Article: Currency Ruin Or Compensating Tariffs

Currency Ruin Or Compensating Tariffs?
- A Lack Of Compensating Tariffs Ruins Our Dollar And Economy -

"An unspoken, yet widely accepted reality is that the United States will have to massively debase its currency to deal with the fiscal mess it has created. A weaker dollar means more competitive U.S. exports and more expensive foreign imports, both of which are meant to counter the growing trade deficit. It also means big losses over time for any foreign financial institution with significant dollar reserves. The elephant in the room is whether or not the greenback's managed decline will turn into a downside blowout. The soaring gold price suggests that the world's dollar-holders are becoming a little nervous"The endgame for the Fed comes down to a Hobson's choice: destroy the economy or destroy the currency. Is there any doubt which option Ben Bernanke would chose?"
The Daily Reckoning

The idiocy of free trade as we know it is becoming clear today as our trade deficits mount, our ability to manufacture falls, and the administration is busy trying to deliberately destroy the value of the dollar - all in order to make up for counterproductive, ruinous, undemocratic, and costly "free trade" policies.
The result of currency value decline is that we lose any previous gains from free trade and, worse, purposely reduce the value of our money and assets. This self-defeating process is in lieu of simple, compensating and incentivizing, tariffs giving every country the freedom to control their level of globalization and interdependency" via their own democratic processes.
What we are now getting from this no-tariff, costly, and far-less-than-free trade policy today are price increases which give rise to inflation - meaning the "Fed" will raises interest rates throughout the economy. This then hits the consumer and families hard and so reduces the very consumption the economy is so dependent upon. Worse, it leads to a flight to unproductive gold and precious metals investments as people attempt to protect themselves from the stupidity of "their" own politicians trade policies and competitive currency devaluations.
So all these predictable reactions to our currency destruction policies reduce any previous benefits gained by so-called free trade. What we end up with is a weaker dollar, a weaker economy, more dependency on imports, less domestic freedom, more assets transferred to foreign owners, less investment in domestic production, and less control over our destiny. Again, the flight to gold and hard assets (caused by forced trade policies and Bush deficits) drives the predictable investor defense against dumb trade polices and deliberate currency value destruction - all of which drains capital from the very industries that make the goods and services we might trade.
The idiocy is thus complete. The question is whether this "strategy" is deliberate or simply the result of true believer, blind-faith, religio-economics? Either way, the dismal result is the same.
Nevertheless, rather than admit their mistakes with our money and future, true believers must cling to the idea that this very calamity is somehow the much heralded "universal gain" of which capital's amoral economists speak of as occurring via free trade "in the long run." In fact, however, this forced, undemocratic, "harmonization" is ruining America and what we have is an illusion of a recovery supported by unprecedented levels of monetary creation and debt levels while the middle class is eviscerated.
In reality, as we now better understand, the no-tariff game (not appropriate for a still very disparate and undemocratic world) is very costly, particularly as this counterproductive "efficiency" loop gains steam. Trapped therein due to a lack of tariff freedom, we must get into competitive, repetitive, currency devaluations in order to keep "winning" in the forced free trade game. Meanwhile, the Chinese continue their currency peg to the dollar and have given up only token moves on the upside. Either way, Chinese producer currency up, or USA consumer currency down, we lose.
All this ruinous, dependency-generating, forced trade nonsense is in lieu of simple, rifle-shot, tariffs giving us the freedom and focused ability to offset imbalances in trade, and incentivize democratic and environmental reforms as a prerequisite to gaining entry to First World market. As they stand, however, GATT and NAFTA take away from the vast majority the very freedoms we need to create a sensible and flexible trade policy, and adjust imbalances with rifle-shot tariff changes rather than wholesale currency destruction.
Short of sane, smart, countervailing, tariff freedoms we are simply competing with other countries to make our own citizens poorer and, incredibly, coveting the greater slave's "comparative advantage."
Indeed, the costs of corporate-defined and driven "free trade" are already high, and will become even more enormous, if not disastrous and lead us to serious inflation/depression. In fact, they already have, "free trade" will continue to exceed the cost of rational tariff policies - particularly if you properly value quality-of-life issues typically left out of "economic" equations, and have no provision for Distance Tariffs as proposed by this writer.
We should remember that the US, Japan, and Germany did not become the world's greatest economies via free trade and, further, the depression was not caused by "Smoot-Hawley." Today, however, the middle classes of the G7 First World countries, with their once better wages and standards, are fast disappearing as a direct result of a ruling corporate elite's "race to the bottom" trade policies, and their secret trade tribunals you never see on television.
In short, the GATT-NAFTA scheme passed by our Congress (without being read or understood) was the beginning of this ruling-elite, counterproductive, trade scheme" one for which we are now paying in spades.
In any case, the real problem is that, in a still very disparate and undemocratic world, a truly costless free trade is possible only between countries of relatively equal wages, standards, and values - where labor arbitrage is not used to terrorize First World workers and transfer the wealth of generations to the greater slave, undemocratic, regime.
As for progress, all China and India need do is change the incentives in their own economies and societies and they will prosper without decimating the very First World wage levels and standards they seek to acquire. Instead, ruling corporate elites have set up the perfect zero-sum game" and we're guaranteed to be the "harmonized" losers by the very nature of the rules.
Again, tariff-less trade is neither appropriate nor free for trade between disparate nations - unless rewarding the greater slave, and ending First World wage levels and standards is the objective. Disparate nations and cultures need disparate policies and freedoms democratically tuned to their own economies, stages of development, environments, and the freedom to come and go from a global economy as they see fit.
This is true trade freedom and real free market economy because it is determined by wage-earning majorities in each nation. This is exactly what the growing backlash to globalization is telling us.
Exactly such local democratic powers and rational tariff freedoms, fit for a disparate world, were crushed by a corrupt and fascist GATT-NAFTA. As a result, all we have left is to devalue our currency rather than employing rifle-shot tariffs to adjust trade imbalances, and more effectively gain human rights, and environmental concessions out of developing, and undemocratic, economies.
In sum, instead of rational, smart, and truly free trade, determined democratically by the vast majority, we now have forced trade imposed by stateless corporations. These so-called Free trade treaties, as written and implemented by capital alone, are turning into the worst possible investment - a sorry strategy indeed and one giving a totalitarian "capitalist" nation control over our currency and First World economies. Surely, the veterans of WWII and Korea must be turning over in their graves.

Kent Welton,
TheCenterForBalance.org