Why Tariff's are bad for the economy
I'm a faith investor which means I invest in the future, not just for profits. TL;DR I break down my thoughts on the recent economic news.
Think about a company whose business is producing knives. The company has to import steel from somewhere unless they make it in-house. The steel will most likely come from China because it's cheap and that means higher profit margin for investors. Speaking of investors...
Most would think that a bad bourgeoisie business owner would fire the proletariat right? Well, you're correct on that part, but the reason they do this because just like the employees they do have restrictions. If they don't create profit every quarter then they can't push that profit to the shareholders. This means most shareholders will pull their funding and the business will bleed until they have to declare bankruptcy.
They don't fire their employees because it's to create profit for the CEO's. They fire their employee's because it's the lesser evil compared to have all their funding pulled which means even higher unemployment.
When you have companies that fire employees to create profit then the unemployment goes up. When the unemployment goes up then families have less money. With less disposable income they can't consume as much which means less profit for the businesses which in turn means more cutbacks.
The planned 4 interest rate hikes this year are also very troubling. Higher interest rates mean that businesses have to pay more for loans so they are less likely to leverage debt till the market settles.
Now OPEC also wants to create a higher petrodollar. They plan on decreasing production to increase the price of oil. Dollar and oil are usually correlated, but higher gas prices mean higher transportation cost. This increases the price of consumer goods and decreases the consumption power. Lower consumption means weakened economy.
I can see why Gary Cohn left. There's no talking sensibility to Trump's campaign.