The job market, inflation and tariffs

I suspect this from John Ganz is correct

Here’s one theory: Far from being “good on the economy,” there’s a lot of evidence that Trump is basically incapable of understanding abstract entities like “the market” or “the economy.” His entire notion of the world comes down to personal relationships and he personalizes every concept and event. If the market goes down, someone is trying to screw you, personally. If it goes up, and you benefit, it’s because you’re smart. Many commentators are pointing out that he’s establishing something like a patrimonial or personalist regime, which replaces the impersonal rationality of bureaucracy with a network of personal ties and loyalty.

https://www.unpopularfront.news/p/the-juggler

 

Looks like both unemployment and inflation are up. This usually happens because one or the other is caused by extenuating circumstances and not by the business cycle.

In this case, I think the economic slowdown is causing the rise in both unemployment and underemployment, and it should on paper also have a deflationary effect on the economy.

The reason we are still having inflation is that this deflationary pressure created by the slowdoiwn is not enough to compensate for other factors, like the tariffs and the disruption of the global supply chains.

In this case, I think it would make sense for the fed to cut interest rates, as they need to deal with the slowdown that's causing the unemployment. The fix for inflation in this situation is not going to be to raise (or refrain from lowering) interest rates, because slowing the economy even more is not going to help.

The solution for the inflation problem would be to deal with the factors that are causing the inflationary pressure, like the tariffs (hint: remove them) and the disruption of the global supply chains, particularly for energy and raw material.

 

It looks that way. Actually, whether he understands the market or the economy is irrelevant, because his priority appears to be short term personal gain and power to him and to a lesser extent to his cronnies, at the expense of all else, including the market, the economy, or even the nation's democratic institutions.

 

Don't necessarily think this is a bad thing, but can't see this changing much if they decide to approve it.

 

I was talking to mom about this idea at our weekly dinner. Trump doesn't deal in rational thought. To him, it's all about emotion. And that doesn't do a country - any country - well.

 

This is insane corruption

At the heart of their relationship are two multibillion-dollar deals. One involved a crypto company founded by the Witkoff and the Trump families that benefited both financially. The other involved a sale of valuable computer chips that benefited the Emirates economically.

While there is no evidence that one deal was explicitly offered in return for the other, the confluence of the two agreements is itself extraordinary. Taken together, they blurred the lines between personal and government business and raised questions about whether U.S. interests were served.

In May, Mr. Witkoff’s son Zach announced the first of the deals at a conference in Dubai. One of Sheikh Tahnoon’s investment firms would deposit $2 billion into World Liberty Financial, a cryptocurrency start-up founded by the Witkoffs and Trumps.

Two weeks later, the White House agreed to allow the U.A.E. access to hundreds of thousands of the world’s most advanced and scarce computer chips, a crucial tool in the high-stakes race to dominate artificial intelligence. Many of the chips would go to G42, a sprawling technology firm controlled by Sheikh Tahnoon, despite national security concerns that the chips could be shared with China.

https://www.nytimes.com/2025/09/15/us/politics/trump-uae-chips-witkoff-world-liberty.html

 

If you declare Brazil a winner, it's certainly a very small battle that they are winning while suffering the negative effects of a larger unnecessary war.

The reality is that Trump's trade policies not only are hurting the US but they are also hurting other countries, including Brazil. Brazil is facing its own uncertainty in terms of possible stagflation - although they may have a bit more flexibility than the US in terms of interest rates- and the US's unpredictable and unreasonable trade policy is not dong them any favors.

Furthermore, aligning themselves with China may give them small term benefits but it also carries significant risks, even for a large economy like Brazil’s. Can’t say I blame them, though. The US is proving to be an unreliable partner.

 

Yep. Soybean farmers are desperate. I've seen some videos of them describing the situation. China has tariff on US so their prices are not competitive. China accounts for 25% of US soybean production market.

 

How familiar are you with China?

I'm not saying whatever China is offering is worse than what the US is offering under Trump, but China under Xi is not exactly a reliable partner either. They will take what you give them and will exploit you if they can, as much as they can.

I worked a lot with China, I had my own business there for over 20 years, and under Jian Xemin they were increasingly a reliable partner, and very much interested in productive relationships with foreign investors and nations. This started to get a bit more problematic under Hu Jintao's leadership. There was a reversal of policies (not unlike what Trump is doing in the US, although more subtle) that inclined the field in favor of China and against the foreign interests.

Also the trends at the local provincial levels were getting worse, both in terms of corruption (which always existed) and government interference, mostly regulatory uncertainty with changes unfavorable to foreign investment. For reference, my business interrests were primarily in Liaoning province, but I worked enough with other provinces to know that this was a general trend.

By 2009 things got so complicated that I decided on an exit strategy and I got out of China completely by 2012. I still stay in touch with contacts in China as well as people who still do business there to know that once Xi Jinping took over things are getting progressively worse.

Things are also getting worse for the Chinese people themselves, and you can tell a lot about how a country will treat you based on how they treat their own. And, there are numerous examples of countries that worked with China in the past 20 years and ended up getting the short end of the stick. This is also true of foreign business investors.

I understand the reasons for Brazil turning closer to China given the US present hostility and attempts to interfere in their internal affairs, I'd probably do the same if I was in a position of leadership there, but you have to be extremely wary in how you deal with China, and I certainly wouldn't call becoming more dependent on China a victory.

Think of the Jewish Maccabees in the 2nd century BC forming an alliance with the Romans in order to protect themselves from the Seleucid empire. They may have felt at the time that turning to Rome was a victory, but long term it didn't turn up well. Okay, the Roman empire was obviously going to take over anyway regardles of what the Maccabees did, and China may very well become the preeminent world power regardless of what Brazil does today. But if China does become the preeminent power in the world, Brazil and the rest of the world are going to be in very deep shit. So, be careful what you celebrate!