Peter Schiff: ‘Nobody Is Prepared For The Long-Term PAIN That’s Coming’

Peter Schiff has been saying that this is a bear market for a few weeks now, and it looks like president Donald Trump may have just gotten the same memo. While Trump said some investors may feel some “short-term pain” in the market, but Schiff says it’s actually going to be long-term pain.

According to Seeking Alpha, Trump says any short-term market pains will all be worth it because we will get long-term gain, referring to the benefits we’ll reap when we win the trade war. In his most recent podcast, Peter said that’s not at all how it’s going to play out, though.

“We’re going to have short-term pain and then the pain is going to get worse in the long-run,” Schiff said.  Schiff is a financial and market analyst who predicted the 2008 recession. But Schiff says the bigger problem, is that nobody is ready for any pain at all.

Schiff says that the real problem is the government itself. Policymakers aren’t willing to take the steps necessary to reap long-term benefits. Those steps would have to include a major cut in government spending, a cut in entitlements, cutting defense spending, and shutting down government agencies and government departments. And we couldn’t agree more.  Government spending is out of control and people struggle to get by with the tax burden levied on them, and that will only worsen when a Democrat takes power.

There would be some short-term pain that would deliver some long-term gain. How about if the Fed normalizes interest rates and lets the bubbles collapse, lets people lose money, lets the markets restructure? That is short-term pain for long-term gain. That is what a real free-market recession is like. Let the government get out of the way. Let the central bankers get out of the way, and let the free market correct the imbalances and create a good foundation where we can build a lasting, sustainable, viable recovery.

But Schiff says that’s not what President Trump is all about. He’s about avoiding the short-term pain by kicking the can down the road, just like every other president in modern history.

This is a time bomb. The debt keeps going up. Every day we’re closer to the crisis. Every day there is more and more debt, right? And so, every day that goes by, we’re one day closer to the debt imploding.

Schiff went on to detail what will go wrong if the Fed decides to make a move that no one is expecting.

Normally the markets are forward-looking. They discount things that they think are going to happen. Well, if you don’t think something is going to happen, how can it be discounted? So, it’s when the markets are blindsided, when they’re surprised, that’s when you see the biggest moves because they didn’t get discounted in advance. You can’t buy the rumor and sell the fact if you’ve never bought the rumor because you don’t know there’s a rumor or you don’t believe it. So when the fact happens, nobody is positioned for it. Nobody is prepared for it. And that’s where we are in the gold market. That’s where we are in the gold stock market, in the bond market, in the US stock market. Nobody is prepared for any of the things that are going to happen because nobody believes that they are going to happen.

And Schiff says don’t get too attached to your tax cut if you actually benefited from it.  Once the Democrats take the White House and both houses of Congress, those tax cuts will not only go away but be raised substantially to pay for even more democrat government spending.

 

Trade War: China Imposes Retaliatory Tariffs on 128 American Products

(ZHE) As previewed one week ago, on Sunday China unveiled new retaliatory duties on US food imports including pork, nuts, wine and fruits of between 15% and 25% in response to Trump administration’s Section 232 tariffs (not to be confused with the $60BN in Section 301 tariffs unveiled subsequently) on steel and aluminum imports. In a statement posted on […]

3 Recent Events That Could Send the US Hurtling Toward World War III

This article was originally published by Daisy Luther at The Organic Prepper

Recently, the news has been all abuzz with teen activists who want to take away our guns but refuse to use clear backpacks, the Facebook privacy scandal, and how someone bit Beyonce in the face. But there are three recent events that aren’t getting much press which tell us it is entirely possible that we could be headed toward World War III at worst and toward an economic collapse at best.

During the election, it really seemed as though Hillary Clinton as president would be a much more likely path to World War III. She even gloated of the actions she planned to take that would have led directly and immediately to war. Donald Trump as president seemed less likely to get us into a war with Russia, but it appears the tides may have turned back in that direction.

#1) The Trade Tariffs

We’re already at financial war with China due to punitive trade tariffs that our governments are instituting on one another. President Trump wants to rebalance global trade in America’s favor, and China isn’t going to go down without a fight. Here’s more information on the list of tariffs the US wants to charge for Chinese merchandise and the retaliatory list from China.

The last time we were involved in a major trade war, the Great Depression happened, according to an economics expert for CNN.

America’s last trade war exacerbated the Great Depression in the 1930s, when unemployment rose to 25%. Claiming it was protecting American jobs, Congress passed the Smoot-Hawley Act in 1930. The original bill was meant to protect farmers. But to build political support, many lawmakers asked for tariffs — or taxes — on all sorts of goods in exchange for their vote.

Several nations, such as Canada, slapped steep tariffs — or taxes — on US goods shipped and sold abroad. For example, US exports of eggs to Canada fell to 7,900 in 1932 from 919,000 in 1929, according to Doug Irwin, a Dartmouth professor and former trade adviser to President Reagan.

The result: US imports fell 40% in the two years after Smoot-Hawley. Banks shuttered. Unemployment shot up. Surely, there were a litany of factors at play. But economists widely agree Smoot-Hawley made the Great Depression much worse than otherwise. (source)

And what happened at the end of the Great Depression? World War II happened, and this ended the unemployment and resulted in a spending frenzy that pumped up the economy. There’s always an increase in the GDP during wartime due to defense spending. But that is one hell of a bad way to fix the economy, don’t you think?

#2) The PetroYuan

As of Monday, March 27th, the US has lost petrodollar status. The petrodollar now has competition in the form of the petroyuan. What this means is that previously, the only way anyone in the world could buy oil was to use US dollars to do so. This kept the value of our currency high. But now, Russia and China are buying oil using the yuan. Others may soon follow because the United States has ticked off a majority of the planet in the past century.

What does this mean for Americans? Inflation. Major inflation. If our dollar is worth less on the global scale, it means that anything we import is going to cost more. If you want the super-detailed economic explanation, this article and video will provide the in-depth info you want on the history and potential collapse of the petrodollar.

Many articles have been written about the possibility that the United States will go to war to protect the petrodollar status. This one is a good read. For a quick explanation, watch this video.

#3) Kicking Out the Russian Diplomats

We also kicked 60 Russian Diplomats out of the United States because Russia was accused of poisoning their own spy on British soil.

Trump took the action after the US joined the United Kingdom in accusing Russia of attempting earlier this month to murder a former Russian double agent and his daughter using a nerve agent in the town of Salisbury, England. The action comes just 11 days after the Trump administration leveled the first sanctions against Russia for its interference in the 2016 US presidential election.

“The United States takes this action in conjunction with our NATO allies and partners around the world in response to Russia’s use of a military-grade chemical weapon on the soil of the United Kingdom, the latest in its ongoing pattern of destabilizing activities around the world,” White House press secretary Sarah Sanders said in a statement. (source)

Russia, the world’s favorite scapegoat recently, denies responsibility for the poisoning.

“It’s complete drivel, rubbish, nonsense that somebody in Russia would allow themselves to do such a thing ahead of elections and the World Cup,” Putin told supporters after winning a fourth term as president.

“We have destroyed all chemical weapons,” he added, rejecting Britain’s claim that only Moscow could be behind the nerve agent attack on former double agent Sergei Skripal and his daughter Yulia. (source)

As for the dozens of Russian diplomats expelled from countries around the world, Russia has promised a response.

RIA Novosti reports an unnamed foreign ministry official protested the decision by EU, NATO nations to expel envoys, and  confirmed that Russia will respond to each country expelling diplomats, warning that the “expulsions won’t go unanswered.”

“Unfriendly” action won’t be left unanswered.

U.K.’s allies are “blindly following” principle of Euro-Atlantic unity at the expense of common sense.

Additionally, Russia’s ambassador to Washington, Anatoly Antonov, said that, with regard to the US response, “US only understand force.“

“I mentioned in my statement in the State Department that I consider these actions counterproductive,” Antonov said.

“I said that the United States took a very bad step by cutting what very little still remains in terms of Russian-American relations.” (source)

Whether Russia was responsible for the poisoning of their former agent or not, this incident and the response could lead to…you guessed it…war.

President Trump Seems to be Building a War Cabinet

If Russia and China decide to team up, it’s a safe bet they won’t just be making passive aggressive comments about the US. We can look for a brutal and decisive attack. Whether the United States strikes first or gets hit first would be the only thing in question.

Whatever the case, it looks like the White House is expecting war.

There was more upheaval in Washington DC last week when President Trump replaced his National Security Advisor. Many people were shocked when Trump booted H.R. McMaster and replaced him with an avid Warhawk, John Bolton.

“I am pleased to announce that, effective 4/9/18, @AmbJohnBolton will be my new National Security Advisor. I am very thankful for the service of General H.R. McMaster who has done an outstanding job & will always remain my friend. There will be an official contact handover on 4/19.”

“The two have been discussing this for some time. The timeline was expedited as they both felt it was important to have the new team in place, instead of constant speculation,” a White House official said. “This was not related to any one moment or incident, rather it was the result of ongoing conversations between the two.” (source)

Here It Comes: China About To Launch “Tens Of Billions” More In Tariffs

This report was originally published by Tyler Durden at Zero Hedge

This morning the market has been on edge over, and traders are obsessed with just one question: how will China retaliate to Trump’s trade war and tariffs… further. After all, the initial response of a modest 15-25% tariff on $3 billion in 128, mostly agricultural, products, seemed laughably small and appeared to be more of a warning shot than a real response to Trump’s $50BN in Section 301 tariffs.

One answer was revealed moments ago when as we reported that China’s ambassador to the US Cui Tiankai did not rule out the possibility of scaling back purchases of Treasuries in response to Trump’s tariffs.

“We are looking at all options,” he said, when asked whether China would consider reduced purchases of Treasuries. “That’s why we believe any unilateral and protectionist move would hurt everybody, including the United States itself. It would certainly hurt the daily life of American middle-class people, and the American companies, and the financial markets.”

But the more likely reaction is that China will simply escalate with a “brute force” tit-for-tat retaliation, and as Citi notes, the editor-in-chief of the state-controlled Chinese newspaper Global Times, Hu Xijin, confirmed precisely that when he tweeted: “I learned that Chinese govt is determined to strike back.”

More importantly, he explained the confusion over the “disproportionate” $3 billion response, noting that “Friday’s plan to impose $3b tariffs is simply to retaliate to tariffs on steel and aluminum products”, i.e. a response to the previous, Section 232 round of tariffs, and has nothing to do with the latest round of $50 billion in Section 301 tariffs.

Instead, Hu warns that “China’s retaliation lists against the 301 investigation will target US products worth $ tens of billions. It is in the making.”

I learned that Chinese govt is determined to strike back. Friday"s plan to impose $3b tariffs is to retaliate tariffs on steel and aluminum products. China"s retaliation lists against the 301 investigation will target US products worth $ tens of billions. It is in the making.

— Hu Xijin 胡锡进 (@HuXijin_GT) March 23, 2018

Or, in other words, China’s real retaliation – one which is guaranteed to infuriate Trump with its proportionality and lead to further tit-for-tat responses – is about to hit.

As a reminder, here is a list of the main US exports to China, which – if this warning is accurate – are about to be crushed.

Thiel: Bullish On Bitcoin, Trump, & Musk; Bearish On AI, EU & Political Correctness

This report was originally published by Tyler Durden at Zero Hedge

Fresh off his move to Los Angeles, and a profile in the New York Times where he defended President Donald Trump and lashed out at the pervasive groupthink that drove him out of Silicon Valley, billionaire venture capitalist and PayPal co-founder Peter Thiel sat for an interview with Maria Bartiromo at the Economic Club of New York.

Early in the discussion, Bartiromo asked Thiel – who famously opened for Trump at the Republican National Convention – what he thought about Trump’s performance.

In response, he explained that he’s extremely happy with the president’s performance during his first year in office. While the media has been hyperfixated on the latest leak from the Russia probe, Trump has quietly been slashing regulations and questioning orthodoxies like the economic benefits of free trade.

“That’s why, if he runs again, he will be reelected,” Thiel said.

Though “it’s probably the case that Democrats will do quite well in the midterms.”

He also pointed out the irony that people in the Bay Area describe him as a “contrarian” for supporting Trump…

“Supporting Trump was the least contrarian thing I ever did…nearly half the country voted for him. But within the context of Silicon Valley it was viewed as extremely contrarian.”

“The one thing that I liked about Trump and still very much like about him is a willingness to ask questions and to reframe the debate and not be bound by these strictures.

“There are any of a number of issues where it’s good to rethink things.”

Later in the conversation, Bartiromo asked Thiel about the “Gawker situation.” Thiel, who sounded uncharacteristically willing to discuss an episode about which he has been famously reticent, explained that Gawker’s argument in its own defense was, in reality, an insult to journalism. Thiel said that just because Gawker billed itself as a news site doesn’t automatically extend first amendment protections to everything it publishes.

“I’m very proud to have supported Hulk Hogan in a successful lawsuit… The claim that a pornographer pays someone for sex tapes, and a journalist gets to publish sex tapes without paying people… that’s what in effect what Gawker was arguing.”

“We have a first amendment, we believe in free speech, but that doesn’t mean you get to steal a sex tape made in the privacy of a bedroom and post it on the Internet for everybody to see. We have a first amendment…but we also have a fourth amendment that protects us from unreasonable search and seizure…so that’s the legal framing.”

The Gawker lawsuit demonstrated to America why defining the scope of privacy protections in the digital age is so important. Today, the conventional wisdom is that Americans have tacitly surrendered their right to privacy by participating in the digital world. But Thiel says this notion is anathema to the preservation of a free society.

There was a brief discussion of trade, in which Thiel briefly pointed out that US is in a much stronger position to bargain with China and EU than vice versa…

“Quite unclear where China can reciprocate with tariffs on US. We’re exporting so little. US no longer is a monopoly exporter in any single area.”

“With Germany, it’s a very similar thing, hard to know how you retaliate in a way that hurts them more than it hurts US.”

The Silicon Valley billionaire then added that Peter Navarro has sold 1 million copies of his book “Zero To One” in China vs. 40,000 in India, which Thiel says is one way to show how one country is thinking about entrepreneurship versus the other.

When Bartiromo raising the European Union’s decision to introduce the “first ever” regulations of Google, Facebook and other giant tech platforms. Thiel sees good reasons and bad reasons for this threat of regulation:

“The good reasons are these privacy concerns and the bad reasons are there are no successful tech companies in Europe and they are jealous of the US so they are punishing us.”

Additionally, Thiel acknowledged that “privacy in a digital era deserves to be rethought” but said that “as a libertarian I always dislike regulation.”

Intriguingly, amid all the hype and anxiety surrounding investment, Thiel explained why, as an investor, he wasn’t particularly interested in artificial intelligence: because of its bad reputation.

“The thing that struck me is how uncharismatic AI is at the point. Basically, it’s going to take our jobs and, once it takes our jobs, at the singularity [the theoretical point at which superhuman artificial intelligence is created, triggering an unprecedented cascade of technological change] it’s just going to kill everybody.”

“I’m not sure that dystopian view is necessarily correct but that’s actually what most people believe,” he said, adding that when considering investments he tends to ask whether technologies are good and how they are going to make the world better…

“The answers for things like AI are quite weak,” he said.

Bartiromo then steered the conversation toward bitcoin, and mentioned that, the last time she had spoken to Thiel, that he had expressed reservations about a lot of cryptocurrencies, but was optimistic about the long-term prospects of bitcoin. Thiel explained that he’s owned bitcoin for a long time, and has been consistently bullish.

Though he doubts it’ll ever be successful as a medium for payments, Thiel believes bitcoin could endure as a store of value that, much like gold, could serve as a hedge against inflation.

“The technology that people like to talk about is the blockchain technology, and I’m somewhat skeptical about how that translates into good investments, but the one use-case of cryptocurrency as a store of value may actually have quite a bit of a ways to go. I would be long bitcoin and neutral to skeptical of just about everything else at this point, with a few possible exceptions.

“The question with something like bitcoin is whether it can become a store of value. And the thing it would replace is something like gold. The analogy is it’s like bars of gold in a vault that never move and you get it and it’s a hedge of sorts against the whole world falling apart.”

“The objections that people have to bitcoin are also objections to gold. It’s this weird currency that’s not backed by any government. Same thing is true of gold. It’s not clear what the intrinsic value of bitcoin is. Same thing is true of gold. It may well be a bubble, but – and most bubbles are unstable and end – one of my friends has this line that ‘money is the bubble that never pops’, so if it is a bubble, then it is money.”

“If everybody decided that a $100 bill was worthless then you wouldn’t want to have a $100 bill.”

There are a lot of crazy dynamics in the crypto world, but one thing that’s different from the dot-com bubble of the late 90s is there aren’t any Wall Street bankers involved… yet – one reason why bitcoin strikes Thiel as “deeply contrarian.”

At the very least, both Wall Street and Silicon Valley were both late to the bitcoin party. While this isn’t a reason to be bullish in and of itself, it’s definitely a factor worth considering. And while there are risks surrounding the influence that miners exert, as well as the unraveling of privacy protections. But, Thiel says, there will likely be only one online equivalent to gold…and right now, bitcoin is the only crypto product that fits that bill.

Thiel offers some parting advice: “Never bet against Elon.” and “don’t compete with Amazon.”

When Thiel first invested in Musk’s rocket company, SpaceX, he was sceptical that it would be able to build a reusable rocket.

“I have known Elon for 18 years and you should never bet against Elon,” he said.

“I thought it was inconceivable that it could be done … and they have actually pulled it off,” he said.

The company to watch, he said, was Amazon, which has expanded into a broad range of industries, from infrastructure and logistics to retail and healthcare.

“Amazon is the most ferocious company in the US at this point. It’s probably the company you don’t want to be competing against,” he said.

“I can’t think of any other company even close to Amazon.”

Finally, Thiel circled back to Silicon Valley and the politically-correct folly of it all…

“It’s striking how what had always been a very liberal place has become almost a one-party state,” he said.

“When you have complete unanimity that tells you that political correctness may have gone a little bit too far.”

Here Are The Full Details Of The “Negotiable” Tariffs Trump Will Enact

This report was originally published by Tyler Durden at Zero Hedge

While much of what Trump is announcing today has already been leaked, here are the details of the import tariffs Donald Trump formally adopted on steel and aluminium imports which allow US allies to negotiate and apply for exemptions, a sign of the growing concern that the president was alienating America’s closest international partners, and that 2 of the 4 largest foreign suppliers of steel will be exempt.

The tariffs will come into force within 15 days and are expected to draw retaliation from the EU and other steel producers and heighten fears of a descent into a trade war.

Here are the highlights from Reuters:

• TRUMP TO ANNOUNCE ON THURSDAY IMPORT TARIFFS OF 25 PCT ON STEEL, 10 PCT ON ALUMINUM STARTING IN 15 DAYS -SENIOR ADMINISTRATION OFFICIAL


• U.S. OFFICIAL SAYS CANADA AND MEXICO TO BE EXEMPTED FROM TARIFFS FOR UNDETERMINED PERIOD; CONTINUATION OF EXEMPTION DEPENDS IN PART ON PROGRESS IN NAFTA TALKS


• TRUMP’S TARIFF PROCLAMATIONS TO INCLUDE PROVISION TO CONSIDER ‘ALTERNATIVE WAYS’ TO ADDRESS THREAT TO U.S. NATIONAL SECURITY CAUSED BY OTHER NATIONS’ STEEL, ALUMINUM EXPORTS -OFFICIAL –


• U.S. TRADE REPRESENTATIVE LIGHTHIZER TO HANDLE DISCUSSIONS WITH OTHER COUNTRIES ON ALTERNATIVE REMEDIES TO ‘FLEXIBLY MODIFY’ TARIFF PROCLAMATIONS -OFFICIAL


• MAY HAVE TO RAISE TARIFFS ON OTHER COUNTRIES IF CANADA, MEXICO EXCLUDED; CAPACITY USE TARGETS MUST BE MAINTAINED -OFFICIAL


• TRUMP OFFICIAL DECLINED TO SPECIFY ALTERNATIVES THAT OTHER COUNTRIES COULD SEEK TO AVOID STEEL, ALUMINUM TARIFFS

And the details, from Bloomberg:

Steel tariff to be set at 25%, aluminum at 10%

• Beyond that, proclamations almost identical


• To take effect in 15 days


• Official says may have to raise tariffs modestly on everyone else if Canada, Mexico excluded long-term; adds document flexible enough to allow that

On exclusions:

• Canada, Mexico will be specifically exempted from both tariffs initially
  
  
  
  • Trump has linked the exemptions to Nafta talks ongoing; exemption isn’t open-ended, official says
  
  
  
  


• For other countries, will have ability to modify order owing to national security
  
  
  
  • European countries and others could be able to request exclusion
  
  
  
  

On economic impact:

• White House official says there will be no significant downstream price effects, and thus no significant downstream job effects
  
  
  
  • Expectation counters multiple statements and prognostications from several companies and industry groups that use steel and aluminum, as well as lawmakers representing them, who have warned the tariffs will harm their businesses or industries
  
  
  
  


• Only job effects White House sees are positive ones in U.S. steel, aluminum industries: official


• Says process extremely, carefully well vetted

In short, tariffs but with notable exemptions, which begs the question: why did Gary Cohn quit again?

Trump Trade Wars A Perfect Smokescreen For A Market Crash

This article was originally published by Brandon Smith at Alt-Market.com

First, I would like to say that the timing of Donald Trump’s announcement on expansive trade tariffs is unusual if not impeccable. I say this only IF Trump’s plan was to benefit establishment globalists by giving them perfect cover for their continued demolition of the market bubbles that they have engineered since the crash of 2008.

If this was not his plan, then I am a bit bewildered by what he hopes to accomplish. It is certainly not the end of trade deficits and the return of American industry. But let’s explore the situation for a moment…

Trump is in my view a modern day Herbert Hoover. One of Hoover’s first actions as president in response to the crash of 1929 was to support increased tax cuts, primarily for corporations (this was then followed in 1932 by extensive tax increases in the midst of the depression, so let’s see what Trump does in the next couple of years).  Then, he instituted tariffs through the Smoot-Hawley Act. His hyperfocus on massive infrastructure spending resulted in U.S. debt expansion and did nothing to dig the U.S. out of its unemployment abyss. In fact, infrastructure projects like the Hoover Dam, which were launched in 1931, were not paid off for over 50 years. Hoover oversaw the beginning of the Great Depression and ended up as a single-term Republican president who paved the way socially for Franklin D. Roosevelt, an essential communist and perhaps the worst president in American history.

This is not to say Hoover was responsible for the Great Depression. That distinction goes to the Federal Reserve, which had artificially lowered interest rates and then suddenly raised them going into the economic downturn causing an aggressive bubble implosion (just like the central bank is doing right now). But Hoover did actually aid the Fed in their undermining of economic stability by pursuing policies which were poorly timed.

I’m hitting readers with all of this because I am growing rather tired of the contingent of Trump apologists in the liberty movement scrambling to defend every single Trump action no matter how illogical. These people should know better. Sorry, but Trump is not “playing 4D chess” against the globalists. His primary actions have only served so far to create a useful distraction away from the globalists.

The disturbing key to all of this is the fact that many of Trump’s policies are things that I and many others have argued for in the past. The problem is, he is implementing them out of order and with bad timing, which will only make such policies appear destructive in the end, rather than constructive.

In terms of the implementation of tariffs, the people who are defending this action at this time do not seem to understand the basics of international trade. Tariffs can only be enacted from a position of economic strength and resource development. This strength comes from internal self-sufficiency in production; meaning, in order for the U.S. to force a trade balance (which is what tariffs are supposed to do) the U.S. must have a strong industrial base and MUST be capable of producing most if not all necessary goods and goods in broad demand.

The fact is, U.S. manufacturing has been utterly outsourced by the very corporations Trump just gave a 10% tax cut to, and rebuilding that industrial base would take decades. Why? Because there are no incentives for corporations to bring manufacturing back.

As I already stated, Trump is instituting potentially solid policies but he is doing so out of order. Tax cuts for corporations should have been enacted only as an incentive for manufacturing jobs to be returned to America. Instead, corporations got tax cuts for absolutely nothing. And will those tax cuts go towards more jobs or innovation? Nope. They will be going to pay off unprecedented corporate debts, and stock buybacks, most of which were accrued through borrowing from the Federal Reserve.

Will this stock buyback bonanza even generate new highs in the Dow? Probably not. But I’ll explain why that is later.

If Trump had given tax incentives for corporations to bring manufacturing back into the U.S., and then given those corporations a few years to make the shift, only then would tariffs have been an effective action. But as the situation stands now, we have minimal tangible production in this country, and, historic debts held by the same overseas competitors that Trump is now seeking to “teach a lesson.”

Debt is the next issue which needs to be addressed before tariffs can ever be implemented in a practical way. In terms of national debt, rather than setting up a plan to reduce U.S. debt expenditures, Trump is increasing debt by reducing taxes while at the same time increasing spending. Trump did not take a hard stand on the debt ceiling debate as he originally claimed he would, and so, the debt train continues unabated.

Who is going to purchase this debt, I wonder? Over the past several years the largest buyer of U.S. treasury debt was the Federal Reserve through fiat money creation. Now, the Fed has tapered quantitative easing and is dumping their balance sheet at a rate faster than anyone expected. The Fed is pulling the plug on its artificial support of the economy.

The next largest buyers are major foreign central banks in countries like China, Japan and to some extent the supranational EU. If the debt buyers of last resort are now the very same countries Trump is seeking to enact tariffs over, how do you think this little theater will end? Yes, with a dump of U.S. treasury bonds and perhaps the dollar as world reserve by those nations.

But what about the U.S. consumer? Isn’t the consumer market in America so enticing that nations like China would “never dare” dump U.S. debt or the dollar? No, not really. If we are talking about a trade “war,” then a country like China, which has a vast manufacturing base and which has also been building up its own domestic consumer market, would be willing to make the sacrifice. America would be hurt far more by the threat of debt default and the loss of the dollar’s international buying power than China ever would be by the loss of American consumers. With tariffs being implemented, they may lose the American consumer anyway.

Our retail market is hardly as appetizing as it was 10 years ago given the decade of drudgery Americans have endured, with the largest number ever of working age citizens no longer participating in the jobs market, as well as real worker wages in continued decline while the American consumer is now more indebted than at any other time in history.

All of these negative effects are weighing down our economy while the Federal Reserve is quickly deflating the fraudulent markets that the establishment used during the Obama administration to argue that America was “in recovery.” Of course, alternative economists have known since the beginning that this was a lie, and that the only thing propping up the economy and stock markets was central bank manipulation.

The Fed under Jerome Powell has made it crystal clear that they WILL be raising interest rates and cutting the Fed balance sheet, perhaps more than their dot plots had indicated in the past. Without low rates and a steadily rising balance sheet we have already seen the results. Stocks in particular have gone crazy compared to the past few years, dumping nearly 10% one week, spiking about half that the next week. One thing is certain, the supposedly endless bull market induced by the Fed years ago is now over. Stocks are in heart attack mode.

It is no coincidence that the first two times the Fed reduced its balance sheet the Dow plunged over 1,000 points. The latest dump of $23 billion at the end of February resulted in a drop of around 1,500 points. It is too early in this process to know what the trend will be, but it seems to me that stocks are being steam valved down every month. With a marked decline just after a balance sheet dump, followed by a less impressive dead cat bounce the week after.

In the meantime, Trump’s “trade war” is now being blamed in the mainstream for the decline in stocks that the Fed is actually responsible for. As I have always said, Trump is the ideal scapegoat for the inevitable economic crisis the central bankers have staged. Trump’s tariffs might exacerbate the problem, just as Hoover’s policies did in the beginning of the Great Depression, but the blame rests squarely on the Federal Reserve and central banks around the world. Will the average person understand this dynamic once the dust settles on our financial system? Probably not.

So, to summarize, while Trump has indeed set in motion policies that conservatives in general tend to approve of, he has done so in an impractical way that will ultimately be blamed for a market crash the Fed created. If conservative ideals such as limited government and sovereign trade protection get the blame for an unprecedented economic crisis then this could sabotage conservatism for generations to come. If elections are still even a factor as this crisis unfolds, the chances of the public accepting a socialistic nightmare regime after Trump exits the White House are high. And, the banking elites that conjured the whole mess will escape once again without any punishment.

The question we must ask is this – Is Trump aware that his policies are creating a perfect distraction for those same banking elites? I believe we will know for certain the answer to that before 2018 is over.

***

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You can contact Brandon Smith at: brandon@alt-market.com

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Xi Jinping Meets with Trump

President Trump welcomed President Xi at his Mar-a-Lago estate in Florida on Thursday [image: Carlos Barria/Reuters]China and America are largely world’s apart on ways to resolve differences between them, including major geopolitical issues.

Beijing urges diplomatic outreach with Pyongyang and cessation of provocative US/South Korean military exercises the DPRK believes are preparations for war on its country.

Washington categorically refuses to end decades of unjustifiable hostility toward North Korea, choosing confrontation over responsible outreach, risking unthinkable war on the peninsula, possibly going nuclear by accident or design.

Beijing and Moscow want provocative US THAAD missile systems removed from South Korea, threatening their territory. The Trump administration is unbending, keeping them deployed, intending new installations – aimed mostly at China and Russia aggressively.

Unacceptable US air and sea incursions encroaching on China’s territory remain a major sticking point between both countries.

So are arms sales to Taiwan and economic relations. Trump’s “America first” agenda risks initiating a trade war – last November saying “(w)e can’t continue to allow China to rape our country.”

“That’s what they’re doing. It’s the greatest theft in the history of the world.” He threatened a “tit-for-tat approach” through imposition of tariffs on certain Chinese imports.

Trump and Xi Jinping spoke several times by phone. On Saturday, they met for the second time on the sidelines of the G20 meeting in Hamburg, Germany.

Both agree on Korean peninsula denuclearization. Xi stressed the need for both countries to show mutual respect and cooperation on regional and international issues – to keep bilateral relations positive.

Trump said he and Xi have a “wonderful relationship,” expressing confidence both leaders can achieve “success” in addressing common issues of concern.

“Trade is a…very, very big issue for the United States,” he stressed, adding “we’re going to turn that around.” On North Korea, he said “there will be success in the end one way or the other.”

Trump is scheduled to pay a state visit to China later this year. Focus will be on continuing discussion of major issues both countries agree and disagree on.

Resolving latter ones will likely remain unattainable. Washington wants all countries observing its rules. China insists its sovereign rights be respected – yielding them to no other country.

A rocky bilateral relationship looks likely to continue – Xi under no illusion about America changing how it operates, hoping to make the best out of a bad situation.

Trump Planning Global Trade War?

[image: Getty]According to Axios, Trump appears heading toward imposing tariffs of around 20% on steel and other imports.

Although the Constitution grants Congress tariff-imposition authority, congressional legislation delegates the power to presidents under the following circumstances:

• under the 1917 Trading with the Enemy Act against any nation as long as America is at war somewhere;

• under the 1977 Emergency Economic Powers Act – during a real or invented national emergency; no legitimate one existed in America since WW II ended;

• under the 1974 Trade Act, permitting across-the-board tariffs – based on an allegedly needing to confront an “adverse impact on national security from imports; and

• under the 1962 Trade Expansion Act, targeting certain industries.

If Trump faces resistance from cabinet officials, congressional members, US companies or other countries, judicial appeals could take years to play out.

Targeted nations almost certainly will retaliate, sparking a global trade war, assuring losers, not winners.

According to Axios, together with 20 of his top officials, Trump, Pence, and likeminded advisors “made it clear they’re hell-bent on imposing tariffs” on various imports – including “steel…aluminum…semiconductors, paper, and appliances like washing machines.”

Despite overwhelming opposition from administration members, Trump may impose tariffs anyway. So far, he hasn’t acted.

China is the number one target, then Mexico. Almost all cabinet members stressed it’s a bad idea. “But everyone left the room believing the country is headed toward a major trade confrontation,” said Axios.

Trade war with China will affect other US allies, including Canada, Mexico, and major EU ones.

“Trump was warned…that an affected industry like automakers is likely to seek a court injunction within hours of any tariffs on steel,” according to Axios.

Protectionist policies exacerbated the Great Depression’s severity. They didn’t cause the economic crisis. They hampered recovery when production fell.

Beggar-thy-neighbor trade policies are counterproductive. Trump would be foolhardy to play this game. It’ll hurt economically, not help.

Separately, Axios said “the White House recognizes it faces long odds to rescue” Trumpcare. Enough opposition senators haven’t been persuaded to come aboard.

Suggesting a fallback option, Trump tweeted: “If Republican Senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date!”

Congress isn’t likely to go along. If it does, new healthcare legislation will require 60 Senate votes to pass (impossible with unanimous Democrat opposition), not 51 for a repeal-and-replace bill.

It’s Official: You’re Paying for Trump’s Wall — Twice

(ANTIMEDIA) “We’re going to build a big, beautiful wall — and Mexico is gonna pay for it,” was one of Donald Trump’s campaign mantras. However, as Americans who don’t have political short-term memory loss will remember, politicians break promises once they’re elected. Such is the case with Trump’s promise to make Mexico pay for his “great” wall.

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You’re paying for it, not Mexico, and Trump’s newly released White House budget has made it official.

The Trump budget blueprint, released late Wednesday, calls for taxpayers to fund $4.1 billion through 2018 for Trump’s wall along the southern border of the United States. But that’s just for the initial construction. According to DHS estimates, the overall cost to taxpayers could be $21.6 billion, a figure that will likely be even higher considering the government’s penchant for going over budget and deadlines.

But wait, there’s more. Because Mexico has made it abundantly clear that it will not pay for America’s “great” wall, Trump has floated the idea of slapping a 20 percent tariff on all goods imported from Mexico to make up for the cost. This idea may sound legitimate if you disregard the laws of economics, but the reality is that Americans will wind up paying for the tariffs through higher food and consumer prices. As Anti-Media reported in January:

“Many food products that people living in the U.S. enjoy, like fruits, vegetables, beef, and avocados, could be taxed an extra 20 percent under Trump’s plan. Mexican beer like Corona? 20 percent. Tequila, too. Cars, electronic equipment, machines, engines, pumps, oil, medical and technical equipment, furniture, lighting, signs, plastics, gems, precious metals, coins, iron, and steel products are Mexico’s top exports, which could be taxed 20 percent more.”

In response to the proposed tariffs, Mexico stated it would return tariffs — or border taxes — on U.S. goods going into Mexico, which would hurt American businesses and workers. So basically, you’ll be paying for the wall twice, or possibly three times if you are employed or own a business that relies on exports to Mexico.

At a time when illegal immigration to the U.S. from Mexico has reached a 40-year low, and the supposed economic benefits of the wall are nowhere to be found (though its negative effects are already being felt), many people are likely left wondering if it’s even worth it.

Will Trump’s Trade Policy Bring Jobs Back Home?

President-elect Trump has already gotten tough with three US manufacturing giants, warning that there will be financial penalties for building plants abroad. Will strong-arming these companies succeed in bringing jobs back home?

Ask Ron Paul – Tariffs, Populism, Disinfo, And More…

A year-end edition of “Ask Ron Paul,” where we turn to our viewers to pose the questions. We had a good crop of questions this time around!

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