GUALFIN, ARGENTINA – We continue our exploration…

…of why the stock market is a fraud…

…why investors’ savings are not really funding U.S. business…

… why instead, they are aiding and abetting a multitrillion-dollar rip-off…

…and how the ripper-offers are going to get what’s coming to them, good and hard.

Trade Controversy

But first, we answer our (many) critics.

Good! We get worried when too many people agree with us.

In the present controversy, dear readers seem sure that the new trade barriers will make them better off.

Maybe they know something we don’t. Maybe Adam Smith and David Ricardo were idiots. Maybe there is some theory… or some experience… that proves trade barriers will work.

We know of none. As far as we know, there is no plausible reason to think that you can make an economic gain by preventing people from doing win-win deals.

“But wait,” say our critics. “The foreigners have been taking advantage of us for too long.”

How so?

Colleague David Stockman, who served in President Reagan’s cabinet as budget advisor, calculates that we have run trade deficits for the last 55 years… totaling about $19 trillion in today’s money.

Foreigners send us refrigerators, autos, games, clothes. We send them… pieces of paper with green ink on them. Who’s taking advantage of whom?

“Wait…” Our critics don’t give up. “It’s the principle of the thing. The foreign devils cheat. They subsidize their industries. They impose tariffs. They block our exports.”

But what principle is this? If the foreigner shoots himself in the foot by queering the win-win deals that would help him, it is not a good reason for us to get out a pistol.

Free trade benefits the free trader; it doesn’t matter what the other side does.

Everyman Capitalist

But let’s step back… so we can sneak up on the subject from a different direction.

Investors have been trained to believe that buying publicly listed stocks is a way for them to participate in the growth of commerce and industry… and that by buying stocks, they are “funding” U.S. enterprise.

They think they are rewarded with what Wall Street calls a “risk premium” for supporting American industry rather than investing in supposedly “risk-free” Treasuries. As the economy grows, they are told, they get richer.