I think a gold standard means that each dollar is backed by a certain quantity of golf. The price of gold in each currency floats freely as set by the free market

If i buy from a supplier in China, essentially I trade my gold for the product the supplier makes. Eventually I would have no gold and my Chinese supplier has all my gold- stopping trade until the supplier in China buys something from me and pays me
Some of his gold by buying some of my products. So trade imbalances can’t go on unchecked.

If I use a paper deposit receipt (dollar) instead of sending physical gold, the result is I have now less physical gold but the same number of receipts. This makes the value of my receipt (dollar) worth less in terms of how much gold iit represents- therefore I need to send more of the receipts for each product I buy. That means the price of my suppliers product has risen and I will buy less

Isn’t this the was it’s supposed to work?

Our federal reserve system somehow hides the depreciation of our dollar and results in unchecked trade imbalance. We just print dollars and the stupid Chinese treat each dollar as if it had the same value

Somehow we have asked for what is happening

Suppose every country in the world had the gold standard for printing their currency. What would happen if it were not mandatory that gold be valued the same in each country? What would happen to the commodity price for gold on the market? There was an official mandated price for gold for decades at $32 per once which then was raised to $42 per once. Then when the gold standard was dropped the price became a market price. A gold standard, to work, would have to be based on the changing market price with currency supplies fluctuating with the market price. That would end with trade imbalances just as today. Of course, trade agreements and war threats might straighten out the mess, though not likely. Inflation might be somewhat under control, depending on whether the gold supplies increase or decrease uniformly throughout the world, thus allowing some countries to print more money and have other countries decrease the amount of money. There is nothing to stop a government from just pretending that gold is worth more than the market price and produce inflation.
It is just like anyone in the market with a finite amount of capital. There will always be a balance of payment problem between traders. If a system does not work at the local level, there is no way that it can work on a country or world level. A contradiction in a small system cannot be eliminated by increasing the size of the system.

So the continuing trade imbalance is the result of fiat currency printing. Thanks to Richard Nixon in 1971 !!

"As to the balance of trade imbalance, its caused by the lack of an objective backing of our currency. If it was backed by gold, we would have lost a lot of gold to china and our currency would have weakened and therefore chinese prices would have risen to balance things out. Its OUR fault."
I would put it a little differently. It depends upon what happens to prices within the countries. In the US, either the amount of production would decrease or prices would have to fall do to a smaller amount of money, otherwise the market could not clear. In china, either prices would have to increase do to the excess money or more production would be needed to match the larger amount. In trade between the two countries, the higher gold value in the US and the lower gold value in China would have to be readjusted for trade to take part.
It really does not matter. Gold is a commodity and when used as money, it is just traded at the values that the traders place upon it. Once traded for goods, it becomes the sellers property and need not be returned to the buyer other than when the buyer can offer a product worthy of being bought. The main trouble comes when paper currency is created. The backing by some commodity does not ever stop a government from printing excess money. It just pretends that the value of the commodity can be revalued to make it look like all is well, at least until the inflation of currency grows enough to cause price rises. The inflation of the currency is the result of the commodity being reevaluated by the government, i.e., removed from the free market.

I feel like hank rearden sometimes. I think we are ok for 2019. We stocked up before the tariffs got really onerous

Given there is a 3 to one price advantage buying from China, it would take a lot more than 25% to make us by usa

"However, he says he loves tariffs and they bring in billions to the government." This is, indeed, a different tack than his original position, which was it was better to have no tariffs, but since China was cheating we need a way to level the playing field with them.

I guess from your company's perspective it won't matter if China blinks or Trump settles as long as it happens before you go under. How long do you think your company can stand this trade "war"? Are you seeking alternate suppliers?

I appreciate the perspective here. I think you hit the nail on the head.

I dont think China is going to blink. I think its Trump who will somehow "settle" on something that appears good enough to get rid of the tariffs. However, he says he loves tariffs and they bring in billions to the government. I also note tht until a few days ago, the dems backed him (because they want the tariff money also). Now they are seeing how us consumers will pay them and will revolt against trump. Now the dems are against the tariffs.

Yes, very interesting discussion indeed! I'm willing to say it's a safe bet that most Americans, including myself, are totally unaware of the $50k tax tier "gotcha" in the new tax laws you just described and I'm willing to bet most Americans, including myself, had no idea there was such a thing as "domestic production tax credit" in the first place and now it's gone. My understanding most simply described was the new tax laws were to give mainly businesses an across-the-board tax break and, therefore, allow them to hire and expand accordingly and jump start a sluggish economy. You have just described the first case I've heard of where that didn't work from a business perspective. Up until now all I've heard was the expected Neo Communist whining about tax breaks for the rich.

As far as the tariff "war" effect on your business goes, I think any rational American knows there will be those who get hurt worse than others. I've been watching the plight of the soy bean farmers as well. All of us are going to "pay" something on this as consumers of Chinese goods.

You and your company are suffering a double whammy with the tax change and the tariff. I wonder how many others are the same. In the end, though, the USA can't continue with this trade problem with the cheating Chi-Comms. Also, tax and regulation relief was needed to boost the economy in general. For your sake, I would want China to "blink" and I think they will.

Interesting discussion ! As to regulations, I applaud Trump for trying to cut them out. We are a small company, so arent really impacted by regulations directly. Therefore, I dont see what Trump has done at least for me and our company.

What he has done is increased corporate taxes if the company shows profits of $50k or less. He upped the tax rate from 15% to 21% for that tier of profits. In addition he got rid of the "domestic production" tax credit. So Trump has hurt us and other small companies.

Trump is also costing us a LOT in import duties from china. It doesnt cost china a penny. Its just a tax on the usa buyer and consumer. So Trump is guilty of a bit of lying on that front.

We buy from china because the prices are 1/3 of what it costs to buy american. Manufacturing has left the USA, and we are one of a tiny number of manufactures who have stayed in business and employed our 10 people. We have done that by buying raw materials and subassemblies from china, and doing design and assembly here in the USA. The tariffs wipe out any profit we will make in 2019. Raising prices to usa and our foreign customers isnt in the cards, as we would lose substantial business.

I think that instead of going to a gold standard which would fix the balance of payments problems, Trump is trying to use tariffs to discourage americans from buying chinese stuff, period. The stealing of intellectual property is just a straw man. This is why he cant get a "deal". He doesnt want a deal.

Trump is better than any of the democrats, and I voted for him in 2016. I would vote again for him in 2020 if he wises up and gets off the tariff train.

If not, maybe its time to get Bernie Sanders in here and destroy the whole economy with a fatal dose of socialism and get it over with. I would close this business and retire for sure

I have long stopped listening to what the politicians say as their "reasons". Its always the hidden agenda at work, at least it seems that way to me.

In the case of the tariffs, china is not stealing from us. If our companies want to sell in china and the price is that they give up their secrets, its still a willing transaction

As to the balance of trade imbalance, its caused by the lack of an objective backing of our currency. If it was backed by gold, we would have lost a lot of gold to china and our currency would have weakened and therefore chinese prices would have risen to balance things out. Its OUR fault

As to competitive advantage, China has whipped our asses. In my experience, they are far and away more aggressive marketers than our more lazy americans. They have passed the usa in many areas, and of course their prices are 1/3 of what it costs to make the stuff in the USA.

I say Trump is trying to look good by discouraging usa companies from buying from china without actually demanding that we do that. His intention is to penalize americans from buying chinese until the balance of trade balances (which it never will !!). The whole issue of stealing technology is a straw man designed to NOT get an agreement until americans stop buying from china.

Trump might well, and hopefully will, back off from this stance assuming he is able to tout a deal with China resulting from the tariffs. The argument "hurt them more than us" is a terrible argument, alluding to a kind of war to the death. When I saw those words from whatever official, I realized that official knew nothing of value. The justification for tariffs would be China selling our secrets to Iran or North Korea. But if that were the case, perhaps we should have taken the deal including the IP protection. Sorry to hear about the profit loss.

I believe you allude to a kind of crony capitalism that I agree is a result of foreign economic policies currently in place. Your logic is sound for most scenarios, so why does it not explain reality? Perhaps we can consider it important to understand two points: (1) rational decision making is critical to the description provided above and (2) certain materials and technologies will always be controlled if national security depends on them.

To explain (1) further: https://en.wikipedia.org/wiki/Behavio...

To explain (2) further, ask yourself whether you (USA) would sell your only gun to another person who made obvious his hatred toward you (Iran) or his desire to take your other belongings (China)? At what price would you sell that gun, considering there are no police in this scenario?

Once one installs a model like a "perfect global capitalism model" one must do it by laws which negates capitalism, which is freedom of action economically. That means that trades are not free rather than being done by choice, not by some legally set permissions. Laws dealing with the market should only deal with crimes such as theft, breaking contracts, etc. and not with how one should choose to trade. That is an individual choice of a free human being.
When a country tries to deal in some way to hurt other countries economically, they only harm their own citizens by reducing their standards of living. Subsidized goods which are cheaper and of the same quality than elsewhere should be used in order to free up capital for other enterprise in the importing country. In capitalism, one is penalized by unnecessarily having to buy overly priced goods since the extra money used decreases capital available for other uses.
In the case of tariffs, the government takes money out of the economy for purposes which may not have any economic value and certainly no value to those who are hurt from the tariff law.

"...too many regulations and costs in the USA. We have lost out competitive advantage over the years, and our workers are too entitled"

Good points, term2, and I understand these problems. The Trump administration has been working on the regulations, but has a long way to go. There are state and local regulations Trump can't do a thing with, but the states are learning (notable exceptions are NY and Kalifornia). As far as workers being too entitled, I see where that is very true in some areas, but not in others. "Entitled workers" are mainly the result of government regulations (at all levels) making it so.

I still say it's a race. We could win, we could lose. China could lose big time if Trump stays the course, IMHO. I've said the statement: "A socialist system can be made to appear to work as long as there is a strong enough capitalist base to support it." China figured that out and right now the main capitalist base it's suckling is the good ol' U.S. of A. [Side note: The Stalin method of making a socialist system work is "guns and gulags", but that has a rather limited life span. China figured that out, too, even though it's still part of their game.]

Side note regarding: "...China's lower wages and more aggressive attitudes towards productivity." First, the Chinese workers are not more productive than Americans. They are a mixed bag of hard workers and lazy do nothings that expect to get paid. Been there, seen it.

Second, China's lower wages. We have to be careful here because it isn't the number of dollars they get paid, it's the buying power. For a quick example using easy numbers, there isn't much difference in an American making $20 and hour who pays $2 for a loaf of bread and a Chinese who makes $2 an hour and pays $0.20 for a loaf of bread. The Chinese, of course, is paid in Yuan, not dollars and the Chinese government sets the artificial difference between currencies to make it look like a big difference. This is the currency manipulation game the Chi-comms play that Trump wants to address. If the yuan and the dollar suddenly exchanged on par then the Chinese worker in the above example would look like he's making $20 per hour and his loaf of bread would cost $2, just like ours. Of course, the values I used here are not exact, but it illustrates what currency manipulation does.

I disagree. I understand there are Objectivists against strict border laws, tariffs, etc. However, there are also hawkish types who were in favor of attacking Iran as soon as there was evidence treaties weren't being honored. For me, the perfect global capitalism model is unachievable at this time. I personally believe "free trade" as it its used by at least some modern Republicans is a bromide, a substitution for choosing a trade deal that benefits a certain sector, group, person, etc. In relation to China, it is obvious the nation-state is seeking out ways to keep or gain leverage over the US. China sees THIS as a value, regardless of the actual values Rand lists in her works. Therefore, it is, in my opinion, irresponsible to NOT manage the trade relationship very closely.

And it's not just the US. If Europe followed suit, maybe Swiss watches would be made there start to finish.

I just wish Nixon never had "normalized" that totalitarian state in 1971. Why should we deal with them at all, in the first place? And plenty of other places make cheap products: Taiwan, Japan, Thailand, Mexico, France....

I suppose one of the attractive parts of socialism is that the proponents of it think they will get something that they dont have to work for (or pay for)

The economic principle of taking account of what is seen and what is not seen is being brushed over with forgetting the "not seen" part of the principle. The "not seen" removed is from the mind by lumping it into the loss being just a tiny part of the 20 trillion (US trillion) plus dollar GDP. While it is a small part, it is not seen what damage is done throughout the economy with higher prices lessening newly created jobs, individual decreases in standard of living, difficulty for some to make ends meet, etc.
Where else can one buy a cheap watch which keeps perfect time for $8.00 if one is not out to impress others with some kind of jewelry. That opens up some extra money for other uses. Individuals are being ignored by being discarded into collectives.

People want socialism because of the imagined promises made by the mystics of muscle. The mystics of spirit make a different promise.
Both require sacrifice of self and others.

The John Galt speech talks a bit about this.

UNFORTUNATELY, history has shown that what you say is true. We were lucky I think that there was enough "reality" in an empty continent where people HAD to fend for themselves that we got at least some capitalism. As soon as we became wealthy, people seemed to want socialism like it happens almost everywhere else.

Right. Just like enough people really learned that socialism doesn’t work with fall of Venezuela— Not!

But that wasn't real socialism.
/s

I think that these tariffs, if kept more than a couple of months, willl result in Trump and the repubs losing in 2020 to either Sanders or Biden. Not sure who would be worse. Biden is a crooked democrat, and Sanders is a power hungry idiot.

I can just tell you that 25% tariffs just wiped out any profit we will make in 2019. We have to raise prices which will result in lower sales and the laying off of more of our workers. Making things here is NOT an option, as the only reason we are still here is the ability to buy cheaply from China.

I am close to the point of giving up on the fight against socialism. Let the country fall, as it did in AS, and then perhaps enough people will see socialism doesnt work at least.

The reason socialism is getting such a push now is because Trump's economy is doing so well. There is more $$ available to be looted.