The grand new American reawakening has come, Trump announced with his inaugural ‘Day of Liberation’—a Declaration of Economic Independence:
simplicius76.substack.com
It turns out Trump’s entire game plan may have been taken from economic advisor
Stephen Miran’s playbook. In November, Miran wrote
A User’s Guide to Restructuring the Global Trading System, which according to experts precisely parallels what Trump is now attempting to carry out. One of the core tenets of the document is the deliberate
devaluation of the US dollar in order to make US exports favorable again to reignite American manufacturing. The entire issue revolves around the famous Triffin’s dilemma, which notes:
To summarize the above for the laymen, a country which holds the world’s reserve currency faces a significant dilemma wherein its national trade policy and monetary policy are effectively at odds against each other. In order to keep its currency as reserve status—and reap all the geopolitical benefits this creates—the country must hamstring its own economic output by running a huge trade deficit, which means the country imports far more than it exports, which hurts—or in the case of the US,
kills—domestic manufacturing.
Why must a country run a trade deficit to retain its global reserve currency status? Because when your currency is the global reserve currency, the entire world constantly hungers for it in order to use it in all the various countries’ international trade between each other. The only way to keep those countries constantly supplied with dollars is for Americans to buy tons of foreign imports, which effectively sends dollars to those countries, since these purchases are made with dollars. If the countries instead bought a ton of US exports, they would be paying for those exports with dollars, which means all the dollars would be sent
back to the US, and global nations would have a severe lack of US dollars. What would happen then? They would have no choice but to trade with their own currencies, which would mean the collapse of the dollar reserve system.
A simpler example: if a French person buys a $50,000 Ford truck and imports it to France, that’s $50,000 USD that leaves France and goes back to the US, lowering France’s dollar holdings. If an American buys a $50,000 French Peugeot to import it to the US, he sends his $50,000 USD to France, which increases its dollar holdings.
As seen, the only way to maintain the dollar’s reserve status is to make sure US dollars are constantly flooding the world, which can only be done by running a massive trade deficit where imports of foreign goods (outflow of USD) far outweigh exports of domestic goods (inflow of USD).
In essence, the devaluation of foreign currency can offset the duties on imports. You’ll note this appears to contradict the premise of devaluing the dollar as well, but that’s where it gets much trickier. As I understand it, the paper proposes to strike a fine balance, explaining that if adversarial countries choose to devalue their currencies as a reaction—to boost their own exports—the pain could be ‘offset’ by the explanation above. Friendly countries, on the other hand, could agree to help devalue the dollar in what Miran imagines as a ‘Mar-a-Lago Accords’ agreement, akin to the Plaza Accords, or even the Bretton Woods agreement.
Miran also envisions the tariffs as just the first stage of a more elaborate operation. The tariffs could be used merely as the initial bullwhip to bring countries into negotiations, wherein Trump will then switch to a carrot-on-stick approach in alleviating or removing tariffs on countries which agree to finance ‘significant industrial investments’ into the US manufacturing sector.
Because of this, different stages of the process are expected, like the dollar first strengthening, then eventually weakening:
Miran does note the dangers, however:
Now the main argument revolves around whether US has a manufacturing backbone to even revive anymore. Many argue that at this point, things are ‘too far gone’—infrastructure has crumbled for too many decades, entire generations have lost the knowledge to build things, and perhaps worst of all, the
culture in America has dwindled to become a kind of poisoned well that has disincentivized the newest generation of men from taking the types of jobs that would lead to some imagined manufacturing boom or golden age.
As
one thread propounds:
Figures I’ve seen suggest there are now nearly 5 million less workers in the manufacturing sector than there were in the year 2000, despite the fact the US population has grown by a whopping 60 million people since then.
In many ways, what Trump is attempting to do is strongarm the world into a modern form of imperial neo-feudalism, where vassal states pay handsomely for the privilege of lowering their ‘protection’ racket fees. Some will argue this is an equitable system; in Anglo terms, perhaps. China envisions quite a different global order, without the need for mafia threats and coercion.
Also important to note is that Trump’s multi-phase plan includes the gradual replacement of the IRS with the ERS—or External Revenue Service. Trump’s Secretary of Commerce Howard Lutnik said as much many times, with increasing emphasis most recently;
As stated earlier, many believe Trump’s grandiose vision to be too little too late, but a counterargument is that the world is now in a race to the bottom, with European nations well ahead of the pack. Trump may not rekindle an American golden age, but his bold and drastic actions will likely tighten the yoke around European vassals, ensuring American supremacy in that quarter of the world for years to come.
The big question that will remain is how competitive can America ever realistically become against China. It’s difficult to imagine America ever catching up without resorting to total war in setting China back by several decades, which is likely why we’ll continue seeing major provocations there. On the first count, at least, Economist agrees in their latest:
https://archive.ph/xeOVN
As a last note, it was claimed that Russia was not included amongst Trump’s tariffs because sanctions on Russia have resulted in little trade that can be measurably tariffed. Several outlets rebutted this explanation:
If true, this would be an interesting development, as it would mean the US-Russia rapprochement is much deeper than assumed, and Trump could be banking on ingratiating himself to Russia as a way to truly turn the world on its head with an unprecedented eventual partnership between the two superpowers.
This comes amidst Putin’s personal presidential economic development envoy Kirill Dmitriev landing in D.C. today, along with full media circuit:
Video 1, Video 2. Dmitriev is a Kiev-born, US-raised, Goldman Sachs-trained financier who’s got a unique handle on the lay of the land. His recent rise to prominence clearly indicates the coming together of Russian and American business interests and thawing of relations, which could be a positive sign for Trump’s long term global reorientation strategy.
