The Dow Jones lost 800 points on Wednesday as Trump claimed to be 'winning' the trade war with China.
As the stock market cratered Wednesday afternoon, Trump claimed victory over his trade war with China in a rambling series of tweets.
"We are winning, big time, against China," Trump wrote at 3:20 p.m., when the Dow Jones average was down 698 points on the day. "Companies & jobs are fleeing. Prices to us have not gone up, and in some cases, have come down. China is not our problem, though Hong Kong is not helping." The Dow finished the day 800 points down.
Trump is lying about consumer prices not going up. In April, NBC News reported that Americans paid a total of $1.5 billion more for washing machines in 2018, thanks to Trump's trade war. That figure comes out to about $100 more per washing machine.
Earlier this week, Trump's own Labor Department released data showing inflation hit a six-month high. "[It] is clear tariffs are beginning to drive goods prices higher," Sarah House, a senior economist at Wells Fargo & Co., said, according to Bloomberg.
Researchers estimate Trump's various trade wars cost the U.S. economy $7.8 billion in 2018. Research published by the Federal Reserve earlier this year estimated Trump's trade war with China will cost families $831 each year, or almost $70 per month.
In addition to families across the country, Trump's trade war has devastated farmers. Farm bankruptcies have spiked since Trump took office, and the trade war with China seems to be making things worse.
After discussing China, Trump abruptly changed topics in the middle of a tweet, aiming his ire at the Federal Reserve.
"Our problem is with the Fed. Raised too much & too fast. Now too slow to cut... Spread is way too much as other countries say THANK YOU to clueless Jay Powell and the Federal Reserve. Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!"
Trump is complaining that the Federal Reserve raised interest rates too fast, and attacking the Federal Reserve Chair Jay Powell by name. Trump himself nominated the "clueless" Powell for the position in 2017.
Trump also mentions the inverted yield curve, which refers to the price of two-year and 10-year treasury bonds. Usually, 10-year bonds pay more interest. An inversion is when two-year bonds pay more interest than the 10-year bond, and this phenomenon has occurred before every recession in the past 40 years, according to Politico.
"It sounds like a wonky bit of financial arcana," Politico's Ben White explains. "But it's a closely watched gauge. And it has investors freaked out."
Many economists attribute Wednesday's massive stock market plunge of 800 points on investor worry about a looming recession, sparked by the yield curve. The inverted yield curve comes on the heels of major banks like Goldman Sachs and Bank of America issuing warnings about a coming recession.
According to the Washington Post, previous administrations would come up with policy proposals to stave off a recession. "Instead of rolling out new policies, Trump and other top aides have escalated their attacks on the Federal Reserve, trying to pin much of the U.S.'s problems on what Trump alleges is elevated interest rates that are strangling growth," the Post reports.
Trump had no trouble boasting when the economy and stock market were doing well, claiming all the credit. But as soon as things start to turn south, Trump is wasting no time trying to find a scapegoat.
Published with permission of The American Independent Foundation.