When Trumponomics Meets Abenomics

Posted on February 10, 2017 by MN Gordon

What will President Trump and Japanese Prime Minister Shinzo Abe talk about when they meet later today?  Will they gab about what fishing holes the big belly bass are biting at?  Will they share insider secrets on what watering holes are serving up the stiffest drinks?

Indeed, these topics are unlikely.  Rather, what they’ll be discussing is cooperative trade, growth, and employment policies between their respective national economies.  They’ll also talk about currency debasement opportunities.

Soon enough, perhaps by the time you read this, you’ll be able to peruse the headlines and garner soundbites of their discussions.  Maybe a new partnership will be announced.  Anything’s possible.

Regardless, what follows is a brief review – a thirty year retread – that’s intended to put the meeting within its proper context.  This is the backstory you won’t hear anywhere else…

To begin, it was precisely the wrong thing to do at precisely the wrong time. Continue reading →

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Don’t Blame Trump When the World Ends

Posted on February 3, 2017 by MN Gordon

There was, indeed, a time when clear thinking and lucid communication via the written word were held in high regard.  As far as we can tell, this wonderful epoch concluded in 1936.  Everything since has been tortured with varying degrees of gobbledygook.

The fall from grace was triggered by the 1936 publication of John Maynard Keynes’ The General Theory of Employment, Interest and Money.  The book is rigorously indecipherable.  What’s more, it has the ill-effect of making those who read it dumber.

Nonetheless, politicians and establishment economists remain enamored with Keynes’ gibberish.  For it offers academic rationale for governments to do what they love to do most – borrow money and spend it on inane programs.  In particular, Keynes advocated filling bottles with money and burying them in coalmines for people to dig up as a way to end unemployment.  Somehow, this public works egg hunt would make everyone rich.

Over the years this reasoning has inspired countless government stunts to save the economy from itself. Continue reading →

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Adventures in Currency Debasement

Posted on January 27, 2017 by MN Gordon

The U.S. dollar, as measured by the dollar index, has generally gone up since mid-2014.  The dollar index goes up when the U.S. dollar gains strength (value) against a basket of currencies, including the euro, yen, pound, and several others.  Conversely, the dollar index goes down when the U.S. dollar loses value.

Between July 30, 2014 and December 28, 2016, the dollar’s value, as measured by the dollar index, increased from 79.78 to 103.30 – or 29 percent.  Since then, the dollar index has dropped to about 100.  In addition, President Trump has said that the dollar is “too strong” and Treasury Secretary Steven Mnuchin has called the dollar “excessively strong.”

President Trump wants a weaker dollar to help with his program of bringing manufacturing jobs back to the U.S.  The rationale is simple enough.  A weaker dollar should make U.S. exports more attractive on international markets.  Similarly, a weaker dollar should make foreign imports more expensive for U.S. consumers so they’ll buy products Made in USA. Continue reading →

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The Right Stuff

Posted on January 20, 2017 by MN Gordon

“You boys know what makes this bird go up?  Funding makes this bird go up.  That’s right.  No bucks, no Buck Rogers.” – Gordon Cooper and Gus Grissom, The Right Stuff (film)

Pledges for Trump

Things are looking up for the United States economy in 2017.  You can just feel it.  Something great is about to happen.

Earlier this week, for example, after meeting with the incoming President, Bayer and Monsanto announced they will spend at least half of their agriculture research and development budget – approximately $8 billion – in the U.S. over the next six years.  It’s estimated the combined efforts of these two companies will add 3,000 new U.S. high-tech jobs.

Wal-Mart and General Motors also made job and investment pledges for Trump.  Wal-Mart said they’ll add 10,000 jobs this year.  General Motors announced $1 billion in investment, which would generate 1,500 U.S. jobs.

Following these pledges, Trump tweeted: Continue reading →

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