LETTER TO THE EDITOR: Fighting trade wars is a losing battle

As a hobbyist futurist I’ve been thinking about who is going to win President Trump’s trade war. Let us ponder the variables. The Chinese outnumber us by over three to one. That is a very important factor. The other most important consideration is No. 1 standing of the U.S. dollar in the world economy. President Trump feels threatened by the likelihood that the dollar will probably lose its predominance and that also scares a lot of ordinary people. It shouldn’t.

Over the next 20 years the American consumer probably won’t lose much of her buying power to prevailing conditions unless our economy is decimated by a trade war. We are, at least for now, the wealthiest nation on Earth and will probably remain so as long as we continue to adjust to challenges instead of being belligerent towards those we trade with.

It’s not about the dollar; that’s why trade deficit numbers and consequential national debt statistics don’t scare the daylights out of me like they do many people who are reading this. I’ve read the history of debt crises in many countries throughout the modern era. I know how they are managed. I do not believe President Trump will properly manage a trade war which will prompt other nations to fill the void the loss of our predominance will create.

Let us look to the future. The U.S. dollar is going to go away. It’s already happening and a trade war might hasten its demise. How much business do you transact with paper money? Even though I know paper money and ultimately the dollar, as we know it, is going to go away, I still use it because these are early days in the process and I rather a mugger steal paper than my identity. I don’t think paper money is going to go away in my lifetime but it might. I think it highly unlikely the dollar will meet with revaluation before some future economic crises — probably between the fourth and fifth decade of this century.

Most every other first world nation in existence today has revalued its currency at some point. One of the widely advertised strengths of the dollar is that we can say “we never did that.” But we are a young nation with a short history. Don’t say the latter won’t happen but it would be better to let the Baby Boomers mostly die off so that critical debt mass is achieved before changing the money. Presently we are being conditioned towards credit and to numbers stored on computers which has even less intrinsic value than paper. The trade deficit is not that concerning to me in light of these probabilities and also because of the incredible wealth of our nation.

Therefore, the only ones who are going to lose a trade war are ordinary people. When President Obama said the United States is not going to evolve into some old European country like Switzerland, he was mistaken because such as that which he referred to are mostly mature economies that are stabilized by economically driven controls on demographics.

For example, here in the United States but for immigration we have largely achieved zero population growth because our economy has been “tooled” toward financially crippling working class couples who have more than two children. For a time China experimented with the “one couple-one child” policy until their economists reconsidered the wisdom of enforcing it (the policy’s abandonment had little to do with human rights) lest they were left with a billion old people the working population couldn’t support.

There is a similar graying in the United States but our numbers aren’t half as menacing as China’s, partly due to (guess why) immigration. The math suggests China’s inevitable interior demographic meltdown is going to be worse than the one in the United States, which we so happen to have entered earlier than them, so why, since China is headed for the fiscal cliff, should we risk a trade war that can cause an economic catastrophe here when we can least afford it and when they can best weather it?

We need to wait and strike when they are most vulnerable because (I reiterate stop worrying about the deficit) we can economically crush them in 20 years if we pull the revaluation trick out of our hats at the same time as they are trying to feed a billion unproductive people. I mean, in their own way that’s essentially what they are doing to us by overrating their money.

The Chinese know that even though they will suffer greatly in the short term if we have a trade war with them now, it is likely they will better fair their meltdown in 20 years, so why not go for it? Theirs is a very harsh social environment. They won’t nudge their aged to their graves, they will bulldoze them.

Blaming the carnage on the United States will be a two-for. Therefore the probability that China will not be intimidated by President Trump is very high, which means either the American consumer takes it on the chin or President Trump eats crow. Which do you think is more likely?

Carol Hotte

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