Digital $$$ The Problem…Not Trade Deficit!

February 9, 2017

Our monetary unit is now a mere ‘digit’ in the computer screen, Mr. Trump. This ‘digit’ ($) floats and fluctuates against all the other ‘digit’ currencies on our planet continually. Are you aware of this reality, Mr. Trump? In addition to the ‘nature’ of our monetary unit (now a ‘no thing’ unit) we have our central banks increasing/decreasing these ‘digits’ via their own trading strategies (daily). Central banks can now subsidize one of their large international export companies and/or restrict access to monetary ‘digits’ by a mere policy change. Yes, China is a currency manipulator!

All this manipulation of a currency’s ‘value’ from moment to moment on our international cyber market exchanges, creates export advantages for some (say Mexico/China as their currency weakens relative to the U.S. Dollar) and import advantages for others. What Trump proposes is to charge a tariff on some imports from Mexico, China, Canada, Japan, etc., so that American exporters can compete more favorably. All this sounds good in rhetoric but in reality it is mostly meaningless. It is unlikely to create new increases in manufacturing or jobs!

Our real problem is not our current trade deficit (which is generally increasing) BUT the ‘nature’ of all our ‘digit’ currencies (now manipulated to off-set trading problems via central bank decisions).  As the Peso, for example, weakens with Trump rhetoric our deficits with Mexico actually increase rather than decrease. A weaker Peso generally causes American prices (via imports) to decline and a wider trade deficit. Adding a tariff may help temporarily but not longer-term…since a further weakening of the Peso could off-set the goals of the tariff. Think about what is happening globally now that all our currencies are mere floating ‘digits’ within the computer screen.

A currency’s value changes in microseconds as HFT computers and trading strategies (now also done by our central banks) continually manipulate a currency’s ‘value’ in relation to another currency. There is NO fixed reference point for ‘value’ today within any of our international currencies. There is no gold standard today! The $ changes in ‘value’ continually relative to another currency and each global currency changes in ‘value’ continually relative to the $. The entire global currency market is made up of mere ‘cyber digits’ which have no substance or stability. Relative trading changes are now mostly accomplished via manipulation of a currency’s ‘value’.

The recent article in the WSJ on February 8 entitled ‘Trade Deficit at Its Widest in Four Years’ reveals that the $ rise since Trump’s election makes our goods and services more expensive overseas. The $ rise, however, is mostly a function of our central banks policies and manipulations. China, for example, continually uses their currency (the Yuan) as a tool to subsidize select Chinese exporters so that they can maintain their trading advantages over the U.S.A. Other central banks do similarly. Our entire global currency system is the REAL problem not our continuing TRADE deficits. And our central banks are the real culprits! Think about this!

What is needed now is a recognition by the Trump economic team that our $ is the REAL problem internationally. This cyber currency has zero substance, no independent value, is created ‘out-of-nothing’, acts as the primary reserve currency, and floats and fluctuates within our computer screens with every major trading manipulation. All this happens at near the speed of light (24/7). Our PROBLEM is our imaginary currency unit ($). Think about this for a few minutes. What is a ‘digit’ ($) within the computer screen? Is it a thing or a non-thing? Does is even ‘exist’ within our greater material universe? How can it serve as a valid reference point for ‘value’? Personally, I think our PROBLEM is our currency unit! Enjoy! I am:

Additional images to consider with this missive:

With no ‘fixed’ reference point for ‘value’, there can be no stability in trade or currency transactions. History reveals that a $ without a tie to material reality is a pure ‘fiction’ of the mind (subjective). What is a ‘cyber’ digit within the computer screen? Think on this for today!

Gold was first discovered in U.S. at the Reed farm in North Carolina in 1799, a 17-pound nugget.

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