A good take on the hysteria for sure. But not so fast on shredding free trade. No free lunch. 35+ years of lower prices on goods about to go out the window. Admittedly I’m no economist nor a micro expert, but imagine what many things would cost today if the same manufacturing and trade relationships existed as 40 years ago. We may get ‘fairer’ trade relationships but unfortunately those who can probably least afford it will bear the brunt with higher prices in the short and intermediate term.
Thanks Mack. “If something cannot go on forever, it will stop.” It’s time to try to influence how it stops.
The aim (for Pettis and for me) is to improve free trade, not move away from it. The current problem is many mercantilist members of the WTO have actively undermined free trade, creating unsustainable imbalances and bolstered unpleasant regimes. Free trade is predicated in comparative advantage and is inconsistent with pervasive subsidies. Diverting investment into the world’s only reserve currency helps only CCP, Wall Street and major transnational corporations. It undermines fiscal sustainability in the US and distorts households balance sheets in China & America (and elsewhere).
exactly, is it actually 'free' trade? it is government sponsored trade in an effort to gain an economic advantage and potentially a political and military one as well. the politics of nations is changing and free trade will be a casualty.
Fortunately America, as consumer of last resort and investment destination of first resort has some firepower to recalibrate international arrangements. The lack of viable alternative as a reserve currency is a huge challenge, however.
When I lived in NYC in the early '80s, the media loved showcasing Trump. He was brash, articulate, and confrontational. He was and is a master of emotional manipulation. As far as public policy goes, we will see what actions back his words with Trump2. While I am not a fan, come January, words meet reality2. The Biden admin unleashed way too miuch stimulus. Trump1 tax cuts enriched the wealthy and mutlinationals. The spigots are still open and the Biden admin did not do anything to contain it. Good luck putting inflation back in its place.
Will they have the willpower to bring debt/GDP into balance? I don't know. If they don't, a debt/credit event might just do it. Will they blame every mistep on the former admin, for sure. Will the lower and working class be better off, probably not. Will the wealthy prosper, they always do. Am I concerned about the DXY, absolutely. I just don't think policy makers are forward enough thinkers to understand the gravity/importance of the worlds reserve currency. The stronger the dollar, the more pain in the EM world and all of our trading partners. I don't know how we can compete with China. That is where your expertise comes in.
There is no easy solution. Tax more, spend less, and grow your way out of the debt. I don't know any other way. This is what I hope to hear out of the Trump2. The time for revenge and blame is over.
There are some reasons to be hopeful and many impediments to success - not least of which is the tendency of the president-elect to see success as a personal transaction rather than a change of course accompanied by a change in perception.
A good take on the hysteria for sure. But not so fast on shredding free trade. No free lunch. 35+ years of lower prices on goods about to go out the window. Admittedly I’m no economist nor a micro expert, but imagine what many things would cost today if the same manufacturing and trade relationships existed as 40 years ago. We may get ‘fairer’ trade relationships but unfortunately those who can probably least afford it will bear the brunt with higher prices in the short and intermediate term.
Thanks Mack. “If something cannot go on forever, it will stop.” It’s time to try to influence how it stops.
The aim (for Pettis and for me) is to improve free trade, not move away from it. The current problem is many mercantilist members of the WTO have actively undermined free trade, creating unsustainable imbalances and bolstered unpleasant regimes. Free trade is predicated in comparative advantage and is inconsistent with pervasive subsidies. Diverting investment into the world’s only reserve currency helps only CCP, Wall Street and major transnational corporations. It undermines fiscal sustainability in the US and distorts households balance sheets in China & America (and elsewhere).
exactly, is it actually 'free' trade? it is government sponsored trade in an effort to gain an economic advantage and potentially a political and military one as well. the politics of nations is changing and free trade will be a casualty.
Fortunately America, as consumer of last resort and investment destination of first resort has some firepower to recalibrate international arrangements. The lack of viable alternative as a reserve currency is a huge challenge, however.
Thanks for clarity- super helpful. Sounds like a heavy lift given the size/power of the status quo interests but I guess we may find out.
When I lived in NYC in the early '80s, the media loved showcasing Trump. He was brash, articulate, and confrontational. He was and is a master of emotional manipulation. As far as public policy goes, we will see what actions back his words with Trump2. While I am not a fan, come January, words meet reality2. The Biden admin unleashed way too miuch stimulus. Trump1 tax cuts enriched the wealthy and mutlinationals. The spigots are still open and the Biden admin did not do anything to contain it. Good luck putting inflation back in its place.
Will they have the willpower to bring debt/GDP into balance? I don't know. If they don't, a debt/credit event might just do it. Will they blame every mistep on the former admin, for sure. Will the lower and working class be better off, probably not. Will the wealthy prosper, they always do. Am I concerned about the DXY, absolutely. I just don't think policy makers are forward enough thinkers to understand the gravity/importance of the worlds reserve currency. The stronger the dollar, the more pain in the EM world and all of our trading partners. I don't know how we can compete with China. That is where your expertise comes in.
There is no easy solution. Tax more, spend less, and grow your way out of the debt. I don't know any other way. This is what I hope to hear out of the Trump2. The time for revenge and blame is over.
There are some reasons to be hopeful and many impediments to success - not least of which is the tendency of the president-elect to see success as a personal transaction rather than a change of course accompanied by a change in perception.