Jul. 28, 2020

MOST PEOPLE UNDERSTAND NEITHER ECONOMICS NOR POLITICS

Examples of why many have simplistic ideas follow.

 

             

Gold is at a record high. Aren't I clever!                             
Not, if you adjust for inflation and the recent fall in the dollar. It was much higher during the last two recessions.  
 
The Stock market and oil prices are up. This good for pension funds and investors! 
                           
This is incorrect. When the dollar falls, assets priced in $ adjust to compensate.   
                                                         
Being priced in $ they are an example of the previous point. Additionally, oil prices are decided/heavily influenced by the OPEC cartel and US policies on tax breaks, subsidies and 'strategic reserves'. 
 
Great for countries other than the US! Currencies like the Pound and the Euro are gaining strength against the $. 
                                                                        Maybe not. A falling Dollar reduces the cost of US debt servicing. Some think the US will manipulate a dollar devaluation during the recovery,hitting those cursed foreigners, who lent the US money and bought US assets. This would reduce debt servicing costs further and encourage US business activity. A devalued US is more competitive.
 
 
Tech stocks are the place to go! The NASDAQ proves it!              
This maybe true, as these businesses, pay little tax, have low indebtedness, generate enormous wealth for their owners and control public opinion and governments. The little investors do not make the massive wealth increases the billionaire insiders do. High rewards are matched by high risks in free markets. But these are not free markets. So far, the grip of these companies on politics, is stacking the odds in their favor.
                                                   
But- If the EU, Russia and China were to fight back with bans, regulations and tax on local revenues, this could change. They could also introduce packaging taxes and end the myth that those working for these firms are self employed.
We will see.
 
The US is fighting for global freedom and democracy. It is right to take action against China and Russia!
 
Maybe the US and its allies' China strategy is based on reducing the economic threat from China rather than freeing its people? The US has a long history of supporting or installing brutal dictatorships, feudal Kingdoms and fake democracies around the world.
 
Painting China and Russia as bogeymen, allows the US corporations and military industrial complex to sell the idea to voters.                                                                        
All the above allows continued economic exploitation of other countries for the benefit of the US. The US also wants to  see a weak EU, hence its, support for Brexit.
                     
Russia wants a weaker EU too, so it can have more relative power. Russia also seeks a fragmented UK too. The removal of a US supporting global nuclear power is a key Russian objective. Hence it seeks Scottish independence and reunification of Ireland.
 
Boris Johnson's restrictions on UK travel to Spain etc are bonkers!     
         
Maybe? Or maybe they are a way of demonstrating to the EU nations that the UK can screw up their plans, just as the EU might want to do the reverse to the UK to scare a better Brexit deal?  
 
Discouraging foreign travel  also helps boost the Pound and the struggling internal UK travel industry.