Trump, Europe’s Collapse & Why Liberals Keep Losing, with Yanis Varoufakis (Trump Tariffs, Economic Harakiri, What Happened to Japan, and Gold)

I’m sorry I haven’t posted in a while. There’s so much information, and I’m struggling to process all the news. I didn’t have time to write a post, and I wasn’t sure what to write about, as there’s so much to cover and so much is happening lately. I joined a Discord server of Gary Stevenson, who’s videos I posted before. Most of the people I met there scare me regarding the future of humanity. They lack so much understanding and knowledge about the world, which honestly depresses me a little. I tried, for example, to explain geopolitics and the truth about history and what the West has done throughout history—Afghanistan, Yugoslavia, Iraq, Libya, Syria. I tried to explain the truth, but it was literally like hitting my head against a wall. To give you an example, this is one of the responses I got during a conversation on this Discord: “It all makes sense now, The Duran is a giga pro-Russian site where the director is a host on RT, no wonder all you are spewing is Russian propaganda.” I was accused of being a Russian propagandist getting paid by the Kremlin. In response, I wrote that I unfortunately don’t spew US and Western propaganda, so I didn’t get the peace of mind from USAID, which sponsored the so-called free and independent Ukrainian news that he believed in. I told him that I knew he wasn’t in pain from USAID now since Trump stopped it, but I asked him if he was ever paid by USAID, like the so-called independent and free Ukrainian media, or if he was just so naive that he actually believed what they say and simply spewed Western propaganda for free.

Anyway, I spent a lot of time trying to understand what’s happening and I found some interesting things. Now, I’m looking into gold, for example in Russia—100 tons of gold disappeared, and London is sending gold to the US in bulk, while Germany asked the US to return their gold six years ago, and the US told them they’d send it back in six years. The deadline is soon to pass, or it already has, so the US is supposed to send the German gold back to Germany. Meanwhile, Trump wants to audit the US Treasury gold reserves. Funny and strange things are happening now regarding gold.

This post is about something different. I posted a video of Tom Luongo, which discusses the same subject, but I don’t fully agree with him. Anyway, the video I posted here explains what Trump’s tariff plan is. This is related to my other posts, but first, let me share an interesting fragment from the video:

16:01

“The main discontent regarding the state of the United States is shared by the vast majority of people around the world, including me. We believe—and we are not wrong to believe—that the United States has an exorbitant privilege, and that is the US dollar. The US dollar is the only currency in the world that is in demand independently of what the United States produces.

The only reason you would want a British pound is if you want to buy something produced in Britain or if you want to visit Britain as a tourist. Nobody really wants pounds—maybe for speculation—but, for example, I am speaking to you from Athens. When I put gas in my motorcycle, even if it is a Greek company buying petrol from a Greek or French refinery that has purchased crude oil from Libya, so no American corporation is involved at all, that act of purchasing gas still increases the demand for dollars because oil is denominated in dollars.

That is the exorbitant privilege of the United States. It allows the Germans to keep selling to the United States, the Chinese to do the same, the Japanese as well, and all of this is recycled through Wall Street. It becomes rents for the entire upper class in the United States—it becomes rents for the bankers on Wall Street, and so on.

Trump, while understanding all this and loving it—he loves the fact that the dollar has this exorbitant power for the United States ruling class, and he is one of them—nevertheless sees this exorbitant privilege also, or primarily, as an exorbitant burden. From his perspective, he is a nationalist. He does not like the fact that the United States can no longer build nuclear submarines because there is no longer an engineering sector capable of doing so or because the country is not producing enough steel. He once said, back in the 1980s—1982 or 1983—I saw a quote from him stating that if you do not have steel, you do not have a country. America is no longer producing steel in any substantial quantity; it is primarily China and, to some extent, Germany.

For him, this exorbitant privilege, which he adores, comes with the exorbitant burden of effectively shrinking the United States. But he also has an economic theory behind it, leading him to conclude that this exorbitant privilege will not last long—that economic carnage will come to the United States. And I do not think he is wrong on this.

His argument is as follows: why does the United States have such a large trade deficit with Germany, Japan, China, and so on? Why does the market not correct this? If Paul Krugman and other liberal establishment economists were right that markets work to equilibrate through demand and supply, prices, interest rates, and exchange rates, then the dollar should have fallen because America has a trade deficit. Any country with a trade deficit sees its currency decline. But why is the dollar not declining? Because it has this exorbitant privilege—because people want it for other reasons.

From the perspective of Trump’s team—not just Trump himself, but also the economists around him, who are not fools but rather quite smart (even if they may be evil)—they realize something. Their analysis is that the reason the dollar is not declining is that foreign central banks hoard dollars.

Why do they hoard dollars? Because the dollar is the global reserve currency. When Germany sells cars to the United States, dollars flow back to Germany. What happens to these dollars? The vast majority of them—those not returned by Mercedes-Benz to New York—are hoarded by the European Central Bank. The same happens with the Bank of England, the Bank of Switzerland, the Bank of Sweden, the Bank of Japan, and the Bank of China. Increasingly, we see this with China as well—$3 trillion is held by the Central Bank of Japan. Three trillion dollars—3,000 billion dollars—is not to be scoffed at.

Why do they hold these dollars? Why don’t they convert them into their own currency to increase economic activity? Because this is how they preserve their currency at a low level.

Because when you hold these dollars, the value of the dollar relative to your own currency goes up, enhancing the competitiveness of your export sector. Therefore, Trump says, “You see, the foreigners are taking advantage of us. We are gifting them the reserve currency, which keeps their currencies down and backstopped. Instead of holding gold or diamonds, they are holding our dollars, and in doing so, they are disadvantaging our exporters while advantaging their own exporters who are selling to the United States. That’s why we have the US trade deficit.”

Now comes the story about tariffs. Conventionally, liberal establishment economists think Trump is an idiot because they believe he doesn’t understand that tariffs can’t eliminate the US trade deficit. Their view is—and this part is not entirely wrong—that slapping tariffs on Chinese aluminum, plastics, or clothing will increase prices for American consumers, which could fuel inflation and harm the US economy. However, they assume Trump does not understand this dynamic, and that is where they are wrong.

The conventional economic argument is that imposing tariffs should, in theory, push the dollar up, which would counteract the tariffs’ effects. Even though Americans might initially pay more due to the tariffs, a stronger dollar would offset those costs, meaning that what they pay at Walmart wouldn’t actually increase much.

Trump fully understands this. I have read policy papers circulating among his team, and they know this precisely—and they love it. Why? Because that’s how they get foreigners to pay for the tariffs. This is something explicitly stated in their policy documents. The logic is:

• The US slaps tariffs on foreign goods.

• Foreign central banks immediately reduce interest rates to absorb the recessionary shock from the tariffs.

• As they lower interest rates, their currencies decline in value.

• The dollar strengthens.

• Import prices for Americans remain relatively stable despite the tariffs.

• Meanwhile, foreign economies are effectively paying the tariffs by absorbing the costs through currency devaluation.

For the Trump administration, this is a win. Not only does the US collect tariff revenue, but there is also an added political benefit: Congress, particularly the House of Representatives, controls tax revenue, but not tariff revenue. If Trump wants to increase tax receipts, he has to negotiate with Congress, where he faces opposition. However, tariff money flows directly into the Treasury without congressional approval, giving him a financial stream he can use with fewer legal hurdles.

That’s phase one. By the end of it, the US trade deficit has not been reduced, but Trump has increased Treasury revenue and made foreign economies pay for it.

Now comes phase two: a grand negotiation. Trump then tells foreign governments—China, Germany, Saudi Arabia, and others—”You are now going to revalue your currency.”

This strategy is not entirely new. Reagan did something similar with Japan in 1985, leading to the Plaza Accord. Reagan gathered European central bankers, but primarily the Japanese, and pressured them to revalue the yen under the threat of tariffs.

Trump, however, reverses the order. He first imposes tariffs, then forces foreign governments into one-on-one negotiations, which he prefers because it maximizes his leverage. He tells them they have two options:

• Sell off some of the dollars they are holding to buy their own currency, which would strengthen their currency and revalue it against the dollar.

• Swap their US Treasury holdings for new, long-term Treasuries at lower interest rates, effectively subsidizing US debt.

If they refuse, the tariffs remain in place. It’s a win-win situation for Trump. If they comply, he claims victory. If they refuse, they keep paying tariffs. Either way, he benefits.

This plan is well-documented and carefully thought out, with substantial financial and economic reasoning behind it. However, I believe it will ultimately fail—not for economic reasons, but for political ones.

The success of Trump’s plan depends on social movements, labor unions, and political forces rising against the governments that engage in deals with him, both internationally and within the United States. The biggest flaw in Trump’s strategy is that, ironically, if it works, it could backfire on him.

If the US trade deficit is eliminated through currency revaluations and debt swaps, then the financial elites—Trump’s own allies—will turn against him. Wall Street and the real estate sector thrive on the capital influx generated by the US trade deficit. The excess dollars from foreign trade flow back into the US, fueling real estate speculation and financial markets. If the trade deficit disappears, that capital flow will shrink, and real estate moguls and financiers will be very unhappy.

At some point, if Trump’s plan succeeds, he will have to choose whom to betray:

• The American working class, to whom he promised manufacturing jobs and an end to the trade deficit.

• His own circle of real estate investors and Wall Street financiers, who rely on the very trade imbalance he seeks to eliminate.

Guess who I think he will betray?”

All this is related to other things I have posted before, like the earlier mentioned post containing the video of Tom Luongo, such as:

Best recent interview of Tom Luongo. (My views on geopolitics and what is happening—this will be a very long post, but I hope people will stick with it until the end.)

But it also discusses how reserve currency works, which I explained in this post:

Mark Goodwin on Digital Currency, Surveillance, DOGE, and the Coming Techno-Feudal Order.

“A country that issues the global reserve currency enjoys an unfair economic advantage because most nations can only expand their money supply based on economic growth without causing inflation.

For example, if Germany's economy grows, an increase in money circulation can create deflationary pressure (since demand for the currency increases). To counteract this, the central bank can print more money. If the increased money supply matches the deflationary effect, inflation remains in check.

However, when a currency is the world’s reserve currency, the situation is different. Demand for USD wasn’t just tied to the U.S. economy but also to global demand. Since the USD was the only currency directly linked to gold, foreign banks wanted to hold it as a reserve asset, treating it like gold itself. This external demand caused additional deflationary pressure, allowing the U.S. to print more money than its economy alone would justify.”

In this case, I was writing about the USD before the removal of the gold standard, but the "additional deflationary pressure" caused by being the global reserve currency also continued after the gold standard was removed. This is what Yanis Varoufakis spoke about regarding the special privileges of the reserve currency.

This is also connected to another post of mine:

How Central Banks Have Seized Power Over Our Societies (The Story of Japan and What I Think Will Happen in Europe)

This explains what happened to Japan in the 80s, which Yanis Varoufakis also spoke about. Simply put, the US forced Japan to commit economic seppuku, or harakiri. Trump intends to do what the US and Reagan did to Japan in the 80s, which destroyed Japan's economy and turned its economic miracle into three lost decades. Now, Trump wants the US to do the same thing it did to Japan, but this time he wants to do it to the entire world. Trump wants to force the rest of the world to commit economic seppuku, or harakiri. Yanis Varoufakis thinks it will not work, and I agree that the only effect it will have is to destroy the world economy.

If Trump were to strengthen US manufacturing and industry, he would need to destroy the current American economic system by devaluing the USD. The problem is that to strengthen US manufacturing and industry, he would destroy Wall Street and the entire Western economic system. The US does not have a manufacturing base — people in the US are too uneducated, too unskilled and too unhealthy to compete with the rest of the world. The poor quality of the US’s private healthcare system, private education system, and lack labor laws which allow workers to be worked to death result in competitiveness. Unhealthy and uneducated people are not good workers, while the lack of labor laws that allow them to work to death is not enough to make them competitive. The US needs to import labor because the domestic workforce is unqualified; they need European talent to exist, and they are too unhealthy to work effectively for long periods.

Even if Trump wanted to create an industry and manufacturing base in the US, the country is too poor in terms of human capital to be competitive. Moreover, most of the US economy is based on software and financial instruments like banks and Wall Street, which would suffer from what Trump is doing which is problematic. He is trying to help a small part of the US economy while threatening to destroy the main part of the US economy.

This video I linked helps me understand what Trump wants to do with tariffs. He wants to force other countries to flood the market with USD they are holding to reduce the price of USD, making manufacturing more competitive. But on the other hand, this would destroy the US banking system and Wall Street. I would say it could work if, at the same time, he introduced a socialist program like a national healthcare system, a national education system, and stronger labor laws, which would improve the quality of life and the skill levels of the US workforce. This could make the US really strong. However, instead, he plans to reduce taxes for the rich and destroy the remaining welfare system, which only screws over workers even more.

On one hand, he gives the rich big tax cuts, but on the other hand, he is threatening the financial system, including banking and Wall Street, from which the rich profit. I also think this connects to what Tom Luongo has talked about. Recently, Tom Luongo discussed gold. When I was trying to understand the gold situation I found out that the gold in the US Treasury is undervalued because it’s priced at values from the 50s or 60s. If it were revalued at current market prices, it would be worth about 400 trillion dollars. Tom suspects that the US Treasury is full of gold, and he doesn’t believe the rumors that places like Fort Knox are empty. The problem is that all gold reserves haven’t been properly audited since the 50s or 60s, and now Trump wants to audit it.

So, it’s strange and suspicious that when Trump wants to audit the US Treasury or Fort Knox, we suddenly hear that Russia is missing 100 tons of gold and that London is sending huge amounts of gold to the US. The issue is, I do not agree with Tom Luongo’s belief that the gold reserves in the US Treasury actually exist. There have been many rumors in the past that gold from Fort Knox and other places in the US Treasury has been sent around the world to be borrowed and sold. In fact, when I tried to follow the gold story, I found out that the price of gold is artificial and has been manipulated, partly to keep gold priced lower than it should be.

Anyway, I hope you enjoy it.

“Knowledge will make you be free.”

― Socrates

+

“Knowledge isn't free. You have to pay attention.”

― Richard P. Feynman

=

“Freedom is not free, you need to pay attention.”

― Grzegorz Ochman

Please pay enough attention, or we will all be screwed. God bless you all.