Posted by: Dr Churchill | March 5, 2019

US debt mushrooms to $22 Trillion and a good third of the foreign publicly held debt, is owed to China…

Today it is revealed that the United States debt has mushroomed to $22 Trillion and a good third of the foreign publicly held debt, is owed to China…

As of October 2018, foreigners owned $6.2 trillion of U.S. debt, or approximately 39 percent of the debt held by the public of $16.1 trillion and 28 percent of the total debt of $21.8 trillion.

Now wait a minute here…

Why is it that nobody amongst the two major parties is talking about this?

Are they waiting for an Independent to speak up?

Maybe,

Or maybe because all advocates of a stronger US monetary policy are currently sidelined by both the Dems and the Republicans.

Because they both think that they can kick the can down the road indefinitely, and also because even the hawks of foreign and monetary fiscal currency policy, all argue amongst themselves — if this a “Too Big To Handle” issue, and “Too Difficult To Solve” therefore an “Impossible To Tackle” government matter.

Yet, as an Independent, I must say that our collective failure to tackle the Chinese monetary policy battle and our unwillingness to scale the “Chinese Monetary Firewall” and breach the defenses of the Chinese enforced devaluations of the Yuan, have resulted in the cataclysmic events that we are now facing in our Deficits and Huge National Debt.

Along the way the Chinese masterminds, have caused the US debt problem and the subsequent global misalignment of all FX and of all global currencies, because they want to destabilize the US Dollar in order to dethrone the United States fort he global pole position.

And that is a devastating problem globally, but more immediately an American problem that demands a drastic solution, and the application of Executive Action from the White House, such as the forced depreciation of the dollar in equal measure to that of the Chinese currency’s depreciated value of the last many years…

We need parity of current values and a “Monetary Detente” in order to avoid mutually assured monetary war and economic destruction.

And to get there we need to fight.

That simple solution is what is needed.

But does this beleaguered President have the stomach for this expanded fight that has no obvious winners and losers — yet long term it will guarantee our economic sovereignty?

Maybe he does and maybe he doesn’t, because now he seems to seek easy and newsworthy easily understood mini-victories…

But he doesn’t seem to be savvy enough to engage in this gigantic and largely unheralded fight.
Because what this fight might need, is a Master leader who understands economic policy and the fact that a country, unlike an Enterprise — cannot restructure through bankruptcy.

Indeed the longer we wait for dealign with this disease — the more likely is that when the trauma to our economy is felt — it will be so devastating that it will render the Untied States into a second rate power.

Obviously that is not welcome news to most of us, but the necessary adrenalin needed to tackle this issue now, seems to be lacking in the current administration hamstrung by the errant Democrats and their never ending investigations akin to witch hunts of Salem in the days of yore.

Obviously a President who is prosecuted as a 16th century witch, cannot engage in frontline fighting that the Monetary Policy war, requires.

So let us hope that a new Independent minded person can focus on that monetary policy large scale war, instead of a tiny territorial trade battle skirmish, that only makes Mr Prez look good.

Because if we want to see long term equitable relief action that will not cause a loss of buying power for the American citizens, their savings, & their pocketbooks — we need to pick up our armor and go out for pitched battle of the mentally demanding Monetary Policy War, the kind of War that is so Meta that even Econometrics professors don’t even understand how it is waged….

Indeed this monetary policy misalignment, and the resultant exploitation of the FX currency markets, and interest rates, by the Chinese government, along with the constant production and issuance of fake economic data by China — has been the main cause of a rising trade deficit and increasing national debt in America over the last 30 years…

That is the “Phat Chinese Wave” that is coming crashing across the Pacific, each and every day, and it affects America in a damaging, dissonant and discordant way — each and every economic transaction, sale, and banking service, that we allow this to happen to ourselves…

And thus today even the prudent and fiscally conservative (in theory) President Trump’s attempts to deal with the currency issues in trade negotiations with China, along with his constant public complaints about a strong dollar — seem unlikely to change anything in the substantial and dramatic fashion that this grave issue for our Republic requires.

This matter requires our utmost attention, and if we add to that, the effects of five consecutive increases of the FED’s interest rates — you have the makings of an economic policy disaster, because the “strong dollar” due to hikes in interest rates, matters greatly for all the producers and the economic actors of these United States.

To address this inequity, matters greatly, because this situation, has led to near-record deficits in manufactured goods, and non-oil & non-gas goods, that are being masked by increases in exports of oil & gas, and all services.

In consequence, it is that which makes the US’s trade balance far worse than what the official data that is released would reflect. So my advise is that we should watch out for the Monetary Policy battles and not so much to the much ballyhooed tariffs of the news-worthy Trump trade war that has been made into a catchy tune all over the news…

Because that is a side show and the real show is the Monetary Policy battle between the two countries.

Indeed it appears that there’s a lot of underhanded stuff that is going on below the surface over there in Beijing’s Financial Street, and tin the palace of the bureaucrats of the Communist party, and it is this kind of stuff that we can’t even see, and yet it is equivalent in perspective to the unseen, and unobserved, underside of the underwater size of the Chinese iceberg, that is currently threatening our economy and our supremacy as a nation.

Even President Donald Trump’s, attempts to stop the trends of the past Obama presidency’s dismal monetary policy years — while bucking economists’ expectations for growth and wealth creation for all Americans — still hold the keys to the true trade deficit not just through his fight for installing tariffs and creating equalization with our main trading partner globally, but by waking up to the reality of the monetary war that is going on, and choosing to engage in that “monetary policy knife fight.”

Even though he wants to avoid cuts and bloodshed — this a fight that needs to be fought sooner rather than later.

But this President is not willing to open up another front in these difficult times for his administration as the paid provocateurs in the employ of China, have actively started to undermine him inside Congress and the DOJ.

Yet, some measure of hope shows from the new economic data (to be released officially tomorrow on Wednesday) that will show the US deficit in goods and services with the world, to have just topped $600 billion by the end of 2018.

What that means, is that Trump’s presidency will have seen the U.S. trade shortfall’s hump — that is the main metric by which we judge nations to be winning or losing — growing by more than $100 billion.

Although public economists don’t like to dwell too much on the U.S. trade balance, it remains by and large, an accounting measure that often moves in directions inverse to the health of the economy.

The U.S. trade deficit’s biggest contraction on record came in 2009 when it shrank by more than $300 billion in a single year as a result of the recession that was then under way, and the resulting collapse in U.S. demand for imported goods. As a result largely of that slump the U.S.’s goods and services deficit with the world contracted by more than $200 billion over President Barack Obama’s eight years in office.

This is a major reason why economists say, that You really don’t want this as your scorecard, because it is not an accidental trimming mechanism of deficits and economic health at the Macro level. Nor is it a monetary policy lever at the Executive policy level.

It is what it simply purports to be. A simple telltale signal, that when things are booming we consume more imports, and when the economy is in the dumps, we consume far less imports as well. yet, despite the name, trade deficits tend to have less to do with trade policy than with the broader macroeconomic policy and experience a certain ragtime between establishment of policy and results of said macro-economic policies.

The main long-term driver of persistent trade deficits since 1975 has been the gap between the US’s low savings rate and its attractiveness as an investment destination, fueled partly by the dollar’s role as the world’s reserve currency. That in turn leads to a stronger dollar, which in itself helps increase the trade deficit by lowering the real cost of imports and increasing the local-currency cost of American goods in overseas markets.

In the first 11 months of 2018 the U.S. deficit in goods and services with the world increased $52 billion, or about 10 percent, from the same period in 2017. If that pattern holds in the December data released Wednesday — and economists predict it will — the deficit will have widened to about $610 billion in 2018. In 2016 it was $502 billion.

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The immediate drivers of the surge in the trade deficit under President Trump have been the fiscal expansion, the lower taxes for the middle class and indeed for all the consumers, and the overall spending resulting from the tax cuts President Trump has pushed through Congress aided by the stronger dollar that resulted, from the hyper-juiced economy that the lower taxes economic wealth creation and societal economic expansion have helped create.

However the economic boost from tax cuts has also helped lift the inherent value of the US currency, and it is this very feature of his macro-economic policies that Trump’s supporters insist he needs to be tackling right now. A weaker dollar will help employment locally and will also help the President’s trade negotiations with China and other U.S. trading partners. Trump economic policy supporters, also point to his renegotiation of NAFTA and all other treaties, as something that will help reduce the US trade deficit in the long run, but for now it only helps balloon the value of the dollar to an illusory and unsupportable height.

Yet, we must not forget that Trump’s economic & trade policy have also intentionally contributed to the growth of the trade deficit in 2018, because now we can negotiate with the Chinese from loftier target towards any reasonable reductions in trade deficits that can be offset by the Chinese currency’s fake devaluations and arbitrary hold-backs of the Yuan. Indeed, the tariffs that the President had originally threatened and then went ahead and imposed on Chinese imports — have caused a rush by importers to get ahead of the new duties, and that has fueled a significant and temporary increase in all incoming traffic at West Coast ports last year — that has registered as an increase in the trade deficit.

As a matter of fact, the retaliatory tariffs that President Trump provoked from China, have also hit major U.S. agricultural exports such as soybeans, and it is here where the President proved particularly useful in standing up for the American farmers and small time soybean growers…

Moreover, the showmanship of President Trump, along with his tariff threats and the game of brinkmanship of President Trump’s deal making and deal breaking power, and his apparent complete disregard for the consequences of imposing tariffs on long standing trading partners from China to the European Union, has also contributed to the slowdown in those economies and therefore their demand for American goods.

This is something that can easily be fixed with monetary policy adjustments and interest rate tweaking by the FED chair and the regional offices…

however because this monetary policy is elusive i coming our way — President Trump and his economic advisors, ministers, secretaries and even the well educated and monetary economic policy knowledgable supporters — have all cast the blame on the Federal Reserve, arguing that its decisions to hike rates last year contributed to the strengthening of the dollar.

Yours,

Dr Churchill

PS:

Today, for the first time, President Trump also announced that a stronger dollar has weakened his hand in his trade wars and put a damper on U.S. growth, and it is an act of sabotage from within our own borders, to stop America from becoming the Great Economic Engine of the World and allowing China to remain way back in our own dust cloud…

But I foresee that President Trump will rejoice in they booming race between the two economic giants — the two largest economies in the World — and I forecast that we Americans will the race all over again and forever as we remain UNITED and PRODUCTIVE through our INNOVATION SPIRIT and our LIBERTY to think, create, and iterate.

God Bless America.

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