Steelmanning Liberation Day (or trying to)

Seeing things Liberation Day's way

• the goal is to sell something to the world other than UST

• . . . so the world stops “taking advantage” of our spendthrift ways

• tariffs “work” in a world of one buyer and many sellers

• what if they stop buying our bonds?

• how it might end well

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Publishing note: posting will be a bit more sporadic over the coming weeks. I’ve got some planning to do, plus some other commitments, but then I’ll be away for Passover. So, there will be posts, but not every day.

Steelmanning Liberation Day

Just a few more tariff points and charts, in the ongoing series of ‘Random Walk learns international trade: strong (and evolving) opinions, weakly held.’

• Liberation Day notes

• Liberation Day notes (cont.)

• Stop making sense of Liberation Day (cont.)

The point is here is an attempt to make sense of things, between all the screaming and shouting.¹

As per always, Random Walk is learning in public, so I invite feedback.

This is basically my current framework for seeing things Liberation Day’s way.

What

• the goal here is to start selling as much as we’re buying. That reflects the very Trumpian intuition that if you consistently buy more than you sell, that’s bad. By contrast, selling more than you buy, is good.

• that intuition is Trumpian in that, at a basic level (i.e. ignoring all the attendant complexity), it’s obviously correct, and it’s been staring us right in the face: if you’re spending more than you’re bringing in, eventually you go bust, and there is no doubt that the US has been doing exactly that with increasing urgency since ~2000.

• reshoring would be nice—as would bringing back those manly manufacturing jobs—but really it’s about closing the gap between selling and buying.

• there is, of course, one thing that we export with aplomb: our national debt. We don’t sell many cars, but we sell a lot of treasuries, and that’s kind of a problem too. So, a simpler restatement of the goal is to be a seller of something other than UST.

Why

• that’s especially important as it pertains to China, which appears to have set a deliberate course to sell more than it buys, as a path to global supremacy (or, at the very least, parity).

• China has “taken advantage” of misbegotten US policy, by embracing its role of industrious shopkeep as counterparty to our profligate consumerism.

• it applies to other “offenders,” as well, like the EU, who similarly enrich themselves (sans any aspirations for global domination) by selling us plenty, while buying relatively less, and extorting our techcos to boot

• perhaps the better analogy is that we’re the doe-eyed trust-fund baby, loafing about on a shopping spree, while China and the EU are the coterie of advisers and merchants that see nothing but a ‘fool to be separated from his money.’

• another consequence of this relationship is that the world is flush with all the