The roots of the trade war with China, can be traced to 1940s Germany, the former Vice Chairman of investments at Bear Stearns said.
“The way I see it the war started in the 1940s, late thirties… and in the old days when you had a war you borrowed money, you raised an army, and you went to war and when you won you plundered to pay off your debt,” Michael Tennenbaum told FOX Business’ Stuart Varney. “We did reverse plunder. We beat Germany and then we gave money.”
So what does that have to do with the China trade war?
Tennenbaum explained that what Germany did was “rather clever.”
They kept the currency low and exported a lot of items to the U.S. at a bargain, like German cars. The United States lost jobs due to currency depression, which in turn, had a ripple effect.
“Japan looked at that said, ‘Hello! We hello we can do that,’ ” he said. “So they kept the yen down — they wiped out our consumer electronics and other industries; exported a lot of good jobs out of the U.S.”
But China “did it the best,” he said.
“So we’re running $360 billion trade deficit and the elites, you mention — a lot of economists — they say, ‘Oh! This is OK.’ That’s nuts!” Tennenbaum said. “Every time we run a deficit that means that somebody made something in another country that we didn’t make. So we had fewer … jobs.
Tennenbaum said if you add up all the future claims being made on the U.S. economy it’s “a little nerve-wracking.”
“What’s happening now is that because all these jobs we’ve exported — we’ve had more social spending, we’ve had to borrow money, we’ve had to guarantee things to keep the old economy perking — and we bang our chests and say look how good we are,” Tennenbaum said.
He believes that Trump’s hard-line policy came way too late.
“I just wish he had he or someone had done this years ago because it’s hard to unwind and now you have all this uncertainty that’s delaying capital spending and muting the economy which otherwise would be really strong,” he explained.