Savings – Not Tariffs Will Make America Great Again

While the farcical Kavanaugh confirmation hearings dominated the news cycle for the past couple of weeks, little mention was made of a disturbing economic headline – the August US trade deficit. Despite all the bluster from the Trump Administration about “winning trade wars” and “trade wars are easy,” America’s trade imbalances for August were the highest ever and its deficit with its most contentious partner – China – reached an all-time high.

Some highlights or low lights for the Trump Administration and the clueless economic nationalists were:

  • August imports of industrial supplies and materials ($49.7 billion) were the highest since December 2014 ($51.8 billion).
  • August imports of automobile vehicles, parts, and engines ($31.7 billion) were the highest on record.
  • August imports of other goods ($9.1 billion) were the highest on record.
  • August petroleum imports ($20.5 billion) were the highest since December 2014 ($23.6 billion).*

These numbers will probably mean that the Trump Administration will push for more and stiffer tariffs, although the President is set to meet with Chinese President Xi Jinping next month. Yet, if anything comes out of the meeting, it will have little impact on US trade imbalances or the economy overall.

President Trump does not have to meet with the Chinese President or, for that matter, any other head of state, for the cause of US trade problems emanate right where he currently resides – Washington, D.C. The US trade deficit is the culmination of years of ruinous Congressional and Presidential polices of high taxes, onerous regulations, and deficit spending which have gutted the nation’s manufacturing base. The US simply does not produce goods like it used to and has been kept afloat by its status as the world’s reserve currency. “King Dollar” has allowed America to consume without having to produce.

Instead of trying to strong-arm trading partners into better “deals,” the Trump Administration should be creating an environment for the re-industrialization of the American economy. The first step in such a policy must start with savings which is the key to economic growth.

Before production takes place, savings must be accumulated. The creation of goods takes place over time and savings provide the means for production – land, labor, capital – to be implemented. The more sophisticated goods require greater amounts of savings since they take longer to produce. Production, and thus, economic growth are intimately linked to savings.

Since savings are fundamental for economic growth, policies which encourage it should be advanced. Since the act of saving involves sacrifice, compensation for such behavior – “interest” – should not be tampered with or suppressed which will discourage saving.

The Federal Reserve’s policy since the financial crisis has been to artificially lower interest rates as it has tried to revive the economy by money printing and bank-credit expansion. The result has been the creation of massive asset bubbles, exploding federal deficits, and a debtridden economy.

While President Trump may prefer low interest rates, the exact opposite should be advocated. A free-market rate of interest (higher than current levels) would encourage savings, and while higher rates would pop asset bubbles, they are the necessary, albeit, painful fix to readjust the economy.

Once the bubbles are deflated, real economic growth can take place based on actual savings which will lead to capital formation and the creation of goods. America could start again to become productive and create goods to exchange with its trading partners. Such a transition, however, will not take place over night, nor will it be pleasant.

Below market interest rates has enabled the federal government to engage in its profligate spending, much of which is done through borrowing. Instead of badgering the Chinese and others, President Trump should be attacking Congress to rein in spending. Of course, he is a major culprit in this area, having signed off on the latest massive budget which included insane increases to unproductive and destructive “defense” spending of some $700 billion which he lobbied for!

Trade deficits are a symptom of a bigger problem with the economy and are an excuse to deflect from dealing with real issues. Until the current “bubble economy” is deflated and savings and investment become the foundation of American economic life, trade deficits will continue and the ensuing trade wars may then escalate into actual shooting ones.

*Tyler Durden, “US Trade Deficit With China Hits New All Time High,” Zero Hedge. 05 October 2018.

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

The Gold Standard: Protector of Individual Liberty and Economic Prosperity

goldstandard vs.    the-bill-of-rights

 

 

The idea of a constitution and/or written legislation to secure individual rights so beloved by conservatives and among many libertarians has proven to be a myth. The US Constitution and all those that have been written and ratified in its wake throughout the world have done little to protect individual liberties or keep a check on State largesse.  Instead, in the American case, the Constitution created a powerful central government which eliminated much of the sovereignty and independence that the individual states possessed under the Articles of Confederation.

While the US Constitution contains a “Bill of Rights,” the interpreter of those rights and protections thereof is the very entity which has enumerated them.  It is only natural that decisions on whether, or if such rights have been violated will be in favor of the state.  Moreover, nearly every amendment which has come in the wake of the Bill of Rights, has augmented federal power at the expense of the individual states and that of property owners.

History has shown the steady erosion of individual rights and the creation of “new rights” and entitlements (education, health care, employment, etc.) which have occurred under constitutional rule.  Instead of limitation on government power, constitutions have given cover for the vast expansion of taxation, regulation, debt, and money creation.

While taxation has always been a facet of constitutional governments, it has been the advent of central banking and with it the elimination of the gold standard which has provided the means for the state to become such an omnipresent force in everyday life.  Irredeemable fiat paper money issued by central banks has also led to the entrenchment of political parties which has allowed these elites to create and subsidize dependency groups which, in turn, repeatedly vote to keep the political class in office.

Without the ability to create money and credit, the many bureaucracies, regulations, and laws could neither be created or enforced.  This would mean that the vast and powerful security and surveillance agencies could not exist or would be far less intrusive than they currently are.  With commodity money, debt creation would have to be repaid in gold, not monetized as it is currently done through the issuance of paper currency.

Just as important, it would have been next to impossible for the two world wars to have been fought and carried to their unimaginable destructive ends.  None of the populations involved would have put up with the level of taxation necessary to wage such costly undertakings.  Few of the wars which followed (most of which have been instigated by the US) could have taken place without central banking.  Nor could the level of “defense” spending – currently at a whopping $717 billion for fiscal year 2018 – be financed if the US was on a commodity standard.*

Under a gold standard, governments would have to rely on taxation alone.  Since citizens directly feel the effects of taxation, there is a “natural level” that it can be raised.  Punitive tax rates usually lead to a backlash and potential social insurrection which strike fear in the hearts of political elites.

Recent projections by the Congressional Budget Office again demonstrate that constitutional government provides little restraint on spending.

If present trends continue, the federal government will spend more on its interest serving its debt than it spends on the military, Medicare, or children’s programs.  It is also expected that next year’s interest on the debt will be some $390 billion, up an astonishing 50 percent from 2017.** And, for the entire fiscal year of 2018, the gross national debt surged by $1.271 trillion, to a mind-boggling $21.52 trillion.***

At one time, economists used to speak of the pernicious effects that “crowding out” had on an economy.  Since the onset of the “bubble era,” talk about deficits has almost dropped out of financial discussions.  Yet, the reality remains the same: public spending and borrowing divert scarce resources away from private capital markets to unproductive wasteful government projects and endeavors.

For those who seek a reduction in State power, defense of individual rights, and economic prosperity, the re-establishment of a monetary order based on the precious metals is the most efficacious path to take.  Such a social system would not require elaborate legislation or fancy proclamations of man’s inalienable rights, but simply a return to honest money – gold!

*Amanda Macias, “Trump Gives $717 Billion Defense Bill a Green Light. Here’s What the Pentagon is Poised to Get.”  CNBC.com 14 August 2018. https://www.cnbc.com/2018/08/13/trump-signs-717-billion-defense-bill.html

**Nelson D. Schwartz, “As Debt Rises, the Government Will Soon Spend More on Interest Than on the Military.”  The New York Times. 25 September 2018 https://www.nytimes.com/2018/09/25/business/economy/us-government-debt-interest.html

***Tyler Durden, “US Gross National Debt Soars $1.27 Trillion in Fiscal 2018, Hits $21.5 Trillion.” Zero Hedge.  2 October 2018.   https://www.zerohedge.com/news/2018-10-02/us-gross-national-debt-soars-127-trillion-fiscal-2018-hits-215-trillion

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

Pope Francis: A Clear and Present Danger!

Muslims praying Rome                        Europe’s Future if Pope Francis has his way!

There is probably no greater threat to the long-term survival of the Occidental peoples of the world than the purported head of the Catholic Church, Jorge Bergoglio, a.k.a. Pope Francis.  In his latest plea for greater “acceptance” of refugees, Bergoglio held a “Mass” where several migrants and their family members attended.  The service was to commemorate the fifth anniversary of Bergoglio’s visit to the island of Lampedusa which has been a launching pad for invading migrants on their path to destroy what is left of European civilization.

During his “sermon,” the “Pope” condemned the “globalization of indifference” which many hold toward refugees and their plight.  “Before the challenge of contemporary movements of migration,” Bergoglio said, “the only reasonable response is one solidarity and mercy.”*

While Bergoglio had the gall to call for even greater societal-wrecking migration, one of his Church’s top prelates, “Cardinal” Theodore McCarrick had just been exposed as being a paedophile and was relieved of his public ministry.  To date, McCarrick has been the highest Church official to be guilty of sex crimes with more sure to follow.  Worse, McCarrick’s abominable actions had been taking place for years and were known to just about everyone within his inner circle (including Bergogio), but none had the courage to speak out or take any action against the predator for his debauchery.

Bergoglio McCarrick  Sex crime partners – Bergoglio & McCarrick

It is beyond hypocritical that Bergoglio expresses so much concern for the refugee crisis, most of which has been orchestrated by the usual suspects, yet has done virtually nothing against his own underlings, many of whom have assaulted, raped, and molested thousands of young boys and girls.  Instead of expunging these perverts from the Church, he has, in some instances, promoted them.

Whether Bergoglio knows it or not, it was the Catholic Church which preserved many of the treasures of the ancient world which would have surely been lost forever during the barbarian incursions.  Likewise, it was the Papacy itself which inspired the Christian princes to undertake the Crusades and defend Europe from the repeated attempts by the Muslims to overrun the Continent.   Now, in a direct refutation of its history, the Church is encouraging Muslim penetration of its once sacred soil.

At one time, the Catholic Church stood for the integrity of the traditional family, realizing that it was the backbone of any healthy and fertile society.  The Church condemned artificial contraception, frowned on “working mothers,” and prohibited divorce while it taught that the primary purpose of marriage was the procreation of children not the embodiment of spousal love.  Since the Second Vatican Anti-council (1962-65), however, things have changed dramatically, now the Church speaks of diversity, multiculturalism, and, under Bergoglio, coercive integration.

As the West has crazily adopted Democracy as its governing paradigm, voting and elections will be determined by demographics.  If Europeans become a minority, they will be voted out of power, have their property confiscated, and eventually be replaced.  For an ominous example of what will happen unless mass migration is halted, the horrific plight of white South African farmers is instructive.

While tighter border controls are imperative, fundamental changes need to take place to reverse Europe’s demographic nightmare as the latest statistics have confirmed where the number of deaths (5.3 million) in 2017 have overtaken the number births (5.1 million).**  Most critical in reversing the demographic decline is a revival of the family and the removal of the impediments that have been placed in its way to procreate and nurture children.  Two of the most important of these obstacles are the welfare state and public schooling, both of which have been used by the Left to replace the critical role of the family in the upbringing, education, and the shaping of the young’s moral values.

If the likes of Bergoglio get their way, there will be nothing left of Western Civilization; its institutions, arts, music, literature, languages will be swept away under a deluge of racially, culturally, and religiously distinct and often hostile peoples that cannot and should not be assimilated.  While immigration enthusiasts must be stopped, Europeans must once again realize what it takes to have sustainable and fruitful societies.  When this again becomes part of the Western ethos, the demographic imbalance will cease to be a concern.

*John Bowden, “Pope Francis Celebrates Special Mass for Migrants,” The Hill, http://thehill.com/blogs/blog-briefing-room/news/395799-pope-francis-celebrates-special-mass-for-migrants 6 July 2018.

**Gavin Freiburger, “Deaths Overtake Births in Europe, New Stats Confirm,” Lifesite, https://www.lifesitenews.com/news/deaths-overtake-births-in-europe-new-stats-confirm   12 July 2018

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

 

 

 

The United States of Terror!

US Bombing Since WWII

Two recent articles* have again demonstrated that the greatest “terrorist” entity on earth is not the bogymen – Russia, China, Iran, North Korea – so often portrayed by Western presstitudes and the American government, but the United States itself!  Ever since World War II, the US has been the most militaristic, far surpassing all of the Communist and dictatorial regimes combined.

Some startling and rarely reported facts:

  • Currently, the US drops on someone or something a deadly explosive once every12 minutes
  • W. Bush’s military dropped 70,000 bombs on five different nations during his murderous regime
  • Nobel Peace Prize recipient, Barrack Obomber, launched 100,000 bombs on seven countries
  • Funding this mass murder is a reportedly $21 trillion (!) that is unaccounted for in the Pentagon’s coffers

Despite all of the “America First” bluster at the start of the Trump Administration, little has changed but, in fact, things have escalated.  While G.W. Bush in his wicked eight years dropped over 24 bombs per day and his successor upped that total to 34 bombs per day, the current Bomber-in-Chief has, in his first year in office, averaged 121 bombs per day!  For the initial year of his Presidency, 44,000 bombs were dropped on people and lands despite the fact that the US is not officially at war with a single country!

Despite these grisly statistics, which are hardly ever reported by the mainstream press, the military industrial complex and the controlled Western media outlets have propagated the lie of “precision bombing.”  Precision bombing has been trumpeted to minimize the effect of US aggression to the public that only true belligerents are targeted and not innocents.

When US bombing is reported by the press, the actual casualties and property damage are never accurately given.  The most notorious example of this mendacity was the coverage of Bush II’s Iraq war.  “The US and its allies ruthlessly carpet-bombed Iraq,” a UN report acknowledged, “reducing it from ‘a rather highly urbanized and mechanized society’ to a ‘pre-industrial age nation.’”

Later accounts of what actually happened showed that “only seven percent of the 88,500 tons of bombs and missiles devastating Iraq were ‘precision weapons.’”

Yet, it is hypocritical US policy makers that call certain regimes “rogue” and/or “terrorist” while their own defense budget is set at $700 billion to increase next year by $16 billion.  Yes, more taxes extorted from the public for the pulverization of peoples and their homes across the globe!

Even if these statistics were of common knowledge, do not look for things to change.  The majority of the American public loves its military and government and has been conditioned to overlook and accept nearly all of its military engagements and the propaganda that attempts to justify them.

Democracy Bombing II

What must change is ideology which, at one time, was strongly anti-interventionist, but gradually became pro-war.  Through education, the press, books, and the electronic media, the intelligentsia was able to manipulate public opinion.  Americans began to glorify war under the guise of spreading democracy and “freedom” to everyone, whether they wanted it or not.

Under current ideological conditions, a reversal of thinking to a non-interventionist foreign policy is not likely.  The only way that the nation’s rampaging foreign policy will be checked is through an economic collapse or a severe dollar crisis, the latter of which would end the greenback’s status as the world’s reserve currency.

If America no longer has the means to fund its military around the world, its imperialism will quickly come to an end.  It is extremely burdensome on a domestic economy to maintain a global empire and one that is actively engaged in costly military operations.  If the nation’s economy severely contracts or the dollar can no longer be printed with impunity, the bombing of other peoples and political involvement in overseas affairs would have to cease, or be drastically curtailed.  A historical example of this is Great Britain after WWII.

As it stands now, only financial calamity will bring down the world’s foremost terrorist state.  If such a scenario comes about, the US may become the recipient of the destruction, loss of life, and mayhem it has unleashed upon the world.

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

*Tyler Durden, “America’s Military Drops a Bomb Every 12 Minutes, and No One is Talking About it.”  Zero Hedge,  6 June 2018,    *https://antoniusaquinas.comhttps://www.zerohedge.com/news/2018-06-22/trumps-military-drops-bomb-every-12-minutes-and-no-one-talking-about-it

Tyler Durden, Debunking the Persistent Myth of U.S. Precision Bombing,” Zero Hedge. 23 June 2018, https://www.zerohedge.com/news/2018-06-23/debunking-persistent-myth-us-precision-bombing

 

The Fed’s “Inflation Target” is Impoverishing American Workers

Powell   Fed Chair Jerome Powell apparently doesn’t see the pernicious effects of inflation

At one time, the Federal Reserve’s sole mandate was to maintain stable prices and to “fight inflation.”  To the Fed, the financial press, and most everyone else “inflation” means rising prices instead of its original and true definition as an increase in the money supply.  Rising prices are a consequence – a very painful consequence – of money printing.

Naturally, the Fed and all other central bankers prefer the definition of inflation as a rise in prices which insidiously hides the fact that they, being the issuers of currency, are the real culprit for increased prices.

Be that as it may, the common understanding of inflation as rising prices has always been seen as pernicious and destructive to an economy and living standards.  In the perverted world of modern economics, however, the idea of inflation as an intrinsic evil has been turned on its head and monetary authorities the world over now have “inflation targets” which they hope to attain.

America’s central bank is right in line with this lunacy, as it has been reported that at the Fed’s “May minutes” it wants “a temporary period of inflation modestly above 2 percent [which] would be consistent with the Committee’s symmetric inflation objective.”* Translated into understandable verbiage, the Fed wants everyone to pay at least 2% higher prices for the goods they buy.

Yes, by some crazed thinking US monetary officials believe that consumers paying higher prices is somehow good for economic activity and standards of living!  Of course, anyone with a modicum of sense can see that this is absurd and that those who espouse such policy should be laughed at and summarily locked up in an asylum!  Yet, this is now standard policy, not just with the Fed, but with the ECU and other central banks.

The baneful consequence of this economic quackery is being felt by American workers as admitted by the Labor Department.  Instead of spurring expansion, inflation is eating into and depressing wages:

For workers in ‘production and

nonsupervisory” positions, the value

of the average paycheck has actually

declined in the past year.  For those

workers, average ‘real wages’ – a

measure of pay that takes inflation

into account fell – from $22.62 in

May 2017 to $22.59 in May of 2018.*

While the decline in nominal wages is not significant, the manner in which the government now calculates inflation has been skewed to understate its impact.  Under the previous calculation, the current US inflation rate is probably closer to 5%.

Wage stagnation is not new.  Average real wages peaked more than 40 years ago and have fallen in real terms ever since.  Not surprisingly, the drop in wages in real terms began soon after the US went off the last vestiges of the gold standard in 1971.

As sound theory has long ago demonstrated, the idea of economic growth through money printing is absurd.  Increases in living standards and real wages can only come about through savings, investment, and capital accumulation.  Workers who have superior tools and equipment are obviously more productive than those that do not. Yet, capital goods have to be produced and production takes place over time.  Savings allow for the production process.

The level of wages are also closely linked to savings.  The greater savings an economy has enables entrepreneurs to bid for workers and increase wage rates.  This is how wages rise – competition for labor among businessmen pushes up wage rates.  The more savings entrepreneurs have, the higher they can bid for employees.

How and why wage rates rise and how employment is created had been understood by economists of yesteryear.  Today, however, the profession is dominated by “inflationists” and monetary cranks who believe that nearly every economic problem can be solved by the printing press.  Anyone who holds such ideas cannot be taken seriously.

While the Federal Reserve may think an inflation target will create prosperity, the reality for real wages is quite the opposite.  The laws of economic science have not been repealed.  An inflation target will lead to the impoverishment of not just workers, but lower living standards for all.

inflation target.jpg

*Jeff Stein and Andrew van Dam, “For the Biggest Group of American Workers, Wages Aren’t Just Flat.  They’re Falling.”  The Washington Post.  16 June 2018 A10.

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com