Tariffs will solve this problem. Right?
Who could have possibly thought that a soaring dollar would have an adverse impact on the US trade deficit, and thus, the US economy. Well, not the Fed, if only for now, because just as the Fed hiked rates only for the second time in a decade, the US advance goods trade deficit soared from $61.9 billion to $65.3 billion, far higher than the consensus print of $61.6 billion. This was the highest advance trade gap since March of 2015 when the dollar was likewise soaring.
The reason for the far greater than expected deficit: exports of goods fell 1.0%, while imports of goods rose 1.2%.
Exports of Goods were down 0.99% in November, according to the advance estimate. Most of this $1.2 billion decline came from a $1.8 billion drop in exports of capital goods, which was offset by a $1.2 billion rise in exports of industrial supplies.
Imports of Goods were up 1.19% in November, according to the advance estimate. This $2.2 billion rise was largely a result of a $2.0 billion rise in industrial supplies imports.
All else, equal, this means that Q4 GDP is about to be revised between 0.2% and 0.4% lower, from its current perch, which according to the Atlanta Fed is currently at 2.5%.
Tariffs aren’t a silver bullet. Hell, nothing really is. Its an important piece of the puzzle in our nation’s economic future.
Trump talks tariffs because he’s operating within his own realm of experience. Too bad he isn’t an Austrian, I’d have some small measure of hope if he was.
What would you suggest?
Everybody else is devaluing our currency and our own spending is wildly out of control.
1. Implement a plan to get out of the retirement industry. You can’t turn off the spout for social security, that would be tantamount to condemning a lot of people to death. Phase it out over the course of 10-20 years. Same with medicaid/care.
2. Get out of the medical industry, and treat the American Medical Association with hostility. They create an artificial scarcity, driving up healthcare costs. Oh, and repeal Obamacare.
3. Starting with the middle east – begin closing US bases. The end goal being a Navy powerful enough to ensure American goods get where they are going, and charge the Army with a mission of defending our borders. Don’t build a wall. Just put some tanks over there. An Abrams is basically a wall as it is anyways – 68 metric tonnes of “fuck you.”
4. Tariffs – a flat rate based on competitiveness. Goods coming out of Bangladesh would have a higher tariff than goods coming from Switzerland.
5. End the fed, reign back on executive power, force congress to do their damn jobs, and hold states accountable for their own bad decisions.
6. Stop farm subsidies.
7. Bring back usury laws. Ah, the good ole days of 6% interest.
8. Simplify the tax code.
9. All of this just reigns in our spending but doesn’t do anything about the massive amount of unfounded liabilities our nation currently faces. The world is shaking itself apart financially. Pull an Iceland, and renege on our debts. The dollar will be downgraded like crazy, and will allow the other things to actually take effect without being shackled to 100 years of stupidity in the process.
10. Blow me.
I’m not understanding how this would address the trade deficit and loss of jobs to cheap labor nations.
1. Most of what I’m listing is driving down the cost of doing business.
2. Reneging on our debts will tank the value of the dollar, giving us a bit more parity with a world bent on blowing up their own economies while using the US dollar as a piggy bank.
3. The blow job would put me in a better mood and make me more likely to buy more goods. If its a good enough job, I might even spring for a lovely HK jus’ cuz I like the look.
This is predictable, the dollar being the strongest major currency on earth means it buys more of everyone else’s goods and makes ours unaffordable in other currencies.
Which is why I’ve never understood how or why so many people think a strong (and low inflation rate) dollar is a good thing for us.
I’m willing to hear the opinions of others of a different view for consideration, maybe someone has a different idea about it.
Really? I will tell you why a low inflation rate is good, preferably no inflation – Math. Diluting the medium of exchange of wealth does not make you wealthier. If that were the case, Zimbabwe would be the richest country on planet earth. Do you not understand that when you inflate dollars, the closest people to the inflation are the only beneficiaries? By the time it works through the system, the inflation has already hit, and YOU are paying twice as much in yesterdays dollars that YOU saved yesterday for a product today that is no better, and is in many cases inferior, as they still have to make it affordable to you, even though the raw materials cost more in dollars. It is why it seems that every year quality goes down, and price goes up. Not only that, you are most likely purchasing it with credit at interest, which further dilutes your purchasing power (and everyone else’s at that moment as well).
There is no way that a person that has to work for a living, any living can compete against a central bank or private bank printing money. The simple fact is that for everyone except the money printer, dollars are tied to a physical activity or product that is finite and takes resources to produce. Whereas, the money printer does not need to produce anything (time or product) to create the same dollars.
This ridiculous “race to the bottom” that these central banks all over are doing is simply impoverishing the people of their respective country to give the illusion of prosperity. At the end of the day, ALL of us will be worse off for it. Your ignorance to this is exactly what the bankers of the world count on so they can stealthily steal YOUR wealth and put it in THEIR pockets. Please, Please, Please learn this, because it is THE most important aspect of modern life today. Note the quote from Henry Ford – “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
A low inflation rate also means we have to pay back our debts with dollars of equal value to the ones we borrowed.
That means we will be paying back at constant value dollars instead of inflated dollars that are worth far less.
Maybe that’s possible but I’m not seeing that as realistically so without inflicting sever, and I mean really severe, economic hardship on the American people (reneging on our debts would probably have even more severe consequences as paying them off, but at least equally as much if it didn’t just collapse the system).
Maybe I’m wrong, I’d like to see more discussion of the various possibilities and how they could be carried out along with their probable real life consequences for the American people.
We have never had “free trade”. Foreign governments place trade restrictions on U S products while freely shipping us their products. The “Value Added Taxes” that many countries impose are a way for foreign governments to “protect” their industries. If I had my way, foreign countries who penalize American products with value added taxes would have an equivalent tax imposed on their products…fair is fair…
For an economy to truly prosper, consumers (employees, workers) have to be part of the equation. What good are “cheap goods” when you have outsourced (offshored) your manufacturing capabilities? What is the difference between making 5 million dollars and keeping your USA-based workforce employed (and able to purchase your goods) and offshoring (and getting rid of your US workers) for another mere million in “profits”? Message to all you wall street types and banksters. UNEMPLOYED AMERICANS DO NOT MAKE GOOD CONSUMERS.
Wall street types praise Wal-Mart for “keeping wages low and corporate profits high” while criticizing companies such as Costco for paying their employees decent wages (and still prospering handsomely).
The same thing happened in the last century when Henry Ford paid his employees $5.00 per day (when the average wage was $1.50 per day). Of course, the same wall street and banksters howled that Henry Ford would destroy capitalism by paying his workers a decent wage. The OPPOSITE happened. Henry Ford CREATED a good portion of the “middle class” (of which the wall street types and banksters are presently destroying). Henry Ford (among others) KNEW who was behind wall street and the banksters, published his findings and was roundly (and unjustly) criticized for speaking the TRUTH. Radio priest Father Coughlin had the same message and was muzzled by the Catholic Church…WHY??
We are at a “race to the bottom”. . .
Business “schools”, wall street, banksters and politicians–there are many more of us than there are of you . . .
“Free Trade” is actually anti-American trade.
It’s original purpose was, and still is. to provide benefits to other less developed nations to increase their standards of living with the expectation that they would love and respect us for it (you can actually find this in discussions in the Congressional Record).
It hasn’t worked out that way, but its adherents let their ego’s get us in this position with their pride keeping us there. They’ll never admit they were wrong and start undoing it, they just won’t.
At least not voluntarily.
Americans want a government that spends money. Assuming we don’t borrow or print all of it, the federal government needs tax receipts. Income from tariffs is arguably better than tax receipts from income taxes, even if it doesn’t affect the trade imbalance.
Tariffs and excise tax was what our founders originally intended to finance our government.
Jim, the main purpose of tarrifs is to protect our marketplace from traitorous multi-nationals. Free markets need competition. There is no competition, and no free market, when one set of businesses have to pay wages and taxes, and earn money, and another set of businesses don’t. And exporting high end is running out of gas anyway. We gave Iran money to buy Boeings, and still had to give them 50% discounts. Every third world niggertown on the planet has more american financed brand new airplanes than they know what to do with. Delta just canceled a big order with Boeing, why buy new, they discovered they can buy them slightly used at a 97% discount. That’s not a typo. 97% off. The world doesn’t need anymore jetliners. That’s just a fact. Good luck with that, Boeing. http://www.therussophile.org/delta-scraps-4-billion-order-for-18-boeing-787-dreamliners-as-airbus-cuts-a380-production.html/
I think tariffs would help in the sense the US consumer would probably spend less and import less, thereby lessening the trade deficit or at least putting the brakes on its growth.
TPC is on the right track.
The fed govt has zero right to be in the welfare business. Stop all welfare spending. No SS, no medicare/caid. No food stamps. Nada.
The fed govt has no business policing the world. Spend enough to defend the US borders. Not a cent more.
Eliminate all income tax – corporate and personal. Replace everything with sales tax. 10% across the bord should do it.
No need for tariffs. Any nation charging tariffs or not allowing US goods to enter freely is not allowed access to the US market. Period.
The expendiure needed would plummet to pehaps a half or a third of current expenditure. Accountants can go find another line of work.
The US fed, state, and local govt could spend money on defending the US and its borders, infrastructure, policing, education – and that is pretty much it.
Welfare should be an entirely private matter. Coercing welfare out of private citizens at the barrel of a gun is immoral and will lead, and is leading, to catastrophic consequences.
Oh – and govts should not be allowed to borrow money. Ever.
I have an older sister who, like Llpoh, is an Ivy Leaguer. She says: “What other currency (other than the Dollar) would you bet on long-term?”.
Currency. Long term. Contradiction of terms. Does not compute.
Impossible to repay current size of the govt debt and future promises of largesse. Crash. Burn. Flames.
The US currency is toast. When not if.
Property is next under attack. Govts will make property – ie land, houses, farms – impossible to own, by taxing it to death. Property is difficult to relocate into other asset classes, and hence it is a sitting duck. I have long been pro-property. But have changed my mind.
Nothing is safe. Nothing.