Critique of the Global Monetary System and Trump's Industrial Line

 

Overview

The current global monetary system is shaped by a network of "independent" central banks that often prioritize financial capital, import-oriented policies, and external investors over domestic production. Despite appearing balanced on paper—through trade parity or free-market mechanisms—the system creates severe internal imbalances for producer economies. Local businesses face systemic underfunding, while speculative capital and foreign firms dominate financial flows, protected by legal and institutional privileges.

This article outlines the major critiques of this monetary system and introduces a contrasting model—Donald Trump's industrial policy—as a case of reclaiming domestic economic sovereignty.

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Structural Criticism of the Current Monetary Order

1. Dominance of Finance over Real Economy
   Financial systems often extract value from productive sectors. Independent central banks tend to prioritize bond market stability, interest rate control, and foreign investor security over real investments in infrastructure, SMEs, or innovation.

2. Import Orientation and Capital Flight
   Trade liberalization and deregulated financial flows favor cheap imports and encourage domestic capital to seek speculative gains abroad. The result: national industries weaken, while consumption increases dependency on external supply chains.

3. Fragmented and Bureaucratic Support for Innovation
   Domestic producers often receive fragmented funding—through tenders, grants, and competitions—while access to direct capital is limited. Unlike speculative flows, which move freely, productive investment is encumbered by layers of approval.

4. Weak Institutional Protection for Intellectual Property
   R&D, trademarks, patents, and copyrights—though critical to national technological advancement—receive marginal support. A recommended reform is introducing a separate line in customs declarations dedicated to IP value, with a guaranteed share (up to 5%) of public and private spending reserved for domestic innovation and inventors.

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Leading Critics of the Global Monetary Regime

• Michael Hudson (USA): Exposes how global finance siphons resources from the real economy and leads to unsustainable debt systems.

• Ha-Joon Chang (South Korea): Argues that developed countries "kick away the ladder" of industrial policy once they've succeeded.

• Mariana Mazzucato (UK): In The Entrepreneurial State, shows how public sector drives innovation, while private interests capture the profits.

• Joseph Stiglitz (USA): Nobel Laureate and critic of IMF and World Bank policies that impose austerity on developing countries.

• Hernando de Soto (Peru): Emphasizes the role of informal economies and the need for institutional frameworks for property rights in the Global South.

• Amitav Acharya (USA): Challenges the Western-centric nature of global governance and economic rules.

• Lord Adair Turner (UK): Warns about speculative financial markets and the risks of shadow banking over real economic productivity.

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Speculation on Sovereign Derivatives and Domestic Debt

Emerging economies often become playgrounds for speculation through sovereign derivatives and government bonds (e.g., domestic OVDP instruments). While marketed as tools for development, they often ensure guaranteed yields for foreign capital with little accountability or reinvestment into the real economy. This phenomenon locks countries into a cycle of debt servicing, austerity, and loss of sovereignty, while national producers face cash flow deficits.

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Trump’s Alternative: The Industrial Re-Patriation Line

In contrast to the prevailing monetary orthodoxy, Donald Trump’s presidency pushed for economic nationalism, focusing on restoring domestic industrial capacity. The strategy included:

1. Trade Protectionism

• Withdrawal from global trade pacts (e.g., TPP), renegotiation of NAFTA.

• Imposition of tariffs on steel, aluminum, and Chinese goods to protect local industries.

2. Tax Reform and Repatriation Incentives

• Slashed corporate tax rate from 35% to 21%.

• Provided incentives for U.S. companies to repatriate overseas profits.

3. Buy American, Hire American

• Mandated preference for U.S.-made products in federal procurement.

• Reduced visa programs (e.g., H-1B) to prioritize American labor.

4. Public Investment in Hard Industry

• Supported infrastructure, energy, defense, and agricultural sectors.

• Reframed the economy around “things made”, not just services or financial products.

5. Critique of Wall Street and Financial Elites

• Rhetorically positioned against hedge funds and financial firms that "create nothing".

• Promoted a return to productive capitalism, where value is tied to labor and innovation.

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Conclusion: Toward a Balanced Economic Sovereignty

A rebalanced global system requires recognizing the right of nations to shape their own economic priorities—including the protection of domestic industry, innovation, and intellectual property. As shown by Trump’s partial re-industrialization model, moving financial flows back into physical production is not only possible but vital for sovereignty, resilience, and shared prosperity.

A nation that only services debt and builds apps, but cannot manufacture its own goods, is a nation on borrowed time.

Institutional Innovation: Virtual Private R&D Customs and Multiplex Accounts As a counterbalance to speculative capital and fragmented industrial policy, an institutional innovation is proposed: the creation of a Virtual Private Customs Line for R&D dedicated to producers, inventors, and laboratories. This system would function within the national financial architecture, yet remain agile enough to bypass the slow and often extractive mechanisms of global finance (e.g., SWIFT).

🔬 Virtual R&D Customs (vR&D-C) Definition: A digital customs corridor used by verified labs and manufacturers to register, move, and monetize intellectual property, patents, and product line innovations.

Purpose: Embed R&D as a tradable and trackable asset class.

Application: Included as a mandatory separate line in all customs and logistics declarations, especially for high-tech goods and innovative product lines.

Innovation Clause: A minimum 5% royalty or R&D return attached to each product exported/imported, channeled directly to the inventor or IP holder.

🏦 Multiplex Bank Accounts This model replaces traditional banking logic (where funds are pooled and moved manually) with automated value-splitting logic built into account architecture:

Each transaction includes encoded metadata defining:

% share to inventor

% share to manufacturer

% share to distributor

% share to speculative/investment capital

% share to R&D reinvestment fund

Algorithmic Redistribution: When a transaction is executed, funds are instantly split and distributed across all participating accounts according to pre-defined formulae.

Speed: Operates faster than SWIFT, using blockchain or internal digital clearinghouses.

Transparency: Each value chain actor knows their guaranteed percentage in the final transaction price—even speculative investors receive a fixed share embedded in the pricing formula, reducing parasitic behavior and aligning incentives.

🧩 Benefits: Stabilizes R&D ecosystems: Labs are guaranteed continuous income, not just grants or occasional prizes.

Limits harmful speculation: Financial players are integrated into production logic, not abstract bets.

Promotes reinvestment: By automatically allocating a portion of every sale to innovation and infrastructure.

Customs as Intelligence Node: By digitizing and formalizing value creation in trade flows, customs become a strategic economic tool—not just a checkpoint.

Instead of fighting over “who gets what” after value is created, the system defines “who gets what” within the DNA of the transaction.