The World According to Michael

 For some reason Donald Trump is in the news, but this time it's not for one of his reality TV shows or Miss America pageants.  This time it's because of his appearance at CPAC (Conservative Political Action Conference).  For the life of me I can't figure out why the American people are so blinded by celebrity.  Trump now is considering a bid for the President of the United States as a Republican.  If this doesn't demonstrate the incestuous nature of politics, I don't know what does.  I mean really, how many more ultra rich people can the American people elect to office before they realize the entire system is a waste of time.

Trump ruffled a few feathers during his speech at CPAC when he said that Ron Paul had zero chance of becoming elected.  This prompted many boos and heckles from young libertarians  that have supported Ron Paul for the last several years.  Ron Paul's group C4L (Campaign for Liberty) and YAL (Young Americans For Liberty) dominated the CPAC conference this year.

This brings us to a interview Donald Trump did with CNN where he talks about how he would "Fix" the economy and bring respect to the USA again.  I always find it surprising when people of prominence  get on TV and say something in a confident manner that so many people believe it as truth.  Trump mainly spoke of the symptoms of a failed economic system & policy.  Never once did he mention the root causes of financial mess that we are in today.  This is very typical of politicians and talking heads on TV, is they often only complain about the festering symptoms and not the cancer beneath.

Trump went on to say that he would basically strong arm OPEC into keeping Oil prices low.  This is one of his many misunderstandings on how the market works.  OPEC is a group of oil producing nations that basically run on quotas.  OPEC does not set the price of oil, the market does.  OPEC can increase or decrease the quantity of oil they put into the market.  But this is severely limited due to the fact that there are so many other oil producers outside of OPEC that it has a negligible effect on prices.  Another fact the Trump seems to ignore is that the US receives most of it's oil from Canada & Mexico.  I wonder if he'll try to strong arm them as well?

Trump then moved onto how China is stealing American jobs.  He correctly points out that the US doesn't "Produce" anything anymore.  However, you have to ask yourself "Why" doesn't the US produce anything anymore?  When you look at a random ball point pen or T-shirt and it's "Made in China" mark ask yourself, how much it would cost to manufactur this in the USA?  With high labor & union costs, high taxes and government regulation.  That .28 cent pen would become $3.28 if it were produced in the US.  So what logically has to happen when the demand for inexpensive goods yet high labor & manufacturing costs prohibit US companies from being competitive, thus manufacturing moves to a less expensive part of the world.

 A monetary system that is built solely on expansion of the money supply and debt financing is the root cause.  This should come as no surprise that when prices, wages & debt don't increase at a constant rate then the system starts to eat it's own.  The reason you typically receive a "Cost of living" raise every year at your job is to perpetuate the inflationary system.  That 3-5% cost of living raise is actually compensating for the 3-5% destruction in the original value of the currency on a yearly basis.  Prices, wages and debt have to increase year after year just to keep the system from collapsing.   If our system cannot ebb & flow as it should then it should be no surprise that most of our manufacturing has moved overseas where the cost of doing business is much much lower.

Trump says he wants to institute a 25% tax on all Chinese goods being shipped into the US.  This will only raise prices by 25% thus harming the people that rely on inexpensive products to survive.  Small incremental prices increases hurt poor & fixed income people to the core.  Why would Trump advocate such a protectionist policy?  He believes this will bring back manufacturing to the United States if a policy like this is implemented.  Do you really think arbitrarily increasing prices 25% will cause the imbalance of the cost of doing business in China VS. the US to become non-existent?  US manufacturers couldn't produce the same product the Chinese can for a measly 25% increase.  This wont end at a 25% tax increase on Chinese goods, It will end up a 525% increase or more in order for the US manufacturers to compete in the current system.
 
This chart demonstrates just how competitive the US is compared to other countries.  It's painfully obvious that there is almost nothing we can do given our current system to close the gap of the costs of manufacturing.

This is a symptom of our inflationary, debt riddled system.  Along with high taxes, onerous regulations, union costs this is a predictable outcome and anything you do to tinker with the "Symptoms" will do nothing to correct the underlying problems and will most likely make them worse.

The system is untenable and will collapse on itself until a new system has taken it's place.  One  that promotes savings, maintains the value of your currency.  A system that is not sponsored by debt, regulations or taxes.  A new entrepreneurial spirit will take hold and the central powers will have to remain hands off.  This is what Donald Trump doesn't understand.  He's already sounding like a politician spewing half truths and reactionary rhetoric.  If he gets his way we'll be at war with China, Canada, Mexico and the entire Persian gulf and any other country that has resources that Trump is pining for.  

Donald, to be as cliche as I possibly can.  You're Fired!

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