The fake trade and NATO wars

It takes only two things to keep people in chains:Image result for carnival barker

The ignorance of the oppressed
And the treachery of their leaders


We often have discussed the difference between ignorance and stupidity. We all are ignorant about the vast majority of facts in the universe. Being intentionally ignorant, however, is stupidity.

We discussed the ignorant trade “war” at When ego meets ignorance: Who pays for tariffs? You do, Jun 16 2018

It is a “war” in which your government shoots at the enemy and also shoots at you, and the enemy’s government does likewise.

With both government’s shooting at both sides, how does one win such a war? One doesn’t. A trade war not only is ignorant, but it is intentionally ignorant, i.e. stupid, which partly explains why Donald Trump has caused it.

But the stupidity is not his alone. Many in the media share it. Consider this article in today’s Chicago Tribune:

Reciprocity is the method to Trump’s madness

Image result for victor davis hanson
Victor Davis Hanson

By Victor Davis Hanson, a classicist and historian at the Hoover Institution at Stanford University,

Critics of Donald Trump claim there is no rhyme or reason to his foreign policy. But if there is a consistency, it might be called reciprocity.

Trump tries to force other countries to treat the U.S. as it treats them. In “don’t tread on me” style, he also warns enemies that any aggressive act will be replied to in kind.

The underlying principle of Trump commercial reciprocity is that the United States is no longer powerful or wealthy enough to alone underwrite the security of the West.

It can no longer assume sole enforcement of the rules and protocols of the postwar global order.

Several bits of ignorance all packed into four short sentences:

First, the “aggressive acts” are those perpetrated by Trump. It was Trump who started the trade wars and it is Trump who has directed criticisms and threats toward NATO and specifically, toward Germany and England.

Second, the United States, unlike the euro nations, is Monetarily Sovereign. It has the infinite ability to create its sovereign currency, the U.S. dollar, to underwrite our military.

As such, it is infinitely wealthy. The euro nations are not.

In fact, the more dollars the U.S. government pumps into our military, the wealthier our nation becomes. Gross Domestic Product (GDP) is based on federal spending. The more the federal government spends, the higher goes GDP.

Third, the U.S. does not, and never has, assumed “the sole enforcement of whatever the term, “rules and protocols of the of the postwar global order” is supposed to signify.

And if we did, wouldn’t that be exactly what we want? Think about it. Would we really want someone else to “enforce the rules . . . etc.”?

This year there have been none of the usual Iranian provocations — frequent during the Obama administration — of harassing American ships in the Persian Gulf.

Apparently, the Iranians now realize that anything they do to an American ship will be replied to with overwhelming force.

Is this something that Trump supposedly has accomplished?

Aside from loudmouth bluster about “fire and fury against the North Koreans (whom Trump now loves and admires), we see no evidence of his “overwhelming force.”

Trump’s main effort against Iran has been to free them to continue making nuclear weapons. Are we supposed to believe that Trump’s ending of the Iranian deal has now frightened Iran so much, they will become placid?

Utter Trumpian idiocy.

Ditto North Korea. After lots of threats from Kim Jong Un about using his ballistic missiles against the United States, Trump warned that he would use America’s far greater arsenal to eliminate North Korea’s arsenal for good.

Yes, Trump scared Kim Jong un so much that Kim continued to manufacture nuclear weapons, ditched a meeting with US Secretary of State Mike Pompeo, and instead visited a potato farm.

Ooooh, that “overwhelming force” of Cadet Bonespurs. Another Trump failure which he will claim was a smashing success. And which his followers will believe.

More important, most NATO countries have failed to keep their promises to spend 2 percent of their gross domestic product on defense.

What the American public doesn’t understand it that it does us absolutely no good for NATO nations to spend 2% or even 10% on defense. Two reasons:

First, the U.S. likely would not spend a penny less on defense, no matter how much NATO nations spend.

Second, spending by the Monetarily Sovereign U.S. government costs American taxpayers nothing, and it stimulates economic growth.

There is not a single economic reason why America needs Europe to spend more on defense.

Why does Germany by design run up a $65 billion annual trade surplus with the United States?

Why does such a wealthy country spend only 1.2 percent of its GDP on defense?

And if Germany has entered into energy agreements with a supposedly dangerous Vladimir Putin, why does it still need to have its security subsidized by the American military?

Well, he asked three questions, so I’ll give three answers:

One — Trade Deficit: Germany runs a trade surplus (i.e. a goods and services deficit), with the U.S. because more of our consumers wish to purchase German goods than German consumers wishing to purchase U.S. goods.

Further, as we frequently have noted America, being Monetarily Sovereign, benefits from our trade deficit. We receive valuable and scarce assets, goods and services, in exchange for U.S. dollars, which the U.S. can create endlessly and at no cost.

Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills.”

Thomas Edison: If the Nation can issue a dollar bond it can issue a dollar bill.  The element that makes the bond good makes the bill good also. . . . It is absurd to say our Country can issue bonds and cannot issue currency.

Those wishing for the U.S. to run a trade surplus do not understand economic reality.

Further, Germany is monetarily non-sovereign. Unlike the U.S. it does not have the unlimited ability to create its sovereign currency, simply because it has no sovereign currency.

Germany is similar to the U.S. cities, counties, and states in that it uses a currency over which it has no control.

So, to survive long-term, Germany requires the income that a trade deficit provides. By contrast,  the U.S. needs no income. It creates U.S. dollars ad hoc, by spending dollars. The U.S. government never can run short of U.S. dollars. Never.

Two — Defense: Our spending for Germany’s defense benefits us. It allows us to surround Russia with troops and weapons, and gives us better military access to Africa.

Three — Subsidized security This question is completely nonsensical. Having an energy agreement with “supposedly dangerous” (supposedly??) Russia, has nothing to do with the need for security.

Trump approaches the North American Free Trade Agreement in the same reductionist way. The 24-year-old treaty was supposed to stabilize, if not equalize, all trade, immigration and commerce between the three supposed North American allies.

There is no need to equalize trade, immigration and commerce among the three Monetarily Sovereign nations.

It never quite happened that way.

Unequal tariffs remained. Both Canada and Mexico have substantial trade surpluses with the U.S. In Mexico’s case, it enjoys a $71 billion surplus, the largest of U.S. trading partners with the exception of China.

Canada never honored its NATO security commitment. It spends only 1 percent of its GDP on defense, rightly assuming that the U.S. will continue to underwrite its security.

Not one of the above is bad for America. It is all Trump’s excuse for creating conflict. All dictators want conflict, because that cements their power.

During the lifetime of NAFTA, Mexico has encouraged millions of its citizens to enter the U.S. illegally. Mexico’s selfish immigration policy is designed to avoid internal reform, to earn some $30 billion in annual expatriate remittances, and to influence U.S. politics.

The above must have beoen written by Trump, for it has no basis in fact. There is zero evidence that Mexico is encouraging its people to leave.

This reminds us of Trump’s infamous “They’re not sending their best. They’re rapists . . .”

The immigrants are coming to make a better life for themselves and their children, just as all American’s ancestors did — just as your parents and grandparents did.

Mexico is not sending anyone. This is all a Trump fever-dream being disseminated by Hanson.

Yet after more than two decades of NAFTA, Mexico is more unstable than ever. Drug cartels run entire states. Murders are at a record high. Entire towns in southern Mexico have been denuded of their young males, who crossed the U.S. border illegally.

How does that prove Hanson’s assertion that Mexico is exporting too much to the U.S. and “sending” us criminals? Again, it sounds like a rambling Trump “attack-everyone-and-every-thing” speech.

But in 2016, red-state America rebelled at the asymmetry. The other half of the country demonized the red-staters as protectionists, nativists, isolationists, populists and nationalists.

But Trump followers are exactly that: Protectionists, nativists, isolationists, populists and nationalists — and way too many are bigots.

However, if China, Europe and other U.S. trading partners had simply followed global trading rules, there would have been no Trump pushback — and probably no Trump presidency at all.

Trump’s election had nothing to do with trading rules. It had more to do with the electoral college and gerrymandering, plus a very weak Democratic nominee,  that allowed a minority to win over a majority.

Had NATO members and NAFTA partners just kept their commitments, and had Mexico not encouraged millions of its citizens to crash the U.S. border, there would now be little tension between allies.

“Crash” the border? Did you grandparents “crash” the border. More phony language from a Trump devotee.

Again, a rich and powerful U.S. was supposed to subsidize world trade, take in more immigrants than all the nations of the world combined, protect the West, and ensure safe global communications, travel and commerce.

After 70 years, the effort had hollowed out the interior of America, creating two separate nations of coastal winners and heartland losers.

Ah yes, the divide and conquer idea. The people on the coasts (i.e. the blue New Yorkers and Californians) supposedly are rich, while the people in the middle (except for the blue Illinoisans) are impoverished — a favorite Trump theme.

And all of this is the fault of the trade deficit.

Trump’s entire foreign policy can be summed up as a demand for symmetry from all partners and allies, and tit-for-tat replies to would-be enemies.

No, Trump’s entire foreign policy can be summed up as: Buddy-up to dictators, and make war with allies.

Did Trump have to be so loud and often crude in his effort to bully America back to reciprocity?

Who knows?
But it seems impossible to imagine that globalist John McCain, internationalist Barack Obama or gentlemanly Mitt Romney would ever have called Europe, NATO, Mexico, and Canada to account, or warned Iran or North Korea that tit would be met by tat.

“Globalist”? “Internationalist”? “Gentlemanly”? Even Trump’s silly name-calling has seeped into Hanson’s language.

What do these terms signify with regard to trade deficits? Hanson has nao idea. But calling names is mandatory for a Trump follower.

Email him, and ask him why he writes such nonsense. His Email is at the top of his comments.Image result for victor davis hanson

(By the way, I looked for a photo of Hanson here, and this is what I found):

Perhaps that tells it all.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell


The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:

(Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.

(H.R. 676, Medicare for All )

This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”

(The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.

This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.

Five reasons why we should eliminate school loans

Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.

Salary for attending school. Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.

Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.

7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.

There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.

(Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.

10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.


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