Doug Casey on Trump’s “Tariff Dividend” and the New Fiscal Populism
International Man: Trump is pitching a “tariff dividend” that would take revenue from new import tariffs and recycle it into $2,000 checks for Americans—framed not as welfare, but as a patriotic return on America’s trade strength.
What do you make of this?
Doug Casey: Frankly, it’s ridiculous. Whenever Trump talks, it’s clear that he knows nothing about either economics or history. Of course, knowledge isn’t entirely necessary to steer the Ship of State. It’s possible to get by with only luck, bluster, and coercion—but the results tend to be bad. Trump doesn’t have any consistent thinking or philosophy, either; it’s all seat-of-the-pants feelings.
That’s a characteristic of populists. They try to get ahead of popular whims, and they’ll say or do almost anything that they think the mob wants to hear.
So far, the big reason for Trump’s popularity is that he’s a cultural conservative. Let’s count ourselves lucky in that regard. He doesn’t want to overturn the basis of America itself, as many of the Democrats clearly want to do.
When it comes to economics, Trump is very comfortable with arbitrarily printing wild amounts of money. I suspect he rationalizes it by thinking it will forestall deflationary collapse in the short run and inflate away the otherwise unrepayable national debt in the long run.
He’s mostly in favor of mild deregulation, which is good, of course. But most of what he does is flattery-driven. If he likes somebody and they want to suck up to him, he’ll do what it takes to make himself more popular with that person and their constituency.
His tariffs are a tax on Americans who import things. Part of his philosophy with the tariffs is to encourage manufacturing in the US. But since over half of the imports are for further value-added manufacturing in the US, it turns out he’s really hurting domestic manufacturing. And he’s hurting exports too, because when you don’t buy things from people, they’re less likely to buy things from you.
Apart from generating revenue to distribute to the capita censi, his objective is to encourage domestic manufacturing by making imports expensive and forcing people to make things domestically. Very much like Argentina under the Peronists, whose similar hopes of self-sufficiency wound up destroying the Argentine economy. Building up domestic manufacturing can take many years, sometimes decades. But along the way, a closed, protectionist America will produce uncompetitive products. This results in a lower standard of living for Americans.
The only way to bring manufacturing back to the US—the only way—is to free the US economy: get rid of taxes, institute a sound currency so that capital can build, get rid of regulation so that producers aren’t hamstrung, and remove government from all aspects of the economy. But Trump is doing the opposite. So not only is he not going to get the result that he’s looking for, he’s going to create a disaster.
It’s amusing to see him bragging about cultivating foreign investment. For instance, he expects a trillion dollars from the Saudis, which is almost 100% of the Saudi GNP. Trump’s hyperbole on almost everything he talks about is indistinguishable from lying. How can a sensible person take anything he says seriously? When he says something, it’s just off the top of his head.
International Man: Do the so-called tariff dividends amount to a new form of money printing—QE without the Fed?
Doug Casey: You mean the $2000 he says he’ll distribute to various Americans, with money gained from tariffs? As a giveaway, it’s corrupting. But it won’t add to the money supply because putting on tariffs doesn’t create more money. How many will get this $2000 bonus? Who knows. If it goes to 100 million people, that’s $200 billion. Where’s the money going to come from? Not from the tariffs, which will greatly reduce trade and income, and be counterproductive in every way.
Trump loves spending. But how will Trump finance his spending? Taxes aren’t popular, and Trump wants to be popular. Borrowing in the market is out; it would put upward pressure on interest rates. So essentially, more government debt will be sold to the Fed. They’ll buy it with newly created dollars.
International Man: Do you see these tariff checks as a kind of Universal Basic Income for the Right?
Doug Casey: The concept of Universal Basic Income (UBI) is being widely discussed. It’s a disaster on every level possible. Elon Musk and others are saying that it’s inevitable. When robots and AI do everything, they think mass unemployment is unavoidable. They seem to think that the plebs will have to be maintained like pets, to keep them from rioting.
Others think that once UBI frees the plebs from the drudgery of work, they’ll become thinkers, artists, and poets. That’s a pipe dream.
More likely, UBI will create a population of dissipated layabouts, junkies, and neurotic consumers. Healthy humans have to feel productive. Apart from the fact that it’s psychologically destructive, UBI is unnecessary.
That’s because it doesn’t matter how much the AI and robots create, it won’t be “free”; there are costs to everything. Besides, people have infinite desires. A person can work 24/7, catering to the unlimited amount of goods and services people want. The idea should be to totally eliminate welfare, aka UBI, not to put everyone on it.
Of course, ultimately, the elite would like to see AI and robotics reduce the population of the world by, they say, 90%. If only to save Mother Earth from hordes of useless eaters. I’m sure they’re working in that direction.
International Man: Are these tariff dividends a sign of fiscal dominance—where government financing needs begin to dictate monetary policy—and what would the implications be?
Doug Casey: Trump thinks he’s a genius. And as a world-changing genius, he wants to reform the world the way he thinks is best. So, for instance, he’s actively replacing members of the Federal Reserve Board who share his ideas on money; no doubt he’s very favorably inclined toward what’s known as Modern Monetary Theory—the same for the Supreme Court and Congress. Basically, Trump doesn’t believe in anything; he just has feelings and instincts.
The bottom line is that we’re sure to see a lot more government involvement in the economy. Trump tries to make deals with every person and every group possible; he’s opportunistic and very transactional. I think he sees himself as Louis XIV. But I’ll wager that before his term is over, he winds up more like Louis XVI.
International Man: The last time the government handed out checks to the average person was during the Covid mass psychosis, and it triggered the worst inflation in 40 years. What are the implications for gold, the US dollar, and other investments if these tariff dividends continue?
Doug Casey: It’s not just the proposed tariff dividends, it’s his whole economic approach. Trump isn’t a free-market believer; he’s a narcissist, he thinks he’s a genius, and he’ll impose his will whenever he can. This adds a thick layer of uncertainty to a very shaky economy.
I don’t, therefore, think there’s any way around higher gold prices—despite its all-time highs. Since gold is the only financial asset that’s not somebody else’s liability, more and more people will move to gold. But also to commodities in general; relative to their production costs and historical prices, they are very cheap.
Pay attention to the government starting to invest in mining companies—including MP Materials (one of our picks), Lithium Americas, and Trilogy Metals. Not to mention Intel and US Steel. This is in the worst “state capitalist” tradition of picking favorites. Right now, Rare Earths are the flavor of the month. The result will be corruption and massive distortions. Speaking as an economist, I find it stupid and deplorable. But speaking as a speculator, this foolishness is likely to spark interest in mining companies, which makes me happy.
How about real estate? Commercial real estate prices are said to be off about 25% across the country. Even condominium prices are dropping, off 10 to 15%. Houses aren’t selling because so many people locked in low-interest, 3% or 3.5% 30-year mortgages a few years ago. If they sell, they’ll have to refinance at twice those levels, which many can’t afford. With mortgages at 6.5%, a lot fewer people who want to buy can’t buy—the property market’s in trouble across the board.
In the stock market, all the gains have basically been in high-tech. We’re in a multi-trillion-dollar AI super bubble. The financial world is very unstable. The only places that make sense are commodities, resources, and the companies that produce them. The good news is that though they’ve been moving up, they’re still very cheap. And have a lot of upside from here. I remain very concentrated in the resource markets.
Editor’s Note: America’s turn toward aggressive fiscal populism—illustrated by ideas like a national “tariff dividend”—signals policies that could accelerate inflation, weaken the dollar, and push the economy toward a major reset.
That’s why Doug Casey and his team have just released a new video revealing the steps you should take now—and the inflation-proof assets that can help protect your savings in the turmoil ahead.
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