Trade War With China Ahead?

Miscellaneous Current Events
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Source: blog.civilchallenger.com

Once again, the US government is using “manipulation” to describe what China is doing with its (Yuan) currency despite that the whole point of a central bank is to control currency. China is openly a centralized command economy, whereas the US is supposed to be a free enterprise. Of course the US government established a central bank in the early 1900’s that exists to this day for the purpose of controlling US currency, showing the hypocrisy of the situation.

US Senators Charles Schumer, Debbie Stabenow, and Senator Lindsey Graham are leading an effort to “provide new punitive tools for dealing with a ‘fundamentally misaligned’ currency.” From a free-market economics perspective, any “punishment” with China will likely end up punishing us in the USA just as much as the Chinese just like any of the economic moves I’ve seen any country do to “punish” another. In specific, the proposed punishment is “import duties to counteract the subsidy”. Its fairly well established that import duties hurt the economy that is collecting them so I won’t spend time pulling out the evidence on that point today. The people who are financially hurt the most by this childish bullying by US politicians are “Joe down the street” type of people. Its you and I who have to suffer because of this childish playground fight that mostly seems to be something the US government is starting.

This is part of today’s post at blog.civilchallenger.com and is being re-posted with permission as an effort to promote the blog (brand new, very little traffic right now despite much research).

Also, this is my first post on the Mises Institute Forums. I’m very happy to see such in-depth discussions about fundamental economics and plan to visit frequently! I’ve been souring the internet each day and “donating” my content to one forum each day, and today I found this forum.

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I taught my students today about the Smoot-Hawley Tariff and its deleterious effects. Despite being in 7th grade they seem to get it. I told them that if the government tells them tariffs with China will help to expect the opposite.

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It is Smoot-Hawley all over again. The US Government never learns.

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The USA is risking a whole lot more than just a tit-for-tat trade war. It is literally risking the complete shutdown of the world trading system. These congress folks have no ideal who intertwined and complex these relationships have become. Moreover they completely fail to understand or worse WILLFULLY ignore the purpose for all of this “Globalization”; that being the satisfaction of the desires of fickle consumers. So any interference by Uncle Sam will only result in consumers being worse off. The hidden costs to suppliers in the USA are also very steep. Look at the IPhone made that is assembled in China. It has parts from all over East Asia, Latin America and the East Indies. Then Apple who designed the $300 piece of equipment splits the gross profit about $150 with the retailers. So if you much this up you screw Apple and all of its customers.

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Looks like a great blog.

I’m very impressed by that graph of unemployment. Although it speaks for itself, it might help to have a little caption or discussion about it, to drive home the point.

Also, many people get confused by graphs and appreciate any help you give them interpreting what they see. [“As the red line shows, in our latest recession we are in deep trouble with unempoloyment, and no end in sight. Contrast this with the all the other lines, representing other recessions. Those lines have long since tilted up, meaning employment has risen back to normal levels. Has the bailout and all the “help” merely gotten us in a deeper hole?”]