Trump’s Trade Policy

It’s magnificently right, and catastrophically wrong.

The entitlement sending is out of control, and what cannot go on forever will eventually stop.

23 comments on this post.
  1. Pro Libertate:

    Government spending needs to be reduced dramatically. If the GOP Congress won’t do it, who will? Frankly, this should be top issue right now.

  2. Edward M. Grant:

    No-one will reduce it until reality forces them to.

    Democrats need ‘entitlements’ to buy votes, and Republicans are too scared of losing votes to cut them. So they’ll keep spending like drunken sailors until either no-one wants the dollar, or interest rates rise so high that the entire government income is spent paying interest on the debt.

    With a $20,000,000,000,000 debt, even a 5% interest rate would mean paying out $1,000,000,000,000 a year in interest, and that would require either massive spending cuts, massive tax rises, or a debt default.

  3. Eric Weder:

    You know the Dems never intend to pay off the debt. It’s just a bunch of digits in a computer.

  4. Edward M. Grant:

    I don’t think any country intends to pay back their debt. But foreigners have to believe they’ll pay back the debt one day in order to believe the money they issue has some value.

  5. Karl Hallowell:

    Edward, it means inflation though not necessarily at the level of hyperinflation (where one avoids holding money at all, even for short lengths of time). At this point, I doubt any other outcome.

    That is a sort of debt default, but one that has less short term legal and political repercussions.

  6. Edward M. Grant:

    Doesn’t really work.

    1. Inflation means you need higher interest rates to convince people to buy your bonds. Which means you need to print more money to pay the interest. Which means you need higher interest rates. Which leads to hyperinflation.

    2. Monetary inflation without wage inflation makes voters poor. And they stop voting for you.

    3. You can’t inflate away the cost of the entitlements, because the people receiving them won’t vote for you. So inflation leads to more spending, not less, even if that spending is in devalued currency.

    And don’t forget that you’re talking about doing this at a time when more and more jobs are going to be automated away, leading to a declining tax base and rising demand for welfare.

  7. Fenster314:

    GOP Congress “fixes” entitlements. GOP loses congress big time in next election. Democrat congress and Democrat President brings back entitlements – for Democrat constituencies paying for it on the backs of GOP constituencies.

    Your move, Rand.

  8. jiminator:

    Your short term scenario seems pretty accurate to me, but the next step would be an economic earthquake. It’s a shame that most voters want everything now and the future be damned, and a double shame that this sentiment seems to be represented pretty completely in Congress.

  9. wodun:

    When was the last time you saw print or video media mention how much is spent servicing debt every year?

    The apples and bananas of democrazy are dying in darkness because our priestly truth tellers are complicit in all of this.

  10. Brickmuppet:

    “Entitlement sending is out of control”

    Sadly, no. Though if they were sending the entitlements away I’d be pretty happy.

    (ducks…covers…makes good his escape)

  11. gbaikie:

    “I have argued on several occasions in this space and in articles for the Journal of American Affairs that the only path out of the savings and trade-deficit trap lies through innovation. ”

    Yeah, and US government should explore space, specifically explore the Moon to determine if there is minable lunar water, then explore Mars, to determine if and where there could be viable towns on Mars.

    The problem is US create wealth and lack somewhere to invest money.
    Why invest in countries with have bad governments.
    One could have good governments on Mars, and there could be good Martian investment possibilities.
    But first we need to have NASA focused on the right thing, which is exploring the Moon, to determine
    where in the lunar poles is the better places to mine water.
    So, if that done, then within decade a small amount of investment dollar could spent on what should a high risk investment, but if demonstrate profitably, instead less than 10 billion per year, it get to the level of hundred of billions per year within couple decades. So say within 3 decades, the moon could almost equal the global satellite market of 200 billion per year. Plus around that time, you have Martian investments starting at less than 10 billion per year, but should grow faster to the 200 billion per year level.
    And plus lots of other areas in space, also.

  12. MfK:

    All that needs to be done to colonize the Moon and Mars is to put up billboards in Mexico to the effect that ample jobs plus free medical care and education for all are available on those two celestial bodies.

    I mean, we’ve been told for years by the Left that there’s absolutely no way that we could conceivably stop illegal immigration, that any border wall would be just a minor, trifling obstacle that would merely (slightly) slow down the torrent of illegals pouring into the USA. So they must have some really magical powers, of which we should avail ourselves. Let them know that there’s an uncontested free ride, and they’ll just find a way.

    We don’t require them to learn English, because (apparently, to the Left) they’re just too stupid. But their ability to breach any barrier to freedom (=freedom from paying for doctor visits and school) is so unstoppable that, well, they would get to the Moon and Mars in a heartbeat if told not to.

    Just sayin’…

  13. wodun:

    The United States has legitimate complaints against Chinese trade and technology transfer practice, but the Trump administration’s ineptitude threatens to turn what should be a tough negotiation into a trade war.

    The whole point of the tariffs was to get China to the negotiating table. That part worked. Time will tell how the rest of it goes.

    Goldman throws up his hands and says, Trump is right but there is nothing that can be done so we should just continue writing letters or just ignore China’s dirty trade practices altogether and that even though Trump is right and his policies got China to negotiate, he is really just an idiot doing the wrong things.

    Goldman ignores the steps Trump is taking to make our country more hospitable to production and innovation, especially repatriating profits. He also places more emphasis on tax cuts rather than spending increases in a time (at least for now) when tax revenues are up.

    Trump and the GOP really need to get spending under control. People say this, that, or the other program are to blame but they all need a haircut. A big part of our deficits are paying off pre-existing debt. IIRC, its around $400 billion just to service old debt. The opportunity cost here is just horrible. If our politicians could just tighten the belt for a few years we could get rid of deficits and pay down the debt.

  14. Edward M. Grant:

    “Goldman ignores the steps Trump is taking to make our country more hospitable to production and innovation, especially repatriating profits.”

    Indeed. There have been a number of articles here in Canada recently about floods of investment money leaving Canada for America since the tax cuts.

    Because who’d want to invest in a country run by a drama teacher when they could invest in a country run by a businessman?

  15. Bob-1:

    who’d want to invest in a country run by a drama teacher when they could invest in a country run by a businessman?

    Consider the Reagan vs Carter Presidential Election: who would want to invest in a country run by an actor who became a motivational speaker when they they could invest in a country run by an nuclear engineer who became a successful businessman?

  16. Jon:

    Reagan was the governor of one of America’s largest states.

  17. Eric Weder:

    The successful nuclear engineer who couldn’t lead his country out of a wet paper bag? Leaders have to lead with big ideas that will generate success for their followers and let their subordinates deal with the details.

    Justin has and continues to be successful at derailing Canada’s energy industry by damning it with faint praise. It’s obvious to us that he personally supports the green faction. In that way he’s quite similar to Carter, who took his nuclear engineering way too seriously.

    A green planet with nobody on it is not my idea of success. Let’s hope that Canadians follow the American example and turf the weenie after one term.

  18. Bob-1:

    Jon,

    Yes, both men were governors before becoming president. I was referring to their resumes prior to becoming governor. Reagan’s experience prior to becoming governor was actor and motivational speaker. Carter’s experience prior to becoming governor included inheriting a farm that was barely scraping by and turning into a successful enterprise using both technical and business acumen. Prior to that, after training with Admiral Rickover, he led a team which shut down a nuclear reactor which had experienced a partial meltdown. Right around the same time: Bedtime for Bonzo.

    But hey, if you liked Reagan, maybe don’t dismiss someone for being into drama. And if you didn’t like Carter, don’t assume a leader who was a businessman will make you happy.

  19. Jiminator:

    Bob, Carter’s resume included a horrible 4-year stint as US President, a term that 40 years later remains the standard bearer for incompetence.

  20. Jon:

    Bob:

    This is what you said: Consider the Reagan vs Carter Presidential Election.

    You weren’t talking about the governor races. But even if you were, you ignored the fact that Reagan was head of the screen actors guild. Not a small feat. Also, his motivational speaking honed his principles for good government. Principles that helped him become president. Principles influenced by Barry Goldwater, your favorite republican. The tiresome, Bedtime for Bonzo schtick has been around forever and is silly. Should I talk about Obama’s Choom gang?

    As for Carter shutting down a nuclear power plant, who cares with regards to politics? Being a good engineer does not qualify you for good governance. As for his farming experience, I’m sure it helped in office. Not everything he did was terrible. Volker was a good choice.

  21. wodun:

    The one, and perhaps only, good thing from Carter is the craft brewing industry.

  22. Ed Minchau:

    “a country run by a drama teacher”

    He was a part-time substitute drama teacher. What is that, maybe four or five days of work a year? He also dabbled in being a snowboard instructor. Now he’s dabbling in politics.

    Must be nice to be a trust-fund baby.

  23. FC:

    Trudeau Jr. has made clear that he only inherited a seven figure fortune. Why, he’s practically a peasant.

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