Tag Archives: War

The Geopolitical Consequences of a Coming Recession

Irian Military

With the recent ominous inversion of the 2-10 year yield curve and its near infallible predictive recessionary power, the consequences for the economy are plain to see, however, what has not been spoken of by pundits will be the effect of a recession on US foreign policy.  If a recession comes about prior to November 2020, or if economic indicators such as GDP plummet even further, the chances of a Trump re-election is extremely problematic even if the Democrats nominate a socialist nut case such as Bernie Sanders or Pocahontas.

Elizabeth Warren has been the most vocal about coming economic troubles:

Warning lights are flashing.  Whether it is

this year or next year, odds of another

economic downturn are high – and growing. . . .

 

When I look at the economy today, I see

a lot to worry about again.  I see a

manufacturing sector in recession.  I see

a precarious economy built on debt – both

household debt and corporate debt and that

is vulnerable to shocks.  And I see a number

of serious shocks on the horizon that could

cause our economy’s shaky foundation to crumble.*

Warren

A “doom and gloomer” Demo?

If the economy cannot be reversed, despite the likelihood of rate cuts in September and a possible resumption of “QE” by the end of the year, President Trump will probably look for some “victory” or success to divert public attention away from deteriorating economic conditions.  The most likely targets will be renewal of hostilities toward Iran and/or an escalation of pressure on Venezuelan President Nicolas Maduro to resign.

Of course, the US has been conducting economic warfare on Iran ever since Trump stupidly pulled out of the nuclear agreement and began applying even more crippling sanctions on Iran.  In June, armed hostilities were about to take place over the Iranians downing of a US drone over its air space.  Reportedly, at the last minute, Trump called off retaliation, enraging, no doubt, the bloodthirsty neocons itching for an excuse to unleash more death and destruction.

Another factor, which has been little spoken of, but may contribute to foreign intervention is that Trump has alienated a number of his political base especially the spokesmen among the Alt Right.  While he still commands high poll numbers among Republicans and still attracts impressive rallies of “deplorables,” a number of his prominent backers, who were so crucial for his success in 2016, are, to say the least, disappointed over his inability to stem the tide of illegal immigration.  Moreover, these voices feel rightly betrayed since he has done nothing to halt the Internet tech giants from de-platforming many of their social media activity.

Another group which may be quickly added to disillusioned Trump supporters are gun owners and free-speech advocates if the President goes along with the proposed draconian “red flag” legislation. If these totalitarian measures are enacted, 2nd Amendment defenders will probably not vote for Trump’s opponent in 2020, but instead, may stay home in protest.

In electoral politics, voter enthusiasm can sometimes offset money and media control which was certainly the case for Trump both in the Republican primaries and the general election.  To win again, he will need to mobilize similar sentiment.

The politically savvy neocons, which the President has insanely surrounded himself with, are certainly aware of this dynamic which will give them considerable leverage to push forward their agenda.  A desperate Trump will surely be more malleable if a second term is in jeopardy.  Just look at the recent capitulation when there is, as of yet, no recession, yet, he called off the additional Chinese tariffs after the Dow plunged 800 points.

Even if a recession does not rear its ugly head, an armed conflict with Iran is a distinct possibility.  The more hard line neocons understand that they would be out of power under a Democratic president who may revert to compromise and negotiations to re-engineer a nuclear deal with Iran.  The push for war will intensify if Trump’s poll numbers drop as the election gets nearer due to a moribund economy.

Of course, the US is infamous for provocations and with the huge military build up in the Persian Gulf, any of the many trip wires may spring, leading to a local war which might turn into a general conflagration.

While it is not a certainty that a recession will lead to regime change in Washington, Trump has mistakenly tied his political fortunes to the well being of the economy especially the stock market.  He had the chance and the public support at the beginning of his term to level with the country and explain the monumental financial and economic problems which exist and that he had pointed out during the campaign.  Unfortunately, for both his and the nation’s future, he chose business as usual putting his own political goals (re-election) over the good of the country.

The cost of that choice is now coming to bear which may end in another war that will certainly seal the President’s fate and likely that of America.

*Sanjana Karanth, “Elizabeth Warren Predicts Another Economic Downturn.”  Politics.  22 July 2019.

Antonius Aquinas@antoniusaquinas

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Debt, Death, and the US Empire

Deep State Operative John Bolton

In a talk which garnered little attention, one of the Deep State’s prime operatives, National Security Advisor John Bolton, cautioned of the enormous and escalating US debt.  Speaking before the Alexander Hamilton Society, Bolton warned that current US debt levels and public obligations posed an “economic threat” to the nation’s security:

It is a fact that when your national debt gets to the level ours is, that it constitutes an economic threat to the society.  And that kind of threat ultimately has a national security consequence for it.*

What was most surprising about Bolton’s talk was that there has been little reaction to it from the financial press, the markets themselves, or political commentators. While the equity markets have been in the midst of a sell off, it has not been due (as of yet) to US deficits, currently in excess of $1trillion annually.  Instead, the slide has been the result of fears over increase in interest rates and the continued trade tensions with China.

While Bolton’s warning about the debt is self-serving, it is accurate in the sense that the US Empire which, in part, he directs is ultimately dependent on the strength of the economy.  “National security” is not threatened by a debt crisis which would mean a compromised dollar, but such an event would limit what the US could do globally.  Real national security is defense of the homeland and border control – non intervention abroad. 

War mongers like Bolton are fearful that a debt crisis would necessitate a decline in US power overseas.  America is fast approaching what took place with the British Empire after its insane involvement in the two World Wars and its own creation of a domestic welfare state which exhausted the nation and led to the displacement of the British pound as the “world’s reserve currency.” 

The US-led wars in the Middle East have been estimated by a recent Brown University study to have cost in the neighborhood of $4 trillion.** Despite this squandering of national treasure and candidate Trump calling the Iraq War a “disaster,” as president, Trump increased “defense” spending for FY 2019 to $716 billion.***

US Military Bases Around the World

Profligate US spending and debt creation has, no doubt, been noticed by those outside of the Empire.  It is probably why Russian President Vladimir Putin has been so hesitant to take any serious action against the numerous provocations that the US has taken around the globe and against Russian interests directly.  The wily Putin probably figures that an implosion of US financial markets would eventually limit America’s ability to foment mayhem and havoc internationally. 

The Trump Administration’s latest bellicose act, engineered by – you guessed it – John Bolton, has been the withdrawal from the intermediate-range nuclear forces treaty (INF). The treaty, signed in 1987, was a landmark achievement of the Reagan Administration which de-escalated tensions between the two super powers and kept a lid on a costly arms buildup that neither can afford. 

The next financial downturn will certainly dwarf the 2008 crisis, the latter of which nearly brought down the entire financial system.  The next one will be far worse and will last considerably longer since nothing has been resolved from the first crisis.  The only thing that has occurred has been the creation of more debt, not only in the US, but by all Western nation states.

Under current ideological conditions, a change in US foreign policy to non-intervention is unlikely. Public opinion is decidedly pro-military after years of indoctrination and propaganda by the press, government, academia, and the media.  It will take a fall in America’s economic power, specifically the loss of the dollar as the world’s reserve currency, which will ultimately bring down the empire that has neocons like John Bolton concerned.

Unfortunately, until that time, the US will continue its rampaging ways.  The day of reckoning, however, appears to be fast approaching and instead of a defeat on the field of battle, the US Empire will collapse under a mountain of debt.  It would be more than fitting that such a scenario should play itself out which would thus begin the very necessary retribution process that may, at least in a small sense, compensate those who have suffered and died from America’s murderous foreign policy.

*Tyler Durden, “John Bolton Warns National Debt Is An ‘Economic Threat’ To The US Security.”  Zero Hedge.  01 November 2018.    

**Jason Ditz, “Study: US Wars Cost $4 Trillion, Killed 259,000.”  Antiwar.  29 June 2019.

Military Benefits, “2019 Defense Budget Signed byTrump.”  Military Benefits. September, 2018. 

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

Mike Pompeo and John Bolton: Trump’s Tag Team of Death and Destruction!

Trump Pompeo Bolton Trump’s Men!

With the welcome departure of war mongering UN Ambassador Nikki Haley, the Trump Administration’s neocon tag team of death and destruction – Secretary of State, Mike Pompeo and National Security Advisor (NSA), John Bolton – have enthusiastically taken up where the repellent Haley has left off.  It is highly doubtful that the former Ambassador will meekly return from under the rock in which she crawled, but will reappear possibly as a primary challenger to her former boss in 2020, and, most certainly, as a Presidential contender in 2024.

Last week, Messrs Pompeo and Bolton were dutifully carrying forth Haley’s promises of mayhem to anyone opposed to US hegemony even if those “enemies” have never taken hostile action against the US mainland.  Of course, threats and attacks against nations which have done nothing to America have never much mattered to the foreign policy establishment!

Haley Pompeo Bolton Neocon Triumvirate

In one of the most provocative comments ever made by a US diplomat, maniacal Mike threatened Iran with mass starvation of its population (via US sanctions) if it does not submit to Uncle Sam’s outrageous and humiliating demands.  In a BBC interview, the Secretary of State warned that:

[Iran’s] leadership has to make a decision that they want their people to eat.*

Following up on his genocidal warning, the Secretary of State (with a supposedly straight face) said that Iran was a “destabilizing influence” in the Mideast and was a state sponsor of terrorism.

Incredibly, the sociopathic Pompeo actually believes that Iran has been the greatest disrupter of peace in the Middle East when, in fact, it has been the nation in which he represents (along with Israel) that has been the real culprit of state sponsored terrorism with its destruction of Iraq, the overthrow of Muammar Gaddafi in Libya, and the attempted regime change in Syria to name just a few of America’s nefarious activities in the region.

A Brown University study shows the absurdity of Pompeo’s claims.  The study estimates that between 480,000 to 507,000 people were killed in America’s post-9/11 wars in Iraq, Afghanistan, and Pakistan.  For the US, some 60,000 troops have lost their lives or been wounded.***

US Destruction of Iraq US Destruction of Iraq

After threatening genocide of the Iranian people, Pompeo told an outright lie as he accused Iran for the catastrophe that is taking place in Yemen:

[The] Iranians are responsible for the starvation of Yemen civilians.****

No one outside of the Western controlled press or among the clueless American populace believes such a claim and knows that the starvation which is taking place in Yemen has been caused by the US’s ally, Saudi Arabia, which America has armed for decades.  It is not the Iranians, but the US which is guilty as an accomplice for the genocide taking place in that misbegotten land.

Yemen Drone Stike Yemen Drone Strike

Not to be outdone by his fellow merchant of death, John Bolton focused his most recent bellicose talk on Latin American regimes that have not fallen in line with the US Empire’s wishes.  He labeled three countries as “the troika of tyranny in this hemisphere – Cuba, Venezuela, Nicaragua.”** Big Bad John boasted that the three had “finally met [their] match” in the Trump Administration.

Wow, John, you are so tough, but saying that these three hellholes are a “match” for the US is a bit much when it is unlikely that the three combined could even defeat Rhode Island’s National Guard in a pitched battle!

While Bolton ruled out (for now) military intervention, he did say that sanctions would soon be placed on the “troika of tyranny.”  Bolton proclaimed that “Under this administration, we will no longer appease dictators and despots near our shores.”

Yes, by all means, a possible invasion by a Cuban/Venezuelan/Nicaraguan juggernaut rolling up to the shores of south Florida should be a concern for all Americans.  No telling how much damage inflicted and territory conquered the “Latin American Axis” could accomplish!  It is good that perceptive and ever vigilant foreign policy experts like John Bolton keep a watchful eye out for such threats!

These are dangerous and evil men who think nothing of inflicting pain and suffering upon innocent people who have little control over what their nation’s leadership does, just as Americans have little say in the policies and actions of their government.

A global empire attracts personality types like Haley, Pompeo and Bolton.  It needs such sociopaths to provoke others and stir up troubles where there is none to justify its existence.  A more peaceful world will only come about with the demise of the American Empire, not changing the personalities who guide it.

Sadly, for Americans who have to fund it and the peoples of the world who are in its path, until there is an economic collapse and/or a dollar crisis, the American Empire will continue to threaten and, in some instances, carry out those threats led by the likes of Michael Pompeo and John Bolton.

*Tyler Durden, “Iran’s Leadership Must Decide ‘If They Want Their People to Eat’ – Pompeo.”  Zero Hedge. 9 November 2018.

**Alex Gorka, “US Declares War on ‘Troika of Tyranny’ Pushing Them Closer to Russia.”  Strategic Culture Foundation.  7 November 2018.

*** Jason Ditz, “US Wars in Iraq, Afghanistan, and Pakistan Killed 500,000 People.” Antiwar.com  8 November 2018.

****Durden, “Iran’s Leadership Must Decide.”

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

Is Political Decentralization the Only Hope for Western Civilization?

US Secssion Map II

A couple of recent articles have once more made the case, at least implicitly, for political decentralization as the only viable path which will begin to solve the seemingly insurmountable political, economic, and social crises which the Western world now faces.

In the last few months, over 3,000 millionaires have fled the hopelessly corrupt and bankrupt state of Illinois.  When asked, 47% of Illinoisans would like to leave the state which, over the last decade, has seen over a half million of its residents flee.  Naturally, this exodus has exacerbated the Land of Lincoln’s financial straits to catastrophic levels.*

A report published by the American Legislative Exchange Council predicted that the tax flight which is occurring in Illinois will similarly take place in the coming years in high-tax blue states such as California and New York.  The 2017 Trump tax reform will accelerate this process since under the new legislation the amount of state income tax that can be deducted on federal tax returns has been capped at $10,000 per family.  The authors of the report wrote: “. . .  high [income] earners in places with hefty income taxes – not just California and New York, but also Minnesota and New Jersey – will bear more of the true cost of their state government.”**

The not too subtle consequences of the new tax code will mean an even greater exodus of taxpayers out of blue states which will shrink state revenues even further and create job losses across the board.

While those who want to escape the crushing burden of individual state taxation and regulation, if they have the means and desire to do so, can move to more favorable climes, no such option exists (except the drastic step of expatriation) to escape federal tyranny.  Yet, the same benefits which occur from a multiple of individual states and jurisdictions would be present if the various nation states which dominate the globe were broken up into smaller political units.

While the authors of the cited articles see the advantage that multiple states have where one can “vote with his feet,” the same logic can be applied to central governments across the planet who are, on the whole, more tyrannical than local jurisdictions.  More political bodies would not only provide sanctuary for the oppressed, but it would tend to keep a check on tyranny among existing states.

Political decentralization is a far greater deterrent to government largesse than constitutions, elections, or finding the “right person” to “fix things.”  The events of the last few weeks in the realm of US foreign policy once again demonstrate that trusting candidates to fulfill campaign promises is naive, to say the least.

To get to this goal, all and every secession movement, even of a Leftist bent, should be supported, whether they are nations that want to “exit” from larger political units, such as Great Britain from the EU, or within nation states themselves such as California in the US.  All should be encouraged.

Of course, the case for decentralization has to be made on ideological grounds.  The Left, most likely, will not be a natural ally for secession, nor are conservatives, most of whom are under the spell of “nationalism” and “restoring the Republic.”  Yet, the Right offers the best opportunity to build a secession movement and needs to be convinced that the preservation of the nation state will only lead to the complete triumph of liberalism.

Secession would also necessitate the breakup of the nation-state’s monopoly of money and banking.  Numerous political divisions would be more likely to adopt a single monetary unit – gold – which would guarantee financial stability rather than the debt ridden paper-money system now in place.

Next to the outbreak of World War III, immigration is the greatest threat to what remains of Western Civilization.  Smaller political units would be far better to control their borders than reliance on a central authority which can be easily manipulated from outside agents.

The solution to the myriad of social and economic problems that confront Western societies will not come about from a “reform” of the nation state, but through its dissolution.  Only through a world made up of hundreds, if not thousands, of Lichtensteins, Hong Kongs, Monacos, confederacies, free cities, etc., will these crises be hoped to be resolved.

*Tyler Durden, “This $5 Trillion Time Bomb Will Devastate Americans.” Zero Hedge.  9 August 2017.  https://www.zerohedge.com/news/2017-08-09/5-trillion-time-bomb-will-devastate-americans

**Robert Frank.  “800,000 People Are About to Flee New York and California Because of Taxes, Say Economists.”  CNBC.com. 26 April 2018.    https://www.cnbc.com/2018/04/26/800000-people-are-about-to-flee-new-york-california-because-of-taxes.html?__source=sharebar|twitter&par=sharebar

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

Heaven Forbid Peace Should Break Out Between the US and North Korea!

US bombing Korea

Hamhung, North Korea, June 30, 1950

As long as the US Empire can be funded and maintained on the backs of its taxpaying public, the chance of de-escalation of tensions not only on the Korean peninsula, but throughout the world are practically nil.  And, as long as the nation’s current interventionist ideology holds sway, it will only be through a financial meltdown that the US’s role as global policeman will come to a much-needed end.

The most recent example of the world’s biggest bully escalating matters is its on-again, off-again badgering of North Korea.  In contrast to Western/CIA media reports, the November 28 launch of what appears to be an intercontinental ballistic missile, the Hwasong-15, was not unprovoked.  Instead, the North Korean test firing was in response to the unexpected announcement of further US/South Korean military drills to take place starting on December 4.  The exercises are, in part, to show off the latest mass murdering “product” of America’s military industrial complex, the USF-22 Raptor stealth fighter jet.

Before the latest launch, the Kim Jong Un regime had not fired a missile for two months and was in discussions with other intermediaries about how tensions could be lessened on the Korean peninsula. For the bellicose US, however, not even an uneasy “truce” can be tolerated.  The next American scheduled drill was not to take place until the spring of 2018, yet, while negotiations were taking place, the US abruptly, and to the outrage of everyone involved, renewed exercises.  Russian Foreign Minister, Sergei Lavrov, explains:

We have been working with Pyongyang.  Then,

all of a sudden two weeks after the United States

had sent us the signal [about readiness to dialogue],

they announced unscheduled drills in December.

there is an impression that they were deliberately

provoking [North Korean leader] Kim Jong Un to

make him break the pause and gave in to their

provocations.*

This, of course, is not the first time that the US has acted with duplicity in foreign matters.  Its barbaric dealing with two Middle Eastern strongmen (Saddam Hussein, Muammar Gaddafi) are grisly examples of what happens to those who run afoul of the US Empire, especially those who do not possesses a nuclear deterrent.

North Korea, too, has witnessed the wanton destructive capabilities of the American military during the so called “police action” of the early 1950s:

The US Air Force estimated that North Korea’s

destruction was proportionally greater than that

of Japan’s in the Second World War. . . .   American

planes dropped 635,000 tons of bombs on Korea . . .

including 32,557 tons of napalm, compared to

503,000 tons of bombs dropped in the entire Pacific

theatre of WWII.**

The loss of life was, to say the least, catastrophic as 10% of the population, some 3 million people, perished due mostly to American bombing while the destruction of property was equally brutal.  “By the end of the war,” North Korean sources assert, “only two modern buildings remained standing in Pyongyang.”***

Is it any wonder that the North Korean leadership gets a little antsy when the US scramble its jets.  It does not want a repetition of the holocaust inflicted on it by the merciless American Air Force.

Of course, these inconvenient facts are rarely if ever spoken about in the Western media, academia, and certainly not by war-mongering politicos like U.N. Ambassador Nikki Haley.  They are simply ignorant of history or pretend not to know.

The US Empire only accepts peace if it favors its interests.  For the Korean Peninsula that means that Kim Jong Un must disband his nuclear program.  Such a move, however, would mean a premature death to Un and the eventual carpet bombing of his country.  The North Korean strongman will do no such thing.

The Trump Administration may huff and puff all it wants and enact greater sanctions on the North, but unless it wants to risk a nuclear confrontation that may spread into a general world war, it has little options.

Instead of another round of destabilizing military maneuvers, maybe President Trump and his foreign policy team should try to engage in genuine negotiations to bring about an equitable solution to the matter.

Why not “give peace a chance?”

*”Russian FM Reveals First Victims in Case of War on Korean Peninsula.”  Sputnik News.  2 December 2017.  https://sputniknews.com/asia/201712021059640205-russia-provocations-korea-war/

**Charles K. Armstrong, “The Destruction and Reconstruction of North Korea, 1950-1960.”  The Asian-Pacific Journalhttp://apjjf.org/-Charles-K.-Armstrong/3460/article.html

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

What President Trump and the West Can Learn from China

Trump Trip China

Instead of a demonstration of its overwhelming military might intended to intimidate tiny North Korea and pressure China to lean on its defiant communist neighbor, President Trump and the West should try to learn a few things from China.

The President’s trip to the Far East came on the heels of the completion of China’s 19th National Congress where the current president, Xi Jinping, has cunningly positioned himself as China’s unchallenged leader.  In an address at the opening of the Congress, Xi cautioned that the country faced “challenges” that are “extremely grim” yet, despite these, the nation’s future is “extremely bright.”*

While Western politicos and pundits bemoan the lack of political pluralism that exists within China and President Trump complained about bad trade “deals,” they miss an important factor as to why China has transformed itself from a socialist basket case some three decades ago into an economic powerhouse which now boasts over a third of the world’s billionaires!

China’s economic ascendancy can be attributed not only to the implementation of market reforms in the 1990s, but also its lack of “political competition.”  As a one-party state, resources, time, energy, and capital are not allowed to be channeled into wasteful political processes, but instead are used and “invested” in wealth-creation activities – construction, factories, plants, equipment, research, technology – all of which leads to more and cheaper consumer goods.

The US and the West spend too much on elections, campaigns, polling, political consultation, etc., which diverts scarce resources away from the private wealth sectors of society.  For example, in her last failed presidential campaign run, the Wicked Witch of Chappaqua alone spent over a half of billion dollars.

Under Western democratic pluralism, public debt and state spending have increased to unsustainable levels.  In the US alone – history’s greatest debtor nation – the national debt is in excess of $20 trillion, while its total debt officially is $68 billion with a federal deficit (GAAP) running yearly at $5 ½ trillion.

Such staggering numbers are the result, in part, from political parties seeking public office and once elected exploiting their position to enrich themselves, their constituents, and create dependent classes among the ever shrinking productive segments of society.

China’s foreign policy – an extension of politics – has also been conducive for wealth creation.  Instead of wasteful spending on military hardware, the maintenance of a far-flung global empire, and involvement in incessant wars, China has a rather meek military compared to its national income and has conducted a pretty much non-interventionist foreign policy – witness its diplomacy with North Korea.

The US is almost the polar opposite.  It spends more on “defense” than the next eight countries combined.** Instead of the production of useful consumer goods, billions are siphoned off into the military/security industrial complex.  Not only does this impoverish Americans at home, but it leads to never ending involvement in wars, conflicts, and disputes, most of which are created or exacerbated by US spy organizations.

Def spending

After meeting with Chinese leadership, President Trump tweeted:

I don’t blame China, I blame the incompetence

of past Admins for allowing China to take advantage

of the U.S. on trade leading up to a point where the

U.S. is losing $100’s of billions.  How can you blame

China for taking advantage of people that had no clue?

I would’ve done the same!

Making better trade deals will not revitalize the moribund US economy.  Instead, there should be less politicization of society and adoption of market reforms as China has done.  The most important plank of such a policy would be the encouragement of real savings – not the creation of bank credit – through the normalization of interest rates.  This would begin the arduous process of capital accumulation, the basis upon which any economy can be built.

Another sign of the divergence between the two is China’s continued push to make the yuan the world’s reserve currency with apparently some sort of gold backing to it.  Contrarily, the Trump Administration has continued the same disastrous policies of its predecessors and has chosen a Janet Yellen clone to head the Federal Reserve with a continuation, no doubt, of the suppression of interest rates.  On the other hand, China continues to import massive quantities of gold and encourages its citizens to own the yellow metal while the West is in the midst of a crypto currency mania, another fraudulent monetary scheme.

China’s economic miracle, while certainly impressive, would not look as astounding if Western economies had not been in a state of stagnation and decline over the past half century.  It was not political liberalization that led to China’s phenomenal growth, but economic freedom which used to be a staple of Western life.  The lesson that should be taken from President Trump’s trip is less politics domestically and more free markets.

*Chris Buckley, “Xi Jinping Opens China’s Party Congress, His Hold Tighter Than Ever.”  The New York Times, 17 October 2017.   https://www.nytimes.com/2017/10/17/world/asia/xi-jinping-communist-party-china.html

**Peter G. Peterson Foundation.  “US Defense Spending Compared to Other Countries.”  1 June 2017.  https://www.pgpf.org/chart-archive/0053_defense-comparison

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com