trade Archives -

This just in: I haven’t been blogging for a while. I’m not exactly sure why but “futility” comes to mind. I’m just one person shouting into the wind. However, I think the time has come for me to post a few times; at least enough to clear my head.

Today, I’m going to talk about economics and the coming recession. A recession can have a few definitions but generally, it is a fall in Gross Domestic Product for 2 successive quarters. In short, we become less productive for about 6 months or more.

The two options available are Monetary and Fiscal.

Monetary refers to the abundance or scarcity of money. When there is more money in circulation, we tend to spend it. When we spend it, companies have to produce more. Jobs are created etc. To put more money into circulation, the Federal Reserve lowers interest rates. Lower rates mean we can borrow money cheaply. We buy houses and then fill those houses with stuff. Historically, the FED will take a 6.5% interest rate and maybe lower it to 2% or something like that. However, right now, money is already cheap (2.25%) so there is not much room to lower it even more. So, monetary policy is basically neutralized…not available to make a big impact.

Fiscal refers to government spending and taxation. The government can raise taxes that will take money out of consumer pockets and thus, cut spending. So, doing the opposite – cutting taxes, will put more money into people’s pockets and increase spending and thus, get the economy moving. However, we have already cut taxes more than we can afford to (see skyrocketing national debt). But wait, the government can increase spending and that will put money back into the economy. This works! However, if we are already spending more than we have, this should be kept as a last-ditch effort. For example, deficit spending is considered one of the best ways to get yourself out of a recession, once you are already there.

Tariffs are a form of taxation. In spite of what you are hearing from the White House, Americans are paying the taxes we are imposing on Chinese goods in the form of tariffs. There is no economic justification for the current tariffs. Yes, there seems to be some political justification but that is more of a Trump Personality issue. If we remove the tariffs, that gives us immediate relief from one of the biggest taxes out there.

Immigration, or lack of it, is a real problem. If we don’t allow immigration, we will not be able to sustain any real economic growth. This is because our population growth without immigration is dropping every year. If we have a fixed population and we want to have economic growth, then those that are working, have to be more productive year after year. Imagine how much you contribute to our economy right now. Next year, you must do even more, then more again. Immigration is not an economic burden. Immigration is an Economic Necessity if we are to avoid a recession. It is an Economic Necessity if we find ourselves in a recession and want to get out of it.

Green Energy is the next big economic driver in the world. If we want to be a part of it, we need to start playing. Economically, I am progressive. I’m looking forward and all I see is Green. Someone that is conservative is holding on to a past that is fading in our rearview mirror. Yes, you can invest in coal…but I wouldn’t recommend it and it is an industry in decline.

Trade opens more markets for our goods. Trade deals help amplify the benefits of trade. For us to make these agreements, we need to do two things: (1) make sure the interests of the other parties are also satisfied or they will not play and (2) make sure that people entering trade deals with us are confident that we will hold up our side of the deal. Right now, the entire world is side-stepping the United States on economic issues because we satisfy neither of these two requirements.

That’s enough for now. Time to save the world.

Up, up and away…

Jim

This just in: I see that Trump allowed himself to get played by North Korea; today, stepping out of the proposed summit so that “He could do it before they did.”

Just in case you missed it, Trump has accomplished virtually nothing since taking office. Yes, some things have happened but nothing that would (or should) be considered an accomplishment.

Trump is very big on making a bold promise and then basking in the adulation. Here’s the deal…he actually doesn’t do anything other than say the words. I’m going to post a list of things that Trump has claimed credit for doing simple because he “says he’s going to do it.”

First, a couple of footnotes: (1) Trump recently told Leslie Stahl of 60 minutes that he calls news fake so that people will not believe it when bad stories are written about him and (2) In his book, The Art of the Deal, he says you can lie to people and then do whatever you want to do.

Here is my list….

Trump promised better healthcare at a much, much lower price. “The best healthcare you have ever seen.” He got lots of applause for this on the campaign trail…then did nothing. That’s not quite true. He actually made it worse by eliminating the “individual mandate”; a move that is supposed to add $1,000 to the average medical bill next year.
Trump promised to cut taxes which will bring jobs back to America, lower the debt and spur grow “like we’ve never seen before.” He claimed, without evidence, that GDP would grow at a rate above 5% under his plan. Again, people ate this up on the campaign trail believing that Trump could turn water into wine. As it turns out, he had no plan. This allowed the GOP to cut taxes for their billionaire donors, leaving the rest of the 99% to foot the bill of the largest deficit ever.
Trump promised to deal with North Korea. So far, his strongest action has been a tweet calling the leader of North Korea “rocket man.” On his watch, North Korea has developed the ability to strike North America with a nuclear tipped ballistic missile.
Trump said he would deal with the Iran threat. Instead, he reneged on a treaty with Iran and 5 other countries; opening the door for Iran to once again pursue the development of nuclear weapons.
Trump claimed that he would renegotiate the TransPacific Partnership trade deal. Instead, we dropped out and the deal moved forward without us; effectively reducing our ability to trade with about half the world.
Trump claimed that he would renegotiate NAFTA. Instead, both Canada and Mexico are looking for trading partners to replace us with.
Trump claimed he was going to “deal with China”. Instead, China claimed the South China Sea as their own. Economically, they have outplayed him in every way. China knows that Trump responds to flattery and bribes so they use both to great effect.
Trump claimed he would build a Mexico wall and have them pay for this. His supporters (those that fear we will become a non-Christian, non-white country) loved this idea. Mexico has told him to pack sand.
The biggest one is simply Trump getting on television and saying, “We have been the most productive administration of all time.” His followers believe this and applaud wildly.

Sadly, this too is just words. He brags. People hear what they want to hear. He retains his power.

Sad.

Time to save the world.

Up, up and away…

Jim

Tag Archives: trade

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