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Trade War! Oh, woe is US ?
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
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I just received an Email from FT Exclusive. Here is the entire text:
White House civil war breaks out over trade
A civil war has broken out within the White House over trade, leading to what one official called “a fiery meeting” in the Oval Office pitting economic nationalists close to Donald Trump against pro-trade moderates from Wall Street.
According to more than a half-dozen people inside the White House or dealing with it, the bitter fight has set a hardline group including senior adviser Steve Bannon and Trump trade adviser Peter Navarro against a faction led by Gary Cohn, the former Goldman Sachs executive who leads Mr Trump’s National Economic Council.
At the centre of the debate is Mr Navarro, a firebrand economist who has angered Berlin and other European allies by accusing Germany of exploiting a “grossly undervalued” euro and calling for bilateral discussions with Angela Merkel’s government over ways to reduce the US trade deficit with Europe’s most powerful economy.
The officials and people dealing with the White House said Mr Navarro appeared to be losing influence in recent weeks. But during the recent Oval Office fight, Mr Trump appeared to side with the economic nationalists, one official said.
When evaluating the above, the key thing to remember is the U.S. government is Monetarily Sovereign. It creates unlimited dollars at will.
Bannon et al want the other nations to make our imports more expensive and our exports less expensive, so we can export more and import less. That leaves us with two questions:
- Should we want our Net Imports to be more expensive?
- Should we want to increase Net Exports?
Question #1 seems like a no-brainer. Do you really want all the things you import to cost you more? Do you really want inflation?
No? Well, that’s the way to reduce imports, which is what Bannon and Trump want. (Though not even Trump knows what Trump wants, today. Tomorrow’s 4:00AM tweet could change everything.)
Which gets us to the meat of the argument, question #2. Should we want to increase Net Exports?
That is a no-brainer too, but not in the way you may think.
The fundamental effect of increased Net Exports is to increase the money supply, which on the surface would seem to be a good thing.
But remember, the U.S. government is Monetarily Sovereign. It has the unlimited ability to increase our money supply.
Congress controls the money supply by spending, which it has the unlimited ability to do. So, there is no money-supply need to increase or to decrease imports or exports.
Some may argue that increasing Net Exports by weakening the dollar helps American businesses that export — but it hurts American businesses that import, as well as hurting consumers who will need to pay more dollars for imports.
And if our government really wants to help American business, it simply would reduce or even eliminate business taxes. Then there would be no need for silly trade conflicts like the Bannon, Cohn, Navarro, Trump ado about nothing.
Ah, but if the government reduced or eliminated business taxes, the populace first would complain about business not paying its “fair share,” as though business expenses somehow benefit the populace.
And then after the “fair share” argument ran its course, the populace might come to see that the federal government neither needs nor uses the tax dollars anyway.
Imagine the kerfuffle when government flunkies try to explain why our Monetarily Sovereign government does need tax dollars, but has been collecting them all these years.
Here is the teapot on this tempest:
- A Monetarily Sovereign nation does not need to export. It can control its money supply, and can support its industries, endlessly.
- Importing benefits the nation. When we import we exchange dollars, which cost essentially zero to create, for goods and services which cost time, materials, and labor to create.
In effect, when a Monetarily Sovereign nation imports it gives nothing and gets something.
For instance, when we import from China, we give them dollars we create at the touch of a computer key, and they give us products and services that cost them the blood, sweat, and tears of their workforce along with their precious raw materials.
So who comes out the winner? Clearly, the importer. That so-called “grossly undervalued euro” benefits America.
Those are the simple facts of import/export for a Monetarily Sovereign nation.
Now, sit back and watch the fighting dispassionately, and shake your head in wonder at the treachery of our leaders and the ignorance of the populace.
Rodger Malcolm Mitchell
Monetary Sovereignty
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THE RULES
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes..
•No nation can tax itself into prosperity, nor grow without money growth.
•Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
•A growing economy requires a growing supply of money (GDP = Federal Spending + Non-federal Spending + Net Exports)
•Deficit spending grows the supply of money
•The limit to federal deficit spending is an inflation that cannot be cured with interest rate control. The limit to non-federal deficit spending is the ability to borrow.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Progressives think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
•The single most important problem in economics is the Gap between the rich and the rest.
•Austerity is the government’s method for widening the Gap between the rich and the rest.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..
MONETARY SOVEREIGNTY
Source: https://mythfighter.com/2017/03/10/trade-war-oh-woe-is-us/
