Our Dangerous Failing Economy
The most important issue for our nation is the trade deficit because of its cumulative affect on the Federal deficit and the growing danger it presents to our national economy and security. The following concise economic analysis based upon U.S. Census Bureau tables has been sent to Senators Sherrod Brown and Rob Portman along with Congressman Dave Joyce. It has been sent to all of the media in the Cleveland, Ohio area along with the Census Bureau tables on which it is based. The result has been silence on all fronts. Obviously, this is very telling and much more than disturbing.
My company produces the highest quality non-perishable food products in the world. Last year I met with sixteen international buyers at two international food buyers missions. We achieved zero new international sales after offering significant discounts. This proved to me that we can never balance our trade accounts by just increasing exports. The myriad of international sales regulations and biases are stacked against U.S. small businesses.
Attached below are four graphs that are all based upon U.S. Census Bureau data that show:
1. The trade deficit became a major economic force only after passage of Most Favored Nation Status for China in 1998 and to a lesser extent with NAFTA in 1994..
2. U. S. trade deficits are the main cause of U. S. Federal deficits.
3. China is the largest source of imports that cause U.S. trade deficits.
4. Energy imports are decreasing significantly due to Fracking while apparel, automotive, machinery, and electronics imports are increasing.
- The renewal of Most Favored Nation status for China in 1998 and to a lesser extent with NAFTA in 1994 started increasing the trade deficit after passage as shown below. You may remember Ross Perot, during the 1992 election, talking about the tremendous sucking sound that would result from NAFTA. Well, NAFTA and China MFN free trade agreements made without any requirements for reciprocity did suck as Ross said they would. They sucked out capital and jobs and made our taxable economy too small to support Federal spending. These "free trade agreements" were sold on the ludicrous claim that poor countries would buy more from us than we would buy from them. The true purpose of all free trade agreements was to reduce large producer costs through the use of desperate unprotected foreign labor and sell less costly and therefore higher margin products back into our economy without the added cost of tariffs and without regard to national economic consequences. Prior to 1998, the Federal deficit was primarily driven by fiscal policy. After 1998, the Federal deficit is primarily driven by the trade deficit. Obama was pushing the beltway laden 5,500 page TPP which would only off shore more jobs and accelerate our economic decline. If Obama ever took any economics courses he must have flunked them. He seems to consider himself more a citizen of the world than a citizen of the U.S. and only talks about how TPP would benefit the world. He seemed oblivious to trade deficits and the unemployment and social misery they cause or their long term damage to our economy. He seemed to not care about trade deficits causing unemployment and social misery and destabilizing our economy and a lot of people now realize this.
Annual Trade Deficits
2. As shown below, most of the accumulated Federal deficit is caused by the accumulated trade deficit. Every dollar of trade deficit causes about a two dollar reduction in combined Federal and State revenue. This is called a reverse tariff that subsidizes cheap imports and proves that tariff free trade is only free when it is balanced. As a person, enterprise, or as a national economy, when more value is consumed than is created, capital has to be relinquished.Our national economy has been relinquishing more than half a trillion dollars in capital every year since 2003. The only exception was 2009 when liquidity was reduced by the sub-prime loan crisis that was politically facilitated by the black congressional caucus, Barney Frank, and other Democrats.
https://www.youtube.com/watch?v=Yga7TlsA-1A
Consequential TARP funding in 2009 then exacerbated the Federal deficit.
The Accumulated Federal Deficit Tracks With The Accumulated Trade Deficit That Causes It. Source Of Data: The U.S. Census Bureau
3. This Pie Chart Shows The 2015 Percentage Of Trade Deficit By Exporting Country. Since 2011, the trade deficit caused by Chinese exports has increased from 41% to 49% of the total trade deficit. Source Of Data: U.S. Census Bureau
4. The Following Graph Tracks Ten Years Of Trade Deficit By Major Import Category. Energy imports, because of Fracking, is the only trade deficit category that is improving. Trade deficits in Machinery, Electronics, Autos, and Apparel are trending increasingly worse. The Steel trade deficit has always been a minor factor.
Source Of Data: U.S. Census Bureau
Because of the low 3.6% propensity to save and invest, the economic multiplier amplifies the effect of half a trillion dollars in capital bleeding out of our economy by about 27 times. This has reduced the enterprise demand for about 70 million jobs. We have about 40 million underemployed and 30 million unemployed. Forget the politically contrived unemployment rates fabricated by the Federal government. The high real unemployment level and lack of employing enterprises has made our taxable economy too small to support the current level of Federal spending which is about 56% social programs, about 18% operations, about 20% defense, and about 6% debt service. Without "quantitative easing" to finance the Federal deficit, the interest rate would be over 6% and debt service would take 25% of Federal spending.
"Quantitative easing" really means creating imaginary reserve currency without commensurate value creation. Continued "quantitative easing" guarantees eventual currency devaluation and compensatory inflation that would be politically destabilizing and potentially lead to the economic oblivion that includes freezing of liquidity, freezing of commerce, resulting food shortages, rioting, and martial law. By their silence on this issue, it seems that the DNC and RNC are both corrupted by the same interests who want us to continue this slide into economic oblivion.
Right now corporate income taxes at a 35% rate amount to less than 6% of Federal revenue and yet there has been no political leadership to simply reduce the corporate income tax rate from the world's highest rate to something that would not drive enterprises off shore. This is an obvious total moral failure of Congress and the Administration.
We now have three financial bubbles that could trigger a slide into economic oblivion.
1. 1.6 trillion dollars in potential defaulting student loan debt by students who cannot find jobs because of the trade deficit.
2. Defaulting high risk bonds which are the only ones with attractive interest rates above 4.9%.
3. The collapse of national economies in the E.U. directly affecting U.S. financial solvency because of the unregulated derivatives market. With a single currency and different ratios of value creation and value consumption for each member nation, the E.U. is destined to fail.
All this time, the Hearstian news media is diverting national attention to LGBT bathrooms and other news trash to deny the public any awareness of the economic threat we face and its cause. I truly believe that the Congress, and the media are all smart enough to know what is going on but too corrupt and/or too insidious to do anything about it. Therefore, they all obstruct!
Here are the most relevant questions:
1. Is there still time to turn this economic ship around?
2. Is anyone really willing, beside President Trump, to turn this economic ship around?
3. What is the end game that insidious special interests are driving us towards? Economic oblivion?
Although the media and political class cannot relate to it, there was a real grassroots movement by many people in this country to change the feckless leadership approach in the White House to something other than dramatic but ineffectual teleprompter oratory while Rome burns. Many families were and are suffering economically and truly understand that our Congress has to be bullied to effect any meaningful changes to balance our trade accounts and eliminate Federal deficits and dangerous quantitative easing. We understand that jobs can only be brought back through enforced indexed tariffs on imports by country that are greater than our exports. Therefore we voted for a P.C. intolerant, blunt, honest, and hopefully effective bully that values the U.S. economy and its working middle class first and the rest of the world second or even third. Now there needs to be an organized effort to call out and expose the obstructionists and defeat them in the next election!
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