| Submit your comments on this article |
| Economy |
| Capital Flight -- The Strategy Behind Trump's Sanctions |
| 2018-08-13 |
| [AmericanThinker] When there is war, conflict, or instability, vulnerable human beings flee, seeking refuge in safer countries. Everyone is familiar with the plight of refugees, and the challenges refugees create for surrounding nations. People need and deserve support, and it requires resources to meet this need. When there is war, conflict, or instability, vulnerable capital and wealth also flee. The "problem" of fleeing capital is different, however. Because capital and wealth are not as encumbered and physically restricted as are human beings, especially in the modern electronic age, capital moves far from the source of instability. Capital flight makes support of human refugees even more difficult, as capital often flees nations burdened with the obligation of support, nations in close proximity to the underlying cause of flight. Unlike human refugees, who consume resources and capital, fleeing capital is welcome with inviting arms by safe havens. Capital and wealth must "go somewhere," and if they land in the banks and markets of a particular nation, that nation reaps the reward of that investment. Banks can lend at lower interest rates. Businesses can grow, expand, modernize, and invest. There is great reward and little cost to a recipient nation, especially if that nation has already invested heavily, historically, in the safety and security of the investment, by, for example, modern economic protections, strong security, a stable political system, and reasonable taxation. ...Not all capital flight winds up in the U.S., of course, but it’s safe to say that a good percentage is winding up here. Simple economics: more money chasing the same goods or investment opportunities causes prices to increase. With share prices high, companies can grow, expand, modernize, and invest. The investment increases the value of companies, generates returns for investors, and generates revenues for the U.S. government. ...Trump is not employing a philosophically driven foreign and trade policy wielding empty threats of carrot and stick like his predecessors. His foreign policy is disruptive, and intended to create meaningful reform in both statecraft and trade, first and foremost, to advance U.S. political, economic, and military interests. Achieving these objectives, even in the slightest of degrees, increases the safety and security of the U.S. as a safe haven, which strengthens Trump's ability to reform both foreign services and trade. |
| Posted by:g(r)omgoru |