A question about deflationary pressures and Trump's inflationary policies (user search)
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  A question about deflationary pressures and Trump's inflationary policies (search mode)
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Author Topic: A question about deflationary pressures and Trump's inflationary policies  (Read 455 times)
The_Doctor
SilentCal1924
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Posts: 3,272


« on: November 28, 2016, 10:14:38 PM »

So, I don't have a formal education in economics but I've been trying to untangle the economics implications of Brexit politics. So riddle me this -

With deflationary pressures from low wages due to automation and weak savings after the 2008 crash, as well as the destruction of the personal wealth that most people had in place - my question is, why isn't it necessarily a bad idea to counteract that with inflationary policies such as deporting a number of illegal migrants, pushing up prices and wages in the process, and imposing some low level protectionist measures, such as labeling China a currency manipulator?

I understand, yes, that wages have been taking off at a better pace and there is some wage growth going on right now under Obama. But I'm curious if Trump's policies have the potential, in the short run, to benefit the United States, or could even be beneficial if watered down?

Obviously, massive tariffs would drive up prices sharply and cause an economic shock. I'm more thinking of gradual protectionism and some ways to counteract deflation.

I'm a free trader, but I wanted to ask what would happen. It's probably a dumb question in any case.
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The_Doctor
SilentCal1924
Sr. Member
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Posts: 3,272


« Reply #1 on: November 28, 2016, 10:47:55 PM »

I disagree with Trump's policies, I was exploring the effects of his policies, really. I understand that trade wars, putting up more barriers, and his ideas are likely to lead to a recession and worse. I was wondering about the short term run, given they're pretty inflationary in nature.

Your explanation tallies well with my understanding of the Great Depression era and the long recovery we had (it was a major financial crisis).

I don't understand why you don't believe that we don't have deflationary pressure on wages, given that automation has wiped out a lot of jobs and there's a fundamental skills mismatch (e.g, a lot of STEM jobs going unfilled)? I was under the understanding that the skills mismatch is a big reason for wages being as slow as they are to grow.

(I should do more research on this).
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