Category Archives: Economics

Workers of the World, Unite! by MN Gordon

The real cause of the US’s massive trade imbalance with China is the US’s depreciation of the dollar. From MN Gordon at economicprism.com:

The dawn of war is a time of simple clarity and purpose.  Good guys vs. bad guys.  Cowboys vs. Indians.  Confederates vs. Yankees.  Coppers vs. robbers.  It’s a time when lines are drawn, songs are sang, and drums are beaten with gaiety and confidence.

Indeed, calls for ‘a jolly little war’ are always greeted with merriment and optimism.  This also goes for the dawn of a trade war.  Regardless of whether you’re from Scranton or Suzhou, the escalating  Trump vs. Xi standoff all seems so virtuous.  “We’re right, they’re wrong,” and vice versa.

Here in the USA, the perspective is crystal clear.  America’s rightful bounty is within reach.  After several Presidents that were light in the loafers, there’s finally a leader of the free world with the brass fortitude to reach out and grab it for his fellow countrymen.  And why not?

Several decades of getting spanked by Chinese grunt laborers have American workers longing for reprisal.  This ain’t their granddaddy’s economy.  They’ve been repurposed from well-paying manufacturing jobs to low-level service workers.  The relentless progression has been demoralizing.  Given a fair shake, American workers just know they’ll kick tail and take names.

Yet, as far as we can tell, Trump’s fight is a day late and a dollar short.  The time to stand up for the American worker came and went while Ray Dalio was busy getting absurdly rich from the financialization of the economy.  What’s more, the means to stand up for the American worker had – and still has – little to do with slapping tariffs on Chinese made doohickeys.

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America Will Lose The Trade War Because That Is What Globalists Want To Happen, by Brandon Smith

The US losing the trade war will be an important part of the globalist plan to take down the dollar and reorder the world under global governance. From Brandon Smith at alt-market.com:

Times of great political and social crisis can almost always be linked back to a common root cause – false paradigms. There are many people out there who have no clue what this phrase means, just as they have no clue what the phrase “controlled opposition” means. Some of these people are new activists to the liberty movement who recently joined because of the fervor of the Trump presidential campaign. They think the world of sovereignty and nationalism revolves around Trump, because frankly, they have been duped by a false paradigm themselves.

False paradigms are a base tactic of what is known as “4th Generation Warfare”. The purpose of 4th Gen warfare is described in the document ‘From Psyop To Mindwar’. A document circulated within the DoD by the 7th Psychological Operations Group and written by now former General Paul Vallely (spelled “Valley” in the document) and now former Lt. Colonel Michael Aquino (a self professed satanist, believe it or not). I recommend it as a means to understand how globalists tend to think, how they use division to conquer populations, and to come to terms with the fact that these people are not held in check by empathy, morality or reason.

As far as 4th Gen warfare is concerned, Mindwar describes a method of psychological manipulation and propaganda used by governments and militaries as a means to turn a target population against itself. The goal is to win a war against a group of people by causing them to destroy each other so that the government does not have to combat them directly.

False paradigms are a premier tool for pursuing this outcome. They are achieved by dividing a population through false leadership, fake and sometimes real outside threats, as well as manufactured crisis events. Globalist institutions and the political puppets they control use false paradigms as a means to distract the public away from their criminal endeavors. While we are focused on the political Left, or the political Right, or the Russians, or the Iranians, or the Chinese, they are exploiting our fear and doubt to gain more centralization and more power.

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French Incomes Place Below Some of America’s Poorest States — And the Protesters Know It, by Ryan McMaken

To the French protestors, what’s probably more infuriating than their low incomes is that those incomes are stagnanting while costs of living continue to rise. From Ryan McMaken at mises.org:

With the rise of the Yellow Vest Movement in France — which began last October and continues today — French activists and writers have begun to re-evaluate the state of French income and poverty. Since the movement began, articles with titles such as ” Revealed: The shocking scale of poverty in France in 2018 ” or ” Soul-searching in France as poverty leaves one million children hungry ” have become more overtly political given the context of the protests.

Typically, the government’s response to accusations of widespread poverty — which, as in America, are not necessarily accurate accusations — has been to spend more money on social programs.

But here’s the thing: France is already spending more than the rest of Europe when it comes to welfare programs. According to the OECD, when it comes to “public social spending” as a percentage of GDP, France tops the list at over 31 percent.

In contrast, Swedish social spending is 26 percent of GDP, while Germany and Norway come in at 25 percent. Switzerland is near the bottom of the list at 16 percent, while the US is at 18 percent.

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The Lost War, by Sven Henrich

Is China winning the trade war? From Sven Henrich at northmantrader.com:

Did the US just lose the trade war? It seems like a ludicrous question to ask at this time as the US just raised tariffs on China to increase pressure on the negotiation process. The accepted conventional wisdom is that the US has the stronger hand to play as China would suffer more from tariffs than the US. That sounds good on paper, but is that really true in a three dimensional world with moving parts and conflicting timelines?

In many a fight match up the audience can get a sense of shift in momentum during a fight and as this trade war just shifted gears I can’t help but wonder if the momentum has shifted in China’s favor.

Let’s start with the reason for the sudden tariffs. Those came about because the US side was surprised, surprised by China’s apparent withdrawal from previous commitments. At least that’s the public narrative that is spun. Unless you’re in the negotiation yourself it’s hard to know. Fact is Trump, Kudlow and team led the world believe that a trade deal was imminent. It wasn’t. This move to escalate was not planned, it happened because team Trump realized they couldn’t get the deal they wanted or expected.

Being surprised and being forced to be reactive to escalate does not indicate a position of strength, but rather a position of weakness. And by reacting with tariffs Team Trump may have actually weakened their own position. Why? Because of inflation, time, and pain.

Let’s start with inflation: Despite Donald Trump’s repeated claims that China will pay the tariffs it simply is not so. US businesses and consumers are paying for tariffs which causes consumer inflation on the one hand and margin compression on the other, and perhaps a mix of both depending on what can be passed on.

But conceptually it’s literally shooting yourself in the foot.

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US-China: the hardcore is yet to come, by Pepe Escobar

Try as it might, the US will not stop China’s emergence as a super power. From Pepe Escobar at atimes.com:

US-China: the hardcore is yet to come

A container ship unloads cargo at the port terminal in Long Beach, California on May 10, as talks to resolve the US-China trade battle ended Friday with no deal, but no breakdown. Photo: Mark Ralston / AFP

The Trump administration’s response to China’s emergence has been to throw all sorts of spanners in the works, but tariffs won’t bring back manufacturing jobs

Let’s start with the “long” 16th Century – which, as with the 21st, also saw a turbulent process of marketization. At that time, the Jesuits and the Counter-Reformation were trying to rebound across Asia – but within a context where the rivalry between the Iberian superpowers of the age, Spain and Portugal, still lingered.

The Reformation first attached itself to the Dutch trade thalassocracy – a seaborne empire, under which commerce was paramount – over strict propaganda of religious dogma. Britain’s maritime realm was still biding its time. The emergence of Protestantism proceeded in parallel to the emergence of neo-Confucianism in East Asia.

Fast forward to our turbulent times. Marketization – renamed as globalization – seems to be in crisis. But not in the Middle Kingdom, which is now investing in globalization 2.0 amid increasing rivalry with the other superpower, the US.

The American thalassocracy is being superseded by the Revenge of the Heartland, in the form of the Russia-China strategic partnership – for whom Eurasian trade integration, as expressed by the New Silk Roads, or Belt and Road Initiative (BRI), is paramount over the Make America Great Again (MAGA) dogma.

Meanwhile, the re-emergence of Right populism in the West mirrors the re-emergence of pragmatic neo-Confucianism across Asia.

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Trump’s Trade War is Already Over, by Tom Luongo

China’s real crime in the eyes of the Trump administration is not its massive trade surplus with the US, but that’s it’s using that surplus to no longer fund the US government’s deficits, but rather to fund its own Belt and Road Initiative. From Tom Luongo at strategic-culture.org:

I hate to break the news to China bashers, but the trade war with the US is over. I’ve maintained for months that Trump has no leverage in trade talks with China. If he did China would have done a deal by now.

They haven’t and they likely won’t unless you are talking some form of deal which allows Trump to save face here. But to be honest I’m beginning to doubt whether anyone in the White House cares. This is about the Great Powers Game and the simpleton idea that for one country to win in trade another has to lose.

This is, of course, nonsense.

Trade is not a zero-sum game. Ideally, all voluntary trade is a win-win scenario for both the buyer and the seller. If it wasn’t the trade would not be made. Lost in the numbers is the comparative perceived value of the exchange.

China is still running a massive trade surplus and that is true. But from the perspective of US trade, that is as much a function of Trump’s own profligate spending habits as any structural inequalities.

Trump is running a $1 trillion budget deficit. This is money that is conjured up out of thin air by the miracle of selling bonds. $1 trillion in bonds. Where do you think those $1 trillion in government expenditures goes to?

The moon? Laos?

No. It goes to China. It also finds its way into the US equity market Trump is so in love with and other places that produce goods that we Americans buy with that money. If Trump wants to win the trade war with China he should consider spending a little less money allow consumer prices here in the States to fall and let his tax cuts continue to attract capital for the right reasons – the value the American work force is capable of generating.

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Should Alabama Impose Tariffs on California? by Bill Bonner

The one thing you can always say about a free trade: both parties have voluntarily agreed to do it because they both think their economic well-being will be enhanced. From Bill Bonner at bonnerandpartners.com:

We bet that Trump would never go full retard in his trade war with China.

Were we wrong?

Maybe.

Out of the Money

Last week, our no-real-trade-war bet was moving further and further out of the money. Team Trump didn’t yet go full retard, but – raising tariffs on $200 billion of Chinese imports – it was losing IQ points fast.

Our prediction was based on the guess that Trump cares more about stock prices than trade policy. A real trade war would cause the stock market to sink… we thought… and the president wasn’t fool enough to risk it.

He’s setting up the Fed to take the blame for the next sell-off. He doesn’t want fingers pointing at him.

But in the most recent tweets, it looks like tariffs were never a negotiating tactic, but an end in themselves:

Tariffs will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do. Our Farmers will do better, faster, and starving nations can now be helped.

Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch!

If this were true, of course – that you could tax imports and make yourself richer and stronger – there would be many more tariffs in the world. And not just for countries. States… and even counties… would close their borders to imports.

North Dakota might want to build its own oil refineries. West Virginia could develop its own version of Silicon Valley. Imagine New York City banning movies from California to protect its own film industry. Who wouldn’t want to block outside competition if that would make you better off? If prosperity were as simple as that, everyone would do it.

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