Category: World Trade

Is It Too Early to Evaluate Trump’s Impact on the USA/World?

In some ways, the Constitution did us all a disservice by giving us an “almost king” government office called the president of the United States. While some believe that office can right the wrongs of the last president or even the last decade or so of bad decisions, others believe that there are forces that remain hidden in government structure and other power structures in and outside of this country that use this position as a puppet of theirs. It was evident from our first president that the power of the office would be abused, and abused often.

From The Burning Platform comes an interview with Doug Casey that reflects on the good, the bad and the ugly from the latest president and what it means for us going forward. Just a few snips from this article I would like to highlight as you could go to the link above and see what you think:

Let me start by saying that I’m very pleased that Trump was elected because, first and foremost, he’s not Hillary. In addition, he’s never been in political office. So he lacks some of the vices common to professional politicians. Even better, all members of the Deep State reflexively hate him.

That’s a good thing, because there’s some truth to the meme “the enemy of my enemy just might be my friend.”

I also like some of the things Trump’s done since he’s been in office—besides driving liberals and Deep Staters insane. He’s done some deregulating—not nearly enough, but he’s moved in the right direction. Of course, he did this not because he understands Austrian economics, but simply because he’s a businessman. He has some personal experience with the destructiveness of regulations.

So he has disrupted politics to a degree, which is good, but to inact long-term change requires more than just randomly hitting some things. He is missing something at his core which has been obvious all along in the way he approaches problems and seeks solutions almost “off-the-cuff”.

I do like that at the end of the day he would rather talk to the Russians than escalate things, but it is obvious he is limited by his deep state handlers as far as how far he can take this. Sanctions are stupid and are in fact usually the first step towards conflict. At the end of the day there seems to be no overarching philosophy for foreign policy. Trumps knee jerk firing of Tomahawks at sites in Syria a year ago after accusations of Assad using chemical warfare on his own people was an epic stupid move on the part of Trump .. but maybe there was a gun heald to his head like was held to JFK’s?

On the negative side, Doug Casey focuses on the obvious:

…. starting with running a trillion-dollar deficit. Where does he think that money’s going to come from? The Russians and the Chinese aren’t buying US debt anymore. Foreigners are looking to offload US paper.

Americans aren’t buying much, either. The only real alternative is to sell it to the Federal Reserve. Which is a real problem when the Federal Reserve is not only trying to deleverage, but has to refinance hundreds of billions of short-term paper coming due. Recall that almost all the $20 trillion of Treasury debt is very short term. Interest rates are going to rise, a lot. And so will the interest portion of the government deficit. Interest payments alone will be a trillion a year by the end of Trump’s second term—assuming he gets one.

Trump also—like all red-blooded Americans—loves the military. So, he’s adding to the already bloated military budget. It’s ridiculous, dangerous, and provocative. The United States already spends more than the next 10 or 12 biggest nations in the world put together. And most of that money is wasted and misallocated. It’s being spent on dinosaur technologies. What he’s doing there is very foolish. It’s accelerating the looming bankruptcy of the Government. And of course the Government will drag the country down with it.

He’s foolishly antagonizing the Russians by placing troops in the Baltics. He’s doing the same with China by sending ships to the South China Sea, which is their equivalent of the Gulf of Mexico.

But my biggest problem with Trump is that he has no philosophical core. He’s not by any means a libertarian. He’s a pragmatist, and an authoritarian. He’ll do whatever seems like a good idea at the time.

He’s got no background in or understanding of economics or history. I think it’s true that, as his critics say, he hasn’t read a book in 50 years. He goes strictly on gut instinct.

Exactly. So what we have is someone that keeps kicking things and reacting but never solidifying long-term change. But at the same time, the swamp is huge and he can’t be the only one draining it. While Congress remains inept at doing anything productive (like dismantling spending programs that have outlived their usefulness and mission) because that might keep them from getting re-elected. With an 11% approval rating, incumbents get re-elected at a 95% rate. If voting changed anything they would NOT let us do it!

So basically, this is essentially entertainment that your tax money pays for, the bread and circus distractions that empires do in their dying days.

At the end of the day all we can really do well is love our families, love our neighbors and pray that God has a plan to keep our kids and grand-kids is His care as this American Empire spins down.

SF1

 

Tariffs, What Are They Good for?

From a Foundation for Economic Freedom (FEE) is an article that discusses not just the initial reaction from a tariff (usually, an increase) but also the downstream consequences that few seem to be able to anticipate.

Five different tariffs are discussed, but for the purpose I have for this post is around an earlier tariff back when the General (now called Federal) government used ONLY tariff revenue for its operations. Yes, even back in the 1840s the government was into income redistribution as tariff revenue derived mainly from the cotton exports in the south would fund northern infrastructure projects, first with canals and then with railroads.

Specifically, the so-called Black Tariff of 1842:

The tariff was passed because of a deadline set 10 years earlier to lower tariffs, and instead did the opposite by raising tariff rates to almost 40 percent—displeasing Southern states and his own party members. The tariff was repealed four years later because of the negative impact it was having on the economy.

The fall-in trade that followed wasn’t the only negative impact of the tariff. The tariff further divided the country, since the South depended on trading cotton with the British. … Given that his tariffs are an explicit prioritization of one group’s economic interests over those of the rest of the country, his duties on steel and aluminum will likely make things worse.

Back in the 1800s the logic used for the railroad and then the steel industry was that these “young/emerging” industries needed out government’s assistance to keep them sustainable and therefore “protected” these industries with tariffs. It is simply amazing that after 150 years the steel and aluminum industries “need protection” on the world’s stage with all the technology we have ESPECIALLY in the US toward sustained innovation that COULD keep the US competitive. Unfortunately, my hunch is that the very hand that wants to help is the same hand that ties these industry’s hands in other ways making them into corporate welfare queens that they have become in 2018.

The ripple effect is that domestic use of steel and aluminum is about to get much more expensive ( “… President Donald Trump announced his plans to impose tariffs on steel and aluminum coming into the United States at 25 percent and 10 percent respectively ..” ) and is counter productive towards allowing free-market capital improvements to proceed in the US economy. The only real outcome of this is for our government to grab yet another revenue stream as it continues to spend money WORSE than a drunken sailor!

FYI, as a former sailor I know 1st hand that drunken sailors stop spending money when they run out of money, unlike our government.

SF1

Don’t Judge the Past Through the Lens of the Present – New Amsterdam to Run Island

Things are not always what they appear .. whether it be history or this world. The movie “Shooter” said it well:

So this is more of a lesson in how we approach both history as well as current events, and how we can relate the two and become wiser. If the goal is to protect your family and property, you might want to seek wisdom and in the long run find yourself becoming more humble.

This article from Medium helped me how to unpack history in the lens of THOSE times, and also helped me connect the dots from something I was aware of:

  1. The British taking New Amsterdam from the Dutch in 1664 (without a shot fired)
  2. Battle of Medway in 1667 (as seen best for visual learners in the movie (English version) “Admiral“, the story of then Lieutenant-Admiral Michiel de Ruyter

It seems that #1 above was not received well back in the Republic of the Seven United Netherlands (Dutch Republic). This action helped to kick off the Second Anglo-Dutch War in 1665 culminating in a decisive British defeat by the Dutch Navy (60 ships) and Marines (1500 men) in June 1667. Basically, the Dutch had this planned the year before but since negotiations for a peace treaty were in process, this might give the Dutch a better position at that table.

Dutch Republic

The Dutch Navy under nominal command of Willem Joseph van Ghent and Lieutenant-Admiral Michiel de Ruyter, over several days bombarded and captured the town of Sheerness, sailed up the Thames estuary to Gravesend, then sailed into the River Medway to Chatham and Gillingham, where they engaged fortifications with cannon fire, burned or captured three capital ships and ten more ships of the line, and captured and towed away the flagship of the English fleet, HMS Royal Charles.

The context is this:

England and the Dutch Republic both wanted to establish dominance over shipping routes between Europe and the rest of the world. The Anglo-Dutch Wars were how they settled this disagreement.

Think of these conflicts as international trade disputes — in which each side had a big navy and wasn’t afraid to use it.

The Second Anglo-Dutch War lasted two years, from 1665 to 1667, with an estimated joint loss of 52 ships. Over 12,000 men lost their lives.

The war ended with the signing of the Treaty of Breda, leaving Manhattan under English rule. In exchange, England conceded to the Dutch the South Pacific Island of Run.

That is it. The Dutch had the upper hand after England was humiliated, at it took the ISLAND of Run (instead of the harbor that would become New York City) located  on the western side of the Banda Islands which is a part of the Maluku Islands now part of Indonesia.

I take it that didn’t help. I too needed a visual aid:

In this view, you don’t see the island OR the chain of islands it is a part of. So the Dutch got a deal? Well … as a matter of fact, yes they did. Again, you need to get in the lens of 1667 .. not 2018 to get this one. Our default follows:

Humans are amazing at making snap decisions, at extrapolating the broad view from the briefest glimpse. Humans see a pattern emerge that reminds them of something else, and — bam — they know exactly what’s going on. And all without a single conscious thought.

It’s a talent that’s served us well in the past. With a single glance, we can draw innumerable conclusions about our environment. What a lovely day. Such a warm smile. Oh crap, a tiger!

It’s this same talent that allows us to look at the terms of the Treaty of Breda and say, Something’s fishy here. The Netherlands got a raw deal.

Yup, we might call them stupid. Knowing what I know, I don’t think is was them. You need to understand the context. There are a few facts you need to know with this story:

First, spice was the 17th Century’s driver for worldwide trade:

Today, we take spices for granted. Every kitchen has a spice rack, or a well-stocked pantry. … But spice prices weren’t so reasonable in the 17th century. In fact, there’s an old French saying that goes something like this: You can buy a serf’s freedom for a pound of pepper.

Let that sink in for a minute. You could buy a person’s way out of a lifetime of indentured servitude with an item we can grab at the supermarket for $12.98.

Spices typically grow best in warm, non-European locales, which means that a lot of time and effort was spent just getting spices to Europe — thereby driving up the price. Case in point: Marco Polo’s first overland journey to Asia took 24 years. Sure, sailing cut that time down considerably. But then you had to factor in problems like scurvy. If it took 50 men to crew ship properly, you’d hire 75. Chances were you’d lose a third of your crew to sickness and death along the way.

Second, Europe’s naval power’s primary interest in the Americas was not settlement and not the fur trade. The English and the Dutch was trying to figure out how to get around America. The possibility of a short route up a river and getting to the “Spice Islands” drove these explorers. The Dutch had lost interest in New Amsterdam as it had little value to them.

Third, the spice that grew on Run best was nutmeg .. and the value of nutmeg in 1667 when the treaty was signed was similar to the price of gold:

The economics of nutmeg

The third fact to know is that of all the high-demand, low-supply, overpriced spices, nutmeg was king. It was the most precious spice on earth from kingdom to kitchen.

I’m not knocking it. It’s the secret ingredient in my homemade pancakes. It does a stand-up job dusted over eggnog. I wouldn’t want to imagine pumpkin pie without it. In the 1660s, though, nutmeg ruled the world.

It was literally worth its weight in gold. Incidentally, I looked up the price of gold, and, at the time of this writing, it’s trading over $1,250 an ounce. That would make the average quarter-ounce nutmeg seed worth over $300

So the decision was made and so did the Dutch cash in on their choice? (Do note that the British only held on to New York City for about 100 years)

Holland went into the war already controlling most of the Banda Islands. All but Run, to be precise. By the end of the hostilities, the Dutch had an exclusive monopoly over the most expensive spice on the planet. A nutmeg-opoly, if you will. And they held onto it until 1810. (At which time, the British used the Napoleonic Wars as an opportunity to capture Run’s neighbor, Banda Neira. They then shipped nutmeg trees to tropical parts of the British Empire, such as modern day Sri Lanka, effectively killing the Dutch nutmeg-opoly.)

That’s 143 years of nutmeg domination.

Or, 34 years longer than England held onto New England. Not a great bargain for the English after all.

So there you have it. In context you know know more about the big deals of the 17th century BUT you also can look at history and research for yourself how to get into THEIR shoes and try to SEE what they saw BEFORE you pass judgement on THEIR decisions.

Does this help? Can you follow the process to unpack history for your advantage which helps you, your family and your friends start to figure out current affairs in your country as well as in the world. It is my hope that when you read of situations in other parts of the globe that you would take time to research their world, their context and their culture before you quickly come to a snap judgement based only on your own lens.

SF1

 

High Tariffs Suck! (Republicans Are Experts at That and Democrats Want a War Anyway)

Think about it in historical context, the VERY day after the Confederate Congress set their tariff rate at 2% to effectively become a free trade zone, Lincoln’s Congress UPPED their tariff to even 60% on some items .. economic war can easily lead to a shooting war .. Republicans and Democrats (w/ Japan ala 1941) should know that well.

“.. the White House trade council chief launching an attack on the Canadian PM, saying there is a “special place in hell” for anyone who double-crosses his boss.

Director of the White House National Trade Council Peter Navarro preached against the Canadian Prime Minister during an interview with Fox News Sunday when asked whether US President Donald Trump’s very personal attack on Trudeau was warranted, given that Canada is the second biggest trading partner of the US…”

Stupid little man!

From Russia Today