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‘Gold Standard’ Needed to Fix Trade Imbalances!

January 29, 2017

Image result for america's trade deficit (in goods) since 1975

The Trump Doctrine wants to fix the trade imbalances which America runs with many of its trading counterparts (like China, Mexico, India, etc.). But this is nearly impossible without a return to a settlement mechanism like a gold standard or a gold exchange standard. Today, our fiat (cyber) standard allows the ‘dollar’ to serve as our balance of payments settlement unit. This unit has no anchor to anything fixed or stable. The floating ‘dollar’ standard allows trade imbalances due to the nature of the system.

America’s current annual trade deficit is some $737 billion (goods) and currently monthly exports are declining as monthly imports are rising. This imbalance is primarily caused by our corrupted cyber (floating) currency system where exchange rates fluctuate continually with our counterparts. The Trump Doctrine wants to create some balance in trade with countries which sell us more than they buy. But is this possible under our current corrupted cyber currency system?

I would suggest, NO. If our general global economy turns down substantially then we could witness some decline in our imports but our exports would likely decline even more (so relative imbalances would continue). If our economy continues to grow (as it is currently) this same imbalance is likely to continue due to automatic adjustments in currency exchange rates. The real problem with the Trump Doctrine is that settlement between our counterparts is unstable due to the SYSTEM (the floating cyber system).

The imposition of tariffs (say with China, Mexico, India, etc.) will reduce imports (to a degree) but it will also increase prices for our consumers (not good). Bilateral trade agreements are unlikely to solve any of these trade imbalances as our SYSTEM is the problem. What is needed to resolve these continuing trade imbalances is a GOLD standard or similar. Stable currency exchange rates with final settlement in gold might work (under a new global agreement). But a gold standard would also mean that countries must accumulate gold as a reserve. Who can do this?

A gold exchange standard (like the previous Bretton Woods Agreement) might also help to temporarily stabilize global exchange rates if our markets were similar to 1944-46. My sense is, however, that our international currency system is now so corrupted that ‘nothing’ will work at this time. The current non-system would need to collapse completely prior to implementing another international system. Today, our cyber (floating) exchange rates promote instability and beggar thy neighbor trade polices (due to the nature of our system).

What Mr. Trump and his team of advisers need to recognize is that a floating cyber currency system (as we now have) creates all these trade imbalances and unfair trade relationships. The SYSTEM is our problem and blaming China, Mexico, India or any other trading counterpart will not improve our immediate situation. America needs to focus on cleaning up our own financial house of cards (debt, deficits, and excesses) prior to attempting to change the other. This is the difficult message that needs to get to Mr. Trump!

My sense is that the Trump trade doctrine (as espoused during the recent election period) was logical given the serious imbalances we now witness…but the solution is not to impose tariffs and taxes on our innocent counterparts. The solution is a NEW SYSTEM for our planet (where cyber currencies are eliminated). The system is our problem and a NEW SYSTEM means that the old must first collapse. Under Capitalism this is called ‘Creative Destruction’. America should start the trend towards cleaning up her own house now so that this ‘example’ permeates to all our counterparts. What do you think? I am: https://kingdomecon.wordpress.com.

P.S. Kingdom Economics would suggest that a better alternative (after the collapse) is actually the elimination of all monies from the system…but this is a deep philosophical debate which must wait for another day!

9 Comments leave one →
  1. therooster permalink
    January 29, 2017 6:37 pm

    The old methods of balancing trade with the use of gold would amount to just another can kicker if the whole market did not have access to gold based payments. That’s why we now have goldmoney for the sake of one and all. Nobody has to be left out.

    Gold is now being spent directly into circulation by consumers. This allows for a new system to morph, organically based on the natural laws of the marketplace and as such there is no need to destroy anything.

    Each passing day gets just a little bit better as we add the much needed “yang” to the existing “yin” within the total model for global liquidity. The economy gets support while existing debt gets purged and retired from circulation.

    Symbiosis ensues as the new system becomes a new systemic relationship between the measure and the weight, now featured in real-time.

    Care to help , Don ?

    Goldmoney.com/r/0UZxqF

    Like

    • January 29, 2017 11:16 pm

      Dan: go to this website for our growing debt. Where is the purge. D

      http://www.usdebtclock.org

      On Jan 29, 2017 5:38 PM, “Kingdom Economics – The Future Is Now” wrote:

      >

      Like

      • therooster permalink
        January 30, 2017 6:29 am

        The debt purge that I’m referring to is a forward looking outcome based on the grass roots response to personal monetization and circulation of gold, bottom-up. It sets a process of displacement into motion.

        It’s the only way to enter gold back liquidity into circulation without a debt market crash in what could easily be a “rush to judgement” if gold was brought into circulation by legal means (by fiat), top-down. The process must be bottom-up. This is the marketing challenge that the academic approach to balancing numbers can easily overlook.

        We must be as wise as serpents , yet as gentle as doves. Remember that ?

        We are now in a trade environment that features real-time pricing for bullion markets and all currencies, alike. Gold has never experienced any kind of historical monetization with these real-time price features. An “event” by fiat would be dangerous. An introduction by market means would feature market oriented “stealth features” that come down to personal consciousness as we add the much needed “yang” to the existing “yin” as a method of creation ….. like light coming out of darkness, Don ,,,, just what the doctor ordered. Nothing new.

        Like

      • January 30, 2017 11:17 am

        I understand your philosophy. It will not work IMO. D

        On Jan 30, 2017 5:29 AM, “Kingdom Economics – The Future Is Now” wrote:

        >

        Like

      • therooster permalink
        January 30, 2017 11:21 am

        Don … you haven’;t said why you think it won’t work. Here’s your chance. Have you rationalized why you think gold currency won’t work ? I suspect that you may not have an explanation , but being a fair guy, I’ll give you the chance.

        Over to you. I’ll be ready for your blind spots. 🙂

        Like

      • January 30, 2017 6:12 pm

        Dan: It won’t work because the concept of value is subjective. We need to eliminate money from this planet. D

        On Jan 30, 2017 10:21 AM, “Kingdom Economics – The Future Is Now” wrote:

        >

        Like

      • therooster permalink
        January 30, 2017 8:42 pm

        Do you mean straight barter ? Product for product ?

        Like

  2. therooster permalink
    January 30, 2017 9:04 am

    If our debt system is represented as a “yin” and the addition of assets in circulation would constitute a “yang” , that process of completion is a change, is it not ?

    The process of creation can be seen as light coming out of darkness ….. nothing new , Don.

    In the monetary model for total liquidity , all the market has to do is “add assets and stir”. The process will be a progression toward completion as we add the yang to the existing yin. Symbiosis ensues.

    When we add assets to circulation, look what we get.

    1) Added liquidity for the economy
    2) The ability to safely purge existing debt (Interest rates can rise)
    3) Fiat currencies strengthen on the basis of debt purging (less supply)

    WE ALL WIN.

    Like

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  1. The Trump Trade Doctrine IS NOT the Answer - A New Financial System IS - munKNEE dot.com

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