What's The True Cost Of Free Trade?

There must be something wrong with free trade, because it's all the rage around D.C. Bush and all the D.C. Gang love free trade. It's as if it is the milk of life and human kindness have all been placed in one wonderful jug for us all to imbibe. Free trade is so glorious and grand, that the purveyors of it loft themselves on to lofty platitudes about integrity, public obligations, responsibility and all the other gibberish so common within the beltway. I beg to differ. Free trade as is espoused by the D.C. Gang is sure death for America, and makes no economic sense at all.

Would you bet on the local high school football team against the Super Bowl champion Colts? Would you bet that a Model A could win the Indianapolis 500? Silly? Not really, when you realize that Chinese labor works for a few cents per hour, has no benefits, health care, Social Security, or other things taken out of their miserly wages. Free trade between America and anywhere else is supposed to be the elixir of life, but in reality it is a death potion for American industry and the economy. How can American labor and manufacturing compete with Mexican labor, just across the border, which makes perhaps a couple of bucks per hour with NAFTA lowered tariffs? 60,000 loaded Mexican truckers now enter the US every day, and while they may be driving unsafe rigs, and know little of American traffic rules, it's OK with the free traders.

Free trade between equals is fine. Free trade between unequals isn't free at all. Free trade is really quite common though, and don't negate the beauty of true free trade. E-Bay is usually free trade. Willing buyers and willing sellers trading for goods which were previously manufactured in America is free trade. No sales taxes, and cheap foreign labor doesn't enter into it. When cheap foreign goods are sold on E-Bay, and whose prices reflect cheap overseas labor, it is not free trade. Yard sales are mostly free trade. Willing American buyers and willing American sellers of American made goods is free trade. McDonald's is free trade, as is Burger King, even though it is owned by the Brits…assuming their food is grown in America.

Restaurants are free trade, no matter how cheap or expensive they may be, unless they import their food. They are American restaurant owners selling meals to willing American buyers.

It is said that $45 billion each year is sent South of the Border by Mexicans working here. In other words, they are exporting $45 billion in American capital to a foreign land. If Americans living here and working here, spend their salaries here, and buy American made goods and food stuffs, it is free trade. Jap cars made in America with American labor, is not usually free trade at all. Why? Because much of the parts inventory comes from Japan, and the profits all go back to Japan. Literally, hundreds of thousands of huge containers come into American ports every month, chock full of foreign made goods and foods. They go back empty. The 60,000 trucks every day, which come into America from Mexico, carry foods and merchandise made or grown outside of America, and the profits and receipts go back to their country of origin, rather than staying here. It is said that America now only grows 39% of the food it consumes.

Wars are huge exporters of capital. Tens of trillions of U.S. dollars left America during the two World Wars, plus Korea, Vietnam, Kuwait, and now Iraq. The total cost of the wars didn't go overseas, because a lot of the armaments were made here. The total cost of the wars was a depletion of capital though, because even if the arms were made here, they were not productive. A productive manufacture, is goods which can be used as enjoyment, sustenance, or business and civilian profit making, and voluntarily capitalized. Free trade, in other words. Pouring capital down the drain of arms manufacture, being paid for by government confiscated capital or printed capital, is simply a drain on the economy. A drain into the coffers of arms manufacturers which may make profits, but the profits come from printed or confiscated capital. This doesn't include the destroyed infrastructure, buildings, homes, businesses and farms of the land where the war is conducted. Nor does it include the lost lives and debilitated warriors which must be cared for by governments engaged in the war making.

So called free trade, which is grossly unfair trade, exports billions of US capital out of America every day. If one siphons gas from a car, how long can a siphon go on before the tank is empty? Obviously, only as long as there is any gas left to siphon. How long can capital be exported out of America, before there is none left? That is an interesting question, and it can be answered easily, if one equates dollars with capital. While capital and dollars aren't exactly the same, due to dollars being printed recklessly, ($400 billion a week), we have to use the comparison, fair or not. How long can this siphon of capital last? It isn't as if it is taking gasoline from a tank, because the supply of dollars can be extended for a long time. Printed dollars, sent to China for goods sold in Wal Marts, Hobby Lobbies, and the like, are being exchanged for goods made in China. While the dollars have no real value, and the goods exchanged for them do have real value, as long as the myth of dollar value survives, the trade can go on for a long time.

Eventually, the printed dollars being exchanged for goods and foods made out of America, will become so plentiful, that faith in them will cease to exist, and the suppliers of the goods and foods will no longer accept the dollars for their goods and foods. There is then a currency collapse. When there is so much of a thing around that no one wants it, its price or value goes to zero. Salt water in Atlantic City is valueless, and sand in the desert is the same. There is so much of them that no one will accept them as having value. This is a situation which is unavoidable. Never in history, has any nation, once it began inflating, ever figured out how to stop it, nor even slow its progress. It is impossible to stop or even slow, because the printed dollars, (capital) is necessary to conduct daily lives and business. The less they become worth, the more of them that is necessary to print…just to stay afloat a bit longer.

The pioneers on the Oregon Trail, and California 49ers, ended up throwing out their prized goods along the trail, just to stay alive and attempt to get to their goal. They wore their oxen out and left their carcasses on the trails. They left wonderful stoves and furniture along the trails because they had become too heavy to carry, their livestock was dying, and they just had to survive. If they could just get over Donner Pass, they might have a chance. If they could just get to that next water hole or river so they and their horses and oxen could get a drink, they might make it. The D.C. Gang figures that if they could just keep it going a bit further, someone may think of a way to make it all come out OK. They just have to print a few trillion more dollars, and someone will figure out a way to save the economy and dollar value.

America has more debt than any nation in history. The debt is so high, that it is totally unpayable. I am certain that the D.C. Gang knows this, but they keep the propaganda mills humming, so as to fool the citizens and lenders in to not abandoning the dollar. They have succeeded! Our capital is leaving us on a daily basis, so fast, thanks to free trade, that the end will eventually come just as certain as the sun will rise. Like all magic acts, frauds, and the like, no one can predict when the tables of public and foreign opinion and patience will end, and the public and foreign lenders will wise up and say, 'No more, we're out of here." Saddam was sick of dollars, and began selling his oil for euros, which didn't set well with the D.C. Gang, who voted to take him down. Will China develop new markets in other nations, which will take their production, paying for them in something other than dollars? Will enough Americans wise up, get out of dollars and into tangible things such as gold and silver, before it all comes crashing down upon them? Has this begun already? No, because when this really gets underway, gold will be in the thousands of dollars per ounce, and silver in the hundreds. There's only so much gold and silver to be bought, whereas the presses can run indefinitely. Protect yourself.

February 22, 2007

Don Stott has been a precious metals dealer since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com

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