I’ve never been a big fan of the phrase “political economy.” The reality is that the economy, as much as we try to control it, is a more organic machine than many appreciate, whose gears move with greater power than any four-year leadership cycle can truly harness. Covid is a pretty good example of this: a natural disaster of sorts whose ramifications can be used for or against either political party.

In my Market Overtime interview with Vivek Ramaswamy – the billionaire businessman who ran for president and has been teased for a “big” role in a possible second Trump administration – I tried to get a clearer sense on the Republican mindset about the current state of the economy, and what kind of major economic initiatives may be in store.

Ramaswamy didn’t hesitate to blame inflation on the Biden administration. He says government spending and a flippant Federal Reserve caused prices to surge. The problem with that logic is that spending was biggest under Trump, whose $3T Covid stimulus sent the debt/GDP ratio to an all-time high just before leaving office. Ramaswamy cited weak real wages as a fault of the past four years, and it's true wage growth has stagnated relative to inflation, but wages are still at elevated levels and not actively deteriorating as inflation ebbs.

So, what about the future? One of Ramaswamy’s big ideas is to slash the Federal workforce by up to 75%. Make sure to check out that section in the video for his response on whether that would strain the economy.

Viewers know we do not cover politics on the Schwab Network, and this is no exception. The reality is that stocks are at highs but VIX is elevated, likely because the election is around the corner. Prediction markets skewed in favor of Fmr. Pres. Trump the past week, but so far in this election, we’ve heard more about character and culture than the economy (just 10 minutes of the single 90-minute debate between the candidates was about the economics). It makes sense to try and get more specifics. 

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