Trump, Inflation, and Some Thoughts from Steve Forbes

The race to the White House 2024 is the most dramatic in recent memory. Anything could happen in the next 105 days, but it is currently looking more and more like a Trump win. What could that mean for inflation and YOUR pocketbook in 2025? 

We ran into Steve Forbes recently and asked him to share a few thoughts on inflation, the pandemic and gold. He was as pithy and affable as always.

Watch: Video 

Forbes points out the double-edged sword of monetary and nonmonetary inflation and how the pandemic lockdowns and stimulus packages gave us the worst of both worlds.  

So let’s consider the different types of inflation and how a Trump win could affect the economy and the value of the dollars in your bank account. 

In a nutshell: Nonmonetary has to do with supply chains and production. Shutting down businesses leaves shelves empty, meaning there are fewer goods for dollars to chase. Prices go up because of scarcity.  

Monetary inflation involves devaluing the currency by printing up too much of it. The stimulus checks produced that type of inflation, but were the politicians’ genius reaction to people complaining about goods becoming suddenly scarce and too expensive. 

In many ways, the economy is still playing catch-up on these things. Many businesses shut down permanently during the lockdowns and new businesses are struggling to gain a foothold in an inflationary environment. 

How would Trump handle inflation? 

Based on his track record and campaign statements, Trump’s policies on trade and manufacturing could be positive, negative or mixed… 

Trump and the Biden Administration generally agreed on tariffs and trade, although Biden escalated tariffs Trump had imposed and added some more..Trump has campaigned on significantly increasing tariffs by another $524 billion, which the Tax Foundation estimates will start a global trade war and have a net negative effect on the economy. This could create additional nonmonetary inflation by reducing availability and choice of goods in stores. Will that be counteracted by a corresponding cut in regulations, easing red tape on American businesses? That remains to be seen.  

Trump has also floated the idea of cutting corporate taxes all the way down to 15%. Will this ease prices consumers pay? 

What are Trump’s plans for the Federal Reserve? 

He has indicated he is willing to keep Jerome Powell on as Fed Chair for the remainder of his term, which goes into 2026. He has also mentioned JPMorgan CEO Jamie Dimon as possible secretary of the Treasury.

So, not much will change at the Federal Reserve. Trump is indicating that he doesn’t think a cut in interest rates right now is “the right thing.” 

Will manufacturing come back to the United States?  

One way to combat nonmonetary inflation is to increase manufacturing and production. 

JD Vance certainly hopes we will restart some factories and it makes sense. Vance has railed against the deindustrialization of the US, and indeed it has gotten so bad that all but 1 munitions and explosives factory has closed down – largely due to environmental regulations. Virtually ALL our explosives for military weapons are made in Russia and China. So what happens if we end up in a war with Russia or China? 

We need to learn how to make stuff again, and not just munitions. But in the current environment, regulations and permits are crippling, not to mention labor costs which might be permanently elevated. If Trump really does mass deport millions, will that eliminate an (albeit illegal) source of cheaper labor? Who will work in the new factories at wages they are able to pay? 

Will Trump/Vance be willing and able to unleash American economic power again? Will it be soon enough and big enough to counteract $34 trillion in public debt, a gathering storm of a banking crisis as over half a trillion in unrealized losses sits on balance sheets, and Washington spending that shows no sign of abating?  

We have monumental economic problems in this country and, love him or hate him, there is no reason to think a Trump presidency would magically fix everything, and certainly not overnight. He’s up against some mighty headwinds, to say the least. 

Ditto for a continuation of whoever was in charge of the Biden Administration.  

And either outcome is capable of making things worse. 

Don’t wait for the political clouds to clear to buy gold. If anything, the clouds are getting darker and more foreboding. The election year surprises are coming nearly every day now and it is important to prepare NOW while you still can. Even bigger and more shocking surprises could be yet to come. And they could take the value of the dollar down with them. 

Don’t sit on the fence. Buy gold today.