Tag Archives: China Trade War

Trump China Tariff Policy-Win-Win for the US!

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Watching the pundits and supposed political/business “experts” on TV would be comical if the stakes were not so high in the current US/China trade issues.  I would suggest to those TV talking heads that they should read Trump’s past books in order to “get it” and understand what Trump’s play is in this “trade war”.

Trump has two primary and simple objectives:

  • To rebalance our trade with China and eliminate the $500 billion trade deficit with China.
  • To eliminate the intellectual property theft by China from US companies doing business in China.

That’s it!  But, what is his strategy?  His tweets are confusing!  He seems to be jumping around with what he wants out of China from day to day.

Pay careful attention.   Here is the Win-Win:

  • Trump wins if China NEVER agrees to a trade deal!  Really?  Yep.  How?  Well, the US will collect about $100 billion per year in tariffs even if Trump does not raise them any higher.  That will reduce our trade deficit to $400 billion by itself (20% reduction).  During the ensuing months, US companies will have to find other countries, including the US, to produce their products.  This is the “revamping of the supply chain” that you hear about.  China will continue to lose manufacturing businesses to other countries and the US consumer will not see any significant price increases.  (July consumer price index rise was well below the FED inflation target!)  Why, because, until those companies leave China, China will have to keep devaluing their currency, negating the impact of our tariffs, as well as keep subsidizing its companies in order for them to compete with the tariff penalty.  China has to pay for the tariffs or risk losing manufacturing business even faster!  IF China continues to stonewall the negotiations, in time they will lose our business to other nations who are not subject to our tariffs.  Further, since our companies are leaving China, no further intellectual property theft will take place.  But the biggest prize Trump is seeking IS THE WEAKENING OF CHINA AND A WEAKENING OF THEIR MILITARIZATION POLICIES.  Without US trade, China’s cash flow will dwindle and they will be forced to reduce military spending just to keep their domestic base happy.
  • Trump Wins If China Agrees to a Trade Deal!  Trump will not back down on rebalancing our trade and eliminate our trade deficit with China as well as stopping China’s theft of our intellectual property.  He has no need to negotiate these away as he benefits that longer this drags on.  The only risk he is running is whether inflation, based on price increases due to his tariffs, starts hitting our consumers.  But, Trump is keeping pressure on oil producing nations to keep gas prices down (1 cent at the pump puts $1 billion back into our consumer’s pockets), all the while using the tariff income to subsidize our industries who may be suffering from China backing out of purchasing US goods. 

Trump is also betting that he has a second term as this trade war may not end, either way, during a single term.  China thinks that it has nothing to lose by waiting Trump out in the hopes that he is defeated in November of 2020.  Think again.  Trump will win again and at that point he will NOT need China to sign the deal.  He can merely wait them out until all of our companies have revamped their supply chains and abandon China altogether…  Then, Trump also wins the “cold war” with China in terms of its military build-up. 

Trump is already warning US companies to stop putting all of their eggs in China’s basket.  Apple is probably the most vulnerable as it relies almost 100% on China to product its products.  This would be a bad strategy regardless of the tariff war.  To give China that kind of power over your company is simply bad business.  Others are in a similar predicament.

All the talk about how strong China is economically is rubbish.  The US GDP is $21.5 Trillion while China is only $14.2 Trillion.  Looking at per capita GDP, the US in 2019 will come in at $65,062 per person while China will continue to lag behind at $10,099 per person.  The current “trade war” is hurting China and will continue to do so unless they come to the table.

When you hear the talking heads say Trump’s China policy is not effective, change the channel.  They clearly do not get Trump’s policy, economic or military.  

RD Pierini

@RDPierini

 

Trump Vs The Federal Reserve (Fed)

Federal Reserve “Palace”, Eccles Building Washington DC

Are you one of those who listen to the political pundits bad-mouthing Trump for criticizing the Federal Reserve policies and its Chairman Powell?  If you think the President is wrong to criticize the FED, consider the following.

The Federal Reserve (FED) is an extra-constitutional institution that was created in 1913 to stop financial crisis and provide stability to our nation’s credit, its banks, and to protect consumers.  Ironically the FED did nothing to prevent or end the Great Depression, and the recessions that have plagued this nation including the recessions of 1980 and 2008.  Following the recession of 1980 that was accompanied by runaway inflation, the FED was given additional powers to “control” inflation.  In short, our nation’s entire fiscal health, and the health of our banking systems, rely on an institution that is not mentioned in the US Constitution; is totally governed by 7 unelected citizens; and is advised only by 12 individuals from the banking industry that the FED is supposed to manage.  

The Fed is led by the Federal Reserve Board (FRB) comprised of seven Presidential appointed “governors”.  Below the are two additional levels of UNELECTED BUREAUCRATS.  Below the FRB, is the Federal Open Market Committee (FOMC).  Its membership is comprised of the seven members of the FRB plus five of the twelve  Federal Reserve Bank Presidents.  The Federal Advisory Council comprised of twelve REPRESENTATIVES OF THE BANKING INDUSTRY.  The FAC “advises” the FRB on all matters under its jurisdiction.  

Finally, the Federal Reserve Act created Twelve (not sure why they were hung up on the number twelve) Federal Reserve Banks, each of which is responsible for member banks located in its district.  (This was before national and international banks!)  

Each of these FED banks has a President appointed by its board of director.  While District Federal Reserve Banks are purported to be independent from its member banks, the MEMBER BANKS DO ELECT SIX OF THE NINE OF THE REGIONAL FEDERAL BANK’S BOARD!  

Sorry for the dissertation on the structure of the FED but the key points are:

  • The Fed is Extra-Constitutional
  • The Fed management is devoid of any elected individuals
  • The FED is controlled by 7 non-elected officials that are appointed by Presidents.
  • The banking industry itself controls the boards or members of Federal Reserve Advisory Council and the District Federal Reserve Banks.
  • The FED creates banking regulation and regulates private banks, PERIOD.  No elected official or agency of the Executive Branch has any sway over these banking regulations.  
  • Yes, the President can nominate the members of the FED Board and the nominees have to be confirmed by the Senate but any actions undertaken by the FED is not subject to Congressional or Executive Oversight!

So, the Federal Reserve can “create” money; manage how much of our cash is available to world; set funds rate which sets interest rates; print  money then buy back US debt also known as Quantitative Easing and monetizing the debt!  All this without any check or balance, nor anyone on the FED being elected by US voters!

YOU THINK THE FEDERAL DEBT IS $22.3 TRILLION!  NOPE, THE FED HAS “BORROWED (PRINTED) ANOTHER $4 TRILLION FOR A TOTAL NATIONAL DEBT OF $26.3 BY USING QUANTITATIVE EASING.  

Should the President Publicly Challenge the FED?  Someone Better!

During the Obama Presidency, the FED not only pumped $4 Trillion into the economy by borrowing (printing) money, they also drove interest rates down to zero Then when President Trump came in, the FED began to pay down, (remove cash from the economy), and then went through 6 additional Fed Rate increases (this increases your credit card and mortgage Interest rates) beginning in March 2016 raising the interest rate to 1%, until December of 2018 raising the funds rate to 2.5%. 

All of these actions depress the economy! 

These actions by the FED were justified as making sure inflation did not get out of control as the Trump economy was booming!  What, there wasn’t and still isn’t any inflation!

What you need to know is that raising interest rates slows economic growth, and what supposed “conventional wisdom” defines as inflation!    It is a mechanism that has been used to curb INFLATION.  Paying down the monies borrowed by the FED also slows down economic growth by taking cash out of the market. The FED set a target of 2% inflation following the Jimmy Carter presidency that featured an exploded inflation rate accompanied by the FED exploding interest rates to over 16%.    During the Trump administration and the economic growth under Trump in 2019, teh economy has yielded an inflation rate AT A LOWER RATE THAN THE 2% FED TARGET!  Thiws is why The President keeps saying that especially the last Fed interest rate hike in 2018 was deflationary and seriously damaged the growth of our economy.

The FED, the National Debt, and Globalism:

Why is the FED fighting against the Trump economy?  Why is the National Debt still rising?  and Where is the FED in all of this?

Remember, the FED is totally comprised of and controlled by International bankers.  The vast majority are globalist in that they believe that a “balance” among nations economically is good for all.  The only problem is that the FED charter has nothing to do with making sure nations, other than America, are financially sound.  Some argue that international economic stability is our responsibility.  Then why don’t we have a say in the really dumb decisions made by EU nations, China, Russia and other nations that are driving their own economies into the toilet?  Why is our economy held hostage by poor decisions being made by other countries!

Why is our National Debt still rising?  Two reasons, One is an corrupt Congress that does not have the guts to change its own rules allowing spending to keep climbing due to automatic increases each year.   Two, a FED, aided and abetted by Congress, the US Chamber of Commerce, and the Business Roundtable, that constantly depresses the US economy and makes sure that our growth and ensuing tax revenues do not strengthen our economy vis-à-vis other nation’s economic growth.  If the US economy is flat, then even if Congressional spending is flat, we can never pay down our national debt.  IF the Trump economy can generate an annual increase in our Gross Domestic Product in the 3-4% range, tax revenues will increase and eventually start chipping away at our national debt.  (Why not raise taxes?  Raising taxes decrease tax revenue.  Tax decreases increases tax revenues.  This is a historical fact!) 

The FED makes sure that our international globalist can move their investments and businesses out of the US into countries that increase their profits.  THE FED AND THESE SELF-INTERESTS AND FOREIGN NATIONS promote foreign countries to maintain tariffs on US imports further depressing US growth and US job promotion.  

President Trump’s

BUY AMERICAN, HIRE AMERICAN

is the Antithesis to the goals of the FED, the Globalists, the US Chamber of Commerce, the Business Roundtable and the Progressive Left.

This is why the President is taking on the FED chairman Powell directly and in the public square.  Continued rate hikes without inflation in excess of 3% is recessionary and contrary to the US National Interest.  The President understands that no matter what he does in terms of regulation and tax cuts, the FED can counterbalance his moves by merely printing more money or raising interest rates.  The President’s economy is generating inflation because for every job gained, PRODUCTIVITY per hour is increased.  For every good produced in this country versus China or elsewhere, GDP and tax revenues into the US treasure are increased!  

TARIFFS, NOT REALY A TAX ON US CITIZENS.

You hear every day that US Tariffs on other nations good being brought into the us are TAXES ON US CONSUMERS.  Not True in the Long Run and Not really true in the short to medium term.  Why?  Ask yourself, “How can the US inflation be less than 2% if ur Tariffs are increasing the cost of the good we import to any significant degree?  Answer, they are not! 

The exporting country, say China, cannot afford to loose production nor revenue due to US tariffs.  Also remember, that China is a communist country whose economy is totally controlled by its communist party.  So, China will devalue their own currency to offset some or all of the tariffs.  How does this work?  Say they export an item to the US that costs them $1.00.  We put a 25% tax on that item so the cost of that item would be $1.25.  By devaluing their currency by say 10%, the real tariff cost for the item is $1.125.  Then, in order for the Chinese factory to not loose the $0.125 per item, the Chinese government creates a subsidy for the factory in the amount of $0.125 per item.  In the end, the item cost is still $1.00 to US Consumers.  This is exactly what is happening to China today!  

In the short term, most of the exporters of Chinese goods have forward contracted with Chinese manufacturers to by their goods at a set price over a period of time.  Most are hedged against the Chinese currency to avoid loses due to Chinese currency manipulation.  So, in the short-term, the goods sold to US consumers do not carry a price increase. 

For items like electronics, South Korea and Japan have forced prices down by $150 or so per television over the past 18 months for example.  Our tariffs on Chinese TVs would have no impact on US consumers for specific items as they can buy the less expensive Korean or Japanese TVs.  In the medium to long term, these exporters can seek other country’s suppliers especially Viet Nam, Japan and South Korea.  During this same time frame, the Chinese manufacturers who have non-Chinese partners, will see their non-Chinese partners move their investments to other countries or even the US to avoid the tariff impacts.  Many already have plants in multiple non-Chinese countries.

So, President Trump has to fight for the US consumer on many, many fronts.  The FED is certainly at the top of the list as they can kill the impact of Trump economic moves and even drive the US into a Recession.  The FED can also manipulate our currency and overvalue it and kill our ability to export, especially agricultural goods that are priced on international markets.  

Congress is also a stumbling block as they typically support their big donors, regardless of party, and these include the US Chamber of Commerce, the Business Roundtable, the Koch Bros. and others.  While they give lip service to supporting America First, just listen to these political hacks when Trump threatens tariffs on Mexico and others.  In this case, the day Trump threatened to impose a 5% tariff on Mexico, their Peso was devalued at over 5% thus negating the impact of the tariffs in the short-term.  Congress will always stand behind global interests, until we institute term limits and expel these hacks from Congress.

Keep Up the Good Fight!

So, when you hear the talking heads and political hacks decrying Trump Tariffs, consider the sources.  Trump knows that the Chinese tariffs may in time case some of the Chinese goods to be more expensive for US consumers.  In the meantime, he has ramped up US energy production to drive down gas prices for consumers and manufactures alike in order to buffer potential Chinese price increases. 

What always gets me is to hear pundits say that it is better for US consumers to be able to by cheap goods from China than to have those goods produced in the US.  Good for Who?  If you have been laid off at a factory and receiving unemployment or welfare, your purchasing power has been seriously reduced.  Further, rather than you paying taxes and increasing revenue into our treasury, and keep circulating your wage income within the US, you are taking from our treasury and the dollars we are spending with China leave this country and are never recirculated within the US!  Moving jobs out of the US no matter the cost of a tennis shoe is never a net benefit to this nation.  

———————

Note:  if you have a chance, read “Why America Will Fail-Unless the People Take Back Their Country” by clicking on this link: https://wp.me/pY51c-yo  It will explain in more depth the structure of the FED and other institutions and how many of our economic safeguards have been removed intentionally by the globalist.

RD Pierini

@RDPierini

 

Hat Tips

https://en.wikipedia.org/wiki/Federal_Reserve

https://www.thebalance.com/fed-funds-rate-history-highs-lows-3306135

https://www.investopedia.com/terms/f/federalfundsrate.asp

https://www.investopedia.com/articles/03/122203.asp

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2019

https://www.quora.com/What-should-be-the-ideal-inflation-rate-for-country-like-India-and-why

Top 10 Countries with Largest National Debt-to-GDP in 2018

 

The Left Has Trump Right Where He Wants Himself for 2020!

You are witnessing a crescendo of Media, DOJ, FBI, Swamp, and RINO attacks against President Trump.  Pelosi and Reed are circling their collective toilet bowl in joining the fray.  The goal, to kill any chances of Trump being a two term President.  Their goal, to make sure no one from the private sector ever try to run against the Progressive-Left swamp agenda.  Their goal, to stop President Trump’s America First agenda and reset the Progressive-Left/Obama Globalist/Socialist dominance.  To put America in its “rightful place” as subservient to our enemies.

In order to view this from Trump’s perspective, go back to the 2016 campaign and ask yourself who supported candidate Trump and who opposed candidate Trump?  Trump’s support came from you, middle-class Americans who were tired of being told you are not doing enough for the world while you witnessed Republicans and Democrats pairing with the global Progressive-Left media,  global businesses and governments to rob you and your children of your American Heritage.  You saw those same Anti-American traitors do everything in their power to negate a phrase from our Declaration of Independence that we all hold dear:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”  

So where is President Trump in this current onslaught to take him out and to destroy him and his family completely?

President Trump is fighting every single minute of every single day for you and your family.  He is continuing to fight to deliver the promises you asked him to keep to ensure that our children continue to have the ability to pursue their personal, spiritual and economic happiness.  He is the lone barrier to a complete world dominance of the United States and a takeover by globalist powers.  He stands alone against a Progressive-Left media and both Republican and Democrat politicians who are in sync in their efforts to stop Trump’s America First.  Just ask yourself, how many Republicans are actually fighting to support President Trump and your interests?  Not many and even those who once in a while support us also bend with the wind and oppose us and President Trump! 

Today, the Progressive Left is constantly accusing President Trump of Colluding with the Russians to harm America, Obstructing Justice by firing the disgraced Jim Comey, Obstructing Justice by firing AG Jeff Sessions, Obstructing Justice by opposing the Mueller Witch Hunt, criminal Federal Election Law abuses by paying off two women alleging sexual improprieties even though these actions began in 2014, one and a half years before Trump announced his candidacy, and investigations of the Trump Foundation for various alleged unlawful actions.  There are more but suffice it to say that the entire federal bureaucracy, the DOJ and the FBI, State Attorneys General,  the media, and both political parties are using every tactic they can to Stop Trump!

Trump is standing firm and fighting back with everything he has at his disposal.  The DOJ/FBI/Mueller are using despicable tactics to coerce cooperation from anyone Trump has ever met to get to Trump.  Trump is standing firm on his agenda and fights every day to accomplish your America First aspirations.  Trump is taking his fight directly to his foes and is relying on you to stand with him against the rest of the world!

Trump 2020 Tactic

Trump will use all of those aligned against him as cut outs to attack their agenda to take America Down.  He will use all of those aligned against him to draw the contrast between America First and those who embrace taking America Down.  He will use every tool at his disposal to fight back for your benefit.  He cannot be defeated as long as you stand behind him!  Trump is strong and believes his supporters are as well.

Border Wall:  Trump is disappointed, to put it mildly, that a Republican led Congress would not fund the border wall and make the immigration law changes that he supports.  He INTENTIONALLY let the House fend for itself in the mid-terms so he could purge as many anti-Trump RINOs as he could from the house.  Now, he is using the border wall funding to force the Democrats and RINOs to stand up and be counted as opposing the Wall and our national security.  Trump will build the wall even if he has to pull funds from other federal agencies or the military under the banner of national security.  He will use this fight as a cornerstone of his 2020 campaign and to campaign for Republican House and Senate candidates who support his border security policies.

Foreign Policy:  The Progressive-Left is hammering the President for supporting our national interests in not turning his back on Saudi Arabia in spite of the death of the Saudi, Muslim Brotherhood, Washington Post reporter.  If Trump had turned his back on Saudi Arabia, then Iran would be bolstered up and weaken Trump’s effort for a domestically sponsored regime change.  Any chance for a Middle East peace plan would also go by the wayside without Saudi Arabian backing.  They will do everything the can to support China against the “Trump Trade War” which will not only hurt our economy and our workers but throw a monkey wrench in the middle of Trump’s Korean Denuclearization efforts.  Make no mistake, all of Trump’s America First foreign policy efforts are diametrically opposed by the Global Progressive-Left!

Economy:  Trump will continue to support his pro-growth agenda and fight for every single job in America.  He will fight to make sure that every American has a chance to pursue their happiness.  He will not be able to make the past rounds of middle class tax cuts permanent with a Pelosi led House but he can hold the line against any effort to reverse his economic successes.  Be aware though, that Wall Street is NOT Pro-Trump and will do everything the can to convince you that Trump is pushing us into a recession.  Why, they are 100% global oriented and see America as a cow they can milk to feed their global interests!  They will do everything they can to hurt the stock market as a rise in stock prices makes Trump look good!  Trump will continue to fight against the Federal Reserve interest hikes until his Tariff fights against China, the EU and others are settled.  Why?  Because every time the Fed raises interest rates it strengthens our dollar against other currencies making foreign imports cheaper and our exports to others more expensive.  In short, it reduces the pain to China and the EU when Trump raises US Tariffs against these economies.

Minority Communities:  The Progressive-Left’s most feared Trump policy is his efforts in raising our inner-cities out of abject poverty and causing the Black and Hispanic minorities to take a second look at supporting Trump!  Trump’s support among these communities has skyrocketed to over 30% recently which if translated into votes, would doom any Democrat chance to keep the House and expel Trump from the White House!  Trump has established “Opportunity Zones” to create pubic-private partnerships to increase jobs and opportunities in targeted inner-city and rural locations.  His second push will be to provide real school choice for minorities to rid them from the shackles of second-rate public education.  He will use executive orders and regulations from the Department of Education to go as far as he can without Congressional action.  He will use both of these efforts to contrast the Democrat efforts to keep minorities in poverty and living in drug infested communities.  Minority unemployment is at an all time low.  Guess who will win this argument!

President Trump sees all of the attacks against him personally and against his policies as opportunities.  He wakes up every day and commits himself to continuing his fight for you.  He never tweets, “gee, I don’s think I can win against all of these attacks”.  He is always on the offensive.  We all need to be behind him and fight by his side. If you were a multi-billionaire, would you risk everything to fight for others?  Trump did!

RD Pierini

@RDPierini