Dynamic Duos, Debt Deflation, Laughable Steel Ideas

Let's explore the "Dynamic Duo" effect of Trump plus the Fed starting with an absurd thesis about steel.

The Trump administration and EU officials complain about the "overproduction" of steel.

A 2016 Economist article goes one step further. The Economist attempts to explain Why the world has too much steel.

Think about the silliness of that idea. It should take about one second.

If we truly had too much steel, people would pay to get rid of the stuff!

By definition, no one would want it. You could not give it away. You would have to pay to get rid of it.

What Should We Do?

Nothing.

Since US manufacturers that use steel outnumber producers by a vast margin, we should be happy for the cheap supply until there is a genuine national security risk, assuming that is even possible, which I highly doubt.

Similarly, if China wants to give us free solar panels or free cars we should take them.

China won't. It can't. It would soon go bankrupt if it tried.

Meanwhile, if China is indeed giving the us solar panels, steel, or anything else below cost, it is to the benefit of US and the detriment of China.

Amazon vs Mom and Pop

The debate about China is similar to the debate about Amazon.

Big box retail stores struggle to compete against Amazon.

So what?

That's called progress. More goods, faster deliveries, and cheaper prices is progress.

Standards of livings rise, by definition, when more goods are available at cheaper prices.

Dynamic Duo

  • The Fed seeks inflation in a technologically-deflationary world.
  • Team Trump tariffs are a loaded gun fired not at China but at the US.

Never have we seen so much howling over things that are actually beneficial.

Meanwhile, the Fed's foolish attempt to produce price inflation in a deflationary world has done nothing but create another bubble that will bring on deflation when it pops.

Debt Deflation Setup

Those who understand debt dynamics and what inflation really is also understand that Inflation is in the Rear-View Mirror.

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