some portion of this I hear and I when I asked in these four group chats I got he's throwing stuff at the wall the Border he's trolling the 10-year note and he doesn't care about stocks and then I got on Shoring and Manufacturing as a possibility we going to make it more expensive to bring things in so why don't you consider making stuff here do you think that third possibility is what's going on here just David freeberg pick one of these three choices or another what's going on here with Tas specifically I don't sit inside
of Trump's head and I don't have any direct line of communication to folks that are constructing the theory and the policy if I were to say what's the most masterful plan in an optimistic way of what could be going on here what's the master plan I would kind of craft it as follows tariffs aren't being done in isolation they're being done along with a coordinated policy effort to reduce income taxes and another policy effort to reduce government spending so those are three actions three legs on a stool so tariffs reduced income taxes reduced government spending
and they are related to each other they're related to each other because if we increase tariffs one element of that is that to import products is more expensive for example I buy LED lights in my greenhouse and the price of the LED lights just went up by 25% this week I actually spoke with the CEO of an LED company and I was like why don't you guys make the LEDs here here and there starts to become a crossover point where it actually makes economic sense for the company to make the LEDs here instead of sourcing
them from Asia and there's a 100,000 examples of this when the industrial supply chain goes to the lowest part of production it's going to end up offshoring when there's no tariffs and if there are tariffs then you start to do production here so you're increasing both kind of security for the US supply chain but also increasing demand and creation of Workforce Now I think that the income tax piece is critical here because in order to make the capital available to build that industry here we need to have unleash capital and reducing of income taxes the
economic theory would be that Capital will now flow into these entrepreneurial activity these opportunities that have emerged where suddenly it makes sense for me to make textiles to make metals to make materials to make cars to make all this stuff here in the United States that I otherwise wouldn't be making so both the corporate and the personal income tax by reducing it unleashes capital that instead of going into the government it now goes into the private sector into building businesses okay I think that there's another theory about this which is as you drop the income
tax one of the kind of key theories that I've heard spoken about a lot lately and I think we're going to hear about it a lot more this year is trying to get the United States to move away from an income taxation model to a consumption taxation model so effectively what the tariffs do is there's a tax for you buying certain things so now instead of getting taxed when you earn money as an individual you get taxed when you spend money and some people think that that's both a more fair system and a more kind
of economically vibrant system because that will drive investment in the things that people want to to produce because the money's going into production do you think that freeberg I'm curious I I don't know it's a really interesting economic theory I mean I am not opposed to seeing some sort of an experiment play out where we look at a shift from income taxation to consumption Taxation and see if it actually does have an effect on economic growth and productivity it has not been done in 150 years there's a lot of economic theorists on both sides of
the equations saying this does work or it doesn't work okay and let me just say one last thing by reducing government spending we are moving workers from the government into the private Workforce so as those new Industries pop up as those Investments start to get made in building new industry on Shore where are the workers going to come from remember the government's 30% of the US GDP today so if that's not a great way to invest money maybe the Private Industry is better at investing money in employing people that will unleash the workforce and it
will counterbalance the inflation that we're experiencing so there's a lot of inflation because of tariffs and by reducing government spending that's the offset to inflation so those three actions I think are three legs of a stool and they actually are all interrelated to one another so that would be my grandmas theory of what might be going on
