Stock Market Fluctuations

Yesterday I discussed the drop in the stock market indexes as one of several indications that Trump’s policies were harming the American economy. Some people were surprised that Trump didn’t seem that concerned, as they thought that the stock market would be the one economic index that might constrain his worst economic policies.

President Trump’s volatile economic policies, especially the on-again, off-again tariffs, create an atmosphere of uncertainty which is bad for businesses. On Tuesday March 11 about 100 business leaders met with Trump begging him to stop destabilizing what had been a booming economy. They told him that uncertainty made it difficult to plan and was killing investment.

In talking to reporters after, Trump did not appear to be dissuaded from his objectives. He told them “Markets are going to go up and they’re going to go down, but you know what, we have to rebuild our country. Long-term what I’m doing is making our country strong again”.

As I pointed out yesterday, most stocks are owned by the wealthiest Americans. One exception is pension funds which invest heavily in stocks, and would be hurt by a crash. And, with an accompanying recession involving inflation plus high unemployment, many people would be forced to sell off their shares (at a loss) just to get by.

Thom Hartmann in his March 12 substack post argues that the wealthy fare well in recessions and a volatile stock market. During every recession in American history the wealthy have significantly increased their wealth. That was true for the industrialists in the 1890s and 1930s, in the mortgage recession (2007-09) and most recently in the 2020 Covid-19 recession.

Billionaires love recessions. People with money can take advantage of those forced to sell by buying up stocks at bargain prices. Between March and June of 2020 during the Covid lockdown the seven richest men in America increased their wealth by 50% (while paying 4% income tax).

Hartmann asks if this is the reason that 11 of the last 12 recessions occurred during a Republican presidency. Republican policies of deregulation are a significant factor in the cause of recessions. And Republicans like to use an “economic crisis” as an excuse to cut services to the poorest Americans and cut taxes to the wealthiest – just the opposite of what should be done to turn the recession around.

Hartmann speculated that perhaps Trump’s on-again-off again tariffs were deliberately manipulating the stock market for the benefit of his billionaire friends. The stock market scam works best if you have insider information. For example if you know Trump is bluffing when he announces a tariff that will harm the auto industry, when stocks in Ford and Chrysler plummet you can pick them up expecting them to go back up in a week when the tariff is canceled and turn around and sell them at a profit.

That doesn’t appear to be the case, though. I think Trump’s flip-flops are the result of his whim of the day and his ego. He seems to be using the threat of tariffs to make countries like Canada and Mexico grovel, and to make him appear strong. Someone described it as just another tool that the mob boss could impose or withhold to show disfavor or to extract favors.

 

Sources

https://heathercoxrichardson.substack.com/p/march-11-2025

https://hartmannreport.com/p/stock-market-meltdown-the-morbidly-06a