White House Trade and Manufacturing Policy Advisor Peter Navarro appears on CNN to debate economic policy with Jake Tapper. As customary Tapper attempts to use the Multinational Big AG talking points to identify farmers as victims.

♦The yield on the benchmark 10-year Treasury note dropped to 1.623% Wednesday for less than one hour; momentarily below the 2-year bond rate of 1.634%. The cause was a rapid influx of foreign capital, mostly from the EU (due to negative interest rates), into the U.S. to secure a return. This is not comparable to the historic ‘bond rate inversion’.

♦The biggest fallacy pushed in this interview, YET AGAIN, surrounds price impacts on Chinese imports. Tapper takes the talking points of the Wall Street multinationals, and their paid think-tanks, to push an empirically false assertion of the U.S. consumer paying for tariffs on China. Here’s the easiest refutation of that nonsense:

• The Steel (25%) and Aluminum (10%) tariffs have been in place for two years.
• The 25% tariff on $250 billion Chinese goods have been in place over a full year.
• The current inflation rate (Consumer Price Index) is only 1.4%.

(Bureau of Economic Analysis – Personal Income and Consumer Price Index)

If the tariffs on China were impacting consumers, inflation would be much higher. In fact the exact opposite is happening. Because the protectionist Chinese and EU currency manipulation hits *ALL* imports, including non-tariff products, we are actually importing deflation.

National Economic Council Chairman Larry Kudlow appears on NBC with Chuck Todd to debate the issues surrounding current trade and economic policy.  While Todd is obviously annoying, Kudlow makes two important points:

1.  The Q3 CapEx (capital expenditure) spending reflects a domestic energy sector investment pause related to the dropped cost of oil. A fluctuation related to extraction costs and projected finished product price. [Energy companies pause on low price.]
2. The Sept. “Next Step” tariff delay relates to pre-contracted prices of holiday goods with the import price attached to lower dollar value at the time of contract. The delay allows the arrival of product without price impact. If products were determined with current valuations the current arrival price would have been lower (offsetting tariffs).

For all intents and purposes Germany is the EU, because German economic policy dictates the outcomes of all EU economic policy.  So as the EU promises to engage in more central bank monetary printing (quantitative easing) simultaneously Germany promises to keep negative interest rates floating as long as possible. [EU Parliament pictured below]

Yes, the EU is in serious structural economic trouble; and that is likely the real reason why quivering Chancellor Angela Merkel has decided to exit the political stage before the larger communal catches on.

Within the remarks by German Finance Minister Scholz it is the lamentation about the lack of investment into their grand collective economic scheme where you find the economic dissonance, and ultimately the hilarious punch lines:

BERLIN (Reuters) – German Finance Minister Olaf Scholz said on Saturday that he expected interest rates to remain very low for “the next few years”, adding that companies should seize the opportunity of near-zero borrowing costs to boost private sector investment.

The European Central Bank has already signaled even more monetary stimulus for the euro zone economy, hoping to arrest a downward spiral that could lead to an economic recession.

Asked by a member of the public during a government open day about his view on the outlook for interest rates, Scholz said: “I also believe that the time of higher interest rates can come up every now and then, but that will not happen in the next few years because of central bank policies.”

Then comes the real kicker of a comment… the part where the German political class admit what is happening: President Trump is kicking their collective asses; yet few within the audience recognize exactly what Olaf Scholz is saying.

“What I would wish for is more investments by the private sector,” Scholz said, pointing to a much higher willingness of companies and investors in the United States to put fresh money into new projects or business ideas.  “My wish is that we also achieve such a cultural change here,” Scholz said. (link)

So much multi-layered economic dissonance, it is quite amazing to think about how this mindset is driving economic and monetary policy over such a large population.

First, the reality of President Trump’s trade policy demanding reciprocity is the wrench in the EU machine.  The EU is a protectionist trade system with one-way tariffs and carefully crafted non-trade barriers designed to keep position as an exporter, and limit access to their market.

The historic cornerstone of this trade system to benefit the EU was the Marshall Plan; to apply tariffs on U.S. manufactured goods as a way to finance the EU rebuilding after World War II.   Seventy-five years later that same unidirectional benefit still exists. This parasitic trade policy is what President Trump is changing.

Second, it is silly to watch the German finance minister lament the lack of investment into their economic system when these same politicians advance policies like: The Paris Climate Treaty, the Transatlantic Trade and Investment Partnership; in combination with high domestic tax policies against corporations and ultra-left-wing social benefits that necessitate the need for those high tax policies.

Gee, no-one wants to invest in Germany?… Go figure!

There is nothing the EU and China can do to stop the de-globalization process; and efforts to stimulate their economy, more quantitative easing (pumping money) while the global supply chains are being shifted, are futile.

The more a nations’ economy is dependent on exports, the more exposure they have to the inherent downsides of de-globalization. U.S. multinational companies that are invested in these nations will lose their investment over time; some rapidly. This will keep the stock market volatile, yet on Main Street USA the economy is thriving.

President Donald Trump has purposefully stalled the process of globalization, and is resetting global supply chains. This is bringing massive amounts of wealth back into the United States.

In essence President Trump is engaged in a process of: (a) repatriating wealth (trade policy); (b) blocking exfiltration (main street policy); (c) creating new and modern economic alliances based on reciprocity (bilateral deals); and (d) dismantling the post WWII Marshall plan of global trade and one-way tariffs (de-globalization).

.

These remarks from Germany are the perfect backdrop for this interview as a reminder.

The “ECB” is the European Central Bank.  The “QE” is quantative easing (printing more €uros).

An interesting article in the South China Morning Post (SCMP) highlights how China is shifting their procurement priority from minerals used in manufacturing (cobalt, copper) to the acquisition of food and agriculture products.

The impact is being felt throughout Africa, where mining companies are shutting down operations because Chinese demand no longer exists.

Articles like this highlight the ancillary impacts of a weakened Chinese economy.

Despite the proclamations by Beijing about their ability to withstand the withdrawal of the U.S. as a primary customer for manufactured goods, reality shows they cannot.

There is a confluence of events all leading to radical changes just below the surface.  China has been burning cash to subsidize industries impacted by U.S. tariffs.  Simultaneously Beijing has lowered the value of their currency in an effort to eliminate the tariff impact in the cost of their finished goods. However, as the ideological economic conflict between the U.S. and China continues, Beijing cannot hold their position indefinitely.

When a woman marries her uncle: (1) her husband is her grandmothers son; (2) her daughter is her first cousin; and (3) her mother-in-law is also her “grandmother.”

Keep this in mind as you review: