Trump’s Opening Act: A Trillion Dollars of Infrastructure Spending

Trump’s Opening Act: A Trillion Dollars of Infrastructure Spending, by Robert Wenzel.

The deficit is likely to soar all the way to Pluto under Donald Trump.

In his opening speech as president-elect of the United States, Trump again referenced his plan for spurring $1 trillion in infrastructure investments …

Trump has promised to “get a fund,” “make a phenomenal deal with the low interest rates” and “do infrastructure bonds for the country.”

He thinks he will “pay” for it because of the “increased activity” of this central planning activity.

…not to mention his planned defense spending buildup.

The US public infrastructure is noticeably old and in poor condition, especially in contrast to the shiny new roads, ports, railways, and airports in China. Trump has called for huge employment growth in rebuilding infrastructure. The money to do this will have to be printed, because he is lowering taxes and no one ever cuts welfare appreciably.

The Japanese deliberately followed this path in the 1990s and 2000s, to stimulate and kick-start their economy. But of course it didn’t work. The excessive infrastructure did not increase productivity much, so it was a waste of effort that just made society poorer.

The Keynesian idea that conjuring up more medium-of -exchange (money) out of thin air helps the real economy is just an accounting illusion based on a poor understanding of feedbacks, and always fails in the long run.