President Trump and his trade czar, Peter Navarro, are moaning and groaning about NAFTA and the US trade imbalance with Mexico.
“NAFTA has been a catastrophe for our country; it’s been a catastrophe for our workers and our jobs and our companies,” said Trump on February 2.
Let’s investigate this allegedly catastrophic deal for the US with a set of pictures.
Manufacturing Employment
Trump and Navarro moan about NAFTA causing a loss of US manufacturing jobs. If anything, NAFTA stabilized or increased US manufacturing jobs for six or seven years thanks to an increase in bilateral trade.
The demise of US manufacturing jobs started in June of 1979, long before anyone could blame either Mexico or China.
US Balance of Trade in Goods with Mexico
Goods Trade with Mexico
It’s impossible to make a realistic case that NAFTA hurt the US.
Explaining Balance of Trade
The seeds of trade imbalances were sewn in 1971 when Nixon closed the gold window. The trade deficit rose, then skyrocketed.
Total Credit Market Debt Owed
Following Nixon closing the gold window on August 15, 1971, credit soared out of sight to the benefit of the banks, CEOs, the already wealthy, and the politically connected.
Scapegoating
- Trump blames Mexico and China.
- Larry Summers blames “Secular Stagnation”.
- Ben Bernanke blames a “Savings Glut”.
Scapegoating Mexico and China helped get Trump elected. Scapegoating also allows the Fed and central banks to blame anything and everything but lack of a gold standard.
“Our Currency but Your Problem”
The source of global trading imbalances, soaring debt, declining real wages, and the massive rise of the 1% at the expense of the bottom 90% is Nixon closing the gold window.
At that time, Nixon’s treasury secretary John Connally famously told a group of European finance ministers worried about the export of American inflation that the “dollar is our currency, but your problem.”
Balance of trade issues, soaring debt, declining real wages, and the demise of the US middle class are now our problem.
The Fed, ECB, Larry Summers, Paul Krugman, Donald Trump, and economists in general, cannot figure out what caused the problem. Instead, Bernanke, proposes a “savings glut”, and Larry Summers proposes “secular stagnation”.
Related Articles
- Steen Jakobsen on “The Nixon Doctrine”, Trump, Equities, Gold
- Trump Accuses Germany of “Currency Exploitation”: Merkel vs. Trump, Is Either Side Telling the Truth?
- Navarro Nonsense and the Folly of Trump’s Proposed Tariffs
- Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold’s Honest Discipline Revisited
My challenge to the Secular Stagnation Theory of Summers has gone unanswered.
Mike “Mish” Shedlock
Unbacked currency is debt if we are using it to buy imports. When they decide to claim their real assets and repatriate their dollars, the debt will come due.
Nah. That’s what the “defense” spending is for. We’ll continue getting our way until there is a competing war/spy machine to stop us.
“Unbacked currency” is debt? What is owed to whom and on what payment plan? For that matter, what “backs” the value of gold, with 4 billion oz in existence, totally swamping the metal’s use?
How will those foreigners “repatriate” their dollars? What claim on “real assets” do they have that could be exercised, independent of US exported goods?
I know this is a simpleton asking…lolol However.Everything Imported,that Could have be produced WITHIN the United States..contributes to Job Loss..Correct?
No. Consider bananas. Could we grow them in the US? Sure but at great cost. Importing cheap bananas makes households richer (since their dollars stretch) and frees up money that can be spent on other goods and services.
But could we afford your bananas regardless of how cheap you imported them if we had no jobs from which to earn and pay?
It is one thing to simply import one good at cost advantage while exporting another to provide purchase ability, but when you choose to take advantage of cheap prices with debt or un-backed currency, it is but a matter of time before something really bad happens.
Also there are some jobs Americans won’t do. Picking bananas may be one of them.
Everything Imported,that Could have be produced WITHIN the United States..contributes to Job Loss..Correct?
No – Downright idiotic.Paying more for stuff does not create jobs. Paying less for for things enables consumers to buy more things. Imports create trucking, shipping, stocking jobs (at least for now). Lower prices let more stores be built. Free trade always creates jobs and it puts more money in your pocket.
I agree but we are confusing something here.
The point is not to ‘create jobs’ but to create income and wealth. One job is hardly equal to another job. Getting 1,000 to bake bricks at $5/hr is hardly the same thing as 1,000 jobs that pay $85K per year with full health coverage.
It’s one thing to say we should have jobs for people who aren’t right for going to college or who are inclined to something more physical than sitting on a computer. But that’s more about the mix of jobs out there rather than ‘creating jobs’.
It is suicide to have Free Trade with countries whose Labor and Environmental laws are so much weaker than ours. American workers can form Unions and bargain for better pay and better working conditions; Chinese workers cannot form unions and cannot petition their govt to stop factories from creating horrible pollution in China.
The West has no prayer of competing for jobs with China and similar countries unless we let them pollute here like they do there and make working conditions so bad that factories literally have suicide nest outside of the windows.
What IS free trade?
Can you have free trade without real currency….without blowing the whole thing up?
There is absolutely NOTHING wrong with buying cheap imports, as long as you have a means of paying for it that does not compound debt. And make no mistake that when you have millions of people still eating that are not producing, that this does not constitute a liability.
Economics should have some basic math to it and I have really not had anyone explain to me how we can run continuous and growing trade deficits for decades and still consider it sustainable.
Madash , it is easier to ignore the trade deficit math except as a pointer to where money flows. That is to say, the trade deficit to Mexico means money goes to Mexico to buy goods. Nothing wrong with that. Mexico then does what? If it cannot spend those dollars immediately , or if it wants to hold them, it buys something with them. What? Usually US treasury debt. That means it is earning from funding the US government, and intermediaries take a cut too. The interest is your tax, the funding might go to refuge cities, Mexican government profits might appear in the accounts of US bad hombres amigo mio, some of them might give your savings NIRP just to make sure they are worth SOMETHING, and so on. I exagerate, or not, but you get the idea – large deficit is not bueno, but you can ride it to oblivion if you like, and it will make ‘all the right decisions for you’ along the way.
I fail to see how it can ride to oblivion unless oblivion is just around the corner. How long will they buy Treasuries if they pay marginal rates in a declining dollar value. How long can our currency retain its “image” of solidity as it become more apparent to the world that our economy has no clothes….that the productive capacity is NOT owned by America but by multinational companies that can relocate anywhere in this world or off? Automation is not fixed by geography or people and increasingly the “value” of such technology is not in the hardware but in the ownership of the intellectual property. As our government finds it must squeeze more and more out of its producers to support these not working, PLUS the interest on our debt and all of the government regular expenditures that are skyrocketing in cost projections, ANY companies that can leave, WILL, and all the rest will die. There is nothing new in this as it has been happening for decades. Look at the statistics for small businesses…ain’t good. And big business can go anywhere…unless something restrains them.
Corporations were limited in the past to relocating to nations that offered cheap resources like land labor and minerals. With technology companies, they could effectively locate off planet and provide much of their profit centers.
Remember the cookbook…”to serve man” from The Twilight Zone?
Oblivion is the point where people forget, as in forget what the country was supposed to mean or their place in it, the value of the currency being forgotten etc.
The US still has enough sense about itself, just.
Half of my company’s manufacturing base of heavy equipment is in Mexico. We certainly don’t give away the additional margin of the Mexican units due to the cheap labor to our customers lol! Of course it goes right to the bottom line.
You are failing to consider the number of people who are forced to go on public assistance because they can’t find work or work a job that pays squat that can’t support a household.
We have 45,000,000 on food stamps in America. Maybe if Americans had access to more jobs they could pay for their own food and medical care.
“Free trade always creates more jobs and puts more money in your pockets” is way too simplistic and doesn’t account for all the variables in the equation.
Please do not spew nonsense about what I have “not considered”.
If the Fed did not have an inflationist policy, prices would not go up.
How many times have I stated that? I bet at least 100.
Moreover, and any thinking person ought to know this standards of living inevitably rise as prices decline. So please think.
Finally, one problem with welfare is there is little to no encouragement to get off welfare. How much extra incentive would there be if we did not allow food stamps to be used for snacks, pop, candy, frozen pizza, etc.. Instead, and also something I have pointed out, Clintom promised to end “welfare as we know it”. He succeeded. It went up.
https://mishtalk.com/2013/09/11/states-have-an-incentive-to-promote-not-stop-disability-fraud-so-how-much-fraud-is-there/
https://mishtalk.com/2013/10/08/mainstream-media-finally-catches-on-to-disability-fraud-60-minutes-reports-on-disability-usa/
https://mishtalk.com/2014/08/23/40-of-u-s-on-welfare-obamacare-expands-welfare-by-23-million-more-on-welfare-than-full-time-employed/
https://mishtalk.com/2013/03/27/unwilling-to-work-25-in-hale-county-al-collect-disability-14-million-nationwide-a-simple-solution/
Not only have I commented hundred hundreds of times on the Fed’s role in inflation, I have commented dozens of times on welfare and welfare fraud.
You may not have been aware of those welfare posts but you are undoubtedly aware of my posts on inflation, yet you tell me I have not addressed things that I clearly have addressed.
I agree credit explosion from leaving the gold standard is a big problem. The second problem is the world sending us all this stuff which we buy. Our country has a stable government, so the world gives us debt. It also helps to be the one controlling the world bank. The paradigm of world trade has shifted which in the long term I believe will lead to war.
“Free trade always creates jobs and it puts more money in your pocket.”
IMO, there is a conundrum waiting to be solved as regards Free trade.
Free trade appears good but comes with one major problem. The problem is that it takes money out of one pocket and puts it into another. Let us take a couple of examples…1) IT: It created jobs and put money into pockets of Indians 2) Manufacturing: It created jobs and put money into pocket of Chinese.
In both the cases money was taken out of American workers’ pockets (workers) into some other pockets (consumers and other country workers) and also boosted corporate profits. The American workers made up the loss by getting into debt, readily obliging the Fed. You can readily see the inequality it can lead to over decades, which is what we are facing now.
Thus the net effect, when you take the entire population into account, is negative, especially over long periods of times. This is the crux of the problem.
Free trade without employment generation (with similar earning potential) for those displaced will reduce the total money in the pockets of entire population and will in all likelihood lead to social upheavals. Unless this problem is solved it is likely that protectionism will have the upper hand.
Trade should always balance out, and not be in continuous deficit year after year. That is an indication that the ‘free market” is not working as it should due to the influence of external factors. Failure to do so will result in an impoverished debtor nation.
You are then an advocate for the slippery slope of declining returns. As long as imports are cheaper than USA made, we should all have more to spend, true enough. But what happens when the average job is a lowly part time gig with no benefits and Amazon is a fully automated supplier of all foreign made products. It’s called the decline of a nation and it’s terrible when it happens to you.
Brad DeLong identified the spurt in manufacturing as coming from US automakers. Ironically NAFTA allowed the auto industry to rationalize their manufacturing, giving low value added jobs to Mexico and keeping high value added ones in the US and Canada. By achieving lower costs they could compete with Japan and the EU on price and as a result sales increased as did employment for the auto manufacturing sector.
Some US jobs were lost, however. Tile and brick making was hit esp. hard but in terms of quality jobs suitable for middle class life the auto sector offers far more than making tiles and bricks.
The quality of US cars manufactured in Mexico continuously lags.
The quality of Japanese cars manufactured in the US continuously exceeds.
Labor unions killed US car manufacturing in the US. Had workers accepted fixed contribution benefits like the rest of the private sector work force, Detroit could have kept many jobs at reasonable salaries – not upper middle class salaries, middle middle class salaries.
Maybe they are something to do with Steve, Kev ?
us car making is alive and well in non-union foreign owned and operated plants (mostly in the south) – but the auto plants of those same companies are unionized in the homelands.
Japan can have all the domestic unions it wants as long as it maintains a positive trade balance…and they are desperate to maintain that positive balance, to the point that they have devalued massively to hold it AND maintain their domestic spending. But let interest rates rise, the Yen rise, deficits grow and all types of things will change. America has changed the economic rules by maintaining the world’s reserve currency. How do we….ANY OF US maintain this for much longer. Every time there is any attempt at reconciling the books, they must cheat and fudge to keep it even barely afloat.
I don’t know who is right, but all I can surmise is whoever thinks it will last..is the real IDIOT.
Cue the inevitable idiots arriving to tell us how the gold standard won’t work anymore and how reverting to it would cause “chaos” and how the Fed was created to “protect us” from the instability of the free market in currency.
And this isn’t the only area where there are problems that aren’t being traced to their source.
Healthcare costs aren’t a result of Obamacare. They are the result of Medicare/Medicaid and the passage of the law in the eighties that allowed anyone to go to any emergency room anywhere in the US (as long as the hospital accepted Medicare/Medicaid patients – which means virtually all of them) and get treatment even without the ability to pay.
But no one wants to talk about this being a source of the problem.
I suspect if you back out the healthcare costs of chronic disease management and treatment (cancer, diabetes, heart disease, dementia) out of the annual spending on health care you’d get a figure that’s very flat in terms of yearly increase. It’s not ER visits that drive costs, it’s the shift away to health being managed by constant medical care versus an older model where health was treated on an incident by incident basis (a broken leg or heart attack resulting in an ER trip).
Aging population, more sedentary too.
Less physical labour.
Healthcare costs are driven by:
1) Expectations of multi-million dollar end of life extensions for everyone.
2) Cancer treatment
3) Monopolistic-by-regulation medical drug and technology markets.
4) Malpractice insurance
5) Overqualified, debt-burdened practitioners.
Insurance is a passenger. It steals a seat on the bus.
Healthcare costs are driven by HOPE in what many times is illusory, and is enabled by continually forced cost transfers between healthy and ill. If the Ill paid for their healthcare from their personal wealth and credit sources and healthy paid for theirs in the same way, cost would fall precipitously. Of course a lot more people would likely die sooner as well. The point is that as our health insurance costs increase and technology offers such great promise, people are not hesitant to DEMAND the very best, and to spare no costs and defer no “long shot” operation or treatment to extend our lives a precious few more day, months or years.
What would healthcare cost for each of us if NO ONE were allowed to die? If we could extend life and forestall death indefinitely (regardless to consideration of quality of life), and if it was MANDATED by government, how much would it cost? Because THIS is what we are dealing with. Empathy demands that no one die “before their time” and that notion is allowed to be perpetrated because we are told that someone else will pay for it. The RICH, Corporations, Big Pharma, OBAMA. Anyone else will do. But what we will NEVER do is decide how much a human life is WORTH, which would seem the very FIRST thing a society would do when anticipating the socialization, the collectivization of healthcare. It’s a series of blank checks being written and we are continually shocked at the endless cost escalation.
Correct that is why we need someone to make the decision that spending 500k to extend someone life for 6-12 months isn’t going to work in the long run. If people want those heroic efforts then they should buy a separated policy. Our per capita health car cost is about double the industrialized world average, where they also do have socialized medicine. Our overall health is well below average, we are 39th. Obviously we are overpaying for health and not getting our moneys worth.
I was brought up to believe that our PRINCIPLE occupation was to prepare…for ANYTHING. To save, to live frugally, to not be in debt or beholden to anyone who could direct our future. We were to save so that our job did not own us…that our security was in knowing that we could QUIT without committing suicide. My parents saved their entire lives for their old age and healthcare. They never had a lot of material things but were not poor. They died with money in the bank…exactly as they had planned it, and they chose to die without exposing themselves to terrible suffering for the sake of postponing an end that we ALL should know is coming. My parents lived into their eighties, but they did not contribute to my healthcare costs. They “quit while they were still ahead”.
This is not the template for today, as we are to “enjoy” life, even if it means we must force others to sustain us, even if it means we are to become dependents of a system that only pretends to care for you but just as happily end you at the license office as not.
People are desperate to have a sustainable planet while completely ignoring everything needed to have a sustainable economy…or healthcare.
Outlaw insurance in favor of pay-as-you-go and watch doctors, medical staff, and big pharma turn into a screaming bunch of SJWs. Medical services have become mostly a big marketing scheme over the years…. a nest of self promotion. I can count 5 or 6 times in 65 years that I’ve actually needed a doctor.
They will never outlaw insurance, only PRIVATE ownership of insurance companies.
The American government is the largest insurance company in the world. They advertise endlessly of our risk exposure to so many unfathomable dangers that only THEY have the power to mitigate. They only demand our allegiance, a portion of our liberties, and a significant portion of our wealth to do so, with NO alternatives. You see, as with healthcare, they tell us the only workable alternative is forced conscription, because if we allowed those who do not perceive the risks to bow out, the costs to everyone else would be prohibitive. The only way liberty is affordable is if it is doled out on a “needs basis” only. As every system in our environment becomes more advanced, more technologically modern and LARGE, we oddly seem to see a declining efficiency and increased costs that can only be explained by the non-adopters, the resisters and deniers, who insist on going without. Every systems expert in the world will tell you the ONLY way to control, is to control completely. America IS insurance and it will redistribute everything you own, wealth and liberty, until THEY are sure you are safe and protected…and even then…..
Repeal the laws that forbid the reimportation of US made pharmaceuticals that we sell on the cheap to all our global neighbors. Why should a Canadian or a German pay 3 times less than I do for a pharmaceutical that is made in my own country?
I’m fed up with subsidizing medical care for the rest of the world.
Then you will need to force the nations of the world to honor all of our patents on pharma, because the ONLY reason they sell these drugs on the cheap to prevent them from knocking them off and then watching as their international business evaporates and eventually their primary US markets. If we attempt to import THEIR drugs back into America, they will simply shut down the supply and impose their own controls.
We want to pretend we live in a globalist market that is defined by rules but ANY PERSON knows this is not TRUE. Every nation is busily imposing their own protectionist rules to control their markets…especially someone like China who has appropriated most patents and intellectual property. Pharma starts asking US prices from the rest of the world, we will have Chinese knockoffs before your prescription runs out. You might think that is fine. Apparently so does MISH because they are cheaper right? ALL GOOD? Yeah, the drug companies may go bust and increasingly our medications may have very high content of melamine, but hey, they’re cheaper! And who will then pay for drug development…..American taxpayers?
Do not mistake me. I’m not defending Pharma, as they have deliberately manipulated laws and patents to maximize their returns regardless of investment, but do not be fooled with simple solutions on this. As always, we need better laws, not more laws. We CAN fix this and still keep our Pharma industry in America
The stealing that is going on is being done by health insurance CEOs. Take a look at the increase in their salaries since ACA came in.
How much do deductibles and premiums need to go up to cover them?
The trade deficit can’t all be explained by the unpegging of gold/dollar. Something else is going on. Mexico, China don’t have gold backed currency either and they have a trade surplus with the US. Please elaborate more on this point. If we had a strong dollar we may still have a trade deficit.
+1. Germany has a huge trade surplus. So they must have a currency pegged to gold too. Right? Right?
Please think
The US has the reserve currency not Germany
The dollar represents about 60% of the world’s reserves. The Euro about 25%. Not equal to the dollar but still a major player.
How much of Germany’s exports are driven by credit that THEY back? Greece anyone?
How are ANY country’s number valid if they are all based upon credit that never requires repaying, or is indefinitely deferred or ultimately bailed out/in? This is not about trade, it is about infinite unreconciled credit. If I can simply borrow or print money to pay my employees without ever selling a single product, is THAT a viable economic model?
From a certain viewpoint, there is never a trade surplus or deficit, there is just trade as it organises itself, around mountains, around or by legislation, what have you.
So the trade balance, measured in currency of one nation, or the other, could simply be viewed as a currency surplus, fiat is cheap to make.
Yes yes, the accounting, what is spent out in currency will one day be spent back in the US but for now is ‘somewhere else’ right? All the dollar reserves are sat in a Mexican vault, right? Right??
Point is that it is something of a fools game to try to square the circle.
With gold as currency it would have to be legislated/forced as legal tender to play the part of fiat. Why? Because otherwise people would spend it ( or hoard it) and then turn to whatever alternative they could find, digital, prom. notes etc. Governments like to control finance, they like to manage ‘national account’, and so they will always want to install or own the currency in some way.
That is not to say gold is not money and cannot/would not be used, now or in future, just that it is ‘a’ money, a worthy one, but never ‘the’ only unit available to create a balance of transaction. The jump to fiat proved that… so flexible It cannot but corrupt though.
Back to trade and the obvious, or not so obvious.
You will hear it repeated in many ways – until you remove legislative and financial manipulation, the balance of activity will tend towards exploitation and a resultant decadent atrophy, political illusionism, social confusion.
What does protectionism do?
It closes the system to demand a certain sense and order within it, it leaves open only where there is no sensible domestic alternative… and with the exploitation of others being so easy to justify as a freedom by comparison?
How little we need, how much we must have.
Supply AND demand? How many flat screen TVs do we need? I would submit we have LOTS of TVs because they are so damned cheap…but those dollars are still being spent on foreign goods rather than domestic. So what ARE Americans doing for a living now?
If we subtract the massive amount of consumer debt that has been introduced in the last twenty years, and then compound that with government debt that has been used to subsidize the unemployed consumption, what IS or REAL economy? We saw when debt was curtailed in 08/09….damned near killed us. This is a “coked up” world economy on debt that has no choice but to continue to keep doing what it has before, only seeking an even cheaper high.
Suppose robots were capable of producing everything we could want. And suppose, since no one has a job, the government gives everyone $100,000 to spend. And then the government taxed back the $100,000 minus a reasonable profit from the robot owners. This would be a real economy.
And this is essentially what we have today because the old “real economy” simply is too efficient to require the labor of 10’s of millions of Americans. The difference just being scale. Maybe 20% of the population live unemployed and receive a very meager subsidy. In 50 years, it might be 80%.
Who owns the robots and why would they provide them to us to produce free stuff? If not free and as you suggest, the government basically “creates” money for us to spend, why couldn’t they have done that a thousand years ago? The vast amount of our expenditures is for discretionary items, many unimaginable a hundred years ago, that now we must provide robots to produce for us and purchase with imaginary wealth. Our cost of living was far less even a hundred years ago, so if we could simply print for existence, why wait until it is so expensive? Today most families require all members to be working in a household unless they are receiving entitlements, and many work multiple jobs to make ends meet.
Sounds solid to me. Nothing could POSSIBLY go wrong there!
Automation will transfer labor, just as it does wealth, to a smaller and smaller portion of producers, while rewarding the non producing consumers.
Just as Mish contends that cheap prices are good, I don’t think he can contend that they are good for EVERYBODY, unless he is simply going to ignore those who’s jobs have been eliminated and have found no alternatives. It is understandable that many economists and better educated people see the damages of trade is irrelevant, because for most of them it has not been THEIR jobs under threat. We are all NUMBERS, statistics that can be rationalized out “for the better good”. Like the notion of “let them eat cake” they blithely contend that those who have lost their jobs simply go our and get a better education or retraining while simultaneously yet blindly complaining of student debt and the high costs of education. Meanwhile, we see uncountable cases of H1b visas being used to displace EDUCATED WORKERS in place like colleges where Napolitano presides in CA. simply to lower employment costs. College employees…let that sink in.
The problem Jon is that the US is not contained politically or socially in that new environment. You would expect a country in a position of surplus to be well managed, well built, positive outlook, socially buoyant, non dependent etc…..
I enjoy your posts madashellowell, the one concerning your parent struck a chord with me especially. Old school independence through labour and thrift is out of fashion.
What happened to society?
Fish, I understand that times change and the “rugged individual survivalist” is an extreme vision, but both my parents came through the Great Depression and WWII. They both grew up on farms but were not oblivious to the rest of the world. They saw the costs of dependency and they saw the destruction of mindless State interventions in the economy…not to mention WAR. My mother worked building bombers in a plant in KC while my dad jumped out of them in Germany. They understood insanity.
I am not proposing we live in shelters deep underground or anything like that, only simply paying attention.
No matter what anyone says, I fond it impossible to image how we would be in this shape without our massive debts. What power would the world have over us if our homes were paid for and we could take care of ourselves. Today, few even know how to cook beyond reading microwave instructions, much less how to grow anything. What we have got in trade have been wonderful toys and conveniences while we have become completely and absolutely dependent upon a corrupt system that ON ONE really wants to change because they are afraid to…and rightly so. WE are told by progressives we can NEVER go back to the deplorable days, that we are destined to go ever further and faster FORWARD with no real vision of exactly what that means. Have one describe it to you sometime….and then rationalize it…if you can.
So we are simply going to “allow” corporations to provide us with all of our worldly needs through massive investments in automation, in exchange for money printed by our benevolent and loving government. I can’t help but wonder why it took us SO long to come up with this brilliant scheme, especially when in the past it would have been so much easier as our expectations were so much lower? The best we were able to do before this new brilliance was simply TAX our corporations that produced OUR goods and services in the belief that our perpetual motion money machine would continue spitting out “other people’s money” in perpetuity.
People REALLY ARE SMART!
Until the Euro, the Mark were managed to minimize inflation much more thoroughly than the dollar. Germany hasn’t had nearly the bubbles in everything from dot-coms to houses that the US has had. Neither does it have nearly the same size financial and other asset pumping dependent rackets.
The mere fact that neither the USD nor Mark nor Euro nor Yen nor Zimbabwean Dollar are on a gold standard, doesn’t mean they are all managed exactly the same. Heck, even if the US were on a Gold standard, they may have ended up with a long term systemic deficit vis-a-vis countries on a Bitcoin standard, as that one is even less inflationary.
Due to being a reserve currency, the US, despite managing the dollar in a similar fashion to what Zimbabwe did, still sees enough demand for the paper to allow them/us to obtain goods in exchange for it. No other country has been able to do this to the same extent, which is what the trade imbalances bear witness to.
Of course, the printed dollars don’t just spread around randomly and without side effects. Instead, they specifically increase the purchasing power of those with first access to them: banks, the wealthy, the well connected and government. And those are the groups who can afford to buy influence over both the political process, the media and academia. Which is why the entirety of the propaganda machine, keeps pounding away about inequality, trade deficits, poverty and every other social ill, are due to every other conceivable hobgoblin than unbacked printing.
So they blame “the corporations” until that runs out of credibility. Then blame Soros. Then the Mexicans and the Chinese. Then Uber and the robots. None of it even remotely relevant. Instead, it’s all, 100% printing. But, so is 100% of the so called “successfulness” that the ruling class, including Trump, hangs on to in order to justify their own wealth. Not brains, not hard work, not talent, certainly not useful work. But instead, just simple graft, facilitated by crass money printing and debasement.
The departure of the gold standard was marked by accelerating inflation in the 70’s and then declining deflation from the 80’s onward. http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart indicates that after departing from the gold standard gold has swung wildly but declined steadily from 87 to 2001 where it almost touched its ‘pre-window closing price.
This implies that if a gold standard was followed more money would have been printed from 87-2001 but much less in the 70’s to 86 or so. But the growth in inequality and/or trade deficits do not follow this pattern. The causal justification for Mish’s assertion remains elusive.
Debt compounding?
Question – can the size of the US and global economy be predicted if the US had stayed on the gold standard and then compared to the reality now?
Comparisons needed else no one knows what the alternative to today would have been.
The problem is GDP is a silly measure
But no, we cannot say what would have happened precisely.
But we can say there would be less debt, less wage inequality, less currency inflation, and less trade imbalance
It’s likely there would have been less outsourcing and higher employment even if we cannot quantify none of this precisley
Given it would have limited credit creation I suspect the global economy would have been somewhat smaller overall today.
I’m interested to know what role the Gold Standard would have on social mobility too as well as speed of uptake of technology. Something makes me think social mobility would have been reduced and technology uptake would have been slower.
Living standards? No idea but if living standards have a technology element and tech was slower to be taken up I think living standards could have been lower too. There might have been more equality, less mobility.
A method of forcing some fiscal discipline is needed but I can’t see a pure Gold Standard as it as gold annual supply growth is so low.
Blue dotted lines on chart 1:
The most obvious fit for that chart has three steps, not two:
1) 1950 to 1970,
2) 1970 to 2000,
3) 2000 to present
The tech bubble obviously caused the 1996-2000 bump up.
The real estate crash obviously helped the 2008- as yet not-recovered-from bump down.
My present employer maintains two factories in Mexico. It took several years to get them running correctly. They were NAFTA assisted. Moving to China was outside the company’s comfort zone. After succeeding in Mexico, trying Asia seems less daunting
Why would a tech bubble cause a bump up in manufacturing employment in the US when most tech firms, esp. the ones of the dot com bubble, had nothing to do with manufacturing jobs? Why would insane IPO’s for Netscape, Yahoo, Napster etc. translate into a surge in manufacturing employment?
Because the massive influx of cash into the markets, the IPOs and debt for these massive companies stimulated American jobs, spending and consumption. Go look at a Google campus and the massive money spent on them. But of that growth, how much more still went to overseas producers? Is this not when we saw many of the Asian nations getting their first leg up in the world markets?
Not really buying it. Yes Google and companies like it spend a lot on their corporate campuses. They are not huge employers, though. During the dot-com bubble very few people actually worked at dot-coms. Do even if Google or Napster purchased a lot of manufactured goods for their corporate campuses in the late 90’s, it would not be so dramatic as to impact manufacturing employment very much. For example, this (https://www.quora.com/How-many-employees-does-Google-have) seems to show Google had less than 10K employees in the early 00’s. Even today it only has about 60K and that’s around the world. Even if every employee got a very nice desk and chair manufactured in the US, it isn’t the type of demand that would dramatically increase manufacturing employment.
Constructing a huge campus would show up as construction employment…but again I don’t think you’re going to see much of a bump in manufacturing or even construction employment from the dot com bubble.
Also why would Google’s spending center on US manufactured goods when all other spending seems to be on a multi-decade trend of less manufacturing concentrated?
Just seems like when you have IPOs worth hundreds of billions that flow into the markets, and many of these companies spend that money on employees, equipment, R&D through sub contractors, not to mention their considerable real estate developments. I know Google has several campuses just here in DFW. I have no real idea other than supposition.
Why do you think it happened. Government spending was down so they can’t take credit. No profitable wars.
Mexico is corrupt. It refuses to patrol its borders allowing its black market drug economy to pour through our borders. It discriminates against US citizens who travel there. It is, in short, a sick economy & only friendly because it gets what it wants and gives nothing.
Please Think
If the US stopped its ridiculous “war on drugs” and legalized them, the problem would go away, so would tens of thousands stupidly sitting in prison at huge taxpayer expense.
Mish
Why do we not have similar problems with Canada? Is Mexico corrupt BECAUSE of drugs, or do we have a problem with drugs because Mexico is CORRUPT?
Why is Mexico so damned poor, and Canada is not? After all Mexico has a massive trade balance PLUS a very profitable drug trade, not to mention a many decades old mature petroleum business. Looks like Canada should be falling behind in this race.
Or is it AMERICA’S fault again?
We didn’t provide their poor with enough jobs and better education?
We didn’t facilitate even easier transfer of funds to Mexico from US illegals?
Or was it that we still have not extended enough social service entitlements to Mexican INHABITANTS, who are claiming non-citizen dependents within our borders while living in their home country?
I feel so damned guilty. My bad.
“The source of global trading imbalances, soaring debt, declining real wages, and the massive rise of the 1% at the expense of the bottom 90% is Nixon closing the gold window.”
But what caused the closing of the window? Something was getting out of hand. The government was running a guns and butter program and the days of the U.S. being producer to the world were in decay, as economies recovered from WW2.
Gold at $35 an ounce, was a peg and the peg could no longer be maintained. We can see what has happened since breaking the gold/dollar peg, but what would have happened if the peg had been maintained? There would have been some form of hell to pay, regardless which way Nixon went.
Supporting the idea that one cannot point to a single moment in history where it all came apart. Prior decisions set the stage for current decisions. It’s all interconnected. The root is not maintaining first principles and sacrificing those principles in order to achieve a desired outcome, instead of accepting whatever outcome flows from moral first principles. This is the essence of liberalism, the religion of the State.
“Morals and Principles.” Yes.
Somewhere amongst all this there are morals, and lack of them.
Moral decay. It’s not just increased family breakdown and individualism.
It’s also spending less than you earn, tending your own garden, being a good neighbour.
This is true on a Government level just as much as the individual and family.
Only when each determines to improve themselves will the whole improve.
Since all any of us can try to control is ourselves that’s where we should be taught to start.
Right! The Gold PEG was just an alternate way of manipulating world currencies that the so-called leaders skewed beyond recognition. We may as well have been pegged to peanut shells for all the good it did. Every currency has and will be manipulated by those who think they can gain from it at the expense of someone else. It works until it doesn’t and the fit hits the shan. The correct course is to have gold, silver & dollars as all acceptable forms of transacting trade. It could easily be accomplished by removing the tax on the latter two.
Gold is little better than FIAT’s “Full Faith and Credit” that governments rely on now to give value and legitimacy to its currency. Gold can be set by governments [gold is mostly still in the government Constitution] at any arbitrary value. It’s not a good risk, and too valuable to get you a cup of coffee.
In 1971, all of America’s oil fields were in rapid depletion and the US was going to have to begin importing oil on a massive scale. The standard of living in the US was going to take a massive hit. Even without Nixon closing the gold window, the price of oil was heading up, driving up inflation and reducing US living standards. The US had been printing dollars for years and the world’s dollar supplies held by foreign nations exceeded the value of US gold reserves.
Maintaining the peg would have meant a near one for one decline in internal purchasing power in exchange for each barrel of oil purchased, almost certainly throwing the US into a major recession and a much lower trajectory of the American lifestyle. No US president could let that happen.
So they sold illusion instead.
“…what would have happened if the peg had been maintained?”
There would be no gold left in our Treasury. Foreign central banks would have eventually claimed all of it.
“…what would have happened if the peg had been maintained?”
There would be no gold left in our Treasury. Foreign central banks would have eventually claimed all of it.
Precisely but there is one alternative:
The US would have had to jack up interest rates to support the dollar
Mish
“religion of the State”
Good idea
Yes, and getting off the gold standard where debt no longer mattered, enabled all sorts of government expansion.
The problem absolutely ties back to the gold window. Is that the only thing? No. Demographics are very real. So are public union promises that cannot be kept. And of course globalization would have occurred anyway, but the problems would not have been one sided. We also have to factor in Fed inflation policies in a globalization-price-deflation world.
No it call “all” be blamed on the Gold window, just most of it, with following policy errors by Congress, Fed and pubic unions, all enhanced by the window.
I especially like your visual approach as well as the fact that the so called experts refuse to answer a simple challenge.
Thanks again for sticking it to the blowhards and cowards.
Mish does not appear to have gotten the memo. Repeat after me:
Trump is the Messiah.
His word is never to be doubted.
He destroys our enemies.
He shall rule forever.
The only way to know for sure if Trump is the Messiah, is if we see him nailed to a cross on the evening news with an ongoing celebration. Give it a little time, they ARE working on it.
“Trump is the Messiah.”
YOU apparently didn’t get the memo. His proper title is “God Emperor.”
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…. I believe that banking institutions are more dangerous to our liberties than standing armies…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” Thomas Jefferson
Yes. People got “wealthier”. But that “wealth” is in assets that have been inflated fully out of reason and the accociated costs. $6, 000 per acre corn farms with quarter-million $ tractors; $700 per share companies that make no profit; $1,000, 000 homes that require $5, 000 per month to service the debt, pay propery taxes, insurance, electricity, and maintenance. Not to mention $5, 000 per month (at least) for a unit in a decent assisted living facility.
Then there are the insane hospital costs. I live in an area of 100, 000 people in NW Montana. We have a very good 300 bed hospital. This hospital system will gross $1 Billion this year.
Running faster just to stay in one place. Even with $2 million in the bank, the worry is running out of money.
“Running faster just to stay in one place.”
Yep. It’s not human but most find themselves having to play along.
The system is set to commoditise people whilst converting them into pure consumer units.
Sometimes happiness is not craving more but learning to be content with what one has.
Its hard to see the current system as sustainable long-term. As soon as people prioritise items outside of playing along it will all come crashing down, when enough people decide to do their best to be happy with less and what they have.
Yup! I cannot agree more.
How inflated is that hospital? If it grosses $1B a year I’m getting that’s about $9132 per bed per day. Let’s say a higher end hotel will charge at least $132 a day that works out to $9000. If is crazy for a hospital procedure that requires a full day stay amount to $9K?
Not sure why the Census Bureau disagrees and thinks there was a 59B dollar deficit with Mexico last year? Sounds closer to what Trump was reporting.
In the 80’s the “Create Shareholder Value” movement started and IMHO that is one of the roots of today’s problems. As soon as CEO’s discovered (helped by Wall Street) that leveraging up the balance sheet through takeovers and/or stock buybacks would raise the value of their stock option plans and make them very, very rich in a short time – all hell broke loose. Next move was outsourcing to squeeze out the last drips of profits and so on. The very low interest rate level triggered some more financial engineering via stock buybacks all financed by loading up for debt.
Creating shareholder value isn’t the problem.
It’s more to do with the incentive schemes utilised that are a blunt instrument and too binary, not enough finesse – easy to manipulate for short term benefit.
Lack of growth has made the situation worse with low interest rates encouraging M&A to compensate for the lack of growth whilst the incentive schemes remain the same.
At the base of all this there is a moral issue. What is good business really? Maximising total human benefit over the long term or pure monetary profit?
How do we measure return on capital in full, including benefits to society of sustainable business? What value doing the right thing by all involved in society?
I like the old Quaker model. It built some very socially responsible, long-term and profitable businesses. Workers mattered.
NAFTA has been a bad deal for US manufacturing but even worse deal for US manufacturing was George w. Bush’s lobbying so that China could join WTO.
Before China joined WTO US manufacturing kept it’s head above water.
.
Also it is obvious US manufacturing could not crash due to NAFTA immediately upon signing because it takes time to plan new plants and in a capitalistic society when one company moves manufacturing to mexico it’s competitors have to follow to stay competitive.
Mish,
I do agree that maintaining the gold window would have vastly reduced income inequality, However, the reason would be because companies couldn’t offshore manufacturing which would have left powerful labor unions controlling pay in much of the US as they did in the ’60’s and ’70’s. I’m not sure that is a world that you would appreciate.
US has about 60B trade deficit with Mexico, 50B net deficit in autos and 20B net deficit in electronics. 230B out and 290B in overall.
Trump is on the offensive and will wring some post NAFTA concessions from Mexico.
If NAFTA had really been good for US manufacturing Hillary would have carried PA,OH,MI, and WI and she’d be welcoming tens of thousands additional muslim refugees, so NAFTA had a silver lining.
Ehheemm. Globalization promised cheaper goods for the US consumer…..but here’s what actually happened:
1. cheaply made products have flooded into the US mainly from China. Companies have RAISED prices and pocketed the much bigger profits and raised CEO pay 500%.
2. millions of manufacturing jobs once located in the US are now in factories overseas.
3. 11 million illegal Mexicans living in the US have had an average of 3.5 children per couple…so add 35 million kids to the 11 million original immigrants that’s 46 million new people to fill US jobs in the last 30 plus years.
4. Many large US corporates have imported about 25 million H1B and other category foreign visa workers mainly from India and China and South Korea. and these are highly skilled workers many of whom are US college grads…we are talking about doctors, pharmacists, high tech STEM workers and every high paying job category available. Not to mention all their wives and kids they had here in the US.
5. Meanwhile, Mexicans have virtually taken over the construction industry, food service, and many other decent paying jobs. Not to mention all the high end jobs going to college educated foreign visa holders.
Prices up up up and product quality down down down.
How is this a good thing, MIsh??? Its not.
It would behoove you to think.
It would also behoove you to read what I have stated.
How many times do I have to say “the problem is handing out free benefits and free services to illegal aliens” before someone notices.
as for cheap prices from China.
Please think. Imagine the benefits if China gave everyone in world a free car. That will never happen of course, but the standard of living of everyone in the world would immediately rise except for a miniscule percentage of auto workers.
The undisputed fact remains is simple: Cheaper prices = improved standard of living. If China gave everyone a free house – guess what? By definition, everyone in the world would own a house.
Only idiots do not want lower prices or free stuff.
Where do you shop?
Do you seek out the highest prices you can find?
Or are you a hypocrite?
Mush, I’m one of those idiots you refer to who does NOT buy the lowest price. I try to buy from reputable businesses whenever possible and small and local as well. While I’m an idiot I do realize that buying the cheapest thing is many times in my best interests in the short run, but as a conservative from birth (not counting my brief liberal indoctrination period in college of the seventies) perspective has informed me, short term positives seldom develop into long term plusses. If you are not willing to buy from your neighbor, then who will? And you know that in our world if you as well as everyone else do not, we all end up supporting them doing nothing. Your dream of free markets ONLY works when there are honest unrigged consequences….which politicians will NOT allow to happen.
Americans of our past understood sacrifice while Americans of today know NONE. We deserve our quality of life, even if we find it hard to define. I try to imagine what my life would be like without cheap imported goods and I have flashbacks of the horror of only ONE TV, a toaster that lasted twenty years and NO cell phone…apps, twitter or Facebook. Life would be horrible.
If we cannot endure the unspeakable hardships of buying inferior products or paying higher prices in order to sustain our neighbors job, then who the hell are we kidding when talking of American empathy? We are going to PRETEND we are doing immigrants a favor by buying their products when all we cared about was PRICE? And the same for the Chinese and Asian slave labor?
This is not funny, this is sad. This is not even freedom or liberty as neither of those would blindly destroy themselves.
I have built custom furniture for Exxon for twenty years, but in the last eighteen months, no more. China. We can’t compete. Period. If Exxon can’t afford american, who can, right? But of course they CAN, they just decided NOT to.
Where do my employees go? Were do I go after 31 years of investment in my business? So sad, too bad, right?
America is what we collectively MAKE IT. If America is going to be Walmart, then so be it. It was never my vision, but it does paint a picture, doesn’t it?
I do not always buy the lowest price. Rather I tend to buy the best value for the money. And I do take service, even friendliness into consideration. I tend to tip extremely well. Often 30% for short-order cooks and bartenders that pay attention to customers rather than chat away. If someone serves me well I remember it. To me, that should be the norm. It isn’t. I suspect we agree more than you think. Cheers.
btw, thanks for your blog, its very good and I appreciate it.
It’s called a trade imbalance for a reason…… It’s imbalanced.
Economics….FREE economics and FREE trade, exist in a self balancing world…it’s natural. What is NOT natural is debt and currency that is not supported by real assets. Our economy, our trade “imbalance” is the result of an unnatural existence. If trade imbalances had resulted in domestic job losses (as I contend they have), in a natural world, those jobless people would have been on the streets begging and DEMANDING remedy. In the past the only remedy was protectionism, which as we all know has many troubling aspects to it…but it does work to some extent.
What has happened instead is what we saw in the argument between democrats and republicans 125 years ago, republicans pushing to keep protectionist tariffs on imported goods and democrats demanding a general revenue tariff, claiming that protectionist tariffs kept prices too high while a revenue tariff levied on all goods, foreign or domestic would yield lower costs for all. The argument still persists accept that the democrats only want to tax US producers and labor and NOT imports, simply because they understand that the ONLY way they retain power is for the masses to be afforded cheap consumables, with the full enablement of the media to point the blame for job losses squarely at business… and the dreaded rich.
The only thing that will truly work is for Americans…everybody, to understand WHERE their best interests lie, and that those interests seldom (if ever) fall in short term instant gratification territories.
Instead we have been lied to, manipulated and indoctrinated to believe we can buy what we want FROM who we want and there IS no consequence. I contend there are consequences for EVERYTHING we do. We can contend that cow flatulence is destroying our climate, yet believe we can spend in any way we want with NO consequence? Our spending habits IS us. It IS our economy. It defines what we value, and it is the HEIGHT of idiocy to pretend it does not. We can blame the Mexicans, or Obama, or the Banks, or the FED, or any number of contributing factors but it is WE who make the real choices. WE decide what our trade balance is. The fact that those holding power will print money, lend money, lie to us on every occasion SIMPLY to retain power, should not surprise ONE SINGLE SOUL ON THIS PLANET.
The way I read the first graph is that manufacturing declined after 1980 then tanked after NAFTA. Overlay that chart with percentage of employment in manufacturing, instead of total numbers.
NAFTA was good for the US and it’s trading partners. More trade is always good for everyone involved. Increased productivity and the resulting job losses are the result of improving technology, not trade agreements. This has been going on for hundreds of years and it is not going to stop. Trying to blame a trade agreement for job losses is idiotic. However, if it helps get you elected because the electorate is too stupid to know better, then I guess it’s good for one person. Trump is going to cause a trade war, and then job losses will reach depression levels. However, he will blame everyone else, and his supporters will probably believe him. I was hoping he would take a pro business, pro trade position once elected. My hopes are fading fast.
First, how is “More trade good for everyone involved”, unless you are considering those who lost their jobs due to it as no longer being involved. You can’t look at employment numbers and in any way see this as a universally good thing, unless you think the stock market is the real reflection of wealth and overall prosperity in America.
Second, we have ALWAYS had growth in technology, but when it has happened there have always been people who suffered. If they are acceptable collateral damage…well, that’s a position. The question is in that case, at what level are the losses no longer acceptable? When it’s YOUR job? Further, how many times in our past has massive debt as a percentage of our overall economy, been responsible for this tech displacement? Why is it verboten to even consider the malinvestment costs of profligate debt regarding technologies that will eliminate jobs….jobs that will not be replaced but instead subsidized through entitlement programs to keep them consuming at the cost of even greater debt and wealth transfer from the remaining job holders? How many would be buying Iphones if they were not sold on credit…and at what cost? How many would be buying the latest $65k pickup truck made in Mexico using automation, if not for debt by the purchaser as well as the manufacturer who is financing these massive factories of robots?
And keep in mind that we have some of the richest, most valuable corporations in the world telling us that they MUST import H1b visa workers if they are to remain competitive.
Do we seriously believe we can ALL be unemployed and live happily ever after? Or are we holding out in hopes that consultants advising us on investment strategy are always going to be in demand?
Well said. In all the hype of AI, what is seriously overlooked is that if ALL are unemployed who is going to buy the stuff that is produced by robots and if no one can buy them or so few can buy them that it hardly matters why would they be produced. We need a holistic solution which takes into consideration price, employment and social benefit. By now it is abundantly clear a focus on only corporate profits and cost cutting (slashing jobs) alone leads to a dark alley.
Bingo
‘More trade is always good for everyone involved’
Trade is always considered good for those (two parties) involved, or they would not. Hence trade, whether more or less , is considered good. Only an intermediary looks for trade for trades sake, and for him more trade is always better.
Some of the most successful nations and empires were so because of their trading status as intermediaries, that includes legislated empire where stability allowed trade from which the elite could profit.
They all ended.
Now if you consider that a citizen is included in the term ‘everyone’, many would disagree, as would someone on the receiving end of arms traded by the US.
If your neighbour traded the house next to yours to people you cannot support, it is not good for everyone.
I could go on but you get the picture, or do you think that everyone will simply adapt to it all for the better?
If so, that I would consider irresponsible and chaotic – name me the principle that will oversee some kind of moral jurisdiction prevailed?
Two people agreeing is no justification EVEN from the position of priority over one individual where he is affected in some way by the agreement.
There is a reason society works better in closer communities, maybe you can figure it out by yourself… there is a hint already above… ‘liberalism is the religion of state’….or maybe ‘ communities have a closer understanding of each other and so responsibility is always near’.
?
If the government didn’t borrow so much, maybe US trading partners would by our goods instead of our Treasuries.
And if there were not so many burdensome regulations and taxes on goods made and sold within the country, maybe companies could compete better with imports.
Hello Mish.
I love your blog. Always interesting topics and straight to the point.
Many thanks
Then what is this?
http://www.tradingeconomics.com/united-states/balance-of-trade
EXPLAIN this to me!!!
who are you asking?
I believe I already did explain
Balance of trade is negative
It will fluctuate
There is something wrong with the setup of your text. It’s wrapping around your diagrams.
Thanks I appreciate that!
It must be browser specific because I have only 2 other complaints which I did not understand.
I had “align-left” on images for a couple days.
Had to redo images in many posts
Thanks again.
Mish
Trump is only mirroring his supporters’ opinions which many politicians failed to do. The MSM has been abysmal in explaining economic information. The reason for their failure is now clear thanks to Trump. The MSM is the propaganda machine for the global elite and their job is misinform the public. That is why I like your site.
Because Trump is a business person and not a politician his approach seems wrong to many. Hopefully with Tilerson as SoS Trump’s “good cop/ bad cop” routine will bear results. It is not China and Mexico fault but is the result of many years of poor U.S. Government and corporate policy decisions. Hopefully as Trump goes through his process these factors will be revealed.
You got it right Mish. Thanks for protecting the little guy from the bankers’ electronic printing press.
I would appreciate your commenting on the below article relative to “a negative trade imbalance is bad for the US”.
http://wolfstreet.com/2017/02/07/us-trade-relationships-exports-imports-deficits-by-country/
More nonsense from Mish. (Do we really need a human to produce the stuff he does?!)
Just search for “rust belt factory pictures” on Google images and you will get hundreds of pictures of the real world (not some squiggles on a chart) that roundly disprove your theories.
Regardless of what you call money, politicians will always blow it up. Besides, not a single gold standard throughout history has ever survived, so what magic do you have in mind to turn politicians into saints?
The foundation of prosperity is trust, confidence, freedom, and the equal enforcement of the rule of law. Great society’s, with and without a gold standard, have collapsed because political corruption destroys this foundation in the quest to sustain the jobs, perks, and power of politicians.
It’s time to stop repeating the flaws of the past and move forward – starting with short term limits, balance budget ammendment, and no interest on govt spending in the meantime.
Public hanging of politicians that undermine the Constitution wouldn’t be a bad idea either – and Trump should start with Rand Paul, who wants to exempt the healthcare industry from anti-trust laws – http://market-ticker.org/akcs-www?post=231812; and establishment hacks on both sides pushing the carbon tax, and the fraud of global warming – https://www.bloomberg.com/politics/articles/2017-02-08/prominent-republicans-begin-push-to-tax-carbon-cut-regulations.
How is a gold standard going to prevent this govt fraud and corruption?