WORLDVIEW: Why Trump’s US will be spending like there’s no tomorrow

By Alec Hogg.The world's economic driver is something called Quantitative Easing, born in the aftermath of the Global Financial Crisis that hit six years ago. A Crisis which was rooted in greed. Too much debt. And too much leveraging of that debt by already rich bankers desperate to make even more money..The bankers gambled far more than their companies could afford to settle. When those bets went south sparked by the collapse of 164-year old Lehman Brothers, non-bankers were left holding the baby. And a gigantic dilemma. Punish the perpetrators by allowing the financial system to collapse and unleash pain worldwide. Or a lesser but disgusting evil of bailing out those who'd caused the problem..___STEADY_PAYWALL___.Morally, there was no choice. Economically there was. Last time society punished greedy bankers was in the 1930s. That led to something Americans still refer to as the Great Depression. Unemployment rose above 20%. Soup kitchens and squatter camps sprung up everywhere. Businesses stopped growing..Politicians could never allow a repeat. Not on their watch anyway. In South Africa, we've become immune to a similar reality. We live with it. Which, I guess, is the difference between active and aware voters and those who put loyalty and deference above logic..But back to our story. America is now starting to wean its economy off the financial drug called QE. Its central bank has warned that, as a result, there are likely to be three interest rate hikes in 2017. And where the US goes the rest of the world follows..QE has been great for global liquidity. And has inflated asset prices, boosting the value of shares, property and commodities. So might we expect a sharp reverse now that the days of easy money are ending? Is it time to dump those assets, hoard cash and wait for the bargains?.Not quite. Last year's major development was the election of Donald Trump, introducing a disruptive force into the Oval Office. Trump has promised to turn on the spending taps through a massive upgrade of the US's creaking infrastructure. But that might be more difficult to do than he expects. US debt is at an all-time high, so borrowing more to expand that mountain of debt is going to be costly..But one area where Trump can trigger stimulus is in defence spending. It's sure to be politically popular, too. For decades already, many Americans have fretted over their nation's apparent lack of military preparedness. A Trump world raises the risk of confrontation. And, perversely, supports the new POTUS's plans to spend his economy out of recession. He'll achieve it. Just not in the way most expected. Prepare for another bout of QE, just with a different name.

WORLDVIEW: Why Trump’s US will be spending like there’s no tomorrow

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