Engineering a depression

"The Trump Depression" by Robert Kuttner, 5 March 2025, at The American Prospect. The subtitle says "Donald Trump is on track to be the first president to deliberately engineer a severe depression." That was the first reference I found to Trump creating a depression. The statement is clear and, I think, correct. The goal is depression, and the intent deliberate.

The second reference to depression that I saw was S2E8 of "Have I Got News for You". About 8:50 into the video, Roy Wood Jr asks "What happens of Trump's tariffs don't work and America ends up in a depression?" And again, about 9:14 into the video, Roy Wood Jr asks: "If the depression hurricane is off shore, how close is it to landfall?" It is a comedy show, but Roy Wood Jr was expressing honest concern.

Don't fast-forward to the depression quotes. Watch the show, it's so funny. It's my new favorite show.

The third reference to depression is from "Smerconish" on CNN. Season 2025, the 12 April episode. At the end of the episode he shows a cartoon of Trump wearing a hat that says "Make America 1929 Again". It's perfect.

I'm glad the topic comes up once in a while because if we are going to have a depression, it is best not to be caught by surprise. Anyway, these things take time to develop. And if people believe Trump is creating a depression, and react negatively, there is time to change course. Of course, the reaction to Trump's policy would have to be strong and severe.

In the American Prospect article, Kuttner asks: "What in the hell does Trump think he is accomplishing?"

It's a good question. I have been waiting, focusing on the news, trying to understand what Trump's plan is, trying to understand how "tariffs" and "Greenland" and "bullying" and all the other pieces of his plan fit together. It finally struck me about two days ago: He's creating a depression. Thank you, Mr. Kuttner, for helping me see it.

Kuttner says: 

A related key question is whether Trump has any master plan for the economy here, or whether he is just batshit crazy. The evidence is that Trump’s effort to destroy the government reflects a certain malign consistency, but that his effort to destroy the economy is based on sheer ignorance and impulsivity.

It's not ignorance or impulsiveness. It can't be. It's a plan. A "deliberate" plan to create a depression. As Kuttner has it, "There are several distinct elements" to Trump's policy, "all cutting in the same direction, all interacting with each other, all needless." Together, they will create a depression.

Depression opens a door to the future that Donald Trump wants.

Trump wants regime change. He doesn't want democracy. He doesn't want to be restrained by the US Constitution. He wants to be a dictator -- "for one day," he said. Dictator for a short time, and then Emperor: Emperor of the Western Hemisphere: For now, Emperor of the US, Canada, Greenland, and Panama. Before long, no doubt, also Mexico and most or all of Central and South America. Willing to trade Gaza.

Why create a Depression? A depression will make it easier to get rid of the US Constitution. A depression will be the last straw, convincing an overwhelming majority of Americans that the existing US government is the cause of our economic problems and must be eliminated. They will torch the US Constitution and line up behind their Emperor.

But the proximate cause of our economic problems is excessive private-sector debt. The cause of that cause is that our economic policies encourage us to use credit, to help our economy grow.  Using credit to grow the economy works best when there is little accumulated debt. It does not work at all when we have been encouraged to use credit for 80 years and our accumulation of debt has become massive.

Required reading

First, read something that will give you a feel for how very good a good economy can be: From Time Magazine, Friday 31 December 1965: "We Are All Keynesians Now" at Brad DeLong's site. Or, if that title turns you off, read the first few paragraphs of Jude Wanniski's "The Way We Were":

... you have to have lived in the 1950s and 1960s to have experienced a good economy.

I want to be sure you know that for a very long time our economy has not been good. Wanniski says it well, but the Time article really makes you feel it.

Second, read page 30 from William E. Leuchtenburg's Franklin D. Roosevelt and the New Deal, 1932-1940. I want to be sure you see that when a bad economy is very bad, people react as if the problem is political. Leuchtenburg tells us that

Henry Hazlitt proposed abandoning Congress for a directorate of twelve men.

He also quotes Barron's from 13 Feb 1933:

"Of course we all realize that dictatorships and even semi-dictatorships in peace time are quite contrary to the spirit of American institutions and all that," remarked Barron's. "And yet — well, a genial and lighthearted dictator might be a relief from the pompous futility of such a Congress as we have recently had. ... So we return repeatedly to the thought that a mild species of dictatorship will help us over the roughest spots in the road ahead."

Yes, you can change things by abandoning Congress. Yes, you can change things by abandoning the US Constitution. But if you want to change the economy, you need to do economic things. And if you want to improve the economy, then you must correctly understand what the problem is, what the economy's problem is, so that when you change economic policy the economy changes in the way that you want.