Yes, the markets are down, but it’s not the bloodbath many were predicting. So I want to reiterate the overall theme from the first post this morning. The Trump Tariffs are not part of a “trade war” in the usual sense that we’re used to. They’re a tactic that is designed to operate a bit like a blunt instrument, to get the type of global reset that Trump would never have been able to get by trying to use sweet reason. The dynamic that is working in Trump’s favor is that the forces aligned against him are basically trying to defend the status quo in a revolutionary moment—and that’s what Trump says he’s after: an “economic revolution.”
Thus we have the counterintuitive (to some) spectacle of Wall Street and the “Chicoms” in alliance to preserve the status quo. In reality, much of the world will actually end up benefiting from the overthrow of the neocolonial status quo. Further, China is in a difficult position due to its demographic implosion. China has developed in spectacular fashion, yes, but this has come as a result of an overworked and rapidly aging populace that lacks a strong social safety net and the traditional backstop of family to care for the old people.
So, here’s Philip Pilkington responding to some of the prevalent misconceptions. PP seems to swing from optimism to pessimism several times in the day, but his posts are useful:
Ian Miles Cheong @stillgray
Serious question: What happens if China decides to dump its US Treasury Bonds? China holds $760.8 billion in bonds.
They won’t dump them. Not at this point in the game, anyway. Doing so would devalue the USD, strengthen the yuan and make Chinese exports even less competitive. The Chinese are possibly moving to support USD right now.
Theo McDonald @tbald101
China is praising Reaganism while Liberals are reposting Milton Friedman and promoting the maintenance of cheap labour and goods from China
This is the last gasp of the liberals who have become so partisan they have no identity any more. There is no coming back from this. China is betting on a really bad horse. They should recognise their trade policies sparked a revolution and try to rationally adjust.
What is being revealed by the political alliances this week is that Chinese trade strategy rests in part on an extractive Wall Street in the US. This is uncomfortable for my Chinese friends but it is the truth. The Chinese should work to rebalance this relationship.
It takes two to tango. This is a toxic relationship. The Chinese are loaded up on Wall Street junk equities from recycling their surplus dollars. They are getting rinsed. Time to dump the Wall Street sludge, comrades!
This next is very big, and shows just how revolutionary Trump’s goals may be:
Council of Economic Advisers (CEA) Chairman Stephen Miran says USD reserve asset status is a problem. The Trump administration may move to purposely dismantle USD hegemony. The average person on this platform has literally no idea what they are watching right now!
The Trump crowd go full Maoist while the liberal left defend Wall Street and globalisation. Even if the tariff war ends in disaster, there won’t be much of the left left afterwards.
Big Serge @witte_sergei 
It’s really weird how a sensible discussion about reshoring military supply chains, semiconductors, and rare earths metastasized into nostalgia for hundreds of thousands of Americans working in shoe factories.
… Why are people so exited about low wage jobs? Loser mentality.
Imagine thinking having a healthy apparel industry in your country is a bad thing. Education standards are desperately low, it seems.
It’s embarrassing. Go on YouTube and you’ll see a thriving American footwear industry. Red Wing etc. All high-end stuff. I’m sure these companies would love to expand into more affordable product. But people with literally no skills like @DrewPavlou hold their noses. Decadent.
Brian @MNBrian_1
Have seen a lot of "Who actually wants to work in a factory?" takes these last few days.
I know plenty of people/towns that would love these opportunities.
But also this:
Techie Stan 阿共同路人 @stanchang168
Replying to @philippilk
Looks Like PRC Just Sold $50B Treasury Notes Today
It does. I have no idea why they’d want to further weaken the USD given the tariffs.
This tariff sea change reverses the gears of a machine that has been in motion for decades.
At a very basic psychological level, people are opposed to change. It doesn’t matter whether it’s changing their cable provider or taking a detour in traffic.
Extrapolating from this, people are really opposed to bigger, more consequential change.
Extrapolating from this, in the world of finance, I have consistently argued that market participants have been falsely conditioned by our monetary and fiscal policy in this country to always expect comfort and never expect interruptions from the market moving higher, or the quality of life status quo that we believe we are entitled to here in the United States to suffer.
This concept was the basis for my article explaining why I thought the next market crash would “break the brains” of market participants.
Now let’s zoom out and think about what President Trump is trying to accomplish with his tariff agenda. He is essentially saying that the status quo in the United States isn’t working and large changes need to be implemented—changes that will shock the global economy—to remedy the issue.
“Who is the status quo not working for?” some of you will ask me from your Porsche, driving down PCH, or from your desk overseeing your millions in the market.
If I had to venture a guess, I’d say it’s not working for people in towns like this:
Before hitting “Publish” let me be clear. I’m not saying China is to blame for all our ills, as if Americans didn’t lazily go along with the self destruction of their own country, or benefit gladly from the exploitation of cheap foreign labor. However, what Trump is promising is not a win in a traditional style “trade war” that leaves the status quo in place. If that statement by Stephen Miran, emanating from the White House, means anything, it means that Americans will be demoted to living within their means—as a country. China will need to find a better way than profiting off the greed of the irresponsible American Ruling Class. If this works, it will be a better world for our children. America can be great again, but that will happen if Americans face up to being great without the help of exporting inflated dollars.
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"May you live in interesting times", gets more prophetic each passing day
Thomas Cahill, author of the phenomenal "How the Irish Saved Civilization", called defining moments in history the henges of history
He wrote a whole series of six books deal8ng these pivotal moments in history.
I wonder, if Trump pulls this off and the planet is not thrown into a cataclysmic WWWII, if we are not only in interesting. Fascinating times but at a henge point?
For the last few years the Chinese have been shedding their USTs, whether by letting them mature and not replacing them, or downright selling them. They have also been adding to their gold holdings. The reason is clear - they want to avoid the consequences of the weaponization of the dollar.
The Chinese have enabled the US to run ever larger deficits while also having access to cheap imported goods from China, though I will note that much of the stuff imported from China isn’t cheap when you factor in how short its lifespan is compared to what it replaced.
It is amusing to watch the political class that has demonized stocks now lamenting the fall of the stock market - all due to Trump’s tariffs, of course. Never mind that the stock market had achieved nose bleed altitude prior to the tariff war.
"May you live in interesting times", gets more prophetic each passing day
Thomas Cahill, author of the phenomenal "How the Irish Saved Civilization", called defining moments in history the henges of history
He wrote a whole series of six books deal8ng these pivotal moments in history.
I wonder, if Trump pulls this off and the planet is not thrown into a cataclysmic WWWII, if we are not only in interesting. Fascinating times but at a henge point?
For the last few years the Chinese have been shedding their USTs, whether by letting them mature and not replacing them, or downright selling them. They have also been adding to their gold holdings. The reason is clear - they want to avoid the consequences of the weaponization of the dollar.
The Chinese have enabled the US to run ever larger deficits while also having access to cheap imported goods from China, though I will note that much of the stuff imported from China isn’t cheap when you factor in how short its lifespan is compared to what it replaced.
It is amusing to watch the political class that has demonized stocks now lamenting the fall of the stock market - all due to Trump’s tariffs, of course. Never mind that the stock market had achieved nose bleed altitude prior to the tariff war.