No Matter What Trump Says: Nothing Will Be That Simple

By Rich Kozlovich

The Washington Examiner ran an article entitled, Trump's trade war won't make America great again, discussing how Trump wants to place tariffs on trade with Mexico and China....and who knows who else.  I often wonder if he realizes what he's saying, or whether he even cares what he's saying.  He's an international businessman.  He has to know starting trade wars is like suing someone.  When you sue someone they have the tendency to get really ticked off about it and then counter sue.  From that point on it's like riding a tiger.  You can't just stop and say - I was only kidding!  Trade wars are much the same.

President Herbert Hoover thought supporting a tariff would act as a boost to employment.  Hoover thought this would create jobs by forcing Americans to buy American products and enhancing employment ending the recession. A recession his tariff turned into a tariff war - a tariff war that really started the Great Depression.

We're constantly told the stock market crash of 1929 caused the great depression.  That's not entirely accurate.  The unemployment rate before the crash was less than 2%, and the crash caused a recession that would have most likely bottomed out in two years with only 8% unemployment.  Remember - very few people owned stocks in those days.  Most recessions - and there were a number of them over the years - lasted around two years, and then bottomed out.  Recessions are the fix of imbalances in the economic system.  They're called creative destruction.  They destroy and replace what's incompetent, inefficient, corrupt or out of balance.  

Hoover signed into law the Smoot Hawley Tariff bill in 1930 and unemployment soared to 15%.  This and other other federal interventions by Hoover triggered the beginning of what now would be called the Great Depression. 

What gave impetus to the Great Depression and extending it for the next 12 years was Roosevelt's New Deal.  Roosevelt ran against Hoover criticizing him for his policies and then out Hoovered Hoover when he became Pesident with unending federal interventions in business starting with the National Recovery Act.  Federal interventions that were found to be unconstitutional two years later.   It was too late, the damage had been done and the nations unemployment bounced between 9% and 25% averaging 15% until the advent of WWII. 

But it wasn't the war that ended the Great Depression - that merely gave us full employment.  It really ended when Truman eliminated many of Roosevelt's socialist New Deal schemes, which were neither new or a deal, but were patterned after Woodrow Wilson's fascist administration during WWI.  Same programs with different names run by many of the same people who worked for Wilson.  But America had the only industrial base left in the world after the war.  Every other nation's industrial base had been destroyed, and they were all bankrupt.  If you wanted to buy finished products you had to buy them from us, and Americans became great consumers themselves. 

The perfect economic storm, and in this case a positive storm which gave us an anomalous 25 year period of amazing prosperity. 

That's gone and will not return.....except......we're coming to the end of the Bretton Woods era.  America can no longer can afford to be the world's policeman or subsidize the world's economy.   We're looking at an end to the world's economy as we know it. 

The European Union is doomed.  Europe is economically, philosophically, morally and militarily bankrupt without the means to create capital on it's own without huge exports and even more importantly - they're breeding themselves out of existence, and I include Russia in this mix. 

China is ever worse with a banking system that's nothing more than a department of the Chinese government publishing figures that can in no way be checked and are clearly fraudulent.  China's economic miracle is a illusion.  The Chinese leadership committed China to an economic system of full employment - not profitability.  The debt load in China is un-payable!  Their economy is based on exports - period.  Without massive buying from outside China their nation will collapse, no matter how big their internal market may be - and that's soon to come.  See more here.

By 2030 the world will be as different as we can imagine.  By 2030 some countries like Greece will no longer exist as independent nations and the only country that is capable of creating the capital to recover on it's own will be the United States.  Our economy is only based on 20% exports.  We have most of what we need and will recover bringing back many of the industries that left go to China and other areas of the world.  Bretton Woods will be dead by then!  America will only interfere in international affairs when it's in the nation's interests - either economically or defensively - because America will no longer be able to afford to do more. 

Now - does Trump believe this talk of tariffs will speed up the process of ending Bretton Woods for the nation's benefit - or is it just flatulence?  I think the latter.  Trump's real concern should be what role the United Nations will play in all of this.  That's where the real crisis lies! 

Oh, there is one more thing none of the candidates are talking about.  How are we to pay off the national debt?  Just a passing thought!