Category Archives: Debt

Trade Deficits In The Context Of State-Managed Trade And Systemic Debt

Capitalism, Debt, Economy, Free Markets, The State

THE NEW COLUMN is “Trade Deficits In The Context Of State-Managed Trade And Systemic Debt.” It’s now on Townhall.com.

An excerpt:

… What goes for “free trade,” rather, is trade managed by bureaucratic juggernauts—national and international—central planners concerned with regulating, not freeing, trade; whose goal it is to harmonize labor, health, and environmental laws throughout the developed world. The undeveloped and developing worlds generally exploit and pollute as they please.

One of the promises Candidate Trump had made and hasn’t yet violated was to simply make these statist organs and trade agreements work for the American people. To wit, the president believes in reducing trade deficits.

Far be it from me to endorse tariffs as a means of reducing trade deficits. I am only here questioning the totemic attachment free-traders have to trade deficits, given that Americans live under conditions of systemic debt and state-managed trade that is anything but free.

If free trade is an unknown ideal, it is quite appropriate to question the alleged glories of an aggregate, negative balance of trade, in this “rigged system,” as Trump would say.

As to systemic debt: Yes, libertarians ought to oppose tax increases, which is what tariffs are. We hold that voluntary exchanges are by definition advantageous to their participants. Trader Joe’s, my hair stylist and the GTI dealer—all have products or skills I want. Within this voluntary, mutually beneficial relationship, I give up an item I value less, for something I value more: a fee for the desired product or service. My trading partners, whose valuations are in complementary opposition to mine, reciprocate in kind.

Ceteris paribus (all other things being equal), there’s nothing wrong with my running a trade deficit with Trader Joe’s, my hair stylist or my GTI dealer, as I do—just as long as I pay for my purchases.

And there’s the rub: The data demonstrate that we Americans, in general, are not paying for our purchases.

Americans, reports Fortune.com, actually have more debt relative to income earned than Greeks. “Indebted U.S. households carry an average credit card balance of $15,706, according to NerdWallet.”

Corporate America is likewise heavily leveraged.

The Federal government is the definition of debt. The U.S. national debt is over $20 trillion without federal unfunded liabilities. Those exceed $210 trillion, by Forbes’ 2017 estimate. Total public debt as a percent of Gross Domestic Product, announced the Federal Reserve Bank of St. Louis, is 104 percent.

Our improvident government’s debts, liabilities and unfunded promises exceed the collective net worth of its wastrel citizens.

Given these historic trends, it seems silly to dismiss the yawning gap between U.S. exports and U.S. imports as an insignificant economic indicator.

Because of decades of credit-fueled, consumption-based living, the defining, current characteristic of our economy is debt—micro and macro; public and private. Unless one is coming from the pro-debt Keynesian perspective, is this not an economically combustive combination? …

… READ THE REST. “Trade Deficits In The Context Of State-Managed Trade And Systemic Debt” is now on Townhall.com.

The Mercer Column can be read on WND, as well, titled “State-Managed Trade Is Not Free:” “The defining, current characteristic of our economy is debt.”

It’s also on The Unz Review, America’s smartest webzine.

‘In South Africa, More People Have Loans Than Jobs’

Africa, Culture, Debt, South-Africa

“Household debt is hobbling the black middle class” of South Africa. Via The Economist:

* South Africans are the world’s most avid borrowers, according to the World Bank. A study published in 2014 showed that 86% had borrowed money in the previous year.
* Most borrow from friends or family, but an astonishing 25m out of about 37m adult South Africans owe money to financial institutions or other corporate lenders (such as utilities or shops that allow them to buy now and pay later).
* Fewer than 10m people are formally employed (although many more work on farms or in the informal economy, where statistics are not reliable).
* Many South Africans are ignorant of the basics of personal finance, a trait that transcends income levels. Neil Roets, who heads Debt Rescue, a debt-counselling firm, says new clients are first asked for their household budget. Most do not have one. “We get people coming in who earn very big salaries…and have never learned how to work with money.”

MORE about the great South-African success brought about by the “Anglo-American axis of evil.”

Why Aren’t Dumb Republicans Calling Out Democrats For Devotion To DACA, Not America?

Debt, Democrats, Government, IMMIGRATION, libertarianism, Republicans

From the libertarian perspective, we want the Federal Government to shut down and not to open. Even a temporary shutdown, an exercise repeated annually to the same hysteria, will make little difference.

What never fails to surprise is the irredeemable stupidity of the Republicans—even though it, too, is as inevitable as water spiraling down a plughole. Tactically speaking, Republicans need to be shouting from the rooftops that Democrats are fighting, not for the American people, but for illegal aliens. What kind of party got to bat for non-citizens? A political party must represent its countrymen.

UPDATED: ‘Continuity Candidate’ Jerome Powell To Chair The Federal Reserve System

Debt, Economy, Federal Reserve Bank, Inflation

“Paul Volcker looks especially good right about now” given the appointment of “continuity candidate” Jerome Powell to chair the Federal Reserve Bank.

MORE:

“Paul Volcker Looks Pretty Good Right About Now” By Jeff Deist.

“Trump Taps Jerome Powell to Chair Fed” @ CATO

UPDATE:

“The Swamp Wins: Trump Nominates Powell to Replace Yellen“:

… in naming Powell, Trump is picking an Obama-appointed Fed Governor for his most important nominations is itself quite fitting. While we have long known that bad monetary policy is bipartisan, Powell’s nomination serves as a particularly useful illustration of how little has changed in Washington since the Bush Administration.

Of course, just as Trump received his loudest applause from Washington for doing his best impersonation of his two predecessors, the President is already being praised for making a “grown up” decision when it comes to the Fed.