Trump Econ 101: Not sure what the next four years of Trump might mean to you financially? For reference, try the four years beginning in 2017 through January 2021.

I know for many of you there is a high degree of excitement and anticipation for the next four years of a Trump presidency. I also know that for many of you there is fear and trepidation.

What I also know is that The United States is and incredibly well-designed country and our political system, while not perfect, is much better than most throughout the world. There is no place I would rather be. We will guide you in the best way forward.

So let’s take a look at where we’ve been and where we’re going.

After taking office in January 2017, Trump prioritized things. Some, markets liked and others it didn’t. He moved fast on immigration, pulled out of the Trans-Pacific Partnership trade deal and renegotiated trade with Mexico and Canada. He sought to make America as energy independent as possible and was on a sustainable path. He then fumbled trying to end the Affordable Care Act, otherwise known as Obamacare.

He didn’t literally make Mexico pay to build a border wall, but he was serious about reducing illegal immigration. Investors had to wait until the end of the year to get the tax cuts they anticipated, while regulatory easing took a long time too.

This time the same four big policies are in play as well as get the United States back on a path to complete energy independence and power. In 2017 he was new to the Washington play game. Now he is very experienced with four years at the helm and four years sidelined but still planning. As in 2017, the four big policies are just as incremental. Getting the U.S. back to energy independence and dominance is critical to his vision as well. Clampdowns on immigration and high tariffs could hurt the economy, while lower corporate taxes and less regulation, especially in energy, could help economic growth and higher stock prices.

The order they receive will be critical and remains entirely unknown. Yet investors have been piling on the happy thoughts as they buy U.S. stocks, especially smaller companies, and dump Treasurys. The Trump trade is based on the potential for higher growth and less red tape.

The Trump trade lasted for a while after the 2016 election, but then faded before he entered the Oval Office. Could last week’s jump in stocks be a similar short-term bounce?

One argument is that the gains are what normally happen after an election, but on steroids. There was a lot of uncertainty ahead of the vote, because the polls, which proved deeply flawed, were 50-50, and many investors were concerned that Trump would not concede defeat if he lost. The VIX index of implied volatility hit 23 at the end of October, before plunging to 15. The trope that investors hate uncertainty has some truth to it, and that fall in the VIX almost mechanically pushes up stocks.

Chris Brightman, chief executive of Research Affiliates, says stocks have tended to trend upward after past elections for about 20 trading days as uncertainty is resolved, before the effect fades.

Another argument is that it is much easier for Trump to implement the stuff markets don’t like than to cut taxes and regulation. He can quickly impose tariffs and limit immigration with executive orders, even if he is highly unlikely to follow through literally on using the army to round up illegal immigrants for deportation.

Cutting taxes needs Congress. Where the House election outcome remains in some question, it looks like it will be a clean sweep of power for Republicans and their values. Regulatory moves are sure to be challenged in court. Even so, if they have to go to the Supreme Court, it is balanced more in the conservatives favor and could allow for leeway under the Trump trade And economic pathway.

Tax cuts are inflationary and pile on even more government debt. However this should lift stocks and Treasury yields.

Removing bad regulation should raise productivity, which increases growth without inflation and pushes up Treasury yields, while lowering the cost of compliance is great for stocks.

On taxes, again it was right to take him seriously but not literally. One example was the estate tax: In 2016 Trump said he would abolish it, then kept it, but with much larger exemptions. The broad direction would clearly be lower taxes and an extension of the 2017 tax cuts, but don’t assume he will follow through on the (very problematic) promise to scrap taxes on tips.

Even so, it isn’t completely obvious how his major policies will interact. Supply shocks from ejecting immigrants and from higher tariffs are in principle inflationary in the short run. But in the long run they slow growth, which should lower stocks and Treasury yields.

There is no doubt about it, Donald Trump is very serious about the deportation of illegal “asylum seeking” immigrants. The good thing is that the first target will be those immigrants with a criminal history. Throughout trump’s election campaign he railed several times against immigrants which were let out of their jails and insane asylums and let into United States.

Most know very little about the Venezuelan gang, Tren de Aragua. I heard about them from my son who lives in Colorado Springs and found out that the rhetoric that Trump was talking about “Venezuela let tons of people out of their prisons and mental institutions and led them here”, was very real. While visiting Colorado we even had our own issues with crime. Whether or not it was Tren de Aragua or just crime as usual in the city remains at question.

It may be unfair to the good Venezuelans that migrated to the U.S. but if they entered illegally, it doesn’t matter much. Fixing a broken system of immigration is a great idea but letting millions pour across without vetting is a big reason Trump is in and Biden Harris are out.

The cost on Medicaid and welfare programs for many cities and hospitals throughout the United States is staggering and an unneeded cost.

On the flip side of this is the benefit that many of the illegal immigrants or asylum seekers is that they are working in jobs which are not being utilized by others. The illegal immigrants are paying a fair share of money into Social Security, Medicare as well as Medicaid and other social programs. To a certain degree, this offsets the cost of the minority of illegal immigrants that are bad or creating difficulties for hospitals or welfare. The bad ones need to go – immediately.

The problem here is where do they go? Most countries have accords that let the good ones back in, but not the bad ones.

There is also a question whether or not the huge tariffs that Donald Trump said he would put on foreign nations were campaign rhetoric or a real objective of the trump administration. It is more than likely that this was campaign rhetoric however there is a good chance that some tariffs will be increased and others may be put in place that are not they’re currently.

As Douglas MacGregor recently pointed out on a podcast which he spoke on the 2016 through 2020 time period is much different than where we are now. China has rearranged it’s international trading operations and has more closely aligned with the bricks as well as other Asian countries as well as South America. The United States does not have the same leverage that it did with China from the earlier time frame.

The unintended consequences of tariff’s did not have a negative affect on the economy from 2017 through 2021. Maybe they won’t now. Maybe they will affect the U.S. differently this time. We’ll have to see to what degree te Tariff trade is bluster and to what degree it is real.

Trump has said he will make billionaire Elon Musk his “efficiency czar,” which suggests a return to the pre-Nixon days of light-touch regulation. But voters like clean air, clean water, safe vehicles and reliable banks. Picking which rules to ditch and which to keep will require time-consuming assessments, while a slash-and-burn approach to red tape could alienate many supporters.

There have been those that have stated that certain agencies will disappear. These might include the Department of Education, to the department of agriculture and even potentially the Department of Energy. Whether or not these agencies will go away completely is questionable. However a large reduction across the board of many or even all agencies is almost guaranteed.

This could end up adding to the unemployment roles as government hiring has been pretty high over the last four years. Much of the lower employment numbers that have been enjoyed have been due to a flurry of new government jobs.

With Elon Musk as the efficiency’s czar, this may come to an end. If you happen to have a job in a bloated area of a government agency you should probably look out.

When it comes to energy Donald Trump is well known for saying drill baby drill. The United States sits on a vast array of oil and gas reserves and Donald Trump has made it very clear that he intends to increase production. That being said, there is much more to just drill baby drill.

During the Biden Harris Administration, the Strategic Petroleum Reserve was reduced to it’s lowest point in more than 40 years. This actually put the U.S. at a slight disadvantage in the event of a major need. Through 2021 to today, there have been articles which have stated the reserve was being re-filled. This was a farce.

Under Trump, the likelihood of the SPR being refilled is much greater as well as the impact of the U.S. becoming a major energy producer worldwide. This could have huge implications for national prosperity and security.

As for the implication that we will scorch the Earth, the Earth’s temperature has been rising and falling for billions of years, changing how the Earth works and the implications for those who live on it. The idea that human beings can stop the Earth from getting hotter (or colder) is insanity. Maybe slow it down, maybe speed it up. But stop it? No, human beings can not stop the trajectory of the Earth. However, we can wreck our economy by trying to do so. What humans must do is adapt and that will affect financial planning and potential for investment, as well as lifestyle changes which I don’t get into here.

Due to the amount of regulations in the United States there have been no new refineries built for many years and getting from production to refining to the end user will take a great deal of effort as well as investment.

Neither of the candidates ever spoke about Social Security. Every year I bring up Social Security and its impending problems that are closer and closer all the time. Each year the Social Security trustees report renounces that it will be drained by 2033 to 2034. This year is no different.

One of the things that I warned about in the July financial freedom event is that if Kamala Harris won the presidency the pressure to do something about Social Security in the next 4 years would almost be void due to the fact that in the first four years of a presidency, they always try to do the softball regulations that won’t destroy their possibility for the next 4 years.

There are important and difficult decisions that await the president of the United States with regards to Social Security. The last time that major restructuring of the agency was done was under the Clinton administration.

In order for Social Security to continue on there are major adjustments that need to be made. There is the potential that early retirement might be moved to the age of 63 or 64 and that inflation adjustments may be made as well. Donald Trump said that he would like to end taxation on Social Security. While I would love this, I don’t really think it will happen, but that remains to be seen.

The debt of the United States is at an all-time high compared to GDP. Donald Trump and Elon Musk seemed to understand this and have a pretty good grasp on the financial an economic situation of the United States. The debt must be reduced at this point while growth is increased and that is no easy task.

Overall, the next four years will be extremely interesting but also incredibly important. Over the last four years we have seen prices rise with out of control and brought back down by the Federal Reserve increasing and now, finally, lowering interest rates. The last administration had nothing to do with lowering inflation. Illegal immigration was out of control until someone saw it as an election problem and something was done to stop it. We also saw escalation and the potential to be on the precipice of World War III. We have seen our strategic petroleum reserves reduced to an amount not seen in more than 40 years and those reserves should be replaced.

Starting in January 2025, we will begin to get a clear view of exactly where the Trump administration will take us. Based upon the financial planning changes that will most definitely occur as well as the investment opportunities as well as the drawbacks we’ll continue to keep you up to date of the benefits as well as the pitfalls.

On a smaller, micro level, the new guidelines for tax breaks and savings in IRA’s, 401k’s and more have been released. I’ll get them to you soon.

One thing is clear everything has changed. But have they changed enough? There will be a lot more on this in the future.