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Is Donald Trump Wrong About What’s Killing the Middle Class?

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He is the only candidate worth voting for, but Donald Trump is wrong about bad trade deals being the main problem.

When I point out that Donald Trump is wrong on trade, I don’t mean he is wrong to oppose these secretly negotiated managed trade deals. That pretend “free trade” deals need to be ended because they are undemocratic, unconstitutional, and unfair. They are undemocratic because they are negotiated in secret and even our representatives are kept in the dark. They are unconstitutional because they require that Congress bestow on the President superpowers that he doesn’t have. And they are unfair because they inevitably choose winners at the expense of losers in the U.S. economy.

But that doesn’t mean that those trade deals are the reason for the damage to the economy.

Financial analyst, Mike Shedlock (“Mish”) recently posted under the headline, Explaining Social Anger, Brexit, Donald Trump in One Chart.” The chart shows wealth has been fleeing the middle class and flowing to the lower and upper classes. Only wealth hasn’t been fleeing it has been confiscated by the Federal Reserve.

The reason the middle class is dying is that central banks insist on inflation. New money benefits elites and those near to them while robbing from savers.

Income inequality, the shrinking middle class, angry voters, and the rise of extreme political parties are all symptoms of the real problem: Central banks and their inflationary policies.

The middle class doesn’t see this. It is a perfect crime. But they do see enough to produce anger:

People Angry Because

  1. Banks were bailed out and they weren’t
  2. Middle class is shrinking
  3. President Bush’s Bankruptcy Reform Act of 2005 made kids with student loans debt slaves for life.
  4. Warmongering by the Bush and Obama administrators alike made billions for defense contractors at the expense of everyone but the contractors and their employees.

Instead of blowing up the world, making enemies in the process, and creating ISIS in the process, wouldn’t we have been better off building US infrastructure?

Bad trade deals are attempts for some industries to do better than others. But the real killers of the middle class are the “private” dictatorial central banks.

Meanwhile, even trade works to empower and expand the Federal Government at the expense of the middle class. Trump has accused China of currency manipulation but I haven’t heard him point out that the Federal Government directly benefits from China’s practice. They want it to continue.

When Chinese companies receive American dollars in exchange for their imports, they trade them for Chinese currency. China’s central bank creates new currency to give to those companies in exchange for the dollars to keep China’s currency weak. Then it “invests” those dollars in Treasuries. In other words, it loans the dollars back to the Federal Government, depressing interest rates. So the artificial trade deficit with China grants our government cheap loans to run up budget deficits.

The American people lose because the debt load is going to cause a crisis. The Chines people lose too, because, with few exceptions, they don’t become wealthier. The Chinese currency is kept weak by government policy. This means the Chinese are kept poor and don’t gain the buying power to purchase American goods. It is all laid out in this video series by Salmon Kahn (surprisingly). Patrick Buchanan claims China has become “the greatest manufacturing power on earth,” but it is about to become the greatest economic implosion. Depending entirely on the demand for exports while the rest of the world struggles with recession is not a good thing. China may become a large version of Detroit.

If we didn’t have central banks, but traded in a commodity money like gold and silver, nations that had cheap labor would become importers as they became more wealthy. There would be a resultant demand for American goods. Each nation would produce the things it could do best.

While I think Donald Trump is right to oppose the status quo (and thus Hillary Clinton and the Republican establishment), I wish he would speak out against the Federal Reserve as well as the engine that is destroying the middle class.

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Joe Scudder

Joe Scudder is the "nom de plume" (or "nom de guerre") of a fifty-ish-year-old writer and stroke survivor. He lives in St Louis with his wife and still-at-home children. He has been a freelance writer and occasional political activist since the early nineties. He describes his politics as Tolkienesque.

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