In the pause: One of the giants of the investing world expresses concern about Trump

“In matters of style, swim with the current; in matters of principle, stand like a rock.” ~Thomas Jefferson

In my ongoing pursuit to understand the strange economic climate that Mr. Trump is generating, I read this article about non-partisan investor Seth Klarman one of the most interesting reads as of late. (Hat tip to my friend, Alex, for sending it to me.) While the societal impact Mr. Trump is having garners most of the press and public opinion, what his leadership style and actions are doing, and will potentially continue to do, to our economy makes me increasingly nervous. Mr. Klarman has communicated the same fears.

Though the journalist who wrote this piece doesn’t share the entire contents of Mr. Klarman’s letter to his investors, he pulls out some of the most salient and relevant points. One point is that Mr. Trump’s protectionist trade policies, which he dubs as “America First”, are dangerous and historically have proven to be harmful to the U.S. in the long-run. Eventually, it will drive prices higher, harm all manner of relations with countries around the globe, comprise safety, and increase interest rates and inflation. For all those voters who said their number one reason for voting for Trump was that he promised to cut taxes, Mr. Klarman also views that as a short-sighted reason. These tax cuts could ultimately harm the U.S. because they have the potential to balloon national debt with rising interest rates and cause societal unrest by growing economic disparity. Essentially, they make the poor poorer and the rich richer. And that my friends, is a recipe for revolution that has toppled leaders, and at times entire governments.

I highly recommend reading this brief article but if you don’t have time, here’s the crux of it: buckle up, keep reading and discussing to stay educated on the issues, and don’t be a bystander. To borrow Mr. Klarman’s turn of phrase, be an upstander. Democracy needs each one of us, now more than ever.