YOUGHAL, IRELAND – We left off yesterday explaining what we think will happen. Today, we elaborate.

Not that we’ve gotten a sneak peek at tomorrow’s headlines. We still read the news at the same time you do.

But two things happened this week and last that made the future seem a little more visible…

Unwanted Light

First, Nancy Pelosi announced impeachment proceedings against the president. Most likely, this will not hurt POTUS. But it will bring unwanted light on the Bidens and their apparently corrupt dealings with the Ukraine.

Second, Bernie Sanders had a heart operation.

Neither of these things is directly connected to our beat – money. But the link will become clearer as we continue with our guesswork about tomorrow.

Most likely, the stock market will crash sometime before the 2020 election. We can’t know when. But Richard Russell used to explain the increasing odds, by referring to his time as a bombardier in WWII.

Each mission over Germany might carry the same risk of getting shot down as the one before. But the more missions you flew, the more likely you were to not come back.

“There were good combat pilots and bad combat pilots,” he said. “But there were no old combat pilots.”

Crash and Burn

The end of the stock market boom, too, is unpredictable. But each passing day brings us a day closer to when it will crash and burn.

What will set it off? Hints of a forthcoming recession? A bad turn in the on-going trade war with China? A collapse of the Chinese economy? Or a sudden surge in the polls by Elizabeth Warren?

With Biden tainted by corruption… and Sanders by age and infirmity, Ms. Warren is the likely Democratic candidate.

The Democrats will blame the crash on Mr. Trump. The president will point the finger at the Fed… and the Democrat’s impeachment plan.

But a stock market crash will be more damaging to Mr. Trump than to the Democrats. It will call into question the one thing people still feel they can trust about the president – that he understands money.

Business Genius

Maybe Mr. Trump is the business genius he claims to be. Maybe not.

But his economic views were always silly and defective.

There were two major economic campaigns undertaken by the Trump administration – the trade war with China and the tax cut.

The trade war was a mistake from the get-go. No real victory was ever possible. A defeat would mean more expensive imports and less trade – weakening both economies.

But a success might be worse – from Mr. Trump’s perspective, at least.

Imagine that China renounced all its trade impediments and opened its doors to American markets. It would still have a 5 to 1 advantage in labor costs. So the wider the doors, the more Chinese goods would enter the US, increasing the trade deficit and possibly taking more good jobs from heartland Americans.

As for the tax cut, it put money in some people’s pockets. But where did the money come from? It had to come from other taxpayers… consumers… and the public. And what the Trump administration gave in 2017, the economy now taketh away.

Sales and capital spending are both going back down. As we saw yesterday, manufacturing is back to 2009 levels. And new job creation has slipped back to pre-Trump levels and still headed south.

All the tax cut achieved was that it possibly delayed the correction… and contributed to another $2.4 trillion added to the federal debt in the last 24 months.

More Claptrap

A crash in the stock market now would immediately be followed by a recession. Unemployment would soar to 8%… maybe 10%. The Dow would be cut in half.

At least Ms. Warren has a “plan,” heartland voters would say to themselves, unaware that the plan is claptrap.

That much is almost sure. But so is what happens next. That is where it gets interesting.

If the market crashes before the 2020 election, odds are Mr. Trump will lose to Ms. Warren.

If Mr. Market holds his fire, on the other hand, Mr. Trump has decent odds of reelection.

It hardly matters, because when the crisis comes… Mr. Trump or Ms. Warren will react in about the same way.

Both will be faced with an inflate-or-die trap. And neither wants to see their career die.

Besides, each has the same tools to work with – inflation, price rigging and boondoggles. And each has a whole gaggle of enabling economists, who tell them that stimulating the economy is the only way to go.

When the Going Gets Tough

Who will object? Not the powerful insiders – the cronies and Deep Staters who get the money.

Not the public, who’ve been taught that the feds always come to the rescue when the going gets tough. Besides, they won’t say “no” to a giveaway either.

Not the right. Not the left. And not the Old Conservatives… who disappeared years ago.

And certainly not Wall Street. Investors think it is the Fed’s duty to keep stock prices high.

The Old Conservatives – if any are still alive – will be staggered as the federal debt goes not to the $30 trillion that is presently forecast, but to $40 trillion and beyond…

Amidst all the hubbub, people will hardly notice. They will go to the store and find prices for turnips and gasoline have gone up… and then, autos too… and parking fees… and coffee and potatoes…

…and then the media will begin reporting on price increases. “Inflation is on the rise,” they will say. Three percent! Four percent! Five percent…

…wait… Ten percent!

Whoa… What to do now? Stay tuned.

Regards,

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Bill