“Practical men who believe that they are quite exempt from intellectual impact are generally slaves of some exhaust economists. The beauty of authority who hears voice in the air distilled enthusiasm from academic scrip blur several years ago.”
-JOHN Maynard Keynes, General theory of employment, interest and money (1936)
Practical goal
Is Donald J. Trump a practical person? Is he crazy?
Do he hear a voice in the air?
We will leave you answer to this question. Certainly, Trump is a slave of past destructive decisions. Many of these decisions were guided by dead economists.
For example, a century ago, a century ago, forced to forced Trump’s plans, such as the Federal Reserve in 1913 and the seizure of the FDR of the US citizen’s private gold stake in 1933. Today, in fun and free, we try to better understand the great disasters he deals with.
First of all, Trump’s tariff policy is to route the origin of production and the flow of global trade. In particular, he is trying to relocate the production of imported products from foreign factories to domestic factories. The purpose is to activate US manufacturing and create new blue collar jobs.
This sounds like a practical goal. Undoubtedly, the US consumer economy did not work for the working Americans. Over the past 50 years, workers have no workers or technical transactions other than professional services.
But the reason is complicated. Applying a chaotic tariff may not be able to achieve its intended goals. And even if that’s the case, this will take decades, not many years. In the meantime, there will be confusion between the United States and the world.
If you remember, the US manufacturing base has been holy in the last 50 years because foreign competitors can produce the same product as part of the cost. approximately 32 % In 1953, the manufacturing industry occurred in 1953. Today is about 8.5 %.
Consumption and production
The gap trade imbalance, which has developed over the last 50 years, is a function of Fiat Don and Credit. In fact, Nixon closed the gold window in 1971 and broke the natural relationship between money, credit and international trade.
If international trade meets gold standards, there is a natural limit to trade imbalances. If you spend more than a country produces, you will not be able to pay for money.
As money disappears, labor becomes cheaper. Then, with effort and originality, you can produce your own products at less than import costs. You can also export products to other countries and operate a positive trade balance.
In addition, when the supply of money is fixed to gold, if it is fixed to an unprecedented gold, the interest rate will naturally rise and fall as adapted to the inflow and leakage of free market transactions. This is in fact self -over consumption and overproduction.
In the late 19th and early 20th centuries, the United States was inexpensive labor and emerging economies. As the population moved from the farm to the city, manufacturing and industrial production increased rapidly. The US’s ability to make and export products has dramatically increased wealth.
At the end of World War II, the United States was the only advanced economy with the industrial base remaining. This advantage has been in operation for decades without competition.
As wealth continued to flow to the United States, wages increased and workers were accustomed to consuming excessively. They thought that wealth and abundance were the birth of the United States. They joined the labor union and demanded wages beyond what their technology was guaranteed.
But so far, money has become fake. In the 1960s, the federal government’s over -spending on guns and butter produced runaway consumer price inflation in the 1970s. The United States also began to operate a consistent trade deficit. In other words, it was consumed more than producing due to the difference in debt.
Dollar demand and runaway debt
According to the Bretton Woods contract in 1944, the US dollar, which was acquired by foreign governments through trade, was able to convert to gold to $ 35 per ounce. The United States was consuming more than now, so foreign governments were turning excessive dollars into gold.
In 1971, Nixon saw the US gold stocks on the coast. But instead of force Americans to strengthen their belts and work to lower wages, they changed the rules of the game. On October 15, 1971, he converted US dollars to gold. From this point, debt and deficit have not been alleviated.
Another factor in the US Runaway debt is the preliminary currency of international trade and the US dollar. Henry Kissinger further strengthened this with the Petrodollar agreement with the FAISAL BIN Abdul Aziz king at the end of the Arab-Israeli War in 1973.
This contract had to be carried out using US dollars. The value of the dollar has increased in the foreign exchange market by arresting the dollar on the world’s most valuable resources and creating enormous demand for the dollar.
Then, as China and the Far East economy began their business at the end of the 20th century, US debt and defects jumped off the chart. It is out of gold constraints, but by supporting the oil trading value, you can make credit without limitations.
Every time US consumers or US governments proceed in cash, new credit has expanded. However, as credit increases, the opposite, debt increases. Currently, all US debts (government, business and consumers) are over. $ 102 trillion. And most of this debt is used to consume products made in foreign countries.
For example, in the early 1970s, US trade was balanced. But once it fell into the deficit, it could not be reversed. In 2024, the United States exported $ 3.19 trillion from goods and services. However, it imported $ 4.1 trillion from goods and services. This resulted in a trade deficit of the year. $ 918.4 billion.
MAGA policy on Trump’s asset destruction
For decades, the United States has been transformed from a saber state to a debtor country. During this period, many cities were neglected and corrupt when the manufacturing base was carried out and sent overseas.
The federal government also wasteed the advantage of holding a preliminary currency by participating in unnecessary foreign wars and intervening in foreign politics. Following the invasion of Ukraine in Russia in February 2022, the United States and the European Union freeze the Russian Central Bank Fund.
This signed the world that the United States and the EU could not be trusted that they could not respect their debt. Also, it accelerated effort BRIC country Brazil, Russia, India and China have above all, international trade other than US dollars.
This effort to increase the US dollar makes the dollar value falling compared to other currencies and all currencies decrease compared to gold. This will make imports more expensive and consumer price inflation for Americans. But US exports should be made cheaper.
All of this seems to be consistent with the plan to return Trump’s manufacturing to the United States. But the questions that will not be answered in the next few years are as follows.
Are Americans doing less work and driving out the debt of the country?
All bets are turned off. This country has been digging into a huge hole for the last 50 years. Decades of efforts, originality and joint resolutions are required to revitalize the US industrial base.
Trump seems to better understand the unfavorable reality of debt problems in the United States than in the past. He is also the first president to solve the problem.
But instead of focusing on returning to sound money, Trump decided to Mark by bending his willingness to his tastes through tariffs. Alas, his tariff policy is a policy of asset destruction.
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thank you,
Mn Gordon
For economic prism
Returning from Trump’s MAGA asset destruction policy to economic prism
