In this Institute of Economic Affairs podcast, the IEA’s Head of Media Reem Ibrahim interviews Stan Veuger, Senior Fellow in Economic Policy Studies at the American Enterprise Institute.
Reem, a very interesting conversation. Stan had explained many similarities that we in the UK have to consider. I think Trump is not savvy as he thinks. He can’t reason an argument in full down the line and assess any possible adverse or positive impacts. He wants to control the stage and circumvents congress and House of Representatives. He likes to dictate and bully. That’s his way. He is really hitting the dictator button and adopting the ‘I’m alright jack’ stance. Yet he wants recognition for being a statesmen. But he has little or no statecraft and is being given the runaround by Putin. As I see it tariffs are a self inflicted wound. He higher’s the cost of imports so either they don’t sell anymore to the US or the US consumer suffers a higher cost. Inflation is inevitable. We know here the dangers of inflation. So he hasn’t thought it through. It also has begun a lukewarm warm even tepid view of the USA. And him not backing Europe against Russia is a real coup for Putin. But it leaves us in the lurch. And thrown into doubt article 5. Will the US be there for us like we were for them? I think the EU delegation had shown a good stance in his face for Ukraine. I do hope we continue help for Zelensky. So my opinion of his leadership is poor. As poor as ours here . Starmer and the Tory’s have find not much better either. But the one thing I credit Trump with is his realisation that equal trade is optimum. I happen to agree but, I think he doesn’t quite get why! All modern world economies have more or less the same monetary system. It’s been the same for millennia. I call it faith, hope and charity. We faithfully work expecting reward. We then exchange the fruits of that effort and hope when we SPEND it we van get it back again? But if not, there is always charity! From Bill Gates!! It hasn’t been possible to do s as nothing else! … until now. Now we have bank accounts that can track and trace every penny, as long as the currency stays in the Country of origin. For the first time we can adopt a sure fire economic model, not based on faith, hope or charity, but based on a fair framework if work and reward whilst at last running a nation without borrowing! Here in the UK and in the US we run huge deficits. In US it’s $35-40,000,000,000,000.00 trillion dollars and here it’s getting on for £3,000,000,000,000.00 trillion pounds. We have allowed our governments to borrow from the rich our own money back whilst paying them back with interest, making them even richer. Whilst we all get poorer. That means we are all under pressure and unhappy. Taxes are so high yet, they fail to pay our way as nations. We are using an outdated and failed system. Trump and Starmer try to buck the market. Stopping inflation, which at least keeps us earning sufficient yo pay for our increases in costs, whilst resigning back an economy to a standstill just to keep inflation down. All it does is ruin our economy further than it was so it’s failing faster. They say, 95%of wealth is owned by the top 5% of people. I don’t know how true that is but let’s say it’s near! That means that 95% of us are fighting over just 5% of money! No wonder we can’t make ends meet. No wonder there is insufficient tax take from our underfunded pot. You see a misunderstood fact is that in the UK snd I’d bet it’s the same in the USA is that all taxes are triggered by SPENDING. Not working. When an employer SPENDS on their workforces it’s that SPENDING that triggers tax revenue. The same for sales tax. Here we have vat and duty. Both bring in more than income taxes. Those income taxes are Bernie Madoff class of illusion taxation. It is misunderstood as a result. It’s not about workers who pay for non workers. It’s specifically about SPENDING and NOT SPENDING. In an economy there are just two basic requirements… MONEY and SPENDING. Without either it fails. First you need sufficient money and then sufficient spending , in a time scale required for it all to work. The revenue generated in the economy will exponentially pay taxes. The more money and the more spending the more revenue is passed and rotated which in turn gives the tax revenue required to run a surplus. The key is SPENDING and in a time frame required. I have a simple equation MS=R it represents The money in issue multiplied by SPENDING equals revenue. Without any of this our economy will not work at its optimum. Instead of borrowing our own money back we need to have it back for free! Via SPENDING. The tsunami of revenue of all that money being SPENT will create wealth throughout society. We will be able to give proper wages for happiness, with a clear gap from benefits to show work pays! We can have a proper state pension so won’t need a private one. It’s another Ponzi scheme anyway. And we can take care of our duck and disabled and our unemployed, although u don’t think there will be too many of those in a supercharged economy, but crucially we can keep the unemployable at home away from those who work. Who wants to employ a drug addicted it d thief unless they change of course. No benefits can be a safety net. Workers will earn much more and even the rich will be richer as long as they SPEND it back! I suggest swapping money for s new currency of digital and electronic basis in house. One bank.if we all earn well why worry about getting it back again? It can be a surety. Put a ‘spend by date’ on part of all of that income. Make it be Spent or gave it taken by central government if not spent. Do away with all taxes except say a sales tax like Vat. Streamline the system, make it autonomous and perpetual. Reward hard work, brains, leadership and skills. The problem all nations have is that at present money is not in the economic pot from which we all earn and from which we pay taxes. Without the pot being full his cannot properly work? Remember, MS=R. Every one can be wealthy with purchases. No tax is paid by those who don’t have to SPEND their money now. Money unspent unused idle or hoarded abroad pay no revenue and no tax revenue. That’s the problem. It so simple! Otherwise if we continue, the world economy will collapse. It’s inevitable. Borrowing cannot be sustained. Trump has already sacked the poor lady who supplied the figures. He is trying to buck the market and the figures. The USA is only richest because of the fact we all allow it to be the yardstick for currency. If it implodes then it won’t see many friends lining up to put them back in that pedestal. It will be the yen if the Rial or even the euro or pound. A depression could easily follow if the few rich want to again hang on to their money and deprive others of it. If we had a currency remaining in house y to hen foreigners can buy or sell goods from the same in house bank account with the same rules. Spend it or have it taken. That way we get the parity of trade Trump is after! Harmony!
If you believe Kyle Bass, China desperately needs to keep a strongly positive current account to keep its over leveraged domestic economy from sharp contraction with all the political ramifications that would bring.
Trump’s team very China focussed. The abuse of its position within WTO and its mercantilism are largely what has produced problematic global trade imbalances.
A lot here that’s not covered. No mention of non-tariff barriers, especially China & EU.
No mention of medium term offsets such as removal of bans on fossil fuels lowering energy costs, tax cuts paid for with tariff receipts & potentially DOGE savings. Plus onshoring & FI.
Trump sees trade as an effective way to get diplomacy done quickly when you are short of time, which he is. Witness deals recently done, which potentially involve military as well as economic.
EU imports are largely non-essentials and have less inflationary put through due to consumer choice.
Some signs are that medium term effects will be positive, despite short term uncertainty.
I am doubtful of courts ability to block Trump’s programme.
Although not certain, Trump’s team have been adept at appealing issues all the way up to a more sympathetic Supreme Court.
Even then, the court ruling only applies to IEEPA tariffs and Trump can use more of his e.g Section 201, 232 & 301 powers to compensate. Alternatively, get Congress to increase MFN tariffs.
Plus, the longer he can stall the more deals get done. The EU already blinked, China is uncomfortable at things dragging out. Mercantilists are generally less comfortable than consumers.
But as free marketeers we should, I think, be less critical of the idea of using tariffs to address the abuses of WTO by China & EU in particular through non-tariff barriers?
And besides, since the post Liberation day sell off, stock indices have been hitting new highs. The greater uncertainty now seems to lies with ME, Ukraine & potential Taiwan conflict.
Reem, a very interesting conversation. Stan had explained many similarities that we in the UK have to consider. I think Trump is not savvy as he thinks. He can’t reason an argument in full down the line and assess any possible adverse or positive impacts. He wants to control the stage and circumvents congress and House of Representatives. He likes to dictate and bully. That’s his way. He is really hitting the dictator button and adopting the ‘I’m alright jack’ stance. Yet he wants recognition for being a statesmen. But he has little or no statecraft and is being given the runaround by Putin. As I see it tariffs are a self inflicted wound. He higher’s the cost of imports so either they don’t sell anymore to the US or the US consumer suffers a higher cost. Inflation is inevitable. We know here the dangers of inflation. So he hasn’t thought it through. It also has begun a lukewarm warm even tepid view of the USA. And him not backing Europe against Russia is a real coup for Putin. But it leaves us in the lurch. And thrown into doubt article 5. Will the US be there for us like we were for them? I think the EU delegation had shown a good stance in his face for Ukraine. I do hope we continue help for Zelensky. So my opinion of his leadership is poor. As poor as ours here . Starmer and the Tory’s have find not much better either. But the one thing I credit Trump with is his realisation that equal trade is optimum. I happen to agree but, I think he doesn’t quite get why! All modern world economies have more or less the same monetary system. It’s been the same for millennia. I call it faith, hope and charity. We faithfully work expecting reward. We then exchange the fruits of that effort and hope when we SPEND it we van get it back again? But if not, there is always charity! From Bill Gates!! It hasn’t been possible to do s as nothing else! … until now. Now we have bank accounts that can track and trace every penny, as long as the currency stays in the Country of origin. For the first time we can adopt a sure fire economic model, not based on faith, hope or charity, but based on a fair framework if work and reward whilst at last running a nation without borrowing! Here in the UK and in the US we run huge deficits. In US it’s $35-40,000,000,000,000.00 trillion dollars and here it’s getting on for £3,000,000,000,000.00 trillion pounds. We have allowed our governments to borrow from the rich our own money back whilst paying them back with interest, making them even richer. Whilst we all get poorer. That means we are all under pressure and unhappy. Taxes are so high yet, they fail to pay our way as nations. We are using an outdated and failed system. Trump and Starmer try to buck the market. Stopping inflation, which at least keeps us earning sufficient yo pay for our increases in costs, whilst resigning back an economy to a standstill just to keep inflation down. All it does is ruin our economy further than it was so it’s failing faster. They say, 95%of wealth is owned by the top 5% of people. I don’t know how true that is but let’s say it’s near! That means that 95% of us are fighting over just 5% of money! No wonder we can’t make ends meet. No wonder there is insufficient tax take from our underfunded pot. You see a misunderstood fact is that in the UK snd I’d bet it’s the same in the USA is that all taxes are triggered by SPENDING. Not working. When an employer SPENDS on their workforces it’s that SPENDING that triggers tax revenue. The same for sales tax. Here we have vat and duty. Both bring in more than income taxes. Those income taxes are Bernie Madoff class of illusion taxation. It is misunderstood as a result. It’s not about workers who pay for non workers. It’s specifically about SPENDING and NOT SPENDING. In an economy there are just two basic requirements… MONEY and SPENDING. Without either it fails. First you need sufficient money and then sufficient spending , in a time scale required for it all to work. The revenue generated in the economy will exponentially pay taxes. The more money and the more spending the more revenue is passed and rotated which in turn gives the tax revenue required to run a surplus. The key is SPENDING and in a time frame required. I have a simple equation MS=R it represents The money in issue multiplied by SPENDING equals revenue. Without any of this our economy will not work at its optimum. Instead of borrowing our own money back we need to have it back for free! Via SPENDING. The tsunami of revenue of all that money being SPENT will create wealth throughout society. We will be able to give proper wages for happiness, with a clear gap from benefits to show work pays! We can have a proper state pension so won’t need a private one. It’s another Ponzi scheme anyway. And we can take care of our duck and disabled and our unemployed, although u don’t think there will be too many of those in a supercharged economy, but crucially we can keep the unemployable at home away from those who work. Who wants to employ a drug addicted it d thief unless they change of course. No benefits can be a safety net. Workers will earn much more and even the rich will be richer as long as they SPEND it back! I suggest swapping money for s new currency of digital and electronic basis in house. One bank.if we all earn well why worry about getting it back again? It can be a surety. Put a ‘spend by date’ on part of all of that income. Make it be Spent or gave it taken by central government if not spent. Do away with all taxes except say a sales tax like Vat. Streamline the system, make it autonomous and perpetual. Reward hard work, brains, leadership and skills. The problem all nations have is that at present money is not in the economic pot from which we all earn and from which we pay taxes. Without the pot being full his cannot properly work? Remember, MS=R. Every one can be wealthy with purchases. No tax is paid by those who don’t have to SPEND their money now. Money unspent unused idle or hoarded abroad pay no revenue and no tax revenue. That’s the problem. It so simple! Otherwise if we continue, the world economy will collapse. It’s inevitable. Borrowing cannot be sustained. Trump has already sacked the poor lady who supplied the figures. He is trying to buck the market and the figures. The USA is only richest because of the fact we all allow it to be the yardstick for currency. If it implodes then it won’t see many friends lining up to put them back in that pedestal. It will be the yen if the Rial or even the euro or pound. A depression could easily follow if the few rich want to again hang on to their money and deprive others of it. If we had a currency remaining in house y to hen foreigners can buy or sell goods from the same in house bank account with the same rules. Spend it or have it taken. That way we get the parity of trade Trump is after! Harmony!
Thank you!
If you believe Kyle Bass, China desperately needs to keep a strongly positive current account to keep its over leveraged domestic economy from sharp contraction with all the political ramifications that would bring.
Trump’s team very China focussed. The abuse of its position within WTO and its mercantilism are largely what has produced problematic global trade imbalances.
A lot here that’s not covered. No mention of non-tariff barriers, especially China & EU.
No mention of medium term offsets such as removal of bans on fossil fuels lowering energy costs, tax cuts paid for with tariff receipts & potentially DOGE savings. Plus onshoring & FI.
Trump sees trade as an effective way to get diplomacy done quickly when you are short of time, which he is. Witness deals recently done, which potentially involve military as well as economic.
EU imports are largely non-essentials and have less inflationary put through due to consumer choice.
Some signs are that medium term effects will be positive, despite short term uncertainty.
I am doubtful of courts ability to block Trump’s programme.
Interesting thoughts! Why are you doubtful that the courts will stop the tariffs?
Morning Reem!
Although not certain, Trump’s team have been adept at appealing issues all the way up to a more sympathetic Supreme Court.
Even then, the court ruling only applies to IEEPA tariffs and Trump can use more of his e.g Section 201, 232 & 301 powers to compensate. Alternatively, get Congress to increase MFN tariffs.
Plus, the longer he can stall the more deals get done. The EU already blinked, China is uncomfortable at things dragging out. Mercantilists are generally less comfortable than consumers.
But as free marketeers we should, I think, be less critical of the idea of using tariffs to address the abuses of WTO by China & EU in particular through non-tariff barriers?
And besides, since the post Liberation day sell off, stock indices have been hitting new highs. The greater uncertainty now seems to lies with ME, Ukraine & potential Taiwan conflict.