by Hugo Salinas Price, Plata:
There are two kinds of ignoramuses in this world:
A. The ignoramuses who don’t know what is going on in this world, and who know that they don’t know. This group is relatively harmless and they are not the great wrong-doers of this world, because they know that they don’t know a great many things, and so they keep their mouths shut.
B. The ignoramuses who don’t know what is going on in this world, but who don’t know that they don’t know. This group is terribly dangerous, as in the old saying: “Fools rush in where wise men fear to tread.”
I am sorry to have to place President of the US of A, Donald J. Trump, in this second group – for the second time.
The first time was when Mr. Trump decided to “MAGA” – “Make America Great Again” by instituting Tariffs on certain imports to the US.
He did not realize – and still doesn’t understand – that the US has enjoyed a free ride of magnificent proportions, because since the end of WW 2, the US Dollar has had the enviable position of Reserve Currency of the World.
This means that the whole world wants to sell goods of all sorts to the US, in order to get precious Dollars for their Reserves. So the US gets an unlimited amount of goods from all the world, in exchange for Dollars which are essentially nothing but numbers, which cost the Fed and its banking system nothing to produce.
So instituting Tariffs on imports is an attack on the system whereby the US sucks up production from the whole world, in exchange for – nothing.
That’s Trump’s Error No. 1
But now we have Error No. 2 coming up.
Mr. Trump says that if other countries are devaluing their currencies, in order to sell more to the US, that this is wrong, and that therefore, the US should retaliate by devaluing the Dollar. Trump evidently thinks that by devaluing the Dollar, he will get a result which he regards as good:
Trump thinks that it would be more expensive for Americans to purchase foreign goods, if the Dollar were worth less; Trump thinks this would reduce the perpetual US Trade Deficit, which he detests.
However, “devaluing the US Dollar” poses a problem that has no solution: the rest of the world can devalue their currencies against the Dollar, their Reserve Currency. But against what would the US devalue the Dollar? There is nothing against which the US could devalue the Dollar, because it is the final, ultimate currency of the world.