Guest Post by Martin Armstrong
The entire problem with trade and jobs has been its focus on only the job and not the consumer. David Ricardo developed his principle that nations should pursue their own competitive advantages. In other words, just because I might want to be a brain surgeon does not mean that (1) I might be very good at it, and (2) that I am entitled to state protectionism to prevent others coming into the field who could expose me as second-rate.
When the collapse of socialism is in motion, people demand state benefits and assume they can just legally take. Governments have been in serious trouble and are raising taxes to try to make ends meet, but at the same time, their economies are moving into sharp declines. The greater the instability in Europe and Asia, not to mention emerging markets, the stronger the dollar becomes.
Trade has always been misunderstood for the two primary elements are jobs and currency. If you do not comprehend both elements, then you cannot properly manage trade. It is always a great topic to expose for votes during elections, but quite honestly, there is nothing any politician has ever been able to accomplish but confusion and chaos. The entire protectionism of the Great Depression was set off by (1) economic implosion in Europe reduced sales to Europe, and (2) the rise in the dollar reduced the competitiveness of US goods and lessened the cost of imports. The US entered a trade deficit with the rest of Europe because of the strong dollar.
The dollar soared in value as European countries began to default on their sovereign debts. Trump will face the same crisis once again. One solution will be to index tariffs to the dollar. Thus, a 10% tariff across the board would be plausible on the trade issue. However, the danger of protectionism will emerge if you pick and choose between products and fail to understand the link to the currency.
The left socialists are out in force to say Trump’s 10% on time tax on foreign held money by U.S. corporations will do nothing for the economy. EBay was looking to take over two companies to expand domestically. They had to decline because the expansion meant they would have to bring cash in from overseas and the added tax would make the deal unattractive. Yes, some companies will bring back cash and pay out dividends and buy back their own shares. Trump should also eliminate the dividend tax; thus the money would go to shareholders who would pay their one-time tax on income. This will be a far better stimulus plan than the Fed handing money to bankers in hopes that they will lend it out, which never happens. Small businesses are turned down by the bankers for more than 80% of all loans. The banks do not invest in innovation that is the mother of jobs.
Trump should impose a 10% tariff on everything, and then index it to the US dollar index. That will avoid a protectionism crisis and deal with the largest influence being the currency. The entire reason why Germany wanted the euro was to eliminate currency risk for German companies so they would not need to worry about currency swings.
We have to start thinking out of the box. What politicians have been doing for decades is always listen to only academics who never think out the box as a rule.
Our difficulties in restoring a republic require reducing
socialism to a minimum…starting with the fat cat entitlements.
I figure we have a 30% fraud/graft embezzlement rate.
Armstrong shows a character in a box, with no apparent way out.
That is where we are…in that box.
At some point we must end the Fed…but the Fed may fight over it,
and they may use nukes. There must be an alliance among the powers,
to the greatest extent possible, with the goal of ousting the worldwide
money printing monopoly. There is no need to ‘criticize’ any of the actors,
or incite a rebellion against them. The key is to just do it. And be watchful, and
zap any opposition from the banking cabal. One step at a time folks, we can get
them gone.
The Fed ultimately is a chartered bank by the US congress. Which means, yes they and their owners – the regional banks and their stockholders can guide the bank, however if Congress has enough pressure on it, congress has the nuclear option of simply pulling their bank charter and instructing the US Treasury to begin issuing debt free money. Very simple really, and would not cause a lot of disruption.
Also, the same could be done to bring down the big TBTF banks. Bank of America or JP Morgan Chase threaten to cause “disruption”, congress can pull their bank charter. End of B of A or Chase that very moment. We the people have the ultimate power, if we would just use it. The Fed is a political problem, not a monetary problem. Bankers hold too much lobbying power in Washington, solve that problem, and everything else is possible.
Great comment anon. The only effective tool against concentrated private power (cover your eyes, my libertarian friends) is an ears pinned back, take no prisoners federal government, intent on getting the job done. We may have that in Trump. Time will tell.
we have been here before, we got sold out long ago. Trump will really try they will fight to yhe very end. It will nut end well. It is the game played that the people don’t see thatwill kill us