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.


China Reneges Badly on Phase 1 Trade Deal Commitments

February 9, 2022

In January of 2020, China signed a trade deal known as the “Phase 1” deal. They committed to increasing their imports of four classes of American-made goods during 2020 and 2021. Those four classes of goods were manufactured products, energy products, agriculture products, and overall goods. The deal used their purchase of those goods in 2017 as the baseline for their new quotas.

Prior to signing this agreement, the U.S. had levied 25% tariffs on half of all imports from China. The effect was dramatic. Imports from China fell from a record of $52.1 billion in October, 2018 to a pandemic-induced low of $19.8 billion in March, 2020, after which it leveled off just below $40 billion per month by mid-2021.

Under threat of having those tariffs extended to cover all of Chinese imports, China agreed to the “Phase 1” deal which delayed the implementation of those additional tariffs for two years in exchange for China’s agreement to significantly bolster their imports of American goods. The agreement was clear about the rewards for meeting the quotas, or the consequences for failure. Meet the quotas, and the U.S. would begin reducing the already-in-place tariffs. Fail, and the U.S. would extend the tariffs to cover all imports from China. China agreed to the quotas and to the terms of the deal and signed it.

The final verdict is in, with yesterday’s release of December’s trade data. Here is a table showing the 2017 baseline trade data, the quotas for 2020 and 2021, and the actual results: Click to access phase-1-china-trade-deal-goals-vs-results.pdf.

China reneged on the deal in spectacular fashion! They didn’t come even close to meeting a single quota for any of the four categories of goods in either year. By the end of last year, China was barely importing half of what they had agreed to do. Their imports of energy products were nearly 80% short. Clearly, they never had any intention of meeting their commitments. They had won the delay in tariffs that they wanted, and they were betting that, when the two years were up, whoever was president at the time wouldn’t have the gumption to enforce the agreement.

Now the question is, what will Biden do? It doesn’t look promising. Through most of his first year in office, he didn’t even acknowledge that the deal existed. As the end of 2021 drew near, his Trade Representative even hinted that they were considering dropping the tariffs altogether, clearly feeling pressure from globalist corporations and pro-globalism organizations like the U.S. Chamber of Commerce.

Then, a couple of days ago, this appeared: https://www.reuters.com/business/exclusive-us-calls-concrete-action-china-meet-phase-1-purchase-commitments-2022-02-07/.

U.S. officials said they would continue to press China to show “serious intent” to reach an agreement on their purchase commitments, but conceded the framework of the deal offered them little leverage to enforce the purchase commitments.

You’ve got to be kidding me! “… to reach an agreement on their purchase commitments?” They already agreed to meet these commitments! Now we need another agreement to comply with the agreement?!?! “Little leverage?” Read the damn agreement, Biden! It gives you the ultimate leverage; it tells you exactly what to do – what China had actually agreed would be fair – to slap 25% tariffs on ALL imports from China. This kind of weakness absolutely sickens me and it should sicken all Americans! Biden talks about how he supports American workers. This is his chance to prove it. Instead, he chooses to cower before the power of China and its pro-globalism lackeys.


America’s economy is locked in a downward spiral toward socialism.

January 12, 2022

Empty store shelves. Runaway inflation. Labor shortages. Auto production way down for lack of chips. The Federal Reserve ready to start jacking up interest rates and start dumping bonds into the market. And have you noticed what’s happening with the trade deficit?

Probably not, so I’ll fill you in. It exploded in September, soaring to $81.4 billion, crushing the previous record of $73.2 billion set the previous month. As announced by the Commerce Department last week, the trade deficit in November was just shy of that September record. But that doesn’t begin to tell the story. The deficit in manufactured goods soared to a new record of $96.3 billion in November, eclipsing the previous record set only two months earlier by a whopping $5 billion.

Look at this chart of the trade deficit in manufactured goods: https://petemurphy.files.wordpress.com/2022/01/manfd-goods-balance-of-trade.pdf. We’ve been told that those empty shelves are due to Covid-related labor shortages at overseas manufacturing plants. In light of the trade data, that’s clearly a lie! If it were true, imports would be declining instead of shattering records. And the trade data is corroborated by the massive backup of container ships waiting to unload at west coast ports.

The fact is that warehouses across the country are stuffed to the rafters with goods, so much so that they can’t keep track of where everything is. Items that you see missing from the shelves are here in abudant supply, but buried so deep in the warehouse by more recent shipments of other things that they can’t even get at it. As a perfect example, the state of Florida recently discovered a stash of a million Covid test kits that had expired, buried so deep amid other stuff that they had completely lost track of them. So they’ll head straight to the landfill.

Our economy is stuck in a downward spiral. Trade deficits suck money out of the economy – money that can only be pumped back in through deficit spending. A trade deficit of $96 billion per month requires federal deficit spending of at least a trillion dollars per year just to keep it from sinking into recession. The only way to pump that much deficit spending into the economy is through social programs – socialism – that only fuels more demand for imported goods, making the trade deficit bigger. More deficit spending, more inflationary pressure and higher interest rates, more disincentive to work for a living. More labor shortages. More socialism.

The U.S. ran its last trade surplus in1975. Thanks to both parties’ embrace of globalism and free trade since the end of World War II, we’ve now had forty-six consecutive years of trade deficits that have transformed America from the richest country the world had ever seen – the world’s preeminent industrial power – into a skid row bum, begging the rest of the world, especially China, to loan us money by buying our debt. The optimism I felt when the Trump administration recognized the problem and began slapping tariffs on Chinese imports is gone.

There’s no hope that Biden will lift a finger to address the trade deficit. Trump left him a perfect tool to tackle it – the “Phase 1” trade deal with China, in which China itself agreed that if they didn’t meet quotas for increasing the purchases of American-made goods, then the U.S. would slap a 25% tariff on the half of Chinese products that weren’t already hit with tariffs. By the end of 2020 they had failed miserably, making a mockery of the deal. Not only did Biden not follow through on the deal, it was many months before he even acknowledged its existence. With only one month of data left to be tabulated for 2021, China’s performance vs. their obligations is even worse. Still the Biden administration won’t act. Not surprising. Biden’s decades of experience in the Senate make him one of globalism’s architects.


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.


Existential Threats

September 21, 2021

“Existential threat.” It’s a term that gets thrown around a lot these days. What is an existential threat? It’s something that threatens your very existence. Someone who wants to murder you is an existential threat to you. You will stop at nothing to stop that person because your life depends on it. Another nation that wants to overthrow our own nation and make it their subject is an existential threat. Our nation’s continued survival depends on stopping that other nation, just as we had to do in World War II to stop Japan and Germany. Every citizen took part in mustering everything we had to fight them.

So, when you hear that term used today, you would expect an all-out effort to combat the threat. Consider China. Over the past 2-3 decades, China has used trade to its advantage to put it on a path to becoming the world’s most dominant economy, making us utterly dependent on them for virtually everything while draining the wealth from our own economy through their massive trade surplus. And, using those trade dollars, they’ve engaged in a massive military build-up and have begun bullying other nations in that part of the world. Belatedly, our own leaders now consider China to be the biggest existential threat that we may face in the world.

To counter that threat, Biden just cut a deal with Australia and Great Britain to provide Australia with eight new nuclear-powered submarines. That’s about $24 billion worth of naval power. If we’re willing to go to that extent, wouldn’t you think that we’d jump at the chance to put an end to China’s ambitions for a teeny, tiny fraction of that cost? Trump, Biden’s predecessor, left him with the perfect tool to do exactly that when he cornered them into agreeing to the “Phase 1” trade deal in January of 2020. Take major steps toward reducing their trade surplus with the U.S., or have a 25% tariff slapped on the remaining half of their exports to the U.S., just like Trump had already done to the other half. That was the deal.

China agreed to it but, not surprisingly, they never intended to comply, believing that we would never enforce it, just like we had demonstrated for decades that we never enforce any trade deals. A year and a half into that two year trade deal, China has reneged on every aspect of it. They agreed to very specific goals for imports of American agriculture products, energy products, manufactured products and total goods. Through July, the most recent month for which trade data has been released by the Commerce Department, China is $74 billion short of its goal for manufactured goods, $43 billion short of its goal for energy products, $25 billion short of its goal for agriculture products, and a whopping $134 billion short of its goal for total goods.

When Trump slapped the 25% tariffs on half of all Chinese imports (something Biden has wisely left in place), it put a real hurt on China. Their total exports to the U.S. have fallen by – guess how much? – 25%, falling $108 billion in 2020 from their record amount of $418 billion in 2018.

China has thumbed its nose at the U.S. on this deal. What has Biden done in response? Absolutely nothing. In fact, not one time has he ever even acknowledged that the Phase 1 deal even exists. I don’t get it. The U.S. is desperate to counter China’s growing influence, willing to spend many billions of dollars to do it, yet the Biden administration won’t take advantage of this powerful tool – the one China fears the most – and, in relative terms, it wouldn’t cost a damn dime to implement. Why? It’s difficult to come to any other conclusion than Biden doesn’t want to give any credit to Trump. We’re faced with an existential threat, and Biden won’t lift a finger for political reasons.

Another example is global warming. Just today, Biden addressed the UN and emphasized the need to take more drastic action to blunt this threat to the very existence of our planet. On Sunday, when questioned by Margaret Brennan on Face the Nation about his claim that the Democrats’ infrastructure bill should be $6 trillion instead of $3.5 trillion, Bernie Sanders replied by asking “How much would we be willing to spend to save the planet?” It’s a good question, actually. If the earth could become uninhabitable, then we should stop at nothing to prevent it, no matter how great or small the cost and no matter how complex or simple the solution.

Global warming (or climate change, if you prefer) is caused by human activity which generates greenhouse gases like CO2 and methane to name a couple, which trap heat in the atmosphere. It was never a problem until, during the last couple of centuries, the human population exploded, doubling over and over again while clearing forests to develop cities and fueling an improved standard of living with fossil fuels. Greenhouse gas emissions grew beyond the planet’s ability to absorb them. The problem is total emissions, which is the product of per capita emissions multiplied by the size of the human population.

But what if we didn’t have to spend trillions of dollars (maybe quadrillions?) to wean the world off of fossil fuels in favor of renewable sources like solar and wind? What if greenhouse gas emissions could be reduced for free? It can be done. It was demonstrated by the Covid pandemic when most people stayed home during the early weeks of the spread of the disease. Amazingly, the air cleared all over the world and the concentration of CO2 in the atmosphere dropped for the first time in many decades, something that all of the thousands of wind turbines and millions of solar panels had yet been able to achieve. When so many people hunkered down, it simulated what the world would be like with a smaller population.

It wouldn’t cost a thing and could be done more quickly than the decades-long or century-long timelines we’ve heard for cutting greenhouse gas emissions by X percent that scientists say needs to be achieved, though there’s little agreement on what “X” is. It can be done ethically, without resorting to Draconian measures. Birth rates can be influenced by something as simple as tax policy, and immigration can be cut. Reducing the population would not only solve global warming but virtually every other environmental threat along with it.

Yet no one utters a word to suggest reducing the population. In fact, the powers that be want it to continue to grow. The Paris Climate Accord pulls no punches in admitting that its real mission is not to stop global warming, but to reduce it to a manageable level so that “sustainable development” can continue. It’s not the planet they’re worried about. It’s “Sustainable development” – an oxymoron designed to fool you into believing that there really is such a thing – that you don’t need to worry about the environment because they’ve got everything under control.

In fact, the whole environmental movement has devolved into a scam meant to lull you into believing that everything is under control so that you won’t think about the situation so hard that you stumble upon the real problem – that it’s impossible to continue growing our population in a finite world. It’s a lesson that you learned as a child when you watched all the baby guppies die in your aquarium simply because there were too many for that little ecosystem to support. But that lesson has been tamped down by the purveyors of “sustainable development,” by the environmental proclamations of global corporations who are desperate to prop up growth in sales volume with population growth, and by politicians who tighten their grip on power by growing their electorate.

We are, in fact, facing existential threats, but the supporters of free trade and economic growth (code for population growth) would rather continue to profit from unsustainable policies in the short run, the future for our children be damned. They’d rather continue to trade with communist dictators today. Who cares if our children one day live under them? They’d rather have you believe that the recycle you put out on the curb for collection isn’t really going into a landfill, that your water-efficient appliance is actually saving you water, that your electric utility’s wind turbines and small solar panel farms are anything more than a drop in the bucket relative to the problem. Worst of all, the economists want you to believe that mankind is clever enough to overcome all obstacles to growth. I can think of two obstacles that we have yet to demonstrate we can overcome – stupidity and hubris.


Pro-China Lobby Groups Lying in their Quest to End Tariffs on Chinese Imports

August 7, 2021

Let me begin with a question. The U.S. Chamber of Commerce is an agency of the U.S. Department of Commerce whose mission it is to aid U.S. businesses. True or false?

If you answered “true” to this question, as most people would, you’re dead wrong. The U.S. Chamber of Commerce is a lobbyist organization that promotes business interests and is funded by its member businesses – from the smallest of local businesses to global corporations. Naturally, the interests of those businesses that provide the lion’s share of their funding – global corporations – take precedence over all others. And they’re not above speaking out of both sides of their mouth in promoting those interests.

The subject of trade is a good example. Check out this “policy priorities“page from their web site. Click on the “Internation Trade, Investment and Regulatory Policy” link. Scroll down about half-way to the section on “International Trade, Investment and Regulatory Policy.” The third bullet item reads:

“Press for a China policy that seeks improved access to the Chinese market, advances structural reforms in China and tariff relief through new negotiations …”

Now, see the links to “Go Deeper” articles in the right-hand margin of the page. There you’ll find two conflicting articles. One is titled: “Two Big Wins for U.S. Trade: Completion of USMCA and the Phase 1 deal with China mean big things to American business.” The other, just above it, is titled “They’re Still There: Tariffs Weigh Heavily on U.S. Economy.”

Those tariffs on China – 25% on half of all Chinese imports – were the only thing that brought China to the negotiating table – and the threat of imposing them on the rest of all Chinese imports was the only thing that forced them to agree to big increases in their purchase of American products as part of the Phase 1 trade deal.

You can’t have it both ways. Either the Phase 1 deal was good for American business or it wasn’t. You can’t argue that it is and then complain that the very heart of the deal – the tariffs – is bad for American business. Yet, that’s exactly what the U.S. Chamber of Commerce does. To placate their small, local business members, they praise the deal. But, in the interest of big, global corporations, they complain that it’s a bad deal and what it terminated.

As further evidence, check out this article: https://www.foxbusiness.com/politics/business-groups-call-biden-restart-trade-talks-china. Here’s the key excerpts:

“Nearly three dozen of the nation’s most influential business groups — representing retailers, chip makers, farmers and others — are calling on the Biden administration to restart negotiations with China and cut tariffs on imports, saying they are a drag on the U.S. economy.”

“In a Thursday letter to U.S. Trade Representative Katherine Tai and Treasury Secretary Janet Yellen, the business groups contend that Beijing had met “important benchmarks and commitments” in the agreement, including opening markets to U.S. financial institutions and reducing some regulatory barriers to U.S. agricultural exports to China.”

“The trade groups include some of Washington’s most influential big business associations, including the U.S. Chamber of Commerce …”

The claim that China has met its commitments and therefore qualifies to have the tariffs dropped is a flat-out lie. The Phase 1 deal set very specific goals for Chinese imports of American products. Meet those goals and the existing tariffs could be dropped. Fail to meet them and the tariffs would be extended to cover all Chinese imports. That’s the deal, stated in very clear terms. So far, through June, the most recent month for which trade data is available, China has failed to meet a single commitment.

In 2020, China fell short of its commitment for purchases of total U.S. goods by 33.5% or $62 billion. They fell short of their goal for the purchase of energy products by 64%. Among the four categories of goods for which specific goals were set – manufactured goods, energy goods, agricultural goods and total goods – they met the goal for agricultural goods only during the last three months of 2020, but fell far short for the year. Four categories of products. Twelve months in the year. That’s 48 opportunities to demonstrate a willingness to meet their commitments. They failed 45 out of those 48 times. In fact, for the year, they barely exceeded the 2017 baseline of the deal. In the all-important category of manufactured goods, they actually imported less than the 2017 baseline.

Six months into 2021, their performance is even worse. Their imports of total goods are 46% below their commitment. Their imports of energy products is 78% below. Even their imports of agriculture products, the category where they at least met the goal for the last three months of 2020, have collapsed in 2021, falling short of their commitment by 46% and even falling short of the 2017 baseline by $10 billion.

China hasn’t met their commitments, as the U.S. Chamber of Commerce claims. It’s failed abysmally. Contrary to the Chamber’s claim that China has earned the elimination of tariffs on its products, it has blatantly thumbed its nose at the Phase 1 deal, believing (and rightly, so far) that the U.S. will continue its long-demonstrated practice of failing to enforce trade deals.

President Biden, don’t listen to these globalist lobbying organizations. They’re lying to you. It’s time – past time, actually – to declare China a failure and to enforce the Phase 1 trade deal by extending the 25% tariffs to all Chinese imports. Fail to act and the U.S. will continue to be the laughing stock at the trade table for all other countries for years to come. That’s certainly not in America’s interests.


Biden Tackles Minor Corporate Abuses While Ignoring the Biggest and Most Obvious

July 11, 2021

As reported in this Reuters article, Biden has signed an executive order that tackles many corporate abuses in an effort to help American consumers. Good for him. Many of these actions have been long overdue. But he has completely ignored the one “corporate abuse” that dwarfs all others in terms of its impact on American workers. I’m talking about the trade deficit and the practice of off-shoring millions of manufacturing jobs.

To his credit, while ignoring the abuses that Biden addressed with this executive order, Trump is the only president since World War II who took the trade deficit seriously and took concrete steps to address it.

You may wonder why I focus so much attention on the trade deficit since the purpose of my book, Five Short Blasts, and the purpose of this blog, is to raise awareness of the economic consequences of overpopulation – namely, that falling per capita consumption as over-crowding worsens must inevitably drive up unemployment and poverty. And poverty kills. Ultimately, if nothing else gets us first, it will prove to be mankind’s undoing.

It’s really not that hard to understand once you understand that increasing over-crowding as the population continues to grow inevitably drives down per capita consumption and, along with it, the need for labor. People living in crowded conditions live in ever-smaller dwellings. They own little furniture and appliances because there’s no room for them. They own less clothing because of a lack of closet space. They don’t have yards and gardens, so they don’t need tools to maintain them. They don’t own cars because roads are choked with traffic and there’s no place to park. So they don’t have garages. They don’t participate in sports because there’s nowhere left to play them. They don’t engage in recreational boating because launch and dock space is all taken.

You get the idea. But what does this have to do with trade? Consider a country with a reasonable population density. Let’s say there’s 100 million people in this country. Their lifestyle resembles that of the U.S. Now suppose that they engage in free trade with another nation that is far smaller – say one tenth the size – but also has 100 million people. It’s ten times as crowded and people live in conditions like those described in the previous paragraph. For that reason, their consumption is only half that of the first country.

Through free trade, these two countries, though each is still a sovereign state with borders, behave economically as one country. The work of manufacturing the products that their combined population needs is spread evenly across the work force, but the consumption of those products isn’t. Consumption in the 2nd country remains low because of their over-crowding. The end result is that the first country has lost 25% of their manufacturing jobs and has lost even more in terms of market share. In essence, the first country has been forced to pay the price for the 2nd country’s overpopulation.

By trading freely with the 2nd country, the first country has immediately taken on the economic traits of a country twice as populated – something it would have taken decades to happen through the course of normal population growth. Worsening unemployment and poverty are the inescapable consequences of free trade with overpopulated nations. This is why my concern for the economic consequences of overpopulation has driven me to put such heavy emphasis on trade.

With all of that as a backdrop, what has Biden done to address our massive trade deficit – now an annual one trillion dollars in trade in manufactured goods? Absolutely nothing. Oh, he’s paid some lip service to wanting to help American workers and has encouraged us to “buy American.” But he’s done nothing about our trade policy and hasn’t spoken a word about our trade deficit.

As reported this past week by the Commerce Department, our trade deficit in May continued to hover at a near-record level of $71.2 billion, the 2nd worst reading ever since setting a record of $75 billion in March. In fact, in his first four full months in office for which trade data is available – February through May of this year – Biden owns the four worst monthly trade deficits ever recorded.

Our largest trade deficit is with China. Thanks to Trump’s enactment of 25% tariffs on half of all Chinese imports, however, that deficit isn’t nearly what it once was. Our annual deficit with China peaked at $418 billion in 2018. Thanks to Trump’s tariffs, that fell to $344 billion in 2019, and fell again in 2020 to $310 billion. So far this year, it’s on track to remain at that level.

Trump left Biden the perfect tool to build on that progress. In January, 2020, he got China to sign the “Phase 1” trade deal which held at bay his threat to extend his tariffs to all Chinese imports in exchange for China’s agreement to dramatically increase their imports of American goods. What’s happened? China is failing miserably in its commitments and, not only has Biden done nothing to enforce the agreement, he hasn’t even acknowledged that the Phase 1 trade deal even exists. So far, through May, China is 39% behind its commitment on manufactured products, 43% short of its goal for agricultural products, and is a whopping 78% short of it goal for energy products. They’re barely exceeding their imports in 2017 which formed the baseline for the agreement.

So far, the Biden administration makes a good show of supporting American workers but, on this most critical issue – the one that would help us the most – all we hear from the White Houe is …….. the sound of crickets.


No One’s at the Wheel

May 13, 2021

As reported last week by the Commerce Department, the United States’ trade deficit in goods soared to a new monthly record in March of $91.6 billion – an annualized deficit of $1.1 trillion – led by a near-record deficit of $88.7 billion in manufactured goods. Here’s a chart of that deficit in manufactured goods dating back to 2010 when the monthly deficit was only $37 billion, an increase of 140 % in eleven years.

In 2010, the goods deficit with China accounted for half of our total goods deficit. In March of this year, that was down to 30%. Since October of 2018, the goods deficit with China has fallen by 36%. During that same time frame, the goods deficit with the rest of the world has skyrocketed by 580%. Think about that. A 580% increase with the rest of the world vs. a 36% decline in the goods deficit with China! That’s absolutely astounding!

That disparity in trade results in only 2-1/2 years demonstrates the power of tariffs in shaping global trade. The 25% tariff that Trump slapped on half of all Chinese imports in 2018 was a shot to the head – a bullet right between the eyes – for China’s ambitions to dominate global trade. Say what you will about Trump, but he was the first president since World War II to defy the free trade advocates and the World Trade Organization to enact such a bold tariff program. His only mistake was not extending the tariffs to a number of other overpopulated nations that feed on America’s economy to support their bloated labor forces.

But at least he left Biden with a powerful tool to slash the goods deficit with China even further – a proven tool that could be extended to other countries to finally restore a balance of trade. I’m talking about the “Phase 1” trade deal that Trump struck with China – a deal that would have forced them to dramatically step up their imports of American goods, or face the consequence of having that 25% tariff extended to all Chinese imports. The results were predictable. (In fact, I predicted China’s failure from the moment the deal was signed). They ended 2020 by falling short of their mututally-agreed goal by $62 billion, a full one third short of their goal. Through the first quarter of 2021, they’re on track to fall short of their 2021 goal by $127 billion.

So what has Biden done? Nothing. While expressing a desire to help American manufacturing, he’s been dead silent on the subject of our trade deficit and has never even mentioned the trade deal with China which they continue to blatantly ignore. The dashboard of America’s economy has a huge, glowing red gauge right in the middle that monitors our trade performance. The problem is that, like that Tesla in Texas that sheered in half against a tree as it rounded a curve, there’s no one at the wheel. Biden’s asleep in the passenger seat, oblivious to what’s happening in global trade and the devastation to our manufacturing economy. We’re approaching that curve and all we hear is snoring.


Who’s afraid of Biden? Certainly not China.

April 20, 2021

At least that what the trade data for February, Biden’s first full month as president, suggests.

In January of 2020, China signed a new trade deal with the U.S. – the “Phase 1” deal – committing to specific and significant increases in its imports of American goods in exchange for the U.S. delaying its application of 25% tariffs to the remaining half of Chinese goods. (The U.S. had already levied a 25% tariff on half of all Chinese imports.)

In 2020, China fell woefully short of its commitment – 31% less than the required imports of American manufactured products and 27% below its commitment for agricultural products. In February of this year, China not only failed to meet its commitments under the Phase 1 deal, it didn’t even meet the 2017 baseline in a single category – not in manufactured goods, nor agricultural goods, nor energy products, nor total goods. Already lagging its commitments in January, Its imports collapsed in February, falling by 27%. So far, year-to-date for 2021, China is now 46% behind its commitments.

Why should China live up to its trade commitments? So far, Biden hasn’t acknowledged that the trade deal even exists, never mentioning it. But he’s talked of getting tough with China in general. This is a golden opportunity to show that he means business – that he’s willing to stand up for American workers and farmers. How can any world leader take him seriously when he won’t even enforce a signed-and-sealed trade deal that has clear commitments and clear consequences for failure to meet them?

Recently, Biden called the level of gun violence in the U.S. a “national embarrassment.” You know what’s really a national embarrassment? A president who doesn’t have the courage to stand up for American workers and enforce commitments that other nations have made! (And make no mistake, Biden’s not the first such president.) To use a couple of Biden’s own favorite expressions, “C’mon, man! Do something, for God’s sake!”


In a test of Biden’s backbone, China reneges on trade deal.

March 10, 2021

Under a threat by the U.S. to expand its 25% tariffs to all Chinese imports, In January of 2020, China signed the “Phase 1” trade deal with the U.S. They agreed to boost their imports of American goods significantly in 2020, followed by an equally large increase in 2021. Very specific goals were set for boosting its imports of manufactured goods, energy products, agriculture products and overall goods. And the consequences for failing to meet those goals were also very specific – extending the 25% tariffs that already were applied to half of all Chinese imports to include the other half.

When it comes to trade, tariffs are the only thing China understands. Those tariffs were devastating for China. Their surplus of trade with the U.S. shrank by roughly 25% as companies abruptly abandoned China and took their manufacturing elsewhere. China was desperate to avoid any more tariffs.

However, based upon America’s long track record of failure to follow through on virtually every trade deal it’s ever negotiated when the terms of the deal weren’t met, China figured the same would happen again. So far, they’re right. Their imports fell far short of the 2020 milestones. Actually, they didn’t just fall short of the 2020 goals. They barely exceeded the 2017 baseline in all four categories of goods. The U.S. didn’t utter a peep of protest.

Now the results for January are in. Their imports of total goods from the U.S. fell 37% short of the goal. Their imports of manufactured goods were 42% short, and their imports of energy products were 71% below the goal. Only their imports of agriculture products were close to the goal, falling only 5% short.

Biden has vowed to continue Trump’s tough stance against China. He has to act. The whole world is watching. This wasn’t some Trump executive order that he can choose to ignore. It’s a signed agreement between the United States and China. If he allows them to thumb their nose at this trade deal, we’ll have zero credibility with the rest of the world regarding trade and beyond. We’ll be seen as a patsy. The U.S. is being economically crushed by our trade deficit, not just with China but with many other nations that prey on the U.S. market to support their bloated labor forces at the expense of American workers. If Biden won’t show some backbone on this critical issue, then no one can take him seriously on anything.