---President Elect Musk and Convicted Felon Donald J Trump---

They added a third possible outcome that aligns well with Trump’s deep-seated desire for absolute power: that he would end the political independence of the Federal Reserve to steer interest rates and the dollar’s exchange rate to propel faster economic growth and terminate the nation’s trade deficit.

If Trump got all he asked for, the model said, the outcome would be pretty bad.

Trump could claim a “win”: The current account deficit — the broadest measure of the nation’s trade balance — would snap into a surplus, a longtime dream of the former president’s. But that would be wholly a product of capital fleeing the United States, starving the country’s economy of resources to purchase imports.

For everyday Americans, reality would become a nightmare: Trump’s plan would shrink the nation’s gross domestic product by $8 trillion over a second presidency, in today’s money. That is more than a quarter of the nation’s economic output in 2024. At the end of that term, prices would be about 25 percent higher. Employment would tank. The dollar would sink. Apocalyptic stuff.

What would have gone wrong? Standing annoyingly in the way of Trump’s MAGA dream is math.

Deporting 5 percent of the workforce would deliver a massive double whammy to the economy. It would boost inflation (through rising wages) even as it slowed growth by curbing consumer spending (immigrants are consumers) and investment as businesses with fewer workers to hire would invest less in themselves. This would ultimately cause deeper job losses.

The deportations alone would knock $6.4 trillion off American output over Trump’s term in office, according to the economists’ model. The additional tariffs would deal a bedraggled economy yet another blow. They would directly boost inflation by raising the price of imports (as well as that of the domestic goods that competed with them). But because the United States would need less foreign currency to pay for imports, the tariffs would also boost the dollar, curbing U.S. exports, too.

Other countries, moreover, would probably not take kindly to Trump’s tariffs and retaliate with tariffs of their own, blocking U.S. exports and further slowing economic growth in the United States.

Finally, curbing the Fed’s independence would deliver the coup de grâce. If Trump pushed rates down to goose growth, GDP and employment might get a short-term boost. But that growth would soon be eaten up by higher inflation. And, ominously, investors’ mistrust of a Trump-led Fed would surely spur substantial capital flight.

Maybe Trump can be prevented from doing some of this. Maybe he only manages to deport a couple million undocumented workers. Maybe he can’t easily raise tariffs on countries with which the United States has trade agreements. Taking away the Fed’s independence could get entangled in constitutional niceties.

But one should not assume that Trump will be easily deterred. After struggling with grown-ups in his first administration, it is unlikely he will bring many into a second. And congressional Republicans looking to get in Trump’s way will first have to find their spines.

Perhaps the ultimate irony is that the red-hat crowd that so reveres Trump will be punished the most by his plans. The MAGA contingent might think it’s okay to burn down the house to stick it to the liberal elites that populate blue coastal America. But it’s the homes of working-class Americans that will burn first. Tariffs, for one, are particularly harmful to the poor, who consume most of what they earn with little left over for savings. The rich pay the “tariff tax” on a much smaller share of their income.

And, so, the United States will have gotten back at the world — asserting its hegemony and making itself great again through an act of economic suicide.

https://www.washingtonpost.com/opinions/2024/10/22/trump-economic-policy-depression-catastrophe/