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Malay Mail
3 days ago
- Business
- Malay Mail
Trump's hubris will deliver the hammer blow to the US and the world — Phar Kim Beng
MAY 31 — In a recent and poignant Time article, economist Richard S Grossman reminds us that when political leaders ignore economists and elevate personal pride over empirical analysis, economic catastrophe is not a possibility — it is a pattern. Grossman draws sharp historical comparisons: President Andrew Jackson's assault on America's nascent central bank and Winston Churchill's ill-fated return to the gold standard. Both decisions were rooted in ideological conviction and personal pride, not evidence or consensus. Now, in the second term of Donald J Trump, history threatens to repeat itself — only this time, on a global scale. Trump's self-referential style of governance risks destabilising not just the US economy but the very foundations of global economic interdependence. His actions echo Jackson and Churchill — but they are also amplified by a kind of hubris unique to this media-saturated age, where policy is shaped more by image than substance, by ego rather than expertise. Jackson's Bank War: Populism at the expense of stability In the early 1830s, President Andrew Jackson waged war against the Second Bank of the United States. Chartered in 1816, the Bank had functioned as a quasi-central institution, restraining inflation and regulating credit. Jackson, however, viewed it as a tool of elite corruption and vetoed its recharter in 1832, allowing it to collapse by 1836. His Specie Circular of 1836, which mandated payment for government land in gold or silver, drained the economy of liquidity and triggered the Panic of 1837. As chronicled by economic historian Peter Temin, this crisis caused GDP to contract by up to 30 per cent, and unemployment skyrocketed. It took nearly a decade for the economy to recover. Jackson's decision, made in defiance of economic logic, delivered a populist victory — and a national calamity. US President Donald Trump speaks with the media after a trip to Pennsylvania, at Joint Base Andrews, Maryland, US May 30, 2025. — Reuters pic Churchill's gold standard gambit: Pride in decline Fast forward to 1925. Winston Churchill, then Chancellor of the Exchequer, committed Britain to returning to the gold standard at its pre-World War I parity — despite explicit warnings from economists like John Maynard Keynes. The move drastically overvalued the pound, making British exports uncompetitive and forcing deflationary wage cuts across industry. The economic damage was severe. Between 1921 and 1929, while the United States and France saw GDP gains of 40–50 per cent, Britain lagged behind with under 20 per cent. The North of England sank into chronic unemployment. The General Strike of 1926 and other labour uprisings signalled deep unrest. Churchill, clinging to imperial nostalgia and fiscal orthodoxy, stayed the course until 1931 — when a full-blown crisis forced Britain off the gold standard. Trump's economic nationalism: Narcissism over institutions Trump's second term is shaping up to be a repetition of these self-inflicted traumas. But while Jackson and Churchill made costly decisions for their nations, Trump's impact is transnational. His economic worldview is transactional, driven by an obsession with trade deficits and a conviction that tariffs will restore American greatness. This belief contradicts decades of economic research. Trade deficits are not inherently harmful, nor do tariffs reduce them. They tend to raise prices for consumers and provoke retaliatory measures from trading partners. Yet Trump persists, seemingly convinced that personal instincts are superior to expert counsel. He routinely undermines institutions like the Federal Reserve, publicly attacks international economic bodies such as the WTO, and treats trade as a zero-sum game. His policies, lacking in consistency and long-term logic, have already begun to erode global trust in American reliability — both as a trade partner and as a steward of global finance. From trade policy to global shockwave The world's largest economy cannot afford this kind of unpredictability. In contrast to Jackson and Churchill — whose economic errors had localised effects — Trump's decisions ripple through complex global supply chains, rattle markets, and stoke geopolitical tensions. His tariff wars have hit not just China but also traditional allies like the European Union, Canada, and Japan. The result? A deeply fragmented global trade environment. Allies no longer assume continuity in American policy. Investment flows hesitate. Emerging markets, many of them reliant on exports, suffer. Trump's economic strategy — fuelled by bravado and nostalgia — is incompatible with the integrated global system the US itself helped create. The theatre of strength, the reality of retreat Richard S Grossman rightly points out that Trump's view of tariffs is rooted in a misunderstanding of history. He romanticises the 19th-century Gilded Age, a time of high tariffs, while overlooking its accompanying instability, monopolism, and deep inequality. Trump's policies risk bringing back that era — not as triumph, but as cautionary tale. What truly binds Jackson, Churchill, and Trump is not simply error, but ego — the conviction that personal willpower can override economic complexity. But in Trump's case, this ego is magnified by media spectacle and a disdain for dissent. His economic policy is crafted not through consultation or deliberation, but through impulse. The coming hammer blow The most dangerous consequence of Trump's economic hubris is not just stagflation or market volatility — it is the collapse of global trust. Trust is the glue of the international economic system. When nations can no longer rely on US commitments, the temptation grows to seek alternatives — whether in digital currencies, alternative trade blocs, or parallel security arrangements. This erosion of trust could mark the twilight of US economic leadership. While the dollar remains dominant and American markets deep, overreach can accelerate decline. The American century — once built on openness, innovation, and stable leadership — now risks ending in retreat, with tariffs not as tools of power but as symbols of decline. Trump's economic nationalism, then, is not just policy. It is performance. And like all performances, it ends. The question is whether the final curtain will fall on American economic primacy — or whether institutions, allies, and economists can intervene in time to prevent the hammer blow from becoming permanent. * Phar Kim Beng, PhD, is professor of Asean studies at the International Islamic University Malaysia. ** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
Daily Mail
27-05-2025
- Business
- Daily Mail
Finance guru who predicted crash of 2008 issues devastating take on US economy
In a stark warning bestselling financial author Robert Kiyosaki says he believes the United States is barreling toward an unprecedented economic catastrophe. Kiyosaki says that the next downturn will eclipse that of Great Depression and make the 2008 crash look minor by comparison - and far worse than anything seen since the 1930s. 'This is not just another downturn,' Kiyosaki declared in a viral X post. 'The U.S.A. may be heading for a GREATER DEPRESSION.' The expert who predicted the collapse of Lehman Brothers in 2008 wrote Rich Dad Poor Dad in 2002 and it still remains one of the most influential personal finance books of all time. Kiyosaki cites a dangerous cocktail of record-high credit card debt, ballooning national liabilities, rising unemployment, and shrinking retirement savings as signs the economy is about to unravel in spectacular fashion. 'In 2025, credit card debt is at all-time highs. US debt is at all-time highs. Unemployment is rising. 401(k)'s are losing,' he wrote. 'This coming Great Depression will cause millions to be poor … and a few who take action may enjoy great wealth and freedom.' According to the Federal Reserve Bank of New York, Americans are now drowning under $1.21 trillion in credit card debt - an all-time high, a national debt of $36.22 trillion, and a jobless rate that ticked up to 4.2% in March. Kiyosaki says that the next downturn will eclipse the Great Depression and make the 2008 crash look minor by comparison and worse than anything seen since the 1930s For many, their 401(k)s, once viewed as the backbone of retirement, are now in the red. Far from a recession, Kiyosaki's prediction is suggesting there will economic annihilation and that people should pivot into what he considers the only real shelters left: Bitcoin, gold, and silver. 'For those who take action today, when the crash crashes, those who invest in just one Bitcoin, or some gold, or silver … You may come through this crisis a very rich person,' he urged. Gold is trading around $3,300 per ounce, having blown past the once-daunting $2,000 mark. Silver, too, has climbed, and Bitcoin, despite its volatility, recently broke $110,000 per coin but Kiyosaki says the real explosion is yet to come. 'I strongly believe, by 2035, that one Bitcoin will be over $1 million. Gold will be $30K and silver $3,000 a coin,' he declared. Ray Dalio, founder of Bridgewater Associates, echoed Kiyosaki's sentiment in February, telling CNBC, 'People don't have, typically, an adequate amount of gold in their portfolio,' adding, 'when bad times come, gold is a very effective diversifier.' Kiyosaki, 78, agrees and has been advising Americans to stock up for years. Back in October 2023, he warned: 'Gold will soon break through $2,100 and then take off. You will wish you had bought gold below $2,000. Next stop, gold $3,700.' Kyosaki predicts Bitcoin will reach $1 million by 2035 - a lofty prediction considering the crtpyocurrency's value currently sits at $110,000 Indeed, financial firms have introduced easier ways to invest including gold-backed retirement accounts, known as Gold IRAs, which combine the tax advantages of IRAs with the safety of physical bullion. Kiyosaki has always challenged conventional wisdom even when it comes to the American Dream of home ownership. 'Your house is not an asset,' he told finance YouTuber Sharan Hegde in September 2023. 'If it puts money in my pocket, it's an asset. If my house is taking money from my pocket, it's a liability.' Instead, he advocates for rental properties - investments that pay you, rather than drain you. Through crowdfunding platforms like Arrived, even those with limited capital can buy into vetted rental homes for as little as $100 and begin earning income - no landlords, no leaky faucets, no nightmare tenants. Kiyosaki's boldest bet, however, remains on Bitcoin. In November, he posted: 'Bitcoin will soon break $100,000.' By early December, that prediction came true. While the digital currency has since fluctuated, his long-term vision remains wildly bullish. Twitter co-founder Jack Dorsey similarly predicted in May 2024 that Bitcoin would hit at least $1 million by 2030 - and perhaps far beyond. Crypto platforms such as Gemini, Robinhood and Coinbase have made buying Bitcoin easier offering regulated, full-reserve exchanges where users can trade dozens of digital assets with peace of mind. Kiyosaki's warnings come at a time of deep political and economic uncertainty. President Trump's sweeping tariffs have thrown global markets into disarray. Inflation, though somewhat tamed from its peak is still an issue and interest rates remain high.
