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Job Requirement for Federal Reserve Chair: The Vision to Balance the Dollar
Jesse Richman, 9/20/2017

Janet Yellen is nearing the end of her current term as Chair of the Federal Reserve.  She may be reappointed.  She may be replaced.  But either way, whoever takes on the Federal Reserve job needs to work to develop the vision to include managing the value of the dollar as part of the Fed role.  The US trade deficit is once again growing, driven by overvaluation of the dollar.  Meanwhile, the Federal Reserve is contemplating how to 'unwind' the trillions in US bonds it acquired as a result of quantitative easing. 

The solution to one problem should be used to address the other.  As US bonds mature, the Fed should use the proceeds to purchase bonds and other assets as a sovereign wealth fund in countries that are running a large and persistent trade surplus with the US.  These purchases will strengthen the US. 

1. They will improve the US net international investment position, reducing the extent to which the US is a global debtor. 

2. They will help bring about a readjustment in currency values that will help market forces correct the trade deficit.

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It is past time to levy a large excise tax on prescription opiods
Jesse Richman, 9/13/2017

While many of the costs of opiod addiction are borne by the addicts themselves -- costs that range up to and including 183,000 deaths according to CDC estimates for the period from 1999 through 2015 -- these costs also spread to the broader society in terms of treatment expenses, emergency response, crime, lost productivity, and much more. Hence, opiod addiction creates negative externalities for society, which some estimates put at 80 billion dollars. 

A basic principle of the economics of managing negative externalities is that one should seek to make those creating the externality -- those involved in the production and consumption of opiods in this case -- pay for the external costs they are creating through their market transaction.  And one of the easiest ways to do this is to impose a tax upon those transactions.  

There have been some scattered efforts to do so.  For instance Senator...

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Needed Corporate Tax Reform Is to Eliminate It
Raymond Richman, 9/12/2017

The principal cause of the anemic growth of the U.S. economy in recent decades has been the chronic trade deficits with the rest of the world which have cost millions of U.S. manufacturing jobs and converted the U.S. from the world’s leading creditor to the world’s leading debtor. There are many causes of trade deficits.  Tax reform, contrary to the claims made for it, will not balance our trade at all. The US international trade deficits averaged about 3 percent of Gross Domestic Product in recent decades. If trade had been in balance, the growth of the GDP would have been 5.3 percent on the average since 2001 instead of 1.6 percent. 

The principal causes of international trade deficits are the relative costs of producing goods and services in different countries, the foreign exchange rates, and the existence of barriers to trade imposed by trading partners. Wilbur Ross, the Secretary of Commerce, in an opinion piece in the Wall Street Journal 8/1/2017 states that the U.S. imposes fewer barriers on imports than the European Union and China with which we have huge trade deficits. Other countries with which we are experiencing large chronic trade deficits are Japan, Korea, and Mexico. Together with China and the EU, these countries accounted for 88.9 percent of our trade deficit in 2016. An unintended consequence of all of our trade agreements to date is that they enabled American corporations to invest in countries that have low corporate income tax rates and to export their products to the U.S. duty-free, exacerbating the trade imbalances.  We would not be concerned about this practice if U.S. trade were in balance.

There is a simple solution to the trade deficits. We can impose single-country-variable-tariffs which are authorized by the world trade agreements which permit member countries to impose tariffs designed to balance trade. The tariff would apply to all imports from the trade surplus county including those of the multi-nationals formerly producing their products in the U.S. So long as trade remains unbalanced, the single-country-variable tariff would produce substantial revenues. Would it start a trade war? Countries with trade surpluses cannot win a trade war with countries they have trade surpluses with. The trade deficit country has the advantage in a trade war. If trade diminishes with the trade surplus partner, it will increase with the other trading partners with whom we have no trade deficit....

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Time to Close the Foreign Investors Tax Loophole -- we're published in the American Thinker this morning...
Howard Richman, 9/6/2017

We begin:

Congress will put together a tax reform bill with the goal of eliminating tax loopholes, simplifying the tax system and reducing tax rates. One loophole that they should eliminate is the most self-destructive tax loophole ever enacted, the Foreign Investors Tax Loophole [Sections §871(h,i,k) and §881(c,d,e) of the Internal Revenue Service code]. Enacted in 1984, it lets foreigners earn interest in the U.S. tax free, so long as they don’t reside in the United States.

Negative Effects upon Economy

Previous to this loophole, foreigners paid 30% withholding tax on interest income earned in the United States. After the loophole, they paid zip, zero, nada. Even worse, the bill directly harmed the U.S. economy in four ways:

To read it go to:

http://www.americanthinker.com/articles/2017/09/time_to_close_the_foreign_investors_tax_loophole.html

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    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]