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Patrick Barron
April 16, 2025
Since he was a young up-and-coming property magnate in New York City, Donald Trump has been fixated on what he believes to be foreigners’ cheating on international trading terms to the detriment of the US. He believes, along with many Americans, that foreigners have stolen all our good, high paying jobs by manipulating their own currencies, subsidizing their home industries, and erecting protective trade barriers–in the form of tariffs and quotas–that make American goods uncompetitive. He believes that erecting high tariffs against foreign goods will level the playing field, so to speak, and restore American industry and high paying jobs. In summary, Donald Trump is a firm believer in Autarky and Mercantilism, discredited economic theories that tout national self-sufficiency on the one hand and exporting more than one imports on the other.
Whatever one may think about America’s economic progress or lack thereof and about whether or not America is losing good paying jobs, foreigners are not to blame. We ourselves are to blame, and there are several ways in which we “do it to ourselves”. The first and most important occurred at Bretton Woods in 1944 when the dollar was granted international reserve currency standing as the equivalent of gold at thirty-five dollars per ounce. The thinking, which was challenged at the time in a series of articles by New York Times columnist Henry Hazlitt, was that as long as the US had enough gold to completely back its currency at that price, the international trade clearing system would function just as well and with less cost than the cumbersome system, as it was described, of shipping gold back and forth among nations. For example, if England imported more goods from France than vice versa, then England would owe France money. It would “clear” its shortfall by shipping gold to France. Under the Bretton Woods system, England would send American dollars to France or ask an American bank to pay France dollars held in its account in New York. Much easier, or so almost everyone thought at the time. Although he spoke in more diplomatic terms, Henry Hazlitt felt that the temptation to print money without gold backing was too tempting even for Americans. He was right.
The problems arose when the US started printing more money than it could back with gold at thirty-five dollars an ounce, just as Hazlitt feared. Charles De Gaulle, president of France in the 1960’s, and Jacques Rueff, his long time chief financial advisor, were both economic scholars of the “old school” who suspected that Americans were cheating; i.e., printing dollars without sufficient gold backing.
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Article continues:
alasdairmacleod.substack.com
April 16, 2025
Since he was a young up-and-coming property magnate in New York City, Donald Trump has been fixated on what he believes to be foreigners’ cheating on international trading terms to the detriment of the US. He believes, along with many Americans, that foreigners have stolen all our good, high paying jobs by manipulating their own currencies, subsidizing their home industries, and erecting protective trade barriers–in the form of tariffs and quotas–that make American goods uncompetitive. He believes that erecting high tariffs against foreign goods will level the playing field, so to speak, and restore American industry and high paying jobs. In summary, Donald Trump is a firm believer in Autarky and Mercantilism, discredited economic theories that tout national self-sufficiency on the one hand and exporting more than one imports on the other.
Foreigners Are Not to Blame for America’s Economic Woes
Whatever one may think about America’s economic progress or lack thereof and about whether or not America is losing good paying jobs, foreigners are not to blame. We ourselves are to blame, and there are several ways in which we “do it to ourselves”. The first and most important occurred at Bretton Woods in 1944 when the dollar was granted international reserve currency standing as the equivalent of gold at thirty-five dollars per ounce. The thinking, which was challenged at the time in a series of articles by New York Times columnist Henry Hazlitt, was that as long as the US had enough gold to completely back its currency at that price, the international trade clearing system would function just as well and with less cost than the cumbersome system, as it was described, of shipping gold back and forth among nations. For example, if England imported more goods from France than vice versa, then England would owe France money. It would “clear” its shortfall by shipping gold to France. Under the Bretton Woods system, England would send American dollars to France or ask an American bank to pay France dollars held in its account in New York. Much easier, or so almost everyone thought at the time. Although he spoke in more diplomatic terms, Henry Hazlitt felt that the temptation to print money without gold backing was too tempting even for Americans. He was right.
De Gaulle and Rueff Suspected American Cheating
The problems arose when the US started printing more money than it could back with gold at thirty-five dollars an ounce, just as Hazlitt feared. Charles De Gaulle, president of France in the 1960’s, and Jacques Rueff, his long time chief financial advisor, were both economic scholars of the “old school” who suspected that Americans were cheating; i.e., printing dollars without sufficient gold backing.
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Article continues:
A sober look at America's decline
This article by Patrick Barron was posted at Going Postal last week. I have his permission to repost it.
alasdairmacleod.substack.com
