The great trade-deficit hoax

It takes only two things to keep people in chains:
The ignorance of the oppressed and the treachery of their leaders.Image result for in chains——————————————————————————————————————————————————————————————————————————————————————————–

Here is a direct quote from one of President Trump’s recent tweets:

“From Bush 1 to present, our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars. Last year we had a Trade Deficit of almost 800 Billion Dollars. Bad Policies & Leadership. Must WIN again!”

It is a classic example of how selective facts can produce a wrong conclusion.

Here is the other side of that coin:

Fact check: Is Trump right about the size of trade deficit?

Trump persistently miscasts the trade balance, citing the U.S. deficit in goods and ignoring the U.S. surplus in services. The actual trade deficit last year was $566 billion.

As for manufacturing, Trump leaves out what is widely regarded as the main reason for the decline in factory jobs — automation and other efficiencies.

What he doesn’t say is that despite the loss of those 5.5 million factory jobs, the U.S. economy overall has added a net total of about 40.6 million jobs in that time. 

Bottom line: The U.S. has been moving from “brawn” factory jobs toward “brain” office jobs. Is that a bad thing?

O.K., so Trump is ignorant and a compulsive liar.  You already knew that. But what about that trade deficit. Would you say it is harmful or beneficial?

Think of where you’ve spent your money, this year. You’ve shopped at grocery stores, drug stores, clothing stores. You’ve gone to movie theaters, restaurants, ballparks, retail malls. Perhaps you bought a car. You might have shopped online.

In each case, you gave them money and in return, they gave you goods and services.

In short, you ran a “trade deficit” with every grocery, drug, and clothing store — with every movie theater, restaurant, mall, car dealer, ballpark, and online provider.

That is exactly what a “trade deficit” means. One party gives another party money in exchange for goods and services. After the exchange, which party “WINs” (to borrow Trump’s term), and which party loses?Image result for trade

Clearly, both parties win. It’s an even exchange, which both parties desire.

When you bought that loaf of bread, did you feel that you “lost”? If you had, you wouldn’t have bought the bread.

You wanted bread; the retailer wanted dollars; you both got what you each wanted.

That exchange just as easily could be termed a trade “surplus” as a trade “deficit,” since you came out with a surplus of bread.

When the U.S. runs a trade “deficit” with the rest of the world, which we do almost every year, it doesn’t mean we have “lost.” It means we have received valuable goods and services in exchange for dollars, which our Monetarily Sovereign government can create endlessly, at the touch of a computer key and at no cost.

When you personally engage in overly large trade deficits, i.e. buy too much stuff, you can run short of dollars to pay your bills. You even can go bankrupt, as Trump’s companies often have. The reason: You are monetarily non-sovereign.

Similarly, cities, counties, states, and businesses cannot run trade deficits endlessly, because being monetarily non-sovereign, they can run short of dollars.

But the U.S. is Monetarily Sovereign. It never can run short of its own sovereign currency the dollar. America never can run short of dollars.

The early settlers of our nation built and maintained their own houses; they grew and prepared their own food; they sewed their own clothing; they even taught their own children, in the home. They mostly were self-sufficient.

Now, in our modern society, you purchase your houses from home builders; you purchase your food from farmers and processors; you purchase your clothing; you pay people to do your plumbing, carpentry, landscaping, sewage removal, and road paving. You pay schools to teach your children.

When Americans were self-sufficient, they didn’t run trade deficits.  They didn’t buy things. Today, you run trade deficits; you buy most of what you want from people who more efficiently can supply these things.

You buy from China, the things it can produce better or more cheaply, than comparable things, made here in America. Would it benefit you to purchase “Made in America” goods and services, if these goods and services were more costly or less useful than those made in China?

Trump claims that the U.S. should be a net importer of dollars.

If instead of having a trade deficit, we had a trade surplus, we would become a net importer of dollars — the very last thing this Monetarily Sovereign nation needs.

We would be sending our precious assets overseas in exchange for the one thing of which we have an infinite amount: U.S. dollars.

Finally, tariffs — both import and export — are not paid by China or the rest of the world. They are paid by you.  The tariffs on imported goods are dollars added to the price. Those dollars leave the U.S. private sector and are sent to the federal government.

The same President who boasted about how much his tax cuts would benefit the economy now proposes tariff tax increases to  — you guessed it — benefit the economy. 

How increased taxes, which take dollars from the private sector and give them to the federal government, which has no need for them, can benefit our economy has yet to be explained.

And when China, and the rest of the world, institute their retaliatory tariffs against our goods,  our factories and farmers either will have to cut profits to remain competitive or lose sales. Either way, the U.S. workers will be hurt.

I can understand why Trump wants this trade war. He is a stupid, vindictive, semi-literate man, who obtains his ideas from the stupid, vindictive people of Fox and Friends.

I even can understand why Trump’s followers buy into this economic catastrophe. They don’t understand the realities of international trade; they believe whatever their failed hero tells them.

What I cannot understand is the GOP members of the Senate and the House. These people know America will be hurt, but are too spineless to fight. They would rather see the people of America suffer than to displease this egomaniacal President.

In that sense, they choose their party over country, which makes them traitors to America.

May they be damned to eternal fires, especially the religious right, who while claiming morality, have sold their souls to the devil.

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


The 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:
1. ELIMINATE FICA (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.
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?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) 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.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE 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.
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.
9. FEDERAL OWNERSHIP OF ALL BANKS (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.


–Let’s destroy the food, clothing and shelter of the rich

The debt hawks are to economics as the creationists are to biology.

Here’s an idea to help our economy. The rich have access to more food, more clothing and better shelter than have the poor. So let’s take some food, clothing and shelter from the rich and destroy it.

What? You don’t see how that can help the economy? You think it’s a stupid idea? Well, maybe. But isn’t it identical with what the politicians want to do right now?

You see, money is the food that makes the economy run. Today’s economy is starved for money. Yet, the politicians want to increase federal taxes on the rich, which will destroy some economic “food.” That’s right, federal taxes destroy money. The federal government doesn’t use taxes for spending. There is zero relationship between federal taxes and federal spending. (This is different from state and local governments, which do rely on taxes for spending.)

So, if you understand that taking food, clothing and shelter from the rich, and destroying it is useless and harmful, then you also understand that increasing federal taxes on the rich is equally useless and harmful. And if you understand it, why don’t your federal government representatives understand it?

Rodger Malcolm Mitchell

No nation can tax itself into prosperity