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The Triumphant Trump

Beggar-thy-neighbor

Trump Crude oil

America first- 2020 Great Depression

CRUDENOW-nov2016:“ America First” this policy is not new and often referred to as "beggar-thy-neighbor policy“, and it is a text straight out of the 1930 Great Depression's text book.

In 1930, the Hawley–Smoot Tariff Act raised U.S. tariffs on over 20,000 imported goods to record levels.This Act (Hawley-Smoot two USA senators) caused other countries to follow suit, resulting in a massive decrease in international trade and domestic production in the United States.At least the ensuing tariff wars were highly responsible for the depth and length of the global Depression of 1930

If every country plans economic expansion through export growth strategy , then , with world GDP growth is anemic or stagnant, the only way to achieve this growth is at the expense of other countries

Crude oil Crude oil Beggar-thy-neighbor policy says the fastest way to have the best price is to devalue your currency. The European will see below (1.10) exchange rate as a “good news" ,because European exports would become more attractive. Similarly, Japan favors a weaker yen. China has for years been accused of keeping its currency substantially undervalued .

Now we can see how beggar-thy-neighbor works. The Triumphant Trump is slightly different , “ America first “.which means that “ export to American Market is not free, there are political and economic concession to make and the American military support is not free of charge , you have to pay, much the same strategy he used to take him from obscurity to the highest political post in the world . There will be no softly-softly policy with, Iran, China, Europe… and specially the developing economies. It simply is “take–it- or- leave it policy”. This is scary . Is it taking us back to 1930? .

Beggar-thy-neighbor policies start with currency devaluation, If left unchecked it can lead down a dangerous road to protectionism, which in turn leads to the breakdown of global trade and a world depression.The US government taxes are at a very low level, about 18% of GDP. To cut it further spells disaster for the rest of the world .Internal tax cut , is in fact, subsidy for exporters and effectively operated as an import tariff. It violates the WTO trade agreements the United States signed.This puts money into the economy by means of spending and tax cuts, The new cash pumped is simply, a new form of QE, most of which ended up in the financial institutions . These big tax cuts are meant to be a non refundable credit to exporters,the government can print. ?.

Today, with US Dollar as a major international currency, US is paying for its import bill through its deficit or printed dollar…. But the new policy will make America pay for its imports by exporting cars, oil, technology … read next week article