Shocking Explosion in Trade Deficit in March!

May 9, 2022

On March 29th, in the wake of the release of the January trade data, I wrote that the U.S. economy may be beyond repair. The release of the March trade data this past week should erase all doubt about that. Never in my worst nightmare did I think that what happened in March was even possible. As bad as the trade deficit had become, the March deficit completely demolished the previous record. It didn’t just set a new record; it blew past February’s record by $20 billion, a 22% increase IN ONE MONTH! The increase was driven by imports, which soared $33 billion past the previous month’s record of $319 billion.

No doubt most will think that increase can be blamed on the higher price of oil imports. Well, think again. Oil imports rose by only $1.5 billion, while oil exports rose more, resulting in a $1.5 billion surplus in the trade of oil. No, the increase in the trade deficit was driven entirely by manufactured goods, where the deficit jumped by $24.6 billion, $22.1 billion (21%) higher than the record set in January. The increase was across the board of categories of manufactured goods: industrial supplies and materials; capital goods; vehicles, parts & engines; and consumer goods. You’d better be sitting down when you look at these charts: March trade deficit; March trade deficit in manufactured goods.

If you’ve been wondering why inflation is spiraling out-of-control, this is your answer. The explosive growth in government spending has fueled an equally explosive demand for goods, nearly all of which are imported. Well, you might think, at least American manufacturers must also be enjoying this expansion in demand. Right? Think again. As this explosion in imports has been taking place, American manufacturing is in serious decline. Look at this chart of the U.S. ISM Purchasing Managers Index, a good measure of manufacturing activity. It actually fell through the first quarter and, more recently, plunged in April. Why? “The US manufacturing sector remains in a demand-driven, supply chain-constrained environment.” In other words, U.S. manufacturers can’t get the materials, equipment and parts – most notably semiconductor chips – that they need. For example, auto imports jumped dramatically in March while American production slowed due to lack of “chips.” Living in the Detroit area, I can tell you that once-empty lots are now over-flowing everywhere in this area with unfinished cars and trucks, unfinished because they’re awaiting the installation of computer chips. You have to see it to believe it.

In that same post on March 29th, I speculated on the supply of Javelin anti-tank missiles in the wake of Ukrainian President Zelensky’s request for 1,000 missiles per day to be delivered, and doubted that we had the capacity to produce even ten per day. Yesterday, on CBS’s “Face the Nation,” hosty Margaret Brennan interviewed Jim Taiclet, CEO of Lockheed Martin, maker of the Javelin missiles. Mr. Taiclet reported that his company’s capacity for production of those missiles is 2100 per year which, assuming a 5-day work week, is a capacity of eight missiles per day. (My guess of ten per day was pretty close, huh?) Clearly, there’s no chance in hell of providing Ukraine with the 1,000 missiles per day that they requested.

Mr. Taiclet also confirmed that each missile requires 250 “chips.” He said that they have enough chips today to keep production running at current levels, but would be supply-constrained beyond that. In addition it would take years to scale up significant additional capacity.

Meanwhile, China remains in a lock-down which, they claim, is an effort to stamp out the Covid virus. Does that make any sense to you? Given that the Covid virus no longer exists in its original state, and that we’re now dealing with subvariants of subvariants that no longer have the lethality of the original virus, the pandemic is for all intents and purposes over. Yet we’re to believe that it’s so bad in China that they’ve locked down entire cities? There’s something else going on. I believe that what’s happening is that China is implementing the final stage of a strategy to wipe out America’s manufacturing capability to the extent that it’s even unable to maintain its armed forces. Think about it. The war in Ukraine is sucking up all of America’s munitions while, at the same time, China is choking off our ability to replenish. The day may be rapidly approaching when Russia and China defeat the U.S. without even firing a shot, since we may not have a bullet left to fire.

Our politicians and media may not be able to see what’s happening, but Wall Street sure does. Inflation alone doesn’t explain the ongoing market crash. Not even fear of a recession can explain it. Clearly, there’s growing fear of something much worse – perhaps the end of our economy as we know it, if not the outright demise of the United States itself.


February Trade Deficit Ties Record Set in January

April 7, 2022

At $89.2 billion, the February trade deficit, released by the Commerce Department on Tuesday, tied the record set the previous month. The all-important deficit in manufactured goods was down slightly at $103.4 billion, but not enough from January’s record of $106 billion to avoid being the 2nd worst deficit in manufactured goods ever. Here’s the chart.

In a related piece of news, the March employment report included a tally of which sectors of the economy added workers since the start of the pandemic in February, 2020 and which sectors lost workers. Manufacturing was one of the big losers, shedding 128,000 workers. The biggest loser was leisure and hospitality, down 1.5 million workers. Surprisingly, the next biggest loser was health care, down by 298,000 workers. Manufacturing was the third biggest loser. That’s not a good sign. The trade deficit exploded during the course of the pandemic as government stimulus money fed a healthy appetite for goods. For the manufacturing sector of the U.S. economy to suffer like that is an indication that the long decline in U.S. manufacturing has actually been accelerating during the course of the pandemic, making it obvious that the Biden administration’s talk of a renewed emphasis on manufacturing is a bunch of BS.

The big winners during the pandemic? Professional and business services gained 723,000 jobs during the pandemic. Transportation and warehousing added 608,000 jobs. Retail added 278,000. Construction was flat.

It’s going to be fascinating to see what happens going forward as the federal government continues to run massive budget deficits (driven mostly by the need to offset the drag of the trade deficit) – forcing it to sell huge quantities of bonds – while, at the same time, the Federal Reserve will begin selling off its $6 trillion worth of bonds in an effort to drive up interest rates and slow inflation. It’s hard to see how this ends well. In my opinion, a recession – likely a bad one – is a sure bet.


U.S. Economy may be beyond repair.

March 29, 2022

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.


Russian Invasion of Ukraine Exposes Failed Premise of Globalization

March 23, 2022

Globalization was implemented in the wake of World War II, beginning with the signing of the Global Agreement on Tariffs and Trade in 1947, in an effort to prevent any more such wars in the future. Free trade, it was believed, would make all countries more interdependent on one another and would level out living standards by elevating them in poor countries. The world would become one big, happy country where no one nation could derive any benefit from attacking another. Clearly, at least in the form that has been practiced up to this point, it hasn’t worked. War has once again broken out, a war that could easily turn into World War III.

Trade between Ukraine and Russia isn’t the issue. The issue is the notion that rewarding your enemies with lucrative trade deals will make them your friends, and not just wealthier, more powerful enemies. It’s truly no different than businesses paying “protection” money to a local crime syndicate that’s running a protection racket. When has that not ended badly? You pay until they bleed you out of business.

That’s especially true of trade between the U.S. and China. Experts have been warning for years that China is no friend, and that our trade dollars – nearly $6 trillion paid to China since they were granted “Most Favored Nation” status in 2000 – have built them into a superpower that now threatens our very existence.

Now China and Russia – two superpowers made rich and powerful by our naive embrace of the globalist trade protection racket – have aligned themselves against us. Experts have for years been raising the alarm over what we were doing – surrendering the manufacturing sector of our economy to enrich our enemies and fund their military build-ups. Now the two of them are a match made in heaven, or in hell, to use a more appropriate metaphor: Russia has the resources and China has the manufacturing might. Who can stand against that?

Layer this failure – the misguided hope that cozying up to our enemies will make them our friends – on top of the other failures of globalist trade policy. Foremost is its failure to account for the role of population density in driving massive trade imbalances (see “note” below), turning loose badly overpopulated nations to prey on the markets and manufacturing jobs of those more reasonably populated and, in addition, enabling further population growth beyond sustainable levels.

Globalist free trade policies have created huge economic distortions and destabilizing imbalances around the world and, instead of turning enemies into friends, have enriched despotic dictatorships like Russia and China, building them into superpowers that now threaten the rest of the world. Globalism has back-fired, ensuring that this next world war will be far more lethal instead of preventing it.

Note: I’ve been sitting on the latest U.S. trade data since it was released earlier this month. The explosion in our trade deficit is accelerating at an astonishing pace. I found the data to be so disheartening that I’ve struggled to even post about it. I fear that there may be no hope for the U.S. to avoid economic ruin. Nevertheless, I’ll provide the data soon in one of my next posts. Also, look for posts about admitting refugees from Ukraine and the trade sanctions imposed on Russia.


BUY AMERICAN!!, says Biden

March 2, 2022

During his State of the Union address last night, Biden loudly and emphatically proclaimed that we shoud all “buy American” in support of the mythical resurgence of American manufacturing. It begs the question: American what?

What companies who were importing their products are now manufacturing them in the U.S.? I’ll be damned if I can find them. About the only American-made products you can find are cars and trucks, and that’s only if you do your homework to figure out which ones are actually made here. Few are, and the ones that are contain a lot of foreign content. How about a new Ford Mustang EV? Surely that’s made here, since Biden also praised the work of Ford and GM to build their new electric future in the U.S.. Nope – made in Mexico. How about a Chevy Bolt EV? Nope – made in South Korea. How about a Ram truck? Surely that’s made here? Nope. Unless you’re buying a high end model, most are made in Mexico. My next door neighbor tried to “buy American.” He assumed that if he bought a Buick he was buying American. He was mortified to learn that his new Buick Envision was built in China.

Biden highlighted Intel’s plans to build a new semiconductor plant east of Columbus, Ohio, and introduced Intel’s president who sat in the gallery. They’re not actually building it yet, mind you. That’s waiting on legislation that would essentially pay them to build it with taxpayer dollars. The same is true of the auto industry’s grand plans to go all-electric in the U.S. The plans are there, but will only be executed if and when the government passes legislation to pay them to to it.

If there was any real resurgence in American manufacturing, it would show up in our trade results. Imports would be down and exports would be up, resulting in a declining trade deficit in manufactured goods. Look at this chart: https://petemurphy.files.wordpress.com/2022/01/manfd-goods-balance-of-trade.pdf. Our deficit in manufactured goods is exploding. Clearly, American manufacturing remains in rapid decline. People aren’t buying American because they can’t find any American-made products to buy.

If I need a tool, for example, I can get cheap ones at Harbor Freight. Everything at Harbor Freight is made in China. But I want to buy American. So I go to another tool store that carries high-quality brands that used to still be made in America. I pick up the box and, sure enough, find that it’s made in China. It’s definitely a better-made tool, but still made in China – just to more stringent specifications.

Regarding the economic sanctions being imposed on Russia in retaliation for their invasion of Ukraine, one that Biden mentioned is that he has cut off their access to high technology products. What a laugh! Hardly any such products are made in the U.S. any more. Computers, cell phones, semiconductors – you name it – everything is made in China, and the U.S. has no control over Russia buying them from China.

Biden rattled off his long list of initiatives to support American manufacturing. All of them are trivial and ineffective, designed only to create the illusion of supporting American workers. The one initiative that he could take that would be effective is to slap tariffs on imports of all manufactured goods, not just from China but from any over-populated country in the world who preys on the American market to support their bloated labor forces by stealing manufacturing jobs from Americans. But has he? He doesn’t even have the guts to impose tariffs on China – tariffs that even the Chinese agreed would be fair – in the wake of China’s abject failure to meet a single goal of the Phase 1 trade agreement.

Biden also took credit for creating six million jobs during his first year, linking this to the mythical resurgence in manufacturing. The truth is that the economy recovered that many jobs from the pandemic-caused depression a year earlier. However, through November of last year, the U.S. employment level still remained 3-1/2 million jobs below the level of February of 2020. By that measure, we remain mired in a deep recession, thanks in no small part to the decline in American manufacturing.

It makes me sick to hear these politicians playing the American people for fools. We sure got another heavy round of it last night.


BEA to begin tracking “trade in value added”

December 13, 2021

If you visit the web site for the “Bureau of Economic Analysis,” you’ll be greeted with an announcement that the Bureau will begin tracking “trade in value added,” which I find very interesting. Could this be the first step toward the U.S. imposing a “value added tax” – or “VAT” – on imports?

What is a “value added tax?” It’s a very complicated subject. It’s essentially a sales tax – one that would be levied by the federal government. Nearly every country in the world uses it to generate a substantial portion of their government’s revenue. The United States is one of the few, and most glaring, exceptions. When applied to imports, it essentially functions as a sort of tariff – but one that’s perfectly legal under the rules of the World Trade Organization.

Wikipedia has a very long article explaining the value added tax and it will leave your head spinning when you’ve finished it. What’s most important is the effect on trade. For that, zip right to the end of the article:

Many politicians and economists in the United States consider value-added taxation on US goods and VAT rebates for goods from other countries to be unfair practice. For example, the American Manufacturing Trade Action Coalition claims that any rebates or special taxes on imported goods should not be allowed by the rules of the World Trade Organisation. AMTAC claims that so-called “border tax disadvantage” is the greatest contributing factor to the $5.8 trillion US current account deficit for the decade of the 2000s, and estimated this disadvantage to US producers and service providers to be $518 billion in 2008 alone.

In other words, other countries use the VAT as a sort of tariff, which the WTO allows. The U.S. doesn’t, putting it at a huge trade disadvantage. So this announcement by the BEA that it will begin compiling “value added” data may be signaling that a move in that direction. In other words, the U.S. may finally have reached the conclusion that “if you can’t beat them, join them.” This would be an enormous development!

Some may protest that they don’t want to pay more sales tax – one to the federal government on top of what they already pay to their state. But if it were accompanied by a corresponding reduction in federal income tax, the only effect would be its role in leveling the trade playing field, at least to some extent (probably not enough to offset the the effect of population density disparities), bringing high-paying manufacturing jobs back to the U.S.

If the U.S. doesn’t have the guts to thumb its nose at the WTO and impose tariffs on imports (like Trump did with China), at least a VAT would be a smaller step in the right direction.


Trade Deficit Down as Exports Rise

December 11, 2021

In a rare bit of good news on trade, as announced by the Commerce Department this week, the overall trade deficit, led by exports of U.S.-manufactured goods, fell by $14.3 billion in October to $67.1 billion. Here’s the chart: https://petemurphy.files.wordpress.com/2021/12/balance-of-trade.pdf. The decline in the deficit was due to a big jump in exports, rising by $16.8 billion to $223.6 billion, shattering the previous record of $215 billion set in May of 2018. The jump in exports was more than enough to offset a $2.5 billion increase in imports, which set a new record of $290.8 billion, the fifth consecutive monthly record.

The best news, however, is that the decline in the trade deficit was led by a decline in the deficit in manufactured goods. Here’s the chart: https://petemurphy.files.wordpress.com/2021/12/manfd-goods-balance-of-trade.pdf. Exports of U.S manufactured goods jumped by $10.3 billion to $125.5 billion, beating the previous record of $119.7 billion set only two months earlier. It was enough to offset an increase in imports of $1 billion to $207.4 billion – also a new record.

Clearly, the new records set by imports debunk the claim by some that the supply chain crisis is due in part to labor shortages caused by the pandemic at foreign manufacturers. That’s a ridiculous claim. We’ve been inundated with a flood of imports that has left warehouses stacked to the rafters.

The slowing increase in manufactured imports and the accelerating increase in manufactured exports is the best news in this report. It may be the early signs of a manufacturing revival in the U.S. and may also explain, at least in part, the “labor shortage” we’ve been witnessing. That, together with massive spending on infrastructure, have combined to attract workers to higher-paying jobs, leaving other industries that are dependent on cheap labor – like the restaurant industry (where over-building is also a likely factor) – unable to attract workers.

However, it remains difficult to draw any hard conclusion on any economic data until the dust from the pandemic and massive government stimulus spending begins to settle.


Inflation / Supply Chain / Worker Shortage Crisis. What the hell is going on?

November 14, 2021

It’s been a while since I’ve posted anything. It’s because I’ve been analyzing the most recent economic data in the hope of being able to relate it in some way to my theory that worsening overpopulation, and trade with overpopulated nations, is driving unemployment and poverty higher – ultimately leading to mankind’s undoing.

I find myself at a loss, however. None of what’s going on in the economy today adds. Finally, I’ve come to the conclusion that it doesn’t make sense because something fishy is going on. So I’m just going to present the data and let you decide for yourself.

Trade Data:

Let’s begin with this chart of our trade deficit in manufactured goods. It had begun to show signs of leveling off until June of 2020 when it took off again, but has leveled off again for the past five months, setting a record in September. The trade deficit with China soared to its highest level since December 2018, as imports rose and as China continued to renege on its commitments to buy U.S. exports, confident that the Biden administration doesn’t have the backbone to enforce the “Phase 1” trade agreement. At any rate, it seems that companies who switched to their secondary suppliers in other countries when tariffs were imposed on China had no choice but to order more from China when those secondary suppliers were unable to keep up with demand. That’s not cheap and surely factored into rising prices.

The soaring trade deficit kind of makes sense. As the pandemic began to bite and as stimulus money fattened up wallets, consumers began to simultaneously hoard some items while soing on a shopping spree for others. Companies increased their orders for foreign goods by $20 billion per month until the supply chain was choked off by a shortage of shipping containers and a glut of cargo ships stalled at inbound ports. Now, here’s a chart of our overall trade deficit. As you can see, it was fairly stable at an average of about $50 billion per month but, sometime around June of 2020, it began to soar, reaching an all-time record of $80.9 billion in September, the most recent month for which trade data is available. That’s a jump of $30 billion per month. The increase in manufactured imports explains most of it. The rest is due to a huge jump in oil imports. In May of 2020, oil imports had fallen to a modern-era record low of $5.95 billion. In September, imports were back up to $18.9 billion and climbing.

Last week I saw a news report that said the number of ships anchored offshore from the port of Los Angeles had risen to over 100. It was also reported that warehouses across the entire U.S. are completely full. So full are the warehouses that truckloads and containers full of goods are being parked in empty lots and anywhere they can legally park.

At the same time, we see rolling product outages of everything on our store shelves, including domestically produced food items. There is talk of turkey shortages and cranberry shortages for Thanksgiving. One day you’ll see an empty shelf where some commonly used item once sat. Next week, that space is full but some other items are now gone. You never know what you’re going to be able to get.

It’s these shortages that are blamed for soaring prices. But how the hell do we have these shortages? The trade data and news reports about ports clogged with offloaded containers and warehouses stuffed to the rafters all paint a picture of a glut of products beyond anything that anyone could ever have imagined.

I’m telling you, something’s not right. I believe global corporations have learned a new trick, using the pandemic as cover to create an illusion of shortages to justify big price hikes, all in an effort to grab up as much government stimulus money as they can. Domestic producers and shipping companies are also capitalizing, and blaming it all on the pandemic – something that was a factor early on but hasn’t been – at least economically speaking – for a long time now.

Employment Data:

The most recent employment data is even more confusing. We see the “help wanted” signs posted on the door of virtually every establishment we walk into. We hear the news reports about shortages of workers in every industry, from manufacturing to fast food. Companies are boosting wages and offering various kinds of “signing bonuses,” yet still can’t attract workers. The worker shortage is constantly cited as the reason behind empty shelves and soaring prices.

But wait a minute. The Labor Department reported last week that unemployment fell to 4.6% in October. That’s a pretty low level of unemployment. In the past fourteen years, it was lower than that for only a three-year period from March of 2017 to March of 2020. And look at this chart of per capita employment, which is essentially the same thing as the “labor force participation rate” which is tracked by the labor department. It fell like a rock at the onset of the pandemic, but has almost completely recovered just as quickly. Today, it stands at the same level as it did in September of 2016. (It has never yet recovered to the level that existed before the global financial crisis of 2008.) In September of 2016, we were in the final months of the 2016 election, and the Democrats were touting the strength of the economic recovery from the financial crisis. Inflation was nearly non-existent. Shelves were fully stocked. Every establishment was fully staffed. Unemployment was 5.0%. So how is it that today, in spite of the fact that the labor climate is almost exactly the same now as it was then, and the fact that we have two million more workers employed today than we did then, shelves are empty, prices are soaring and everyone complains that it’s because of a worker shortage?

I believe part of it can be explained by the explosion in highway construction work and in residential and commercial construction. Perhaps there’s even some element of growth in manufacturing employment as companies grow more disgusted with the global supply chain. I’ve said for a long time that a return to domestic manufacturing would transform the economy, creating millions of high-paying jobs that would siphon workers away from low-paying jobs in industries like fast food. We may be witnessing exactly that kind of transition. If we are, don’t be surprised if vast swaths of the fast food industry and others that provide very little value to consumers disappear. Don’t be surprised if restaurant chains like McDonald’s and Wendy’s bite the dust. How long will customers wait in long lines at drive-through windows before they wake up to the fact that they could pack themselves a brown-bag lunch at a quarter of the price and in one tenth of the time, not to mention the gas wasted and carbon emitted while they sit there with their engines idling for fifteen minutes?

Even so, such a transition in the economy would shift at most maybe five million workers from those low-paying industries to high-paying manufacturing and construction jobs. That’s five million workers out of 160 million. It doesn’t explain how every industry is complaining of a worker shortage. Just take a look around and you can’t help but be suspicious of something fishy. Fast food restaurants with closed dining rooms have “help-wanted” signs at the entrance to their drive-through window. Yet, walk into the Culver’s or Chick-Fil-A right next door and you find them fully staffed.

A big part of the explanation of the supply chain crisis is that trucking companies can’t find enough drivers to move the goods. But then you take a trip in your car and find the truck volume on the interstate highways is worse than you’ve ever seen it.

I could go on, but you get the idea. None of this adds up. You can’t help but wonder: is this fast food restaurant really trying to hire any workers, or is that “help wanted” sign just there to create a phony narrative that justifies their higher prices and your long wait in the drive-through lane? Are these rolling outages on store shelves really due to product shortages, or they engineered to justify higher prices. Are all of these companies using that same narrative to raise prices not because they need to, but to suck up their share of pandemic stimulus money and social spending money that’s pouring into the economy by the trillions?

If you’re a domestic manufacturer of consumer staples, are you going to stand by while manufacturers of televisions, computers, cell phones and others rake in huge profits from people spending their stimulus money, or are you going to get in on the action by creating an illusion of shortages to justify higher prices and profits?

Where are the journalists who should be asking these tough questions? Where are the regulatory agencies who should be overseeing this crap? And why is the Federal Reserve sitting on its hands while inflation escalates out of control?

This whole supply chain/inflation/worker shortage crisis is a bunch of BS that doesn’t add up until you look at corporate profits and then realize that we’re all being taken for a ride.


Supply Chain Chaos Fueled by Overpopulation

October 18, 2021

We’ve all seen the empty shelves in our stores and have had to adapt and substitute as everyday items that we’ve long taken for granted are suddenly out-of-stock. And we’ve heard the stories and seen the pictures of massive back-ups at our ports – shipping containers stacked high and dozens of cargo ships anchored off-shore, waiting to be unloaded. The global supply chain is in chaos. The Covid pandemic is taking the blame because the globalists who created the global supply chain don’t want you to understand the real issues.

The global supply chain is a “system” and, like any system, requires controls to keep it stable. The more variables there are in a system, the more difficult it is to control. Take your car, for example. Maximizing your fuel mileage requires a computer that adjusts the fuel-to-air ratio to any given combination of conditions – air temperature, engine temperature, octane rating of the fuel, throttle position, oxygen level in the exhaust, and so on. When your car is first started, all of these variables are in such a state of flux that it’s impossible to control in such a way that minimizes your fuel consumption. So your car runs in “open loop” mode until the variables settle down. Only then does it go into “closed loop” mode where the computer (using that “chip” you hear so much about that is in short supply because of the global supply chain chaos) can actually fine tune the fuel injectors and spark timing. Any disruption in any variable that’s out-of-range will cause the computer to throw up its hands and default back to open loop mode and your “check engine” light comes on.

That’s just your car. Now think of more complex systems. Think of nuclear power plants, for example. Maintaining precise control is absolutely critical. Loss of control can result in a core melt-down which isn’t just a matter of life and death, it’s an existential threat to everyone and everything within a huge radius. Everything has to work perfectly. Sometimes it doesn’t. A weather event, a power failure, a failed cooling pump, a crack in a pipe, a failed valve and pretty soon you have a Three Mile Island, a Chernobyl or a Fukushima.

Complex systems that experience loss-of-control can deteriorate until they experience a catastrophic failure. Control algorithms can be developed to reduce the risks to an infinitesimal level, but the risks can never be completely eliminated. So there must also be plans in place to mitigate the destruction and clean up the mess.

With all that said, let’s now look at supply chains. You’re a company that needs a widget. You go to a widget manufacturer down the road. “Sure, I can supply you with your widgets. Tell me how many you want and when you need them. Here’s your price.” Pretty simple. Not a global supply chain, though. There’s nothing simple about that. In fact, there may be nothing more complex. The variables are almost infinite. Your manufacturer may be in China, and has a whole supply chain of his own to manage just to make your part. Then there’s obtaining a shipping container, transporting it to a port in China, obtaining and loading a cargo ship, traversing a stormy ocean, dealing with customs, unloading at the port on the west coast, loading your container onto a truck and, after your container has made its way from one distribution center to another, with multiple carriers involved, it’s supposed to make its way to your door just in time – just as you’ve used the very last widget from the previous shipment.

A failure anywhere along the line can throw your whole supply chain out-of-control. So why would you set up such an elaborate supply chain? Sure, the labor may be cheaper at your manufacturer in China, but all of that around-the-world shipping doesn’t come cheap. The fact is, it isn’t cheaper. So why don’t you just get your widget from a local source? Because there isn’t any. There used to be, but they were driven out-of-business by the global supply chain. Wait, you say. That doesn’t make any sense. If the supplier in China isn’t cheaper, then how did they drive the local supplier out of business? They did it by selling at a loss. Why would they do that? Because the purpose of globalism isn’t to reduce the costs for American companies. The purpose is to establish an economy in third world countries, like China, where they have four times as many consumers as the U.S., and turn them into U.S.-style consumers. That way, sales volumes and profits for global corporations grow four times as fast as they would have if they focused only on the American market.

Look at these charts, updated through August, the latest month for which trade data is available: https://petemurphy.files.wordpress.com/2021/10/balance-of-trade.pdf, https://petemurphy.files.wordpress.com/2021/10/manfd-goods-balance-of-trade.pdf. The first is a chart of our overall trade deficit. It’s a perfect representation of the state of our supply chain. Stable until the onset of the pandemic, it’s now out-of-control. If this were a chart of a nuclear power plant’s reactor core temperature, rising as fast as the trade deficit is rising, you’d be in a state of panic if you were an operator at that plant, and lights in the control room would be flashing red. The 2nd chart is more narrowly focused on our deficit in manufactured goods. It, too, is out-of-control, though in recent months it’s begun to show signs of stabilizing. Are trade policy changes enacted under Trump – the USMCA agreement with Mexico and Canada and the tariffs on Chinese imports – showing signs of having the desired effect of boosting domestic production? Or are we seeing signs that companies are awakening to the follies of the global supply chain? It’s too early to tell.

The global supply chain is in a state of “melt-down.” The crisis is more likely to get worse than improve. Thousands of businesses are responding by increasing orders in reaction to their empty shelves and are scrambling to find new suppliers. A few major retailers are bypassing the shipping companies by chartering their own ships. All of this will add to the chaos. However, perhaps the biggest factor working against regaining control of the supply chain is the fact that the main purpose of the global supply chain isn’t supplying us with goods at all. The real purpose of the global supply chain is to tilt the balance in favor of the “developing world” in the global war for employment. The economies of badly-overpopulated nations need to be propped up with manufacturing-for-export in order to employ their bloated labor forces and maintain political stability. As the supply chain chaos begins to unravel that grand plan, nations and global organizations like the UN, the IMF the World Bank and others will begin to react in ways that aren’t necessarily productive toward restoring stability to the supply chain. It’s impossible to predict the effect on such a complicated, out-of-control system.

As proof that powerful global forces are at work shoving the “global supply chain” model down our throats, consider this. We’re subjected to a daily drumbeat of warnings of an existential threat posed by carbon emissions. So dire is the threat that our energy industry must be converted to wind and solar and our auto industry must become all-electric, they say. Beyond that, elaborate plans are underway to “capture” CO2 from the atmosphere and from smoke stacks and to store it in underground caverns, in tanks, or anywhere they can hide it. Yet, you never hear anyone utter a single peep about the fact that the vast fleet of ships plying the oceans as part of the global supply chain consume five billion barrels of oil per year – not gallons – barrels. Those are emissions that could be completely eliminated by returning the world to a domestic supply chain.

Nor do you hear a single peep about the role of out-of-control population growth. No one bothers to even ask the question, “What will we gain if we reduce per capita oil consumption and carbon emissions by 50% if we double the population?” Globalists don’t want you to think that far. They deceive you into believing that the existential threat of climate change can be controlled by elaborate plans for reshaping our entire economy, and by throwing around oxymoronic terms like “sustainable development” so that you won’t begin to ask about simple, cheap fixes like returning to domestic supply chains and stabilizing the population. Those simple, cheap fixes would pose a threat to what they’re really concerned about – big profits available from developing third world countries and never-ending population growth. They think we’re all idiots.

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As an aside, I went to a home improvement big box store this week to purchase a shop light to replace one that I use throughout my basement and garage for lighting. To my dismay, I discovered that all such lighting has been converted to LED. You can still get flourescent bulbs for your existing light fixtures, but new flourescent fixtures are no longer available. This particular store used to stock at least 20 of these basic shop lights because, as you can imagine, there was a constant demand for them. But they didn’t have any of the basic 4-foot, two bulb shop lights available in the new LED design. I went home to search online for stores in the area might have them in stock. Not a single store in the whole metropolitan area had a single one in stock! Supposedly, I can get one within a couple of weeks if I order.

Doing some research into these new LED light fixtures, I made another interesting discovery. Every single LED light bulb, regardless of its configuration, uses a “chip” to make it work. Think about that. Just converting lighting to make it more efficient requires an additional billions of “chips” per year (which will add to our landfills), and now we can’t get enough chips to build cars. The entire world has gone mad.


Biden admin makes first acknowledgment of “Phase 1” deal as China’s compliance deteriorates further

October 12, 2021

In January, 2020, China signed an agreement with the U.S. – the “Phase 1” agreement – to boost its imports of American goods. They agreed to specific goals for four classes of goods – manufactured goods, energy products (like oil, gas and coal), agricultural goods and total goods. The agreement set specific goals for 2020, followed by higher goals for 2021. They also agreed that, if they failed to meet those goals, the U.S. would impose 25% tariffs on the remaining half of Chinese goods exported to the U.S. (The Trump administration had previously imposed a 25% tariff on all Chinese imports. The Chinese agreed to the Phase 1 deal in exchange for a delay of tariffs on the remainder of their products.)

Earlier this month, the Commerce Department released the trade data for the month of August. China’s imports of Amercan goods fell to their lowest level since February. Their imports of total goods dropped to $11.3 billion. By this time in the agreement, they should be importing $24.5 billion per month. Year-to-date, they’ve imported barely half of what they agreed to import. In fact, they’re barely exceeding the 2017 level that was used as the baseline for the agreement.

Their imports of manufactured goods have been flat at about 60% of what they agreed to import. Their worst performance has been their imports of energy products – only 20% of what they agreed to import in 2021. Surprising, given that China is currently in the midst of an energy shortage. Their imports of agricultural goods are less than half of what they promised – again, surprising given the challenges of feeding such a badly-overpopulated nation.

Through all of this, the Biden administration has remained silent, never once even acknowledging the existence of the Phase 1 deal, one of the signature accomplishments of the Trump administration. Until earlier this month, that is. Last week, U.S. Trade Representative Katherine Tai called out China’s failure to comply with the deal and said that Washington must enforce the deal. See this article: https://www.reuters.com/business/bidens-new-china-trade-plan-echoes-trumps-assumes-beijing-wont-change-2021-10-04/

The opening paragraph in the article reads:

“Top U.S. trade negotiator Katherine Tai on Monday pledged to exclude some Chinese imports from tariffs imposed by former President Donald Trump while pressing Beijing in “frank” talks over its failure to keep promises made in Trump’s trade deal and end harmful industrial policies.

Already I smell rat – the “free trade” rat that has infested Democratic and Republican administrations alike for decades and has absolutely ruined the manufacturing sector of America’s economy. Tai pledges to “exclude some Chinese imports from tariffs imposed by Trump” and wants to engage in “frank” talks. You’ve got to be kidding me. The Chinese themselves agreed to the deal. They agreed that they deserved to be punished with more tariffs if they didn’t comply. Instead, Tai wants to actually reward them by removing the tariffs already in place and then engage in mealy-mouthed talks – the same tactic that has left China rolling in the aisles with laughter each time such talks have ended, in disbelief at how stupid and weak American trade negotiators are.

This absolutely makes me sick. If you ask me, failure to enforce this trade deal should be an impeachable offense.