Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Protectionist Trump Policies To Crash Dollar, Gold and Bitcoin to Soar

Stock-Markets / Protectionism Dec 08, 2016 - 03:28 PM GMT

By: Jeff_Berwick


Many people seem to think Trump is going to “fix” the US by invoking the isolationist, nationalist, and oft failed economic policy of protectionism. But, as Ludwig von Mises put it in Nation, State and Economy, “From the purely economic point of view nothing speaks against free trade and everything against protectionism.” In other words, there is no economic argument in favor of protectionism. It is not a viable economic policy.

Any basic economics class will inform you that protectionism is the opposite of free trade and the opposite of the harmony of nations. “The philosophy of protectionism is a philosophy of war. The wars of our age are not at variance with popular economic doctrines; they are, on the contrary, the inescapable result of consistent application of these doctrines.” Mises said.

There is no fixity in that direction. Trump’s protectionist policies are sure to fail!

And they are sure to dismantle all the benefits of free trade that have accumulated over the decades, even if through somewhat dysfunctional government created trade agreements.

Maybe that’s just what our controllers – the ones at the highest level – want.

People are hopeful enough and desperate enough to believe that things are headed in the right direction. Many are relieved that Trump won the presidency and for this reason they want to give his economic programs a try.  Just like socialism, protectionism “sounds good”, but in real life it is destructive.

Additionally, he is being presented as an elite upsetter, a blunt-talking part of a “popular” wave that will usher in a brighter tomorrow. If only it were so!

Mind you, his rhetoric certainly sounds great. He has talked about reducing taxes, which theoretically would be a step in the right direction.  But without a spending reduction or privatization plan to offset this drop in state revenues, that’d also mean the total US public debt would go even higher.  And, he has backed off a lot of his tax reduction talk as a result since being elected.

He has talked about “draining the swamp”, but most of his appointees are crony capitalists, Wall Street insiders and the same old neocons who regularly inhabit the swamp.

Now, as though he was running out of populist charm, he is talking about protectionist policies in order to “save jobs” by placing a 35% tariff on companies who leave the US and begin importing products into the country that are made elsewhere.

But this will not help the overall US economy. In fact, it will worsen it. As Ron Paul has stated before in layman’s terms, the expense of a tariff is simply passed along to the consumer.

The trouble is that people forget, they are both producers and consumers. When companies “export” jobs they are trying to save on costs, which get passed on to consumers when there is competition. When Ford opens up a car plant in Mexico in order to save on certain costs, it produces cheaper cars for people, creating savings that can be used to acquire other goods.

Economists have long known that what counts is not money wages, but your real wages, i.e., what your wages can buy. If you can buy more and more stuff with the same wages then that is growth, that is what creates more jobs, with savings left over to buy other goods.

Rising living standards means that your wages can buy more stuff. Higher profits allows companies to expand, to invest more. Trump should be looking at the labor monopolies (unions), the central bank and government interference at home if he wants to create jobs.

This tariff imposition is a textbook socialist capital control which will only act as another restriction on the free market. In other words, the cost is more than just dollars and cents.

To give a medical analogy, Donald is going to come in and start making surgical incisions without thinking about the symbiotic nature of the organs he will cut through and the implications of the veins being severed. He is not recognizing the totality of the problem.

In “I, Pencil,” Leonard Read made the point that not one person on this planet knows how to make a pencil. It takes the coordination of different companies and different individuals with different skills all over the world contributing to it, but not one person could tell you how to make one in full and where all the elements are sourced. This is the wonder of the market.

It allows millions of investors to coordinate their plans bottom up.

Last week Donald boasted that he had reached an accord with United Technologies, Carrier’s parent company, to preserve 1,100 of the jobs which would have otherwise been outsourced to Mexico. Later, the Union found out that only 730 of the production jobs would remain and that 550 of its members would lose theirs. None of this should be surprising though considering Donald’s tendency to perpetuate falsehoods and flip flop on his political positions.

The US, at one point in the distant past, became so great because it had free trade, low taxes, low regulation, reasonable government debt, no protectionism and a central bank that, up until a point (1971) was restrained from inflating too much due to the link of the dollar to gold.

That’s all gone now.  The US now has some of the highest taxes in the world, one of the most regulated markets, the most indebted government in world history, a central bank that has had 0% interest rates for eight years and Quantitative Easing to infinity… that’s why there are so many problems in the US today.

Free markets create wealth.  Putting in tariffs, fines and regulations on the ability of capital and labor to move, only makes things worse.

Sure, many people in the US might cheer as they find out their factory isn’t going to get shut down as expected due to these actions.  But, with higher costs to produce in the US, due to all the taxes and regulation, that will mean prices will increase dramatically.

And, this at a time when the majority of people in the US are living paycheck-to-paycheck.

If all the items at Walmart that are currently mostly imported from China were made in the US you’d see percentage price increases in the triple digits.

In other words, get ready for the food riots.

Plus, if Trump really institutes protectionism, there will be less demand for the US dollar which will cause its value to drop dramatically.

This, of course, is very good for things like gold and bitcoin…. But very bad for your average American and the US economy.

Now is the time to start moving your funds into these kinds of assets so that you can not only preserve your wealth, but also expand it exponentially – as soon as the US dollar starts to crack people will flock in droves to these kinds of safe havens.

To find out more on how to shelter yourself from the upcoming calamity via gold and bitcoin and to receive a free copy of our book, Getting Your Gold Out Of Dodge, click here.

To see more of my views on the changes in store under a Trump presidency, check out this interview I did with Luke Rudkowski of We Are Change.

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media.

© 2016 Copyright Jeff Berwick - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Jeff Berwick Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules