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Category Archives: Trade

Draghi Punts, Trump Grunts, Gold Bunts, by Tom Luongo

The world’s central banks are running out fingers to stick in the dyke of the increasingly leaky global financial system. From Tom Luongo at tomluongo.me:

For months now the markets have been in denial that ECB President Mario Draghi has any answers to the Euro-zone’s problems. Today’s statement confirms what anyone with eyes to see has been saying.

There is no Plan B.

Draghi started the year saying he would end his various QE programs and by June he’s not only put them back on the table (New TLTRO in September) but has now opened up the possibility of taking rates lower.

Draghi told an ECB conference in Sintra, Portugal, that “further cuts in policy rates… remain part of our tools.” He added that there was “considerable headroom” to re-start bond purchases, which inject newly created money into the financial system in the hope of boosting lending and economic activity.

Draghi has been exposed as swimming naked, as Warren Buffet would put it.

The fun part is that Draghi used the cover of Trump’s trade war with everyone to justify a policy that was inevitable anyway.

In response, President Trump piled on accusing Draghi of being a currency manipulator. And then announced his upcoming meeting with Chinese Premier Xi Jinping to hammer out a trade deal.

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When China Leads the World, by Godfree Roberts

Most Americans have no idea of China’s military, industrial, and technological capabilities. From Godfree Roberts at unz.com:

By using force and pretending to benevolence the hegemon will certainly have a large state. By using virtue and practicing benevolence the wise ruler will achieve humane authority. Mencius.

In the course of his study of the Peloponnesian War Thucydides, the fifth century BC Greek historian, claimed that interstate relations are based on might, not right, and that states’ strategic interactions follow a recurrent pattern: while a change in the hierarchy of weaker states does not ultimately affect a given system, disturbances in the order of stronger states upset its stability. He said that lesser states strive to gain power at the expense of others because stronger states, hegemons, ‘do as they please while the weak suffer what they must.’

Modern thinkers theorize[1] that hegemony has three components: material power, an accepted image of world order and institutions that legitimize the use of military force, and observe that the United States used all three to institutionalize its hegemony after World War II, in what became known as the Washington Consensus. The US insisted that Athenian democracy is the only legitimate form of government and enforced its claim through its military, the United Nations, the US dollar, the World Bank, the media and numerous political, technical and scientific bodies. It rewarded conforming states and punished or excluded those, like China, that judged government legitimacy on performance rather than ideology. Lesser states could revise their native ideology–as Sweden did by abandoning pacifist socialism–or attempt to universalize their own cultural values and replace the hegemon’s norms–as China, based on its long history of world leadership, is currently doing.

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Much More Than A Trade War, by Daniel Lacalle

China doesn’t bring as many weapons to the trade war as many people think. From Daniel Lacalle at dlacalle.com:

In these weeks we have read a lot about the so-called trade war.  However, this is better described as a negotiation between the largest consumer and the largest supplier with important political and even moral ramifications. This is also a dispute between two economic models.

Nobody wins in a trade war, and tariffs are always a bad idea, but let’s not forget that they are just a weapon.

Why right now?

For many years China has been allowed to maintain a mercantilist dictatorship and protectionist model under the excuse that its high growth made it attractive.

Shortly before the US launched its set of tariffs, the Chinese government accelerated two dangerous policies that we cannot ignore: intensifying capital controls , limiting the outflow of dollars from the country, and increasing the list of banned companies and sites, two measures that proved that the Chinese government was unlikely to open  its economy, rather the opposite. These measures intensified in the last year and a half. Two other factors show China’s decision to halt the opening of its system. The “Made In China 2025 Plan” and the removal of the two-term limit on the presidency, effectively allowing Xi Jinping to remain in power for life.

Between 2004 and 2018, the United States filed 41 complaints against China at the World Trade Organization, focused on 27 different areas. The vast majority of these WTO resolutions are not enforced (“Paper Compliance: How China Implements WTO Decisions.” The previous strategy of looking the other way and expecting the Chinese economy to open up little by little met the reality of increased interventionism.

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Doug Casey on Trump and the Trade War

Like all wars, once the first shots are fired in a trade war the battleground is enveloped in confusion and unintended consequences. From Doug Casey at caseyresearch.com:

Justin’s note: The trade war is spiraling out of control.

If you’ve been reading the Dispatch, you already know what I mean. In short, Trump’s taken his tough stance on trade to new heights.

He hit China with more tariffs last month. He also threatened to impose tariffs on Mexico. This is a huge deal. After all, we’re talking about two of America’s biggest trading partners.

Unfortunately, this is likely just a taste of what’s to come.

Doug Casey explains why in today’s brand-new Conversations With Casey. Doug also tells me why Trump absolutely cannot win the trade war…


Justin: Doug, Trump’s really been living up to the “Tariff Man” nickname lately. Why can’t he stop it with the tariffs?

Doug: This really brings us to a discussion of Trump himself. I admit to kind of liking Trump when he was running in 2016, despite the numerous philosophical and psychological problems that I pointed out – accurately – in 2011 when he was toying with a run. And I did make a gentleman’s bet for 100 ounces of silver with Marin Katusa that Trump would win – but that’s a different matter. The main reason I hoped Trump would win was because he wasn’t Hillary, who would have been a total and complete disaster.

Although it was clear Trump didn’t know anything about economics, he at least had a business background, unlike Hillary or most politicians. He also said he was going to end all the pointless wars the U.S. either started or aggravated.

Unfortunately, what little mettle Trump had has apparently been corrupted by living in Mordor for the past two years. The Deep State is a very real thing.

He hasn’t pulled troops out of Afghanistan, Syria, or a dozen other countries where the U.S. has varying levels of actual combat troops. Instead, he’s made the already bloated military bigger. He’s letting his warmongering advisors play chicken with China, Russia, and Iran. So, he’s failed from that point of view.

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The Next Stage Of The Engineered Global Economic Reset Has Arrived, by Brandon Smith

The globalists not only want to impose one-world government, they want us to love it, or at least say we love it. From Brandon Smith at alt-market.com:

When discussing the fact that globalists often deliberately engineer economic crisis events, certain questions inevitably arise. The primary question being “Why would the elites ruin a system that is already working in their favor…?” The answer is in some ways complicated because there are multiple factors that motivate the globalists to do the things they do. However, before we get into explanations we have to understand that this kind of question is rooted in false assumptions, not logic.

The first assumption people make is that that current system is the ideal globalist system – it’s not even close.

When studying globalist literature and white papers, from Aldous Huxley’s Brave New World, to H.G. Wells’ book The New World Order and his little known film Things To Come, to Manly P. Hall’s collection of writings titled ‘The All Seeing Eye’, to Carol Quigley’s Tragedy And Hope, to the Club Of Rome documents, to Zbigniew Brzezinski’s Between Two Ages, to former UN Director Robert Muller’s Good Morning World documents, to Henry Kissinger’s Assembly Of A New World Order, to the IMF and UN’s Agenda 2030, to nearly every document on globalization that is published by the Council on Foreign Relations, we see a rather blatant end goal described.

To summarize: For at least the past century the globalists have been pursuing a true one world system that is not covert, but overt. They want conscious public acceptance of a completely centralized global economic system, a single global currency, a one world government, and a one world religion (though that particular issue will require an entirely separate article).

To attain such a lofty and ultimately destructive goal, they would have to create continuous cycles of false prosperity followed by catastrophe. Meaning, great wars and engineered economic collapse are their primary tools to condition the masses to abandon their natural social and biological inclinations towards individualism and tribalism and embrace the collectivist philosophy. They created the current system as a means to an end. It is not their Utopian ideal; in fact, the current system was designed to fail. And, in that failure, the intended globalist “order” is meant to be introduced. The Hegelian Dialectic describes this strategy as Problem, Reaction, Solution.

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Tariffs: A Threat to America’s GDP, by Bob Luddy

You don’t make people better off by taking money out of their pockets, which is, like taxes, what tariffs do. From Bob Luddy at spectator.org:

Faraways/Shutterstock.com

Tariffs are a popular remedy to maintain a favorable balance of trade and create domestic jobs. Some believe tariffs will foster a renaissance of American manufacturing, but let’s consider the facts.

America has six million unfilled jobs, with almost every industry desperately trying to hire qualified personnel. Our trade surplus is widening as these trade wars progress, and international relations are very stressed.

Free trade allows buyers and sellers to be winners and facilitates comparative advantage and the division of labor. For example, iPhones are designed and engineered in the United States, manufactured in China, and sold worldwide. China assembles the iPhone, but many countries provide the components, software, and technologies for this amazing computer.

Apple is now enduring tariffs imposed on China and restrictions on the sale of technologies to Chinese companies such as Huawei. Chinese buyers have reduced their purchases of iPhones because of American tariffs. If the U.S. imposes tariffs on the importing of iPhones, it will have a very adverse impact on Apple and its suppliers. More importantly, Americans rely on iPhone technology in every industry to operate their businesses; for example, chefs store their recipes, contact their users, and order food from this small device.

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Far from quiet on the US vs Russia-China front, by Pepe Escobar

Much of Eurasia is working to free itself from the US orbit, by either gravitating towards the China-Russia axis, or staying officially nonaligned. From Pepe Escobar at thesaker.is:

Let’s start in mid-May, when Nur-Sultan, formerly Astana, hosted the third Russia-Kazakhstan Expert Forum, jointly organized by premier think tank Valdai Club and the Kazakhstan Council on International Relations.

The ongoing, laborious and crucial interconnection of the New Silk Roads, or Belt and Road Initiative and the Eurasia Economic Union was at the center of the debates. Kazakhstan is a pivotal member of both the BRI and EAEU.

As Valdai Club top analyst Yaroslav Lissovolik told me, there was much discussion “on the state of play in emerging markets in light of the developments associated with the US-China trade stand-off.” What emerged was the necessity of embracing “open regionalism” as a factor to neutralize “the negative protectionist trends in the global economy.”

This translates as regional blocks along a vast South-South axis harnessing their huge potential “to counter protections pressures”, with “different forms of economic integration other than trade liberalization” having preeminence. Enter “connectivity” – BRI’s premier focus.

The EAEU, celebrating its fifth anniversary this year, is fully into the open regionalism paradigm, according to Lissovolik, with memoranda of understanding signed with Mercosur, ASEAN, and more free-trade agreements coming up later this year, including Serbia and Singapore.

Sessions at the Russia-Kazakhstan forum produced wonderful insights on the triangular Russia-China-Central Asia relationship and further South-South collaboration. Special attention should focus on the concept of the Non-Aligned Movement (NAM) 2.0. If a new bipolarity is emerging, pitting the US against China, NAM 2.0 rules that vast sectors of the Global South should profit by remaining neutral.

On the complex Russia-China strategic partnership, featuring myriad layers, by now it’s established that Beijing considers Moscow a sort of strategic rearguard in its ascent to superpower status. Yet doubts persist across sectors of “pivot to the East” Moscow elites on how to handle Beijing.

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