I would have titled this post “Another Greek Bailout”, but I’m pretty sure I have already used that in the past.

Another “deal” has been reached to again avoid a Greek exit from the euro and the European Union.  It is more of the same.  It is like the movie Groundhog’s Day.

After Greece already missed a major payment to the IMF (i.e. defaulted), the European bureaucrats did not want to see Greece miss its next payment to the European Central Bank.

So Greece will get a bailout of about $95 billion over the next three years.  They call it loans, but why will Greece be able to pay back these future loans if it can’t already pay back the ones it has?

The Greek government cannot even afford to make the payments on its loans, so the ECB is going to go ahead and give out more loans.  The Greek government can use these loans to fund its banking system and pay the interest payments on the other loans.  Do you have all of that?

If a family has $50,000 in credit card debt, you don’t help them out by loaning them another $10,000.

Greece is supposed to enact reforms, which basically goes against the vote that took place last week.  It is probably worse for Tsipras and the Greek government that there ever was a vote.  Now he is just going against the will of the people.

Greece’s reforms include increasing the VAT (tax), which is a terrible idea.  It will just stifle the economy more and hurt business and consumers more.  Reforms also include simplifying the pension system.  The pension system desperately needs reform.  The payouts need to be reduced dramatically.

Greece is also supposed to run a surplus over the next several years, but how can this be enforced?  What if the economy is so bad that the tax collections just don’t add up?

But the Greek parliament is supposed to approve all of this.  What happens if it doesn’t approve?  In other words, this story may not be over yet.

We can call these loans, but it is simply a bailout.  The reason is because the loans will never be paid back.  Any system can be sustained if there are others outside the system willing to continually fund it.

Greece is a massive welfare state.  Now it depends on outside welfare from the ECB, the IMF, and the various European governments.  As with any forced welfare, it ends up being bad for both parties in the end.  The only ones who may benefit are the bankers and politicians.

The welfare recipients (the Greeks) may get temporary relief, but it is just temporary.  It just creates more dependency and it will be that much harder down the road.  The welfare payers, particularly the Germans, end up resentful.  They are being forced to throw money down a hole right now.

This is just another attempt to delay the day of reckoning.  It will only make things worse in the long run as wealth is depleted.  Maybe the Greek parliament will reject the measures and the deal will fall through.  Stay tuned.

The Chinese stock market is on a roller coaster ride, and it just started its major descent a few weeks ago.  I have written an article on this for Wealth Daily.

I have been warning about a massive China bubble for a while now.  First it was in real estate, and then a stock bubble grew on top of that.

On June 5, 2015, I wrote a post about China when the market topped the 5,000 mark.  I specifically said in the first paragraph, “…the Chinese stock market is in a major bubble.”

How did I know?  It’s because it had gone parabolic at that point.  It was not sustainable, and the only thing justifying the major rise was easy money by the Chinese central bank.

The Austrian Business Cycle Theory applies here.  When there is an artificial boom due to easy money and low-interest rates, along with government policies that encourage the bubble, then a bust becomes virtually inevitable.

The hard thing about the Austrian theory is timing.  You can’t predict when the bust is going to occur.  This sometimes gives a bad name to the Austrian school because predictions do not always turn out to be true right away.  This is why, if you are an Austrian school follower making a prediction, you should make it clear that the timing of your prediction is not Austrian based.  You have to make sure your prediction itself is Austrian based too.

The reason I was able to call the Chinese bubble so easily was because the stock market was up 150% in less than a year with an explosion upward toward the end.  It was fairly evident that it was in its final stages.

Now the government has instituted major controls.  Almost half the companies in the exchange have basically delisted, prohibiting trading of shares.  What kind of exchange would allow that?

The government is prohibiting executives and major shareholders from selling.  Meanwhile, it is encouraging the big players to help support the market and buy.

It is a completely rigged market at this point.  The Chinese government is making America look pretty good right now.  The Chinese stock market is now resembling that of a third-world country.  What is the point of owning stocks if you can’t sell them?  The majority of money in stocks now is basically prohibited from selling.  At this time, most shares are essentially worthless if you are not able to sell them.

I don’t know where the Chinese stock market goes from here, but it doesn’t really matter at this point.  The Chinese central planners have shown that they have little respect for property rights and that it is a corrupt and rigged market.  Stocks may go up now because most people are unable to sell.  The share prices no longer reflect any sort of market price.

I am still expecting a bigger crash in Chinese real estate.  It is going to get bad there.  This is going to affect the American economy.  We just don’t know to what extent at this time.

We’ll keep paying attention to China, but the stock prices have become almost meaningless now.  If they go down further with all of the restrictions, that is going to look really bad.

In a recent post about Greece, I said that the debt is not so much hurting future generations as it is hurting people right now.  I have discussed this before, and I think it is important enough to reiterate again.

The U.S. government has been racking up debt like crazy, particularly since 2008.  Of course, it was bad before then too, but not a trillion dollars per year bad.

Even the so-called surpluses in the last few years of the Clinton administration were just mostly surpluses in payroll taxes.  The Social Security taxes coming in were greater than the Social Security payments going out.  The difference was used in the general fund and to give us the supposed surpluses.  There is no doubt though that the much smaller deficits of the late 1990s were far preferable to anything since then.

When I hear people in the U.S. criticize the national debt, they will typically say that we are burdening future generations.  But this is only mildly true, and for different reasons than what is realized.

It hurts future generations only in the sense that it means less savings and private capital investment today.  We can thank our ancestors going back thousands of years for our current standard of living.  You can go back as far as forming a language, writing, and building simple shelters.

And if the Industrial Revolution had never taken place, or even taken place later than it had, then our standard of living would be far lower today than what it is.

So debt hurts future generations because there is less advancement in technology and less advancement in building capital goods than there otherwise would have been.

In terms of paying back the debt, we must consider an example.  First, the debt could end up like the way Greece’s debt is going: into default.  If the government defaults on the debt in the future, then it isn’t really burdening anybody.  It is bad for those holding the worthless “investments”, but that is money that was spent in the past on the government bonds.

What if the debt is never defaulted on?  Let’s say that Joe lends the government a million dollars for 30 years.  Now the bond has matured 30 years later and it is time for the government to pay him back his principal amount.  That money is coming from taxpayers.

This is a case of wealth redistribution, but the overall wealth of society hasn’t really changed.  The money is going from private hands (the taxpayers) to private hands (Joe).  Perhaps there is an argument to be made that it is a disincentive for production, but that would be about it.

Even if you count the debt from the Federal Reserve, the interest payments get remitted back to the Treasury.  And if debt matures and is not rolled over, then it means a contraction of the money supply, which is actually beneficial for anyone holding dollars.  Again, there is redistribution when there are interest payments or the paying back of maturing debt, but the money ends up back in private hands if the government doesn’t spend it.

The problem here is that Joe lent the government a million dollars 30 years ago.  That money could have gone into capital investment and put to good use.  Instead, it was used by the government to misallocate resources.

This is not to say that all of the money was completely wasted by the government.  It may have been or it may not have been.  It could have been used to build a road that is now used.  You can have a misallocation of resources without the resources being completely wasted.

This is the reason that debt hurts us in the present.  If the government runs a trillion-dollar surplus, it means the government is spending an extra trillion dollars that is not in private hands.  It is misallocating these resources to things that consumers mostly did not want or need.  If they did, they could have just bought it without having to go through the government.  It can also serve to discourage production, investment, and savings.

Are the Greek people worried about future generations right now?  The probably are not for the most part.  They are worried about now.  They are worried about paying the rent and putting food on the table.

This is not just due to debt, but the entire government apparatus.  It is a massive welfare state that cannot be sustained without outside handouts.

The debt is a burden now.  The Greeks should default on all of it.  From a libertarian standpoint, it is not a valid contract because it depends on the use of force on people to pay it back and these people did not sign the contract.

If the Greeks default on all of the debt, it will mean no more interest payments. It will also mean that few people/ governments will be willing to lend any more money for a while.  This is seen as a bad thing, but it would actually be a good thing.

Assuming Greece doesn’t turn to hyperinflation with its own currency (which is a big assumption), then the government will be forced to dramatically cut spending.  That is what is desperately needed there more than anything else.

To help the current generation, get rid of the debt now and stop accumulating any more.

The Greeks voted “no” on July 5.  We can’t even be sure of what exactly they voted “no” on.  I’m not sure that the Greeks themselves know either.

Does this mean a full default on the Greek government’s debt?  Does it mean an exit from the European Union?

I really hate the term austerity.  I have for quite a while now.  The problem is that it is used interchangeably for higher taxes and government cuts in spending.  This is how slick propagandists get away with their rhetoric.  They don’t clearly define their terms on purpose.

Higher taxes are bad for an economy.  They stunt growth and hurt living standards.

Lower government spending is beneficial for living standards, at least in the longer run.  It enables people to use their own money.  Government spending misallocates resources, and it also hurts savings.  We need savings and investment for production and more wealth.

I’m not really sure how much lower government spending Greece has actually seen.  It is still a massive welfare state.  It is just a welfare state that has sucked up most of its resources.

Margaret Thatcher was right.  The problem with socialism is that you eventually run out of other people’s money.  Or maybe that is the good thing about socialism because it often brings it to an end.  I don’t know how socialist Greece is, but it is at least some combination of Keynesianism and corporatism.  And not only is it a massive welfare state, but it also has a big military industrial complex, which is another form of welfare.

I see complaints that the Greeks got to vote on not paying their debts.  People make an analogy of someone not paying on their mortgage or credit card debt.  But there is a major difference.

When a government makes a “promise” to pay back its creditors, it is promising the money of future taxpayers.

If I borrow money from Al and promise to pay him back with Bob’s money, that contract is only valid if Bob has actually signed off on it.  But Bob has not agreed to it personally.  The Greek people are Bob.  They should not be forced to pay back debt made in their name.  This is collectivist thinking that the Greek people are responsible.

As an important side note, we often hear that government debt is bad because it is burdening future generations.  But this is only true in the sense that there is less capital investment today.  The real burden is on the people now.  This should be quite evident in Greece, where some people are scavenging for food.

So what is the best case scenario for Greece going forward, realistically speaking?

The best case is a full default, but to retain the euro.  For the sake of liberty long-term, I would like to see the whole European Union fall apart.  But for the sake of the Greeks, they might be better off remaining in the European Union for now, if they can do so with a full default.

The reason is because I fear what a Greek central bank will do with its own currency.  It will likely try to continue the welfare state by turning on the money printing presses.  High inflation or hyperinflation is only going to make things worse there.

Perhaps even better would be pegging to the U.S. dollar, but I don’t see that as likely.  I think the best hope is to stay with the euro for now.  But they should only do that with a full default.  If Greece can somehow keep using the euro while leaving the European Union, that would be great.

The Greek people need freedom.  Much of it is their own fault, in a collective sort of way.  They need a stable currency with dramatically less government spending.

The people in Greece with big pensions thought they were living the easy life off of others.  For a while, they probably were.  But even for those still able to collect a pension, they are much worse off.

It just shows that, eventually, almost everyone suffers under big government.  Even the net beneficiaries of the welfare state are worse off.  Those who promote the free market weren’t kidding when they said that a rising tide lifts all boats.

This is my annual tribute to July 4.  It is called Independence Day.  It is a holiday representing secession, whether people realize it or not.

For anyone who thinks that the so-called Civil War settled all debate about state secession, then what do those same people think about the colonists declaring independence from the British crown?

After all, if someone thinks that it is unpatriotic to even discuss the possibility of secession, then to be consistent, he should think that Americans should still be part of Great Britain.

I also have to point out each July 4 that the British government was far smaller in terms of taxation, regulation, and spending than the U.S. government is today.  It makes you wonder what exactly was fought for.

Most libertarians will agree with me on these points.  But here is my last point where I find much disagreement.

You shouldn’t go around protesting the July 4th holiday as a libertarian.  You should not walk around grumpy because Americans are ignorantly celebrating freedom and independence during a time of big and intrusive government.

When I recently saw Adam Kokesh speak, he made a point about libertarians walking around who are angry, or some other emotion other than happy.  You probably aren’t going to influence a lot of people in your direction by constantly complaining.

Another point he made is that you should celebrate the freedom that you do have.  Despite an overbearing government (or governments), you are a free individual.

Have you ever thought that the people enjoying grilling, and fireworks, and spending some fun time in the sun, are acting more libertarian than some libertarians?

Just because you believe in liberty, it doesn’t mean you have to be a miserable person to be around.  You should be celebrating the liberty that you do have.

Are you never going to have any fun in your life until we reach some society that is minarchist, or anarchist, or whatever you believe in?

In some ways, we have more liberty in our lives today than has ever been seen in world history.  Yes, the U.S. government spends a lot more now than it did in 1800 or 1900, but we also enjoy vast wealth that didn’t exist then.  And if you are living in the U.S. and didn’t sign up for the military, you have little worry about fighting in some foolish war.

Happy July 4th, liberty lovers.  Don’t stress out over it.  Don’t be angry over it.  Celebrate your liberty and enjoy it.  If you can use it to have a friendly conversation with someone on the benefits of liberty, then go for it.

The Greece saga has been going on for years now.  Is this the grand finale?  It likely will be unless the German government and the European Central Bank and the rest of the establishment go along with another bailout.

I do not mean to make light of this in the sense that I know there are a lot of people suffering in Greece.  As a collective, it is their own fault, but part of that is through ignorance.  Part of it is also a mentality of handouts and trying to live off of other people’s labors.

I wish I had more direct knowledge of what is going on in Greece.  Every person’s story is different, but we can be sure there are similarities.  I know that some of the people are really in poverty.

There is a major contraction in the division of labor.  I just read one story of a florist who is afraid for her business.  She depends on foreign business (destination weddings), but many are cancelling their plans.  Worse, she is not sure how she will get supplies from other countries for her store.

Many of the Greek banks have been shut down.  The ATMs are limiting withdrawal amounts – and that is for the ones that aren’t already empty.

I don’t understand how some people there are so stuck.  I have been writing about the vulnerability of Greek banks for quite a while.  How could some people not see this coming?  It is bad enough if you have actually stayed in Greece.  It is just downright foolish to have left a sizeable amount of money in Greek banks at this point.

The Greek government has already defaulted with the IMF.  It is now going to officially default, barring some last-minute bailout.  The Greek people are supposed to have a referendum on July 5, one day after the American Independence Day.

If the Greeks vote to leave the European Union, that will be their independence day.  Unfortunately, it won’t really be a good thing.

From a libertarian standpoint, the Greek government should default and leave the EU.  Government-issued debt is not really a valid contract anyway because it is based on a promise of other people’s money who did not agree to it.

Unfortunately, a Greek departure won’t have many other libertarian aspects.  Decentralization isn’t going to work if it means a continuation of the welfare mentality.  It isn’t going to work with a new central bank that tries massive inflation to continue the welfare state.  It isn’t going to work with everyone trying to live at everyone else’s expense.

I will provide a new update when something more final happens.  That will either be an official Greek departure/ default or a longer-term bailout.  A Greek departure could happen at any time, but maybe it will take until July 5.

With stocks on shaky ground and a Chinese economy that is on the verge of a bust, it will be interesting to see if this is a trigger for greater panic.  It has already caused volatility in the markets.

Stay tuned!

After the mass murder at a Charleston, South Carolina church, I expected the main political issue to be gun control.  That has certainly come up, but it was a losing battle for Obama and the Democrats after past shootings.

The big issue now is the Confederate flag.  This is rather silly because it is not as if the shooting would not have happened if the Confederate flag had been removed from society, whether by force or voluntarily.  Getting rid of the Confederate flag will not reduce violence in the future at all either.

In fact, by making this a big issue, it only serves to inflame racial tensions, if anything.

I also need to point out that the media loves these kinds of stories.  The media pundits consider themselves to be so brave by coming out against slavery in the 21st century, even though that is not the issue.  In addition, when we are debating flags, we are not talking about overseas wars or a struggling middle class or massive government debt.

As far as the flag issue goes, I can sympathize with both sides to a certain degree.  But I do believe that some people who are taking a stand against the Confederate flag would ban certain forms of speech if possible.  Flags are a form of speech, so anyone who advocates a government ban on certain flags for businesses to sell, or individuals to own, or even individuals to burn, is no friend to liberty.  It doesn’t matter the motives because I often defend people’s rights to free speech, free association, etc. without necessarily agreeing with them.

I am not originally from the south, so I really have no strong feelings towards the Confederate flag one way or another.  I could stereotype the typical person who would demonstrate a Confederate flag.  That is not the same thing as being racist or bigoted.  One of my stereotypes is that you would not typically find a Confederate flag in an upscale neighborhood, particularly in an urban environment.

I don’t think most people who care about the Confederate flag are racists or bigots.  I don’t think most people are at all.  There are people who are intolerant of a culture of violence and victimhood that is often prevalent in black communities.  This is not racist.  There are many black people who feel the same way.

I cannot speak of the motives of all people who wave the Confederate flag.  I’m sure there are some who are not decent people.  There are others who are decent people.  Either way, changing the flag on their lawn isn’t going to change the person’s characteristics.

I think there is too much flag worship everywhere.  I get tired of people wrapping themselves in the American flag to promote their agenda of war and empire.

As a libertarian, I have nothing against the American flag.  I will wear it or display it as a symbol of liberty.  At the same time, I don’t want people to mistake my display of it as a symbol of war and empire.

For all of the people who want to get rid of the Confederate flag because of its association with slavery, I would ask that you examine everything that has happened under the American flag.

Slavery existed under the American flag.  Even many of the northerners supported the Fugitive Slave Act, which essentially supported slavery.

What about World War II, where Japanese Americans were put in internment camps?  This all happened as Americans displayed their American flags.

What about all of the aggressive wars in Vietnam, Iraq, Afghanistan, Libya, and the list could go on and on?  The U.S. government has done a lot of evil things, many of which we don’t even know about.  It will continue to do evil things.  Should we ban the American flag because of this?  If you favor getting rid of the Confederate flag, then shouldn’t you be consistent?

I don’t have any special allegiance to the American flag or any other flag.  But when people aren’t throwing war propaganda in my face, I generally try to see the positive sides of the American flag and what it stands for.  I still believe there is a culture of individualism, entrepreneurship, and liberty in the U.S. that is stronger than almost anyplace else.  I have mostly negative things to say about the U.S. government (and most governments), but this is not a complete reflection of America.  Most people are reasonably decent.

The current battle over the Confederate flag will only divide people.  I wish more people would see through the propaganda.  The opponents and proponents of the Confederate flag who are not part of the establishment may have more in common than they think.  They  are both oppressed by the U.S. government and should seek common ground here.

This is also a reason for panarchy.  People can share different views, even in politics, and live peacefully together in the same world.

Greece is getting headline news again in the financial media.  I know we have been down this path before.  It is almost a version of Groundhog’s Day, as once again we are waiting to see if there is some kind of an “agreement”.

These agreements are mainly between politicians and central bankers.  It is not as if the average citizen gets a say in the matter.  They aren’t going to hold a vote in the European Union on whether to continue bailing out the Greeks.

I have no idea what is going to happen this time.  We may see the can get kicked down the road, yet again.  The bailout would have to come from somewhere.  It could be the Germans.  It could the be the U.S. Federal Reserve.  It could be the European Central Bank.  It could be the IMF, some of which is funded by the U.S.

It seems they can always delay the day of reckoning longer than it seems possible.  But let’s remember that this has to come to an end at some point.  The Greeks simply cannot pay their collective bills.  The Greek government spends more money than it can collect in taxes.  And as the economy continues to spiral further downward, there aren’t going to be many taxes left to collect.

The Germans need to pull the plug on the whole thing.  They would probably benefit the most.  And when I say “the Germans”, I don’t mean the government there.  I mean the people need to overwhelmingly demand a stop of the handouts.

I like how some people make it look as though the Greeks are somehow being abused.  Well, maybe the people are, but it is mostly self-inflicted.  But we hear complaints about austerity being “imposed” on the Greeks.  It isn’t being imposed.  They can simply withdraw from the European Union and default on their debt.  But guess what?  No more handouts.

So that is the real problem for the Greeks and their apologists.  They don’t want austerity “imposed” on them, but they want to keep getting the free lunches.

If there is a Greek exit – commonly known as a “Grexit” – then what will this mean for everyone else, other than the Greeks?

First, Greece is a relatively small country.  It is not any kind of an economic powerhouse.  Its direct economic effect on the world is minimal.

However, for a small country, it has racked up a lot of debt.  In total, the Greek government owes over $300 billion.  Most of it is owed to other European countries or the IMF.  Only a small percentage is owed to private investors.

A default will certainly hurt some of the European governments.  It is hard to say how much it will hurt the banking system.  The Greek banking system is already on the verge of collapse.  For the wider European Union, the ECB is not going to allow a major banking collapse.

I think the bigger ramification of a Grexit is the precedence it will set for others to leave.  Not too long ago, it was common to hear the term “PIGS”.  This is an acronym for Portugal, Italy, Greece, and Spain.  Sometimes you will see “PIIGS”, which includes Ireland.

There is a reason these countries are grouped together.  They all have major financial trouble.  They are all covered in debt.

If Greece officially defaults (it has already technically defaulted by missing a payment to the IMF), then what comes next?  Why should we not expect the same thing to happen with Spain, Italy, and Portugal.  These are much bigger potatoes that we are dealing with.

This is why I think the European Union is going to break apart eventually.  It may be this year or 5 years from now.  But it is not really sustainable over the long run.

Some of the countries will be worse off when they get their own central bank back and inflate like crazy.  Some countries, such as Germany, will hopefully be better off in the long run.

Decentralization is generally better for liberty, but this isn’t to say that it will be great for everyone.  If Greece exits and turns up the inflation with its own central bank, the economic conditions there could get even worse.

Even though Greece is a small country, this story matters.  It matters because of what will follow.  It will be somewhat symbolic of what is to come for some of the bigger countries.

The former Secretary of Labor under Bill Clinton – Robert Reich – is shilling for an increase in the minimum wage.  He wants to start out by raising it to $15 per hour.

I can go through the many arguments against minimum wage laws.  They basically prevent people from getting jobs at a certain price.  It doesn’t mean that employers have to pay employees more, because they can decide not to employ them at all.

And there is the reductio ad absurdum: If raising the minimum wage is so great, why not raise it to $100 per hour and we can all be rich?

Some make the mistake of thinking that the problem with a $100 minimum wage is that we would have high inflation.  But inflation is a monetary policy issue.  With a minimum wage of $100 per hour, it would basically destroy the economy if it were enforced and if the Fed did not massively inflate the money supply.  We would be relying on the underground economy at that point because almost everyone would be officially unemployed, except perhaps for some entrepreneurs.

Reich’s short presentation is particularly bad.  He says that people making minimum wage will spend the money, thus helping the economy.  This is pure Keynesianism, and it is the opposite of correct.

An economy grows based on productivity.  You need to increase wealth, not spend more.  The way to increase production is through savings and investment.  So on this point, Reich is absolutely wrong.  He has it almost completely backwards.

He also makes this absurd comment that if the minimum wage had kept up with American productivity since 1968, then it would be at almost $22 per hour.

First, how does he come up with productivity?  Just because we have more productivity, it doesn’t necessarily have to translate into higher wages.  The real median household income has been relatively flat for decades, so why would relatively unskilled minimum wage workers get a greater wage increase than someone in the middle?

Second, is Reich really suggesting that we should eventually raise the minimum wage to $22 per hour from where it is right now?

This is really a basic lesson of supply and demand.  If you make employment illegal below $15 per hour (or any crazy amount), then there will be less demand for labor from employers and a greater supply of labor.  In other words, unemployment will be higher, assuming the Fed does not massively inflate.

If the minimum wage were lowered to $2 per hour, it would be almost the same as abolishing the minimum wage.  It would have virtually no effect on employment because most people would be unwilling to work for anything less than this anyway, at least in the United States.

I don’t know if Robert Reich really believes the ignorant things he is saying.  But based on his policy proposal, he is advocating a massive increase in unemployed people.  The former Labor Secretary wants less labor.  Well, it might mean more labor for the robots.

Donald Trump has entered the presidential race, with a lot of criticism coming from all sides.  There is something that I like about Trump only because the establishment is so bothered by him.  They are attacking him more at this point than Rand Paul.

If nothing else, Trump’s entry into the race should be entertaining.  He will get the mudslinging going strong.  He also has no trouble criticizing other Republicans such as George W. Bush.  Just because of his seeming honesty, I think he is going to resonate with at least some people.

Unfortunately, when it comes to economics, Trump is terrible.  He may be a good businessman, but it doesn’t make him knowledgeable in the field of economics.

He recently attacked China for stealing U.S. jobs and devaluing their currency.  In speaking about Americans looking for work, Trump said, “They can’t get jobs, because there are no jobs, because China has our jobs and Mexico has our jobs.”

Trump said that with China devaluing its currency, they “make it impossible for our companies to compete, impossible.  They’re killing us.”

This is just bad economics.  I agree that China should not devalue the yuan, but that is for the sake of the Chinese people.  This actually subsidizes Americans by making imports cheaper.  It means that poor Chinese consumers are subsidizing relatively rich American consumers.

It is also rather hypocritical to criticize the Chinese for devaluing the yuan without criticizing the Federal Reserve.  The Fed has quintupled the monetary base since 2008.  And over the last 100 years of the Fed’s existence, the dollar has been depreciated by well over 95%.

After Trump’s comments, a spokesman for the Chinese Foreign Ministry, Lu Kang, responded.  He said, “Economic and trade cooperation between China and the United States has grown to such an extent today that it has become like ‘You are among us and we are among you.'”

He also said, “It’s a two-way win-win situation.  Such trade has actually given the two sides great benefits.”

So for whatever faults I can find in the economic central planners of China, this statement is rather accurate.  Apparently the Chinese central planners understand economics better than Donald Trump, or else they are just less prone to demagoguery.

China doesn’t “steal” jobs.  China is a country.  There are Chinese workers who do work for American companies.  There are Chinese companies and Chinese workers who manufacture products that are sold to Americans.

This benefits Americans on the whole.  If Apple has Chinese workers making i-Pads, it benefits Americans because they are more affordable.  Would Trump rather have those jobs here (if they would even exist here) and have i-Pads selling for $100 more than they are?  It may not matter to him with his billions of dollars, but it matters to middle-class Americans.

Buying products made by Chinese workers is really no different from someone in California buying products from a worker in Virginia.  These are just imaginary borders.  The only difference with China is that the Chinese use a different currency.  But if they want to devalue it, that is their problem.

The liberalization of the Chinese economy over the last three decades has been a huge benefit to Americans.  It has been a bigger benefit to the Chinese, as hundreds of millions of people have moved out of severe poverty.  It doesn’t mean China is a capitalist country now, but it is far better off than it was.  And we are better off for it.

If Trump is worried about American companies shifting jobs overseas (which isn’t a bad thing, if done in a free market), then he should start by advocating a massive reduction in taxation and regulation.  If you cut corporate taxes and income taxes (including payroll taxes), then this goes a long way to helping employment and wages.

If the U.S. had a much more free market environment, then we would be hoping for a lot of jobs to be filled in China and elsewhere.  It would make us that much richer.  It would just be an issue of comparative advantage.

In a free market environment, unemployment is not a problem.  There is always work to be done as long as we don’t live in a world filled with robots that can do everything.  The key is to have jobs that add to productivity and to our overall happiness.

Ultimately, we don’t want more jobs.  We want more wealth.  You would think Trump would understand a thing or two about wanting more wealth.