Donald Trump, Courtesy Of The Federal Reserve

A Benjamin Cole post

America’s chattering elites cannot say enough bad things about GOP presidential candidate Donald Trump, the billionaire celebrity real-estate developer. He is decried as xenophobic, economically clueless, a buffoon.

Among his cardinal sins, Trump bashes Chinese imports and 13 million illegal immigrants, most of whom are in the U.S. seeking work, but who lack protection of law.

Meanwhile, the Federal Reserve has suffocated the U.S. economy for at least eight years, while all along some Fed officials rhapsodized about zero inflation. Tens of millions Americans lost jobs or left the labor force.

So what see the American middle- and working-classes? They see Wal-Mart full of Chinese goods, foreign cars clogging the roads, weak job markets, feeble economic growth, and (at least) 13 million Third Worlders who want American jobs. The Rust Belt is so old it is passé to mention it.

Then average Americans hear from established party leadership how wonderful immigration is, and that even illegal immigration must get a free pass as it is impossible to do anything about it, and that free trade makes your life better. Why, a wall across the border would cost $6 billion, too much money. (BTW, federal outlays in last fiscal year were $3.59 trillion).  The GOP party hails tight money.

Then Mr. and Mrs. America see Donald Trump.  Egads, the question is not, “What is propelling Donald Trump?” but rather, “Why hasn’t Trump effectively won this election already?”

If a central bank chooses asphyxiation as the norm, are voters wrong to seek the protection of socialism from unfettered free markets? Or a candidate who talks about what they see?

Trump

Trump should be winning easily, but he has kneecapped himself at every turn. Instead of legitimately questioning the role of illegal immigrants in U.S. job markets, Trump denigrates the motives of Mexicans border-hoppers, most of whom only want jobs. Trump pointlessly belittles women, a huge voting block, to say the least. He alienated natural ally of Fox News. He wantonly castigated Sen. John McCain’s war record. Trump’s latest miscue, of course, was to advise Moslem immigrants be kept out of the United States. And lastly, Trump has dropped only faint come-ons to the big GOP-bloc of evangelical voters, a mysterious blind spot.

And yet Trump still dominates the GOP field.

Why?

Because Trump gets it: Tight money, large-scale immigration and free trade have not resulted in higher living standards for a big swath of Americans, certainly not if the Fed is going to perma-suffocation as their default mode. You have to be blind not to know illegal immigrants work for the wealthy, as maids, nannies, gardeners, in restaurants, and for agri-business. The middle class can’t afford such luxuries, and rarely owns farmland. Immigrants have crowded the U.S. unskilled and semi-skilled job markets—a world invisible to the chattering classes.

Conclusion

The Fed has helped bring about Trump, but unfortunately Trump seems to understand little about monetary policy, even though he is a real estate-developer. He might understand city zoning and its effects on housing costs, but again he has not said as much. It is sad to see such an irreverent and potentially positive national character gut his own campaign through ugly, hurtful, pointless and divisive barbs at one voting group after another.

It is even sadder to consider that the other contenders for America’s highest office offer less.

PS Yes, Kevin Erdmann’s pioneering work on housing costs is very important. Yes, Trump is a bit of a “Trumpenstein”—the right-wing has scare-mongered for generations about overseas threats and terrorism. So, Trump says he will answer the terrorists with steel. But at the core of Trump’s appeal is that he appears to offer a solution to weak job markets (suffocated by the Fed).