As the curtain falls on the 2024 presidential election, Trump has become the first Republican presidential candidate to win the popular vote in the past 20 years and the first to be criminally convicted and re-elected. The Republican Party has secured the Senate and, without any surprises, will likely control the House of Representatives along with a more right-leaning Supreme Court. With control of all three branches, Trump, who will take office in the White House in January next year, will be able to more easily push legislation, confirm judicial appointments, and set a broader agenda without facing too much opposition.

Who is saying that the United States is further divided because of Trump, when in reality, the United States is standing behind Trump, united as one. What reasons would make the American people overlook his 34 serious criminal charges, being convicted of one, and facing another 2 pending cases to potentially send him back to the White House? A segment of interviews with young college students may provide some insights.

This college student mentioned that during Trump's presidency, his family had saved enough money to buy a house. However, in the years following his presidency, due to inflation and high prices, their savings had been exhausted, forcing them to rent again. The rent became too expensive to afford. Although he is a Christian and disagrees with Trump's divorces and numerous children, he had to vote for Trump simply based on economic issues.

In the comments of this video, one person mentioned having only $300 in savings and being unable to afford the current high prices. Another person stated that most of their income was from tips and expressed a wish to have this portion of income tax-free so they could afford to travel and explore other cities.

Based on the Federal Reserve's "2023 Report on America's Household Economic Status," which is based on the 11th annual Survey of Household Economics and Decisionmaking (SHED), a thorough study was conducted on the financial conditions of American households and adults. Among all surveyed American adults, only 18% stated that they could cover their largest emergency expense of less than $100 solely through savings. Even more alarming, only 14% said they could cover expenses of $100 to $499, and just 10% said they could cover expenses of $500 to $999.

Only 63% of American adults are able to cover a $400 emergency expense with "cash or its equivalent" (using cash, savings, or a credit card and paying it off by the next statement due date). Among the remaining 37% of adults, 13% said they could not pay this amount by any means. This data remains unchanged from 2022 but has increased by 11% compared to 2021.

The interview with the young person and other comments above make this study more vivid and concrete. Despite being the wealthiest country in the world, the United States' citizens are genuinely worried about $100.

On the other hand, the already soaring US stocks, the capitalists with a large amount of capital, or the advanced workers who can afford to make regular investments every month, have seen their assets multiply several times in the past few years. A few people who can make a living through dividends have the leisure to read, care about politics, pay attention to what is happening in every corner of the world, and have time to research companies to make better investment decisions to earn more money.

However, this is not the life of the silent majority. Imagine an ordinary adult who works 8-12 hours a day, using their spare time to compare where to buy groceries cheaper in order to save money. How could they have the leisure to care about what a politician says, or to care about climate change. Trump can mock anyone at will, but all of this cannot shake the fact that up to 70% of the population believe he will perform better in terms of the economy.

Mass expulsion and tariffs

In Trump's first term, within a few months after taking office, he signed the 'Muslim Ban', which denied entry to US residents with green cards from these countries, ending this farce under a court ruling. But this time, the returning Trump is more prepared, and his mass expulsion plan will not be just a farce.

Trump's longtime advisor and immigration hawk Stephen Miller openly stated that invoking the 'Enemy Alien Act' to replace the current immigration laws would allow Trump's future government to 'suspend due process normally applicable to deportation proceedings'. The 'Enemy Alien Act' (Alien Enemies Act of 1798) grants the US president the power to arrest, detain, or expel any citizen of a hostile country during wartime.

Using a law from 226 years ago intended to deal with enemy nationals during wartime to manage US immigration in 2024 is not an exaggeration. When facing questions from Congress during the nomination of the four conservative Supreme Court justices, they all affirmed the legalization of abortion in the 'Roe v. Wade' case half a century ago, calling it a precedent that they will respect. However, in 2022, when overturning this precedent in the 'Dobbs v. Jackson Women’s Health Organization' case, Justice Alito cited the views of the 1609 British jurist Sir Edward Coke as part of the legal basis for overturning Roe v. Wade.

Trump's mass expulsion mainly targets illegal immigrants, but according to the regulations of the IRS, regardless of their immigration status, as long as they have an income in the US, they are required to pay taxes according to the law. Despite their illegal status, many illegal immigrants still pay taxes through individual tax identification numbers, wage taxes, and consumption taxes. A study in 2017 calculated that illegal immigrants pay approximately $11.6 billion in state and local taxes each year.

The latest estimate from the American Immigration Council (AIC) indicates that nationwide, mass deportations will cause the construction industry to lose 1.5 million workers, the agriculture industry to lose 0.22 million workers, and the hotel industry to lose around 1 million undocumented workers. The AIC also estimated the impact on the Gross Domestic Product (the total value of goods and services produced and sold annually) of the US, and predicted: 'Mass deportations will result in a loss of 4.2% to 6.8% of the US GDP, equivalent to $1.1 trillion to $1.7 trillion in 2022 dollars.' As a comparison, the council pointed out that during the 2007-2009 economic recession, the US GDP lost 4.3%.

In summary, immigration is very important, whether legal or illegal, without immigration, the United States will experience an economic disaster. Taxpayers will have to bear the cost of deportation, as analysis data estimates that out of 11 to 12 million undocumented immigrants in the United States, arresting and deporting only 1 million people could cost taxpayers around $20 billion, or $19,599 per person, and the required time far exceeds Trump's four-year term.

During 2017-2018, Trump implemented a series of tariff policies. His tariff policy mainly targeted countries and regions such as China, the European Union, Canada, and Mexico. In 2018, massive tariffs were imposed on China in multiple phases, ultimately levying 10% to 25% tariffs on around $370 billion worth of Chinese imports. The products affected include electronics, industrial parts, textiles, consumer goods, and more. Economic studies on the impact of the new tariffs implemented during this period indicate that ultimately, most of the economic burden is borne by American consumers.

This time, Trump plans to impose an additional 60% to 100% tariffs on goods imported from China, and 10% to 20% tariffs on all imported goods. Trump firmly stated, "The higher the tariffs, the more likely companies are to come to the United States to build factories, so they don't have to pay tariffs." He considers this tariff policy as a long-term strategy aimed at revitalizing domestic industries such as manufacturing, creating more domestic job opportunities, and generating revenue from other countries to fund his other proposals.

Democrats insist that this policy will cost middle-class families $4,000 per year. This figure is consistent with estimates from the left-leaning Center for American Progress and the right-leaning American Action Forum.

The Peterson Institute for International Economics estimates the annual cost per household at $2,600. The Tax Foundation states that by 2025, a 10% universal tariff will result in an average of $1,253 in additional taxes for American families, while a 20% universal tariff will increase costs by $2,045.

Financial experts say that more aggressive tariff policies can also be seen as an economic confrontation. Sam Millette, Director of Fixed Income at the Federal Financial Network, said, "When a country imposes a series of new tariffs, other affected countries often react. This can lead to a trade war. In fact, this situation can cause both affected countries to see government intervention. This often results in higher prices for both countries' consumers."

The S&P 500 index at great heights

The s&p 500 index hit another historical high for the 48th time in 2024, with a pe ratio close to 31 times, now only slightly lower than 30.5 times before the internet bubble burst in December 1999.

As mentioned above, while ordinary people find it difficult to even take out $100, the stock market has repeatedly hit new highs, and cryptocurrencies have also reached new highs, with huge fiscal support driving budget deficits. A rate cut will lead to even bigger bubbles, and a vicious cycle will require more rate cuts to sustain the bubble.

When we compare the market value of the most valuable companies during the dot-com bubble period as a percentage of the US GDP to the current situation, we will find that today's US stocks are exceptionally expensive. During the dot-com bubble period, Microsoft's market value as a percentage of GDP was the highest, peaking in 1999 at 5.9% of the US GDP, whereas today the market value as a percentage of GDP is almost twice as much, reaching 11.5%.

At that time, the 'Magnificent Seven' accounted for 31% of the US GDP, while today's market leaders account for 60% of the US GDP. Currently, there are 3 companies with market values exceeding 10% of GDP, namely Apple (12.7%), Nvidia (12.5%), and Microsoft (11.5%). During the dot-com bubble period, there were no companies with such high values.

Buying indices at the current level is insane. If the bubble bursts, it will cause a huge negative wealth effect, plunging the US into a deep recession, which would be very dangerous. Therefore, the Federal Reserve will do everything possible to prevent the bubble from bursting. However, one day, the bubble will become so large that it will be difficult to sustain.

"Stock God" Buffett, starting from the fourth quarter of 2022, has been constantly accumulating cash, especially since the second quarter of this year, his cash reserves have surged from over $170 billion to over $320 billion. Buffett usually supports Democratic Party candidates in the US. His political inclinations and ideologies are generally in line with the Democratic Party's positions on tax policy, social fairness, economic equality, etc. This year, however, he openly stated that he would not support any presidential candidate. The reason given publicly is that he is concerned about imposters on social media, but this lame explanation seems to be just an excuse, perhaps he has already seen everything and doesn't want to stand on the opposite side of history.

Since the 1970s, the US has experienced multiple interest rate hike and cut cycles, each time having profound impacts on the global economy, triggering a world-class financial crisis.

From October 1979 (start of rate hikes) to June 1981 (start of rate cuts), in response to high inflation, the Federal Reserve began raising interest rates in October 1979, increasing the federal funds rate from about 10% to 20% by June 1981. Subsequently, the Federal Reserve began cutting rates, and by the end of 1982, rates had fallen to around 6.5%. High rates increased the debt burden for Latin American countries, especially Argentina, ultimately triggering the 1982 Latin American debt crisis.

March 1988 - June 1989: The Federal Reserve began raising rates in March 1988, increasing rates from 6.5% to 9.75% by June 1989. Rates gradually fell to 3% by 1992. A high rate environment led to the bursting of the asset price bubble in Japan, triggering the economic stagnation of the early 1990s, known as the 'lost decade'.

From February 1994 to July 1995, the Federal Reserve began raising interest rates from 3% in February 1994 to 6% in July 1995. Subsequently, the interest rate fell to 4.75% in 1998. The rate hike led to capital outflows from emerging markets, eventually triggering the 1997 Asia financial crisis, severely impacting the economies of Southeast Asian countries.

From June 1999 to January 2001, the Federal Reserve began raising interest rates from 4.75% in June 1999 to 6.5% in 2000. The interest rate then fell to 1% in 2003. The rate hike led to the bursting of the internet bubble, triggering the 2000 technology stocks crash, affecting global stock markets.

From June 2004 to September 2007, the Federal Reserve began raising interest rates from 1% in June 2004 to 5.25% in 2006. The interest rate then fell to 0.25% in 2008. The rate hike led to the collapse of the subprime market, triggering the 2008 global financial crisis.

The current cycle began with an interest rate hike in March 2022, and rate cuts began in September 2024. Will this time be different? Will Trump's serious implementation of his campaign promises after taking office lead to a financial crisis in the USA, puncturing the stock market bubble and causing negative repercussions worldwide? We should be prepared.

Editor/Lambor