Tag: economics

A Timely Reminder on Tariffs

This is a repeat of a 2018 post that is itself a rehash from a paragraph of my 2009 book entitled The Return of the Great Depression. And contra Martin Armstrong and everyone else who is pontificating about how Trump’s proposed tariffs would “destroy the global economy”, it’s just not true, at least not on the historical comparison to which most of them are appealing.

Every single talking head who makes any reference whatsoever to Smoot-Hawley is a poser and a fraud who knows nothing about economics or economic history. This is basically a variant of the “Um, Ricardo?” pseudo-rebuttal to an argument for tariffs or other forms of protectionism. It is proof that the speaker has heard about the subject, but doesn’t actually know the subject at all.

The point is so trivial that I dealt with it in a single paragraph in The Return of the Great Depression ten 16 years ago and haven’t seen the need to mention it again since until now.

For many years, it was supposed that the Smoot-Hawley tariff of 1930 played a major role in the economic contraction of the Great Depression. As more economists are gradually coming to realize, this was unlikely to have been the case for several reasons. First, the 15.5 percent annual decline in exports from 1929 to 1933 was less precipitous than the pre-tariff 18.3 percent decline from 1920 to 1922. Second, because the amount of imports also fell, the net effect of the $328 million reduction in the balance of trade on the economy amounted to only 0.3 percent of 1929 GDP. Third, the balance of trade turned negative and by 1940 had increased to nearly ten times the size of the 1929 positive balance while the economy was growing.

There was nowhere nearly enough international trade taking place at the time to cause or account for the Great Depression. Whoever originally came up with that idea didn’t know what they were talking about and didn’t understand economics. And neither does anyone who still takes the ridiculous idea seriously.

The reason the Great Depression happened was the same reason that the financial crisis of 2008 happened. Everyone was overleveraged and the total amount of money being borrowed collapsed. That is why an average of 1,287 banks failed every year from 1930 to 1933. The historical credit collapse had vastly more impact on the economy than a smaller annual decline in exports than had been experienced seven years before as a result of the Fordney–McCumber tariff act.

The only way Trump’s proposed tariffs can “collapse the global economy” is if the resulting shift in purchasing preferences toward domestic producers results in the collapse of overleveraged corporations and banks that will no longer be able to service their debts in countries that have a trade surplus with the USA. But that’s going to happen anyhow. What 100-percent tariffs really mean is that global producers will have a serious incentive to produce goods in the USA instead of manufacturing them elsewhere and shipping them into the USA; it would definitely alter the relevant math on leather book production, just to give one example.

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Occupied Britain

This level of “immigration” goes well beyond invasion and amounts to conquest and occupation:

The UK’s net immigration record has been smashed again with 906,000 now thought to have been added to the population in a single year. Huge revisions to official data show the extraordinary mark was hit in the year to June 2023 – and the figures remain at historically unprecedented levels.

Official data covering the 12 months to June this year show long-term immigration was 728,000 higher than those leaving the country. That is almost as high as the previous record. But the bar has been shifted upwards by the Office for National Statistics, with net migration for the year to June 2023 skyrocketing upwards by 166,000 from the initial estimate of 740,000.

A similar revision has been made for net migration in the year to December 2023, which was initially believed to be 685,000 and is now put at 866,000, an increase of 181,000.

The British population in 1939, on the eve of WWII, was 47,760,000. Great Britain has now been invaded as many foreigners in the last four years as the combined forces of Nazi Germany, Romania, Finland, Italy, Hungary, Slovakia and Slovakia used to invade the Soviet Union in 1941.

The UK is now in a similar state to the USA. Either mass repatriations will begin within the next ten years or the state will collapse into secessions and civil war. Russia has absolutely nothing to fear from either the USA or the UK, because it has no need to defeat either of them in war, it has only to damage sufficient economic infrastructure to begin the inevitable process of societal collapse that will prevent their militaries from engaging in foreign actions.

And between them, Russia, China, and Iran collectively possess enough economic power to inflict the necessary level of damage to Western infrastructure without ever directly attacking the USA or the UK. I don’t bother mentioning Western Europe, because, barring a complete economic surrender to Russia, the German economy is already doomed.

Lest you fail to draw the obvious conclusion, immigration is not “good for the economy”. To the contrary, over time it is considerably worse for the economy than losing a war is.

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Germany Suicides Even Harder

It’s very, very difficult to imagine what the NATO mouthpieces currently pretending to run Germany think they’re going to accomplish by threatening to suicide Germany even harder by throwing its young men and women on the same altar they’ve sacrificed the German economy:

Now Germany reveals plans to mobilise national defence and 800,000 NATO troops after Kremlin nuke threat – as US announces new weapon Kyiv can use to stop Russia after allowing long-range missile strikes.

Ukraine’s strike on an ammunition depot in Russia’s Bryansk region yesterday with US-supplied ATACMS (Army Tactical Missile System) meets these criteria, with Moscow saying that it marks a ‘new phase of the Western war’. ‘This is, of course, a signal that they want to escalate,’ Russian foreign minister Sergei Lavrov said, while foreign intelligence chief Sergei Naryshkin said attempts by NATO countries to facilitate Ukrainian missile strikes deep inside Russia ‘would not go unpunished’.

In Eastern Ukraine, Russia’s forces are steadily grinding towards the logistics hub of Pokrovsk having taken large swathes of territory in the Donetsk region in recent months. Putin’s army took 185 square miles of Ukrainian territory in October, a record since the first weeks of the conflict in March 2022, according to an analysis of data provided by the real-time conflict tracker from the Institute for the Study of War.

Now, where are those “800,000 NATO troops” going to come from? Not Poland, the Scandinavian countries or the Baltics. They’re talking about US troops, mostly, but there is no way President Trump is going to send more US troops to Germany; he’s far more likely to withdraw all the troops that are already there.

Simplicius points out that the IMF, the World Bank, and the CIA have now all confirmed that Russia is decisively winning its war with NATO and its member states on economic terms as well as in the military context.

A couple months back, you may recall World Bank announced that as per their calculations, Russia had finally surpassed both Germany and Japan in GDP PPP. However, the official IMF and CIA figures still scoffed at this, with Russia trailing both countries on their counts. This allowed the popular narrative to be maintained that the World Bank figures were some kind of inaccurate fluke or anomaly.

Well, the IMF has just done their latest report and has officially concluded that Russia has blown past both Germany and Japan as of 2024, and is now the number four economy in the world. And not only that, but the IMF has Russia in the lead by an even larger margin than World Bank. On top of which, the CIA also updated their numbers and likewise reflects Russia at the number four position.

This means that the longer Germany persists in its futile denial of the need to stop supporting Ukraine and encourage it to surrender, the worse off the Germans and the other Europeans will be. Time, attrition, and economics are all on the side of the Russians, and more importantly, their allies in China, North Korea, and Iran.

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BRICS to Expand by 13

13 countries received the status of BRICS partner country at the 2024 BRICS summit. They are Turkey, Kazakhstan, Uzbekistan, Algeria, Belarus, Bolivia, Cuba, Indonesia, Malaysia, Nigeria, Thailand, Uganda and Vietnam. BRICS partner country status is a mandatory step before full membership.

The 13 new partner countries, at least 10 of which will become full BRICS members in a year or so, effectively add 840,276,082 people to the economic alliance, which alone is more than the USA, the UK, the EU, and Israel combined. Their coming addition will also make BRICS the global majority. The key additions are current NATO member Türkiye, Southeast Asian giant Indonesia, African giant Nigeria, and Asian military power Vietnam. Clown World has been desperate to keep both Türkiye and Vietnam on its side, but it now appears to have lost both.

At this point, it should be clear that Russia has comprehensively defeated Clown World, not only militarily and economically, but diplomatically as well. To paraphrase Rorshach, Clown World hasn’t locked Russia in solitary, but Clown World is locked in with itself.

Note to the Finnish, Swedish, and Swiss governments: You all chose poorly in selecting this particular moment in time to abandon your historic neutralities. Very, very poorly indeed. There isn’t a single BRICS nation, or even BRICS partner country, that is as small as any of you. Not only is the USA totally incapable of “protecting” you from Russia or any other military threat, but you’re actively doing harm to your ability to engage economically with more than half of the globe and counting.

You would do well to re-establish your neutrality, and do it fast.

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Please Don’t Go!

NATO is begging Türkiye to stay in NATO even if it joins BRICS:

Türkiye has the right to cooperate with the BRICS economic group without undermining its status as a NATO member, the secretary-general of the US-led military bloc, Mark Rutte, has said.

The NATO chief’s remarks came at a press conference in Estonia on Tuesday. He was asked by the Estonian Public Broadcaster whether Ankara’s desire to become a member of BRICS, which the outlet described as a “Russia-dominated organization,” should be a cause for concern.

Rutte stressed that Türkiye remains “a very important ally in the alliance” as it is “one of the best equipped military forces in NATO” and plays a “vital role in its part of the NATO geography.”

“Obviously within the alliance, being a democracy, 32 countries, there will always be debates on this and that,” the secretary-general admitted. However, he insisted that Ankara has “the sovereign right” to work towards a BRICS membership and cooperate with its members.

The real question is if BRICS will permit the Turks to join if they remain in NATO. And the jury is still out on that one.

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The Intellectual Limits of Thomas Sowell

I like Thomas Sowell and his work. It was a minor influence on my intellectual development in my youth. But he has always been limited in his willingness to depart from conservative orthodoxy, as evidenced by his unwillingness to accept the relevant aspects of human genetics as they relate to societal development, or the lack thereof.

Sowell is the leading conservative proponent of the cultural explanation. In regard to race differences in the US, his idea is that black Americans adopted a dysfunctional culture from white rednecks in the South. A different culture would have, and in the future could, set blacks (as well as southern whites) on a different path. While he mostly avoids ad hominem attacks against hereditarians, he portrays most of them as bumbling half-wits with a history of making baseless and contradictory claims.

I was recently interviewed for “The Genius of Thomas Sowell” podcast to talk about hereditarianism vs. culturalism, and the host, Alan Wolan, persuaded me that it would be worth spelling out my objections to Sowell in more detail. Here I respond, in turn, to Sowell’s arguments for the cultural theory of race differences and his critique of hereditarianism. I contend that hereditarianism remains by far the most plausible explanation for persistent gaps among groups living under comparable conditions, including American blacks and whites.

Some hereditarians believe that, even if Sowellism is false, it would be politically expedient to promote it as a means of countering leftist narratives about race and racism. I will explain why this is a mistake. Even if (counterfactually) we could convince large numbers of people to accept Sowell’s scientifically incorrect theory of race differences, this would not stop wokism.

While he is a generally admirable man, one unfortunate characteristic of Sowell is his refusal to follow the observable, and even undeniable, truth, at the cost of his personal preferences. Given his identity complications, it is not even remotely surprising that he would prove willing to sacrifice his intellectual integrity on the altars of both race and personal relations.

Sowell is without doubt an effective starting point for conservatives, but at some point, anyone who is geniunely devoted to the Good, the Beautiful, and the True will find they have to move beyond him if their intellectual journey is going to proceed.

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Why Africa Supports BRICS

While the West has mostly focused on the increased Chinese influence in Africa, it wouldn’t be surprising if the entire continent embraced the BRICS system due to the West’s attempt to protect the pro-Western post-colonial regimes:

Speaking on the sidelines of the BRICS Business Forum in Moscow, which was held on October 17-18, Mantula highlighted the organization’s capacity to counter the influence of Western narratives, financial systems, and the impact of sanctions.

“Now that we’ve seen sanctions being imposed on certain countries, we’ve seen the biasness of some of these international bodies, the BRICS has become a solution,” Mantula noted, reflecting on how the group, which began with Brazil, Russia, India, and China, has grown into a significant platform for cooperation.

She pointed out that countries are drawn to BRICS because of its inclusive approach to diversity and mutual respect, both economically and culturally. Mantula emphasized that BRICS offers its members an opportunity to operate independently of Western structures, making them more resilient to potential sanctions. “Within the BRICS countries we are having a bigger population, more natural resources and if we learn to work independently outside of the Western systems, even the sanctions won’t harm us,” she explained.

Mantula also referenced a speech by Iranian President Masoud Pezeshkian during the forum’s plenary, where he spoke of sanctions imposed on certain countries. “Any one of our countries can be sanctioned next,” Mantula stated, underscoring the potential of BRICS to offer a united front against Western pressures.

Most Americans and Europeans aren’t aware that in addition to Russia and Iran, Washington and Brussels have placed economic sanctions on China as well as a number of African nations. This has, quite rightly, alarmed all of the African governments, who realize that they are one regime change, or worse, Western-sponsored attempted regime change, from being cast out into economic darkness.

This is why Egypt, Ethiopia, and South Africa have already joined BRICS, and why it is safe to assume that most of the other countries on the resource-rich continent will be seeking to join it soon, assuming the divide between the anti-Western nations (Russia, Iran, and China) and the neutral nations (Brazil and India) can be successfully bridged at the current summit.

The Second Phase of WWIII

Didactic Mind explains the significance of the BRICS Pay card announced last week:

Each individual BRICS+ nation is at a different stage of development along the path of having a proper banking system. Therefore, trying to create a unified messaging and money transfer platform, is COLOSSALLY difficult. The back-end infrastructure of global payment systems IS NOT easy to build – take my word for it on this – and nor is it a trivial matter to get different national payment systems to work together. I have barely even begun to describe the problems involved, and I am by no means a deep-knowledge subject matter expert on the issue.

But… we are now seeing the beginnings of a new financial order coming together. And that BRICS payment card prototype, is the first demonstration of the front-end technology. Whether the back-end is fully operational, is very much open to question – but it does seem to be getting there.

The importance of this development cannot be overstated. If the architects of the Western financial system are paying any attention whatsoever to the upcoming BRICS summit in Kazan’, which starts very soon – in fact, the BRICS Business Forum wrapped up just today – then they should be sweating bullets.

The advent of a true globally scalable, secure, stable, and reliable BRICS+ payment system will allow for rapid digital settlements between BRICS+ central banks. That was one of the original ideas behind this system – to use some sort of digital currency backbone to settle in national currencies between different countries. I had heard many different idea proposed, ranging from a stablecoin of some kind, to a gold-backed and metals-backed currency, to a new currency built on a basket of currencies, like the old “bancor” idea that John Maynard Keynes proposed as the fundamental unit of exchange within the old Bretton Woods system, or the Special Drawing Rights (SDRs) that the IMF has the ability to issue.

If, or rather, in my opinion, WHEN, this becomes a reality – in whatever form it takes – the dominance of the dollar is DONE.

This is not hyperbole. Think about it. Why would anyone want to use SWIFT, and pay the (quite exorbitant, in relative terms) fees to send money through a literal cartel of correspondent banks to transfer money overseas, when they could go through a digital system with far lower fees, and transact directly in local currencies, with local exchange rates? And if people can do this peer-to-peer, or business-to-business… what need is there for the dollar?

I think this is why we’re seeing the Clown World provocations heating up everywhere from the Korean Peninsula to Ukraine. The end of military supremacy is bad enough, but the direct undermining of the international dollar system spells out the end of Clown World. And desperate people accept very low-probability odds…

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Ski-U-Mah

24 Minnesota
17 USC (#11)

So that was fun. Minnesota hasn’t beaten USC since 1955. I was a Gophers fan when I was a kid, Tony Dungy was the quarterback, and upsetting a #1 Michigan team 16-0 in 1977 was the most exciting thing about growing up in Minnesota prior to The Miracle on Ice in 1980. I even went to a few games at the old Memorial Stadium, including the 1976 season opener that was a win over Indiana.

But too many seasons of losing 45-0 to Big Ten rivals and 73-0 to Nebraska, in company with the incredibly stupid move to the horrible Metrodome, caused me to lose all interest in college football, except for keeping an eye on future NFL players. They didn’t even make it to a single bowl game, no matter how lowly, between 1987 and 1998.

However, the new stadium is really cool – the Vikings played there in Brett Favre’s last year – and the expansion of the Big 10 means that the Gophers are now getting the chance to play teams like USC and UCLA that they seldom played without getting to the Rose Bowl, which hadn’t happened since 1962. In fact, this was only the sixth time the two maroon-and-gold teams had ever played in my lifetime… and the first time was the year I was born.

Because my mother is a football fan who grew up in Pasadena and attended USC, I spent many a late Saturday afternoon watching USC play, although I tended to prefer UCLA. PAC-8 football always seemed a little exotic compared to Big 10 football, although SWC football, with its tearaway jerseys, was the most exciting. I was a bit of a Texas fan, mostly because my parents’ friends, who were huge Arkansas boosters, were so annoying, with their “Pig-sueey” nonsense. The Michigan upset notwithstanding, 1977 was a tough year.

Most people think the development of NIL-related professionalism is a terrible thing for college football, and I certainly have my doubts about the evolution of the Big 10 and the SEC into superconferences. The disappearance of the PAC-12 is certainly to be regretted and I wonder if USC will one day regret its move to the Big 10 for the same reason Arkansas misses the now-defunct SWC. But it is at least possible that the money-related dispersal of talent across dozens of universities may end up having a very positive effect on the general level of competitiveness across the NCAA. After all, it’s a lot easier for teams like Alabama, Georgia, and Ohio State to stockpile talent when all it costs them is a scholarship.

Because this certainly wasn’t happening before the NIL era. In fact, it’s been 118 years since Vanderbilt scored this many points on Alabama.

40 Vanderbilt
35 Alabama (#1)

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