Central Planning Meets The Law Of Unintended Consequences

Central planning is frequently (and erroneously) considered synonymous with socialism or communism.  Central planning is a legitimate economic model.  Socialism and communism use central planning as a way of achieving other social and political goals, but generally operate within the construct of a mixed economy.

Does that sound familiar?  It should, because that is a Trumpian economic model.  However, President Trump puts his own nuance on the concept; he, alone, is the decider. 

The president has downplayed the economic stresses arising as a consequence of his tariff policy and unilateral decision to go to war with Iran.  Asked earlier this month whether the financial situation of average Americans was a motive to end the Iran war, he said not even a little bit.  And you know what?  I believe him.  The president is adept at saying the quiet part out loud.  After-all, just like going to war, he alone is the decider.

There is a weak link in the chain of a centrally-planned economy orchestrated by a single individual.  Particularly if that individual is surrounded by sycophants.  In the absence  of hybrid vigor,  economics becomes inbred and less resistant to disruption by outside forces.  Add a war to the mix and things get more complicated.

Consider this; the percentage of credit card balances at least 90 days delinquent rose to 13.2% in the first quarter, the highest level in 15 years.  America's total credit card balance reached $1.25 trillion in the first quarter, the highest first quarter balance since the Fed began tracking it in 1999.

The average interest rate on these cards rose to 21% in February from 14.6% in February 2022 putting an additional strain on consumers.  Why is this important?  Our economy is not driven by manufacturing; it is a service-based economy driven by consumers.

Soaring interest rates and rising inflation have led to the highest delinquencies since the financial crisis; a pattern economists refer-to as survival debt. 

And, of course, the Strait remains effectively closed leaving global supply chains seriously messed-up with all sorta unintended consequences.  So I'm still waiting on President Trump to improve everyone's (not just the investor class) prosperity and general lot in life.  Along with making the world a safer place.

I sure hope he gets this right.  After-all, he's the decider....