David Stockman has written a good article, posted on May 5 at
dailyreckoning.com: "Trumped! Why It Happened And What Comes
Next. Part 1".
Stockman's opinion of the state of the US economy is terrifying, and he
backs up his opinion with plenty of facts. In short, the US is in one hell of
a mess, economically.
Stockman ends his article with recommendations for six "Deals"
which a Trump administration might offer to the American people:
A Peace Deal
A Jobs Deal
A Federalist Deal
A Health Care Deal
A Fiscal Deal
A Sound Money Deal
Stockman's words on the "Peace Deal":
"A Peace Deal with Putin for cooperation in
the middle east, defeat of ISIS, withdrawal from NATO and
a comprehensive worldwide disarmament agreement."
These are very sensible words.
Stockman's recommendations for the "Federalist", "Health
Care" and "Fiscal" Deals are also sensible. We might say that
they are "Standard Recommendations", and all trivial in comparison
with the essential problem of the US.
Stockman stumbles seriously in his proposals for the "Jobs" and
"Sound Money" Deals, because he has not realized that both are
linked - simply different aspects of one central problem - and cannot be
dealt with as separate problems with any success.
As part of the "Jobs Deal", Stockman recommends taxing imports.
If Trump should crack down on imports by taxing them, that would
immediately throw the whole rest of the world into a desperate situation:
other countries' financial systems would collapse for lack of dollar
reserves, because dollars can only be obtained by exports to the US, or by
exports to intermediaries who themselves are exporters to the US.
International debts would be repudiated and Revolution would be the order of
the day.
If the US should begin to tax imports heavily, the rest of the world would
have to respond in kind: heavy taxes on imports from the US; that would mean
a fall in US exports and less jobs. Doesn't Stockman remember the
consequences of the Smoot-Hawley Bill that raised tariffs on imported goods,
back in the 30's?
Taxing imports into the US isn't going to do any good at all with regard
to the calamitous lack of good jobs in the US. So much for Stockman on the
"Jobs" Deal.
Regarding "Sound Money", what Stockman has to say is only
lip-service, which was fashionable as good advice in 1984. His recommendation
regarding Sound Money amounts to the same-old, "More Control Over the
Banking System". However, that is not going to solve anything at all,
because the central, existential problem of the United States of America lies
at a far deeper level.
Regarding the question of political and economic policy for the US in the
grave crisis in which it finds itself, there appear to be three roads ahead:
1. The first road is the road of inaction - this is the
most likely road: doing nothing is itself an action. It is quite possible
that the US will simply roll on, as Empires have the habit of doing, until it
collapses in indescribable chaos; as a knock-on effect, many governments and
economies around the world will also go belly-up. Promising "jobs"
might get Trump the Presidency, but the most likely destiny for the US is to
die a long-drawn-out death by doing, on the one hand, lots of things that
don't do any good, but do make everything a lot worse, and on the other hand,
doing absolutely nothing that would do any good, because it would hurt too
much.
2. Secondly, the road to "Sound Money" - but
not in the Stockman style. "Sound Money" for the US must inevitably
mean the repudiation of the "Bretton Woods Agreements" of 1944
which created the existential problem of the US, because
"Bretton Woods" opened the way for a totally dollar-dependent
world, which in turn guaranteed the devastation of US industry and the
consequent impoverishment of its population. "Sound Money"
means a return to the unthinkable (unthinkable by those who are not
accustomed to thinking, that is) Gold Standard.
The very existence of the US depends on its return to the Gold Standard. A
return which would be very painful, indeed, but which would make jobs sprout
like mushrooms across the US, as imports would collapse to a level where
there would be neither an export deficit nor an export surplus, and US producers
would jump at the chance to reopen industries to supply the American
consumer. There is a vital link between Jobs and the Gold Standard.
Will Trump establish the Gold Standard? Not bloody likely.
3. Lastly, Nuclear War to Clean Up The Mess.
Do not discount this possibility. Nuclear war might happen quite
accidentally. Or it might be the desperate decision of a small group of
crazed men so addicted to power and gigantic wealth that they would rather
commit suicide than see themselves deprived of their power and their wealth.
The North American Continent would become a gigantic smoking ruin; on the
positive side, plenty of jobs for the few survivors.
Enjoy the Election! Trump is a great showman!
