Joe - Jack Welsh and his rising quarterly profits from the financial engineers at GE Capital - the only engineers he favored - set the template. Then Detroit and Boeing followed, as did the financial press and Wall Street analysts and too many companies fell into that marsh, never to get their heads out of that Welsh- created muck.
So the bigger question is - Why do we have such a huge trade deficit? Is it because we are getting hosed by all those nasty tariffs from our trading partners? Actually, no - it is for one simple reason, we in the US buy a lot of shit - a really huge amount of shit. Why? Because we like all this stuff and we like it cheap - so it is made other places that make this stuff for a lot less than our workers (unless its migrant labor but that too alas is departing our country at a rapid clip) will demand here at home. Now - how can we afford all this stuff - easy, we finance it through government debt. What would otherwise be inflationary when the Fed sells Treasuries (and no, the Fed doesn't print money - it sells Treasuries to raise rates or buys them which increases the money supply which lowers rates). So by looking at the FRED chart you can since that since the 2008 financial crisis we've been on a tear and federal debt held by the public has increased from a mere $5 trillion to today at about $29 trillion - a huge run up - meaning we are shipping our inflation out of the country to all these nasty nations buying our debt who in turn send us their money back in dollars for investment- which allow us to buy all the stuff we want, and more cheaply than we would otherwise. The bottom line to all this is - if we are serious about want to lower our trade deficit, we need to lower our budget deficit - significantly. Otherwise we are just pissing in the wind with all this tariff crap.
Although a bit simplistic, there is much truth to your analysis - and, yes, we need to launch a long, sober campaign to get deficits down and start chipping away at that debt mountain. For those of us in the MALA movement (Make America Liquid Again) the inflection point was 2000 - Clinton got us to the point where we were generating a small surplus and we were in position to help dear old Al Gore begin to make some progress on this front. Then Ralph Nader and the Greens blew up his campaign, the Republicans imposed the Bush tax cuts (and started a few wars), the Dems have been obliged to re-ignite the economy a few times and we have had chaos ever since. Time and again, the left and the right have conspired to put us on the road to ruin. We need to figure out how to grab the wheel and not let go this time.
Between what the Fed has added to the US money base (monetary policy - QE, etc) and the Fed Gov't added through public debt sales (fiscal policy expansion) over the last two plus decades - it is no wonder why our trade imbalance is at all time high. Compare the charts below and notice how in tandem monetary policy and fiscal expansion have move mostly in tandem with our import growth. And are import growth gap with exports has been widening. Now the Fed has been reducing its holdings - but the Fed Gov't (with a debt to GDP of 120%) is nowhere near being able to reduce its debt in any meaningful way - and DOGE is not a meaningful way. Either are the tariffs. The ONLY way it will happen is by CUTTING expenditures and INCREASING taxes - you need to manage both sides of the balance sheet. Otherwise in the next 20 years gov't interest payments will exceed it ability to fund its outlays - then will we fly into the abyss. Market economics is dispassionate - like the physics of a brick thrown at your head - unless you take action there will be a big problem - without question.
Largely in agreement and, based on my experience with trying to explain the need to contain costs to liberals in the past, this is going to be a very tough lift indeed. Spend a few years trying to explain government efficiency to Park Slope lefties and see if you don’t develop a drinking problem, as I did.
Voters like a leader that is strong and wrong vs weak and right. I hope that is no longer true with Trump but so many Maga are already saying why crashing the economy and the markets are a good thing.
What is missing from this argument, and from all of the hysteria of the low-information, Trump deranged media, is that we are on the launchpad of the AI technology revolution which changes the entire dynamic of President Trump’s strategy. Moore’s law has historically defined traditional high-tech efficiency gains as doubling every 18 months. But because of the self-learning dynamic of AI the anticipated technology gains are exponential. Offshore cheap and slave labor stitching Nikes and clothing will be obsoleted as a viable business model as they are replaced by robots built for a fraction of the cost of today’s factory automation furniture. President Trump’s plan is to build those AI factories in the US and there will be no tariffs on products built in these factories. Also, AI will soon replace most service industry jobs. But demand for AI technicians is rising and for people who can figure out how things work and build and maintain them, these are highly lucrative careers.
President Trump is once again correct; this is the opportunity for the US to put American ingenuity and our abundant resources and hardworking citizens to work to be masters of our own destiny. There are only two other alternatives; the managed decline of the failed Obama/Biden/Democrat/Wall Street cabal or socialism (from the same cabal). People voted for President Trump because of his vision for the first alternative and we choose to Make America Great Again. Candidate Trump explained his plans for tariffs during his campaign and he has a right to go off teleprompter and point out how he is keeping his promises. Meanwhile the mush for brains democrats and their Pravda media try to claim that Trump is using tariffs to create tax cuts for billionaires (these are the same mush for brains who can’t do arithmetic and have never been able to calculate that the middle tax brackets received a greater percentage tax reduction than the top brackets in Trump’s first tax cuts and will again). In terms of the stock market, we’re on the cusp of buying the dip. The Trump train rolls on!
The cost of building these AI plants of yours just went up exponentially - my wife and daughter are in the construction industry and are already struggling with cost increases caused by the tariffs. As for me, I have been receiving notifications from my vendors of their costs going up - the race is on and it will be many years before this AI magic of yours takes effect. And what’s this managed decline BS of yours (and many folks)? Before the election, The Economist dedicated an issue to the US being “the envy of the world” for its recovery from the pandemic. We are a large complex nation so that prosperity was not as evenly distributed as it ought to have been, but there was nothing to justify the raging self-pity that has led to this economic disaster. Revenge and retribution is not the basis for economic growth, it invariably leads to war and impoverishment.
“You’ve revealed yourself; you are just a child masquerading as an adult. Does your mommy know that you are playing with the computer? I have no time to play with children, especially petulant ones on the bottom of the IQ curve.”
AND
“I already told you I'm not going to play with children. Go play with your Legos.”
I’ll tell you what I don’t understand: what happened to you that you became such a spiteful troll. Even for a MAGA type, you seem possessed of strange obsessions. When did you decide that your mission in life was to hurl insults at everyone in the room?
Central sin is wanting foreigners who work for pennies to make our Nikes. When international union dream died, we all became exploiters of the poor, just not our poor. Like loving hundreds of thousand of Ukrainians dying, not us, outsourcing our war machine. then Capitalism decided to follow Marxism over the Stalinistic deep end, by revering Milton's famous dicta making dividends the only value.
This can't be fixed, any more than Communism could have been.
Hidden in the midst of this fine article was a quote from Joe.
"I've been wrong about Trump so many times"
What's the old quote, the one about the Definition of Insanity.
I got it, Doing the same thing over and over again and expecting a different result.
That's the definition of insanity.
Joe, if you are able to come to that conclusion about Trump. Stop in your tracks and consider, you may be backing the wrong horse.
Timid fearful politicians say, you should use a scalpel when making cuts with trade policies.
Call in the experts, they will know exactly where to cut. The so called experts all have loud opinions where the scalpel should cut. Trying to please everyone while the country sinks. Wishy washy politicians get fearful. Intellectual, sophisticated augments rage back and forth and guess what? NOTHING ever happens.
A strong and determined politician says, Why not use a chainsaw?.
Funny thing, it works beautifully. No so called experts and no arguments. Its getting done. Three glorious words. The day the working class finally get a piece of the American dream.
Actually, the quote was: . "But I’ve predicted disaster for Donald multiple times in the past…and it never quite arrives" I was talking about public opinion--starting with him saying John McCain was not a hero because he got shot down--not about Trump being right or wrong about policy. I've agreed with Trump on some issues like closing the border, ending racial preferences, (sane, surgical) government reform. I find so much else about him repulsive, especially his betrayal of Ukraine and our allies. I've known the guy since his days as a NY developer. He's been a shyster, a grifter, a baloney-slicing liar throughout. What I can't understand is how the Democrats got so silly-left that this miscreant seemed a plausible alternative.
Excellent piece! I am still in support of free trade, but it definitely has a downside, and Trump has exploited it to the hilt and made his base feel that he is sticking up for him. But these tariffs will be a huge burden on the economy, unless Trump can use them to quickly negotiate trade agreements that will benefit the USA. But if he can't, we have seen Trump declare a victory in defeat before and then pivot. He may end up doing that if his tariffs begin to wreck the economy, and they will!
With all great changes, other than a new war, am willing to let time pass, usually at least six months, before making any real decisions on which way it is going to go.
On the other hand, as the Greeks used to say: Those who the Gods would destroy, they first make mad. The problem with Trump is, when do you know that has arrived.
Thank you Joe, I appreciate your reply. Yes your quote was, I've predicted disaster for Trump so many times and the disaster never quite seems to arrive. This week in your column you were predicting disaster again. Guess what? Once again it will never quite arrive.
Next week there will be another disaster that never quite arrives, and the following week........
I rest my case your Honor. Any hint here we may be approaching the Definition of Insanity.
Joe - Jack Welsh and his rising quarterly profits from the financial engineers at GE Capital - the only engineers he favored - set the template. Then Detroit and Boeing followed, as did the financial press and Wall Street analysts and too many companies fell into that marsh, never to get their heads out of that Welsh- created muck.
So the bigger question is - Why do we have such a huge trade deficit? Is it because we are getting hosed by all those nasty tariffs from our trading partners? Actually, no - it is for one simple reason, we in the US buy a lot of shit - a really huge amount of shit. Why? Because we like all this stuff and we like it cheap - so it is made other places that make this stuff for a lot less than our workers (unless its migrant labor but that too alas is departing our country at a rapid clip) will demand here at home. Now - how can we afford all this stuff - easy, we finance it through government debt. What would otherwise be inflationary when the Fed sells Treasuries (and no, the Fed doesn't print money - it sells Treasuries to raise rates or buys them which increases the money supply which lowers rates). So by looking at the FRED chart you can since that since the 2008 financial crisis we've been on a tear and federal debt held by the public has increased from a mere $5 trillion to today at about $29 trillion - a huge run up - meaning we are shipping our inflation out of the country to all these nasty nations buying our debt who in turn send us their money back in dollars for investment- which allow us to buy all the stuff we want, and more cheaply than we would otherwise. The bottom line to all this is - if we are serious about want to lower our trade deficit, we need to lower our budget deficit - significantly. Otherwise we are just pissing in the wind with all this tariff crap.
Although a bit simplistic, there is much truth to your analysis - and, yes, we need to launch a long, sober campaign to get deficits down and start chipping away at that debt mountain. For those of us in the MALA movement (Make America Liquid Again) the inflection point was 2000 - Clinton got us to the point where we were generating a small surplus and we were in position to help dear old Al Gore begin to make some progress on this front. Then Ralph Nader and the Greens blew up his campaign, the Republicans imposed the Bush tax cuts (and started a few wars), the Dems have been obliged to re-ignite the economy a few times and we have had chaos ever since. Time and again, the left and the right have conspired to put us on the road to ruin. We need to figure out how to grab the wheel and not let go this time.
Between what the Fed has added to the US money base (monetary policy - QE, etc) and the Fed Gov't added through public debt sales (fiscal policy expansion) over the last two plus decades - it is no wonder why our trade imbalance is at all time high. Compare the charts below and notice how in tandem monetary policy and fiscal expansion have move mostly in tandem with our import growth. And are import growth gap with exports has been widening. Now the Fed has been reducing its holdings - but the Fed Gov't (with a debt to GDP of 120%) is nowhere near being able to reduce its debt in any meaningful way - and DOGE is not a meaningful way. Either are the tariffs. The ONLY way it will happen is by CUTTING expenditures and INCREASING taxes - you need to manage both sides of the balance sheet. Otherwise in the next 20 years gov't interest payments will exceed it ability to fund its outlays - then will we fly into the abyss. Market economics is dispassionate - like the physics of a brick thrown at your head - unless you take action there will be a big problem - without question.
https://fred.stlouisfed.org/series/IMPGS
https://fred.stlouisfed.org/series/EXPGS
https://fred.stlouisfed.org/series/FYGFDPUN
https://fred.stlouisfed.org/series/WALCL
Largely in agreement and, based on my experience with trying to explain the need to contain costs to liberals in the past, this is going to be a very tough lift indeed. Spend a few years trying to explain government efficiency to Park Slope lefties and see if you don’t develop a drinking problem, as I did.
Voters like a leader that is strong and wrong vs weak and right. I hope that is no longer true with Trump but so many Maga are already saying why crashing the economy and the markets are a good thing.
I weep for my elders trying to rest and retire.
What is missing from this argument, and from all of the hysteria of the low-information, Trump deranged media, is that we are on the launchpad of the AI technology revolution which changes the entire dynamic of President Trump’s strategy. Moore’s law has historically defined traditional high-tech efficiency gains as doubling every 18 months. But because of the self-learning dynamic of AI the anticipated technology gains are exponential. Offshore cheap and slave labor stitching Nikes and clothing will be obsoleted as a viable business model as they are replaced by robots built for a fraction of the cost of today’s factory automation furniture. President Trump’s plan is to build those AI factories in the US and there will be no tariffs on products built in these factories. Also, AI will soon replace most service industry jobs. But demand for AI technicians is rising and for people who can figure out how things work and build and maintain them, these are highly lucrative careers.
President Trump is once again correct; this is the opportunity for the US to put American ingenuity and our abundant resources and hardworking citizens to work to be masters of our own destiny. There are only two other alternatives; the managed decline of the failed Obama/Biden/Democrat/Wall Street cabal or socialism (from the same cabal). People voted for President Trump because of his vision for the first alternative and we choose to Make America Great Again. Candidate Trump explained his plans for tariffs during his campaign and he has a right to go off teleprompter and point out how he is keeping his promises. Meanwhile the mush for brains democrats and their Pravda media try to claim that Trump is using tariffs to create tax cuts for billionaires (these are the same mush for brains who can’t do arithmetic and have never been able to calculate that the middle tax brackets received a greater percentage tax reduction than the top brackets in Trump’s first tax cuts and will again). In terms of the stock market, we’re on the cusp of buying the dip. The Trump train rolls on!
The cost of building these AI plants of yours just went up exponentially - my wife and daughter are in the construction industry and are already struggling with cost increases caused by the tariffs. As for me, I have been receiving notifications from my vendors of their costs going up - the race is on and it will be many years before this AI magic of yours takes effect. And what’s this managed decline BS of yours (and many folks)? Before the election, The Economist dedicated an issue to the US being “the envy of the world” for its recovery from the pandemic. We are a large complex nation so that prosperity was not as evenly distributed as it ought to have been, but there was nothing to justify the raging self-pity that has led to this economic disaster. Revenge and retribution is not the basis for economic growth, it invariably leads to war and impoverishment.
Curtis, What part of:
“You’ve revealed yourself; you are just a child masquerading as an adult. Does your mommy know that you are playing with the computer? I have no time to play with children, especially petulant ones on the bottom of the IQ curve.”
AND
“I already told you I'm not going to play with children. Go play with your Legos.”
don’t you understand?
I’ll tell you what I don’t understand: what happened to you that you became such a spiteful troll. Even for a MAGA type, you seem possessed of strange obsessions. When did you decide that your mission in life was to hurl insults at everyone in the room?
Okay, smarty pants…we will see.
Assuming that AI will no longer be making the egregious errors I currently see it making, I guess ...
Central sin is wanting foreigners who work for pennies to make our Nikes. When international union dream died, we all became exploiters of the poor, just not our poor. Like loving hundreds of thousand of Ukrainians dying, not us, outsourcing our war machine. then Capitalism decided to follow Marxism over the Stalinistic deep end, by revering Milton's famous dicta making dividends the only value.
This can't be fixed, any more than Communism could have been.
forgot the chart - https://fred.stlouisfed.org/series/FYGFDPUN
Hidden in the midst of this fine article was a quote from Joe.
"I've been wrong about Trump so many times"
What's the old quote, the one about the Definition of Insanity.
I got it, Doing the same thing over and over again and expecting a different result.
That's the definition of insanity.
Joe, if you are able to come to that conclusion about Trump. Stop in your tracks and consider, you may be backing the wrong horse.
Timid fearful politicians say, you should use a scalpel when making cuts with trade policies.
Call in the experts, they will know exactly where to cut. The so called experts all have loud opinions where the scalpel should cut. Trying to please everyone while the country sinks. Wishy washy politicians get fearful. Intellectual, sophisticated augments rage back and forth and guess what? NOTHING ever happens.
A strong and determined politician says, Why not use a chainsaw?.
Funny thing, it works beautifully. No so called experts and no arguments. Its getting done. Three glorious words. The day the working class finally get a piece of the American dream.
Actually, the quote was: . "But I’ve predicted disaster for Donald multiple times in the past…and it never quite arrives" I was talking about public opinion--starting with him saying John McCain was not a hero because he got shot down--not about Trump being right or wrong about policy. I've agreed with Trump on some issues like closing the border, ending racial preferences, (sane, surgical) government reform. I find so much else about him repulsive, especially his betrayal of Ukraine and our allies. I've known the guy since his days as a NY developer. He's been a shyster, a grifter, a baloney-slicing liar throughout. What I can't understand is how the Democrats got so silly-left that this miscreant seemed a plausible alternative.
Excellent piece! I am still in support of free trade, but it definitely has a downside, and Trump has exploited it to the hilt and made his base feel that he is sticking up for him. But these tariffs will be a huge burden on the economy, unless Trump can use them to quickly negotiate trade agreements that will benefit the USA. But if he can't, we have seen Trump declare a victory in defeat before and then pivot. He may end up doing that if his tariffs begin to wreck the economy, and they will!
With all great changes, other than a new war, am willing to let time pass, usually at least six months, before making any real decisions on which way it is going to go.
On the other hand, as the Greeks used to say: Those who the Gods would destroy, they first make mad. The problem with Trump is, when do you know that has arrived.
Me, I’ve got enough evidence to go with “stark, raving mad” at this point.
And you may be right, patience is not always right or a blessing.
Thank you Joe, I appreciate your reply. Yes your quote was, I've predicted disaster for Trump so many times and the disaster never quite seems to arrive. This week in your column you were predicting disaster again. Guess what? Once again it will never quite arrive.
Next week there will be another disaster that never quite arrives, and the following week........
I rest my case your Honor. Any hint here we may be approaching the Definition of Insanity.
Another big hurt for
Auto companies was places like Mexico
And Tennessee helping to break the unions by offering cheaper labor