Economics discussion (not political!)

[Vulcan]

Hello all, sitting across the world in little old NZ I wanted to point something out to some of my Americans friends that I'm sure many understand, but not all do.

Over the years my little old country of New Zealand has gradually decreased import duties/tariffs to almost nothing. All we pay on most goods nowadays is GST (Goods and Services Tax, also called VAT in some countries, sales tax in US states iirc). This is good, as when I was young in the 70s we had huge duties on stuff like electronics. The reason was protectionism for local industry. But the reality was a huge duty on TV imports because someone in our local industry thought one day they might make a TV, or made radios and radios=tv (politican minds) there we should put a duty on TV imports.

So over the years the duties/tariffs have disappeared and that made us Kiwis happy.

Why did it make us happy, well many of the goods that had tariffs applied to them just weren't available from local manufacturers - or the ones they did make were of dubious quality or lacked the same features.

The cold hard reality was the only people that benefited from the duties/tariffs were... the government. Because the people who paid for the tariffs were not the people who exported the goods to NZ, but us... the local kiwis. So if an imported TV cost  $1000 NZ pesos, and the tariff was 30%, then us Kiwis paid $1300. Of that $1000 went to the people who made the TV, and $300 went to the government.

Now to be honest, the removal of all tariffs did end up killing some local industries. But we diversified and focused on what we do well - instead of doing a half arse job of things we are not good at. But I just wanted to point out that for me, in NZ, tariffs were always a form of tax against us kiwis ... not the foreign manufacturers. And I was glad to see them go, there were some quite horrific duties on computer gear for a while.

[Busher]

No one wins a trade war and it's the little people that get hurt the worst.

[Spikes]

No one wins a trade war and it's the little people that get hurt the worst.

Indeed. Government and millionaires won't feel a thing.

[CptTrips]

Tariffs are a consumption tax on the consumer.

Tariffs are the gateway drug to a command economy.

Tariffs are highly inflationary at a time when the Fed is still trying to get inflation under control.  They will have no choice but to raise rates or at least stop lowering them.

I'm positioned short the market.  Let it burn.

https://youtube.com/shorts/Mj6N-WBPrVw?si=_cd8xEhZ3P-knAm2

[Oldman731]

Let it burn.

Will be interesting to see how your investments are going in 18 months.

Trying to remake the world's economy in the scant year and a half left to this Congress is optimistic. 

Can't think of a nicer way to put it.

- oldman

[Busher]

Indeed. Government and millionaires won't feel a thing.

Actually all the tariff $'s go to the Government... so maybe they're smiling.

[CptTrips]

Will be interesting to see how your investments are going in 18 months.

Trying to remake the world's economy in the scant year and a half left to this Congress is optimistic. 

Can't think of a nicer way to put it.

Well, I'm not chained to any position.  I review the market and my investments at least once a week now.  If my thesis ceases to make sense,  I will re-evaluate re-allocate.  I have no loyalty or emotional stake in my investments.  I would buy Satan's own stock if I though it would make me solid 15%.  I don't invest long or short on ideology.

I went short last Nov.  Well, 70% money market ( I was a teen last time I saw MM pay out like this with near zero risk), but my only investment outside of the money market is net short.  I have no long equities now.

I didn't know the exact details, but it as obvious for at least 2 years it would a goat rodeo of cataclysmically bad decision making and tariffs and trade-wars and wealth destruction.  National wealth destruction on a biblical scale.  I didn't vote for it.  I don't want it to happen.  It's going to be heartbreaking to watch people's lives destroyed.  Way too many people have been sleep-walking their investments.

However, it is all completely out of my control.  I'm not hurting those people.  Whether or not I find a way to profit on the coming misery, will make no difference to the outcome.  So, I might as well profit off it if I can.

Of course this isn't near the end of it.  This was just the fist cannon shot at Ft. Sumter.  It's going to be a long bloody war.

So, here we are.  Now what happens?

Well, of course all the nations attacked HAVE to also respond now.  They have their own domestic audiences.  More tariffs, just as Reagan described.

OK, then what happens?  Do you think it ends there?  Do you think that powers-that-be might see that as an insult?  A challenge to their self-image of dominance?  What do you think the odds of further tariffs again to save face and show who's boss?

OK, then what happens?  Of course other will have to respond again.  Wash rinse repeat.  Given the domestic consideration, neither side can easily pull back once it gets rolling and this is just the very first shot fired, not the last. 

Every see the movie 13 Days?  Remember when JFK was trying to get LeMay to understand more than one level of chess moves?  How LeMay just ASSUMED they would bow down after we drop bombs on their personnel.  Could not conceive of a series of responses and counter responses.  He was a one level deep thinker.  That's as far as his recursive reasoning stack could go.  I'm not convinced we've even had one level of intelligent cost-benefit analysis.

Just magical thinking by people with 8th grade understandings of economics.  If I sense that is going to change, I will change strategies.


I'd give my right pinky for 4 more years of Reagan right now.

[Animl-AW]

Great post, great lesson, Americans itate listening to reason as iver-rated.

[DmonSlyr]

Lol! Where to start. 3 years ago we saw the highest inflation we've seen in decades and then they raised interest rates causing people and companies to have to pay thousands of dollars more to buy and invest to the trillionaires who run the fed and print money. Keep that in mind when taking about "muh higher prices from tarrifs".

I find it freaking hilarious that all of the sudden the left hates taxes now. When did that happen. 

I've been saying for years and years that higher taxes have artificially increased prices. The highest taxed places are some of the most expensive trashiest places to live. See Cali and New York. But when we you asked them, it's a good thing those taxes are so high!  now all the sudden they are complaining about taxes increasing prices. This is 


I don't think many are seeing the full picture here. We are moving to reduce/remove all federal income tax on Americans. This will put hundreds of dollars back into the American workers, and the businesses who pay employee taxes back in their pockets. It will incentivize hiring American workers again because there's no taxes to skirt. Then Americans will have more money in their pockets to spend.

Tariffs are a variable tax, so prices on foreign items may rise, but not that much, and will just even out with American made products to help American made products compete. This will create more jobs for Americans and impact the American economy. Americans will have more money in their pocket from not shelling out $400 of their paycheck to the fed, then will be able to choose what they want to buy. They will end up having far more money left over in their pocket paying tarrifs than directly siphoning $400 of their paycheck to some place they have no control over where that spending goes.

America has been in a trade war since the early 90s. Look what happened to all of these great Americans cities that have now turned to trash dumps thanks to the theft of high taxes with 0 return to the city along with their businesses leaving over seas and leaving their middle class high and dry and homeless. You can't tell me that's not a hidden trade war. You can't tell me Americans are better off with cheap China crap we should be making in America and creating better manufacturing jobs that pay more than Starbucks baristas.

So, I'd dvise not to listen to the fear mongers and market manipulators. This is all just trying to make a transition look as scary as possible. This is all just short term and we have 0 #s to back any of this market crash up. Further of course the world is going to be mad. I don't care. They had them on us first. America can do what it wants. Remember, it's the rest of the world who feeds off our tits and are getting billions from our tax payers to stay afloat while their economy stagnates due to over taxation and suffocation of its own people. So much so, that people don't want to have children anymore and they'll just flood your countires with cheap middle east scary folks who will work for cents on the Euro because they can't afford to hire their own people anymore. I hope yall will understand that Americans have been sold out for too long and we are standing up against this outrageous miss use of American tax dollars and theft.

[icepac]

I don't think high taxes are the only reason many cities have become dumps.

[Eagler]

To the OP, what does NZ spend on its national defense? How about global defense?

Tariffs mean well but todays citizens don't have the thick skin to absorb the pain needed for them to take affect and work..

Americans want their cheap junk they can't live without and they want it NOW..how much room on my credit card?!?

Add those cost to inflation now rising again and sorry it might be too late..

Eagler

[Animl-AW]

Wall Street stocks drop like a stone... wiping trillions off the value of 401(K)s in minutes

No one is going to be tough about losing their retirement money. I pulled my 2 minths sgo and glad as hell. Saw this coming months ago.

Fear mongering? Some people refuse logic

[DmonSlyr]

Wall Street stocks drop like a stone... wiping trillions off the value of 401(K)s in minutes

And that's based on 0 #s. This is all fear manipulation by hedge funds. Inflation actually decreased per the last report. Its all short term right now. People's 401ks will be buying at lower prices lowering/countering their averages. They will end up with more when the market jumps back. Change is always tough in the beginning. The goal is to reduce the tax burden on Americans which will intern give them more money to spend and invest.

[Animl-AW]

And that's based on 0 #s. This is all fear manipulation by hedge funds. Inflation actually decreased per the last report. Its all short term right now. People's 401ks will be buying at lower prices lowering/countering their averages. They will end up with more when the market jumps back. Change is always tough in the beginning. The goal is to reduce the tax burden on Americans which will intern give them more money to spend and invest.

Dude, sorry, but you appear to not know what you’re talking about.

I just showed you proof and you call proof fear mongering. Thats rich.

What I showed is reality, its not guessing, its not predicting,… this IS this. A lot of my friends just list 1000% by no fault if their own. You go tell them its just fear mongering.

Go look at the msrkets, we ARE going to recession

[CptTrips]

I hope a lot of you captured some of those years of out-sized gains and de-risked.

"People's 401ks will be buying at lower prices lowering/countering their averages."

A funny little quirk about investing math.

If I am long and the stock drops 50%, and then gains back 50%, I am not back to were I started.

If I lose 50%, I now have to make back 100% return JUST to get back to where I started.

It's a lot easier to lose 50% than it is to make 100%.  You are about to get an object lesson.