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State of the Working Class in the Era of the Agentic AI Armageddon

September 9, 2026 by jackrasmus

Trump brags how great the economy is doing and that American workers never had it so good, in terms of both jobs and pay. But the US government’s own data shows that since 2007 both jobs and wages for the working class have barely grown, forcing millions to leave the labor force altogether. The picture has worsened under Trump 2025-26. Job growth has slowed to a crawl and pay stagnated on average, while declining for millions at the median and below. The article then explains how this dire situation is about to get much worse, as next generation Agentic AI in 2026 is slashing millions of jobs this year and more the next.

Dr. Jack Rasmus

Copyright 2026

The Trump administration brags almost daily how great the US economy is and how well American workers are now doing. But the facts dramatically state otherwise. Here’s the facts about the current state of jobs and wages for the working class in America as of Labor Day 2026—and why the next two years both jobs and wages will get significantly worse. (All data is from the US government’s Federal Reserve and Labor Department databases or the Wall St. Journal).

There is nothing more important to a worker than having a job. Next important is a job that pays decently to allow a reasonable standard of living for his/her family. Third, a job with some promise of permanency—i.e. job security.

On all counts the state of the US working class this Labor Day 2026 is dire.

The Corporate Profits Picture

In contrast, corporate America the economy is booming. It’s never had it so good.  In 2008, corporate profits as part of US national income amounted to $943 billion. By 2012 it had more than doubled to $2.2 trillion. Just prior to the Covid crash of 2020-21, in 2019 profits were $2.43 trillion. They then blew through the Covid recession and rose to $3.5 trillion in 2020-21. Big business did quite well during the Covid crash.

It didn’t stop there. Under Biden, profits continued to rise to $4.12 trillion by the time he left office in late 2024. And under Trump, rose to $4.53 trillion at year end 2025. Based on the first half of 2026, profits are on track to top $6trillion by the end of 2026. That’s almost a tripling since 2019!

With the massive near tripling of corporate profits since 2019, one would think job creation and wage gains followed suite. Maybe not a tripling. Of even a doubling. But at least an increase in low double digits. But they didn’t. Not even close. Not since 2008; nor since 2019; nor during the past 20 months 2025-26 under Trump.

The Long Term Jobs & Wage Picture: 2007-2026

(JOBS)

Let’s look at how the working class has fared in terms of jobs. Let’s start with the year 2007. That’s a peak year in employment, well before the crash of 2008-09 and the collapse and loss of tens of millions of jobs those years.

In 2007 the total size of the US Civilian Labor Force—i.e. all those employed and jobless but looking for work (in the US you can be out of work but not looking for work in which case you aren’t considered technically ‘unemployed’ and don’t show up in the unemployment rate statistics)—was 153.9 million.

According to the latest US jobs report for August 2026, there were 169.7 million in the Civilian Labor Force.

That means over the past 18.67 years, from 2007 through August 2026, the US created 15.8 million jobs. That’s roughly 850,000 jobs a year. Divided by months, it’s only 73,800 jobs a month.

Economists generally assume on average 125,000 new entrants enter the labor force monthly. These are students entering the labor market, former retirees having to return to work because they can’t make it financially, youths entering for the first time, and other categories of returnees.

In other words, since 2007 the US can’t sufficiently find jobs for citizens who want to enter the labor force and work.

So where did they go? They mostly dropped out of the civilian labor force altogether. The US government has a statistic for that. It’s called the Labor Force Participation Rate. It estimated 66% of the working age population in 2007 was in the labor force. It’s now 61.6%. That’s 4.5% fewer today. That’s 4.5% of a roughly 170 million today. Or about 7.6 million who’ve dropped out of the labor force altogether since 2007. By the way, they are without jobs but aren’t considered unemployed according to the way the US government calculates unemployment rates. Which means the current unemployment rate of 4.1% in August 2026 should be double that 4.1% at least.

Another labor department measure reveals the scope of the problem that the US is increasingly unable to find jobs for all its citizens who want to work.

It is called the Employment-Population Ratio. Given the rise in the US population, it estimates the percent of the population able to find work. Like the Labor Force Participation, that measure too is falling long term. As the US population rose from 303 million in 2007 to 343 million today, that ratio has fallen as well—from 62.7 to 59.1.

In other words, The US can’t create jobs to keep its population employed as it used to. More and more who can’t find work simply drop out—and are not counted in the unemployment rolls.

This is not about losing jobs due to recessions. That’s another separate cause. This is structural. It’s about an economy that can’t provide sufficient jobs long term for workers entering the labor force and wanting to work.

The past four and a half decades also shows a pattern of collaboration by politicians and corporations to consistently undermine full time job creation. In the 1980s millions of involuntary part time jobs were legally permitted for the first time in lieu of full time jobs. Their wages were less and few benefits were the norm. In the 1990s, millions more temp jobs were created with little or no benefits and no job security. Both part time and temp were legally excluded from the union contracts, where they existed. Free trade agreements after 1989 exported millions more full time jobs offshore. The advent of gig work after 2000 threw workers off regular company payrolls and adrift to find work as independent contractors—often contracted back by the same companies that fired them. Massive business tax cutting after 2001 further encouraged companies to replace millions of their workers with capital equipment. The government eventually reimbursing businesses for the full cost of the equipment that laid off the workers.

Tens of millions of US full time workers lost their jobs since 1980 to these various forces, or else were reduced to part time-temp-gig work at lower pay with few if any benefits and no semblance of job security whatsoever.

All these developments are examples of what’s called structural unemployment. They are apart and in addition to job losses due to recessions and business cycles, i.e. cyclical unemployment. Overlaid on the chronic, long term weakness in job creation, tens of millions lost work in the great crashes of 2008-09 and 2020-21, not to mention smaller recessions and periods of economic stagnation.

This weak long term, and growing weaker, US economy job creation record is about to get worse, much worse. It already is, in fact. The cause is the Artificial Intelligence technology revolution which began to have an impact in 2022-23 and now in 2026 is accelerating in its negative impact on jobs and wages of the US working class. More on which shortly below.

(WAGES)

The US Working Class has not fared any better since 2007 in terms of real wages.

If we’re talking about the working class, one should not include the salary and compensation gains for managers, CEOs and incorporated self employed like doctors, lawyers, small business, etc. The mainstream media likes to throw in their wages and compensation to make the overall wage numbers look better than they are.

The closes statistic of relevance for the working class is wages for what’s called Production and Non-Supervisory workers (PNSW), a subset of about 110 million workers who comprise roughly 81% of the US total private nonfarm workforce.

Real hourly wages for PSNW in 1983 was $8.03 (when adjusted for inflation using the government’s own base year of 1982-84, the most frequently cited statistic for adjusting for inflation). By August 2026 this had risen to $9.94.

That’s a real wage increase of about 4.4 cents/hr. raise a year since 1983!

That’s also likely an over-estimate for several reasons. First, it’s an average. Of the 110 million PNSW workers, those at the median were getting less than the top 10% and those well below the median even less. Second, there’s the question of the inflation index used, the Consumer Price Index, to get the real wage after adjusting for inflation. This author’s estimates conclude the CPI under-estimates actual inflation by at least another 1% a year. Third, even if not an average and if properly adjusted for inflation, it still does not mean the worker has $9.94 to spend. Take home pay after rising taxes and other deductions reduces the $1.14 gain even further. All this means real wages have not even risen the paltry 2.6 cents an hour per the government figures.

Real Weekly Earnings are another measure of pay. Weekly earnings are determined by the number of hours worked per week multiplied by the hourly wage and thereafter adjusted for inflation by the Consumer Price Index.

The results are similar to the hourly wage. The average weekly earnings for PNSW in 1983 was $272 a week. By August 2026 it was $336. That’s an increase of about $1.49 per year in weekly earnings.

The Short Term Under Trump: 2025-2026

Defining short term as the past 20 months of the Trump administration, January 2025 through August 2026, the data show both job creation and wages have slowed still further.

(JOBS)

Private Nonfarm Employment from January 2025 through August 2026 rose from 131.9 million to 132.7 million. That’s 800,000, or an average of 40,000 jobs a month, i.e. about half the monthly average of 74,000 over the longer term since 2007. In other words, nonfarm non-government jobs are being created at half the rate under Trump compared to the longer term since 2007. And don’t forget, that longer term since 2007 includes two massive periods of job loss in 2008-09 and 2020-21.

Government sector jobs not only did not grow at half the monthly rate under Trump but declined. Government employment in all sectors—federal, state, local—declined from 23.5 million in January 2025 to 23.3 million in August 2026, a 200,000 decline.

Both the Labor Force Participation Rate and the Employment-Population Ratio have also continued to fall under Trump—the former from 62.5% to 61.6% and the latter from 59.9 to 59.1.  More workers thus continued to leave the labor force, or did not bother to enter, or else failed to find jobs and gave up. However, none of their numbers show up in the official US government unemployment figures. They are simply considered ‘missing’ by the government and never included in the calculation of the unemployment rate. Which is one reason why the unemployment rate hardly changes at all year to year now, despite the increasingly weak job creation picture.

Breaking down the aggregate Private Nonfarm Employment numbers by industry since 2025 shows little or no net job growth, or actual decline. Manufacturing jobs fell from 12.6 million to 12.4 million. Professional and Business and Retail Trade, two very large areas of employment, were both stagnant since January 2025 with no job growth: the former at 22.5 million and the latter at 15.4 million today as well as 20 months ago. Only the general services sector, where many unskilled and entry level jobs dominate, showed any gain—from 136.5 to 137.4 million. This is important to note since the current escalating impact of AI on jobs has begun to impact this sector of employment first and hardest.

For a number of reasons due to methodologies and data collection, the US monthly job reports tend to grossly overstate the number of jobs created. Those reports (based on two surveys called the Current Population Survey and the Current Establishment Survey) are later adjusted the following year by considering new data from the States’ unemployment insurance data.

In the last two years of the Biden administration, for example, the monthly job reports over-stated the actual number of jobs created by 598,000 and 898,000 jobs, respectively, according to the US Quarterly Census of Employment and Wages (QCEW).

In 2025 the total growth in jobs was estimated at 584,000 by the monthly jobs reports. That was adjusted down by -403,000 jobs for an actual total of only 181,000 jobs created the entire year 2025.

In the summer of 2025, even according to the monthly job reports, the US economy created only 35,000 jobs a month over three months. Big losses were recorded in key sectors like manufacturing, professional & business services, and government. In August 2025 Trump freaked out and declared the Bureau of Labor Statistics management was faking the numbers to make him look bad and he fired the director, McEntarfar.

In the summer 2026 job creation collapsed again, resulting in less than 30,000 new jobs in both June and July, although August numbers rose again to 162,000. However, the composition of the 162,000 is questionable—given that more than 100,000 of that number are attributable to bars & restaurants workers (59,000 gain) and teachers (42,000). Some economists note that the  59,000 was due to the one time surge to accommodate the world cup soccer events in the summer. Another 42,000 was attributed to education. One wonders how teachers returning to work in August is not considered a seasonality adjustment. Did K-12 education really grow that fast in one month?  

It remains to be seen what the QCEW downward adjusted job numbers for 2026 will be when released in February 2027. Will Trump’s politics play a role? Or will the downward trend in job creation adjustment continue?

(WAGES)

The picture for short term wages under Trump since January 2025 is more certain.

There have been no gain the past 20 months under Trump in inflation adjusted hourly wages or weekly earnings for Production & Non-Supervisory Workers in the US.

The inflation adjusted average hourly wage was $9.93 in December 2024 and $9.94 in August 2026. Ditto for average weekly earnings: $335 in December 2024 and $336 today.

That means since 2007 the real hourly wage for PNSW workers was only 2.6 cents and hour. Compared to the 4.4 cents per hour average over the longer period, 1983-2026, the period 2007 to 2026 shows an even slower rate of real wage gain at 2.6 cents. As paltry as the amount is, the gains are declining over time.

And under Trump 2025-26, the gains have totally stagnated for both real hourly and real weekly earnings—in other words no gains whatsoever. And if inflation were more accurately estimated, or the median instead of the average considered, the real hourly and weekly pay would indicate a decline under Trump. Take home pay would fare even worse.

If the job creation and real wage picture for the Working Class is dire in 2025-26, what about the intermediate and longer term, 2027 through 2030?

As bad as it is today 2026 for the working class, it’s about to get worse—and quickly. The current trends in Artificial Intelligence are destined to accelerate the crisis in jobs and wages for the American Working Class. Here’s why.

The Agentic AI Jobs Armageddon

The AI Revolution is occurring in stages. The first stage emerged around late 2022 with the introduction of the AI model called ChatGPT. This was simple AI. Someone programmed the model to do a task. Gave it a result to achieve. Identified tools for it to get and use. Where to go for the data. Then set it in motion with a human user prompt. The user defined the parameters and ChatGPT performed the task faster than any human. And as it performed more, it got more accurate with fewer errors. Moreover, it worked 24/7. No breaks. Holidays. Vacations. No benefits. Faster and cheaper meant more productivity. That meant reduced unit costs and that translated into more profits. Not just from productivity but because it also resulted in significant layoffs of real workers. AI is about making money by reducing labor costs and boosting productivity.

ChatGPT and its competitors targeted the replacement of simply decision making jobs formerly done by humans. Jobs that required little skill. Where the decision process was clearly defined, unambiguous and repetitive. This meant a lot of entry level service as well as manufacturing jobs.

Research sources like Goldman Sachs bank and McKinsey Consulting issued early predictions of the potential job loss due to AI. Goldman predicted 300 million worldwide.  Dozens of other sources have since issued forecasts and predictions of job loss. Nearly all talk of hundreds of millions lost plus more jobs de-skilled and downgraded (and therefore lower paid).

Occupations like data entry clerks, telemarketers, customer service reps, cashiers, medical transcribers, translators, copy and content writers, insurance underwriters, paralegals, basic software coding and many others were the initial jobs impacted by first generation AI ChatGPT 3-4 and its clones. By 2026 these occupations have already been decimated by millions with more job destruction in progress.

The second generation AI appeared in 2026. Its job impact will prove much greater than first generation ChatGPT. It’s called ‘Agentic AI’. And its target is jobs involved in the entire workflow of companies in general. Not just certain industries. Agentic AI is not industry specific. Agentic AI doesn’t depend on repetitive prompts from a human user, like ChatGPT. Agentic AI operates autonomously. Give it a final objective, it seeks out tools and databases wherever it needs them to complete its objective.

Agentic AI is about AI managing AI. It is AI scaled manyfold. Its scalability is potentially unlimited. It is AI that eliminates jobs involving not just simple decision making jobs but what’s sometimes called knowledge workers. It is AI moving up the skilled and complex decision making chain.

Agentic AI hit the economy in early 2026 with a force and a rapidity experienced by no other technology. It is just nine months old and its effect is intensifying. The lure of significant cost reduction and profits expansion has resulted in management rushing its implementation regardless of unknown disruptive consequences.

Agentic AI means an ‘orchestrator’ AI agent directs and manages the tasks of countless other agents under its direction. Emphasize ‘countless’. It is applicable to workflow management throughout all industries and companies. Job functions like project managers, product managers, marketing managers and middle to upper management in general are becoming, or soon will become, superfluous. Much of human resource functions, marketing, accounting, legal and other ‘back office’ work become redundant. Research analyst jobs of all kinds, including stock market analysts market research analysts, systems analysts, etc are all on the Agentic AI block. Traditional quality control jobs are destined to disappear. Agentic AI manages its own quality control tasks. If it makes an error it self corrects its code.

These are not entry-level or simple decision making jobs. They are jobs critical for managing the overall flow of work within virtually every company in every industry.

Most creative work within businesses is also subject to displacement by Agentic AI. Recent surveys showed, for example, that 40% of all song creation in the first half of 2026 had some element of AI in its production, and 20% of all songs were totally AI generated. TV and movie script writing is being similarly impacted right now as well.

Wherever an activity report is issued to or by management in a company—that activity and report can be potentially done by AI.

Earlier this spring 2026, META’s CEO, Zuckerberg, attempted to take the lead by implementing agentic AI throughout the company. His ‘Project OT’ (OT=Organization Transformation) planned to gut most middle layers of the company—including middle managers, project team leaders, software developers, etc.—and have agentic AI replace their tasks. Reports were up to 60% of META jobs would be eliminated or announced cut by November 2026. The META workforce heard of the plan and threatened to leave or demonstrate or even unionize. Zuckerberg backed off and reduced the 20% scheduled spring job cuts to 10% and cancelled planned November layoffs. META couldn’t afford an employee revolt, given its need to secure investor commitments and borrowing to fund its massive AI investing plans.

In recent interviews, Microsoft’s Bill Gates and Google’s Eric Schmidt, made predictions about the impact of this latest stage of Agentic AI on employment in general.

Gates noted the unprecedented rapid pace of AI development with Agentic AI and warned 50% of all entry level jobs will be gone in two years. That’s tens of millions of US jobs. The unemployment rate, now stuck at around 4% in recent years, will range between 10%-20%.

Eric Schmidt, former CEO of Google, has publicly declared people “have no idea what’s coming in 2027.” Only 10% of the impacts of AI are now known, according to Schmidt. There will be an unlimited number of AI agents in two years, he warned. Already, Anthropic Corp’s ‘Claude’ leading edge Agentic AI is doing 80% of all software coding, he added.

Whereas first AI generation ChatGPT eliminated simple service decision making, Agentic AI targets the huge Business & Professional Services sector of the US economy with its 22.5 million jobs. (jobs already not growing in recent years per earlier data).  The target is also the 20 million current US middle-upper management jobs. Both sectors are especially vulnerable to next generation AI replacement.

Agentic AI has also begun to transform ground transportation and manufacturing sectors, and by 2030 will begin to displace the 4 million K-12 public school teachers as well.

AI is already impacting the 2.2 million long haul truck driving industry. 18 wheeler trucks are already traveling across Texas without drivers in the cab. There’s another 1.3 million short haul truckers’ jobs also eventually at risk as well. Uber has 1 million ride-sharing drivers. UPS 100,000 drivers. 134,000 deliver for Amazon. 250,000 drive trucks for the US post office. With Agentic AI, each self-driving vehicle becomes an AI agent with an ‘orchestrator’ AI agent located at company headquarters directing them, planning and changing to the most efficient routes on the fly, avoiding congested traffic flows—all tracked simultaneously via a company’s access to dedicated low orbit satellites.

As knowledge workers, K-12 teachers are well adaptable to displacement by Agentic AI. One can easily imagine State governments defining centralized lesson plans for most academic subjects in K-12 public schools and delivering teaching services by various multi-media devices in the classrooms. Skilled teachers today replaced by lower paid, less skilled humans in the classroom operating the machines and monitoring classroom behaviors. Teachers become babysitters and classroom machine operators. Those that remain in the less skilled roles will consequently be paid less.

Then there’s what’s called ‘Physical AI’, i.e. robots. One has only to view the videos of the current level of AI development in China to understand the rapid pace of development of ‘physical’ AI now underway. And it’s only beginning. The use of human-like AI engineered robots is accelerating exponentially. Already humanoid robots are directing traffic in crowded inner-cities in China.

Not least, the use of Agentic AI in the military is unlimited. It too will negatively impact jobs. Agentic AI is perfectly adaptable to battlefield management. Hundreds and thousands of airborne drones today already engage daily in the war in Ukraine. Swarms of underwater and land-based drones are being prepared. Battlefield management by Agentic AI of individual AI agent military vehicles, weapons systems and robots is on the drawing boards by all major military powers—China, Russia, the US in particular. Fewer human recruits to the military in the US will be required within five years. Today’s 1.3 million active US military force will be reduced by tens and hundreds of thousands of human recruits. The US military recruited 163,000 in 2025.  That level will no longer be needed and will be reduced by tens of thousands annually. Those rejected will be forced to enter the labor force instead, at a time of massive structural unemployment due to accelerating next generation AI.

How do all these impacts current and imminent result in job destruction due to Agentic AI and whatever comes next, 3rd generation?

If Gates is accurate in predicting the unemployment rate will surge to 10%-20%, that means the current 7 million unemployed full time workers today in the US (i.e. the 4.1%) will total 25 million unemployed—assuming just a 15% unemployment rate.  And if Schmidt is right, that’s potentially within the next two years, by the time of the next US general election in 2028.

And that 25 million will not count any unemployment driven by a business cycle contraction and next recession that this writer predicts will occur before 2028. But that’s another story.

Dr. Jack Rasmus

September 7, 2026  

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Condition of the Working Class in the Era of the AI Armageddon

September 5, 2026 by jackrasmus

https://alternativevisions.podbean.com/e/alternative-visions-condition-of-the-working-class-2026-in-era-of-ai-armageddon

What is the state of the US working class in terms of jobs, wages, etc. as of Labor Day 2026? The picture per latest US jobs report for August 2026. Wages. What’s the emerging impact of AI on the American Working Class? Not just in terms of job loss but in conditions of work. What is ‘Agentic AI” now doing to the work force? Show continues with Treasury Secretary Scott Bessent’s last week interventions in the global currency and US bond markets, the chaos results in the recent G20 finance ministers meeting and latest claim the US will ‘grow’ out of its current $40 trillion debt crisis. What’s the actual record of US GDP growth long term?

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The Decline of American Empire Part 1: The Funding Gap

September 1, 2026 by jackrasmus

https://alternativevisions.podbean.com/e/alternative-visions-8-28-26

Today’s show takes up the topic of the American Empire in decline. It’s the first summary preview of my forthcoming book, available in early September, “The Twilight of American Imperialism“, Clarity Press, 2026.  What does it mean to say ‘decline’? What are the indicators? They’re not just geopolitical—i.e. rise of BRICS, lost US wars, disputes with allies, fracturing military alliances, etc. All empires run on money and the American is running out of enough to fund the accelerating costs of empire. It is now experiencing an accelerating financial crisis as costs of Empire accelerate faster than revenues to fund it. As a result, the empire’s Practices have begun to fail and its Institutions under-perform. The book covers the period 1992 through 2026, focusing in large part on Trump 2025-26 and policies now accelerating the decline. Today’s show concludes by revisiting the crisis in the US Treasury market—the main means for debt financing of the Empire–emerging in recent weeks and explains how it is related to the main theme of the book.

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The Yen, US Treasury & the Financial Crisis of Empire

August 31, 2026 by jackrasmus

The Yen, US Treasury & the Financial Crisis of Empire

By Dr. Jack Rasmus

August 30, 2026

What do the collapse of the Japanese currency and carry trade—and the  interventions by US Treasury Secretary Bessent in the currency and bond markets in recent weeks—have to do with the emerging financial crisis of the American Empire?

In August the US Treasury Secretary Bessent intervened in global currency markets to buy Yen to keep it from falling. Moreover it did so by buying Yen with Euros instead of US dollars. Bessent quickly followed that currency intervention with an accelerated buying back of US Treasury bonds, doubling buyback from $4 billion to now $8 billion a week.

What do these two seemingly separate actions by Bessent and the US Treasury have to do with today’s emerging financial crisis of the American Empire?

The Yen, the Dollar and US Treasuries

The Yen had been declining in relation to the US dollar. That meant Japan import prices, and in turn general inflation, had begun to rise in Japan. With inflation the price of Japan government bonds had begun to fall. Since the price and yield (i.e. interest rate) on bonds are always inversely relation, the interest rate on Japan government bonds began to rise in turn. From a level of virtually zero for years, the 10 year Japan government bond rose to nearly 3%.

Now that the yield on Japan bonds began to rise, Japan investors began investing in Japan bonds. When for years Japan bonds provided no yield, investors bought US Treasury bonds. A lot of them. More than $1 trillion.

But with Japan bond rates up and investors starting to buy Japan government bonds, money capital now threatened to turn from buying US Treasury bonds—yielding  now around 4% and thus roughly the same as Japan’s bonds—to buying Japan bonds instead. In other words, demand for US Treasuries threatened to decline as investors turned from US to Japan government bond purchases.

Why is this important?

Because Japan had become by 2021 the largest purchaser of US Treasury securities among foreign holders, eclipsing China. Launched by Trump in 2018, the US trade war, sanctions, tariffs, etc. against China led to China in 2021 to start sharply reducing its holdings of Treasuries. Once holding $1.26 trillion in 2020, by 2026 China has reduced its holdings by half to $633 billion, allowing its Treasuries to ‘roll off’ after they matured and not purchasing new in any quantity. Japan had replaced China as the single largest country holding US Treasury securities.

Japan kept its holdings of US securities at more than $1.1 trillion throughout the period. Should it begin to buy fewer Treasuries—or worse start selling off its Treasuries—that would blow a second hole in US Treasury sales by foreign investors joining China.

Foreign investors (governments, central banks, private banks, corporations, etc.) hold about a third of all Treasuries outstanding today. They held approximately $9.2 trillion or 32% of all Treasuries outstanding at year end 2025, up from $6.8 trillion at start of 2020. Purchasings of US securities are critical for the US economy. New Treasury sales are the most important source for financing (paying for) the US annual budget deficit—and foreign purchasers constitute a significant one third.

Since 2020 the US budget deficit has ballooned, driven mostly by even faster acceleration of defense spending while Congress has massively cut tax revenues—i.e. the other potential source of budget financing which has been declining.

Pentagon spending has risen from $914 billion in 2021 to $1.15 trillion in 2025. US wars by year end 2026 will raise that to $1.4 trillion. Trump has asked for another $500 billion for defense in 2027. And that’s only Pentagon spending. Total US defense/war spending was $2.2 trillion in fiscal year 2025, when other defense related spending for veterans benefits, CIA, military aid, nuclear weapons development and other categories are included.

Given that tax revenues were cut $5 trillion by Trump in 2025 and thus a lid put on tax revenues as a source of funding the accelerating US defense spending and US budget deficit, sales of Treasury securities are increasingly important to fund the rising costs of Empire and exploding US budget deficits.

The US has continued to run massive budget deficits averaging more than $2 trillion a year since 2020. In past decades before 2000, the US used to cover its deficits with economic growth and tax revenues. But growth has slowed sharply since 2020, on average barely 2% per year and tax cuts for corporations and investors have accelerated. So Sales of US Treasuries have been key to ‘financing’ the annual $2 trillion plus US budget deficit.

Should foreign buyers of Treasuries continue to buy fewer Treasuries, like China has been doing, or worse, start selling off their Treasuries—how will the US finance its annual $2 trillion and rising budget deficit? 

The US will have to either cut spending, raise taxes, or sell more Treasuries to domestic US buyers. But to sell more domestically, it will have to entice US domestic buyers to do so. How? By increasing the interest rate on the Treasuries it will pay them if they buy more.

Which brings us back to the recent events regarding Japan, its Yen, and its increasingly competitive Japan government bond rates that offer interest rates to buyers nearly equivalent to US Treasury bond rates.

Japan is about to sharply reduce its purchases of US Treasuries. That means less global demand for US Treasuries. At the same time, Japan has started selling off some of its $1.1 trillion hoard of Treasuries. That increases the supply of Treasuries globally. Lower demand and higher supply both mean falling prices for US Treasuries and, in turn, rising long term US bond interest rates.

Why is Japan selling its US Treasuries? In order to intervene to prop up the Yen, Japan’s central bank since July 2026 has begun selling off part of its $1.1 trillion stock of US securities. In fact, since July 2026 Japan’s central bank has dumped(sold off) more than $90 billion of Treasuries. It’s done so in order to raise cash with which to buy its own Yen in global markets to keep the Yen from falling.

In short, the falling Yen and rising Japan bond rates is threatening to sharply reduce the sale of US Treasuries and is throwing excess supply of US Treasury securities onto the market—both actions destabilizing the $31 trillion US Treasury market.

Bessent’s Yen Intervention with Euros

To assist Japan—and discourage it from selling even more US Treasuries—US Treasury Secretary Bessent last month intervened in global currency markets and started buying Yen to assist Japan trying to prop up the value (price) of its Yen.  But that’s just the appearance. The real Bessent objective is to assist Japan to prevent it from selling off even more US Treasuries. 

In an interesting twist, Bessent didn’t enter the global currency market to buy Yen with dollars. He used the US Treasury’s stock of Euros currency to buy Yen. That may have temporarily helped Japan, but it undermined the value of the Euro and European economies. That did not make the Europeans too happy.

On August 30, 2026 Bessent bragged the US action had stabilized the Yen. But evidence suggests otherwise. The Yen is likely to continue to fall below the benchmark Yen-Dollar exchange of 160 to the $1.  When it does, Japan will likely dump (sell) more of its US Treasury holdings in order to buy more of its currency to prop it up. That means Japan, like China, will reduce its holdings of US securities well below the $90 billion it already expended since July. If it’s selling Treasuries it’s certainly not going to buy more. So both Japan’s demand and supply of Treasuries will push up US long term Treasury bond interest rates.  US long bond rates are already at 5.3%! They’ll likely go higher now.

That will pull up US mortgage rates. So US consumers can forget about US housing affordability before the US November elections. It’ll get worse, not better. It’s already happening.

To sum up: the Japan Yen instability—and the joint interventions by the bank of Japan and the US Treasury to stabilize it—will likely lead to Japan, like China, selling off existing stock of US Treasuries and buying fewer of the same.

If both China and Japan are buying fewer and dumping more, who will pick up the slack in Treasury security sales—the key source for financing the US budget deficit, now at $2 trillion and projected to rise even more?

Since 2020 it has been the Europeans who have offset China’s sell off of Treasuries to enable the continued financing of the US deficit gap. Surprised by that? It’s true.

The question, however, is whether the Europeans will now buy even more Treasuries to offset the China, and soon Japan, decline in Treasuries?

Here’s what the Europeans did from 2020 through 2025:

The UK increased its holdings of Treasuries from $412 billion in 2020 to $865 billion in 2025. Belgium (the location of the EU clearing house bank) increased from $135 billion to $466 billion. Luxembourg from $197 to $431 billion. France from $49 billion to $376 billion. In other words, the Europeans more than offset the loss of China purchases of US Treasury securities. They offset China and bought more to enable the US to finance its chronic $2 trillion deficit since 2020.

Perhaps the US paid for most of the cost of the Ukraine war through 2024 with the understanding the Europeans would in turn buy more US Treasuries?

The question is will Europe continue?  The US Trump administration relationship with Europe is not the best and is getting worse. The US has pulled back (financially) from support of the Ukraine war, turning over the cost of financing it to the Europeans. The latter in turn have had to raise $90 billion in Euro bonds to fund Ukraine, with talk of another $70 billion coming. If they have to raise $160 billion for their ‘Project Ukraine’ war, will they also continue buying Treasuries at the pace they had 2020-2025? Can they even do so?  And if Trump intensifies the dispute with them over Greenland, will they want to?

In short, for both economic and political reasons it is unlikely the Europeans will continue to fill the gap in declining Treasury purchases by China and now potentially by Japan as the latter continues to sell off its Treasuries in order to support its currency?

Which brings us to the second recent US Treasury market event: Bessent’s injecting of another $4 billion a week into the US economy by doubling the rate of Treasury buybacks of US bonds already held by investors.

Bessent’s $8 Billion Weekly Buybacks

What does Bessent’s buyback scheme mean for the US deficit, rising US interest rates and the emerging financial crisis of Empire as well?

Bessent bought Japanese Yen with Euros because he was obviously saving his US dollars to buy back US bonds held by US investors.

Buying back US bonds results in dollars injected into the hands of investors who previously held the Treasuries. Less supply of bonds in the market means a higher price and thus in turn a lower yield or interest rate on long term Treasury bonds.

But the effect of Bessent’s action will prove negligible. $4 billion more a week, even over ten weeks ($40 billion), won’t budge the roughly $31 trillion US Treasury market. He surely knows that. So why did he do it?

Here’s where the current US Artificial Intelligence investment bubble enters the picture. The AI boom is devouring available money capital in the US. The big 9 tech company, so-called ‘hyperscalers’, are gobbling up investment capital borrowing hundreds of billions of dollars to fund their current massive AI investment. In 2025 the big 9 tech corps spent an estimated $500 billion on AI investment (in data centers, apps, chips, etc). This year 2026 the estimate is $1 to $1.5 trillion. Next year, another $1 trillion. And that’s only the big 9. The rest of corporate America is running pell mell off the cliff into AI investing as well. (Many will go bust when the AI bubble crashes in the next 12-18 months, I predict, but that’s another story).

That massive AI investment is being financed out of various sources. The hyperscalers are committing their former massive hoard of cash. They are in addition issuing more equity  (stock) to raise cash. They are signing long term huge leasing deals and commitments. And they are raising debt—i.e. borrowing. The debt component of the total spending is estimated at over $200 billion this year alone. In other words, they are sucking up most of the available investment capital to finance their AI plans.

In the process they are crowding out US investment in general, driving up interest rates. They are also potentially crowding out US investors’ purchases of US Treasury securities—at a time of foreign holders of Treasuries reducing theirs as well!

So Bessent is injecting $40-$80 billion or more in 2026 in extra liquidity into the US economy—in part to assist the massive AI lending by banks but in part as well to provide sufficient dollars for US investors to purchase US Treasuries by investors.

The connection between the Japan Yen intervention and the US bond buybacks is that they are both actions intended in the end to enable the continued purchasing of US Treasury securities—as the US Empire’s defense costs continue to accelerate and the US needs to sell even more Treasury securities in order to finance its accelerating defense spending and budget deficits.

SUMMARY

The takeaways from all this are:

  • Japan’s Yen will continue to weaken. Both its central bank and US interventions will not succeed even intermediate term. The Yen will continue to fall below 160 and Japan will have to continue to sell Treasuries in order to prop up its currency
  • The combination of China, Japan (and likely Europe) slowing of Treasury purchases will mean demand for Treasuries will slow, prices decline and therefore long term US bond rates rise
  • Federal Reserve chair Warsh will follow the market-driven long term bond rate rise by raising Fed short term rates eventually as well
  • The US economy, already slowing (except for AI investment) will slow even more as rates increase. US job creation, already flat, will decline further in turn
  • Big Tech will chase the AI investment bubble into 2027, absorbing money capital, crowding out other investment and driving up US interest rates further until the market side of the bubble busts in late 2027-28
  • Aggregate US Treasury sales by foreign buyers will slow, as US budget deficits rise even further as US defense spending continues to accelerate (Pentagon $1.5 trillion; total defense spending all sources $2.5 trillIon).
  • A crisis in the Empire’s financing of rising deficits and debt from Treasury sales will force the Empire to choose one or more of the following: to reduce war spending, raise taxes, or (most likely) intensify austerity by cutting social programs even further.[1]

Dr. Jack Rasmus

August 30 2026

[1] All the data references are from the author’ forthcoming book, ‘Twilight of American Imperialism’, Clarity Press, September 2026, which are in turn all from US Federal Reserve and Commerce Department data bases.

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US Treasuries, Japan’s Yen & US $40 Trillion National Debt

August 22, 2026 by jackrasmus

https://disk.360.yandex.ru/d/cmDxsLez0wvS2g

What’s the connection between US recent bailout of Japan’s currency, collapse of the Yen carry trade, US $2T annual budget deficits, $40 trillion national debt, and approaching failure of US Treasury sales to finance the US deficit and interest on the national debt? Listen to my interview of August 22, 2026 with RT-TV explaining why Treasury yields are surging and why US Treasury Secretary Scott Bessent, and Donald Trump, won’t be able to halt the emerging US fiscal train wreck.

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US Govt Bonds Dumping/Global Financial Instability Rising

August 21, 2026 by jackrasmus

https://alternativevisions.podbean.com/e/alternative-visions-8-21-26

Following recent weeks crisis in the Yen carry trade and Japan and US governments’ intervention, this past week US 30 yr. Government bond rates surged past 5% to rates just before the 2007 crash. What’s behind it? After the AI stock bubble, legacy software companies’ implosion, private credit market and gold, silver, crypto price crashes, is the 30 Yr. Bond another reflection of increasing US and global financial markets’ instability? What’s the cause? Inflation? US $40 trillion government debt? AI corporate bubble and record debt crowding out government debt servicing? Why the US is approaching a crisis in inability to finance its massive debt with Treasury securities sales. Why the Empire is going broke!

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Japan’s Yen, China’s Deepseek & Trump’s TACO 2.0

August 9, 2026 by jackrasmus

What’s behind Japan and the US Treasury intervening to buy Yen? Will Japan join China in dumping US Treasury bonds? Who’ll make up the loss this time? What it means for the US deficit and Fed interest rates.

The AI bubble: more evidence of fragility as competition intensifies internally and from China. How China’s open source Deepseek AI model is destabilizing the AI market. Show concludes with latest on Iran and Ukraine wars: why Trump TACO-ed again and Iran’s deal with Oman to open the strait of Hormuz on its terms. Why the US can’t even get a proxy war going in the region. Finally, what are the facts behind the western media propaganda campaign that Russia’s losing the war in Ukraine.

https://alternativevisions.podbean.com/e/japans-yen-chinas-deepseek-and-trumps-iran-taco-20

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Latest US GDP & AI Bubble + Eurasian War Coming?

August 9, 2026 by jackrasmus

Why the Iran and Ukraine wars are leading to a merging of the conflicts and a ‘greater Eurasian war’. Iran and Ukraine 2026 are not unlike Spain and China 1937. Today’s show discusses at length the latest developments in both the Iran and Ukraine conflicts and why they are both escalating. Why Iran and Russia have given up on negotiations with Trump and the ‘west’. Why the wars are spreading. Why the Europeans want and need the war to continue. Trump’s latest flip flop in favor of Ukraine and search for proxies in Iran. The Empire’s deceptions of Anchorage and the MOU. Show concludes with discussion of latest US GDP figures of only 1.5% growth (actually 1%) and latest developments in AI bubble.

https://alternativevisions.podbean.com/e/alternative-visions-7-31-26

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Trump’s Iran War US Oil Shortage Deception

July 24, 2026 by jackrasmus

Last June 17, 2026 Trump announced the US and Iran had agreed to a Memorandum of Agreement (MOU) and a ceasefire in the war. The global price of crude oil fell almost immediately—from the $100 per barrel range at which it hovered throughout April and May to $67 for West Texas Crude (WTI) and $70 for Brent crude.

The retail price of gasoline in the US—which had surged from $2.92/gallon nationwide for regular grade gas before the war to the $4.50/gallon range at its peak—cost the American consumer $69 billion in additional out of pocket expense for the four months, March through June.

The MOU did not last long. Within days it began collapsing and in early July both sides declared it was dead. Military attacks by both sides thereafter re-commenced and have escalated steadily ever since. So too has the price of gas at the pump again, as crude oil now exceeds $90/barrel and rising.

As the media story goes in the New York Times and Washington Post legacy media in America, Trump responded and agreed to an MOU as result of the pressure from US oil company CEOs who, in early June 2026, went public and warned Trump US oil stockpiles and reserves were running critically low and would disappear in another 3-4 weeks. That would send the spot price of crude well above $150/barrel and gas at the pump to $8/gallon or more! So Trump proposed the MOU to Iran mid-June. The tentative deal on June 17 immediately drove the price of crude down to $67/barrel and shaved 50 cents or more a gallon off the price of gasoline at the pump.

But is this narrative correct?

Was the Iran war really leading to US oil reserves collapsing, causing a severe shortage that was about to drive retail gasoline prices through the roof? Or was the MOU a deception and a tactic to set up a larger military conflict with Iran that is now unfolding?

Let’s look at some facts of the past five months about US crude oil stockpile reserves, US crude production, US crude oil exports and imports, as well as US refinery capacity and gasoline and distillate fuel inventories since February 28, 2026.

Official Data on Oil Reserves, Production & Exports

According to the sources US Energy Information Administration and the private economic research firm, tradingeconomics.com, US commercial oil stock reserves on February 27, 2026 amounted to 439 million barrels. In the first six weeks of military conflict from that date through April 17, US commercial stockpiles of crude rose to 465 million barrels. Thereafter a mild drawdown occurred and by July 17, 2026 the commercial reserves were still 411 million barrels. That latter number represented a mere 6% below the preceding five year average of commercial reserves. Hardly seems like a major commercial stockpile shortage. Or, for that matter, a shortage justifying a $1.50/gallon rise in the price at the pump and $69 billion cost to consumers!

OK. Maybe the commercial reserves were not at crisis levels but the Trump administration’s authorization of a release from the US Strategic Petroleum (SPR) reserve reflected a shortage offset by government oil supplies from the big SPR storage facilities in Big Hill and Bryan Mound, Louisiana.

At the start of the war, the SPR held 415 million barrels. That was already down from its 714 million barrel capacity due to the Biden administration’s release of 300 million barrels after its disastrous inflation and war policies. But that 300 million was all before the Iran war.

By April 17, 2026 the SPR had been drawn down by only 10 million barrels, to 405 million. The drawn down of the SPR didn’t begin until May. By June 26 the SPR reserve was 325 million barrels. Note this fact: the SPR draw down was in May to early June. That’s when the price of crude per barrel was hovering around $100 per barrel—bouncing around a few days lower as Trump falsely announced an end to the conflict no less than 14 times by various accounts—in order to prevent the price surging to more than $100. As Trump manipulated the markets with his announcements, the crude oil price fell $10 to $20 barrel each time, only to rise quickly again after a few days every time he manipulated the markets.

Since June 26 the SPR reserve has continued at around 320 million barrels. On July 17 it was 314 million, down from 325 nearly a month before. In other words, there was little further draw down of the SPR the past month, mid-June to mid-July. Just as there was little draw down from February 28 through April 17. The actual drawn down—about 100 million barrels—occurred between April 17 and June 17. As we’ll see the timing of that drawn down to the period between April 17 and June 17 is important.

The draw down coincided when the price of crude oil hovered consistently around $100 per barrel!

The SPR Oil Company Profit Scam

When the US government releases crude oil supply from the SPR it doesn’t charge the oil companies anything for the oil. They get the oil for free. No cost. They then can sell it for export at the then prevailing market price—i.e. $100 per barrel or more if April to June 17. Or, they can refine it and sell it in the US domestic market—again at the $4.50/gallon price instead of prior $2.92/gallon. In both cases there’s no costs of production for the drilling and other pre-refinery production. And if for export, no costs of production at all. Lower or no cost mean windfall profits.

In the first quarter of 2026 the 27 major US oil companies reported windfall profits of $40 billion. That was before the Iran war and the price escalation. Soon they’ll report second quarter 2026 profits. Analysts except that to be $60 to $80 billion additional profit windfall.

So the US big oil companies in just the first half will realize more than $100 billion further profit from the Iran war. While the US consumer puts out $69 billion and cuts other spending and/or his savings by that amount.

Who says war is not profitable! And who wants it to continue? And this is not to mention the Weapons companies of the Military Industrial Complex. Or the financial speculators who got pre-notice of Trump’s market price manipulation announcements—which include his friends and family businesses who placed speculative bets on oil price swings since February 2026!

The SPR oil company profits scam—where they wait to take SPR free oil at $0 dollar cost until it reaches $100 per barrel and more and then sell it at 100% profit—is just one of many ways that capitalists of various ilk have been exploiting the war.

Defenders of the SPR scam will argue the oil companies don’t realize 100% profit. They have to return the free oil from the SPR at a higher rate that they received. Typically they are required to return 1.2 barrels for every 1 barrel they take. True. But they can wait up to two years to replace the 1.2 barrels. So they wait until the price per barrel falls more than 20% in order to pump their own oil to send to the SPR.

This is not unlike ‘short selling’ stock market shares by speculators. In a short sale, the financial speculator capitalist takes possession of a share of stock and technically ‘sells’ it. When the price of the stock then collapses he ‘buys’ the stock at the much lower price. So he buys it low and (pre) sells it high. The difference is the speculative profit. He doesn’t actually take possession of anything. It’s all an accounting manipulation, except for the profit at the end which he gets to bank in his account. That’s real.

In similar fashion, the Oil company waits until the price per gallon is high, only then ‘takes’ the oil from the SPR. Sells it at the peak market price. Then waits until the price collapses and replaces the oil at the low market price. Even if the replacement is 1.2 to 1, the profit difference is when the lower replacement price is less than 20%. US oil companies took and sold SPR oil at $100 or more per barrel. They have two years to replace it at less than $80. The difference is pure profit. Should a recession occur within two years, the price per crude will certainly fall to $50 or less.

Other Evidence of No Oil Shortage

The oil companies in the meantime gouge the US consumer at the retail level for gasoline, home heating oil, and diesel.

If there was a true supply shortage, why has US crude oil production not changed at all during 2026 and the war?

From our same sources, on February 27, daily US crude oil production in the US was 13.7 million barrels. On April 17 13.6. On June 26, it was 13.8. Since June it has been steady at 13.8 million barrels. So the shortage is not due to US crude oil production. And, as we saw, not due to oil company commercial crude oil reserves.

So where has the SPR oil supply (100 million barrel draw down April-June) gone? Try US oil companies’ US oil exports. The dollar value of those exports rose from $7.8 billion for the month of February 2026 before the Iran war to $17.1 billion in April 2026 to $19.1 billion in May. (June is not yet available but almost certainly will exceed $22 billion).

An argument can thus be made the SPR release plus the US companies’ crude output increase has gone to exports. While some of the dollar value increase is no doubt due to the rising price of US crude exports, some of that is also due to the increase volume of crude exports.

And not just crude oil exports. Refined oil product exports have risen in quantity and price as well. US Refinery capacity rose from 89% in February 2026 to 96% in July.  That increase in refinery output should have increased the supply of gasoline, distillates, etc. and thus reduced the price for consumers at the pump but didn’t. (More supply means lower price).

Gasoline and distillate inventories fell slightly despite the US refinery production rise from 89% to 96% capacity.

According to the Wall St Journal of July 9, 2026, US gasoline inventories fell from 253 million barrels on February 27 to 212 million on July 9. And distillate inventories from 120 to 103 million barrels. In both cases, not much a decline or shortage from prior five year average levels, but certainly not enough of a supply shock to justify a 50% increase or more in the cost per gallon for gasoline and diesel fuel!

Conclusions:

The data for both US crude oil production and reserves (commercial or SPR) simply don’t indicate there’s been a crisis in oil supply shortage in the US.

US crude production and commercial reserves don’t support that view.

The US SPR release is actually a profits scam to enrich the oil companies, who will have realized windfall profits of more than $100 billion in just the first six months of 2026.

In contrast, US households have paid out of pocket $69 billion. US businesses more.

Much of the SPR free oil was likely re-exported by the US oil companies at significant profit.

US oil companies’ refinery output should have increased the supply of gasoline and distillates but didn’t. That moderate refined oil output increase was also likely mostly re-exported.

There is not now, nor has there been a supply shortage of either crude oil or refined oil products in the US. It’s all a Trump-Media-MIC misrepresentation of facts to justify a grand scale rip-off and exploitation—as all wars are.

Now that the Iran war has resumed as a hot war in July, the process of exploitation of consumers, oil price manipulation and speculation, and oil company profits windfalls will repeat in the second half of 2026.

Jack Rasmus

July 24, 2026

copyright 2026

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Scenarios US Economy 2026-28 +Updates Iran & Ukraine Wars

July 18, 2026 by jackrasmus

Today’s show focuses on likeliest scenario for US economy under Trump’s remaining term, including Pentagon and total US war spending, non-defense spending cuts, deficits, national debt, interest payments on the debt, tariffs, inflation, Fed interest rates, financial markets, real GDP and wages, and likely forecast of recession after 2026. Also updates on why the MOU with Iran collapsed and why Trump now sides with Europe and Ukraine favoring further escalation of war in Ukraine.

https://alternativevisions.podbean.com/e/alternative-visions-7-17-26

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