There is a simple solution to the White House economic grievances

White House economic advisor Steve Miran delivered a notable speech yesterday that aimed to outline grievances around the dollar at the center of the global financial system and who pays for it. It was nonsense and all of his solutions were basically for foreign countries to pay Roman-style tributes for the privilege of using the USD.

Here are two of the main grievances:

• The US trade deficit is too high
• The US dollar is too strong

There is an obvious cause and solution to both these things: The gigantic US fiscal deficit.

Other developed countries have been reeling in spending since covid while the US continues to have the foot on the gas, running deficits at 7% of GDP. That's super-charged US GDP, inflation, borrowing rates and consumption (which is driving the trade deficit).

The solution here: Which no one seems to want to try is to balance the budget.

The second broader point is that White House is making is that globalization hasn't delivered benefits to lower-class and rural Americans. There is some merit to that but it's not because it's delivered benefits to other countries, it's because the benefits have gone to American corporations:

US companies hold two-thirds of global market cap and that's delivered massive returns to Americans.

In the irony of ironies, the White House is arguing that tariffs dollar should be used for a corporate tax cut.

So if you want the people how benefited from globalization to pay for it, it's US corporations. The obvious answer here is to raise corporate tax rates, cut handouts, balance the budget and devise tax incentives for them to re-shore manufacturing. Now no one likes corporate taxes but I'd argue the damage would be much less than the 20% decline we've had in stocks already.

Instead we're going to have the stupidest trade war ever and all the problems will get worse.