It’s a Small World After All…

It’s a Small World After All…

How many people in the United States understand that we overthrew a democratically elected government in Iran to put in the Shah? Which then led to the Revolution. How many people in this country do you think know that?

-      Senator, and POTUS Candidate, Bernie Sanders, New Yorker

It is not working.  And pretending that somehow in the future it (US foreign policy in the Middle East & Afghanistan) is going to work by some unmeasured version (of success)...  It’s a form of fantasy that we simply cannot afford to continue to engage in.

-      Senator, and POTUS Candidate, Elizabeth Warren, MSNBC

By vetoing the War Powers Resolution, Trump has again proven that he is the servant of Saudi Arabia: the theocratic dictatorship that spends billions of dollars every single year spreading the most extreme and intolerant form of Islam around the world.

-      US Representative, and POTUS Candidate, Tulsi Gabbard

By JM Hamilton (4-20-2019)

Lisbon, Portugal -

Amsterdam, Netherlands -

While on vacation in Europe this week, I had the privilege to talk w/ a Scandinavian mother of three, during a lengthy flight.  The lady was fantastic – multilingual – and well versed on current affairs.  At first we talked about family and life in general.  One could tell by the way this individual talked about her kids – from the manner in which her eyes lit up - that she was a terrific mom.  She was deeply proud of all her children.

After a while, the conversation naturally veered towards economics and politics.  This lady related to me how much of her country had found it humorous, if not outrageous, that Fox News had compared Scandinavian countries to Venezuela.  (Of course, the former – Scandinavian countries - have wonderful mixed economies, w/ key elements of capitalism combined w/ a first tier societal safety net/economic foundation for all its citizens, including socialized medicine.  While the latter  - Venezuela – is basically, run by, and for, a corrupt dictatorship.  The former is highly functional – economically, politically, and democratically - while the latter, the dictatorship & the Venezuelan people, are in a great deal of distress, to put it mildly).

My fellow passenger talked about how happy she was that her eldest, her son, was becoming quite the businessman.  Apparently, her son – in his late teens - was building websites for small businesses, and earning real income; moreover, the young man and his girlfriend were considering starting up a clothing line.  That’s highly ambitious, I observed, and we both agreed that it was the social safety net, w/in her Scandinavian country, that allowed her son this tremendous degree of freedom & entrepreneurial drive (to start up a business w/out worrying about becoming sick or ill, because the state has already made prodigious provisions for its citizens' medical care).

By the way, the debt to GDP ratios of these three, primary, Scandinavian countries are: Denmark 36%; Norway 35%; and Sweden 41% (circa 2017).  By way of comparison then, the US debt to GDP ratio is a, highly, unenviable 105% (so much for crony capitalism versus the Scandinavian model).

Then, naturally, came the topic of her husband, and career paths.  Turns out, her husband is a software engineer, who works for a European firm, that in partnership w/ a major US defense contractor, had built a product that has had some problems.  I started rattling off a list of errors w/ said product & US foreign policy in general, and caught myself… not wanting to give offense.  She said, you know, many defense systems take a while to fully develop, which is true (but at what cost and must astronomical cost overruns always be part of the process?).

The whole conversation w/ my new Scandinavian friend - for me - was fascinating… and as the talk progressed, I couldn’t help but think how small the world was and how interconnected, economically & politically, the globe has become.

Needless to say, this fine lady's name, her country of origin, and the US defense contractor will remain nameless.  

Therefore, said US defense contractor is off this week’s menu.

But that doesn’t prevent JMH from writing about macro-foreign policy issues this week, and in particular, US foreign policy (FP).  US FP is something that is rarely, if ever, discussed by centrist politicians from either political party, Dem or Republican. 

Why is that?  Why isn’t US FP discussed and debated w/in the US Congress? 

Given the six trillion in debt the US has racked up in failed nation building, occupation, and in the furtherance of the US Empire… one might think US FP would be a hot topic (approximately a quarter of the national debt has been wasted on US FP, since 9-11).  At six trillion, and counting, to fight losing battles in Afghanistan and the Middle East – and given the huge sacrifice Americans, and future generations, pay & will pay (as defense spending continually crowds out domestic priorities) - as well as the debt incurred to fight these wars - one might think US FP would provoke an incendiary discussion.  US FP should be a key topic among our current political leadership, who are ultimately responsible, or better put, irresponsible, for our current FP fiasco. 

And if centrist politicians, Dem & GOP, don’t want to talk about it – it’s understandable that they don’t, as FP failure directly reflects upon them – one would think the voters would want to discuss this topic.  After all, it’s they and their children, and their children’s children that will be paying for this monstrosity - in ways too innumerable to count - for decades to come.

Here then, deploying a derivative of the Socratic method, a list of questions concerning US FP, which may, intuitively, provide answers to the very questions being asked. 

1)  How is it that the US – allegedly, the beacon of democracy & freedom of speech – backs right-wing dictatorships around the world, but in particular, supports oil rich despots located throughout the Middle East?

2)  At the risk of repetition (see above), how is it that US FP receives scant attention during congressional and POTUS elections?  Is that by design?

3)  How exactly does POTUS Trump campaign, and obtain higher office, on ending unnecessary wars & nation building, but Americans – rather than receiving a peace dividend – see US defense expenditures, as a percentage of discretionary federal spending, ever increasing…  now, North of 50%? (Depending upon how the deck chairs are aligned, defense expenditures --- including, but not limited to, VA, Homeland Security, National Nuclear Security Administration, intelligence & surveillance agencies and services too numerous to count, offline black budgets, and DOD slush funds – and particularly, if we factor in current and future interest to finance all this --- likely exceed a trillion dollars, per annum.)

4)  Why is it assumed that the US must, year after year, spend more than the G10 combined on the DOD/MIC?  How deficient is US military leadership that it feels the need to overcompensate with this absurd amount of money?

5)  Why is the DOD unauditable?

6)  How poorly does it reflect upon Congress, as stewards of the people’s money, and w/ the power of the purse, that they exercise zero control over ongoing DOD/MIC fraud & waste?

7)  Does all this war, and money spent on war, make the US any safer, or, as General Stanley McChrystal once stated, are we merely creating repeated generations of future terrorists (due to significant civilian casualties - aka collateral damage - caused by American military campaigns)?

8)  If we believe in freedom and democracy, why is the US doing the bidding one of the most notorious sponsors of terrorism on the planet, the Saudi regime?

9)  How precarious is the nation’s national security, when our debt to GDP ratio, as mentioned above, now exceeds 100%, and the Federal Reserve is still engaged in exigent efforts to placate Wall St banks, the stock market, and finance US FP?  If fiscal & monetary policies are tapped out, how precarious is the US' ability to handle the next economic or FP crisis (heaven forbid they happen simultaneously)?  Does our unacceptable fiscal & monetary position present a national security crisis, and how do we hold accountable the Congress and the FP establishment?

And, what of the mass migration out of Latin America to the US, and out of Africa & the Middle East to Europe… and how have US wars (the wars on drugs, terror, and in support of Big Oil assets and Middle East despots) played a role in these mass migrations? 

Last, what’s more patriotic: doubling down on the fraud, waste, and the instability created by the US FP establishment; or calling out US FP for what it is - a failure - and advocating a US FP reassessment?

If we answer these questions truthfully --- and please take note, it does not take a FP expert to answer them --- it’s not hard to see that US FP is not only ruinous for Americans and citizens around the globe, but is also highly instrumental in creating a great deal of the chaos in the world today.

Fortunately, for US voters, we have three great POTUS candidates – Senators Warren & Sanders, and Representative Gabbard – who aren’t afraid to ask these very tough questions, and then some, or provide answers.

These three highly capable candidates (Gabbard, Sanders, & Warren) are connecting the dots, w/ a new progressive foreign policy.  These three POTUS contenders realize backing dictatorships is not only antithetical to US beliefs and values, but is a direct threat to the men & women who serve and US national interests.

All three progressive candidates have set forth ideas, and policies, that call out the US FP establishment for what it is… in essence, treading where centrist candidates & politicians fear to go (as all too many members of Congress are beholding, or worse, owned by defense contractors).

Best of all, these three candidates see the link between our domestic economy and our foreign policy, and just how interconnected both are; as well as, how interconnected the world is, and most importantly, both the real - intended & unintended - consequences of our US FP actions.  The American middle class, and the poor among us, are systemically being robbed by an out of control DOD/MIC (and their FP establishment advocates), as POTUS Eisenhower so clearly, and presciently, warned in his farewell address to the nation.  Our founding fathers, too, frequently warned future generations against foreign entanglements, and specifically, against the debt amassed to finance standings armies and foreign wars.

These three progressive candidates know that the future of US domestic policy is not top-down, but rather, bottom-up.  And as it should be w/ domestic policy so should it be w/ foreign policy, that is to say, US FP too, should serve the interests of ordinary Americans, as well as, common citizens around the globe (as they too, suffer from the very same afflictions US citizens do: poverty, wage & wealthy inequality, oligarchy, kleptocracy, and C-Suite brass, in the service of defense contractors & Big Oil, lobbying for war to meet the next quarter’s earnings target). 

Thanks to a crony global economy - and a US FP that supports same - not only does the US citizenry suffer, but these very same problems (at the risk of being redundant: globalism, stagnating wages, wealth inequality, mass migration, and the criminalization & assault upon the poor) are magnified and exported/rebounded onto US shores, via foreign conflict, despots we directly support, & US trade policy.

After all, the world is becoming smaller all the time, and last I checked, it’s the only one we have.

Copyright JM Hamilton Publishing 2019

Correction: An earlier version said the three primary Scandinavian countries included Finland.  The three primary Scandinavian countries are: Denmark, Norway, and Sweden.  Finland and Iceland are sometimes included, as well. 

The Greatest Disrupter of the 21st Century… ?

The Greatest Disrupter of the 21^st Century… ?

Ms. Wilson-Raybould said on Facebook on Tuesday night that she will speak with her supporters about what to do next.

“I did what I was SNC-Lavalin required to do and what needed to be done based on principles & values that must always transcend party,” she wrote.

-       Trudeau and Liberal Party Expel 2 Ex-Ministers at Center of Storm, New York Times

 

JM Hamilton  (4-7-2019)

 

Playing out in real time - just North of the US border - is a Canadian story that presents lessons for all Western democracies.

This paradigm has all the things JM Hamilton loves to write about: political dynasty; corporate rule; crony capitalism; a two-tiered justice system; a liberal darling, whose political career maybe on the ropes; the power of monopolies; the corporate co-option of left of center political parties; the rise of feminism & minorities, and the erosion of white male dominance & privilege; and of course, what is likely to be the great disrupter of the 21^st Century.  

Tout d'abord, un peu de context (First, a little context).  Justin Trudeau comes from a privileged background – his father, Pierre, served as Canadian PM (Prime Minister) for 15 years, during the late sixties through the early eighties – and continuing in his father’s considerable wake, is presently the Canadian PM.  Mr. Trudeau is the leader of Canada’s Liberal Party (in the US, the equivalent to establishment Dems on economic & foreign policy, while, definitively, more liberal leaning on social policy issues), and entered Canada’s executive office in 2015. 

Mr. Trudeau is up for reelection later this year.

In 2015, Mr. Trudeau ran on a fairly liberal platform, with, perhaps, its signature position being a new inclusive leadership.  In short, his cabinet would not be made up exclusively of Ottawa & Ontario insiders, or other persons of privilege, but would draw upon women and First Nations' talent, as well.  Mr. Trudeau is a champion of the homosexual community, women’s rights & empowerment, and called for – and has followed through upon – highly responsible & heavily regulated cannabis legalization (making Canada the second country to legalize recreational cannabis).  Canadian pot stocks have been on a tear, since recreational sales began last year.

On economics, Trudeau is an advocate for Canadian business, and an ardent free trader (albeit w/ a nod to populist upheaval, advocating more progressive trade agreements that attempt to look after the environment, labor, and afford responsible regulation).  On foreign policy, the Trudeau government stood alone & was quick to call out the Saudi Monarchy for human rights violations, presciently, even before the Khashoggi killing. In short, as w/ any leader, Trudeau is a champion of his country’s economy.  In many respects then, some have referred to PM Trudeau as the Anti-Trump, that is bi-lingual, polished, socially liberal, witty, and urbane. 

If the reader is beginning to think JMH is a fan of Mr. Trudeau & his policies, you’d be about 90% accurate.  Mr. Trudeau has even paid reparations to well deserving, and long abused, First Nations' children and Canada’s gay community (an issue, reparations, that some Americans are beginning to hear more about, from the 2020 Democratic field of POTUS candidates).  As for reservations about the Canadian PM, there’s the issue that has brought down many left of center governments, that is to say, the center-left’s love affair with big business, or crony capitalism. 

And before we finally launch into the key issues at hand, and at an abundance of fairness to Mr. Trudeau, Canada is not the United States (which many Canadians are thankful for every day).  Canada is resource rich, and much of the economy is resource driven, not the least of which is Alberta’s oil sands.  W/ only about 10% of the population of the US, Canada doesn’t have the deep bench of businesses the US possesses to generate employment & jobs.  Like the US, many business sectors w/in Canada are concentrated, not the least of which is Canadian banking  (which is highly regulated, eminently profitable, and does not posses anywhere near the risk that Wall St. banks present to the US taxpayer).  

The bottom line, not only is Mr. Trudeau a liberal, but clearly, he walks the walk; and Canadians enjoy a nationalized healthcare system that frees them up from worry, and allows them considerably more freedom to pursue other activities (whether it be the arts, entrepreneurial endeavors, leisure, or philanthropic pursuits). 

Acte deux, le drame (Act Two, The Drama):  And now, the scandal.  It appears that a Canadian engineering firm, SNC-Lavalin, was  - allegedly - caught paying bribes to the Gaddafi/Libyan government.  Allegedly, SNC-Lavalin lobbied for deferred prosecution, in lieu of criminal prosecution (which, if found guilty under criminal statute, would have prevented the firm from obtaining Canadian government contracts for a ten year period).  Right on time, the Canadian legislative body did their part last year, in passing a deferred prosecution law.

And then came the heat.  Canadian Attorney General, Wilson-Raybould, appears to have been placed under considerable pressure to agree to deferred prosecution for SNC-Lavalin, by many members of Mr. Trudeau’s government, including the PM himself.  And yet, Ms. Wilson-Raybould would not yield.  Even when the firm, allegedly, threatened to relocate, Canada’s first, First Nations Justice Minister would not yield to the demand for deferred prosecution.  Ms. Wilson-Raybould was subsequently demoted, from Canada’s AG (aka Justice Minister) to Minister of Veteran Affairs.  Shortly after her demotion, Ms. Wilson-Raybould wrote:

It has always been my view that the Attorney General of Canada must be non-partisan, more transparent in the principles that are the basis of decisions, and, in this respect, always willing to speak truth to power. This is how I served throughout my tenure in that role.

In February of this year, Minister Wilson-Raybould resigned from the Trudeau cabinet, followed by another woman cabinet minister, Ms. Jane Philpott (President of the Canadian Treasury Board).

On April 2, 2019, Mr. Trudeau expelled both women from the Liberal Party, citing the division created w/in the party, and a taped conversation.  Meanwhile, Trudeau and Liberal Party poll numbers have dropped, particularly among women.  The very next day, approximately thirty women turned their backs on the PM, during a young female leadership conference w/in the Canadian House of Commons.

Des leçons, toujours des leçons (Lessons, always lessons): The lessons from this Shakespearean tragedy are too numerous to count, and yet, several core truths w/ application to the US, and many Western democracies, are striking.  W/in the US, Dems in particuar should take note.

 

Let’s start with the obvious :

The whole SNC-Lavalin Affair speaks to the defective form (i.e. crony) of capitalism that has infected Western economies and governments.  Moreover, it speaks to a two-tiered justice system, whereby w/ political influence, size & scale, the elite and multinationals receive deferred prosecution (a slap on the wrist), whereas citizens and smaller business owners would face criminal prosecution (& likely, jail time, for the same criminal infractions).  It is this very brand of crony government, and the rigged economy, that citizens throughout the West are up in arms about, as reflected in the recent rejection of center left & right political parties.

The Canadian example is spot on w/in the US.  Here in America, corporations & multinationals have amassed so much power – through uncontrolled concentration – that they, directly & indirectly, dictate economic and public policy to the various branches of US government and The Federal Reserve.  Regulatory & government capture is the order of the day, at the expense of the consumer, labor, innovation, opportunity, and ever-increasing wage & wealthy inequality.  Monopolies operating w/in the US take advantage of the US government and markets, while moving core operations offshore to mitigate taxes and exploit EM labor.  The threat of corporations cutting jobs - if they do not get their way on any number of issues - is nothing exclusive to Canada; but is ever present w/in the US as well… and is little more than extortion.

The SNC-Lavalin Affair draws attention to the fact that it is no longer democratic/representative government that is calling the shots, but rather, multinationals & monopolies. Moreover, while CEOs and their lobbyist are always crying out for greater scale, and thereby, less competition… the resulting monopolies give politicians – who might like to do the right thing – far less room to maneuver. In short, politicians – over time - have placed a great deal of the nation’s economic output w/in chosen industries, that have consolidated into cartel & monopoly.  So that, by way of example, instead of allowing Wall Street banks to fail (circa 2008), instead, the public witnessed taxpayer funded bailouts for US banks and the billionaire class (ongoing to this very day).  And possibly arriving soon, another round of Fed QE, all the better to goose a range bound stock market.

 

 

 

 

 

 

And the great disrupter of the 21^st Century?  My guess is that it won’t be AI, and is not likely to be automation, or a rising China totalitarian menace… of course, anyone of these are capable of providing considerable disruption to world economies and governments.  But rather, the great disrupter of the 21^st Century is likely to be women.  Women have been put upon for centuries, and in some countries are, to this very day, treated like chattel, property, and second-class citizens.  Women, in particular, know what it is like to be the victims of a crony – male dominated– system, where they, homosexuals, and minorities are exploited, persecuted, & often victims of patriarchal & paternalistic attitudes.  Too many women are treated w/ condescension by their white male colleagues.

This means, many women – in the interests of taking one for the team, or surrendering ethics & values – aren’t likely to play ball.

That’s not to say women aren’t capable, like men, of great corruption (or averting their eyes - like men - to go along and get along); but as women rise up in the ranks w/in business and government, certainly more women than men are likely to call attention to corruption, unfairness, and inequities w/in the system (as they, and their children, are often the victims of same).  In the business world, it’s been documented that more gender diverse corporate boards, and management teams, produce better results for the company.  Taking one for the team, or being a team player, is not in the long-term interests of the team – or a nation – if the team is corrupt or playing by rules that constitute a double standard or are unethical.

Calling out a lack of ethics w/in a team doesn’t make one a traitor, it makes one a leader, seeking to improve the team and/or a nation.

In the SNC-Lavalin Affair, Mr. Trudeau (as much as it pains me to write this) appears to have chosen party and power, before ethics and policy.  The counter argument against Mr. Trudeau, and the Liberal Party, is that as the leader of the team, the PM should have shown his support for his cabinet ministers/team members, Madams Wilson-Raybould & Philpott, over what appears to be a corrupt Canadian multinational looking to escape justice.

Meanwhile, former Ministers Wilson-Raybould & Philpott, as they have admitted, have shown the audacity & bravery to speak truth to power.

In another era, these women would have never seen their respective positions of power (and that’s to Mr. Trudeau’s credit); as heretics & iconoclasts, these women would have likely been burned at the stake, by an all white male jury.  Most fortunately, we live in a new era, and women are calling men out on centuries of abuse, gross corruption, and global warfare, itself…. And the world already is, and will likely become, a much better place, as women rise w/in power structures (formerly the exclusive domain of men).

Here in the states, some of the more dynamic POTUS candidates, today, are women of considerable stature, brimming w/ excellent ideas, and women who have refused to join the male insider’s club.  Of course, JMH writes of Senator Elizabeth Warren & Representative Tulsi Gabbard.

At the end of the day, it’s great to be a team player, but if the team is corrupt, it’s time to pick up the ball and head home.  Canadian Ministers Wilson-Raybould & Philpott should be heralded for having the bravery & brass ovaries to call it as they see it.  At risk to their careers & for the betterment of Canada, they spoke – and continue to speak - truth to power.

These women are an example to us all.

 Copyright JM Hamilton Publishing 2019

The Squealing of the Pigs…

The Squealing of the Pigs…

You know, Paul, Reagan proved that deficits don't matter. We won the mid-term elections, this is our due.

-       Dick Cheney, former CEO of Halliburton, former VP of the United States.

I’m a big believer that deficits do matter. 

-       Larry Fink, CEO of Blackrock

By J.M. Hamilton 3-9-2019

One of the great things about growing up a military brat was the experience of moving every three to four years, if not sooner, and seeing different places, meeting new people, and experiencing different cultures.  Something happened this week that brought me all the way back to the ninth grade. 

My family had just moved to exurbs outside of San Antonio, and my new high school had one the largest agriculture (ag) barns in the State of Texas, if not the largest.  And among the typical teen groups of that era – freaks, jocks, nerds, and socials – was a new group I really hadn’t encountered before, called the kickers.  The kickers were the ag girls & boys, and they spent a lot of time down at the school barn.  Some of these kids would go on to college at Texas A&M.

That first Texas Spring, I heard all kinds of loud animal noises – squeals & screams – coming from the high school barn.  I turned to one of my classmates, wearing a FFA blue corduroy jacket, and asked him, “What is that god-awful noise?”

The fifteen year old pulled out his pouch of Red Man, placed some tobacco in his cheek, pushed back his Resistol a little bit off his brow, and listened to the crying of the animals.

Finally, he said, “It’s nut cutting time.  And the boars, they don’t like it.  They don’t like it at all.”

What brought about my high school flashback, this week, was all the squealing the academic and financial elite are engaged in over MMT (Modern Monetary Theory). Ironically, while the elites maybe screaming about it, MMT has been the monetary policy of the United States, arguably, since the 2008 crash.

MMT is the belief that deficits don’t matter, because as the US possesses its own currency, it does not have to rely upon taxation, or borrowing from foreign governments, to finance federal deficits (which have been running close to, or at, on average, a trillion dollars a year, since the 2008 crash… this is projected to continue as far as the eye can see, thanks to the Trump tax cuts).  Instead, deficits can be monetized by the US central bank, or the Federal Reserve… we saw this in action, post-crisis, w/ the advent of QE or quantitative easing (basically, the Fed buying US treasuries and private debt).  Fortunately or unfortunately, depending upon one’s perspective, the Fed is the most powerful branch of government w/in the US and the least understood by the public.  That is to say, the Fed, w/ a little help from its friends at Treasury, can print money to finance the national debt, and as of late seemingly, w/ few or limited repercussions.

So why then, the elite’s cacophony of crying and squealing? 

After all, the Federal Reserve has been helping to finance the national debt, which has ballooned from approximately $10 trillion in 2008 to $22 trillion plus, today.  Haven’t the elite been the beneficiaries of QE and Fed intervention into private and public debt markets?  Didn’t the stock market soar; weren’t Wall Street banks, shadow banking, and the elite bailed out; didn’t asset prices rise stratospherically; taxes for the wealthy – cut; military contactors enriched by credit card wars; didn’t the rich get richer…  thanks to the Fed and MMT?

Absolutely. 

And therein lies the rub or the tension.  The financial elite – which owns the government and has captured fiscal, foreign, monetary, and tax polices (not to mention all four branches of government) – really doesn’t mind the Fed financing deficits, as long as they are the beneficiaries.  But the second a few Dems, and some liberals, talk about taking the Fed’s bazooka and firing it at real problems, like: a planet in flames; free college education; an economic bill of rights; and wage & wealth inequality (last seen at these levels, during the Gilded Age)…  well, then there’s a problem.

The elite, as I recently argued, have rigged a perpetual profits machine, and the engines of that machine are the Federal Reserve and the debt driven economy.   And the elite like the financialization of the US economy; they like the rigged system they have built for themselves; they like – w/in the US – the preeminence of Wall Street banking, shadowing banking, and the ultra- mercenary, private equity machine.   It requires so little effort to mint profits from cartel & monopoly, and gutting a company’s credit line and employee pension.

Finance is the tail that wags the Main Street dog, and the Lords of Finance – who own the establishment politicians – aren’t about to give that up.  They want the conduit for Fed policy to remain the Wall Street banks & the stock market; they like trickle-down monetary policy, as it effectively, sterilizes the money flowing out of the Fed, and for the most part, keeps it out of the public’s hands. 

In this manner, inflation is contained.

Inflation, Weimar Germany hyper-inflation, is the primary argument that the academic and financial elite raise against MMT. 

What inflation JM?  Great question… glad you asked.

Many economists and financial eminentos (as well as myself) predicted that as a result of the Fed’s balance sheet expansion, the mopping up of US debt, and all the liquidity and money printing injected by the central bank into the economy that inflation would set in.  But inflation hasn’t set in… which would debase the buying power of the dollar, as well as, harm faith in the dollar as a storehouse of value.  Why?

First, thanks to the Fed’s cheap money policies, M&A has exploded.  This has created cartels & monopolies, which exert monopsony power over a thoroughly defeated US labor market.  In short, here in the US, as workers compete for fewer and fewer well paying jobs against global labor (thank you automation, AI, & industry consolidation, as well), wages are suppressed, while management and the ownership class take nearly all income gains .

Second, as the US imports many of its products, due to the offshoring of labor & manufacturing, EM nations are exporting their disinflation – exceptionally low wages – to the United States (which is good if you are a consumer, and absolutely sucks, if you are an American w/ a high school education, or less, and are attempting to find a well paying job).  A quick shout out to my favorite news show, Bloomberg Surveillance, for bringing up this salient point this week.

And third, all the central banks are doing it.  If the US was alone in suppressing interest rates, expanding its balance sheet, and engaged in debt monetization, through QE… The US dollar would no longer be the world’s fiat currency.  But as the BOJ, the ECB, and the PBOC are all engaged in monetary sleight of hand, as well as other central banks, the impact to the dollar appears minimal.  As a result, the almighty US dollar and the Federal Reserve – for now – have suffered no ill effects.  In short, there’s a cartel of central banks engaged in monetary welfare for the global kleptocracy, and as long as they play nicely together, the currencies cannot be played off one another (such that it alters the various currencies' balance of power).

Bottom line:  Inflation is nowhere to be seen.  That is to say, as long as global M&A – and industry consolidation - continues at its extraordinary pace, it remains an employers’ job market… and as long as the plutocracy continues to keep all the economic gains of the global economy for itself (effectively, sterilizing central bank largesse), and central banks continue in lockstep w/ the same easy money policies, directed through a cartel of global banks… don’t expect inflation anytime soon.

Forcing the issue further is nation state debt itself… the central banks can only allow interest rates to creep up so high (higher interest rates would contain M&A and provide interest income to retirees and savers), before nation state debt service loads wreak havoc on government budgets.

So does MMT work, can it work?  JMH can tell you this, it has worked exceptionally well for the 1% for a decade, to such an extent that we now live in a Neo-Gilded Age.

What liberals are talking about, in regards MMT, is the end of sterilization in the money supply, & largesse, issued forth by the Fed.  And the end of monetary sterilization – monetary policy nut cutting time, if you will - is what causes the elites to squeal, like barnyard animals in springtime.

If the Fed largesse was to shift away from Wall Street, and be redirected at the American public - via a Green New Deal, a jobs guarantee, or a UBI – wages would rise, and this would crimp profits in the private sector.  And this is what is so upsetting to the robber barons… the fact that their perpetual profits machine, loaded w/ debt, may suffer a rise in wages.  

Moreover, workers  - unlike the financial elite – tend to spend the money they make, and if aggregate demand outstripped aggregate supply, this, in turn, could actually bring about inflation (the very inflation, the Fed is said to have long sought).  A possible rise in inflation, in turn, may cause greater scrutiny of our cartel and monopoly driven economy…  the primary biz model of the cartel & monopoly economy is to restrict the supply of products & services - or fix price - to drive profit maximization.  

With populism all the rage, the elites don’t want that kind of scrutiny. The model won’t bear it.

As with all things economic & monetary, when treading in unfamiliar territory, the keys to implementing an economic bill of rights, a jobs guarantee, and a UBI  - financed by the Federal Reserve & MMT – would be to do so at a gradual pace.  Arguably, the benefits of MMT, to date, have accrued exclusively to the 1%.  Therefore, it’s long past time to spread the wealth, by redirecting Fed largesse to policies that directly help the 99%.

As for a Green New Deal, that can’t wait. 

Here, the elite need only ask themselves: What good is being wealthier than King Midas, if the planet is destroyed?

Weimar Style

Short to intermediate term, I have to side w/ Cheney on deficits… longer term, unless we want to go to negative yields (which would erode debt and the principle itself, as has been done in other countries – see Germany & Japan), I have to side w/ Mr. Fink.  Eventually, the national debt will have to be addressed, via a haircut.

At the end of the day, the elite have already jumped the Rubicon, and are fully engaged in MMT (aka QE).  They have captured government and government policies (especially, the Fed & monetary policy) for their own personal enrichment.  The elite favor deficits and debt when it enriches them, but are terrified of spreading the wealth to the 99%: partly because of their insatiable lust for profits; unmitigated greed; and partly, because they fear, greatly, a highly successful Northern European socialist model placed w/in the US.  

(The elites, also, like to believe they are self-made, when in reality many are as socialist as they come.  That is, their wealth, often, was obtained by crony contacts w/in government, and a rigged system.  MMT, in the hands of liberals, would upend the top-down/trickle-down approach of our economy, and redirect, to a greater degree, to a bottom-up approach, or a 99% first tack).

After all, how are you going to keep boys and girls down on the farm - and dependent upon slave wages, multiple jobs, & Oxycontin - once they’ve had a taste of a highly successful mixed economy, European model (w/ a healthy dose of socialism to ameliorate the effects of a predatory, crony-capitalist system)?

The longer term solution, of course, and what will, almost, inevitably happen – as the entire house of debt is unsustainable - is there will need to be a, gradual, national debt write down.  And only central banks have that kind of power to forgive that much debt.  Stakeholders in our current catastrophic debt levels, those who make income off that debt – banks, shadow banking, and multinationals - are all that stand in the way of a longer term solution, and, likely, an inescapable write down (that will free up global governments to serve the will of the people & enterprise, via fiscal & monetary policies).

In the meantime, please consider hearing protection to muffle the screams & squealing.

Copyright JM Hamilton Publishing 2019