the problem definition, boundary and goal of the system also need to be questioned. If we succeed in balancing trade, other countries won’t be accumulating dollars and plowing them back into treasuries to finance our debt. What will the bond vigilantes do then?
The formula behind the recent tariffs has spawned a lot of analysis, presumably because there’s plenty of foolishness to go around. Stand Up Maths has a good one: I want to offer a slightly different take. What the tariff formula is proposing is really a feedback control system. The goal of the control loop is … Continue reading "Tariff dumbnamics in the penguin island autarky"
The roots of imbalances are structural, and baked in to the capacity of industries to produce and transport particular mixes of goods (pink below). Turning over the capital stocks behind those capacities takes years. Changing the technology and human capital involved might take even longer
