A British financial analyst sees the tariffs consumption tax for what it is. He’s almost right. He doesn’t go far enough.
Bill Blain, who writes a financial commentary called The Morning Porridge, published an analysis this week comparing Trump’s tariff strategy to a Scooby-Doo villain. “And I would have gotten away with it,” Blain writes, “if it wasn’t for these pesky kids.” The pesky kids, in this case, are the researchers at the New York Fed who just released a report confirming that tariffs are a consumption tax paid almost entirely by American firms and consumers. Foreign exporters have absorbed barely 10% of the cost.
Blain thinks this is news. It is not news. I wrote about the tariffs consumption tax in Issue #214 of The Belden Report, April 2018. I wrote about it again in Issues #247 and #263, and a special supplement I distributed at a coin show in Reno. Seven people took copies. Three threw them away in front of me.
The Scooby-Doo Comparison Doesn’t Go Far Enough
Blain’s Scooby-Doo framing is clever, but it reveals a fundamental misunderstanding of scale. In his version, Trump is the villain and the NY Fed researchers are the meddling kids who exposed the scheme. But Scooby-Doo villains are small-time. They haunt amusement parks. They wear rubber masks.
What’s happening with tariffs is not a haunted amusement park. It’s an accelerant poured on a structure that’s been rotting since 1971, when Nixon severed the dollar from gold and turned the entire monetary system into a confidence game. Trump didn’t build the haunted house. He just set it on fire and charged admission.
Blain reports that Kevin Hassett—Trump’s economic adviser who didn’t get the Fed chairmanship—is now demanding the NY Fed authors be disciplined for their “embarrassing” report. Of course it is. The worst report is always the one that tells the truth.
Everyone Sees the Tariffs Consumption Tax Now
The Congressional Budget Office, the US Tax Foundation, and Yale’s Budget Lab all confirm what the NY Fed found. Tariffs are regressive. They hit the poorest hardest. They reduce GDP. They do not generate the revenues the administration claims. Blain lists these findings as if they’re revelations. I listed them in 2018. My subscriber count remained at 847.
Blain also notes that the dollar has fallen 7% since Liberation Day, which makes tariff costs even higher on American consumers. Hassett claims the strong dollar mitigates tariff impact. The dollar is not strong. The dollar has not been strong since we abandoned sound monetary policy. When your economic adviser cites a strong dollar that doesn’t exist to defend a tariff that doesn’t work, you are not in a Scooby-Doo episode. You are in the final act of a Shakespearean tragedy.
The Real Villain Isn’t Wearing a Mask
Here is where Blain and I diverge. He sees the midterms as the corrective. Angry voters. Exposed senators. The democratic process functioning as intended.
I do not find it interesting. Elections do not fix structural monetary decay. No president—not this one, not the next one—can solve a problem that originates in the architecture of fiat currency itself. The tariffs consumption tax is a symptom. The disease is a system that allows governments to print money, borrow against the future, and call the result “growth.”
Blain worries about inflation. He should worry about what comes after inflation. My third wife once asked me to stop talking about monetary collapse at dinner parties. She is now my third ex-wife.
And I would have gotten away with warning everyone in time, if it wasn’t for these pesky nineteen years of nobody listening.
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