‘Trump presidency will be acid test for US constitution’
RT: Why such a knee-jerk reactions from the market initially?
Max Keiser: Markets are prone to knee-jerk reactions to any kind of news. The volatility is very high because the markets are trying to get historic highs and any kind of news will move them dramatically one way or another. But the initial sell-off is understandable because we were told that a Trump presidency will be catastrophic.
But as saner minds came into the market and took a look at things, they’ve realized that what we’re going to see going forward is a lot of money pouring into infrastructure stocks, we’re going to see a lot of money pouring into areas of the economy that have been ignored for a while; and that there is a lot of beneficiaries of these potential Trump economic policies.
And of course, there will be ... fewer regulations which is very positive for stocks.So I think the big thing going forward is going to be ... inflation versus deflation. We are going to be exiting a deflationary period. We are going to be entering an inflationary period. So stocks will probably do pretty well in this environment but bonds, however, I think are a sell.
RT: Trump has been called an anti-establishment candidate, but he is a billionaire businessman, he is a tycoon. What will his relationship with Wall Street and the financial establishment be?
MK: He is perhaps anti-establishment, but more importantly he is anti-war, which I think captured the imagination of his support. A lot of people are war-weary and they thought Clinton represented more war and Trump was taking something else. And I think that drove a lot of his popularity.
As far as Wall Street goes, he has talked to people like Carl Icahn coming in and helping to redo some of the regulations and maybe a repeal of some of the recent regulations on Wall Street, again to make it easier for banks to do some of the stuff they have been doing.They are going to be looking into the headwind of the rising interests rates. That is what we are talking about in terms of inflation. And that is going to be difficult to overcome going forward. So that is going to be, economically speaking, his biggest challenge.
Rates are going to go up one way or the other. Either the market will force the rate rise or the Federal Reserve and other central banks start to raise rates. But that is going to be his biggest challenge. The 30-year bull market in bonds, to go back to the early days of the Reagan administration, I think is over. That is going to be the challenge.
RT: As a political newcomer he is a freshman in a day to day politics. Is he going to be able to do much or the will machine of government grind him down?
MK: I’m very happy to see this Trump presidency because it will be an acid test for the US constitution which was designed by the founders so that anybody can walk in off the streets and be president of the United States. You just follow the directions. It is government by the people for the people. You go through, you follow the instructions. And any civil servant can come in from the farm, you know, be the president for four to eight years, go back to the farm. That is the way it’s designed.
So this will be a fantastic test to see whether the constitution actually works, whether you can take a successful guy, a reasonably intelligent guy with good intentions. He wants to take time off from the private sector, be president for four or eight years, and go back to the private sector. It should work. That is the way it is designed. Let’s see if it works.
Hillary Clinton was going to be a continuation of a dictatorial interpretation of the presidency, where presidents were signing off on executive orders and bypassing the constitution. And that is a complete anathema to what we as Americans would expect our president to do.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.