Things are on the verge of getting Serious…

The Tariff Debacle that is now unfolding is marked by some important points.

1. The market doesn’t believe Trump’s Tariff plan will work.
2. Trump totally believes that it will work, so things are at loggerheads.
3. The market thinks that the plan will never be really implemented for very long and is expecting major changes that will be explained away as negotiation.
4. The possibility that Trump might decide to tough it out and punish the world is not given much weight. If that should happen the economy will be in for a huge shock as the FED over the past 14 years has learned its lessons on the downside of rescuing situations, let alone a stupid man-made one.

With that in mind I decided to let one of the Chat AI programs take a look at things.

So, I posed this question to Copilot AI; What economic is term is used to describe an environment where production, interest rates, precious metals, and stocks all go down?

Its answer was: The term that might best describe such an environment is deflationary depression or simply deflation. This occurs when there is a significant decline in economic activity across the board, often accompanied by falling prices, reduced production, lower interest rates, and declining asset values like precious metals and stocks. Deflation is usually driven by a drop in consumer and business demand, creating a cycle where lower spending leads to further economic contraction.

It’s a tough scenario, as it can be challenging for governments and central banks to reverse such a downward spiral.