Monday, November 07, 2016

Central Banks Have Eliminated 
The Benefits Of Free Trade
"Free trade has long been among the driving factors behind economic globalization, and for centuries, economists have generally agreed that free trade is an important force in building wealth and economic growth. Even economists who disagree on almost everything else, can often agree that lowering barriers to trade is a good thing. Politically, however, things have changed. Nowadays, organized labor groups, once the lone voices opposing economic globalization (and, whose role it is to protect their members from competition both domestic and foreign), have been joined by 'anti-establishment' political campaigns, from Bernie Sanders on the left to Donald Trump on the right, both tapping into widespread popular discontent. Even Hillary Clinton, who once referred to the ostensibly free-trade pact known as the Trans-Pacific Partnership as 'the Gold Standard' of trade deals, now claims to oppose it. The politicians are, not surprisingly, following the popular sentiment in the hopes of getting votes. The anti-trade stance is now the easier stance for an American politician to take — at least publicly .. Without the central banks’ inflationary intervention, globalization would likely have produced not only disinflation but deflation — which would have more likely yielded the promised increase in real incomes, which would have resulted in popular satisfaction, not dissatisfaction, with globalization. Consequently, the advantages of deflation — as explored here, here, here, here, and here — were never realized. Instead, the central-bank commitment to easy money led to a worldwide real estate and commodities bubble, and the overall inflation of stock and bond markets worldwide .. The money-supply inflation foisted upon us by the central banks did not stave off some mysterious economic death spiral. It merely put in motion the economic forces now resented by workers who have seen their real earnings decline in the face of asset-price inflation in money-supply inflation."
- Patrick Trombly, SVP of a Commercial Bank in NYC
link here to the essay

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