Unprepared

People expected chaos to reign when Donald Trump returned to the White House. One month into his second term, the man exceeds expectation.

From his first day on the job, Trump began ruling by executive issuances, defying the co-equal branches of government. A lot of those issuances are really trivial: renaming the Gulf of Mexico to the Gulf of America, for instance. This week, he issued an order favoring the use of plastic straws over paper ones.

The trivial issuances, I suppose, happen simply to keep the circus running, enabling the Narcissist in Chief to command the news cycle. But there are real limits to the volume of inanity he could spew out around the clock.

Meanwhile, Americans are suffering from a spike in inflation. Trump’s arbitrary dismissal of federal employees has created panic in government offices and threatens to push up unemployment. The abrupt dismantling of agencies and programs, such as USAID, produced serious consequences far beyond the US economy.

The sharp turns Trump has taken on foreign policy shocked governments across the globe. He wanted to retake the Panama Canal and purchase Greenland. He wants to depopulate the Gaza Strip and convert the area into a tourist haven.

This week, Trump began negotiations with Russia over Ukraine without the participation of NATO allies. He seems committed to restoring diplomatic relations with Russia, forcing Ukraine to yield territory and diminishing the stature of the Zelensky government in Kiev. The shift in the tone and direction of US policy alarms America’s closest allies.

All the sharp twists and turns in policy the past few weeks do not seem to have been fully thought through. Trump seems keen on playing the role of disruptor to the hilt. He seems to be enjoying the panic he creates with his wild remarks.

But the clumsy policymaking could cause things to break and throw the entire global economy into a tailspin.

Trump threatened to impose stiff tariffs on Canada and Mexico at the start of this month. At the last moment, he held back – although he still threatens imposing the same tariffs some weeks down the road. Should he carry out this particular threat, he could force hundreds of industrial bankruptcies across all of North America. 

Trump also threatens to impose “reciprocal tariffs” across the board, affecting all countries trading with the US. Those tariffs will pump up inflation for American consumers and dislocate supply chains across the globe.

This week, Trump threatens to pay Fort Knox a visit and physically inventory America’s gold stocks. This is in response to some crazy conspiracy theories that claim that the gold stocks have disappeared, perhaps raided by the “deep state.”

The US president is apparently unaware that his nation’s gold stock is carefully audited every year by the Treasury Department. It is highly improbable that the gold stock that backstops America’s financial system is missing. But by giving credence to a crazy conspiracy theory, Trump adds to the uncertainty already gripping the markets.

At one point, Trump seemed to be hinting he could be selective in honoring US debt papers. This is a very sensitive thing. If he repeats this utterance, he could cause a market crash.

The entire global financial system stands on the absolute reliability of US debt papers. It is treated nearly as risk free investments, therefore the foundation for all other financial transactions. The whole system functions only because there is absolute trust that the US government will honor the debt papers it issued the moment they become due.

Once that trust in US debt paper is broken, there will be chaos across the global financial system. Suddenly all risk calculations, the basis for computing interest rates, become invalid. Trump does not seem to realize that, by a single utterance, he could collapse the financial market and cause a global depression.

It is hard to bet that sobriety will always keep Trump in check. He has shown capacity to say the silliest things simply to accentuate his power. He seems to relish taking the markets on wild rides.

Because of this, the global financial system is in real peril. For instance, any wild statement by Trump could force China to sell down the nearly $1 trillion in US debt paper it currently holds. Should something close to this happen, the global financial system might not be able to withstand the shock. The US will be unable to refinance its standing debt, which is at about 120 percent of its GDP.

The world teeters on the edge of financial chaos. Any wild policy shift by Trump could push things off the ledge.

All nations are drawing up all scenarios – including those once considered unthinkable – to deal with the fallout from any wild policy shift by Trump. We, too, should be drawing up our own contingency plans to minimize adverse effects on our people.

But there is no indication we are preparing for anything. We seem to be content with the narrative that because we are not a trading economy, there is little that Trump’s erratic policies could do to harm us.

Besides, we are all too busy playing the stupid political games we play. We would rather be caught unprepared than be distracted from the clown show that is our electoral democracy.

Unpreparedness is not the best standard of adept governance.