The President invoked section 303(a)(5) of the Defense Production Act. Using National Security to Ignite the Economy The Defense Production Act was established in 1950 during the Cold War between the U.S. and the Soviet Union. In its simplest rendering, the Act gave the president the ability to accelerate key sectors of the U.S. economy in the name of national security. Let’s say the U.S. economy relies excessively on another country for a certain resource. If the President decides that this reliance could hurt the U.S. economy from a strategic perspective, he can invoke the act to dramatically cut regulations and even provide government loans to domestic producers of the resource in order to boost domestic production. In the case of President Trump’s memo in July 2019, he was invoking section 303(a)(5) of the Defense Production Act of 1950 to determine that the “separation and processing of Light Rare Earth Elements is essential to the national defense.” While this particular memo concentrated on rare earth elements, as a broader policy it sent the signal that the Trump administration views the domestic production of strategic elements as a matter of national defense. Put another way, going forward, President Trump will be “green lighting” projects that speed up the development and production of everything from steel to uranium, copper, cobalt, lithium, and more. Indeed, just a few months ago, President Trump signed another executive order, this time: To speed up construction projects, Trump plans to overhaul one of the nation’s most consequential environmental laws… would make it easier to build highways, pipelines, chemical plants and other projects that pose environmental risks… it would force agencies to complete even the most exhaustive environmental reviews within two years and restrict the extent to which they could consider a project’s full climate impact… Source: The Washington Post This is the single biggest development in the markets in decades. Entire industries that have been left for dead will begin to come back to life as TRILLIONS of dollars’ worth of capital begins to flow into these sectors. We’ll be developing this theme more in the weeks ahead. Best Regards, Graham Summers Editor, Money & Crisis |
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