an amazing big deficit of a country that is not in war or destroyed by a natural catastrophe. The gap in the American budget is largely the largest group of seven advanced economies. It places dangerous limits on Mr. Trump's ambitions because the conquests are expensive things. As well as collective deportation. As well as the tax cuts that the new president promised his followers.
The markets are already growing. Since September, the return on US Treasury bonds has jumped for a period of approximately 10 years old to about 4.7 percent. These increasing returns enhance the cost of rapidly growing national debt, which may also help curb the concepts of Mr. Trump.
However, the budget deficit and high interest rates are only the beginning of Mr. Trump's problems. There is also another deficit – this is in the country's running account.
The current account measures country transactions with the rest of the world. It considers the value of all the goods and services that the country sells for the rest of the world and then offers the value of all the goods and services that you buy from the rest of the world. (It is also adjusted on things like profits, interest payments and transfers, but trade is to a large extent the largest part of the current account.)
The American current account balance was negative for years and increased more. To put it in simple English, the United States consumes more than produced.
More more. In the third quarter of 2024, the US current account deficit increased to 4.2 percent of the country's GDP (GDP), the largest deficit (regardless of the structure of the epidemic era) since 2006.
Just to be clear: this does not spell an immediate disaster. The United States may not bear its own weight, but it is still a large and rich country and foreigners are eager to sell its goods and services in exchange for Greenbacks and other US financial assets.
However, the growing foreign demand in the American economy is great. According to Thomas Ryan, an expert in North America at Capital Economics, foreigners now have net calls for the United States of 80 percent of the US GDP, up from 35 percent a decade and 15 percent only in 2006 .
Why was foreigners ready to accumulate American assets? In spacious strokes, they see that these origins are safe.
Imagine, though, if it is for a change due to Mr. Trump's irregular ways. Foreigners may not be ready to ensure American consumption. This may mean a painful amendment to consumers.
This leads us to a final restriction on Mr. Trump's behavior: his need to create good times for his supporters.
Despite what it might think, the United States is not full of wealth for a model family. Although it is correct that the average American is richer than the ordinary Canadian, this is due to a small layer of very wealthy individuals in the United States that pulls their average wealth higher, but it is not a truly indication of the situation in relation to the quadruple middle -class wages.
There is a better amount of the typical person's experience is average wealth. As you remember, the average person is the person in the middle of the road than the population – in this case, it is poorer than half of the population but is richer than the other half.
If you look at the brokers, as calculated by the Swiss Bank UBS in the 2024 global wealth report, you discover something sudden: the Mediterranean is richer than the American -American average – and not exactly what you will be saved from the screaming of Mr. Trump.
It is not clear how Canada, Greenland or Panama will immediately increase the average US wealth. It seems only the opposite, given the costs of unifying new regions. With the next round of Congress elections less than two years away, Mr. Trump may have to keep his eyes away from expansionary dreams and focus instead on the accurate issue of maintaining the strengthening of the American economy.
