Gold’s Rules – Fat Tail Daily | Australian Markets

‘Would you betray the Son of Man with a kiss?’

–Jesus, to Judas Iscariot

When we left you final week, phrase had simply come that China responded to Trump’s ‘reciprocal’ tariff salvo, with reciprocity of its own. Reuters:

Beijing on Friday elevated its tariffs on U.S. imports to 125%, hitting back towards U.S. President Donald Trump’s resolution to hike duties on Chinese items to 145%, raising the stakes in a trade conflict that threatens to up-end world provide chains.

The hike comes after the White House saved the stress on the world’s No.2 financial system and second-largest supplier of U.S. imports by singling it out for an extra tariff increase, having paused most of the “reciprocal” duties imposed on dozens of different international locations.

“The U.S. imposition of abnormally high tariffs on China seriously violates international and economic trade rules, basic economic laws and common sense and is completely unilateral bullying and coercion,” [said China’s Finance minister.]

The best tactic for trade negotiators appears to be to pucker up and kiss Donald Trump’s derriere. As disagreeable as that should be, it’s well worth the shekels…or so that they imagine. But the Chinese, to this point, have proven no intention of doing it. They are additionally thought of a menace, as a result of they’re the almost definitely candidate to take America’s place because the world’s main energy.

Yesterday was Palm Sunday. It commemorates Christ’s triumphal entrance into Jerusalem, driving a donkey — a signal of humility and peace. We recalled Rep. Thomas Massie’s components for US international coverage: simply observe the ‘Golden Rule,’ he stated. Do unto others as we’d have them do unto us.

In the 12 months of our Lord, 2025, the US jefe doesn’t trip on a donkey. He is our Augustus, the Big Man in Washington. And the Chinese are in all probability proper; even a quickie take a look at historical past, exhibits that neither China nor trade obstacles have a lot to do with America’s loss of home manufacturing.

The US was on the peak of its manufacturing glory within the days after WWII. Small surprise. Japan was in smoking cinders — and occupied by the US Army. Germany was a smoldering damage too — occupied by the US, the UK, France, and the Soviet Union. Britain was just about bankrupt. And France was settling scores from years of occupation and collaboration.

It was inevitable that the US share of manufacturing would decline as these nations received back on their toes.

In 1948, roughly one of each three employed Americans was working in a manufacturing facility. By 1978, just one of each 5 had a manufacturing job. This decline came about earlier than China had exported a single gadget… earlier than it took the ‘capitalist road’ and 22 years earlier than it joined the World Trade Organization.

In this period — 1948-1978 — another excuse for the decline in US manufacturing employment was in all probability simply that fewer fingers have been needed. More and higher machines meant much less of a function for human labor. Machines turned more highly effective… more environment friendly… and more specialised.

Even in our restricted expertise, we went from small sq. bales of hay that we manually tossed onto a hay-wagon after which ricked up within the barn…to massive spherical bales that human fingers by no means contact. They are rolled onto the fields after which picked up by massive tractors with telescopic loaders.

After the mid-‘70s came a different period. The US devalued the dollar in 1971 — refusing to pay its debts in gold. And then, it continued to devalue its currency for the next half century. A dollar in 1975 is worth only about 14 cents today — officially. In terms of gold, the decline was even greater. The price of an ounce of gold went from $160 in 1975 to more than $3,000 today. In other words, the dollar lost 94% of its purchasing power.

During the whole post-war period — roughly equal to our lifetimes — America’s manufacturing base contracted. China benefited from it; it didn’t trigger it. And right this moment just one in twelve American employees is in manufacturing.

If the US needed to finish its trade deficits…and enhance home output… it might achieve this simply. It would merely go back to the ‘Golden Rule.’ An trustworthy, gold-backed greenback would power the feds to stability its federal price range. . Thereafter, Americans couldn’t ‘print’ their solution to wealth. They’d need to earn it…by producing issues they may promote.

And Thomas Massie’s ‘Golden Rule’ international coverage would go a long solution to making each the trade conflict and the trade deficit disappear.

Regards,

Bill Bonner,
For Fat Tail Daily

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