I find a poetic justice in Trump’s sense of timing. He was able to piggyback on an already skittish market mood — one that had already taken the Mag7 down to near correction levels since Trump’s inauguration.
So, in the face of Buffett selling his huge AAPL shares — and sitting on the cash! — the downturn in Tesla sales worldwide, and the crash in NVDA, Trump was able to deftly time himself perfectly into the DeepSeek body blow, which exposed the astronomical cost of American AI infrastructure AI (and likely money laundering) of Big Tech billionaires.
“Riding the coattails” is supposed to mean jumping on the bandwagon at the last moment with positive results.
Until Trump, no one understood that someone would willingly sucker punch a fragile stock market at the end of its bull cycle and claim “it’s coming along nicely”.
Apparently (from Simplicius substack post) it's inspired by Stephen Mirin's paper "A Users Guide to Restructuring the Global Trading System.
It looks like a rationalisation of rentier behaviour which drains a system of its productive resources through abusive extraction (blood sucking), and then blames the victim hoping the zombie will reanimate from some magical (economic) thinking.
50% say "Trump is bad, ergo everything he does is bad." 50% say Trump is good, ergo everything he does is good." See the fallacy?
Some say: "oh! my Gosh! This is the worst thing ever!" Others say: "Huh?"
I posit an interrogative: "What outcomes of the financial system that has bound global trade since the invention of the container ship are worth defending from a humanist perspective?"
In other words, what interests are defended by claims that Trump's tariffs will ruin everything? Ruin what exactly, for whom?
I say fiat justitia ruat caelum and more power to the Teflon Don. The collapse of the existing rentier system can only be cheered, is inevitable and likely to result in more positive outcomes for a greater number of people. The form it takes takes no notice of our disapprobation or support.
I do find some cognitive dissonance seeing erstwhile defenders of human rights and dignity take exception to this tactic. Remember, Trump was responsible for the death of the TPP. Who can say that was a bad thing?
It's an interesting enough analysis and I tend to concur with elements of his conclusion, however, what I mostly see is that his personal bias against Trump has cross pollinated his assumptions with his conclusions. He assumes Trump's decisions are capricious and not based in rational approaches and concludes the same.
Given Trump's remarkable savvy in fracturing the Democrats nearly to the point of dissolution, despite the coordinated and concerted efforts against him, it seems - I dunno, a bit off, to start from the presumption that there is no direction or insight to his strategy. It's easy enough to carp on the merits but realistically, at this juncture, no one really knows what the long term effects will be.
With regard to the analyses of tariff impacts, much like covid vaccine studies, they deal with an inadequate period of time from which to base sound statistical analyses and, I believe you will agree, relying on data from the World Bank and the St. Louis Fed may lead inexorably to false impressions.
One thing I did not like in his presentation was the use of mixed measures and time periods throughout the essay. In my years as an auditor I found this tactic usually betrayed a forgone conclusion which was masked behind a flurry of impressive numbers. I haven't taken the time to peruse his citations yet and give him full marks for making his source data known but my question is: what is the author's incentive in writing this piece? Why use such tortured math?
My view remains that: a) the old system was sclerotic and corrupt to a point of absurdity, resulting in accelerating decline for all parties, b) Trump recognizes this and recognizes that most Americans understand the grift and are sick of it, c) Trump was targeted by a trans national cabal fronted by the Biden administration and d) this pissed him off so now he seeks to usurp that power base and is enlisting the help of Elon Musk et al to do just that. I don't think Trump is a high level thinker, but he is crafty, smarter than people give him credit for and, I believe, genuinely cares about MAGA as a social movement. His opponents do not credit him with that. res ipsa loquitur
That's my take on it anyway. Trump's whole point is to wreck the existing international finance and trade schema. It's no accident. It does not matter if he has a plan to re-glue Humpty Dumpty into a simulacrum of long held beliefs. No one can. The forces at play globally will rebalance into a new structural equilibrium. In this regard he is much like President Putin, i.e. sees the multi-polar world is coming and doing his bit to position the US to his perceived best advantage.
Time marches on and further remarkable comments from Singapore leaders and observers is coming to focus on an enlarging suite of consequences for the USA and its gurgling noise as it swirls around the drain.
Thank you Karl for the link to Nima's discussion with Richard Wolfe and Michael Hudson. That holds the key to understanding. If I may humbly offer a summary. The US gives other countries paper or electronic dollars in return for material goods. They would happily use these dollars to buy US goods but US costs of production and thus its goods are too high to make them attractive. Normally, when countries accumulate more of another currency than they want to use to buy the originating country's goods the currency is devalued. But in the case of a reserve currency it can also be used to trade with other countries. The result is that the US gets a lot of stuff without having to provide stuff in return. That's the scam. A lot of this money is handled by US banks or goes into US stocks, bonds, real estate and Treasuries. That's also the scam. The price that is paid is that this financial scam doesn't need an industrial base. Scams aren't actually productive, that's what makes them scams. Trump wants to run the scam AND have an industrial base. Well you can use tariffs to try to rechannel worldwide payment flows all you want, but if you want to build an industrial base it takes a couple of decades and a banking system that funds production not asset bubbles. The US is a bank-controlled, financialized, rentier oriented basket case. And that's something that tariffs ain't gonna fix.
I'm glad you highlighted the legal aspects of the Napolitano/Sachs interview as the economic aspects seem to be junk. Sachs comes across as dyed in the wool laissez-faire / Ricardian 'produce where your relative advantage lies' / 'mutual benefits of trade' imperialist. Policies which have been responsible for centuries of underdevelopment, both in the global south and within Western countries.
This is all theatre / permission politics (insane things happen because orange man insane) - the collective 'Trump' knows exactly what they are doing as can be inferred from the relentless stream of feckless Empire managers trotting out, in unison, the 'prices will go up for little guy' but 'we must spend more on our military' lines.
Sachs still needs to purge a great mass of Junk Economics from his mind but is too old to do so. The easier explanation is the balance of payments—it’s in deficit with those nations where we buy more than hey but from us. There’s no heft involved. The shopping example is applicable—I spent $50 dollars at the grocer today because I didn’t have $50 worth of goods for it to buy from me. So my balance of trade with the grocer is negative $50. Once upon a time, payments were made in kind, so there was an even balance between the actors. The cash economy—something seldom mentioned—alters that equation, which becomes more complex when currency exchange rates are included.
Another major factor in play is technological evolution. Just a very short example: England was the first to mass produce steel. When America began its production of steel, it used technology that was more modern and efficient, and once established was able to undersell England with higher quality steel. Then the Germans got in the game, then the Russians and Japanese. Cue the world wars. Afterwards, America had a vast capacity but older technology while devastated Europe and Japan rebuilt with newer technology. Russia faced the same problem but began retooling in the 1990s and is now suing state-of-the-art technology. The same can be said of the Chinese and other Global South nations. British and American steelmakers decided to move operations overseas to take advantage of using the latest technology and much lower labor and other business costs. And that’s just the experience of one major industry.
Will tariffs lower cost of production within America or provide the required resources at a reasonable cost? And those questions apply to any industry. Why did Tupperware move overseas? It’s resource costs tripled. What happened to Toys R Us, Sears, and a plethora of other retailers? They were destroyed by Neoliberal Parasites, not competition from overseas. Would Amazon be able to compete with AliBaba if the latter was allowed to operate within America? I know the stack markets aren’t the economy, but they are a bellwether, and I just had a look at the weekly chart displayed by Yahoo Finance. If I’d been smarter I’d have shorted the S&P 500—it lost 322 points just today.
When I heard a clip of the Don's introduction to his new numbers racket it made me chuckle. The disingenuous claim that the RoW has been ripping off the United Syndicate of America by the current Don confirmed, in my opinion, Michael Hudson's assessement of Trump's intellectual abilities. Hint: he consider's them minimal.
However, I am pleased to hear that one of the consequences of this latest example of his narcissism will be the end of the globalisation project. In a way the policy itself could be said to be an example of the Syndicate's Narcissitic Personality Disorder inasmuch as the RoW is being blamed for the Syndicate's attack on its own people - the Rust Belt etc, which has left it with a hollowed out economic base.
Overall, however, we the people still have an issue with our own internal compradors of Da Syndicate who are so compromised in terms of their own people that they are unable to wipe their own bottoms without instructions from the top boss - and Valentines Day has past for another year at least!
I'm reminded of the helpful advice on the cover of 'The Hitchiker's Guide to the Galaxy' and the theme song for Monty Python's 'Meaning of Life'. So don't panic and the Galaxy Song ...
The Trauma of Trumps Tariffs won’t make America Great Again is clear.
The Forever Wars, the abuse of the taxpayer in fulfilling the neocons fantasy of riches means No thinking on what is the root cause takes hold after 60 years.
Things Take Time to create Trumps Trauma Tariffs .
Wouldn't surprise me if Putin was behind this Stawk Meerkat crash.
Does the man ever sleep? sarc
But they'll find a way to pin this on Russian/Chinese hackers.
The SM is Trumplethinskin's Holy-Grail and I'll wager one-dollar that Uri Geller brought down building 7 World Trade Centre, Salomon Brothers Building using telepathy upon instruction from Larry 'the long con' Silverstein.
I take a contrarian view of Trump's tariffs. My country (Canada) is under heavy Trump tariffs. I wish it weren't so, but I see method where others see madness. More on that in a minute.
Most people around the world wish that Trump - and America - would just leave things alone and carry on as before. Well, you don't need a degree in economics to know that prospect stopped being sustainable long before Trump came on the scene. There is no way out of America's economic black hole that does not entail a whole lot of pain, both for Americans and the rest of the world.
The USA needs liquidity. To this point in time that hasn't been a problem for the US because they own the world's reserve currency and holding US government debt was essentially risk-free. But that risk-free status has been relentlessly eroded by America taking on too much debt. Because of that debt and other factors as well, people and governments around the world are demanding a premium because of that risk. And that premium further increases the pressure on the dollar.
Like it or not, Trump is going to extract liquidity out of America's business dealings with foreign countries. Simply put, he is making other countries pay more to do business with America. But he's not doing it just to be nasty. HE HAS NO RATIONAL ALTERNATIVE. If he cannot rectify the disastrous fundamentals in the American economy, it will fail. And should that happen, along with America's economic catastrophe, a very large part of the world's economy will suffer a similar shock.
Trillions wiped off the stock market this week? Pfft. That's just a partial correction to more sustainable valuations. Yes, it's a major setback for Americans who have something like 60% of their savings in the stock market. But take a look at the long-term DJIA. Even after the carnage it's 4 times higher than it was 20 years ago - that's still a 100% return every 5 years!
America wants money, badly. If it doesn't get the money it needs to keep the country afloat, the outcome will be FAR greater economic uncertainty than the modest ripples we're seeing now. And it will affect everyone worldwide.
Condemnation of Trump's policy is easy, because we're all going to feel it in our wallets. But do you have a rational alternative? I haven't heard anyone - Sachs, Wolff, et al - float a better idea.
just to add to my other comment... you are essentially saying that the day or reckoning has finally arrived, as i understand it... the buck stops here on trumps watch and trump is going to turn the titanic to go in a different direction... wishful thinking as i see it... instead trump is busy labeling folks terrorist for either taking it out on tesla, or having a different viewpoint on the genocide in gaza... i am sure it is only a matter of time and i will be called a terrorist for having a different viewpoint on what is happening here... that is called 'fascism' as i understand it.. the folks in power get rid of people who have a different viewpoint, as opposed to having to consider a different viewpoint... that is what it looks like to me from here in canada - westcoast - vancouver island.. an earthquake could happen at any time!! such is life!!
And to add to my other comment, I am just talking about economics, not politics. I have no idea if Trump will successfully deal with that day of reckoning you mention. But I can see that he's at least trying to do something about it.
Trump's political choices are another matter altogether. I don't like some of them and I see you don't either, however Trump didn't bring fascism to America. I realize now that it's been there for a long time, but I just didn't see it. Today's circumstances are simply making it more visible. I'm Canadian as well. And to speak honestly, our country has likewise accepted even the ugliest side of fascism when it suited those in power.
People in power will try to marginalize or eliminate anyone who threatens them. This is true of fascism, or communism, or anything in between. Look at the legal nightmare that the government of Canada inflicted on the Ottawa truck protesters.
You don't have to look to America to see fascism. That tendency to squash opposition is evident everywhere.
The world can do without America. What don't you understand??? If you were smart instead of a slave you would figure out a way to avoid the punishment. Stop being a loyal brainwashed American. It's beneath you as a free man.
It's one thing to dislike America for its history, its foreign policy, its wars and all the rest. But the bottom line is that America's economy matters to the entire world. If you want to mix everything in a pot and moralize about what should happen to the USA, go right ahead. But the bottom line is that the world will be more prosperous, and people will be better off in general, if the US economy doesn't collapse.
How does a $27 trillion dollar economy with the world's reserve currency matter to the rest of the world? The answer should be obvious.
Now we can certainly debate over the WAY that it matters, whether it's fair, economically sound or any other value judgment you wish to look at it through. We could likewise debate whether it would be better if the US economy collapsed with a new system rising in its place. Regardless, as the world is currently organized, the US economy matters and what happens to it will affect people everywhere.
Now, most people don’t know anything about economics, particularly journalists and politicians. They know even less about economic history, which is why you’re going to see a few people attempting to look knowledgeable by referencing the Smoot-Hawley tariff, on which the stupid and the uninformed blame the Great Depression. Of course, I addressed this in my 2009 book on The Return of the Great Depression:
For many years, it was supposed that the Smoot-Hawley tariff of 1930 played a major role in the economic contraction of the Great Depression. As more economists are gradually coming to realize, this was unlikely the case for several reasons. First, the 15.5 percent annual decline in exports from 1929 to 1933 was less precipitous than the pre-tariff 18.3 percent decline from 1920 to 1922. Second, because the amount of imports also fell, the net effect of the $328 million reduction in the balance of trade on the economy amounted to only 0.3 percent of 1929 GDP. Third, the balance of trade turned negative and by 1940 had increased to nearly ten times the size of the 1929 positive balance while the economy was growing.
The Pomp Letter has begun educating himself on tariffs and economic history, and has concluded that the mainstream hysteria is based on a foundation of ignorance.
people know when they are being screwed over.. they don't need to know ''economic theory'' in order to know this.. and they know when they see some jack ass for president surrounding himself with billionaires, they also know the jackass doesn't represent the little person... we're going to see how this works out.. i don't think it takes someone with a degree in economics to know how this is going to work out here either...
I don't have a degree in economics, just a keen interest in it. I'm also very much a 'little person' in terms of my personal wealth. Is it your view that America's pre-
Trump economic trajectory is sustainable? If yes, then how do you reconcile America's massive national debt with its ability to service that debt? If not, then how would you do things differently from Trump?
i don't think the debt is sustainable... i think we are headed for a 2008 reset of large magnitude.. the bankers will bail out the bankers and the little person will get screwed again.. i think trump is going help the demise of the american empire - it was coming anyway, and he is going to speed up the process.. i live in canada - it is going to be harsh for most everyone as i see it.. my viewpoint is not a positive one... fiddling on the deck of the titanic ain't gonna change any of this as i see it.. cheers..
As for Trump, for me it's hard to say what his efforts will achieve. He HAS to do something, and fiddling on the margins of the economy will do nothing to correct the problem. He may be introducing chaos, but the status quo is predictably worse.
I'm Canadian too, and near-to 100% of us are going to be poorer in the short term because of what Trump is doing. But that outcome seems highly preferable to a complete collapse of Canada's biggest (80%) trading partner. However I'm definitely interested if you know of an alternative economic track for Trump to take.
i don't think there are any easy answers here... banking is fundamental to our lives, and it is mostly an opaque area for most people too... i personally think we've been screwed over by these economist -banker types - and this is based on a lot of reading... at present i am reading a book i recommend 'the capital order' by clara mattei... i finished reading a book on banking by richard werner not too long ago... banking has a huge impact on our lives and it is mostly left intentionally outside the democratic process or peoples area of interest.. we are suffering from this oversight and literally paying the price for it too..
but perhaps the worst thing is many people's belief that these same banker types will be able to help us out of the mess... i think that just the opposite will happen... notice the trend in getting banker types as political leaders of late?? marcon, merz, carney - and many other examples come to mind quickly... trump is a business man - he knows a few things about bankruptcy... perhaps that is a helpful bit of knowledge here.. i am not so sure..
The USA loves to predict that it will win any war. History has proven otherwise. Perhaps that's why Trump isn't calling it a "tariff war." Quite the contrary. He's framing it as a long-overdue correction in the business dealings between the US and other nations. To determine whether he's right in that viewpoint would take a very deep dive into the nether depths of global economics. Who has the time or the necessary perspective?
Countries that trade with America, including my own, should stop whining and start dealing with the new reality. Trump is preparing to deliver some harsh but necessary economic medicine to America and its trading partners. Maybe the cure will be worse than the disease, I don't know. But he has to do something big and he has to do it now. The future of his country hangs in the balance.
What bullshit. You are defending a colonialist empire intent on bludgeoning the test of the world with a fiat reserve system that stopped working in the 70s. Americans need to rid their nation of Trump and his oligarch friends.
Thank you for your reply. I assure you I'm not defending the American empire, or any other empire. Those are relics of the past. I'm just noting that what Trump is doing is economically understandable in the face of the disastrous financial situation that the USA is in.
If you'd prefer that Trump did nothing and that there was a hard collapse of the American economy, well that tells me that you're someone who is immune to economic setbacks. Power to you in that case.
Stick to something you know about. Historical facts matter. Between wwi and wwii, those economies with tariffs grew the most. The trade war with Europe cost american jobs but grew europe jobs. We were the analogue to China today. No economy can survive that imports products that it can produce itself, unless trade deficit is zero. This country prospered until bretton woods, slow beginning, Nixon open trade with China accelerated the drain. For decades we have debated the so called disconnect between wall street and main street; in 1960, 98% of NYSE valuation was US. Now it is 50% or less. What is good for wall street is not good for Americans. The majority of todays billionaires didn't build or employ in the US; they didn't build anything at all. They used arbitrage (based on cheap labor, protective tariffs, standards, internal rules against the US) to destroy US core industries; supported by the idiots at Chamber of Commerce who support retail. A US motorcycle for $28k costs $80k in Europe because of protectionism. Who gives a rats ass about market capitalization; it is digital "funny money" and most is outside the US. The only thing that the US could do that would be even better is to default on its debt and throw the rest of the world into total chaos; destroy the world economy and stay at home. Milton Freedman actually suggested this back in the 80's. When your core industries (value engineering) are gone, the rest of the economy follows but at a slower rate.
I find a poetic justice in Trump’s sense of timing. He was able to piggyback on an already skittish market mood — one that had already taken the Mag7 down to near correction levels since Trump’s inauguration.
So, in the face of Buffett selling his huge AAPL shares — and sitting on the cash! — the downturn in Tesla sales worldwide, and the crash in NVDA, Trump was able to deftly time himself perfectly into the DeepSeek body blow, which exposed the astronomical cost of American AI infrastructure AI (and likely money laundering) of Big Tech billionaires.
“Riding the coattails” is supposed to mean jumping on the bandwagon at the last moment with positive results.
Until Trump, no one understood that someone would willingly sucker punch a fragile stock market at the end of its bull cycle and claim “it’s coming along nicely”.
Trump is a proponent of the Magic Pudding.
Apparently (from Simplicius substack post) it's inspired by Stephen Mirin's paper "A Users Guide to Restructuring the Global Trading System.
It looks like a rationalisation of rentier behaviour which drains a system of its productive resources through abusive extraction (blood sucking), and then blames the victim hoping the zombie will reanimate from some magical (economic) thinking.
Trump absolutely screwed the pooch on this one, balls deep and hung up. Turn the hose on him, his administration is done.
50% say "Trump is bad, ergo everything he does is bad." 50% say Trump is good, ergo everything he does is good." See the fallacy?
Some say: "oh! my Gosh! This is the worst thing ever!" Others say: "Huh?"
I posit an interrogative: "What outcomes of the financial system that has bound global trade since the invention of the container ship are worth defending from a humanist perspective?"
In other words, what interests are defended by claims that Trump's tariffs will ruin everything? Ruin what exactly, for whom?
I say fiat justitia ruat caelum and more power to the Teflon Don. The collapse of the existing rentier system can only be cheered, is inevitable and likely to result in more positive outcomes for a greater number of people. The form it takes takes no notice of our disapprobation or support.
I do find some cognitive dissonance seeing erstwhile defenders of human rights and dignity take exception to this tactic. Remember, Trump was responsible for the death of the TPP. Who can say that was a bad thing?
This analysis is well done and points to freedom for the world from the dollar trading system. Thus, Trump’s Liberation Day is for Humanity in a manner not as he planned. https://warwickpowell.substack.com/p/never-look-a-gift-horse-in-the-mouth
It's an interesting enough analysis and I tend to concur with elements of his conclusion, however, what I mostly see is that his personal bias against Trump has cross pollinated his assumptions with his conclusions. He assumes Trump's decisions are capricious and not based in rational approaches and concludes the same.
Given Trump's remarkable savvy in fracturing the Democrats nearly to the point of dissolution, despite the coordinated and concerted efforts against him, it seems - I dunno, a bit off, to start from the presumption that there is no direction or insight to his strategy. It's easy enough to carp on the merits but realistically, at this juncture, no one really knows what the long term effects will be.
With regard to the analyses of tariff impacts, much like covid vaccine studies, they deal with an inadequate period of time from which to base sound statistical analyses and, I believe you will agree, relying on data from the World Bank and the St. Louis Fed may lead inexorably to false impressions.
One thing I did not like in his presentation was the use of mixed measures and time periods throughout the essay. In my years as an auditor I found this tactic usually betrayed a forgone conclusion which was masked behind a flurry of impressive numbers. I haven't taken the time to peruse his citations yet and give him full marks for making his source data known but my question is: what is the author's incentive in writing this piece? Why use such tortured math?
My view remains that: a) the old system was sclerotic and corrupt to a point of absurdity, resulting in accelerating decline for all parties, b) Trump recognizes this and recognizes that most Americans understand the grift and are sick of it, c) Trump was targeted by a trans national cabal fronted by the Biden administration and d) this pissed him off so now he seeks to usurp that power base and is enlisting the help of Elon Musk et al to do just that. I don't think Trump is a high level thinker, but he is crafty, smarter than people give him credit for and, I believe, genuinely cares about MAGA as a social movement. His opponents do not credit him with that. res ipsa loquitur
That's my take on it anyway. Trump's whole point is to wreck the existing international finance and trade schema. It's no accident. It does not matter if he has a plan to re-glue Humpty Dumpty into a simulacrum of long held beliefs. No one can. The forces at play globally will rebalance into a new structural equilibrium. In this regard he is much like President Putin, i.e. sees the multi-polar world is coming and doing his bit to position the US to his perceived best advantage.
Time marches on and further remarkable comments from Singapore leaders and observers is coming to focus on an enlarging suite of consequences for the USA and its gurgling noise as it swirls around the drain.
See Warwick Powell speaking with Pascal Lottaz: https://youtu.be/xWvKs_XWZQs
I’m in the process of digesting his now, https://warwickpowell.substack.com/p/never-look-a-gift-horse-in-the-mouth
Thank you Karl for the link to Nima's discussion with Richard Wolfe and Michael Hudson. That holds the key to understanding. If I may humbly offer a summary. The US gives other countries paper or electronic dollars in return for material goods. They would happily use these dollars to buy US goods but US costs of production and thus its goods are too high to make them attractive. Normally, when countries accumulate more of another currency than they want to use to buy the originating country's goods the currency is devalued. But in the case of a reserve currency it can also be used to trade with other countries. The result is that the US gets a lot of stuff without having to provide stuff in return. That's the scam. A lot of this money is handled by US banks or goes into US stocks, bonds, real estate and Treasuries. That's also the scam. The price that is paid is that this financial scam doesn't need an industrial base. Scams aren't actually productive, that's what makes them scams. Trump wants to run the scam AND have an industrial base. Well you can use tariffs to try to rechannel worldwide payment flows all you want, but if you want to build an industrial base it takes a couple of decades and a banking system that funds production not asset bubbles. The US is a bank-controlled, financialized, rentier oriented basket case. And that's something that tariffs ain't gonna fix.
The prospect of huge rents over time is what motivated Bretton Woods. Dexter White was no Trump but many magnitudes better,
Keynes' nemesis
White also wanted a version of the WTO then too, but it was voted down—the only part of the plan that didn’t get approved.
Tariffs and Warwick Powell's analysis on Reports on China which is a really credible China source:
https://youtu.be/rOFyTez7FmU
Precious metals are having a field day.
I'm glad you highlighted the legal aspects of the Napolitano/Sachs interview as the economic aspects seem to be junk. Sachs comes across as dyed in the wool laissez-faire / Ricardian 'produce where your relative advantage lies' / 'mutual benefits of trade' imperialist. Policies which have been responsible for centuries of underdevelopment, both in the global south and within Western countries.
This is all theatre / permission politics (insane things happen because orange man insane) - the collective 'Trump' knows exactly what they are doing as can be inferred from the relentless stream of feckless Empire managers trotting out, in unison, the 'prices will go up for little guy' but 'we must spend more on our military' lines.
Sachs still needs to purge a great mass of Junk Economics from his mind but is too old to do so. The easier explanation is the balance of payments—it’s in deficit with those nations where we buy more than hey but from us. There’s no heft involved. The shopping example is applicable—I spent $50 dollars at the grocer today because I didn’t have $50 worth of goods for it to buy from me. So my balance of trade with the grocer is negative $50. Once upon a time, payments were made in kind, so there was an even balance between the actors. The cash economy—something seldom mentioned—alters that equation, which becomes more complex when currency exchange rates are included.
Another major factor in play is technological evolution. Just a very short example: England was the first to mass produce steel. When America began its production of steel, it used technology that was more modern and efficient, and once established was able to undersell England with higher quality steel. Then the Germans got in the game, then the Russians and Japanese. Cue the world wars. Afterwards, America had a vast capacity but older technology while devastated Europe and Japan rebuilt with newer technology. Russia faced the same problem but began retooling in the 1990s and is now suing state-of-the-art technology. The same can be said of the Chinese and other Global South nations. British and American steelmakers decided to move operations overseas to take advantage of using the latest technology and much lower labor and other business costs. And that’s just the experience of one major industry.
Will tariffs lower cost of production within America or provide the required resources at a reasonable cost? And those questions apply to any industry. Why did Tupperware move overseas? It’s resource costs tripled. What happened to Toys R Us, Sears, and a plethora of other retailers? They were destroyed by Neoliberal Parasites, not competition from overseas. Would Amazon be able to compete with AliBaba if the latter was allowed to operate within America? I know the stack markets aren’t the economy, but they are a bellwether, and I just had a look at the weekly chart displayed by Yahoo Finance. If I’d been smarter I’d have shorted the S&P 500—it lost 322 points just today.
When I heard a clip of the Don's introduction to his new numbers racket it made me chuckle. The disingenuous claim that the RoW has been ripping off the United Syndicate of America by the current Don confirmed, in my opinion, Michael Hudson's assessement of Trump's intellectual abilities. Hint: he consider's them minimal.
However, I am pleased to hear that one of the consequences of this latest example of his narcissism will be the end of the globalisation project. In a way the policy itself could be said to be an example of the Syndicate's Narcissitic Personality Disorder inasmuch as the RoW is being blamed for the Syndicate's attack on its own people - the Rust Belt etc, which has left it with a hollowed out economic base.
Overall, however, we the people still have an issue with our own internal compradors of Da Syndicate who are so compromised in terms of their own people that they are unable to wipe their own bottoms without instructions from the top boss - and Valentines Day has past for another year at least!
I'm reminded of the helpful advice on the cover of 'The Hitchiker's Guide to the Galaxy' and the theme song for Monty Python's 'Meaning of Life'. So don't panic and the Galaxy Song ...
https://www.youtube.com/watch?v=buqtdpuZxvk
There isn't a colostomy bag that could hold the daily amount of puke emanating from Trumplethinskin's filthy lying mouth.
1st Term he throws the Treasury Keys to Goldman Sachs, 2nd Term to a Soros Fund Manager.
One big happy Family of Zionists at the next round of incoming Bailouts.
The Trauma of Trumps Tariffs won’t make America Great Again is clear.
The Forever Wars, the abuse of the taxpayer in fulfilling the neocons fantasy of riches means No thinking on what is the root cause takes hold after 60 years.
Things Take Time to create Trumps Trauma Tariffs .
The gong of reality has been struck April 3rd.
Wouldn't surprise me if Putin was behind this Stawk Meerkat crash.
Does the man ever sleep? sarc
But they'll find a way to pin this on Russian/Chinese hackers.
The SM is Trumplethinskin's Holy-Grail and I'll wager one-dollar that Uri Geller brought down building 7 World Trade Centre, Salomon Brothers Building using telepathy upon instruction from Larry 'the long con' Silverstein.
Turn those Machines back on!
I take a contrarian view of Trump's tariffs. My country (Canada) is under heavy Trump tariffs. I wish it weren't so, but I see method where others see madness. More on that in a minute.
Most people around the world wish that Trump - and America - would just leave things alone and carry on as before. Well, you don't need a degree in economics to know that prospect stopped being sustainable long before Trump came on the scene. There is no way out of America's economic black hole that does not entail a whole lot of pain, both for Americans and the rest of the world.
The USA needs liquidity. To this point in time that hasn't been a problem for the US because they own the world's reserve currency and holding US government debt was essentially risk-free. But that risk-free status has been relentlessly eroded by America taking on too much debt. Because of that debt and other factors as well, people and governments around the world are demanding a premium because of that risk. And that premium further increases the pressure on the dollar.
Like it or not, Trump is going to extract liquidity out of America's business dealings with foreign countries. Simply put, he is making other countries pay more to do business with America. But he's not doing it just to be nasty. HE HAS NO RATIONAL ALTERNATIVE. If he cannot rectify the disastrous fundamentals in the American economy, it will fail. And should that happen, along with America's economic catastrophe, a very large part of the world's economy will suffer a similar shock.
Trillions wiped off the stock market this week? Pfft. That's just a partial correction to more sustainable valuations. Yes, it's a major setback for Americans who have something like 60% of their savings in the stock market. But take a look at the long-term DJIA. Even after the carnage it's 4 times higher than it was 20 years ago - that's still a 100% return every 5 years!
America wants money, badly. If it doesn't get the money it needs to keep the country afloat, the outcome will be FAR greater economic uncertainty than the modest ripples we're seeing now. And it will affect everyone worldwide.
Condemnation of Trump's policy is easy, because we're all going to feel it in our wallets. But do you have a rational alternative? I haven't heard anyone - Sachs, Wolff, et al - float a better idea.
just to add to my other comment... you are essentially saying that the day or reckoning has finally arrived, as i understand it... the buck stops here on trumps watch and trump is going to turn the titanic to go in a different direction... wishful thinking as i see it... instead trump is busy labeling folks terrorist for either taking it out on tesla, or having a different viewpoint on the genocide in gaza... i am sure it is only a matter of time and i will be called a terrorist for having a different viewpoint on what is happening here... that is called 'fascism' as i understand it.. the folks in power get rid of people who have a different viewpoint, as opposed to having to consider a different viewpoint... that is what it looks like to me from here in canada - westcoast - vancouver island.. an earthquake could happen at any time!! such is life!!
And to add to my other comment, I am just talking about economics, not politics. I have no idea if Trump will successfully deal with that day of reckoning you mention. But I can see that he's at least trying to do something about it.
Trump's political choices are another matter altogether. I don't like some of them and I see you don't either, however Trump didn't bring fascism to America. I realize now that it's been there for a long time, but I just didn't see it. Today's circumstances are simply making it more visible. I'm Canadian as well. And to speak honestly, our country has likewise accepted even the ugliest side of fascism when it suited those in power.
People in power will try to marginalize or eliminate anyone who threatens them. This is true of fascism, or communism, or anything in between. Look at the legal nightmare that the government of Canada inflicted on the Ottawa truck protesters.
You don't have to look to America to see fascism. That tendency to squash opposition is evident everywhere.
very true richard.. thanks..
The world can do without America. What don't you understand??? If you were smart instead of a slave you would figure out a way to avoid the punishment. Stop being a loyal brainwashed American. It's beneath you as a free man.
It's one thing to dislike America for its history, its foreign policy, its wars and all the rest. But the bottom line is that America's economy matters to the entire world. If you want to mix everything in a pot and moralize about what should happen to the USA, go right ahead. But the bottom line is that the world will be more prosperous, and people will be better off in general, if the US economy doesn't collapse.
How exactly does America's economy matter?
How does a $27 trillion dollar economy with the world's reserve currency matter to the rest of the world? The answer should be obvious.
Now we can certainly debate over the WAY that it matters, whether it's fair, economically sound or any other value judgment you wish to look at it through. We could likewise debate whether it would be better if the US economy collapsed with a new system rising in its place. Regardless, as the world is currently organized, the US economy matters and what happens to it will affect people everywhere.
If you want to discuss tariffs - bring it on - from DaLimbraw Library......
The USA will win any tariff war because it has been losing the free trade war for decades. America has literally nothing to lose in this regard.
https://crushlimbraw.blogspot.com/2025/02/did-no-one-take-econ-101-vox-popoli.html?m=0
Now, most people don’t know anything about economics, particularly journalists and politicians. They know even less about economic history, which is why you’re going to see a few people attempting to look knowledgeable by referencing the Smoot-Hawley tariff, on which the stupid and the uninformed blame the Great Depression. Of course, I addressed this in my 2009 book on The Return of the Great Depression:
For many years, it was supposed that the Smoot-Hawley tariff of 1930 played a major role in the economic contraction of the Great Depression. As more economists are gradually coming to realize, this was unlikely the case for several reasons. First, the 15.5 percent annual decline in exports from 1929 to 1933 was less precipitous than the pre-tariff 18.3 percent decline from 1920 to 1922. Second, because the amount of imports also fell, the net effect of the $328 million reduction in the balance of trade on the economy amounted to only 0.3 percent of 1929 GDP. Third, the balance of trade turned negative and by 1940 had increased to nearly ten times the size of the 1929 positive balance while the economy was growing.
The Pomp Letter has begun educating himself on tariffs and economic history, and has concluded that the mainstream hysteria is based on a foundation of ignorance.
A whole study on the subject - https://crushlimbraw.blogspot.com/search?q=Tariffs&max-results=20&by-date=false&m=1 - a list of headnotes from DaLimbraw Library to various articles by different authors.
people know when they are being screwed over.. they don't need to know ''economic theory'' in order to know this.. and they know when they see some jack ass for president surrounding himself with billionaires, they also know the jackass doesn't represent the little person... we're going to see how this works out.. i don't think it takes someone with a degree in economics to know how this is going to work out here either...
I don't have a degree in economics, just a keen interest in it. I'm also very much a 'little person' in terms of my personal wealth. Is it your view that America's pre-
Trump economic trajectory is sustainable? If yes, then how do you reconcile America's massive national debt with its ability to service that debt? If not, then how would you do things differently from Trump?
i don't think the debt is sustainable... i think we are headed for a 2008 reset of large magnitude.. the bankers will bail out the bankers and the little person will get screwed again.. i think trump is going help the demise of the american empire - it was coming anyway, and he is going to speed up the process.. i live in canada - it is going to be harsh for most everyone as i see it.. my viewpoint is not a positive one... fiddling on the deck of the titanic ain't gonna change any of this as i see it.. cheers..
I agree, a big reset seems likely.
As for Trump, for me it's hard to say what his efforts will achieve. He HAS to do something, and fiddling on the margins of the economy will do nothing to correct the problem. He may be introducing chaos, but the status quo is predictably worse.
I'm Canadian too, and near-to 100% of us are going to be poorer in the short term because of what Trump is doing. But that outcome seems highly preferable to a complete collapse of Canada's biggest (80%) trading partner. However I'm definitely interested if you know of an alternative economic track for Trump to take.
i don't think there are any easy answers here... banking is fundamental to our lives, and it is mostly an opaque area for most people too... i personally think we've been screwed over by these economist -banker types - and this is based on a lot of reading... at present i am reading a book i recommend 'the capital order' by clara mattei... i finished reading a book on banking by richard werner not too long ago... banking has a huge impact on our lives and it is mostly left intentionally outside the democratic process or peoples area of interest.. we are suffering from this oversight and literally paying the price for it too..
but perhaps the worst thing is many people's belief that these same banker types will be able to help us out of the mess... i think that just the opposite will happen... notice the trend in getting banker types as political leaders of late?? marcon, merz, carney - and many other examples come to mind quickly... trump is a business man - he knows a few things about bankruptcy... perhaps that is a helpful bit of knowledge here.. i am not so sure..
I'm deeply distrustful of the economic elite, and even more so when they're in positions of power in government.
The USA loves to predict that it will win any war. History has proven otherwise. Perhaps that's why Trump isn't calling it a "tariff war." Quite the contrary. He's framing it as a long-overdue correction in the business dealings between the US and other nations. To determine whether he's right in that viewpoint would take a very deep dive into the nether depths of global economics. Who has the time or the necessary perspective?
Countries that trade with America, including my own, should stop whining and start dealing with the new reality. Trump is preparing to deliver some harsh but necessary economic medicine to America and its trading partners. Maybe the cure will be worse than the disease, I don't know. But he has to do something big and he has to do it now. The future of his country hangs in the balance.
What bullshit. You are defending a colonialist empire intent on bludgeoning the test of the world with a fiat reserve system that stopped working in the 70s. Americans need to rid their nation of Trump and his oligarch friends.
Thank you for your reply. I assure you I'm not defending the American empire, or any other empire. Those are relics of the past. I'm just noting that what Trump is doing is economically understandable in the face of the disastrous financial situation that the USA is in.
If you'd prefer that Trump did nothing and that there was a hard collapse of the American economy, well that tells me that you're someone who is immune to economic setbacks. Power to you in that case.
Stick to something you know about. Historical facts matter. Between wwi and wwii, those economies with tariffs grew the most. The trade war with Europe cost american jobs but grew europe jobs. We were the analogue to China today. No economy can survive that imports products that it can produce itself, unless trade deficit is zero. This country prospered until bretton woods, slow beginning, Nixon open trade with China accelerated the drain. For decades we have debated the so called disconnect between wall street and main street; in 1960, 98% of NYSE valuation was US. Now it is 50% or less. What is good for wall street is not good for Americans. The majority of todays billionaires didn't build or employ in the US; they didn't build anything at all. They used arbitrage (based on cheap labor, protective tariffs, standards, internal rules against the US) to destroy US core industries; supported by the idiots at Chamber of Commerce who support retail. A US motorcycle for $28k costs $80k in Europe because of protectionism. Who gives a rats ass about market capitalization; it is digital "funny money" and most is outside the US. The only thing that the US could do that would be even better is to default on its debt and throw the rest of the world into total chaos; destroy the world economy and stay at home. Milton Freedman actually suggested this back in the 80's. When your core industries (value engineering) are gone, the rest of the economy follows but at a slower rate.
Step 1: Crash the markets
Step 2: BTFD
Step 3: "Resolve," the cause of the crash
Step 4: Profit
Secret step: Refer to Rio Reveal, brought to you by BRICS+.