Overturning the global trading table. Just the beginning?

 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Below is an article I wrote in 2015, "Where has all the money gone" the numbers are out of date, but if you know anything about the current deficits and debt, you will see what has happened in the last 10 years.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.                   

 

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