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Blog Post - Views on the Economy and the World

The Trade War Resumes

| May 25, 2019

Donald Trump on May 5 suddenly revealed that a trade agreement with China was not imminent after all.  To the contrary, the Administration on May 10 raised its earlier 10 percent tariff on $200 billion of Chinese goods to 25%, and threatened to extend 25% tariffs to the remainder of imports from China by late June (roughly $300 billion of goods).  China, of course, retaliated against US exports [announcing reciprocal 25% tariffs on $60 billion of US goods, to start June 1.  Surprised stock markets fell in response, with the S&P 500 down 4 per cent over the first week of the renewed trade war.

The mystery is why market investors or anyone else had up until May put faith in White House statements that a deal with China was expected any day.  Why believe this Administration on such a thing? Trump, after all, is the guy who, after meeting with Kim Jong Un in Singapore, claimed that North Korea was no longer a problem because it had agreed to denuclearization. And the guy who said that Saudi officials had promised him to buy $110 billion of US arms and to lower oil prices. Did anyone really expect a proud China to agree, without meaningful reciprocal concessions, to let the US write some of its laws and to pass subsequent unilateral judgment on whether it was complying?

The Real cost of Trump's Tarrifs

Drew Angerer/Getty Images

Analysis & Opinions - Project Syndicate

The Real Cost of Trump’s Tariffs

| May 23, 2019

Whereas winners tend to outnumber losers when trade is liberalized, raising tariffs normally has the opposite result. US President Donald Trump appears to have engineered a spectacular example of this: his trade war with China has hurt almost every segment of the US economy, and created very few winners.

Blog Post - Views on the Economy and the World

Moore on Gold and Commodities

| May 01, 2019

A century ago, the gold standard was considered a guarantor of monetary stability.  That golden era is long-gone.  (If it every really existed at all.  The general price level fell 53% in US and 45% in the UK during 1873-1896 due to a dearth of gold deposit discoveries.)

Continuing my thoughts on the Fed candidacy of Stephen Moore: he has said several times that he favors a return to gold.  In true Trumpian fashion, he recently denied having said it despite the clear video evidence.

Blog Post - Views on the Economy and the World

Moore on Gold and Commodities

| May 01, 2019

A century ago, the gold standard was considered a guarantor of monetary stability.  That golden era is long-gone.  (If it ever really existed at all.  The general price level fell 53% in US and 45% in the UK during 1873-1896 due to a dearth of gold deposit discoveries.)

Continuing my thoughts on the Fed candidacy of Stephen Moore: he has said several times that he favors a return to gold.  In true Trumpian fashion, he recently denied having said it despite the clear video evidence.

Progress in the trade talks between Donald Trump and Xi Jinping has been difficult

Nicolas Asfouri/AFP/Getty Image

Analysis & Opinions - The Guardian

Donald Trump and Xi Jinping are Missing a Trick over Trade

| Mar. 24, 2019

President Donald Trump has postponed until at least April the supposed deadline for concluding the United States’ trade negotiations with China. A good outcome for both sides would be reached if China agreed to protect property rights better and reduce the state’s role in its economy; the US agreed to strengthen national saving and public investment; and both sides agreed to reverse their recent tariff increases. Unfortunately, this is not the deal that is likely to materialise.

Blog Post - Views on the Economy and the World

Xi & Trump Miss a Chance to Expand Markets

| Mar. 24, 2019

Donald Trump has postponed until April the supposed deadline for a conclusion to China-US trade negotiations.  A good outcome for both sides would have China agree to better protect private property rights and to reduce the role of the state in its economy; the US agree to strengthen national saving and public investment; and both sides agree to reverse their recent tariff increases and the resulting shrinkage of international markets.  Unfortunately this deal is not likely to happen.

What does the US want?

Blog Post - Views on the Economy and the World

Bold Ideas are Not Always Better than Old Ideas

| Feb. 28, 2019

US Democrats are moving to the left, we are told.  It is not yet clear that the median voter is in fact moving left, nor the median congressman who was elected last November.  But it is clear that many of the candidates for the 2020 Democratic presidential nomination are experimenting with “bold new ideas”, or at least bold rhetorical formulations.  They are receiving what seems a disproportionate amount of attention for doing so.  Many of the policy proposals, if interpreted literally, are not entirely practical, either economically or politically.