Distortions And Structural Issues And You
“It should not surprise anyone that Western societies are becoming restless. Trump, Brexit, Charlottesville and, arguably, even radical Islamic terrorism are bi-products of global economic distortions largely created by the unwillingness of the Western political dimension to let the global factors of production naturally settle global prices and wages. (Sorry, it had to be said.)”
“As discussed, the biggest challenges facing the US economy and US labor stem from a distorted global price and wage scale. Mr. Trump’s domestic fiscal, regulatory, tax and immigration goals seek only to raise US output and wages. This cannot be achieved without the participation of global commerce. There is no such thing anymore as a US business that makes US products sold only in the US without being influenced by global prices, wages and exchange rates. The romantic, patriotic “made in the USA” theme does not comport with the reality that the US also seeks to keep the dollar the world’s reserve currency and that maintaining America’s power requires the US to control the world’s shipping lanes. Mr. Trump and his base cannot have one without the other. (Do we really have to articulate this?)”
“Mr. Trump’s “Being There” presidency is reflecting an inconvenient truth back on a society that has, until maybe now, successfully deluded itself into believing government is functionally the glue holding society together. Though he does not mean to, Mr. Trump is single-handedly demonstrating to groups ranging from idealistic Washington elites to social media zombies to southern white supremacists that Madisonian government has become a dignified cover for the financial, commercial and national security interests that control it. We suspect those interests would rather the reach of their power be less visible”
Brodsky used a term this week – ‘fake politics’ – not just fake news. Very apropos – the fake politics covers the market distortions and structural economic issues that the politicians lack the courage or intelligence to address.
The distortions in the global economy are causing structural issues around the world – Trump and all this we are experiencing is a by-product of those distortions and structural issues. I don’t agree with everything Brodsky said but he nailed it with “global economic distortions largely created by the unwillingness of the Western political dimension to let the global factors of production naturally settle global prices and wages” – this cannot and will not last and when the current price and wage regime collapses it is likely to do so quickly – which is why debt is your enemy.
Governments and central banks around the world are going to extraordinary measures in order to extend the lifespan of the existing paradigm – but that paradigm will be ending. When the paradigm ends it will be a global earthquake as prices and wages reset in the midst of mountains of unserviceable debt.