Trumponomics, Trade Wars, and the Latest Davos Drama

What a crazy past few weeks it's been in US politics.

Among the many surprises was a debate that revealed the emperor wasn't wearing any clothes.

The assassination attempt on his most likely successor.

A Brutus-esque media hell-bent on the elimination of the incumbent.

You'll be hard-pressed to find a stranger timeline in recent history.

With Biden out and Kamala in, the election seems a bit more up in the air again.

But until Kamala is officially selected and begins attempting to articulate her platform to the public, we have to assume Trump as the most likely winner.

Regardless of your political sentiments (or lack thereof), it is important to understand politicians and their agendas because they impact all of us.

That is most clearly the case with economic policy.

Who do you know that doesn't deal with money in some way?

No one (I hope).

So what are Trump's economic policies?

The video linked above does a great job of detailing what we presently know about Trump's economic worldview.

In a nutshell, many describe it as economic "isolationism."

This is important because it stands in contradiction to economic globalism, which a large segment of American society has come to resent.

And I don't blame them.

After all, who wants shadowy elites in supranational organizations pulling the strings of their coin purses?

Globalism encourages free trade among participatory countries, which is a good thing.

But the way in which it has manifested is much more than just free trade.

Trade, defense, and monetary policy all become entangled in a complicated web of bureaucracy, and the only people deemed to be in a position to manage all of this also happen to be global elites.

The EU, for example, doesn't just have free trade between participatory nations but also a shared defense policy and currency, all controlled by over-educated busybodies in Brussels and subsidized heavily by the US via NATO.

At an even higher level, we have groups like the UN, IMF, and World Economic Forum that get together and decide if and how countries should conduct business with each other.

The global elites love this because it allows them to exert a disproportionate amount of control on everyone else.

To remedy this issue, Trump plans to restrict free trade and globalism by imposing tariffs on all imports, especially those from China, in an effort to make the US economy "competitive" again.

But does this actually work?

After all, if you put "America First," why are you shifting an unnecessary tax burden on foreign goods onto hardworking everyday Americans?

Tariffs just ensure American non-competitiveness in the long run by giving American businesses a "free lunch" that we will later realize was heavily slathered with month-old mayo and will come back to bite us.

Is there any way to do things other than the most recent iterations of globalism or isolationism?

I'd like to think so.

Simply let any person or company in the US deal with anyone in any other country freely.

If national security arises as a legitimate concern in a particular business transaction, deal with it on a case-by-case basis.

Do business with anyone, don't entangle ourselves in alliances, and don't make enemies of anyone who has not imposed force upon us.

Don't "help" companies by giving subsidies or try to hinder their business with tariffs and regulations.

Just let people do business, regardless of where they are located.

Globalists and isolationists alike don't think this can work though.

After all, how can there be free trade if the seven seas aren't secured by the US Navy?

How can parties exchange payments for goods and services if there is no common currency?

That is not my problem, your problem, or the government's problem.

That is a problem to be worked out by the parties conducting business with each other.

"Could there be an uptick in the privatized maritime security industry?"

"How about an alternative currency that can't be meddled with by governments?"

"Surely this must be the end of times."

I like to think of it simply as people being allowed to conduct business. ~ West

For millennia, the Khyber Pass was the central artery of the Silk Road.

It’s crazy to think, but this mountainous pass has been a vital trade corridor since ancient times. Picture caravans loaded with silk, spices, and jewels snaking through this rugged corridor.

The exchange wasn’t just goods; it was ideas, cultures, and various currencies. Alexander the Great famously used the Khyber Pass during his campaign to conquer the Indian subcontinent in 326 BCE, bringing Hellenistic influence to the area.

The villages along the route? They were rolling in wealth, thriving off the free flow of trade. For over 1500 years, Europe and Asia were practically shaking hands every day, each benefiting from the other's technology and resources.

Trade wasn’t just commodities—it was an engine of progress, tolerance, and cooperation. Yes, sometimes war. But overall we see a collaboration of many different cultures enriching themselves.

Let’s fast forward to today.

The Khyber Pass isn’t even a blip on the radar of global trade anymore. It’s no longer of any geographical importance.

And the region? It’s a backwoods, to put it nicely. No caravans, no bustling markets, no merchants. Now it just connects Pakistan and Afghanistan.

The local economies that once thrived off trade are nonexistent. The prosperity of the Silk Road has evaporated, leaving behind a bleak landscape of economic hardship.

Timbuktu, Petra, and even Venice all suffered similar fates as former trade hubs that lost their geographical importance.

As you might have guessed, this story isn’t just about some obsolete trade route.

The Khyber Pass represents what happens when trade becomes absent.

Trade has always been a key driver of wealth and economic prosperity.

Restricting trade isn’t just a bad idea; it’s eventual economic suicide. It’s an almost-guaranteed way to ensure that everyone ends up poorer and more miserable.

Trade is the ultimate win-win. It spreads wealth, fuels innovation, and creates opportunities.

Restricting it? That’s a lose-lose for everyone.

Modern economies that become isolationist are doomed to ultimately suffer the same fate, so don’t let bureaucrats trick you into thinking otherwise. ~ Zack

"Destroy the Four Olds"—

A slogan used by the Red Guard during the Cultural Revolution characterizing the old customs, culture, habits, and ideas they wanted to eliminate.

How progressive.

The promise was to eradicate cultural backwardness and promote equality, freeing the minds of the people from anti-proletarian ideas fostered by the exploitative classes.

Streets were renamed. Public monuments were defaced. Student activists flooded the streets. (Sound familiar?)

Before long... the rhetoric escalated and private property became a target, ultimately leading to widespread assault, murder, and the deaths of millions.

All under the banner of egalitarianism.

Turning our attention to the self-proclaimed beacon of global progress and equality—the World Economic Forum—which now finds itself neck-deep in its own hypocrisy.

Klaus Schwab, the not-particularly-well-disguised-Bond-villain behind this elitist circus, heads a toxic work environment that—gasp!—makes a mockery of the WEF's lofty ideals.

Here's the short version...

The WEF, while preaching diversity, equity, and inclusion, is rife with accusations of sexual harassment, racial discrimination, and pregnancy-related dismissals.

Is anyone really shocked though?

It's a classic leftist strategy: using identity politics and altruistic language to consolidate power under a palatable veneer of progressivism.

What's old is new again.

And this debacle underscores what we already knew: the dangers of centralized power and the red flag of virtue signaling.

It's a tale as old as time.

The louder the sermonizing on equality, the greater the disparity within.

The more rabid the message of inclusion, the more dissenters are silenced.

So, while the WEF continues to fly private to their gathering in Davos, sipping champagne and plotting the next grand gesture to "save the world," it's important to remember this charade ins't anything new and we can learn from history what the consequences usually look like. ~ Zack

I am a big fan of passive investing through index funds.

The theory, which has been demonstrated true through historical data, is that matching market performance is a more likely route to long term financial success than picking individual stocks.

The way passive investing is operationalized is by buying index funds.

In stock markets, the most popular index funds are total stock market index funds, which track the performance of every publicly traded company in the US.

There is a method of pseudo-passive investing that has gained in popularity in recent years though that focuses on investing in index funds in particular industries.

For example, rather than just buying a total stock market index, investors will instead buy an index fund that tracks just companies within the AI or automotive industry.

I call this "pseudo-passive" investing because while investors aren't picking individual companies that they think outperform the market, instead they are picking particular industries that they think will outperform.

I am generally not a fan of this approach.

it still assumes, like active investing, that the individual investor has some insight or knowledge that the rest of the market doesn't have.

In some unique situations that may be the case.

If you have spent your entire career in a particular industry, know the ins-and-outs, and have a speculative hypothesis, then go for it.

Don't let me stop you.

You may indeed be wiser than the market (and certainly wiser than myself).

But most people won't be wiser than the market.

Alternatively, there is a method of pseudo-active investing that doesn't assume greater wisdom than the market and is backed by historical performance.

This is called “factor investing.”

Factor investing uses historical data to parse apart "factors" that are uncorrelated with the total market.

Examples of these factors include Value, Size, and Momentum.

Clusters of stocks that have low price-to earnings ratios, smaller market caps, or have a stronger track record of past performance move in a way that isn't as strongly correlated to the overall stock market.

Factor investors leverage this fact to increase diversification, and sometimes overall portfolio performance.

This makes theoretical sense, and also historical sense through the data.

I won't go as far as to say that factor investing is a "magic pill" of any kind, and there is certainly no guarantee that the factors identified in historical data will maintain their integrity into the future.

Indeed, folks who pitch factor investing seem to focus on the promise of outsized return rather than just non-correlation.

But, it seems like a more grounded approach to pseudo-passive investing than having folks picking market sectors they think will out perform the market willy-nilly.

After all, it is relying on the bedrock of solid portfolio allocation: diversification. ~ West