CONSEQUENCES OF TARIFF PLAN, INCALCULABLE
WILL RESULT IN ENORMOUS CHANGES
The much anticipated onslaught of Tariff's on the world is now reality, the consequences will be enormous and far reaching. This move will be similar to Bretton-Woods, and Nixon's decoupling of the dollar from gold. We can expect massive flows of Capital, tax changes in every country and social changes, many not easily calculable. It is an indication of the Trump administration's realization that the country is in a perilous financial situation, a situation that is not sustainable, and is near coming to catastrophic conclusion.
This action will further put peril on the western economies, may further move the BRICS to their goal of a independent financial situation and be very painful in the short run. Maybe it will at least awaken more of the population of the real peril on the horizon, one that no none seems to realize.
Below is an article I wrote in 2015, "Where has all the money gone" the numbers are out of date, but if you know anything about the current deficits and debt, you will see what has happened in the last 10 years.
We constantly see reports of budget deficits, unfunded pensions, crumbling infrastructure, and weak economic growth. This has been an ongoing and escalating problem for over 40 years. Some of this has been masked by increasing debt by individuals and most local, state and federal governments. The country as a whole will have to address these problems in a serious way, either in a rational long range strategy, or with a haphazard attempt to deal with effects rather than solutions.
It is generally acknowledged that wealth is created by the combination of raw materials and labor to create a tangible product of greater value.
I remember reading in the early 1970,s the book, "The Post Industrial Society ". There was some debate about whether this was a viable idea. I also remember the economic debate in the late 1960's about the economic benefits of deficit spending by the Federal Government. The supporters speculated that this would be a continuous stimulation of the economy, The detractors believed that the government needed to keep a sound money policy. I was a young person at the time but was always a believer that one of the most important duties of government is good stable money. I was not sure about a Post Industrial Economy, but had my doubts.
These ideas were pushed by many at the time and coupled with new social programs of the late 1960's and a avalanche of regulation of industry in 1970's we have now become largely a post industrial society. We have not had a balanced budget since 1969, except 4 years from 1998 to 2001, and those budget surplus's did not take into account unfunded liabilities that are not included in the budget. We have not had a trade surplus since 1971, except for a small surplus in 1973.
The accumulated trade deficits from 1971 to 2014 total, $10,096,538,000,000, over $10 Trillion .
This is over 50% of our national debt. This is money that was not spent or invested within the country.
When the debates in the 1980's and 90's concerning NAFTA and GAAT were ongoing, I, along with many others, predicted that if American labor is to compete with third world labor on an equal basis, the standard of living of Americans must go down. This decline has been happening for many years, many have made up for this by borrowing more, home equity loans etc. Borrowing will no longer bridge the gap.
Many politicians and international corporations both Democratic and Republican preached unlimited free trade, and promised we would make up for our losses by becoming a Hi-Tech exporting country. Look at the numbers above and you decide.
While the private sector has struggled to adapt, the public sector has mostly been insulated from the realities of the real economy. With strong political power it has been decades of special deals for those that benefit from connections in Government. Whether it is entrenched bureaucracies' or International corporations with political connections. This has been all at the expense of the lower and middle class Americans.
As for the Budget Deficits. They have accumulated since 1969 to $19 Trillion . The estimated total debt is near to $100 Trillion, this is the money owed to unfunded mandates, Social Security money that was spent out of the surpluses in Social security since the 1990's. Money from other supposed safe keeping funds that has been spent, by both Democratic and Republican administrations. Anyone with knowledge of Economics know there is only hyper-inflation or default on the horizon. If the Federal Government was a pension fund or a Corporation, they would all be in jail.
While this time is probably the last hope of correcting these entrenched problems, It would need the cooperation of all the people and government, It does not look likely. We would have to change regulations and Government policies to make the USA a enticing place to do business, The kind of business that produces wealth, real tangible goods. We have become adverse to anything that produces dust, smoke or makes your hands dirty. Look at the cities, like Detroit, once the wealthiest city in America, and many others, there are no jobs of substance.
When I was a youth, I remember the textile plants from Northampton to Easton, that employed many thousands, and paid well, as well as the Steel and foundry business's that were a large part of the Pennsylvania economy. I lived in Emmaus, and within walking distance of everyone were several foundries, Rodale mfg., Lehigh Safety shoe' EMF and others. My father worked for Western Electric for 25 years, None of those business exist today. There is too much risk and too little hope of success for manufacturing in America.
If you had a National balance sheet, with income and expenses. The income side is Manufacturing, mining, and producing machines etc. to mass produce products, Farms, Auto Co., Caterpillar, etc. The expense side is everything that is part of the Government. The Government at all levels is not a creator of wealth, a necessary expense, but an expense. Service jobs, lawyers, accountants etc. are all expense side. Government attempts to redistribute wealth, wealth being created today, and even past wealth.
We have been sold a false Philosophy, and we all believed in it to some extent. There are powerful interests who want things to continue as they have. Who hope they will just get to retirement before the reckoning comes. It will be interesting to see how it all plays out.
I remember reading in the early 1970,s the book, "The Post Industrial Society ". There was some debate about whether this was a viable idea. I also remember the economic debate in the late 1960's about the economic benefits of deficit spending by the Federal Government. The supporters speculated that this would be a continuous stimulation of the economy, The detractors believed that the government needed to keep a sound money policy. I was a young person at the time but was always a believer that one of the most important duties of government is good stable money. I was not sure about a Post Industrial Economy, but had my doubts.
These ideas were pushed by many at the time and coupled with new social programs of the late 1960's and a avalanche of regulation of industry in 1970's we have now become largely a post industrial society. We have not had a balanced budget since 1969, except 4 years from 1998 to 2001, and those budget surplus's did not take into account unfunded liabilities that are not included in the budget. We have not had a trade surplus since 1971, except for a small surplus in 1973.
June 3, 2015 | |||||||||||
| U.S. Trade in Goods and Services - Balance of Payments (BOP) Basis | |||||||||||
| Value in millions of dollars | |||||||||||
| 1960 through 2014 | |||||||||||
| Balance | Exports | Imports | |||||||||
| Period | Total | Goods BOP | Services | Total | Goods BOP | Services | Total | Goods BOP | Services | ||
| 1960 | 3,508 | 4,892 | -1,384 | 25,940 | 19,650 | 6,290 | 22,432 | 14,758 | 7,674 | ||
| 1961 | 4,195 | 5,571 | -1,376 | 26,403 | 20,108 | 6,295 | 22,208 | 14,537 | 7,671 | ||
| 1962 | 3,370 | 4,521 | -1,151 | 27,722 | 20,781 | 6,941 | 24,352 | 16,260 | 8,092 | ||
| 1963 | 4,210 | 5,224 | -1,014 | 29,620 | 22,272 | 7,348 | 25,410 | 17,048 | 8,362 | ||
| 1964 | 6,022 | 6,801 | -779 | 33,341 | 25,501 | 7,840 | 27,319 | 18,700 | 8,619 | ||
| 1965 | 4,664 | 4,951 | -287 | 35,285 | 26,461 | 8,824 | 30,621 | 21,510 | 9,111 | ||
| 1966 | 2,939 | 3,817 | -878 | 38,926 | 29,310 | 9,616 | 35,987 | 25,493 | 10,494 | ||
| 1967 | 2,604 | 3,800 | -1,196 | 41,333 | 30,666 | 10,667 | 38,729 | 26,866 | 11,863 | ||
| 1968 | 250 | 635 | -385 | 45,543 | 33,626 | 11,917 | 45,293 | 32,991 | 12,302 | ||
| 1969 | 91 | 607 | -516 | 49,220 | 36,414 | 12,806 | 49,129 | 35,807 | 13,322 | ||
| 1970 | 2,254 | 2,603 | -349 | 56,640 | 42,469 | 14,171 | 54,386 | 39,866 | 14,520 | ||
| 1971 | -1,302 | -2,260 | 958 | 59,677 | 43,319 | 16,358 | 60,979 | 45,579 | 15,400 | ||
| 1972 | -5,443 | -6,416 | 973 | 67,222 | 49,381 | 17,841 | 72,665 | 55,797 | 16,868 | ||
| 1973 | 1,900 | 911 | 989 | 91,242 | 71,410 | 19,832 | 89,342 | 70,499 | 18,843 | ||
| 1974 | -4,293 | -5,505 | 1,212 | 120,897 | 98,306 | 22,591 | 125,190 | 103,811 | 21,379 | ||
| 1975 | 12,404 | 8,903 | 3,501 | 132,585 | 107,088 | 25,497 | 120,181 | 98,185 | 21,996 | ||
| 1976 | -6,082 | -9,483 | 3,401 | 142,716 | 114,745 | 27,971 | 148,798 | 124,228 | 24,570 | ||
| 1977 | -27,246 | -31,091 | 3,845 | 152,301 | 120,816 | 31,485 | 179,547 | 151,907 | 27,640 | ||
| 1978 | -29,763 | -33,927 | 4,164 | 178,428 | 142,075 | 36,353 | 208,191 | 176,002 | 32,189 | ||
| 1979 | -24,565 | -27,568 | 3,003 | 224,131 | 184,439 | 39,692 | 248,696 | 212,007 | 36,689 | ||
| 1980 | -19,407 | -25,500 | 6,093 | 271,834 | 224,250 | 47,584 | 291,241 | 249,750 | 41,491 | ||
| 1981 | -16,172 | -28,023 | 11,851 | 294,398 | 237,044 | 57,354 | 310,570 | 265,067 | 45,503 | ||
| 1982 | -24,156 | -36,485 | 12,329 | 275,236 | 211,157 | 64,079 | 299,391 | 247,642 | 51,749 | ||
| 1983 | -57,767 | -67,102 | 9,335 | 266,106 | 201,799 | 64,307 | 323,874 | 268,901 | 54,973 | ||
| 1984 | -109,072 | -112,492 | 3,420 | 291,094 | 219,926 | 71,168 | 400,166 | 332,418 | 67,748 | ||
| 1985 | -121,880 | -122,173 | 294 | 289,070 | 215,915 | 73,155 | 410,950 | 338,088 | 72,862 | ||
| 1986 | -138,538 | -145,081 | 6,543 | 310,033 | 223,344 | 86,689 | 448,572 | 368,425 | 80,147 | ||
| 1987 | -151,684 | -159,557 | 7,874 | 348,869 | 250,208 | 98,661 | 500,552 | 409,765 | 90,787 | ||
| 1988 | -114,566 | -126,959 | 12,393 | 431,149 | 320,230 | 110,919 | 545,715 | 447,189 | 98,526 | ||
| 1989 | -93,141 | -117,749 | 24,607 | 487,003 | 359,916 | 127,087 | 580,144 | 477,665 | 102,479 | ||
| 1990 | -80,864 | -111,037 | 30,173 | 535,233 | 387,401 | 147,832 | 616,097 | 498,438 | 117,659 | ||
| 1991 | -31,135 | -76,937 | 45,802 | 578,344 | 414,083 | 164,261 | 609,479 | 491,020 | 118,459 | ||
| 1992 | -39,212 | -96,897 | 57,685 | 616,882 | 439,631 | 177,251 | 656,094 | 536,528 | 119,566 | ||
| 1993 | -70,311 | -132,451 | 62,141 | 642,863 | 456,943 | 185,920 | 713,174 | 589,394 | 123,780 | ||
| 1994 | -98,493 | -165,831 | 67,338 | 703,254 | 502,859 | 200,395 | 801,747 | 668,690 | 133,057 | ||
| 1995 | -96,384 | -174,170 | 77,786 | 794,387 | 575,204 | 219,183 | 890,771 | 749,374 | 141,397 | ||
| 1996 | -104,065 | -191,000 | 86,935 | 851,602 | 612,113 | 239,489 | 955,667 | 803,113 | 152,554 | ||
| 1997 | -108,273 | -198,428 | 90,155 | 934,453 | 678,366 | 256,087 | 1,042,726 | 876,794 | 165,932 | ||
| 1998 | -166,140 | -248,221 | 82,081 | 933,174 | 670,416 | 262,758 | 1,099,314 | 918,637 | 180,677 | ||
| 1999 | -258,617 | -337,068 | 78,450 | 969,867 | 698,524 | 271,343 | 1,228,485 | 1,035,592 | 192,893 | ||
| 2000 | -372,517 | -446,783 | 74,266 | 1,075,321 | 784,940 | 290,381 | 1,447,837 | 1,231,722 | 216,115 | ||
| 2001 | -361,511 | -422,370 | 60,858 | 1,005,654 | 731,331 | 274,323 | 1,367,165 | 1,153,701 | 213,465 | ||
| 2002 | -418,955 | -475,245 | 56,290 | 978,706 | 698,036 | 280,670 | 1,397,660 | 1,173,281 | 224,379 | ||
| 2003 | -493,890 | -541,643 | 47,754 | 1,020,418 | 730,446 | 289,972 | 1,514,308 | 1,272,089 | 242,219 | ||
| 2004 | -609,883 | -664,766 | 54,882 | 1,161,549 | 823,584 | 337,966 | 1,771,433 | 1,488,349 | 283,083 | ||
| 2005 | -714,245 | -782,804 | 68,558 | 1,286,022 | 913,016 | 373,006 | 2,000,267 | 1,695,820 | 304,448 | ||
| 2006 | -761,716 | -837,289 | 75,573 | 1,457,642 | 1,040,905 | 416,738 | 2,219,358 | 1,878,194 | 341,165 | ||
| 2007 | -705,375 | -821,196 | 115,821 | 1,653,548 | 1,165,151 | 488,396 | 2,358,922 | 1,986,347 | 372,575 | ||
| 2008 | -708,726 | -832,492 | 123,765 | 1,841,612 | 1,308,795 | 532,817 | 2,550,339 | 2,141,287 | 409,052 | ||
| 2009 | -383,774 | -509,694 | 125,920 | 1,583,053 | 1,070,331 | 512,722 | 1,966,827 | 1,580,025 | 386,801 | ||
| 2010 | -494,658 | -648,678 | 154,020 | 1,853,606 | 1,290,273 | 563,333 | 2,348,263 | 1,938,950 | 409,313 | ||
| 2011 | -548,625 | -740,646 | 192,020 | 2,127,021 | 1,499,240 | 627,781 | 2,675,646 | 2,239,886 | 435,761 | ||
| 2012 | -536,773 | -741,171 | 204,398 | 2,218,989 | 1,562,578 | 656,411 | 2,755,762 | 2,303,749 | 452,013 | ||
| 2013 | -478,394 | -702,587 | 224,193 | 2,279,937 | 1,592,043 | 687,894 | 2,758,331 | 2,294,630 | 463,700 | ||
| 2014 | -508,324 | -741,462 | 233,138 | 2,343,205 | 1,632,639 | 710,565 | 2,851,529 | 2,374,101 | 477,428 | ||
| U.S. Census Bureau, Economic Indicator Division | |||||||||||
| NOTE: (1) Data presented on a Balance of Payment (BOP) basis. Information on data sources and methodology | |||||||||||
| are available at http://www.census.gov/foreign-trade/guide/sec2.html#bop. | |||||||||||
The accumulated trade deficits from 1971 to 2014 total, $10,096,538,000,000, over $10 Trillion .
This is over 50% of our national debt. This is money that was not spent or invested within the country.
When the debates in the 1980's and 90's concerning NAFTA and GAAT were ongoing, I, along with many others, predicted that if American labor is to compete with third world labor on an equal basis, the standard of living of Americans must go down. This decline has been happening for many years, many have made up for this by borrowing more, home equity loans etc. Borrowing will no longer bridge the gap.
Many politicians and international corporations both Democratic and Republican preached unlimited free trade, and promised we would make up for our losses by becoming a Hi-Tech exporting country. Look at the numbers above and you decide.
While the private sector has struggled to adapt, the public sector has mostly been insulated from the realities of the real economy. With strong political power it has been decades of special deals for those that benefit from connections in Government. Whether it is entrenched bureaucracies' or International corporations with political connections. This has been all at the expense of the lower and middle class Americans.
As for the Budget Deficits. They have accumulated since 1969 to $19 Trillion . The estimated total debt is near to $100 Trillion, this is the money owed to unfunded mandates, Social Security money that was spent out of the surpluses in Social security since the 1990's. Money from other supposed safe keeping funds that has been spent, by both Democratic and Republican administrations. Anyone with knowledge of Economics know there is only hyper-inflation or default on the horizon. If the Federal Government was a pension fund or a Corporation, they would all be in jail.
While this time is probably the last hope of correcting these entrenched problems, It would need the cooperation of all the people and government, It does not look likely. We would have to change regulations and Government policies to make the USA a enticing place to do business, The kind of business that produces wealth, real tangible goods. We have become adverse to anything that produces dust, smoke or makes your hands dirty. Look at the cities, like Detroit, once the wealthiest city in America, and many others, there are no jobs of substance.
When I was a youth, I remember the textile plants from Northampton to Easton, that employed many thousands, and paid well, as well as the Steel and foundry business's that were a large part of the Pennsylvania economy. I lived in Emmaus, and within walking distance of everyone were several foundries, Rodale mfg., Lehigh Safety shoe' EMF and others. My father worked for Western Electric for 25 years, None of those business exist today. There is too much risk and too little hope of success for manufacturing in America.
If you had a National balance sheet, with income and expenses. The income side is Manufacturing, mining, and producing machines etc. to mass produce products, Farms, Auto Co., Caterpillar, etc. The expense side is everything that is part of the Government. The Government at all levels is not a creator of wealth, a necessary expense, but an expense. Service jobs, lawyers, accountants etc. are all expense side. Government attempts to redistribute wealth, wealth being created today, and even past wealth.
We have been sold a false Philosophy, and we all believed in it to some extent. There are powerful interests who want things to continue as they have. Who hope they will just get to retirement before the reckoning comes. It will be interesting to see how it all plays out.
Originally published 10/21/2015
