The trade war of ignorance Saturday, Dec 14 2019 

THE TRADE WAR

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America: “Take that, China”

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China: “Take that America”

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Imagine this: You own a large fresh-water lake and all the land around the lake. You live in a house on the shore, and you alone freely can draw endless fresh water from the lake to meet all your needs.

Image result for lovely lake

Imagine that you own this lake and all the land around it.

Your children, who do not live on the lake, grow crops and do some manufacturing. They sell their crops and their manufactured goods to your neighbors, and in payment they receive . . .

. . . Water!

That’s right. In return for your children’s labor and expenses, they receive water, which you can obtain from your own lake, and simply give to your children, at virtually no cost.

Crazy, isn’t it? But wait, it gets crazier.

Since you have unlimited water, and your neighbors need water, you are able to buy food, clothing and manufactured goods from them, and pay your neighbors in the endless water you can draw from your lake.

One day, you become angry at one of your neighbors for not buying enough of your children’s crops and manufactured goods. You want him to buy more from them and to give your children even more water — the same water you could give them at no cost.

Image result for pouring water into a lakeSo to punish your neighbor for not buying enough of your children’s labor, and sending them more water, you take some of the water he gives your children, and you pour it back into the lake!

That’ll show him!

You may think this story is insanity, but what I just have described is the U.S. trade war with China.

The U.S. government, unlike state and local governments, unlike the euro nations, and unlike you and me, is Monetarily Sovereign.

That means the U.S. government has the unlimited ability to create infinite U.S. dollars at the touch of a computer key.

In the above parable, U.S. dollars correspond to the unlimited water you freely can draw from your lake.

China pays for our exports with U.S. dollars, which to the U.S. government are nothing more than water. But the Trump administration is angry at China for not buying enough of our products and sending us more dollars (water).

So the Trump administration decides to “punish” China by levying an import duty on Chinese goods, which is exactly like pouring our children’s water back into your lake.

For every export, there must be an import. When the U.S. exports goods and services, it imports the dollars that pay for the export.

The U.S. does not need to import dollars. 

Remember the above parable as you read excerpts from a story that appeared in THE WEEK Magazine:

China is getting Trumpy
By Jeff Spross

President Trump rails against Chinese manufacturing for stealing U.S. jobs.

In retaliation, he’s used tariffs to cut down on the goods Americans import from China — and, by extension, bulk up the “Made in America” goods they buy.

Translation: Trump is angry at the Chinese for not buying enough of your children’s products (in exchange for water).

So he takes some of your children’s dollars (water) in tariffs (pours it back into your lake).

Meanwhile, Trump’s critics paint this as an absurd and destructive quest; they assert that our economic entanglement with China is good for the United States.

It’s good for the United States because we receive valuable goods, made by the sweat of Chinese labor and valuable assets, and all we give them is the dollars that cost us nothing to produce.

Ironically enough, unlike Trump’s U.S. critics and despite what it says abroad, China’s government has its own downright Trumpian plan to get Chinese consumers to buy more Chinese-made products.

Quite literally, the plan is called “Made in China 2025.” The Chinese government — whose economic policy is a weird hybrid of market liberalization and communist-style state ownership and central planning — announced the plan back in 2015.

Basically, it’s a 10-year industrial strategy to increase China’s ability to manufacture high-tech products like superconductors, computer chips, and airplanes.

China wants to consolidate those supply chains within its own borders, so its consumers can buy more of those types of goods from domestic producers. Sound familiar?

Yes, very familiar.

Like the U.S. government, China’s government is Monetarily Sovereign. It has the unlimited ability to create the Chinese renminbi. It never can run short of renminbi.

It can pay millions of Chinese workers billions of renminbi to manufacture everything locally. It has the financial ability to consolidate all supply chains locally.

And/or, it can use the foreign exchange markets to obtain unlimited dollars, and buy whatever it wants to buy from the U.S.

China is caught in the “middle income trap.”

Most of what it exports to the world is low-cost manufactured goods — think clothes, shoes, or consumer electronics — which are low cost because the workers who make them aren’t paid a lot.

Meanwhile, it imports a lot of  high-tech products, which are much more expensive.

Quite often, this setup traps middle-income countries in perpetual trade deficits.  (They’re exporting cheap stuff and importing expensive stuff.)

The word “deficit” and the word “debt,” are the most misunderstood words in all of economics. Both have pejorative implications.

Consider “deficit.” No one likes to run a deficit. Everyone prefers a surplus. But, a federal deficit is an economic surplus. Money flows from the federal government to the economy.

Which is better? For the federal government, which already has infinite dollars, to run a dollar surplus, or for the economy, which can run short of dollars, to run a dollar surplus?

Similarly, a trade deficit can be viewed as a trade surplus: Goods flow from nation “A” to nation “B,” and money flows from nation “B’ to nation “A.”

So which nation runs the “deficit,” and which nation runs the “surplus”? If you are nation “A,” and you receive valuable goods in exchange for the water you freely take from your lake, are you running a surplus or a deficit?

Every day, you run a “deficit” with your grocer, your neighborhood restaurant, your pharmacist, your clothing store, etc. What if you could pay for all these “deficits” with the free water from your lake? Are you bothered by those deficits?

For a Monetarily Sovereign entity, there is absolutely nothing wrong with “perpetual trade deficits.” In fact, they are beneficial.

You receive valuable goods and services, created by the labor and assets of other nations, and you pay with a commodity that has no cost to you: Your own sovereign currency.

That trap drives them into exchange rate crises every so often.

For a Monetarily Sovereign nation,  there are no “exchange rate crises. They have absolute control over every facet of their currency, including the value of that currency. They are sovereign over the currency.

China’s largely managed to run a trade surplus with the rest of the world despite all this, albeit with the occasional dip into trade deficit.

Which is a testament to the intelligence and aggressiveness of Beijing’s macroeconomic and trade strategies.

Translation: China largely managed to use its valuable labor and resources to obtain renminbi, which it could have created without using any of its labor or resources.

That is no testament to “intelligence” and aggressiveness.”

But now the Chinese government would like to get the country out of the middle-income trap entirely.

They are in a trap created by ignorance, not by reality. Like the U.S., they easily could support “perpetual trade deficits,” i.e. buy endless goods in exchange for their endless sovereign currency.

Ironically, here in America, the Made in China 2025 plan isn’t the kind of thing that Trumpian critics of free trade or establishment champions of free trade want to see.

Critics of free trade want America to close its own trade deficit by selling more stuff to China, which is obviously in tension with China’s desire to produce more domestically.

And neither camp likes the idea of China providing more direct subsidies to its domestic companies, or continuing to grab technological know-how and intellectual property from the rest of the world.

The Trump administration actually released a report in 2018 concluding that aspects of Made in China 2025 were “unreasonable and discriminatory.” And other European countries have complained about it as well.

The only people who should complain about China’s “Made in China” efforts are the euro nations — nations like France, Germany, Italy, Portugal, et al, who do not have a sovereign currency.

They use the euro, which is the sovereign currency of the European Union (EU), not of any individual nations.

Euro nations do not have the unlimited ability to produce euros. They can, and often do, run short of euros, and they depend on the “charity” of the EU for survival.

Like you and me, the euro nations are monetarily non-sovereign. They need to export enough goods and services (i.e., import enough euros) to cover their shortfall of euros.

Similarly, all U.S. cities, counties, and states are monetarily non-sovereign. They use the U.S. dollar, which is the sovereign currency of the federal government. They can, and often do, run short of dollars, a problem that never can happen to the federal government.

As payback for Trump’s tariffs on Chinese exports, China jacked up tariffs on American exports.

Translation: To punish America, China raised taxes on its own people,the same thing Trump did to Americans to punish China.

Not surprisingly, China’s imports from the U.S. have fallen since 2018.

But China’s imports from the rest of the world fell by a comparable amount over the same period. It’s not that Chinese demand for foreign goods shifted from American producers to other countries — it’s that the demand just fell, period.

China is producing and paying for more goods and services internally, which being Monetarily Sovereign, it can do endlessly — as can America.

Both the European Central Bank and the International Monetary Fund have noted the shift, while France’s central bank came right out and said “the recent trade deceleration is closely linked to the shift of China’s production towards domestic demand.”

Yes, European euro nations should be worried. They cannot control their own finances. They are slaves, not only to the EU, but to the rest of the world, and it all was so predictable.

Because of the Euro, no euro nation can control its own money supply. The Euro is the worst economic idea since the recession-era, Smoot-Hawley Tariff. The economies of European nations are doomed by the euro.” The Meteorology of Economics,” 2005

The austerity and free-market policies of the modern global trade order create a permanent shortfall in global demand, thus driving a race to the bottom as every country tries to outwit its neighbor and grab more of the demand that remains.

Rather than attempt to change that game, both Trump’s and China’s protectionism are just attempts to be the player who comes out on top.

Austerity is merely the attempt by the very rich to widen the income/wealth/power gap and to squeeze more dollars out of the middle and the poor.

No people in human history (other than the rich) have benefited from their nation adopting austerity.

By contrast, protectionism by a Monetarily Sovereign nation can be quite beneficial to that nation’s populace.

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

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The most important problems in economics involve:

  1. Monetary Sovereignty describes money creation and destruction.
  2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

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 Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

The tariff nose-cutting, pissing contest Wednesday, Dec 5 2018 

From THE WEEK Magazine:

“President Trump on Tuesday tweeted that trade negotiations with China are “ongoing.”

“Trump said he wants countries who “come in to raid the great wealth of our Nation” to “pay for the privilege of doing so,” arguing that tariffs will “always be the best way to max out our economic power.”

“Dubbing himself ‘a Tariff Man,’ the president threatened to impose tariffs once again if the two nations can’t reach a “fair” agreement in the next 90 days.”

The above, in typical Trumpian style, demonstrates either abject ignorance or intentional perfidy. Tariffs never have been even a good way, never mind “the best way,” to “max out economic power.”

And by calling himself “a Tariff Man,” Trump merely is saying, “I am willing to punish Americans so I can fool them into thinking they are winning.”

Let’s examine tariff reality.  The idea behind tariffs can be visualized by this invented example:

China, because of low local wages or material costs, and/or superior manufacturing skills, is able to produce a pot that is significantly cheaper than, or superior to, similar pots produced in the U.S.

So to protect the U.S. pot industry, and the jobs therein, the U.S. levies a tariff on pots imported from China.

The President then boasts that he has saved the U.S. pot industry and prevented China from “taking advantage of us.”

What really has happened?

  1. The U.S. government has levied a tax on Americans, punishing people who buy Chinese pots.
  2. The U.S. consumers’ cost of all pots has been increased, which is inflationary.
  3. Dollars have flowed from the U.S. private sector to the U.S. government. Taking dollars from the private sector is recessionary.
  4. The U.S. pot industry, being protected from foreign competition, does not need to strive for efficiency, and thereby stagnates, while other nations improve their pot-making efficiency.
  5. China retaliates by levying an import tariff on American pans, which hurts the U.S. pan industry, thereby costing jobs in the U.S. pan industry.

    Image result for water fight

    Trump says we’re winning.

Bottom line results for the trade war: Taxes on Americans have increased; inflation has been stimulated; the pot industry has been protected, but the pan industry has been hurt; and no net jobs are produced.

Trump, and most Americans, do not understand, that punishing Americans with higher taxes, is not a good way to protect Americans. The irony is that Trump boasts about cutting taxes, while his tariffs increase taxes.

If Americans’ income and jobs, and/or a particular American industry, need to be protected, there are far better ways than the self-destructive, pissing contest that Trump and his predecessors have initiated over the years. To:

I. Increase and Protect Americans’ Income: Initiate the Ten Steps to Prosperity (below). Step #1 alone (Eliminate the FICA tax) would increase the incomes of all salaried people. The other Steps would protect the incomes of Americans’

II. Protect Americans’ jobs: The elimination of FICA would cut employment costs, thereby encouraging employment in all industries, not just specific industries.

III Protect American Industries: Step 6. (Eliminate federal taxes on business) would benefit American businesses at no cost to anyone. The U.S. government, being Monetarily Sovereign, neither needs nor uses tax dollars. It creates new dollars, ad hoc, every time it pays a creditor.

Additionally, the federal government could assist vital industries via direct subsidy.

In summary, all tariffs, whether import or export, hurt all nations involved. They are inflationary and recessionary, and being protectionist, they inhibit innovation.

Our Monetarily Sovereign federal government has the unlimited power to protect its citizens, not by punishing them, but by rewarding them. This is a lesson yet to be learned by politicians and the American people.

Tariffs never, never, ever are a good solution to any Monetarily Sovereign government’s trade problem. Tariffs always are harmful to the  people. They are the ultimate nose-cutting, pissing contest.

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

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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:
1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

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

MONETARY SOVEREIGNTY

The fake trade and NATO wars Friday, Jul 13 2018 

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

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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

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Victor Davis Hanson

By Victor Davis Hanson, a classicist and historian at the Hoover Institution at Stanford University, authorvdh@gmail.com

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

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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:
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.

2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE
(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?”

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 (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.

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.

5. SALARY FOR ATTENDING SCHOOL
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.

6. ELIMINATE FEDERAL TAXES ON BUSINESS
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.

8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME.
(TROPHIC CASCADE)
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.

MONETARY SOVEREIGNTY

When ego meets ignorance: Who pays for tariffs? You do. Saturday, Jun 16 2018 

It takes only two things to keep people in chains:

The ignorance of the oppressed
And the treachery of their leaders

===================================================================================

The term “trade war” is used to describe a situation in which one country applies tariffs to imports from another nation, and the other nation retaliates with tariffs of its own.

But, a “trade war” is vastly different from a military war. In a military war, the enemy shoots at you, and you shoot at the enemy.

In a trade war, the enemy shoots at you and at itself, while you shoot at the enemy and at yourself.

A trade war is a suicide pact.

With every nation shooting at other nations and at its own people, how do you  “win” a trade war? You don’t. All trade wars are lost.

The hypothetical purpose of a tariff is to protect local businesses from foreign competition. But a tariff hurts the entire economy.

One example: Taxing imported TV sets would raise the price of all TV sets, because domestic TV manufacturers would feel less pressure to hold prices down.

The two results — both adverse — would be:

  1. The entire American public pays more money so that the relatively fewer American TV makers s can receive more money. The philosophy of tariffs is for many to pay more so the few can receive more.
  2. Tax dollars are taken from the economy and sent to the federal government, which being Monetarily Sovereign, and not needing to receive dollars, destroys them. Reducing the money supply is economically recessive.

The arguments for any tariff generally fall into two kinds of goals:

  1. To protect vital industries from extinction. Consider, for instance, computer processors. They constitute a vital defense product, and if there ever were a military war, the nation having a monopoly on computer processor manufacturing would have a distinct advantage.
  2. To protect domestic jobs. Every industry that is depleted by foreign competition loses jobs.

Both types of protection — protecting vital industries and protection jobs –are reasonable goals, but neither needs to be costly to the economy. It is not necessary, or even wise, to “shoot” our own people, in order to protect them from enemy “bullets.”

Both goals of protectionism can be accomplished by our Monetarily Sovereign government via:

  • federal government purchases from domestic suppliers, even at higher than import prices.
  • federal tax breaks for selected industries
  • direct federal cash infusions to the selected companies.

A Monetarily Sovereign government has the unlimited ability to create its own sovereign currency.

It easily can fund any sort of protectionism without tariffs, which has the added value of stimulating the economy instead of depressing the economy, as tariffs do.

U.S. and China Expand Trade War as Beijing Matches Trump’s Tariffs
By Ana Swanson, June 15, 2018

WASHINGTON — The Trump administration on Friday escalated a trade war between the world’s two largest economies, moving ahead with tariffs on $50 billion of Chinese goods and provoking an immediate tit-for-tat response from Beijing.

The president is battling on a global front, taking aim at allies and adversaries alike.

The United States has levied global tariffs on metal imports that include those from Europe, Canada, and Mexico, while threatening to tear up the North American Free Trade Agreement.

These countries are fighting back, drawing up retaliatory measures that go after products in Mr. Trump’s political base.

China’s response was swift on Friday, focusing on $50 billion worth of American goods including beef, poultry, tobacco and cars.

The trade actions could ripple through the global economy, fracturing supply chains and costing jobs at American companies that will be forced to absorb higher prices.

The tariffs are expected to drive up prices for American consumers as well as for businesses that depend on China for parts.

China is likely to back away from an agreement to buy $70 billion worth of American agricultural and energy products — a deal that was conditional on the United States lifting its threat of tariffs.

To say this is foolish would be an understatement. It is the work of a megalomaniac, who cares nothing about trade realities, but who wishes only to project to his base an image of “toughness.”

His base, being equally ignorant about trade realities, and who is more attracted to faux toughness than to facts, goes along with their self-punishment.

The penalties make good on a campaign promise by Mr. Trump to crack down on Chinese trade practices that he says have cost American jobs. 

Weakening the American economy and costing Americans money surely is the worst way to protect American jobs.

Mr. Trump added, “These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs.”

But the White House has lately vacillated between taking a tough stance on Chinese trade practices and declaring that the trade war was “on hold.”

In recent weeks, the administration had tried to defuse tensions with China ahead of a summit meeting with the North Korean leader. Mr. Trump extended a lifeline to the Chinese telecommunications company, ZTE, at the request of President Xi Jinping.

This constant vacillation signifies government by childlike impulse and ego.

If Trump sees something on Fox and Friends, immediately a policy emerges, until he sees something else, at which time a whole new policy rears its ugly head.

China said it would hit back with additional tariffs of 25 percent on about $50 billion of American-made products, the country’s Commerce Ministry said in a release. 

The ministry said in a separate statement Friday that all other recent trade terms negotiated by the United States and China would also be declared invalid.

Years of trade negotiations will be lost to the petulant, emotional decisions by a man having scant knowledge about the subject of his decisions.

The Tax Foundation, a conservative nonprofit organization, found that tariffs on China and steel and aluminum could lower American employment by more than 45,000 full-time jobs in the long run.

Imposing tariffs places the cost of China’s unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers and ranchers,” said Thomas J. Donohue, the president of the United States Chamber of Commerce. “This is not the right approach.”

The National Retail Federation, which represents grocers, chain restaurants and other stores, said the tariffs would not combat China’s abusive trade practices, but only “strain the budgets of working families by raising consumer prices.”

“Lower American employment,” “places the cost . . . on American consumers,” “strain the budgets of working families” — these are the results when ego meets ignorance.

Are you “tired of winning”?

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

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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:
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.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (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?”
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 (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.
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.
5. 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.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
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.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
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.

MONETARY SOVEREIGNTY

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