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Trump Foolishness, Crooked Hillary, Trade Wars and Game Theory

From the start of the 2016 Presidential Campaign the press, both the left and right, were like most people, quizzical at the perceived foolishness, the stupidity and the lack of tact by the Republican Presidential Candidate, Donald J. Trump.

Never in American election history had there been a candidate that was perceived as being so unfit for office and thus most were skeptical. He gave every opponent a disparaging nickname: Jeb Bush “low energy Jeb” Ted Cruz as “lying Ted,” and then “crooked Hillary” (this was before the Democrats started questioning the Clinton’s cashflow and their foundation).

People started to notice that Jeb was a little low energy and they did question funds flowing into the Clinton institutions. So was it that the “court jester” Trump was just lucky in using imagery and words that stuck to people? Or was it that he employed marketing gurus who coached him?

A brilliant image specialist, and cartoonist, Scott Adams not only pointed this out during the election but he predicted that Trump would win and even claimed he knew the coaches behind soon-to-be President Trump. Mr Adams pointed out that Trump was using persuasion techniques such as “Pacing and Leading” on the immigration issue, then using imagery techniques, which in the case of Jeb Bush knocked Mr Bush right out of the running. “Low energy Jeb” stuck like glue and it is still used today by Bush critiques.

Recently, there are several marketing experts and Wall Street economists who are suggesting that President Trump is using advanced game theory techniques in negotiations in trade and foreign policy.

The game theory technique works especially well when talking about international trade as trade is a rules-based system that if disrupted, can fix the asymmetrical components that undermine the fairness of the system that harm the US. Many of those who study the history of these trade systems, we at Classiarius do, support the idea that they are inherently tilted against the United Status.

A very good example is that, the US has run a hundred billion dollar trade deficit with Japan and South Korea for 70 years, in return the US gets 50 military installations in these two countries that still exist today. This is part of post-WWII Soviet and China containment strategy.

But this post-Second World War international economic order, is now fading away and as it does Trump is, through game theory, realigning the pieces to ensure a level playing field.

In Game Theory terms, the Trump administration has clearly injected “uncooperative” elements into the inherently “cooperative game” of international trade. So as the system breaks down, they can cause serious fractures in the economic and financial architecture with consequences that hit the individual players most. Think about it this way, if the global trade system, the Bretton-Woods System serves export-based economies well, at the expense of everyone else, most countries would want it shut down.  So Germany with 45% of its GDP reliant on exports, China 37% and the US at only 7% then this rule-based system is valuable to the Germans, but useless to the US. Inject instability and the Germans could see serious economic disruption while the US would only potentially see a small and weak recession.

Merkel – Her Legacy Will Be A Major Humiliation Delivered To Germany By Trump

And here is the most important part of Game Theory and trade wars. Trump and his coaches know that trade wars have a tendency to create strong stagflationary impulses, can disrupt growth and increase costs and prices. More importantly, these conflicts damage domestic leaders (in their home countries) and even add pressure to the local banks. Think on the growing domestic unpopularity of Angela Merkel fading away into nothingness while the top bank in Germany, Deutsche Bank is collapsing. With 45% of GDP dependent on exports, Game Theory disruption techniques spell disaster for the German economy. Have a look back last year at the White House when Trump refused to shake hands with Merkel – she showed the face of a defeated political figure because Trump reminded her that the rule-based globalist trade system was imploding and he was going to throw fuel on the fire.

Game Theory disruptions damage everything that is rule-based. Think about China and the commodity, energy and food security that it has very little control over, as Mr Xi and his nation rely on the outside world for everything.  China imports food to feed its people, energy to cook the food and run factories, and commodities to build products. And it gets much worse, China then manufactures these products and it relies on the EU, Japan, South Korea and the US – their consumers – to buy said products.

They only thing that the US needs to do is to challenge China that could potentially disrupt the eating habits, working habits and commerce of the average Chinese citizen is to challenge Chinain the South China Sea, as it does, and it will continue to do.

The US continues and suggests, “we are adding tariffs that will impede your sales overseas.” For a system like China, much like Germany, relying on outside sources of energy, food and consumers for your economic well-being is an outright invitation for Game Theory.

We are not suggesting that Trump should win the Nobel Prize for Game Theory but we are pointing out that he is surely talking to Game Theory experts. And there is no question that to get the best “deal” for the US as it fades in power and China rises, Trump and future presidents to come will employ it as a matter of survival for the US and her allies.

Have you not noticed that the American attacks diplomatically and economically against Germany and China but at the same time, the US says nothing about South Korean and Japan? This is for our next audiovisual presentation.

Classiarius

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Disclaimer: We do not provide investment advice or strategies, this article is not intended as such but only to provide you the reader with information. Please conduct your own research before any investment of any kind.

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