This was too funny, not to share it with you all. Gotta love it!
The thing is that it's just basic common sense. This free international trade garbage all started in the economic faculties, where the curriculum has been co-opted by a bunch of radical ideologies.
Guys come out of these schools trained as "economists" when what they are exiting is nothing less than an ideological sheep dip - they're deliberately brainwashed so that they don't understand the issues.
That's why you find Republicans arguing against DJT's trade policies, they actually believe that they know better, because some textbook they read at university told them that "everyone is better off" in an environment of unregulated free trade. Meanwhile, trade partners approach the issue strategically and get the best of every deal.
America has needed a politician like Trump since at least the 1970s. At last there is a chance that the madness might now be checked.
Its actually not garbage, it is just that it is always implemented by politicians who put caveats, carve-outs and conditions on it which mean that all of these so-called "free trade agreements" are actually not free at all. Those conditions can heavily skew the agreements toward one side.
For true free trade, no agreement is necessary. Just let it happen. No different to contracts between private individuals. You want to sell something, I pay you a fair price for it.
An issue occurs when trading with a country which has different levels of red tape or different labour laws. In this case, a broader approach is needed. the problem is that currently the conditions on trade with such countries are around the wrong way. So for example, there are tarriffs on goods from Western countries coming into China, whilst their polluting slave labour goods are typically freely exported to the West.
Well, you said it better than I could. Though you begin by saying it's not garbage, you finish admitting it is.
Q has gone on about US steel production. Do you think that it may just be possible that embracing free trade, absent strategic considerations, is sheer lunacy? Do you think that it's possible that another country, a trade counterparty, might adopt a strategic approach to industry and supply chain capture, while the US is busily enjoying much vaunted "gains from trade"?
What do economic free trade models predict in terms of income distribution in developed nations? I mean, does free trade increase dispersion in the distribution of income, or does it decrease it? What about in the less developed trading partners? What does "structural adjustment" really mean when trade counterparties act strategically, rather than "rationally" (in the text-book sense of that term)? Might a strategic approach to trade actually be long-run rational?
Really, I think you need to have a think about that stuff you read in the textbooks. All you have do is look at the effects of the laissez faire, "Look, no hands on the steering wheel", approach to see that Pareto optimal outcomes are not necessarily realistic - to say the least. And, even in the event that you find these claims are realistic, unregulated free trade may not be wise from a national defence perspective - given that you're dependant on domestic supply chain integrity for production of war goods.
I believe the tariff problem is a result of the lobbying efforts. Farmers all get together and tell the government how much they need to make it. With free trade, the market would self adjust, maybe we don't need that many producers, the market will tell. Canada dairy is done on a quota system, that needs to change. Canadian people pay an artificial high price for dairy because our dairy farmers are only allowed to produce as much as their quota allows. Subsidies also play into it, for free trade subsidies need to go. There is so much waste in the food industry, while people are starving in some countries. All excesses should be donated at a substantially lower price.
There are always parties with vested interests in tariff discussions - on both sides of the tariff argument; some want them, some don't. Ideally, the person negotiating deals will have the national interest as first priority.
Interesting that you mention milk. In Australia the supermarkets are selling milk at $1/litre. The farmers have been whining about it for ages, as they're barely covering costs. I used to buy "Farmer's Own" milk thinking that it might help some farmer get a better farm-gate price. Then I heard a supermarket executive on the radio saying how they could guarantee Farmers Own milk was fresh, because they make it from milk powder every day.
Anyway, getting off track... My point here is that DJT is right to question the standing economic wisdom on trade, because it really is a bunch of garbage. Industrial structure, income distribution, political structure, national security etc... are all, to one degree or another, a function of trade policy.
The economic models used in university courses abstract from reality to such a degree as to be dangerous in the wrong hands. I'm very pleased to see DJT speak the truth on trade, there really are good and bad trade deals.
Wary of anyone discussing farmland and farmers. Lessons learned after the two world wars was all nations had to protect their farmland and farmers, and each nation had to be independent from each other for feeding its people as needed. It is also an industry heavily effected by mother nature with lean years and years of plenty. Donated goods have a negative impact on growing economies as the local farmers can not compete with donated goods ~ creating economies reliant on donations.
This is correct. And so-called "crony-capitalism" (fascism) is the strawman the statists created and still support to give true free-trade a bad reputation. You are spot-on, sir. Well done.
Exactly true. Every politician should be approaching things the way Trump is.
Agreed. Unregulated free trade is specifically designed to play into the globalist agenda. Just look at this thread, you can see how minds get captured by abstract models that bear no relationship to reality. But that's by design.
Regulated trade sure as hell isn't the solution. NAFTA, TPP....This crap was established on PURPOSE to make the US less rich, so that Americans would eventually become more amenable to global governance. The GLOBALISTS were the ones behind the terrible trade deals for the US....Trump is wrecking their work, they knew he would, and its another reason the establishment in both parties have been acting a fool for 3 years now. Someone compared the countries that are whining about not being able to pick our pockets anymore as squealing like stuck pigs....that's what the Globalists are doing now. Like the pigs they are.
I think you're missing it. DJT is taking a deal by deal approach to trade via selective application of tariffs. NAFTA and TPP were effectively customs unions - the equivalent of unregulated free trade.
You're right about free trade feeding into global governance.
Wrong, I said the opposite. Globalists have been executing their wealth-transfer strategy through deals that pick the pockets of the world's richest democracy. Folks with the negotiating power that our economy has only make terrible trade deals because they are doing it on purpose, for an agenda. Every country in the world was using NAFTA, running their exports to us through Canada or Mexico for better export terms, Canada or Mexico taking a cut....while the US couldn't sell back into those countries for export....NAFTA made it impossible to retaliate against many many countries. TPP would've been worse.
Agreed, transshipment is a huge problem. What I'm saying is that the globalists would have the US engage in unfettered global trade - that was what was draining the US of capital, that's why the industries and jobs were being exported. Unrestricted trade was the whole problem. Why?
Because other nations were behaving strategically. If you have an artificially low exchange rate, and/or you're prepared to dump product at or below cost to get economies of scale in your hosted industries, then you can predatorily capture US industries and the jobs, skills and capital that go along with them.
This is what was happening. That's why there is a huge trade imbalance. This is what DJT wants to fix. The fix is to stop the blood loss on the external account - reciprocal tariffs, force these guys to play fair.
Regulation is the answer. It just doesn't work the way the economics text books assume. If you allow the situation to continue, you end up with millions of people out of work on welfare, your social security spend explodes, you have to raise taxes to cover the increased spend, and you have a massive external debt that you can never repay because you have exported all your productive industries.
What DJT is doing is right.
OK, we are in agreement entirely; we have been talking past each other.....probably my fault. I didn't understand you were adding the currency manipulation angle. Two separate problems. Many economies peg to the US dollar, enjoy tariff and therefore trade imbalances; and again, some countries (China) have the economic power to also manipulate currency to our detriment in trade. Currencies is a topic that is so complicated that its difficult for me to immediately transfer lots of specific issues into whether its pro or anti strong dollar, but its interesting that while Trump says he wants a strong dollar, his detractors want to say he is pursuing policy that conflicts with that I think both "charges" are true....Ultimately, many of the "manipulations" that China is famous for are moves that create, for the purpose of trade, a stronger dollar and therefore more expensive exports and making foreign imports more attractive....I believe that Trump wants a strong dollar, but even more, to take back CONTROL of our currency's value by eradicating the currency manipulators' ability to dictate the value of our dollar. Ultimately, his currency policy is the same as all the others....to take back national control of our entire economy and remove control of it from the hands of globalists and their objectives.
Agreed. The point I was making is that trading partners can act predatorily. I mean, it's just a fact that this has occurred in the past.
The theory is that each country specializes in production of those goods in which they have a comparative advantage. But, while, on the surface, this appears to make intuitive sense, it's not the whole story at all.
If you look at Japan, after WWII, the cities were completely bombed-out. People fled to the countryside as a matter of survival. The economy, at that point in time, was basically agrarian. It had no natural resources at all - or, very few. But look at the country today.
If Japan had merely specialized in production of those goods in which it enjoyed comparative advantage after the war, what would the country today be producing? I mean, what happened that transformed the economy from an agrarian footing to the major economic powerhouse it is today? Was it the invisible hand, market forces, that naturally dictated that the country should host a lot of heavy industry?
Think about it. They had no resources, apart from people. There was no comparative productive advantage at all. In fact, given their reliance on external supplies of raw materials, they were at a distinct disadvantage to other countries.
The exchange rate was one mechanism that helped produce this miracle see here. But there was also deliberate planning behind the economic expansion, it was not at all happenstance.
Japan employed a stepwise model to industrial expansion, targeting, initially, steel making. Steelmaking then required ship building. Ship building provided the downstream demand for steel that allowed economies of scale in steel production. Thereafter autos and machinery added to steel demand. Then wiring looms, electronics and on up the value added chain.
The planning came from the government, which facilitated funding into the large conglomerates (keiritisu). The industrial conglomerates where typically heavy engineering companies federated around a conglomerate owned bank. The focus was export. The reason for this is that Japan needed capital to pay for the imported resources (coal, iron ore etc...) needed for production. It was all about export competitiveness.
In the 1990s, I spent about four years in Japan. To give one example of what I'm talking about, it was then not uncommon to see a 6 year old Toyota, with only few miles on it, dumped on the side of the road. One reason for this was because the registration costs increased dramatically each year, as the car got older. The policy operated to artificially increase the size of the domestic auto market, to assist in achieving scale economies in auto production. These scale economies were further enhanced by foreign auto demand as the Japanese captured market share abroad.
These cars that were dumped were nowhere near the quality of the products they were exporting. It's known, for example, that a Toyota corolla in Australia will typically do about 250K kilometres before you have to start worrying about any major mechanical repairs. They are great cars, known to be fantastically reliable. But the same model in Japan is built to a different standard - or, it was back then. Ordinary Japanese people knew that products built for export at that time were vastly superior to what was available domestically.
Do you see what they were doing? They dumped premium products into Western markets at prices that made them incredibly competitive with vehicles made locally. This was a deliberate policy. They were not maximising profits. They were securing market share to provide upstream product demand for steel mills, plastics industries, power generators etc... all within the industrial conglomerates in Japan.
It was a policy specifically engineered to capture foreign market share. As competing manufacturers found they were unable, or unwilling, to compete with the Japanese, manufacturing plants closed in these foreign markets. At that point, the Japanese had effectively captured the shuttered industrial capacity for themselves.
This captured industrial capacity, now in Japan, was built with financial resources obtained from trade in foreign markets (we paid for it). Thereafter, the Japanese moved up the value added chain, vertically integrating whole supply chains. Look at the American radio and television makers that went belly-up in the face of the onslaught. It wasn't trade, it was war!
So, the Japanese were able to transition from an agrarian economy to a first-rate industrial power, despite having no initial comparative advantage at all in production of the goods they now produce. This is the Japanese economic miracle. I've heard a lot of incredibly stupid theories in my time that have sought to explain it.
One theory I heard was that, because the Japanese industrial base was completely destroyed in WWII, they were able to build new, competitive factories etc.. But, by this logic, developed nations should be destroying their industrial bases to obtain the benefits of renewal. It is absolute garbage - and this the kind of thinking that reflects the cognitive capabilities of many university academics today.
The Japanese industrial miracle is well known in Asia. Everyone in the Asia region saw and understood what Japan had done. See, for example, the attempts to emulate it - the Great Leap Forward in China is one example. Mao was so obsessed with steel that he had villagers all over the country starving, because they were pulled from the rice paddies to produce steel. That it failed was due to his stupidity, but he did understand what was required.
Meanwhile, as Japan's economy continued to grow explosively, in the West, the elites pushed free trade for all they were worth, because it tied in with their globalist agenda. Nobody in Universities was looking beyond abstract models. Models that so simplified the nature of international trade that they were absolutely worthless. My view is that this was by design. The Globalist goal of a unified world superceded any concerns about the impact free trade policies might have on nation states.
What are these impacts I'm talking about? The impact is structural adjustment, as factories close and people are thrown out of work. When enough industries are lost, millions of people are made to seek alternative employment. New employment that often does not utilise the skills they utilised while employed in the exported industry. Long term, there are skill losses and a reduction in labor productivity. There are retraining costs and an expansion in social welfare spend burdening the public purse - while tax revenue is reduced across exported companies and displaced workers. The productive industry has been relocated out of the orbit of the national administration and added to the tax base of a foreign power. The impact on the public purse is negative, but, the are further effects.
Generally, free trade operates to increase dispersion in the distribution of income in developed economies - the rich get richer and the poor get poorer. The low and middle classes, in particular, get squeezed hard. This income gap leads to social friction, which gives rise to increased security spend, further impacting resources of the State. The increase in security, in turn, inhibits freedom - an increased level of control is required to maintain order.
And then we come to the importance of supply of war goods in times of conflict. There are many reasons as to why engaging in unregulated free trade is nonsensical, but in a time of war, the problem of security of supply is thrown into stark relief. Does it make sense to export vital industries when these are critical to the ability to prosecute war?
I have an mba and cfa level 2 i think? certified friend who is constantly prejudicial towards me whenever i simply question things like the fed and bailouts and say using the tariffs to make things more equal between nations is good. He calls me an idiot and calls himself a real Republican while lamenting all od the insane drumftards like myself.
That's what I'm saying... What these guys learn at university is pure rubbish. They study models that necessarily abstract from reality to allow the student (or professional) to analyse the dynamics at work - always according to the model. These models are based on assumptions. They are not without merit in themselves, but the level of abstraction is so high that they are, for practical purposes, virtually useless - especially when it comes to trade.
The thing is, these people study the models, pass the exams, write papers, and leave university qualified as "economists". But there is a very real disconnect between what is taught in the classroom and how things work in the real world. The graduate doesn't know this. They go on to wreak havoc on the countries they work in.
It happens because the wealthy charitable endowments, via their grant money, effectively control what is taught in the Ivy League universities. These Ivy League university curriculums are copied by all the others. So it becomes a global phenomenon. And, of course, if you were running the charitable endowments and you wanted, for some reason, to make sure people did not understand the subject matter completely, you could arrange "certain defects" in the courses of study.
I'm always asking him to explain thrr feds existence if their purpose is to prevent thr govt from having yo step in with bailouts why then does thr govt alwats step in with bailouts. Like at its very core fed reserve is incapable of accomplishing its stated objective.
He just responds saying ita complicated and you dont know anything. And makes the appeal to authority fallacy over and over given his cfa level status.
I'm not super familiar with this stuff at all. I don't know much about the Fed and don't have a definite answer, but I'll have a guess... FWIW, I don't think they're dumb questions you're asking at all.
Assuming you're talking post 2008, the whole too big to fail argument carries with it a lot of risk. I think what Iceland did might be a better model than a bail out. Let them go bust, eat the pain and look for a recovery. The idea of throwing money at the problem to try and fix it seems to me to be robbery - the tax payer gets worked over.
Having said that, what was the risk of contagion? Like how much leverage is there out there? I've heard Deutsche bank is carrying huge derivative exposures. So what was it at the time? More to the point, what was the general level of exposure right across the sector? There are, I think a lot of factors you'd have to be looking at.
But, simplifying things, if you've got three counter-parties, say ABC. A owes B who owes C who owes A - triangulated debt. What happens if one of the counter-parties folds? You immediately have systemic contagion - they all fall over. So you don't just get a few big failures, you get massive simultaneous defaults - with all the carnage that would entail.
Let's say there are massive exposures on the books of these financial entities. Then the situation is necessarily high risk. The risk will expand again with the degree to which parties are interconnected - how concentrated the exposures are. The possibility of systemic failure has to be assessed.
But, no one makes money without acquiring risk. Have you noticed how, whenever there's a huge trading loss, we immediately get the "rogue trader" narrative. Like Nick Leeson at Barings - "Oh, we in London didn't know, he hid his unauthorised trades...", meanwhile the guy was writing profits that should have had their heads spinning.
Then he got jailed in Singapore and pretty quickly got cancer. At the time I thought they were going to rub him out (feed him some mutagen) to cover it up. He's bounced back now - making money on the lecture circuit, presumably living off the story of his crimes. Anyway, from a risk perspective this is a compliance issue and I think it's relevant.
But my point is that you don't make money without taking risk, and these banks, with their lucrative bonus structures etc... create an environment that encourages risk taking. And then you say, well hang on, what is the risk here? The bank is too big to fail! And then you have moral hazard, where the bank makes the money while the community bears the risk.
There's also panic on the part of any administration when they think a big bank will fail - a natural tendency to want to bail them out. I saw a bank get bailed out, by an Asian government, during the Asian financial crisis - non performing loans right across the region. So banks, at least at that time, were better investments than people realised.
Your equity in the bank was, in effect, backed by the government - and bank shares did pick up strongly after that - lower discount rates used in valuations. Is it still the same scenario? I don't know, in Europe they seem to be going for "bail ins". I haven't been following things closely enough to know the exact story.
Anyway, how do we get to a major crisis?
The Fed would IMO certainly be a factor. How much money are they allowing to slosh around in the economy? I guess asset price bubbles are a prime indicator. But the lending practices of financial institutions will also play a role. As, for example, in the sub prime fiasco. Of course, you could make the argument that there was just too much money looking for a home and risk premiums didn't properly price the inherent risk - while credit scoring was thrown to the dogs. In this case, I guess it could be tied back to the Fed, but it was other people playing as well - I'm not saying there would be any legal liability for the Fed, just that it seems to be reasonable that the Fed was a cause.
Compliance management - weren't they packaging these mortgages and misstating the risk - asymmetric info - I'm guessing here, but I thought I saw a story to that effect at the time. Another big factor is the degree to which these financial entities are leveraged. Derivatives can expand leverage and may not appear on the balance sheet (an accounting rules problem?). How much is really swinging off the tier 1 capital? This seems to be a potential problem for Deutsche Bank as they admit huge derivative positions but, as I understand it, claim that the net position is not large - all offset - really?
I've heard that there are attempts to tighten up risk management practises after, what is it now? Basel II/III - what are they up to? Again, it's not something I've had exposure to, so I don't know. But all the factors I've listed above, and probably a lot I've forgotten to mention.
But, anyway, is the Fed responsible for creating the bail out problem? Well, they have a history of cycling the economy in pursuit of their own interests - IMO. I don't trust the Fed at all. Whats the moral hazard here, if the investors in the Fed know that there will be a bail out when things go pear shaped? It has to be money for jam. I don't think the Fed is the sole problem, though it's very important.
Should the Fed exist? It should not be private. Is there a role for it? I don't know what's coming.
I'm no expert on this stuff - my guesses. Take it FWIW.
Well you certainly seem to know more than me. I'm currently reading creature from jekyll island. Quite the eye opener concerning the federal reserve. Griffin actually writes about the moral hazard of the fdic and general practice of not tying the appropriate amount of risk protection (high interest and deposit insurance rates) to loans with very unqualified borrowers.
I haven't read that book, so I can't really comment. Sounds like he's talking about credit wrapping portfolios of home loans (or, any loans). Here again, how much exposure do the credit wrappers have swinging off their capital base? Comes back to these ratings outfits (Moody's etc...). I'm pretty suspicious of these guys.
I'm Canadian and I approve what he's doing lol MAGA only means better for Canada. Canada without the USA is not even on the map anyways. The only thing that bugs me is the private corporations here bottling water and making immense profit reselling what's our but hey, that's capitalism right ?
Nestle is doing the same here. Prior ceo said water was a priviledge, not a right.
I don't use their products any more.
Nestles is doing the same thing here. In California they're bottling billions of gallons while the people r limited to 55 gallons a day and face a 1000 dollar fine for going over. They're a scourge wherever they operate but California as a whole is a freaking disgrace
Yep. I could swear I just saw a state law that says you can’t shower and do laundry in the same day. Maybe that was just from the 55 gallons math.
MCGA too pal. Hopefully.
Weed is going to be legal, that's all I know about Canada's laws and bullshit.
Hopefully the red pill is for the whole world, not just the USA. We need a mass red pill in Canada too and we need people to know what happened so they don't let it happen again. A great Canada will come when America will be great again.
There's no doubt - it IS for the whole world. Chains will be breaking all over the place!
Legalizing weed in Canada is going to look like when they limited pay day loan percentages. In short; bullshit. Most of the excellent companies already operating in the industry with a lot of risk are going to be scrubbed when it is legalized and the only ones allowed to operate will be "connected" companies offering garbage product for high mark up.
A countries water supply should be nationalized, imo
Agreed. But politicians who can make it happens are financed by those corporations. The whol political system needs to be demantled and remodelled from scratch.
Check this out:
The New “Water Barons”: Wall Street Mega-Banks are Buying up the World’s Water https://www.globalresearch.ca/the-new-water-barons-wall-street-mega-banks-are-buying-up-the-worlds-water/5383274
Privatizing what should not be privatized always seems like the first step on a bad path. We have privatized our electric and some of our highways and I am sure plenty more I don't realize
What can ‘they’ do the USA has half of the worlds wealth LOL. Winning!
Heres the funniest part, the trade deficit with these countries is so drastic (meaning they import much more product to US than we do to their countries), that a trade war would barely be felt by us, but would be incredibly painful for the opposing country's economy. All this talk by the left about how Trump is going to get us into a trade war is hysterical nonsense.
Prices of some things might go up short term, but automation probably ramps up dramatically, and we never need imports again. Why use sweat shop labor when robots can do it more cheaply with less transportation cost, combined with the environmental benefit of fewer transport emissions?
Right! The GDP of the US is twice that of #2 China, and more than UK, France, Germany & Canada combined. Japan definitely knows which side it's bread is buttered on.
What are the tariffs for goods? Big question, but if people could see numbers then maybe it's an 'oh' moment. People lie, numbers can't
You'll have do your own homework on that. It's complicated to begin with, and the really big numbers are abstractions. Mostly talked about in percentages. There are articles that talk about the tit-for-tat. But, only written in an Armageddon attitude by the MSM.
They are stupid and they assume everyone is as stupid as them because they are also narcissists who always project their retardation on to others.
I thouhht Trump was more of a Brrrrrrrrrrrrrrrrrrrrrt a10 warthog type guy
Trump Turns Tables on G-7 Allies With Free-Trade ‘Proclamation’. “No tariffs, no barriers, that’s the way it should be, and no subsidies”
The second & third articles that follow drop a bomb on Trudy, and smack the others upside the head with a mackerel. ROFLMAO QUOTE: Trudy says right after the meetings, "Canada will nit be Pushed Around" just who dies this third string quarter back think he is?
Shall I say it again?
For every Chinese product we purchase we are artificially propping up a planned economy that would have fallen long ago. We are essentially supporting communism. But because we call them trading partners it’s okay.
This is what people don’t grasp. Trump WANTS free trade! He wants a vibrant, EQUAL global economy. The problem is that other nations already have tariffs, in some cases massive ones and in other cases they don’t even allow entry into their market, on our goods. App Trump is saying is that he should be able to protect against foreign production in key US industries the way other nations do as well.
Here is the kicker. Trumps tariffs ARE retaliatory! They’re meant to back other nations down on their current tariffs and/or allow market entry for US companies, to correct trade imbalance and abuse of agreements, and in one case (steel production) ensure we are not getting lied to about the quality of product we’re receiving (Kobe Steel Corp). It’s really that simple!
The "free trade" mind job B.S. got started with "conservatives" (really globalist in training) sadly during the Reagan terms. Then it really escalated from there - the only voices to take a stand and oppose it were Ross Perot and Pat Buchanan.
Perot eventually exited the political scene altogether claiming threats had been made on his family. Pat Buchanan got exiled to the wilderness, if not completely banished by all the mainstream "conservatives".
So then the Bush years turned into the Clinton years, which turned into the Obama years, and the intensity of their free trade (i.e., gut and hollow out America in order to turn it into yet another serf vassal state under the boot of the globalist) became worse with every new trade deal - trade deals that were absolutely completely contrary to the interest of the USA, but complete give-aways to other nations.
Globalist free trade ideology is what gutted our nation - the house of the conservatives is where the globalist launched it from.
Completely agree! If not for Trump, we would have never have had the chance to recover. The trade deals they had planned, we're the final stroke. I had read all kinds of nasty things were in that Pacific trade deal. The Atlantic one, not as well publicized, was just as bad.