Category Archives: foreign policy

Monetary Misconception

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Judy Shelton, a Senior Fellow at the Independent Institute, has this one. She wants the Federal government to issue a gold-backed bond would strike a blow for sound money.

Mr Trump has criticized currency manipulation in global trade relations. Challenging other nations to emulate the US [gold-backed bond] by guaranteeing some portion of their sovereign debt in gold would demonstrate America’s vision for stable money as the proper foundation for fair trade.

This is naïve. “Other countries” will continue to manipulate their currencies, just as they do now; this move only would add a new tool for manipulation—varying the value of the metal backing their own debt instrument(s).

Governments have been debasing their metal backed currencies ever since money was invented, doing so by shaving coins minted in the metal; by replacing some of the money-backing metal with other, cheaper metals; outright announcing a differing, lower values for a unit of the metal.

The most infamous recent example of the latter was during our own Great Depression when then-President Franklin Roosevelt (D) seized all privately held gold and then promptly devalued the gold in US dollar terms.

All currency is fiat currency, whether it’s minted in the metal or it’s printed on paper formally backed by the metal (at a rate the issuing government has announced for the time being), or it’s printed on paper and allowed to float in the markets for goods and services—and currencies. That currency has the value, in legal terms, that government says it has from time to time.

Backing a bond with a precious metal has no material meaning. What makes a money sound is the stability of the issuing government; the economy it oversees with a light hand; and that government’s ability to protect its people from invasion, whether physical, economic, or political. Nothing else does.

Negotiating with Canadian Politicians

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Ontario Premier Doug Ford ran an ad pushing back on President Donald Trump’s (R) Canadian tariffs that deliberately, cynically, and dishonestly took sentences out of a Ronald Reagan speech and remixed them, shorn of their original context, into Doug Ford screed against Trump and those tariffs. This is the same Ontario Premier who earlier in the year, when trade negotiations with Canada were just getting underway, threatened to terminate the province’s energy shipments to the US.

In response to the Ford ad, Trump, last Thursday, called a halt to negotiations with Canada over trade. The Wall Street Journal‘s news writer mischaracterized the situation:

Trump threw the economic relationship with Canada into a tailspin late Thursday….

The news writer is no better than the Canadian provincial premier. Ford had thrown the economic relationship into a tailspin with his dishonestly distortionate ad; Trump was merely responding to the smear. Through his spokesperson, Kush Desai, Trump said,

Further talks are a futile effort if Canada can’t be serious.

After that, Ford said he’d “pause” his ad campaign effective today (Monday). He first ran his ad misquoting Reagan ‘way back on 16 October, fully a week before Trump acted. Now he’s magnanimously agreeing to “pause” his ad campaign after it’s run an additional four days. There’s no reason Ford couldn’t pull his distorting campaign last Thursday, whether “pausing” it or terminating it.

Trump is being uncharacteristically polite. Further talks with Canada are futile if Canadian senior politicians are going to lie about the situation.

New Sanctions and some Thoughts

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President Donald Trump (R) has implemented new sanctions on Russia in response to the barbarian’s continued intransigence in its invasion of Ukraine—blacklisting Russia’s two biggest oil producers and a plethora of their subsidiaries. As The Wall Street Journal notes, how much the sanctions will impact Russia depends on three major factors:

  • how well they are enforced
  • the reaction of major markets in India and China
  • whether Moscow can circumvent the measures

Regarding the first, that depends on Europe, India, and the People’s Republic of China. In the short term, Europe will give a strong indication of how serious those nations are in supporting Ukraine and how serious they are in beefing up their defense establishments and industries so as to be able to face down the confrontation with Russia that will follow as the night does the day if Russia succeeds in conquering Ukraine. Carrots can be offered those nations, and a primary one would be tariff relief in exchange for strictly enforcing the sanctions. There even are ready to hand alternative sources for oil and natural gas to supply their current and buildup energy needs.

Tariff relief and improved mutual investment agreements, along with those readily available alternative oil and gas sources, would go a long way to weaning India off Russian oil.

Another carrot is essentially self-referential. By taking themselves completely off Russian energy, they would be proofing themselves against Russian economic blackmail.

The Indian markets can be drawn off Russian energy with tariff relief and mutual investment agreements centered on other matters important to India, Europe, and the US.

The PRC, though, is going to buy Russian oil and gas regardless. The two nations already have an economic arrangement in place that allows the PRC to develop Siberian hydrocarbon resources in return for first pick on the output of that development. When those distributing pipelines are built from Siberia into the PRC, the latter will get the former’s oil and gas functionally at no cost.

There’s more to this, though than just the blacklists. What’s also needed is better enforcement and strengthening of the existing bars against technology transfers and against equipment and maintenance supply transfers that are needed to develop wells and to maintain delivery pipelines to refineries, to (re)build and maintain refineries, and to build and maintain refined output pipelines delivering to end users.

The third factor centers on the black market, the Russian shadow fleet of oil tankers serving that black market, and the buyers’ shadow fleet of tankers as ships meeting the Russian ships for at-sea transfers. This is, perhaps, the most straightforward factor to handle, if the most difficult for the politically timid national managers. The shadow fleet ships could be—have been in the main—easily identified and seized, their cargo transferred to the seizing nation for its use (not resale) and the ships sent to the breakers for recouping the scrap metal and such other items as might be useful. Those shadow fleet ships whose captains resist seizure should simply have their ships sunk on the spot, without wasting much time arguing the matter: “Prepare to be boarded.” “No.” Sink the ship.

All of that is straightforward, only that first factor of widespread enforcement will take some political maneuverings among the relevant nations.

Sometimes….

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The subheadline laid out the concern and the potential for misunderstanding:

Attacks in Caribbean, aid cuts for Colombia and pressure on Venezuela blur lines between counternarcotics and regime change

When illegal narcotics are a nation’s major, if not primary, product, and that nation’s primary source of income is smuggling and peddling illegal narcotics, and especially if that nation’s illegal narcotics are killing so many of our children and young adults, then regime change becomes a necessary tool of counternarcotic operations.

The US does poorly at nation-building, which must follow—by someone—regime change. We were successful with Germany, Italy, and Japan after WWII, but our record is very weak since then. Still, sometimes regime change is necessary, and this one, should it come to pass, will need the follow-on very carefully monitored—and guided, if the wrong builders show up.

Invitations

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Ex-Russian President and current Russian Security Council Deputy Chair Dmitry Medvedev now is making not so veiled threats of nuclear war and of assassination of our President. On the matter of supplying Ukraine with Tomahawk cruise missiles, weapons with an 1,800 mile reach, he said,

that “could end badly for everyone…most of all, for Trump himself,” according to a Google translation of his Russian-language Telegram post.
“It’s been said a hundred times, in a manner understandable even to the star-spangled man, that it’s impossible to distinguish a nuclear Tomahawk missile from a conventional one in flight[.]”

Is Medvedev inviting a nuclear response every time the Russians fire a nuclear capable ballistic missile at Ukraine, every time one (or more) of their nuclear capable bombers launches and flies headlong at Ukraine before launching its nuclear capable cruise missiles, every time one (or more) of its nuclear capable fighter-bomber aircraft invade Baltic State airspace?

Is he threatening the murder of President Donald Trump (R)?

Of course not on the former. The barbarian underboss is simply demonstrating Russian dishonesty. On the latter? Russia does have a history of murdering politicians they don’t like, including murdering them on foreign soil.

Medvedev’s threats, though, are reason enough to double up on the number of Tomahawks originally under discussion, and to authorize their transfer with no strings attached regarding Ukraine’s target lists for them.