Hurting Consumers and Workers Alike

So Donald Trump wants to keep “cheap” (foreign made) goods and services from reaching Americans! But the rub is that when barriers to trade are established, such as tariffs or quotas, folks are deprived of the chance to save and then purchase items they would like to have with the savings.

Not only is this vicious but it is counterproductive. It prevents Americans from spending their funds on goods and services at home or elsewhere.  And that impedes commerce no less so than a highway bandit does.

 

highway robberyHighway robbery in progress. Here an 18th century wig-stealing gang is setting to work (gold, silver and wigs were the most popular items targeted by highwaymen. Wigs were horrendously expensive at the time and very fashionable).

Image credit: Thomas Rowlandson

 

Now one might believe that people in China or elsewhere will dump their “cheap” items in America, meaning they will just sell low here so as to keep us from buying American goods and services. But so what?  If we get the goods and services at a price lower than what they would cost otherwise, we are left with funds that we can spend on others products we want.  And that is all around a good result.

The “buy American” mantra is silly because, in the end the funds we save by buying Chinese or Mexican or whatnot get pumped back into the marketplace.  Everyone wins, over the long haul.

The approach of Trump and other advocate of trade restriction is probably motivated from a desire to seem supportive of American firms and workers but they are exactly who will be hurt from it.  They will have to spend more money on what they want, leaving them without the chance to save and spend on alternate goods and services.

 

Video of Donald Trump’s bizarre and economically illiterate fixation on trade with China (actually, it just shows Trump saying “China” 234 times).

 

Who Should be in Charge?

And, anyway, who are these people, Trump and his ilk, to dictate how we should spend our funds?  I personally want to engage in my own policy of wealth redistribution, earn funds and then spend them as I judge wise.  Why am I not the best judge of how my funds should be disbursed?

Mr. Trump is, of course, riding high on a wave of displeasure with professional politicians. They are thwarting and not enhancing our well being.  Sure, they fancy themselves as some elite who knows-it-all.

But that conceit is what unleashes dictatorships, meddling bureaucrats, and others who refuse to understand that people ought to be treated as sovereign citizens, not as royal subjects.

Mr. Trump’s lame populism is no answer to them.  It is just a different version of the same top down management of citizens who ought to be in charge of their own lives, including with whom they will trade.

 

Trump notices a China-made helicopter attempting to touch down on the landing pad on his head.

Photo credit: Nicholas Kamm / AFP / Getty Images

 

Image captions by PT

 

Dr. Tibor R. Machan was until recently a Hoover Institution research fellow. He is Professor Emeritus, Department of Philosophy, Auburn University, Alabama, and held the R. C. Hoiles Endowed Chair in Business Ethics and Free Enterprise at the Argyros School of Business & Economics, Chapman University from 1997 to 2014.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

34 Responses to “The Trump Idiocy”

  • Mark Humphrey:

    Kafka wrote,”No OSHA, No EPA, no labor standards of any kind, no sanitation required, the list is endless in favor of China and Mexico.” I take that Kafka considers this to be an example of “unfair trade”, in that foreign competitors are not burdened by the same regulatory costs as are US companies. Therefore, Kafka believes, the US government ought to force Americans to buy from American corporations to pay for the costs of the regulatory state.

    That’s a great idea if the goal is to preserve the morass of regulations that hobble US production, by forcing consumers to pay a sales tax on foreign goods. But that’s not a good goal, since it strips individuals of their freedom to choose and impoverishes them.

    It ought to be obvious that the cure for high regulatory costs is to get rid of the regulations. Then companies can produce with much lower costs again. But for the present, if some Americans are thrown out of work as producers try to reduce their exposure to a Robber Baron government, that may increase political pressure for the repeal of bureaucratic edicts that ruin businesses.

    While we await the repeal of Robber Baron edicts, which might entail a lot of waiting indeed, the best course for prosperity is preserving the right of Americans to make their own choices about what to buy and from whom. They will be more affluent than they would be if forced to pay hefty sales taxes on imported goods. The savings they derive from cheaper Ipads, and ten million other cheaper goods and services, will fund their purchase of other consumer or capital goods.

    Those savings will therefore create new employment opportunities in ways most consistent with comparative advantage. That free trade increases wealth for nearly everyone ought to be clear. It doesn’t require a textbook, merely the application of logic and clear thinking to the subject.

  • therooster:

    VB ….

    Why on earth would you insist that gold is not a currency when the means to use it as a currency is available to us all and that business model is growing ? It’s good news for all, IMO.

    What possible reason would you have to doubt BitGold’s legitimate place in the market ? Why would you refer to it as a scam ? The company has tremendous transparency and is publicly traded.

    As for the actual application of the gold being used for the purpose of economic liquidity (debt-free currency), I would suggest that you look at the model in terms of the fees. You’ll see that there are no fees to send or receive gold payments on the platform, payments which are denominated by mass (grams are the standard unit of account) The philosophy is built around the velocity of payments, the velocity of debt-free currency movement.

    As for the debit card that is integrated , it’s simply a method of bridging the asset based capital (bullion) into the fiat currency realm, based on the ability to bridge the two sides of the liquidity yin-yang. Free markets do that and choice is good thing, absolutely ! The account to account payments, direct (with no fees) , are denominated in mass, however. The incentive to allow a robust flexibility with the market incentive to remain on the platform and make your purchases (and sales) with gold mass as the settlement.

    You can also call for your gold if you like, in its physical form. There’s your “lynchpin”.

    It may help for you to know that I’m a customer, only and as a well as being a consumer, I’m also an e-commerce marketer. I don’t relish the large fees that I pay for credit card payments or payments through PayPal. I also prefer my currency to be without the encumbrances and the counter-party risk of debt.

    The BitGold model is a wonderful goose !

  • Kafka:

    Mark
    Go back to your economic textbook. Ceteris paribus- all other things remaining equal. So-called free-trade when both countries can manufacture the same goods becomes a function of all the other things. No OSHA, No EPA, no labor standards of any kind, no sanitation required, the list is endless in favor of China and Mexico.

    To add insult to injury American corporations are transferring technology that is developed in the USA to foreign countries free-of-charge. China is not just a competitor, it is an enemy. Example, GPS, developed by the American military (i.e. paid for by American taxpayers/workers), gifted to China, including the Chinese military.

    Look at the Services component of GDP. It is Government and the Finance, Insurance, Real Estate component, all parasitic components, that are growing.

    You can’t see the forest for the trees; the fact that you can buy your iPhone cheaper while your neighbor starves is not good for the country. Period.

  • therooster:

    Isn’t free trade based on markets that reflect pricing that is based on good sound fundamentals which are also reflected in the underlying settlement currency for the trade ?

    I think the foundational issue of currency has to be addressed. All else can be dealt with , thereafter, to a much easier extent, I might add.

  • therooster:

    VB … Gold is definitely a currency because the market says so.

    • VB:

      Gold is definitely NOT a currency because the REALITY says so.

      A currency is a medium of exchange. NOBODY is using gold as a medium of exchange. When Iran pays with gold for oil, the countries that get the gold don’t use it to pay for something else – i.e., gold is not used as a medium of exchange. It’s just a barter deal – one good for another.

      When the scam outfit you are constantly shilling for gives you a card that lets you “pay with gold”, nothing of the sort happens. The medium of exchange is still US dollars. You work (i.e., sell your labor) and get US dollars in exchange. When you use your “special” card to buy something, the seller gets US dollars in exchange. In other words, the US dollar is the currency, the medium of exchange. Just because somewhere you have bought gold with US dollars and your scam outfit is siphoning 1% per transaction from it for the privilege to let you sell it and buy goods with the proceeds from the sale does NOT make gold a medium of exchange, i.e., a currency.

      Only when you can be paid in weights of gold for the goods you are selling and use that gold to buy something else, gold becomes a currency, i.e., a medium of exchange. But that isn’t going to happen any time soon.

      • Crysangle:

        Whatever is used as intermediary of exchange is at that point currency. Gold is used as a currency. Don’t be distracted by the fact that gold also has commodity value, though that also helps explain why it is used as currency.

  • therooster:

    old set of rules …. a new game is emerging, one that adds debt-free liquidity

  • Kafka:

    “I am struck by the ignorance of most posters,” I confess that I too, once was ignorant by having been trained in economics, mathematics and history. So rather than debating 18th century worldly philosophy about the merits of absolute or comparative advantage of trading goods between nations where both nations produce exactly the same products, I would like to step into the 21st century where nations pretend to have free trade and pay shills to try to demolish opposition to the backroom beneficiaries of “free trade”.

    1. Economics presume goods that are trade are exactly the same. Coal is coal. A car is a car. Nothing could be further than the truth. Coal has hundreds of varieties and a Chinese-made Buick is not a German-made BMW.
    2. Economics presume that currencies trade freely. A pegged Yuan (to the USD) serves to keep Chinese-made goods cheaper, visa-vi all other producers.
    3. Classic economics presumes that cheaper goods in the importing country is in and of itself a good thing. The counter balance to that argument rests in job losses, directly and indirectly, as wealth and technology in secondary industries are also lost to the exporting country. So unless the author includes jobs and technology as a U.S. export then all so-called free trade relationships are entirely one-sided against the U.S. national interests.
    4. So-call free trade supposedly balances out over time. The U.S. has been in a trade deficit for a generation. And there are endless restrictions to exporting into countries like China, Japan, etc.

    For all Trump’s bombast he is hitting the nail on the head and all the apologists are coming out of the woodwork trying to protect the parasitic status quo.

    I don’t believe the author is dishonest- some people might truly believe in the mighty widget- but the article is disingenuous. Trump’s hair- geez, what infantile attacks.

    • Mark Humphrey:

      For Chris-sake. Free trade is free enterprise across international boundaries. If free enterprise makes people wealthier, so does free trade.

      If you object to free trade among consenting adults, why not erect trade barriers between the states? Then Montana won’t have to ship away all those jobs Montanans could benefit from, by growing coffee in greenhouses through frozen winter months. In fact, why not put up trade barriers around rural counties everywhere, to promote job growth among their residents? Rural Nebraskans could build computers in their garages and assemble new cars in their basements. Rural Wyoming residents could finally shake off the “flyover country” label, as people everywhere return to horse and buggy transport, with attendant benefits of new jobs for wheelwrights, buggy whip makers and farriers. Think how New Mexico could boom, if only all the McDonald’s and Burger Kings were run outastate, so that ma and pop $15 burgers (with coffee) became the norm.

      The benefit to free trade is the extension of the division of labor, of which comparative advantage is an aspect. As people realize the benefits of comparative advantage, prices fall because costs of production fall. People who’d been making high cost stuff have to go do something else. New opportunities for profitable production are created and funded by the new wealth that is produced through the extension of the division of labor and comparative advantage. Just as Tibor Machan explained, when people enjoy more real income, the new spending and saving it funds provides new demand for products that must be designed, built and sold.

  • Mark Humphrey:

    Thanks to professor Machan for posting this essay on free trade and and the Great Bloviator, Trump.

    In reading the comments here, I am struck by the ignorance of most posters, who harangue about “free traitors”, but who are completely ignorant of economic cause and effect. People strive to become wealthier, mostly so they can do and buy much more than otherwise. If they can buy more for less from some source outside the US, then as consumers, they become more wealthy. In economist jargon, their real incomes rise.

    Of course, a small number of these wealth seekers will lose their jobs, if they work for enterprises that operate with higher costs than foreign enterprises in their particular line of production. These unfortunates will have to seek employment elsewhere, doing something related to what they sued to do, or something different. Either way, and more or less, these unemployed workers have to adjust to new circumstances by learning more or trying harder.

    But why is this terrible? This is the challenge of human life: people must overcome new challenges, all the time. Most will adapt to and surmount the challenge, provided they are not restricted from doing so by a plethora of government regulations and taxes, and are not lulled to passivity and laziness by welfare.

    So these few unemployed find work or drop out, and before too long tend to enjoy rising real incomes made possible by lower prices and rising business productivity. Everyone else also enjoys income gains as their nominal incomes buy more goods!

    This is not new to economics; economists have patiently explained the benevolence process of free trade for two or three hundred years. Today, though, the nihilism of our time rebukes reasoned understanding as confining and “heartless”. That protectionism impoverishes lower income people is deemed irrelevant by nihilist crowd pleasers like Donald Trump.

    Trump reminds me of Richard Nixon, not as to his policy prescriptions, but rather concerning his policy of thinking. Like Nixon, Trump is a (philosophical) pragmatist; he doesn’t realize this about his thinking, because he is not given to thinking about ideas. Nixon and Trump both believe that moral principles are fictitious or irrelevant to real life: confining, artificial and stupid. Both men judge life to be a process of seizing temporary opportunities and viewing temporary facts, that are plastic, temporary and fleeting. Because they are contemptuous, or at least skeptical of ideas and principles, they act to seize opportunity for advancement, before it disappears–principles be damned. They don’t do this primarily because they want to behave badly, but because subconsciously that is what they believe.

    This would account for Trump’s amazing record of flip flopping on issues and political parties. There is no holding to old fashioned principles and coherent ideas; Trump is an energetic “man of action” determined to seize the moment. He’ll make the trains run on time (like his ideological soulmate, Mussolini).

    Thanks again to Professor Machan for his interesting remarks on Trump.

    • I just love it when ideologues spew their misnomered, theory backed dictums as if they’re preaching the gospels.

      Read my posts again, I explain the consequences of your ideological theories and why they have not worked.

      Tell me, what “comparative advantage” do we gain when corporations export industries to China resulting in the destruction of the economic base, division of labor and specialization?

      • Crysangle:

        We get electronics placed in our hands so that we can watch it all happening and debate over it in realtime, while we do nothing. They do say knowledge is power, and fortunately western information, though often biased, is still essentially unrestricted in nature, unlike many of our competitors that are hampered in their decisions by governmental dictate on content. We should maybe not be trading with states of that nature, out of ethic, it makes us complicit to their nature, it makes us look like profiteers in the repression of others. I suppose the hope is to eventually overturn the dictatorial attitudes by introducing our liberties, but sometimes I wonder if we are simply not learning the bad ways of those we mix with. After all, we are intent on allowing them the reward of an arranged productivity, and are floundering in our own efforts.

  • CG23:

    Yes, let us export all of our good, real, middle class manufacturing jobs to Communist China, and put 50 million Americans on Food Stamps instead – what a great recipe to make America strong and make Americans independent and self-reliant – NOT!!! Your “Free Trade” baloney sounds great in theory, but so does Marxism – which somehow always ends up in starvation and death camps.

  • FreemonSandlewould:

    It is evident from the increased number of authors taking pot shots at Donald Trump that he is winning.

    Illegal immigration has to be shut down. If it does not the USA culture will be forever turned away from a knowing public that has maintained a semblance of democracy and order to a 3rd world police state. Yes yes it already is a sort of police state but you have seen nothing yet if these 3rd worlders willing to tolerate anything in the name of a welfare check swamp out the knowing voters.

    Get accustomed to saying President Trump…..

    ……….He’s going to win. You can see it in the way people react to him. You can see it in the way Trump is so sharp in his off the cuff speaking.

  • wmbean:

    Obfuscation by technical jargon never makes the point or clears the issue. Let us take peanuts as an example of the restraint of free trade. American farmers, mostly those who have formed corporations and farm very large acreages are a very big business. True we might find a few family farms of a thousand acres or less growing peanuts, but for the most part it is a corporate industry. There are crop subsidies and allotments in this business. And there is an import tariff on peanuts imported from other countries. The basic facts are there: in parts of Africa individual farmers and a few corporate farmers can grow peanuts at a substantially lower cost that we can in the US. In this case, a free trader would be correct in maintaining the removal of such tariffs on the basis that such farm land can be used for other productive crops that may, end the end, be cheaper to grow and sell to our own consumers. The same may be said of sugar beets. Both crops grown in the US depend upon heavy subsidies and tariffs. Here the average corporate farm worker will not be harmed by such a decision.

    The question is, who benefits from tariffs and subsidies? If it is the very few then such policies should not be let in place. The problems come when corporate operations become international and yet the consumer remains national. When production is shifted beyond the border but unemployment remains behind it, then nothing is gained by free trade except profits for the international corporation. A case in point is Apple. Their various products are all made overseas and then imported into this country as well as others. If an iPhone only cost $50 or less to make in China and then sells for over $600 in the US, Apple makes quite the profit. But what happens when that profit is off shored by half? the money accumulates in off shore accounts. There is some 200 billion in Apple profits sitting in Ireland and are being invested like a trust fund. If their products were made in the US then the production cost might rise by 100% but the real problem for Apple is the amount of taxes paid to the federal, the states, and the local governments. You see, this free trade affects more than workers, it affects the various governments. So claiming that there is some simple benefits to free trade without accounting for all the costs is an illusion.

    That two hundred billion off shored in Ireland should tell us something about the negative nature of our free trade agreements. Will the shareholders ever see a penny of that profit? will it be used to pay down the corporate debt that Apple has contracted in lieu of paying taxes on repatriated earnings? Skewing the costs is not fair trade.

  • therooster:

    Dwayne Dibley … You made an interesting comment that deserves a little clarity, IMO.

    You stated : “And the only thing that has enabled the “free traitor” system to work is the massive expansion of easy payments, credit/debt”.

    That’s a starement about liquidity. Do you default to the notion that liquidity must be solely driven by debt creation ?

    • No, it’s not a statement about liquidity, it’s a statement about the expansion of consumer credit/debt, which enables people and businesses the ability to afford the crap they couldn’t otherwise afford on what they earn. The expansion of credit/debt has been driving economic activity since the 1980’s.

      Liquidity today is nothing more than asset backed credit in excess of debt, and it can vanish in an instant.

      It took them less than 30 years to erase the distinction between legal tender money and credit/debt to the point that now, every idiot expert assumes they are the same thing. Most don’t even understand fractional reserve banking. Hint: It has absolutely nothing to do with a bank’s ability to generate credit.

      • Crysangle:

        If you prejudice an argument with insults few will bother to debate it with you.

        Cash, as legal tender, is considered to be credit circulating in perpetuity.

        Though bank credit and legal tender are technically not the same, the effect of maturity mismatch does place legal tender to dual use or claim. To me that is multiplication of its basis.

        The ability of a bank to generate credit is partly governed by fractional obligations under law. The retention of a fraction of existing capital does place a hypothetical limit on the reprocessing of capital through the expansion of credit, though compared to the effects of centrally managed rates and collateral valuations in centralized funding arrangements the effect takes back stage.

        • Did you know that there is no law anywhere that designates or acknowledges the credit generated by the Fed or the banking system, a currency? Do you know why that is?

          The difference between legal tender and credit is that; the legal tender is money, the ‘unit of account’, by law, whereas, credit is an accounting entry. All credit represents an obligation to pay legal tender, or an assumption that legal tender will be paid.

          A bank’s ability to generate credit is not governed by either reserve requirements or deposits.

          http://carl-random-thoughts.blogspot.com/

  • therooster:

    The established power and their price machinations feel that it’s a necessary process in the protection of the debt side of the yin-yang liquidity model. On a global scale, you can think USD hegemony.
    Crysangle …. That nasty elite behavior is an essential at this moment and those “necessary evils” as I like to call them are there for good reason.

    It’s a critical part of the yin’s formation, structure and maintenance. The whole model is a yin-yang that relies on both debt and assets to be in circulation. The completion of this hybrid is up to the market, by way of monetizing debt-free bullion based assets that can flow DIRECTLY into the economy, thus raising TOTAL liquidity and allowing debt to be purged. It’s not a top-down implementation. It can’t be because of real-time factors in the financial markets, especially currency. No crashes please ! Rate of change has to be organic.

    I’d say the majority of corruption and manipulation is a symptom of buying time to keep the “dark side” intact so that the market can wake up to monetizing bullion and complete the hybrid. Note that we don’t need the government for the purpose of implementation. The stage is set.

    As the yin-yang relationship of liquidity morphs by way of market osmosis, it’s far easier to see the symbiotic relationship of this hybrid.It combines scaleable liquidity with totally manageable debt. That sets the process in place for free market fundamentals to emerge, including a just market pricing model.

    Summarizing, it’s juts a matter of adding assets and stirring gently The rest will follow market law.

    • Crysangle:

      I understand what you are explaining , the only point I don’t see is how debt will be purged , unless you mean ousted , in which case the authorities that rely on debt for their own existence must be willing to forsake both to a model that largely ignores them.

      • VB:

        You don’t understand what he is “explaining” at all,I’m afraid. EVERY single post of his here is an attempt to promote a scam outfit that lets you buy gold through them (and pay them 1% fee for the privilege) and then “spend” that gold electronically, meaning that they will sell it for you and pay for what you are buying via their own card and in the currency that the seller sells it for – and again you pay them another 1% for each transaction. (But, hey, at least the gold storage is free – except that it probably won’t be so for long, because there is no way their current business model is sustainable.)

        So, every time when he mentions the buzzwords “liquidity”, “debt-free currency” and so on, he is obliquely referring to that scam outfit as the be-all do-all solutions of the world’s economic woes by asking you to pay THEM 1% for every transaction you make, instead of paying your current credit card company.

        If that is not scammy enough for you, they also purport to do it via a “crypto-currency” of their own, which is even scammier than Bitcoin – at least Bitcoin is proof-of-work, while theirs is a proof-of-stake pre-mined crypto-currency that they claim is backed with gold in their vaults. Even the rabid bitcoiners who usually fall for all kinds of scams admit that the pre-mined proof-of-work crypto-currencies are a scam.

        • Crysangle:

          Fair enough as argument, but I still maintain that gold itself is a form of currency, we are just obliged to turn it into fiat to use it as one in everyday dealings.

  • wmbean:

    I believe that you have not examined free trade in both directions. While importing importing goods and services at cheaper prices than one can achieve by the same industries operating in the importing country, the exporting of the ability to produce goods and services formally produced in the importing country means that labor that was once employed in the use of such production now must be employed elsewhere. The question is becomes does that same labor force now have new employment at the former wage and if not, what has been gained by cheaper goods and services?

    Let us say that all automotive manufacturing is now exported to some other country where the cost of labor, taxes, pollution control, and the like are reduced greatly. If all those former auto workers, including all the suppliers, are now out of work, how will they be able to afford the lower price of the imported automobiles? I could, as a worker of any stripe farm out my labor to another supplier of labor and pay them less that I earn from my employer, but can I exist on the difference?

    Your version of free trade only works when employment remains unaffected. But it never does unless by outsourcing one can create more employment for the economy. The fact remains that it never has, hence you engage in a false argument. You present only one side.

    • Crysangle:

      The difference in your argument relies on the production of either surpluses or the ability to shift to needed or desired alternate productivity after outsourcing. I will discount the latter simply as a possibly useful result.

      Let us consider the simplest example, a self sufficient landowner. If he produces a surplus he will trade for outside goods, and he will welcome those that are the most economical. In principle, all social and political reasoning aside, there is no harm done if he trades with a foreign producer. In this case money is a mere intermediary, but the leverage it will hold in foreign hands will possibly infringe on those that he would normally trade with. That is to say his neighbours, who he usually bought from, will be forced to compete. This is a simple deflationary tendency that sets the values of an unadulterated monetary system.

      Now let us expand to include a wider social and economic system. Markets are naturally very complex and I only present this as one main basis of an argumemt. The theory you argue is that the original producing nation will enter into capital consumption if it does not somehow produce enough to net trade for its imports, that by sending capital abroad ( or transferring domestic capital to foreign ownership). As Rooster points out below, our flexible monetary regimes are responsible for allowing this to happen, being a social and international con into focusing on figures openly manipulated by the actions of monetary authority, to the benefit of a select few, and with untested academic pretense. Under a solid monetary system price competion would take place unhindered between countries, and the value of labour would settle to an adjusted international norm. That would mean domestic producers would have to adjust to that norm. They should win easily, due to less transport, storage, paperwork and so on. Why don’t they? Because of the hand of their governments in domestic affairs that regulates prices, the very same that then wish to have a hand in international affairs. Ironically the proceeds are partly syphoned off to pay for the entire setup, at the eventual cost of the nation.

      Finally there is a positive margin that we must recognize, that would be the tremendous increases in productivity over the last century. They allow for a lot of string. That margin will be consumed over time, due to increasing population, maximum efficiencies being reached, or from an inflictive perspective, actual reductions in availability of raw inputs.

      All given, we are currently much more likely to end up with international conflict as authorities try to enforce their reasoning and economic / monetary borders, than we are to see a reasonable framework of international values. The stakes have become too high for many in power, and the most reasonable framework we might hope for is one that actually manages the international failures to containment. That is obviously contradictory to the aim of free trade, but nor will free trade occur until the current imbalances are wiped away and a true working basis established.

      Ideally, if there are to be borders, they would be limited to the likes of guaranty of origin, quality control, and so on.

      Finally, there does exist good argument, in my view, to some form of subsidy to the most basic of domestic production. Ideally it would not be needed, but while we live in a world where foreign dependency is more than likely to be seen as a weakness than part of a global flow of mutual support, and while the global financial and economic imbalances remain at extremes… it’s a catch 22. Would you not sow this years crop because you think a neighbour will later provide its replacement at a reduced cost ? I think you would subsidize a little work with your spare time, knowing hungry people to be easily manipulated . Such are nations as people, only with an even greater distrust of each other.

      • So, you support a plan of global economic equilibrium and redistribution of wealth?

        There is no factual basis for the notions propagated by the “free traitors”, but there is overwhelming evidence that opening our markets to cheap foreign goods produced by labor at pennies on the dollar, destroys local production and jobs, increasing competition in the labor market, driving wages down, lowering everyone’s standard of living and instigating dependencies on foreign production. And the only thing that has enabled the “free traitor” system to work is the massive expansion of easy payments, credit/debt. That and government using regulation and creating agencies as covert public works programs.

        We were already struggling to incorporate states into a national economy and you want to insist upon a global one?

        All economy is local.

        • Oh, and let’s not forget welfare.

          Basically what you’re asking for is the destruction of local economies in favor of one run by multinational corporations and lapdog governments using their first use credit/debt as a currency.

        • Crysangle:

          No , I rail against the use of monetary expansion as a funding mechanism, which inevitably gets dumped on the nation as a whole and is used in manipulation by government . This is what has been going on and to my view it is an untenable equation in real terms .

          If we look at US/China trade this is even more obvious, as the US has agreed to accept a pegged currency that has all the trappings of state capitalism as part of the bargain .

          Under a hard currency regime , under gold , trade deficit would show up as a brake on investment in foreign nations for import purposes , due to either a foreign exchange that started to punish imports , or a domestic devaluation that favoured domestic production over imports . Any projected enterprise would take this into consideration when investing abroad .

          Banks , under that circumstance , would also be obliged to pay attention to the frailties of any economy , to the projected frailties , they would know they were not able to force (their own) success .

          I don’t insist on a global economy, nor management of one kind of economy or another . Since man has travelled he has taken his trade with him . The mainstay of any local economy must naturally be local productivity . After that it is up to you to decide what is local , the only certain thing being that if you are not productive then you will lose without some form of social compensation .

          Unfortunately the consumer will not always share the same view as the domestic producer – both are competing to economise . Though you may regard cheap imports as a false economy , the consumer (that is the person you are supposed to be serving) may feel it is unfair to not be allowed to take advantage of them .

          Finally , nationalism isn’t economics , but if a group of people , or a nation , choose to trade only amongst themselves , who am I to say any better . I’ll hinge it on choose, and let you decide freely on your own views of how that choice should be made .

          • The system is driven by credit/debt expansion, not monetary expansion. The actual legal tender money supply has next to nothing to do with it. You trade stuff you have for stuff you don’t have, that’s trade. What’s taking place is ‘international commerce’, the buying and selling of goods and services across international/socioeconomic boundaries, as opposed to exchanging or trading stuff you have for stuff you don’t have. ‘Commerce’ is not ‘trade’.

            Commerce is, goods, services, production, labor, money, laws, mobility, etc. are all equally applicable, and contained within a socioeconomic system. For an example; Ford ban move its production from Dearborn Mi. to Atlanta Ga. and while it will cause economic disruption in Dearborn, the former employees and certain associated businesses cam freely move to Atlanta and continue. Can’t do that if the industry moves to China or Mexico.

            Each nation has it’s own unique socioeconomic system, some are compatible enough with ours that a limited amount of commerce can occur without causing disruptions, but most are not compatible, at all. China is one such place, Mexico and most South American countries aren’t compatible either. Those are the countries you TRADE with, you don’t engage in commerce with them, unless you’re planning economic suicide, or a multinational corporation looking to extract wealth regardless it nation of origin.

            And using the shortsightedness of ‘consumers’, does not aid your theoretical argument.

            • Crysangle:

              Well I think we are looking at the same picture when we talk of legal tender and debt/credit . The flow of US legal tender to China (I’ll just use China as the most obvious example) via the purchase of Chinese goods is then reinvested in US debt lowering rates , so fuelling asset booms in the US , which are borrowed against by US consumers , or are then traded for profit with US consumers by US consumers , the profit being monetized as earnings to then be spent in China .

              Consumer choice , weakness , ignorance , shrewdness cannot be ignored , but yes , this is all eased through by debt/credit manipulations that are agreed upon by national policies . If you put apparent wealth into someone’s hand you will most likely be thanked , if someone can obtain something quicker cheaper or easier they will most likely not complain . In fact it is part of the ‘job’ of writers on this blog to help explain where the trick of it all lies , where the manipulation is taking place that deceives us , and deceive us it does .

              At the end of the day our fiat regimes are administrative currencies , just as the domestic laws on international trade are an administrative affair , as are matters of commerce , commerce as a lay meaning being large scale trade between domestic regions or foreign countries .

              So I personally will maintain that the deception that is taking place is an administrative decision due to corruption and fraud allowed by the monetary systems we impose on ourselves / have imposed on us , depending on your inclination . The reason for this is that debt simply becomes more money by continuously lowering the standards of its backing from productivity to simple assets, and artificially increasing the numeric value of those assets so as to allow further borrowing and spending against them , remembering that the Yuan currency is pegged and will not show that US activity by depreciating the Dollar . At the moment China holds Dollars , it can devalue its own currency if it chooses , people are guessing , and no more , as to what the true rate should be .

              You could use administrative rulings on trade to try to balance out administrative monetary pursuits , spending patterns , debt , and so on , but I think that somehow it would be chasing its own tail.

              That is one reason I say the imbalances are extreme , they run right through national economies at just about every level , are incorporated in numerous laws , in government policy and action , and more besides . If or when the circuit does not provide , entire nations will be shaken into action of some kind to rearrange themselves , to reform themselves , and the answers are not going to come from the generosity of their previous partners . That is also why I think containment is going to be necessary , otherwise they will lash out at each other in an effort to save face or to rearrange the other to their own liking . At that point of containment administration may step in with a full domestic agenda that is not designed to maintain the current system but to allow its nation to rebuild itself .

              Obviously I am guessing at how events will be , but the current global direction is just too far fetched as sustainable and is looking more than a little lost for direction.

  • therooster:

    Trade and choice are good things. Debt is the culprit and what needs to be purged. Gold is a currency that displaces debt by way of market osmosis.

    Strike the root.

    • VB:

      Gold isn’t a currency – nobody uses gold as a medium of exchange. Debt, by itself, isn’t a bad thing – it allows you to do things that you’d be unable to do otherwise. The problem is excessive, unpayable debt.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • The India-China Border Issue
      Deep-Seated Racism and Happy-Smiley Hypocrites In Delhi, people of the northeastern part of India, who have mongoloid features, are derogatorily called “chinky.” It is not unusual for men in Delhi to stop their cars to proposition a random girl from the northeast for a sexual encounter, assuming her to be “loose.” Indians' ignorance about the geography of their own country, their irrationality, superstitions and bigotry have been fertile ground in these days of Covid-19. People...
  • Silver “Scarcifies” – Precious Metals Supply and Demand
      On Monday, Silver got Scarcer – and Simpler On 23 July, we said:   “Well, it’s complicated.”   The action on 27 July was not.   Silver spot price vs. September basis   Notice the big drop in the basis starting around midnight (London time). It falls from over 7% to under 2%. To refresh: Basis = Future(bid) - Spot(ask) For the first two and half hours, the spot price is not moving. So, the only way the basis can drop is if the price...
  • Best Laid Schemes
      A Really Neat Bridge   But, Mousie, thou art no thy-lane, In proving foresight may be vain; The best-laid schemes o’ mice an’ men Gang aft agley, An’ lea’e us nought but grief an’ pain, For promis’d joy! – Robert Burns, To a Mouse, on Turning Her Up in Her Nest With the Plough (in extract), 1785     Installation of the final cable support pipes on the Gerald Desmond bridge replacement. Here is a drone video of the project. [PT] Photo by...
  • Silver Explodes — But Why? Precious Metals Supply and Demand
      Explosive Days in Silver The silver market witnessed another explosive day! At midnight (in London), the price of the metal was $26.90. By 9pm, it had rocketed up to $28.95, a gain of 7.6%. This is not normal. But then, we are not in a normal world.   After several years of going nowhere and a downside fake-out in March this year, silver has come to life rather dramatically... [PT]   The Republicans are spending like drunken Modern Monetary Sailors. And...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

     
    Buy Silver Now!
     
    Buy Gold Now!