“Practical men who believe themselves to be exempt from intellectual influence are usually slaves to some abolition economists. The authoritative madman who hears voices in the air is steaming madness from an academic author several years ago.”
– John Maynard Keynes, General Theory of Employment, Interest and Money (1936)
Practical Purpose
Is President Donald J. Trump a practical person? Is he a madman?
Is he listening to his voice in the air?
We’ll provide you with the answers to these questions. Certainly, Trump is a slave to destructive decisions from the past. Many of these decisions were guided by dead economists.
Decisions made a century ago, such as the passage of the Federal Reserve Act of 1913 and the seizure of FDRs of American citizens’ private money holdings in 1933, enforce Trump’s plans. Today, with fun and free, we are trying to better understand the great disasters he is dealing with.
First, Trump’s tariff policy aims to re-rout the origins of production and the flow of global trade. Specifically, he wants to move imported products from foreign factories to domestic factories. The goal is to stimulate American manufacturing and create new blue-collar jobs.
This sounds like a practical purpose. Without a doubt, the American consumer economy is not working for working Americans. Over the past 50 years, non-specialized services workers and workers without technology trade have been left behind.
But the reasons are complicated. Applying customs duties functionally may not achieve the intended purpose. And even if that’s the case, this doesn’t take years to achieve. In the meantime, there will be confusion in America and around the world.
Remember, the reason American manufacturing bases have been hollowed out over the past 50 years is that foreign competitors can produce the same products for just a fraction of the cost. about 32% Of the total employment in the country, he was in manufacturing in 1953. Today it’s about 8.5%.
Consumption and production
The imbalances of large trade that have developed over the past 50 years are a function of Fiat’s money and credit. In fact, Nixon closed the gold window in 1971, breaking the natural relationship between money, credit and international trade.
If international trade meets gold standards, there are natural restrictions to trade imbalances. If one country consumes more than it produces, it will eventually run out of money.
As the money disappears, the labor becomes cheaper. Afterwards, due to diligence and ingenuity, they can produce their own goods, as they are less expensive to import. It may also be possible to export goods to other countries to achieve a positive balance of trade.
Furthermore, if the supply of gold is fixed in gold and cannot be created on a whim, interest rates will naturally rise as they adapt to the inflow and outflow of free market trade. This effectively self-regulates the capacity to overconsumption and overproduction.
From the late 19th century to the early 20th century, it was America that had cheap labor and emerging economies. Manufacturing and industrial production boomed as the population moved from farm to city. America’s ability to manufacture and export goods has dramatically increased its wealth.
Then, at the end of World War II, America was the only advanced economy, and its industrial base remained intact. This advantage allowed it to work for decades with little competition.
As wealth continues to flow into America, wages increase and workers become accustomed to excessive consumption. They thought wealth and wealth were America’s birthrights. They joined the union and demanded wages in addition to what their skills guaranteed.
But by this time the money had become fake. Federal spending on guns and butter in the 1960s generated inflation of runaway consumer prices in the 1970s. The US was also beginning to implement a consistent trade deficit. In other words, they were consuming more than they were generated by the difference being made up of debt.
Dollar demand and out-of-control debt
Under the 1944 Bretton Woods Agreement, US dollars acquired by foreign governments through trade could be converted to gold at a rate of $35 per ounce. The US is consuming more than it was currently produced, so foreign governments were converting excess dollars into gold.
In 1971, Nixon had been watching American gold stocks leave the coast. But instead of forcing Americans to tighten their belts and work for a lower wage, he changed the rules of the game. On October 15, 1971, he ended his conversion of the US dollar to gold. From this point on, the decline in debt and deficits has not subsided.
Another factor driving America’s runaway debt is the function of the US dollar as a reserve currency for international trade. Henry Kissinger further cemented this at the end of the 1973 Arab-Israel War with King Faisal bin Abdul Aziz with Petrodler Agreement.
The contract required all oil transactions to be carried out using US dollars. By binding the dollar to the world’s most valuable resources and creating massive, ongoing demand for the dollar, the value of the dollar has been boosted in the forex market.
Later, when the economies of China and the Far East were opened for business at the end of the 20th century, US debt and deficits jumped off the charts. There are no restrictions on gold, but since the oil trade supports its value, credits in dollars can be made without restrictions.
Whenever American consumers or the US government were short on cash, new credits were extended. However, as credit increases, so does debt. Currently, all US debts (government, business, consumer) have ended 102 trillion dollars. And much of this debt is used to consume foreign-made goods.
For example, in the early 1970s, US trade was well-balanced. But once it fell into the deficit, it couldn’t be reversed. In 2024, the US exported $3.19 trillion in goods and services. However, it imported $4.11 trillion in goods and services. This created a trade deficit for the year. 91.84 billion dollars.
Trump’s Newsletter Policy
For decades, America has changed from a country of savings to a country of debtors. During this time, manufacturing bases were hollowed out and sent offshore, causing much of the city to be ignored and collapsed.
The federal government also wasted the benefits of owning reserve currency by engaging in unnecessary foreign wars and intervening in foreign politics. Later, in February 2022 after Russia’s invasion of Ukraine, the US and the European Union froze the Russian Central Bank’s funds.
This has shown the world that the US and the EU cannot trust them to respect their debts. Furthermore, it accelerated the efforts of Brick countries – Brazil, Russia, India, China, etc. – carry out international trade other than the US dollar.
As these efforts move away from the increase in the US dollar, the value of the dollar will fall compared to other currencies, with all currencies falling relative to gold. This makes imports more expensive for Americans and increases consumer price inflation. But it should also make American exports cheaper.
All of this appears to align with Trump’s plan to bring manufacturing jobs back to the US. However, the following are some questions that we won’t be able to answer for years to come:
Have Americans come to jobs where they do more work to get less and lack the national debt?
All bets are off. The country has digged huge holes over the past 50 years. Enabling American industrial bases requires decades of effort, ingenuity and collaborative determination.
Trump appears to understand the disadvantageous reality of the US debt issue more than his past presidents. He is also the first president to attempt to tackle the issue head on.
But instead of focusing on his return to sound money, Trump decided on Maga by bending his will to international trade to his preferences through tariffs. Alas, his tariff policy is a policy of the destruction of wealth.
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From the heart,
Mn Gordon
For economic prism
Trump’s Maga’s policy of wealth destruction to return to economic prism
