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James Rickards, The Death of Money, The Coming Collapse of the International Monetary System (N.Y,.Portfolio / Penguin, 2014
Raymond Richman, 4/27/2015

The book is not about the death of money but it is about the coming collapse of the dollar and the end of the dollar as the international monetary standard. The author predicts an “inevitable” decline of the dollar as the international medium of exchange. Until World War II, most currencies were convertible into gold and the world was then on a gold standard. As one country after another abandoned the gold standard, the U.S. dollar became the preferred medium of international exchange. Except for a short period in the late 1970s when inflation created a lack of confidence in the future of the dollar and even the US Treasury issued bonds payable in Swiss Francs, the dollar was the dominant medium of international exchange and continues to be so until today. In fact the value of the dollar increased in 2014 which seems to contradict Rickard’s predictions. The high value of the dollar makes American goods more expensive to foreigners and puts American manufacturers at a serious disadvantage while making foreign-made goods cheaper and encouraging imports. Rickard’s thesis is that a lack of confidence in the dollar is a necessary outcome of dysfunctional US economic policies.

Inflation increases imperceptibly and gains a foothold before it is recognized but inflation is not  the Federal Reserve’s worst nightmare. Deflation is, because it may result in an outright default on the national debt”, a market collapse, bankruptcies and depression. The result would be international chaos. A new monetary standard would become inevitable. The world’s leading powers seem to be pressing for the IMF’s SDRs, Special Drawing Rights, to be the international medium of exchange to succeed the dollar.  

The book has three parts. Part I on Money and Wealth has two chapters, one on Prophecy, dealing with our increased capability of detecting early attacks on the US dollar, acts of terrorism, and efforts to crash US financial markets. The second chapter, entitled The War God’s Face, deals with the nature of future wars. Future wars will be wars relying on computers, including precision guided missiles and drones but also cyber wars, designed to cause a collapse of the value of the currency, collapse of securities markets, and a country’s economy. ...



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Donald Trump opposes Fast Track
Howard Richman, 4/26/2015

Prospective Republican presidential candidate Donald Trump has come out against Fast Track. Here's a selection from an article about it:...


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Cruz supports giving Obama FastTrack authority
Howard Richman, 4/26/2015

Senator Cruz along with Representative Ryan penned an op-ed in the Wall Street Journal this week calling for Congress to give President Obama the power to negotiate the Trans Pacific Partnership without possible amendment by Congress.

Most Republican voters distrust President Obama would like to see Congress limit Obama's power. But Cruz and Ryan would like to see Congress expand Obama's power....


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Daniel Greenfield: Why Scott Walker is Right on Immigration
Howard Richman, 4/25/2015

On April 23, 2015, Daniel Greenfield (Why Scott Walker is Right on Immigration), defended Scott Walker's call for limitations on legal immigration to protect the jobs of American workers.

Greenfield's observes that the issues of unlimited immigration and unlimited trade are closely entwined in the eyes of some Republicans. Here is a selection from Greenfield's op-ed:...


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Jeb criticizes Hilary for not supporting FastTrack
Howard Richman, 4/23/2015

On Wednesday, Presidential candidate Jeb Bush strongly positioned himself in favor of giving President Obama FastTrack power so that he could negotiate the Trans Pacific Partnership (TPP) treaty without Congressional amendment. In an op-ed (Hillary Clinton’s Politically Motivated Flip Flop on TPP is Wrong), he wrote:

I have no problem supporting TPP.

We’ve worked with some of our most important allies in negotiations to help make this possible — and asked them to take political risks of their own to open their markets to American goods, agricultural products, and services. It sends a terrible signal this late in the negotiations for Sec. Clinton to pull the rug out from under our allies for a short-term political gain.

As governor of Florida, I led 15 trade missions to numerous countries across the globe, including Mexico, Israel, Spain, the United Kingdom, Canada, Colombia and Germany. I know what it means to create strong agreements to help attract investment, jobs, goods and services. I saw the impact firsthand as Florida became a mecca for trade to and from Latin America and Europe. Florida benefited from these agreements.

Jeb is right to criticize Hillary Clinton on trade. Democratic candidates for President say one thing when they are running, but do the opposite once elected. Their flip-flopping on trade should, indeed, be an issue. 

In Jeb's favor, this op-ed also says something positive about his political courage. Jeb wants to give President Obama the "Fast-Track" power to negotiate the TPP treaty without any possible amendment by Congress. In contrast, most Republican voters want Congress to restrain Obama's power. According to a recent poll:...


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Lemmings Watch
Howard Richman, 4/22/2015

I just found a poll on FastTrack. It does not bode well for those who promote it. Here's a selection:

Two-thirds (68%) of Republicans say they are less likely to vote for a Member of Congress who votes to give President Obama fast-track authority. Among the conservative Republicans who dominate many primary electorates, this figure is an extraordinary 74%.

We are about to observe an extraordinary political event. Those Republicans who promote trade with mercantilist countries (countries that maximize their trade surpluses) are about to commit mass suicide. It is becoming clear that they are not only voting for America's continuing economic decline, but they are also voting for their own electoral defeat. 

Hopefully, the Republican candidate for President will break with this lemming tendency. Just this week, Governor Scott Walker of Wisconsin broke with the other Republican presidential candidates on immigration. Instead, he took a position in favor of the American worker:...


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Dick Morris: Fast Track could give away Congressional authority over immigration
Howard Richman, 4/21/2015

On Wednesday, the Senate Finance Committee will vote about whether to give President Obama the "Fast Track" power to negotiate trade treaties without the possibility of Congressional amendment. Dick Morris is warning Republicans that giving Obama such authority would be a huge mistake, partly because Obama could use his power to destroy America's future border controls. Morris warns

The current Pacific Rim agreement, which would include Mexico, Japan, Taiwan, Vietnam -- Pacific Rim countries (at the moment not China, but eventually it will) -- provides that there should be free flow of labor among the signatories, just like in the European Union.

What this means is that Congress can no longer control Mexican immigration into the United States, or Central American immigration, because any law that congress passes, quota-ing or limiting the number of people who can come in legally is superseded by treaty under the Constitution, and this treaty requirement of free flow of labor would vitiate any attempt by Congress to regulate immigration.

Morris also points out that giving Obama unbridled Fast Track authority could lead to trade treaties that permit cheating. Morris continues:...


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What Is the Appropriate Tax Treatment of Capital Gains?
Raymond Richman, 4/11/2015

Capital gains are currently subject to tax when the capital asset is sold or otherwise realized.  Most economists believe that accrued capital gains, that is, unrealized gains, are income but they are confusing capital and income. When one owns an asset whose price has increased in value since it was acquired, he has an accrued but unrealized capital gain. He may realize the gain by selling the asset. To tax accrued but unrealized gains as income while taxing the increased yield which the capital gain capitalizes would be double taxation. It would be taxing the annual yield and its capital value. The value of a capital asset, as every economist should know but often does not, is the capitalized or discounted value of the expected stream of income it is expected to yield its owner. He pays taxes on the yields, the stream of income, as they are earned. To tax accrued gains and the yields as they accrue would be double taxation of the yields because capital value is the value of expected yields. Only realized capital gains can be considered income. Only when a capital asset is sold is the capital gain considered realized and subject to tax.

Holding on to a capital asset which has appreciated in value leaves the owner subject to taxes on its annual yield. Selling a capital asset which has appreciated in value relieves the owner  from paying taxes on its future yields, which will have to be paid by the buyer. No capital value is created by the sale nor has any been destroyed. The case for taxing capital gains as income rests on the fact that in selling the capital asset, the seller is realizing the change in capital value caused by the increase in expected yields during the period of his ownership. He is, in effect, realizing the income that the change in value represents. There is no reason why the capital gain should not be considered income to him.  ...


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President Rand Paul would give libertarian economics a bad name
Howard Richman, 4/8/2015

I watched Senator Rand Paul's announcement that he was running for president. He had good goals, but his economic ignorance was dismaying.  For example, he argued that allowing American corporations to bring back profits from overseas at a low tax rate would encourage investment in American manufacturing.

Exactly the opposite. Doing so would not only make outsourcing more profitable, but it would also bid up the exchange rate of the dollar (American corporations would convert foreign profits to dollars), which would put even more American manufacturing workers out of work.

On the other hand, many of his goals were excellent:...


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The Negative Consequences of a Free Trade Policy in an Unfree Trade World
Raymond Richman, 4/1/2015

As you have been reading on this blog, US free trade policies have resulted in huge chronic trade deficits for decades which have converted the US from the world’s leading creditor to the world’s leading debtor. Pres. Obama is seeking to extend free trade with the low-wage countries in the Pacific region. He is committed to equalizing income and wealth but his policies have only succeeded in exacerbating inequality in the US. He is equalizing wages but only with low wage countries around the world  He has succeeded only in reducing wages as a proportion of US national income domestically. The policy of globalization pursued by him and previous administration has been a disaster for the United States. It is equalizing wages around the world which means that US real wages are tending lower and will continue to edge lower while real wages are increasing in the rest of the world. Unbalanced  trade with low wage countries like China means lower wages for US workers in American manufacturing. 

William Galston in an opinion piece entitled “How the Vise on U.S. Wages Tightened” (Wall Street Journal, 4/1/2015) writes: “According to the Wall Street Journal’s James Hagerty and Jeff Bennett in a March 24 article, the U.S. imported $138 billion in car parts last year, which       works out to $12,135 of foreign content for every light vehicle built in America. …The story isn’t restricted to auto parts.” Galston also cites a paper written by Avraham Ebenstein, Ann Harrison, and Margaret McMillan published by the National Bureau of Economic Research in which they “…found significant wage declines for workers exposed to globalization, especially among workers performing routine tasks. Older workers and workers without post-secondary education are disproportionately affected.” ...



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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]