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The $10 Trillion Trade Shock - Spencer Morrison #6320 · Financial Survival Network

• 0:00
  Speaker 1: The theft of American technology and they're still doing that.
• 0:02
  Speaker 1: By the way, these guys have stolen, like I think
• 0:04
  Speaker 1: since in the last twenty years almost ten trillion dollars
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  Speaker 1: worth of American IP. It's unbelievable, unbelievable. You don't have
• 0:12
  Speaker 1: property rights in China if you're an American company, right, Yeah,
• 0:15
  Speaker 1: so this is a problem. So what they've done essentially
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  Speaker 1: is they've cheated, they've stolen, and they've set up a
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  Speaker 1: system where the playing field is not at all level
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  Speaker 1: when an American company is competing with a Chinese company.
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  Speaker 2: You're listening to Carrie Letz's Financial Survival Network where you
• 0:33
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• 0:37
  Speaker 2: thrive in today's trying times. You need the Financial Survival
• 0:41
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• 0:50
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• 0:53
  Speaker 3: Ever, And welcome you are listening to and watching the
• 1:00
  Speaker 3: Financial Survival Network. I'm your host, Carrie Lutz. Well, tariffs
• 1:05
  Speaker 3: have been all the rage. It looks like the markets
• 1:08
  Speaker 3: have calmed down enough, they've accepted the inevitability of the
• 1:13
  Speaker 3: Trump tariff regime. Is it a plus is it a minus?
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  Speaker 3: I want to know your thoughts. Do you think tariffs
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  Speaker 3: are going to help make America great again? Or is
• 1:24
  Speaker 3: it going to bring turmoil to the world. But one
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  Speaker 3: person who does believe that they are beneficial. Spencer Morrison,
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  Speaker 3: author of Reshore, tariffs will bring our jobs home and
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  Speaker 3: revive the American dream. Spencer, it's great to have you on.
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  Speaker 3: You know, growing up, I was really into Milton Friedman,
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  Speaker 3: free trade, all of this, but free trade never really
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  Speaker 3: took into account weaponized free trade, and that's kind of
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  Speaker 3: what we've been having over the past fifty years, isn't it.
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  Speaker 1: Yeah, that's absolutely correct. You know, thanks for having me
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  Speaker 1: on the program. I love coming on and having an
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  Speaker 1: in depth discussion about these issues. You're entirely right. So
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  Speaker 1: for the last fifty years, especially ever since nineteen seventy four,
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  Speaker 1: America has been running a large on a trade deficit.
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  Speaker 1: You know, the cumulative value of that trade deficit, when
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  Speaker 1: we adjust it for inflation, it's over twenty eight trillion dollars.
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  Speaker 1: That's like a whole year of our GDP that we
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  Speaker 1: used to buy products from foreign countries, over and above
• 2:27
  Speaker 1: what we built in this country, and that's caused a
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  Speaker 1: lot of economic dislocation. So you look, for example, since
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  Speaker 1: two thousand and one, when China joined the World Trade Organization,
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  Speaker 1: over sixty thousand factories closed. They moved to China because
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  Speaker 1: we don't need them anywhere by buying the Chinese products,
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  Speaker 1: over five million manufacturing jobs. They left our shores, they
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  Speaker 1: went to China, they went to Mexico. And on top
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  Speaker 1: of that, the balance of payments, right, so we still
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  Speaker 1: have to pay for these products. We're not getting them
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  Speaker 1: for free, but we're not making anything to trade for them.
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  Speaker 1: So in order to pay for them, what we have
• 3:01
  Speaker 1: to do is we have to sell off assets, so
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  Speaker 1: the value of things that we made in the past,
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  Speaker 1: things like the value of our stock market houses, or
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  Speaker 1: we have to sell debt so the promise to make
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  Speaker 1: product in the future. As a result, what's happened is
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  Speaker 1: we've done the old switch ru. We've taken a whole
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  Speaker 1: lot of money from the productive economy, from Main Street,
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  Speaker 1: and we sort of funneled it into Wall Street and
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  Speaker 1: the financial sectors. So it's been a really bad, really
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  Speaker 1: bad deal for the ordinary America who you know works
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  Speaker 1: for a living.
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  Speaker 3: Yeah, it's you know who thought this was a good idea.
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  Speaker 3: You know, It's funny thing. I was talking to a
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  Speaker 3: group of guys I'm friends with. We have coffee together
• 3:43
  Speaker 3: at Starbucks regularly, and I live in Palm Beach. County
• 3:47
  Speaker 3: is the most dysfunctional county in Florida by far, because
• 3:52
  Speaker 3: it's the size. It's bigger than Rhode Island, it's bigger
• 3:55
  Speaker 3: than Delaware, and parts of the county are agricultural which
• 3:58
  Speaker 3: bear no connection to the coastal communities. So I'm saying,
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  Speaker 3: just redraw the lines. And the resistance I get from
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  Speaker 3: guys who understand inefficiency and understand how screwed up government is,
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  Speaker 3: it's like, why would you want to do that? Like
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  Speaker 3: everything should just stay the way it is. But you know,
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  Speaker 3: before it's the way it is now, it wasn't that way.
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  Speaker 3: Right in the fifties, sixties, seventies, the US was a
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  Speaker 3: manufacturing powerhouse, the manufacturing powerhouse of the world. And it's
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  Speaker 3: not because our quality got so bad other countries. Yeah,
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  Speaker 3: certain industries, autos, et cetera. Quality definitely was a factor
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  Speaker 3: in their decline, but it was really just unfair trade
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  Speaker 3: practices that caused this situation, right.
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  Speaker 1: Yeah, I mean, so we have to understand the dynamics
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  Speaker 1: that have led to this offshoring disaster, and ultimately it
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  Speaker 1: doesn't act really boiled down to your standard sort of
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  Speaker 1: economic models. What we have here is a confluence of
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  Speaker 1: both economics and politics.
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  Speaker 3: Right.
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  Speaker 1: People need to understand that the economy is just not
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  Speaker 1: this thing that sort of operates above us and operates
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  Speaker 1: according to its own laws. There are foreign governments and
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  Speaker 1: in fact our government that take large stakes in the
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  Speaker 1: economy and would like to manipulate it for their own purposes.
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  Speaker 1: And China has been doing that expertly.
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  Speaker 3: Right.
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  Speaker 1: So, one of the things that China did in the
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  Speaker 1: nineteen eighties and leading into the early two thousands is
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  Speaker 1: they subsidized the heck out of their manufacturing sector. They
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  Speaker 1: gave preferential and use policies. They looked the other way
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  Speaker 1: in terms of you know, IP theft, the theft of
• 5:46
  Speaker 1: American technology. And they're still doing that. By the way,
• 5:49
  Speaker 1: these guys have stolen, like I think since in the
• 5:51
  Speaker 1: last twenty years almost ten trillion dollars worth of American IP.
• 5:55
  Speaker 1: It's unbelievable, unbelievable. You don't have property rights in China
• 5:59
  Speaker 1: if you're an American com company, right, Yeah, so this
• 6:01
  Speaker 1: is a problem. So what they've done, essentially is they've cheated,
• 6:05
  Speaker 1: they've stolen, and they've set up a system where the
• 6:10
  Speaker 1: playing field is not at all level. When an American
• 6:13
  Speaker 1: company is competing with a Chinese company, it's not level.
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  Speaker 1: They're backed by their government. They're allowed to steal technology.
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  Speaker 1: Of course, our guys can't do that, and the result
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  Speaker 1: is that we're getting out competed, not because their products
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  Speaker 1: are necessarily more expensive, and not because their products that
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  Speaker 1: are of worse quality. We're getting out competed because the
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  Speaker 1: Chinese government is plugging a lot of money into their
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  Speaker 1: businesses for the purposes of out computing our industry. And then,
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  Speaker 1: you know what the thing is. This is what Peter
• 6:38
  Speaker 1: Navarro has rightly pointed out. Once the Chinese out computer
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  Speaker 1: industries and they kill them, they move in and then
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  Speaker 1: they jack up the prices. So what they're doing is
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  Speaker 1: they're playing a long game. They're dumping their products and
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  Speaker 1: then establishing monopolies because they know that, you know, free
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  Speaker 1: trade is not just about what's good today. They're looking
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  Speaker 1: at it from a business and an investment standpoint. They
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  Speaker 1: want to kill our businesses so they can take the
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  Speaker 1: market chair, not today, ten years from now, and that's
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  Speaker 1: the real difference.
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  Speaker 3: And you know what, Like I was listening to a
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  Speaker 3: guy who's an inventor and big on Amazon, and he says,
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  Speaker 3: they look for markets when they see you're doing five
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  Speaker 3: million or more. And it's easy to figure out because
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  Speaker 3: the algorithms are available on Amazon. They then start to
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  Speaker 3: compete with you. They copy r design. Whether you have
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  Speaker 3: a trademark, copyright, or patent, doesn't matter. You complain to Amazon,
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  Speaker 3: they do absolutely nothing. Then they overwhelm the sector. They'll
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  Speaker 3: have ten of them there, all selling the same thing,
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  Speaker 3: different prices, different everything. And this is how they destroy
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  Speaker 3: American businesses here.
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  Speaker 1: Yeah, we're the ones that invent and innovate. They copy,
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  Speaker 1: but they do it cheaper because they have the state
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  Speaker 1: lowering their prices artificially. Flave labor and slave labor. I mean,
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  Speaker 1: we don't talk about that. Nobody wants to talk about it.
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  Speaker 1: It's the same thing that's happening in India too. You know,
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  Speaker 1: the price of labor in India is one twenty fourth
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  Speaker 1: what it is in the States. And how do you
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  Speaker 1: compete with that on price?
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  Speaker 3: You can't, Yeah, totally cannot so so the solution is
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  Speaker 3: what Trump is doing. And I have a theory that
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  Speaker 3: I believe that China has already capitulated. The only reason
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  Speaker 3: why Trump hasn't gone in heavier is because the Chinese
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  Speaker 3: illusion of an economy has already collapsed, and that would
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  Speaker 3: be the final nail in their coffin. But things like fentanyl,
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  Speaker 3: they've definitely cracked down on a lot of it. I
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  Speaker 3: think the intellectual property is starting to become an issue here.
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  Speaker 3: What are your thoughts.
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  Speaker 1: I think people are finally talking about the IP. I mean,
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  Speaker 1: this has been going on for decades and no one
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  Speaker 1: even talks about it. It's pretty unbelievable. But you know
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  Speaker 1: what I'll say about China is I will believe it
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  Speaker 1: when I see it. China has been saying the verify yeah, exactly.
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  Speaker 1: And I think it's important to remember that China when
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  Speaker 1: they joined the World Trade Organization, they already signed up
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  Speaker 1: for all of this because that was a component of
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  Speaker 1: them joining, and then you know, obviously they didn't actually
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  Speaker 1: follow through on any of it. It's been over twenty years,
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  Speaker 1: so you know, they're saying a lot of the right things,
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  Speaker 1: but you know, the proof is in the pudding. Are
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  Speaker 1: they going to actually follow through.
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  Speaker 3: I'm not so sure.
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  Speaker 1: You mentioned at the start of the program Milton Friedman,
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  Speaker 1: and I think and I just wanted to come back
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  Speaker 1: to that because we were just talking about the difference
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  Speaker 1: between you know, a good trade today and a good
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  Speaker 1: trade tomorrow. You know, Milton Friedman has you know, been
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  Speaker 1: absolutely instrumental his ideas and maybe maybe more so his
• 9:47
  Speaker 1: publicity in a lot of ways, I mean, communicating about
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  Speaker 1: economics to ordinary people, and I think most of that
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  Speaker 1: has been for the best. The one thing that I
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  Speaker 1: would like to just say in terms of you know,
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  Speaker 1: this free trade sort of paradox where America is free
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  Speaker 1: trading and yet we seem to be getting the short
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  Speaker 1: end of the stick. The reason for that is because
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  Speaker 1: economics as a discipline looks at whether or not a
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  Speaker 1: trade is efficient today. It's a very different modality and
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  Speaker 1: a way of looking at things. It's very different than
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  Speaker 1: the point of view of an investor or right who's
• 10:19
  Speaker 1: looking at you know, this trade may be inefficient today,
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  Speaker 1: but it could be a good investment ten years from now.
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  Speaker 1: And in his book Free to Choose, Milton Friedman gave
• 10:28
  Speaker 1: this example of you know, the sort of maximizing comparative
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  Speaker 1: advantage through the secretary and the lawyer. And he said, obviously,
• 10:38
  Speaker 1: the secretary is good at typing, the lawyer is good
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  Speaker 1: at doing legal work. It makes sense for the firm
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  Speaker 1: that the lawyer specializes. Yeah, he's got to specialize in
• 10:48
  Speaker 1: doing the legal work rather than doing his own typing.
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  Speaker 1: And the paralegal is going to be doing the typing,
• 10:52
  Speaker 1: and that'll make everybody richer. And of course that's true.
• 10:55
  Speaker 1: But when you look at it from an investment perspective,
• 10:58
  Speaker 1: it's better for the paralegal to go to law school
• 11:02
  Speaker 1: and become a lawyer, because even if she's a bottom
• 11:04
  Speaker 1: feeder lawyer, she's going to make more money than the
• 11:07
  Speaker 1: best paid parently all in our world. Right, So that's
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  Speaker 1: the difference. Right, So, where it makes good sense to
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  Speaker 1: trade and make that trade now, but ten years from now,
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  Speaker 1: it actually doesn't make. The analogy falls apart. And the
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  Speaker 1: same thing is true with our general economy. It may
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  Speaker 1: make sense to buy cheap goods from China now, but
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  Speaker 1: ten years from now, when we've hollowed out our industrial base,
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  Speaker 1: we've lost the capacity to make things. That stifles our
• 11:34
  Speaker 1: innovation and our ability to grow the economy in the
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  Speaker 1: long run exactly.
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  Speaker 3: So what feels good now isn't going to feel so
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  Speaker 3: good in ten years when the results of it happen.
• 11:45
  Speaker 3: All right, well, exactly so, everybody out there get the
• 11:49
  Speaker 3: book like I did. It's called Reshure, How Tariffs will
• 11:53
  Speaker 3: bring our jobs home, Revive the American Dream. I think
• 11:57
  Speaker 3: it's already happening now, Spencer. It's happening so much faster
• 12:01
  Speaker 3: because AI makes things happen way faster than anybody ever
• 12:06
  Speaker 3: believed possible. And I've been writing books to AI doesn't
• 12:11
  Speaker 3: write it for me, but it's sure as heck does
• 12:13
  Speaker 3: clean up my lousy work from my first draft and
• 12:16
  Speaker 3: enables me to edit at a rate that I never
• 12:19
  Speaker 3: believed possible before. And everybody get the book. Highly recommended.
• 12:25
  Speaker 3: I think it'll give you an insight, but I want
• 12:27
  Speaker 3: to know your feelings out there. Is resharing the key?
• 12:31
  Speaker 3: Is it possible to save the American Dream? Or is
• 12:34
  Speaker 3: the American Dream really dead? And how are you contributing?
• 12:39
  Speaker 3: How's the American Dream working for you? Spencer? Really appreciated. Hey,
• 12:43
  Speaker 3: it's got a question? Comment Klatcarrie LUTs dot com and
• 12:49
  Speaker 3: of course you will find a link to Spencer's book
• 12:52
  Speaker 3: and site on Financial Survival Network dot com. Just ask
• 12:57
  Speaker 3: that you please sign up for our free newsletter, like
• 12:59
  Speaker 3: over seventy thousand of you out there have done. Spencer.
• 13:03
  Speaker 3: It's great connecting with you. We'll talk to you again soon. Hey,
• 13:06
  Speaker 3: it's my pleasure.
• 13:07
  Speaker 1: Thanks for having me on the show.
• 13:08
  Speaker 2: Thanks for listening to carry Letz's Financial Survival Network, your
• 13:12
  Speaker 2: solution to today's trying times. For the latest, go to
• 13:16
  Speaker 2: Financial Survivalnetwork dot com. Financial Survival Network now more than ever,