Stocks are up today with news on trade talks. Is that the reason? Who knows. Perhaps they are up for some other reason or no reason at all.
Anyway, Reuters reports Trump: ‘something could very well come out’ of trade talks with China’s Xi.
Trump, who is set to meet with Xi over dinner on Saturday, made the comment in an interview with Voice of America.
Deal?
If there is a deal, one thing is pretty clear: We could have gotten to this point with a lot less pain a lot longer ago.
Farmers are rightfully howling and automakers are suffering.
Whatever promises China is willing to throw the US, if any, will not be worth the pain and agony it took to get them.
China Already Lost?!
The Epoch Times claims China Has Already Lost the Trade War.
Really? OK. Who won?
Attacking Symptoms
Trade imbalances are a symptom of the problem. Attacking symptoms cannot possibly work.
The problem is we have unfettered monetary printing globally, with no controls anywhere. This all started the moment Nixon closed the gold window.
Total; credit market debt was roughly $1.7 trillion when Nixon closed the gold window. At last report it was $68.6 trillion. The Fed discontinued the total credit market series in the fourth quarter of 2017.
It takes massive amounts of increasing credit to produce relatively trivial increases in GDP.
We have now have unfunded wars, massive deficits, and a stockpile of $21 trillion in debt. The MMT crowd wants still more debt.
If debt fixed the problem we would not have a problem. The US, Japan and Italy prove debt does not fix the problem.
Gold vs Faith in Central Banks
Everything Under Control?
If you don’t think so, buy gold.
Mike “Mish” Shedlock
American JOBS are being destroyed each year (by outsourcing of jobs/factories by US Multi-Nationals) since 2000. The mobile capital of Globalists seeks profit at any cost by exploiting global labor arbitrage. They care little for WAGE workers of America or any other country! Whom are you kidding?
‘The US, Japan and Italy prove debt does not fix the problem.’
Yeh. But it juices up the equity mkts, that’s all the investors, top1%, Wall St and Banksters want! Rest is moot for them. 2008 was caused by excess debt. But, now that DEBT is more than ever! Have you heard or read any lawmaker of either parties mentioning the issue of DEBT?
Is there a collective cognitive desonance along with collective insanity prevailing out there?
Yes: Rand Paul brings up the problem of debt and deficits all the time and introduces bills to deal with it. Maybe you didn’t know that because the news pretty much completely ignores him and the other politicians don’t like it.
“Everything Under Control?”
It is all an illusion. But the illusion works for a long time. In a 360 degree cycle, a waterfall decline only comes along during a brief segment of a cycle.
Long term financial system stability is an illusion, as nothing stays the same. There is a constant and inconsistent ebb and flow. Closing the gold window was an inflection point during a phase of a cycle. There has never been a permanent gold standard, as the changing financial conditions over time, prevent it. Eventually a peg is broken. A war or some other crisis occurs and the peg is tossed aside.
I don’t see how money printing and the US trade deficit are related. Japan prints a crapload of more money comparatively, has a higher fiscal deficit and always has a trade surplus. The trade imbalances are because we can’t compete with the Chinese effectively, partially because they are trade and military predators. Partly because of over regulation and anti business govt policies.
As Mish likes to point out, focusing solely on base money is a bit myopic these days. You have to look at broader aggregates. For all the base money printing the BOJ has been doing, broader aggregates including credit, has been deflating for decades.
Tokyo housing is still; despite the BOJ’s (and recently also the government’s) best efforts at turning more Japanese into homeless wards of the idle twits at Blackrock; substantially less expensive than it was 30 years ago. While rents are barely above half of what they then were, despite renewal rates, and hence quality preservation/improvement, far far ahead of what the indentureds in the West have experienced.
Over a long enough cycle, as in Gold to Gold since eventually all printing pyramids end in complete ruin and sacking by less naive outsiders, focusing on base money makes sense. But that may take 500 years. In the meantime, broader aggregates which more accurately reflect current purchasing power, is a better metric to gauge inflation by.
That is the part I don’t get. Despite their best efforts to debase their currency and create inflation they have failed. I don’t get why this is happening like that over there. I think part of it is the Japanese have a very high savings rate?
High propensity to save is part of it.
Also, In a very indebted economy, the printed base money just goes to pay down largely zombie debt.
In a pumped up fractional reserve economy, base money is a small percentage of outstanding debt. Even seemingly massive increases in the base money stock, aren’t that consequential for aggregate demand, which is to a large extent determined by much broader, credit inclusive, aggregates. So it doesn’t take too much deterioration in loan quality, or simply acknowledging of existing bad loans, to neutralize the new base money as far as real world demand goes.
Do you care to speculate on how that ends for Japan. I don’t see how they can grow their way out of the economic malaise. Perhaps by opening the country to productive immigrants it can get the economy growing again.
While I agree with you most of the time Mish, I am still waiting for you to present your plan to get China to stop stealing US technology. I think it is in fact one of the most important issues in the trade talks, and the last thing China wants to give up. Criticism is easy; real solutions – not so much.
Chinese are not stealing US technology, they are forcing US companies to share their technology in order to do business in China. US companies agree on these conditions, and in return get access to the biggest market in the world with more than 1.3 billion consumers. Trump is using term Stealing to up his hand, its a political term and you are buying it.
Do you really think China isn’t stealing US intellectual property? The scale of fake and counterfeit products coming out of China is extraordinary.
Yup, my math teacher stole calculus firm Newton. Then she got her comeuppance, that scoundrel, when I stole it from her…..
And just think of all the stuff darned pesky kids steal from their parents. From language to manners (or lack thereof.) Bastards! Trump should Do Something(tm).
Stealing, as in “Thou shalt not” has a very specific meaning. And it has nothing to do with learning from others. All that is just more of the same old progressive Newspeak. Used to justify the Junta and their privileged, zero productivity, zero value add, incompetent, deadweight beneficiaries stealing form everyone else.
In addition, if what you’re doing so so utterly bereft of complexity and sophistication that a bunch of third world commies can do it better and more efficiently than you, there’s nothing “intellectual” left in it to begin with. OTOH, China hasn’t “stolen” Google search yet. Not Lexuses. Nor Boeing planes.
Note “better.” Straight up copying copyrighted material and trademarks is a bit in a different category (along the lines of fraud), at least as long as copyright and trademark protections and their enforcement aren’t entirely ridiculous (as they increasingly are in “to ambulance chasers, by ambulance chasers, for ambulance chasers, from everyone else” dystopias like the US.
But as far as US patent trolls go, it’s they who are stealing: From American inventors as well as Chinese ones. As well as from all those who would have access to more better cheaper product if the trolls were, as is just and proper, exterminated wholesale.
You should probably check out a website like thecounterfeitreport.com. The number of fake and counterfeit products listed under brand names sold online out of China is enormous. The OECD reported that in 2013 the global trade in fake products was nearly a half trillion dollars with 63.2% originating in China. This has absolutely nothing to do with “learning from others.” This is theft. Your calculus teacher is safe.
You acknowledge “copying copyrighted material and trademarks is a bit of a different category…” That’s the category I’m talking about as reflected in my short comment.
Given how far out in left field most of your comment is relative to my comment, I’m guessing you’re pushing an agenda rather than actually replying to me.
If you were talking about straight up counterfeiting, I apologize.
I’m so used to being overran with uncritically regurgitated babble about Chinese theft of supposed “IP,” largely referencing supposed “patent” violations, that I instinctively assumed that was your complaint as well. It is certainly what the Trump administration spends most of their time and effort on. Rather than fake Louis Vuitton handbags and Rolexes.
But yes, straight up counterfeiting is a very visible problem for anyone shopping particularly on EBay, but increasingly also on platforms presumed to be more tightly managed, like Amazon. So again, I apologize.
That makes more sense. I wasn’t equating learning to stealing, I was only commenting on actual fakes and counterfeits. If China wants to sell their own line of anything, that’s fine, just don’t label it something else. In short comments it’s easy to talk past each other.
Cbb’s reply is only half true: China does require US companies to share technology with Chinese firms to get permission to do business there; but China also outright steals technology. Patents mean nothing to them, and they have spies constantly looking for stuff to steal, including military technology.
Just give it a fancy name and pull another NAFTA pretend agreement then declare victory,problem is fiscal deficit will shatter another record this year tracking at 2 plus trillion,so big gov’t desperately needs that tariff cash!
At least one Senator wants to save the US $38 Billion:
(I’ll bet the MSM will ignore this)
“Trade imbalances are a symptom of the problem.”
Agreed! But sometimes we have to treat the symptoms at the same time as seeking the real cure. If a person is bleeding severely, first thing necessary is to staunch the blood flow. Because the US has pretended for a couple of decades that other countries were not waging a trade war, the bleeding is now severe.
“The problem is we have unfettered monetary printing globally …”
That is definitely part of the problem — but why does a global problem affect specifically US trade so badly? There are other self-defeating problems which our own US usual suspects have imposed on the US citizenry, such as excessive counter-productive regulation and a dysfunctional educational system.
“but why does a global problem affect specifically US trade so badly?”
Because the guy with the reserve currency can print the most before he gets called on it.
Treating symptoms, not while seeking the real cure, but instead as an excuse for postponing or avoiding the real cure, is worse than not treating symptoms at all. As all it does is make it easier for the underlying disease to continue worsening.
In addition, in this case, the real cure kills all symptoms instantaneously. No point dicking around with bloodletting and Oxy at all, once the real cure, Gold and a crater where the Fed used to be, is applied.
I would put in another turning point: in 2003 Gold ETF’s were launched, making it much easier for average Joe to invest in Gold. These ETF’s helped enable a rally in Gold to turn into a giant bubble.
In a word: no. Compared to the total gold supply-demand equation, ETFs are not even a drop in the ocean. The biggest driver of gold prices is the reservation demand of existing gold holders, and that is not directly measurable,