Tag Archives: z

Memo to The Donald: Cut Tariffs NOT Rates

trump tariff

So far, President Trump’s economic response to a potential coronavirus outbreak and a further stock market sell off has been expected – calls for more interest rate cuts and an additional round of monetary stimulus.  For the stock market, economy, and the virus itself, neither measure will have their desired effect and, in fact, may exacerbate things.

Further rate cuts and more money printing will not alleviate the situation since it has been the Federal Reserve’s recent “repo operations” which has pushed the market to its unsustainable highs.  For President Trump’s re-election hopes, the current “correction” better be short lived since he has repeatedly boasted about the stock market and has tied its success with the supposed health of the economy.  He will pay a political price if the market continues to tank and brings the economy down with it.

While President Trump and economic nationalists have bashed China for its trade practices, they are now going to see first hand how dependent the US and the West are on Chinese exports, as supply chains are disrupted over the coronavirus.

A Bloomberg article describes China’s weakest factory activity ever recorded:

The manufacturing purchasing managers’ index plunged to 35.7 in

February form 50 the previous month, according to data received by the

National bureau Statistics on Saturday, much lower than the median

estimate of economists.  Both were well below 50, which denotes

contraction.*

The expected reduction of Chinese goods will mean higher US domestic prices, however, the increase in prices can be offset somewhat not by rate cuts, but by tariff reductions, or, better still, elimination of duties on imports.  Increasing the money supply or cutting interest rates, which is what Trump, the market, and 95% of economists favor, will only mean higher prices for dwindling imports as greater amounts of money will chase fewer goods.

In the President’s comments on the coronavirus and the stock market plunge, he has repeatedly cited other nations’ (Japan, Germany) – lower interest rates as a policy that the Fed should pursue.  Apparently, the President is not aware that recent data out of Japan has shown that the economy shrank at an annualized rate of 6.3% for the fourth quarter of 2019 while the German economy only grew at 0.6% last year.**  Low rates have not helped either economy or anywhere else where they have been foolishly tried.

What President Trump, world policy makers, and central bankers do not understand, whether deliberately or from willful ignorance, is that the artificial suppression of interest rates and money printing does not lead to economic growth. Instead, prosperity can only come about by the arduous process of saving (abstention from consumption), which provides the means for capital formation, which leads to production.  Employment, wage growth, and income are also ultimately tied to savings.  For the creation of wealth, there is no way around this elementary economic principle – one that few profession economists comprehend.

For saving and investment to have their most efficacious impact and for individuals to engage in such sacrificial behavior, a sound monetary order must be in place.  Unfortunately, ever since the US went off the gold standard internationally in 1971, its monetary system has grown increasingly unstable.

If the Trump Administration would eliminate, or at least reduce significantly, tariffs, it would more than likely induce China to do the same.  The benefits of lower import prices for the millions of out of work Chinese due to the coronavirus shut downs would be a tremendous help and would also boost America’s export industries.  Such action would show to those who elected him that Donald Trump was not a typical politician, but one who thought outside the box.

While it did not cause the Great Depression, the Smoot-Hawley Tariff of 1930 contributed to its severity.  If the recent sell-off is indeed the beginning of the long anticipated bust, following a supposed decade long expansion, then policy makers should do all in their power to alleviate the coming suffering.  The reduction of tariffs not only on Chinese goods, but those the world over would be a step in the right direction.

Let us hope that someone will convince Donald Trump that tariff reduction and not rate cuts will help Americans better deal with the troublesome and potentially economic and socially devastating coronavirus.

*China Posts Weakest Factory Activity on Record,” Bloomberg News, 29 February 2020.  https://www.bloomberg.com/news/articles/2020-02-29/china-feb-manufacturing-pmi-at-35-7-est-45-0

**Megumi Fujikawa, “Japan’s Economy Shrinks Faster Than Expected.”  Market Watch.  16 February 2020.  https://www.marketwatch.com/story/japans-economy-shrinks-faster-than-expected-2020-02-16;  “German Economy Stagnates as Eurozone Growth Hits Seven-Year-Low,”  The Guardian,  14 February 2020, https://www.theguardian.com/business/live/2020/feb/14/german-economy-stagnates-growth-eurozone-gdp-business-live

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

Pope Francis Calls Marxist Economic Summit

index

Pope Francis and his mentor

As if there needs to be further evidence that the current occupant of St. Peter’s Chair in Rome is a Marxist, the announcement of an upcoming conference at Assisi entitled the “Economy of Francesco” should convince any skeptic otherwise.

In his invitation letter to “young economists and entrepreneurs worldwide,” Bergoglio sets the agenda for the Leftist confab quite clearly which is virulently anti-market, a call for massive redistribution of wealth, and a reordering of the current economic systems of the world with a healthy dose of climate change nonesense:

. . . a different kind of economy: one that brings life not death, one that is inclusive and not exclusive, humane and not dehumanizing, one that cares for the environment and does not despoil it.*

While Bergoglio’s Marxist credentials have been firmly established, his blashemous  actions and words has a growing number outside of “sedevacantist circles” calling him a heretic.  The legitimacy of “Pope Francis,” however, is more fundamental than him being a manifest heretic, but his standing as a legitimate pope is invalid since his ordination as a priest and his consecration as a bishop came under the new rites of Holy Orders instituted in the wake of the Second Vatican anti-Council (1962-1965).

The mastermind behind Bergoglio’s summit is professor Luigino Bruni and from his comments he sounds more radical than the Argentine Apostate, if that is possible.  Professor Bruni wants to use taxation as a weapon to “redistribute income and wealth from the rich to the poor.”*

Bruni, a professor of political economy at the Italian University, LUMSA, and the author of a number of books, basis his advocacy for redistribution of wealth on the Scriptures:

[T]he Bible has many words to offer our economic life and ideas [with] the transformation of wealth into well-being.**

It appears that the good professor’s Bible is missing the Seventh Commandment of the Decalogue which solemnly states: THOU SHALL NOT STEAL!  In no legitimate commentary ever written on this Commandment is there an exception made for the confiscation of wealth from the well-to-do to be given to the poor.  Probably just an oversight on the Professor’s part.

Because they are blinded by socialistic ideology, Bruni, Bergoglio, and the likes of Bernie Sanders cannot see that the growing wealth inequality which they complain about is not the result of “capitalism,” but is the outcome of the monetary policy of the world’s central banks.  This, along with tax policies which hamper innovation and shield the entrenched financial class from competition, is why financial elites are able to maintain and increase their power.

Central bank policy of suppressing interest rates and of money printing allow banks and financial institutions to receive “free money” which they can invest and speculate with at zero cost.  The boom (actually a bubble) in asset prices on Wall Street is a demonstration of how wealth disparity takes place.

If Bergoglio really meant to reform the present system, he would call for the abolition of central banking and a return to “hard money.”  Under such an order, banks and financial institutions become wealthy on their ability to make prudent investment decisions subjected to profit and loss.  A free market in banking is the antithesis of the current system of credit expansion and money printing.

Not only have Bergoglio and his cohorts abandoned the Faith, but they have also overturned the Church’s long-held condemnation of socialism and have ignored many of its own outstanding thinkers on financial matters.  From the Scholastics to the School of Salamanca through the Jesuits and the great Cardinal Cajetan, who finally taught the proper doctrine on interest rates, the Church has produced scores of eminent economic thinkers in its long history.

index 1

School of Salamanca

Ever since socialism reared its ugly head as a social system of thought, the Church has warned of its dangers even its more milder forms as Pope Pius XII wrote, “No Catholic could subscribe even to moderate socialism.”  Since Vatican II and especially under Bergoglio’s regime, however, Leftist ideas of all sorts have been warmly embraced.

At the heart of socialism, be it Marxism or its equally pernicious variants, lies envy which became a part of the human condition with the fall of man.  While once condemned, envy has been turned into a virtue by the likes of Bergoglio.

While such ideas may sound appealing to human sensibilities, they will not pass the Divine Judge who knows the thoughts and souls of all His creatures even those of supposed popes.

*Vatican website: http://www.vatican.va/content/francesco/en/letters/2019/documents/papa-francesco_20190501_giovani-imprenditori.html

**Jules Gomes, “Pope Francis Convenes ‘Anti-Capitalism’ Summit,”  Church Militant.com, 15 January 2020.

Antonius Aquinas@antoniusaquinas

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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

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“Strong Dollar,” “Weak Dollar,” What About a Gold-Backed Dollar?

gold backed dollar

The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronoucements and reversals which will take place in the coming months/years as the world’s reserve currency continues to be compromised.  So far, the Greenback has had its worst start since 1987, the year of a major stock market reset.

The brief firestorm was set off by Treasury Secretary Steven Mnuchin who said in response to the dollar’s recent slide, “Obviously, a weaker dollar is good for us, it’s good because it has to do with trade and opportunities.”*  Mnuchin backtracked a bit as international financial leaders criticized the apparent shift in policy while Administration officials sought to clarify the Secretary’s remarks.  President Trump weighted in on the matter saying, “Ultimately, I want to see a strong dollar” and added that Mnuchin’s comments were “taken out of context.”

While President Trump sought to allay jittery currency markets that monetary policy had not changed, candidate Trump supported the Federal Reserve’s suppression of interest rates and did not want to see a rising dollar:

I must be honest, I’m a low interest rate

person.  If we raise rates and if the

dollar starts getting too strong, we’re going

to have some very major problems.**

Of course, the entire uproar about a strong dollar versus weak dollar is a sham. When the dollar (and for that matter all other national currencies) cannot be redeemed for either gold or silver, it is inherently “weak” and ultimately worthless.  That this obvious fact is not recognized by the Trump Administration, international monetary authorities, and the financial press demonstrates just how unstable the dollar and world currencies actually are.

If President Trump truly wants to see a strong dollar that will become a linchpin in “making America great again,” he should enact policies that will return the dollar to its original function – a warehouse receipt that can be redeemed for precious metals.  Just as important, an authentic strong dollar policy would mean that no dollar can be created that did not have “an equal amount” of gold/silver in bank vaults – in essence a 100% gold dollar.  These two acts would guarantee a strong dollar and insure that the dollar would remain the world’s reserve currency.    Moreover, a fully redeemable dollar would likely lead to other nations adopting similar measures.

A gold-backed dollar would also head off China’s not too subtle attempt at replacement of the Greenback with the Yuan as the world’s reserve currency.  Its “Belt & Road Initiative,” its massive accumulation of gold, and other actions are all aimed at making the Yuan the dominant world currency which, if successful, will have catastrophic financial repercussions for the US and Western Europe.

Gold-backed money will not only have positive international effects, but domestic benefits as well.  Crippling price inflation that has been intentionally under reported by government statistics will be a thing of the past.  Prices in a gold-backed currency will actually fall, raising living standards for everyone.

Without the ability of the Federal Reserve to create money out of thin air, the massive federal budget deficits would have to be dealt with.  And, without the Fed’s purchasing of US debt, the government would be forced to make cuts in spending.  Spending cuts would have to be deep and across the board.

Happily, under such a scenario, reduction in spending would mean a pull back in the American Empire.  The US would simply not have the resources to maintain bases abroad or involve itself in the countless conflicts and wars it is now engaged in.  It is more likely that when the American Empire comes to an end, it will not be because of a military defeat, but because it can no longer be sustained financially.

Sadly, under current ideological conditions, a return to gold money is not on the financial horizon.  It will most likely take a collapse of the irredeemable paper monetary system before commodity-backed money is re-established as a general medium of exchange.

It is clear from the recent exchange among Trump Administration financial officers that the same dollar policy will continue, which will lead to an inevitable dollar crisis and certain political disaster for the President.

* “Trump Wades Into the Currency Uproar, Favours ‘Strong Dollar,’ Government & Economy.”  Brit Asian News  26 January 2018.  http://britasiannews.com/en/2018/01/25/trump-wades-into-currency-uproar-favours-strong-dollar-government-economy/

**Inflation Alert: Trump Also favors Low Interest Rates, Weak Dollar.”  Weekly Market Wrap. 6 May 2016.  https://www.moneymetals.com/podcasts/2016/05/06/trump-supports-weak-dollar-000864

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com