BVI News

COMMENTARY: The Trump economy and deflation

By Dickson Igwe, Contributor

There are lessons to be learned from a booming USA; the proceeding story is second of a series of narratives on Donald Trump’s business first, protectionist, economics.

The US economy is booming this July 2018. The US economy is expected to grow 4.5 percent in 2018.

The preceding is a very strong growth rate: unusual for the current western deflationary economy. OK! A long recession in the Virgin Islands is a danger the country cannot afford.

There is a growing awareness that the country is getting complacent with the recessionary situation it finds itself post Irma.

Recessions have damaging social, economic, and political implications.

One Caveat: Post Irma, the United States Virgin Islands and Puerto Rico, together with Irma ravaged islands in the region are all suffering severe economic contraction.

Then, there has been no simply stated solution offered to get the British Virgin Islands on the road to sustainable economic growth.

A simple vision has still not been formulated for a Post Irma Virgin Islands. A vision is critical at a time of uncertainty and confusion.

Why: because, a vision offers residents a clear pathway out of recession and despair. A vision allows all national institutions, a shared platform for development. A unified national vision offers institutions and the people that man those institutions a shared script and common narrative towards a common goal and objective.

A short, measurable, achievable, realistic, and time related (SMART) vision, ties all the various ideas and policy matters together. A realistic vision for the Virgin Islands will lead to full economic recovery, and a prosperous post recovery, making for better and more effective governance and a more wholesome country.

The following story is Part B of an analysis of a booming US economy. It is written with the Virgin Islands economy in mind. OK. Frustrated blue collar workers are driving a growing intolerance towards migrants and minorities in the freedom loving west.

Western politics is undergoing a sea change as a growing authoritarianism, and public anger is becoming part of the political culture. This is not good! Western freedoms and values are pivotal to global peace and prosperity. The world without the prop of a freedom loving and prosperous USA is a very unsafe place. It is that simple!

Post World War 1 tells the tale of American might and power, and its stabilizing effect on world institutions and markets. Now! Milton Friedman’s Chicago School offered a rendition to trickle down, top-down economics. The end of the 1970s began the story of Friedman’s business first, economic thinking.

Laissez faire became the core economic narrative after a Middle Eastern Oil Crisis that plunged the west into a deep recession. From the very beginning of the 1980s, Friedman’s Supply Side Economic Model began to rule the world. Stimulus and the managed economy ideas of John Maynard Keynes were given the proverbial boot, at the tail end of the 1970s. Keynesian ideas were blamed for soaring inflation.

However, that idea of a failed Keynesian economics was an incorrect diagnostic. Late 1970s inflation was driven by a steep rise in the oil price that made western goods and services unsustainably expensive. It was not driven by big government. Inflation was driven by a Middle Eastern political crisis. So, ended thirty plus years of Keynesian economic stability Post the Second World War. To be continued

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15 Comments

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  1. CW says:

    The economy is booming because of the policies of OBAMA. One needs to only look at the US markets sliding south EVERY SINGLE TIME Trump opens his mouth and threatens tariffs and trade wars. They rebound only because of the size of the US economy. Anybody wanting a strong economy needs to study history on a global scale. Trump is a reckless authoritarian and a damaging influence in the world at large. Historically speaking protectionist policies damage a nation’s economy long term.

    Like 1
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  2. john says:

    cw, what a dunce you are. stop watching cnn.

    Like 14
    Dislike 1
    • CW says:

      Calling names shows a brilliant mind lol. It takes YEARS FOR ECONOMIC POLICY TO TAKE HOLD AND BEGIN CHANGE. READ ANY BOOK ABOUT ECONOMICS IF YOU CAN READ SUCH LARGE WORDS. I HAVE A DEGREE IN ECONOMICS AND WORK PROFESSIONALLY IN THAT FIELD. WHEN TRUMP TARIFFS CAUSE A TRADE WAR IN ABOUT 18 MONTHS TIME BE SURE TO BLAME IT ON THE CORRECT PERSON.

  3. Finance Ph.D. says:

    The current strong US economy is as a direct result of the Trump policies to encourage business and free enterprise, while reducing the influence of government. US President Reagan made similar changes in the 1980s, with resounding success. Obama hated business and capitalism, in general. He (Obama) tried very hard to dismantle free enterprise within the US, in favor of centralized government control of everything. This approach was tried many times throughout history, and it failed, big time! Study the history of the old Soviet Union, USSR, East Germany, etc. The facts speak for themselves!

    Like 10
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    • Political Observer (PO) says:

      @Finance PhD, hate or love President Obama, we need to deal in facts. When Prez was inaugurated on 20 January 2009, the economy was tanking with negative economic. Without much help from and much obstruction from the Republicans, during his 8-year tenure, attain 8 years of economic growth, created almost 12 million jobs, unemployment drop below full employment, 15 miilion people who did not have health insurance before got it………etc.

      Economic growth does not occur instantaneously; among other things it depends fiscal and monetary policies, leadership confidence………etc. When President Trump took office on 20 January 2017, the economy was on the upswing. The current boom is not solely the policies of President Trump; the actions of President Obama are also instrumental in the boom. Despite the attempt to eradicate President Obama legacy, it will endure; can’t remove history.

      Like 5
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    • CW says:

      Finance and global ECONOMICS are two very different things.

  4. E. Leonard says:

    True, the economy is approaching the peak phase of the business cycle; it is trending towards a boom. Typically, incoming US administrations take credit for good economic news but shunt blame to the outgoing administration for poor economic news. Nevertheless, the economy was approaching the peak of business cycle during the Obama administration and it should get some credit for the economic boom.

    Well. The economy is booming, ie, interest rate and inflation are low, consumers are buying cars, homes, appliances, electronic gadgets…….etc, consumers are borrowing, and businesses are expanding. Consumers and business spending equate to economic growth. Increasing demand for credit and increasing demand for goods result in an increase in interest rate and inflation, slowing economic growth and pushing the business cycle towards the trough. The business cycle typically last on average 3-4 years.

    A booming US economy means that residents have more discretionary income and that should be good news for the BVI tourism industry. Nonetheless, Hurricanes Irma and Maria damaged hotels and other tourist facilties, and attractions, impacting the BVI’s ability to fully take advantage of a booming US economy. Accelerating the recovery effort would position the BVI to tap into the booming economy.

    s

    Like 7
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    • Diaspora says:

      “Nonetheless, Hurricanes Irma and Maria damaged hotels and other tourist facilties, and attractions, impacting the BVI’s ability to fully take advantage of a booming US economy. Accelerating the recovery effort would position the BVI to tap into the booming economy.” Real talk. Let’s get this recovery effort show started. The chairman of Agency with a supposed salary of $350K is a done deal so let’s roll.

      • Rubber Duck says:

        With a couple of exceptions, hotels in the BVI are not being re-built. I see no rebuilding work at Bitter End, Little Dix , Peter Island etc etc

        There are reasons for that. Some to do with the storms some to do with the impossibility of running such a business in the BVI under its crazy Labour laws and its inaccessibility. .In essence none of these places made a profit. And would not if they re-opened.

        It will be a long long time before the number of hotel rooms climbs back to the 2800 or so we supposedly had before Irma.

        It’s currently about 700 I believe.

  5. Peaches says:

    Our income, retirement, investments, and kids’ job opportunities are on the rise since President Trump took office. That is our experience. I hope others are having the same positive experience.
    There are a LOT of critics of President Trump, but our financial bottom line has most definitely improved over our experience with Obama.
    No political judgement or criticism, just sharing our reality.

    Like 8
    Dislike 5
  6. Gerance P. says:

    Trump fan or not, he is all about business. Businesses create jobs and jobs provide the means to sustain a households needs…. and wants. If the businesses can generate a profit, then everyone will benefit all that much more. There will be higher everything across the board. Donations, social improvements, education, building, and eventually more funds to open new businesses and the cycle multiplies. Govt regs certainly have their place in a society. However, Trump is taking care of the massive abuses of years of overtaxation, aggregious misspending and stifling red tape that will destroy any economy. He just happens to have a nontypical way of getting to what he knows needs to be done. And THAT my friends is all good for us BVIslanders.

    • CW says:

      He’s so pro business that several companies that manufacture in the US have CLOSED DUE TO TARIFFS WITH CHINA. so good at business that the price of cars went up 2k already and the price of housing an average 9k BECAUSE OF TARRIFS WITH CHINA. bean production in Illinois has dropped to the lowest profit margin in history because of TARIFFS WITH CHINA. you all sit in BVI with it’s crippled economy and preach about your knowledge. Let me know how implimentint protectionist policies works for all of you when your precious tourists from North America get a recession like in 2008

    • CW says:

      Except wages have fallen considerably. What good are these jobs if you need 4 of them to live? Trump is taking credit for Obama successes even as he undermines the progress they have created. It’s a big picture thing, the economy. I wouldn’t expect BVI will understand

  7. JD US resident says:

    CW has no idea what he’s talking about. The 2nd Quarter US GDP will be released this Friday….they are predicting 4.5% growth.
    All related to tax cuts and cutting reg’s,,,pro business.
    Obama averaged 1.48% over 8 years. Get a clue.

  8. john2 says:

    CW listens to elezabeth warren and the young socialist from N.Y. ha ha ah ha ha ha lol

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