On top of all of the other depressing developments in the world, this one was just too much for me, so I’ve been sitting on it all month. I’ve come to the conclusion that the only way to deal with it is to finally admit the obvious. America’s economy is broken beyond repair. There is no hope of fixing what’s wrong.
The January trade data, released earlier this month (February data will be released in early April), is the final straw. Here’s a chart of our total goods trade deficit. And here’s the deficit in manufactured goods alone. The records set in both categories in the previous month were bad enough, but they exploded further in January. It’s now abundantly clear that the U.S. has become totally dependent on foreign suppliers for our every need. They have a death grip on our economy.
I believe it’s reached the point where we can no longer fix this problem even if we wanted to which, sadly, no one seems to want to do, because no one cares. Even the basic things we’d need to even try would have to be imported. Even the tools we’d need to make the basic things would have to be imported.
Just this morning I came across this article about a senate bill to fund the rebuilding of the computer chip industry in the U.S.: https://www.foxbusiness.com/technology/us-senate-approves-52b-chips-bill-in-bid-to-reach-compromise. First of all, you need to understand that this is exactly the kind of thing that politicians do to create the illusion that they’re doing something to fix the problem. It’s exactly what the global corporate benefactors of the politicians pay them to do to avoid what they fear most – a turn away from free trade toward a return to tariffs that are so badly needed to provide real incentive to manufacture products domestically.
It’s nothing but extortion, in essence telling America that we won’t even make a show of fixing the problem we created unless you give us $52 billion. Even then, the problem would persist. Most of that $52 billion would be used to import the products needed to build the facilities. Beginning with the heavy equipment needed to develop the sites – the bulldozers, excavators, cranes, etc. – even many of those would be imported. (Caterpillar would get a small piece of the action.) Most of the steel would be imported. Virtually all of the machinery needed to build the chip-making process would be imported. And, once ready to run, virtually all of the raw materials would be imported. Throughout the building process, much of the labor involved would either be illegal or foreign workers here on work visas.
Then, guess what? Once this new chip manufacturing capacity is ready to start up, foreign-made chips will suddenly be in abundant supply again and the customers will shun the new, American-made chips in favor of the cheaper imports, the price of which will have been suddenly cut. The new plants will sit idle because there are no tariffs in place to protect them. The foreign chip-makers will come in, crate up the equipment, and ship it back to their overseas plants for pennies on the dollar. The global corporations will be $52 billion richer and American taxpayers will be stuck with the bill. We’ve seen this same scenario play out over and over.
Recently, President Biden warned the Chinese not to help Russia avoid the economic sanctions imposed when they invaded Ukraine, or there would be serious consequences. The Chinese must have been rolling in the aisles laughing after that meeting! Serious consequences? Oh, you mean like the ones for completely ignoring the Phase 1 trade deal? The tariffs that China agreed in writing would be fair consequences? The tariffs that not a penny’s worth has yet to be implemented? Don’t be ridiculous! China owns us lock, stock and barrel and they know it. They fear nothing that America says because America never follows through on anything.
America prevailed in World War II thanks to its industrial might. Its military at the beginning of the war was barely up to the task. However, thanks to its ability to convert its industrial capacity to war-time production, by the end of the war the Willow Run bomber plant in Michigan was cranking out a new B24 bomber every hour, while the shipyards on the west coast were building new destroyers at a rate of one every two days. Today, we have no such industrial capability. I doubt that we could sustain a military effort of any size for much more than a month before we ran out of imported supplies.
This morning, it was reported that Ukraine has asked to U.S. to continue to supply them with Javelin missiles at a rate of 1,000 per day. The reporter noted that our own military’s supply has been critically reduced by what we’ve provided to Ukraine already. Seriously, do you think the Pentagon has been paying the builder of the Javelins for spare capacity to make 1,000 per day when we probably haven’t even been using them in training exercises at a rate of ten per week? I doubt that we have the ability to produce even ten per day. They’d quickly run out of chips. GM just announced a 2-week closure of one of its most profitable pickup truck assembly plants for that very reason.
The federal budget deficit and the national debt are tied directly to the trade deficit, which is now contributing $1.25 trillion per year to each of them. (The federal government has to pour that much back into the economy to offset the drain of the trade deficit in order to avoid a deep recession or depression.) It’s a problem that they could ignore as long as interest rates were near zero, since that made the interest on the national debt close to zero too. But now interest rates are rising fast. Suddenly, the current level of federal spending is a major problem as the Federal Reserve finds itself far behind on inflation and is raising interest rates fast. Now, the economy is boxed in from all directions. We can’t spend our way out of the trade deficit to avoid an economic collapse. It’s right around the corner and coming fast.
I wrote Five Short Blasts and began this blog in 2007 in the hope that my warning of the effects of the relationship I had discovered between worsening overpopulation and unemployment could lend some urgency to the need to protect ourselves from badly overpopulated nations who were preying on our market, and the need to avoid their same fate.
Now, it’s too late. The foreign globalists have achieved their goal. America has been brought to its knees without firing a shot. What’s going to happen next is just a matter of time. It was foolish to think I could make a difference. My time and efforts have been wasted. Maybe something will happen yet to change my mind. At this point, it’s hard to see it. I may continue this blog, but the nature of it may change. The economic collision that I hoped my Five Short Blasts could avert has finally happened. Now, all that’s left is to say “I told you so” as the rest of the world begins to scavenge the wreckage.
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