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Listen to my Alternative Visions radio show of January 12, 2018 for my analysis of the Trump Tax Cuts’ true dimensions. How they amount to more than $5 trillion in cuts over the decade to corporations, businesses, investors and the wealthiest 1% households. How the budget deficit hit will be twice the official government $1.45 trillion.

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Dr. Rasmus starts the show with comments on last week’s announcement by WalMart raising its minimum wage and the Bloomberg News story about China considering cutting back buying US Treasury bonds. The rest of the show addresses the Trump Tax Cuts true extent of tax reduction on corporations, businesses, investors and the wealthiest 1% households. Jack debunks the notion that the US budget deficit hit from the tax cuts will equal only $1.46 trillion, the official government estimate, showing it is based on the absurd assumption of a 10 year annual average GDP growth rate of 3% and no recession occurring for another decade (or 19 years from the last). The deficit hit will be at least twice, or $3 trillion. Tax hikes on the middle class are about $2 trillion. So the tax cuts for corporate America et. al. therefore exceed $5 trillion. Rasmus then estimates the $5 trillion from the major provisions of the Act: $1.5t from corporate rate reduction, $1t from accelerated depreciation write-offs, $.5t from elimination of corporate AMT, and between $2-$2.5t for US multinational corporations from repatriation of $2.8t to $4.0t profits in offshore subsidiaries and tax havens and a future offshore tax rate reduction from 35% formerly, to 8%. Rasmus explains the cornerstones of the US global economic empire: the twin deficits (trade-budget), free trade (benefits share with local capitalist elites offshore), the dominance of the US dollar as global trading currency, and US domestic tax policy that ensure trillions of profits keep flowing to investors via dividends, stock buybacks, and capital gains.


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Public demonstrations and opposition arising once again in Greece, as the Troika (European Commission, European Central Bank, IMF) demand still more austerity measures (pension cuts, privatizations, tax hikes) as part of the latest maneuvering by the Troika and its Syriza Greek government ally in anticipation of a renewal of yet another ‘debt deal’ later this year in 2018. The old deal–the third established in 2015–is scheduled to end this summer. The Troika-Syriza intend to ‘roll it over’. Thus the new demands for continuing and more austerity raised well before the expiration of the 2015 debt agreement.

Elections for Greece’s parliament, where Syriza has a narrow majority, would have to follow later in 2018, so the Troika-Syriza government seek to wrap up a new agreement on debt before the expiration and new elections.

This sad scenario has been going on since 2010, with no end in sight since there’s no way Greece’s economy can repay the interest and principal on hundreds of billions of dollars of debt imposed on it by pro-Eurozone Greek governments. It is perpetual interest payments for decades to come. 95% of the debt interest payments end up in German and other northern European banks, according to German university institute studies.

As I indicated in my September 2016 book, ‘Looting Greece: A New Financial Imperialism Emerges’, Clarity Press, it amounts to a new kind of imperialism based on financial payments for debt imposed by pan-European political institutions (Troika) on the smaller economies of the Eurozone periphery. (see book reviews and select chapters from the book on this blog’s book roll on the right side of this page. Orders at discount are available by clicking on the book icon–or on Amazon and elsewhere).

Unlike classic imperialism–e.g. 19th century British version–where factories and production were set up in the colonial country to produce goods sold at cost with low wages to British capitalist owners, who then shipped the goods back to the UK, and from there resold them at a higher price in the UK or Europe–the new 21st century financial imperialism exploits the entire economy by requiring debt interest payments to be paid by the colonial government to the banks and investors in the ‘host’ country. The payments are made by imposing fiscal austerity measures on the society being exploited. It’s a new form of ‘colonialism’ where the exploitation is ‘socialised’ and generalized, most of which is ‘paid for’ by pensioners retirement cuts, government workers’ layoffs and wage and benefit cuts, by colonial governments’ privatizing social services and public goods (sold to foreign investors to raise cash to pay the interest), and by tax hikes on households and small businesses to gain revenues with which to pay the interest on the debt.

Watch my most recent interview with Press TV on the latest demonstrations in Greece and popular resistance, which will intensify once again as the current Troika-Syriza government debt agreement expires in 2018.

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See my prior 2016 Youtube interviews on the 2015 prior Troika-Syriza debt deal at:

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As I predicted two days ago, Bannon, was sacked today by the Mercers and others running the Breitbart News board of directors. Read my analysis of January 7 below as to what it means

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Contemporary Anglo-American economists who consider themselves ‘Marxist Economists’ (M. Roberts, Kliman, Brennan, Freeman, Mosely, et. al.) have long held that the rate of corporate profits determine the shifts in business cycles (i.e. recessions, great recessions, depressions). It’s a single determinant view, derived from a dissecting of unpublished paragraphs by Marx in vol. II of Capital on the topic of a falling rate of profit tendency in a capitalist economy and its effect. While alleging causation, what Roberts and others really present is a tabular correlation showing how corporate profit rates from real investment (ignoring non-corporate business income or financial asset profits) slowdown may be correlated with real investment and GDP slowing, and then declining, as well. But correlations aren’t causations. And no number of line graphs of corporate profits plotted on paper against real investment (i.e. net private domestic capital spending) show any causation. (It’s a big problem in economics in general, not just Marxist, today where too much correlation examples are simply claimed to be causative–ie. business tax cuts create jobs, free trade benefits everyone, wages drive inflation, money supply determines economic growth, etc.)

The UK marxist economist, Michael Roberts, who attended the recent economics section of the American Social Science Association’s annual gathering, recently summarized the debates on-going (as they have for decades) between Anglo American Marxist economists and Keynesians-Kaleckians(the latter a variation on Keynesianism) on whether the rate of profit is the singular key variable that determines real investment and therefore growth and the business cycle.

Michael Roberts is an indefatigable defender of the Marxist rate of profit thesis, while I am not. He sees profits solely determining investment, and criticizes Keynesians for arguing the opposite–i.e. that investment determines profits vice-versa. It’s a silly ‘what comes first, chicken or the egg’, argument, for both profits and investment are obviously mutually determining. My reading of both Keynes and Marx is that both realized this ‘mutual feedback effect’ between profits and investment–even if contemporary so-called Marxists and Keynesians have forgotten. What both should be doing is trying to estimate the mutual feedback effects quantitatively, instead of arguing it is one or the other variable that is totally determining the other.

In his recent blog post, Roberts restated the profits-investment, chicken-egg, debate. What follows is my commentary on his post. The problem with business cycle analysis among both Marxist and Keynesians today is that neither understands, or even addresses, in their analyses the new radically changed structure of 21st century global capitalism, which is increasingly dominating by financial asset investing–an argument I’ve been making from 2010 to the present in my three theoretical books (Epic Recession, Systemic Fragility, & my latest, ‘Central Bankers at the End of Their Ropes’).

Marx only began to consider the role of finance capital in his unpublished notes in Vol.III of Capital. (Which raises the question how much credence, one might add, should one give to an author who does not feel his exploration is developed sufficiently yet to publish?) And Keynes only briefly touched upon it in chapter 12 of his ‘General Theory’ book of 1935, moving on in remaining chapters to consider the effects of non-financial variables on real investment. Yet both Marxists and Keynesian followers today generally fail to address the changes in 21st century capitalism, content merely to quote from Marx and Keynes texts that are now 80 years (Keynes) and 150 years old (Marx). Their theorizing is more a case of ‘economic philology’ than economic science observing the new conditions, variables, and changed weights of the old variables. But it is so much easier to simply quote passages from the texts of the masters (and then deliver one’s opinion on such) than to dig into the complex, messy present of 21st century global capitalism. (Which, by the way, I’m convinced the data of which cannot be made sense of by mere text quoting + opinion, but must employ the best of advanced statistical and mathematical methods.)

So here’s my commentary on the profits-investment debate in response to Roberts’ blog entry:

“I find it strange that marxists should be debating keynesians (or ersatz Keynesian Kaleckians) over what determines which–i.e. profits determine investment (Marxists) or investment determines profits (keynesians). Data is clear that both determine each other: profits drive investment (although studies show conclusively real asset investment is financed less than 35% by profits), but investment also determine profits. This poses a problem for Marxist falling rate of profit enthusiasts. What volume of profits is driven by investment? If investment in part determines profits, then it is investment that is determining investment to some extent. The real question is what are the relative magnitudes–of profits determining investment, of investment determining profits and then investment, or of other third variables determining both profits and investment? How does one sort this out? And over time in the lead up to, during, and following the business cycle, during which the relationships and weights between the variables–profits, investment, or other–clearly will change? Certainly not by text analysis. Marxist economists attempt to solve this mutual determination by literary analysis–i.e. by trying to find some secret gem of causation somewhere in Marx or other contemporary Marxists’ works. What we get are constant line-graphs showing correlations (not causation) between profits (however defined) and real asset investment (usually net private domestic investment data). That tells you nothing about causation. If you want to solve the mutual feedback determination effects between profits-investment, it can only be done mathematically. A time series for each variable (profits and investment) via what’s called vector autoregression, combined with an analysis of lagged covariance analysis, will give you a quantitative value of how much profits determines investment, and vice versa, over a given period of time (let’s say 1995-2017 in the US so that two major recessions, and the coming next soon, are included). But that still leaves a dilemma for the falling rate of profit (or volume of profits) arguments for business cycle determination. Profit rates or levels do not determine solely business cycle dynamics. But then in my reading of Marx that never was his intent to explain short term business cycles via falling rate of profit theses (which he never felt was complete enough to pubish as well). Marx wrote of mid-19th century capitalist dynamics. Keynes of mid-20th century. This is the 21st century. Time that Marxists (and Keynesians) came up to speed on the changed structure and dynamics of 21st century capitalism. Neither of whom (Marx or Keynes) understood the new role of financial asset investment (fictitious capital or speculative investment) in disrupting the reproduction of capital cycle(Marx) or GDP contraction. Those interested may read my forthcoming contribution to the ICT journal in Beijing for clarifying all this.”

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Since the run-up to the election of 2016, the ruling elite in America who control the two wings of the single Corporate Party of America (CPA)—the Republican and Democratic Parties—have been battling it out with ‘right populist’ challengers over who will define US policy in the decade ahead. Thus far in 2017 the elite have been clearly winning.

The likely sacking this coming week of Breitbart News’s CEO, Steve Bannon—which follows his banishment from the White House earlier in 2017—is but the latest example of the elite’s post-election objective of bringing their right populist challengers to heel, and in the process herding Trump himself back under their policy umbrella.

The history of the traditional elite vs. right populist challengers goes back at least to the emergence of the so-called ‘Contract with America’ in 1994 followed soon thereafter by their effort to impeach then president, Bill Clinton. Clinton’s hard shift to the right after 1994 on economic, social and foreign policy deflated the challengers’ offensive, albeit temporarily. Then there was the so-called ‘Tea Party’ faction after 2001 that ran primary candidates and disrupted the elite’s Republican wing electoral strategy. With the assistance of the Business Council and US Chamber of Commerce, the Teaparty version of ‘right populist’ challengers were purged in 2014 from Republican primary races and candidacies.

The challengers were not defeated, however. With the financial and organizational aid of the power behind the so-called ‘populist right’—i.e. the Koch brothers, the Mercers, Adelsons, Paul Singers and other radical right big financial supporters backing them—they returned with a vengeance in the 2016 election backing Trump, who opportunistically welcomed their organizational, media and ideological support as the traditional elite consistently rejected him. They bet their Trump Card and gained the White House. The contest did not stop there, however.

In 2017 the contest with the Republican wing of the elite continued. The ‘right populist’ mouthpiece within Congress, the US House ‘Freedom Caucus’, was able to prevail over other Republican colleagues and launch a full frontal assault on repealing Obamacare, the Affordable Care Act. They recklessly rolled the dice on their first toss…and lost. Check one for the traditional elite right out of the box in early 2017.

Another subsequent 2017 ‘win’ by the Republican wing of the elite was to get Trump to go slow on reversing NAFTA and other free trade agreements. Another was the driving of Steve Bannon and his allies from their perch as White House advisers. Yet another elite 2017 success was to convince Trump to back off from campaign promises to reorganize NATO and reset relations with Russia, and instead to continue providing strategic weapons to east Europe and, most recently, the Ukraine. That policy shift is now in acceleration mode. Then there was the defeat of Moore for Senator in Alabama, who Trump and the right populists both endorsed. The Republican wing of the traditional elite—both in and out of Congress—abandoned Moore and joined with the Democrat wing to ensure Moore’s defeat. To have supported Moore would have signaled that the Republican elite’s strategy since 2014, a strategy denying right radicals from formal Republican (and Chamber of Commerce) support, was no longer in effect. A Moore victory would have brought even more radicals from the right demanding to run on Republican electoral tickets. The Chamber could not permit that again.

But the very latest event in the internal battle was last week’s public rift between former right populist Trump election strategist and White House adviser, Steve Bannon, and Trump himself. A rift that, this writer predicts, will almost certainly lead to Bannon’s sacking as CEO of the influential right populist media organ, Breitbart News, this coming week or soon thereafter.

The Bannon sacking will clearly reveal that Bannon is not the driving force behind Breitbart. Nor is the radical ‘right populist’ movement itself an independent force. Bannon and Breitbart are but a mouthpiece. For what? For the real force behind the Breitbart media outlet, Bannon, and similar media organizations and talking heads pushing far right political alternatives and economic policies—i.e. the billionaire money interests that fund them and make the strategic decisions for them behind the scenes. It is the billionaires who sit on the Breitbart board, and other boards of similar right populist organizations who fund the Breitbarts, the Bannons, and those like them that came before and will come after.

It is those billionaires in particular who have become super-wealthy since the 1990s by speculating in commercial property and trusts and shadow banking; the billionaires over-represented from the ranks of private equity firms, real estate REITs, hedge fund capitalists, asset management companies, etc. On the level of individual capitalists, it is the Adelsons, Paul Singers, the Mercers, the Mays, and others—all billionaires—who have been bankrolling the ‘right populists’ from the very beginning, giving them a public soapbox with which to promote their views, ideology, and mobilize public opinion. More traditional economic sector billionaires, like the Kochs, are also among their ranks, of course. But they are especially over-populated with speculators and financial manipulators (much like Trump himself) who want a more deregulated, winner-take-all kind of capitalism they see as necessary to compete with challengers globally in the coming decades.

These billionaires are the election campaign financiers that all the major candidates for national office trek to every election cycle, genuflect before, hold out their hats to for donations. And with their money comes a ‘Faustian’ bargain: they are allowed to define policies once their candidates get elected. They are the silent sources that Trump regularly calls in the early morning hours from the White House to ask their advice and input.

Late last week, the billionaire Mercer family, that bankrolls and finances Breitbart News let it be known it was breaking relations with Bannon. Bannon quickly and contritely offered a public statement supporting Trump and calling him a ‘great man’, which Trump just as quickly retweeted. The Bannon retreat followed a reported statement he made to author Michael Wolf, who in his new book out last week quoted Bannon as saying Trump was psychologically unbalanced and “had lost it”. Calls for Breitbart News to fire Bannon as its CEO quickly followed, and the Mercers statement was made public in turn.

So Bannon’s days are numbered and perhaps in hours not days. He will be gone, relegated to the speech circuit for right wing demagogues, joining the Glenn Becks, Rush Limbaughs, and others that occasionally over-estimate their influence with the capitalist ruling elite and their usefulness to them. And then find themselves on the outside looking in.

What the Bannon sacking will represent is that the ‘right populist’ movement will now ebb, albeit temporarily once more. It will be resurrected when needed, with another figure(talking)head replacing Bannon. The Becks, the Limbaughs, the Hannitys and the Bannons are all expendable, and replaceable with another cookie-cutter ideologue whenever the elite consider it necessary.

The Bannon development more importantly signals that more traditional Republican elite policies and legislation will now even further supplant the right populist initiatives in Congress. The Trump tax cuts just passed benefit clearly the wealthiest 1% and their corporations, and not the middle class, the embittered blue collar workers of the Midwest and Great Lakes, or any other voting constituency in America.

The demise of Bannon also signals that Donald Trump, if he wishes to continue as president, will agree to continue his shift toward policies adopted by the Republican wing of the elite. He has been in synch totally with the recent passage of the Trump Tax Cut act—the elite’s #1 policy objective which is now achieved. Trump will now continue to back off of radical restructuring of free trade, especially NAFTA. He will fall in line with NATO and policies toward east Europe and Russia. He’ll provide more advanced weaponry to eastern Europe and the Ukraine. He will be satisfied with a token Wall and back off from disrupting immigration relations. And he will continue to soft-pedal his tweeting with regard to North Korea and support trade deals with China the elite want him to deliver.
This does not mean Trump’s troubles with the traditional elite are over, however. The events of the past year, culminating in the Bannon purge, only reflect Trump coming to terms with the Republican wing of the elite, as he tactically moves under their political protective umbrella. The Democrat wing of the elite will continue trying to build a case against him.

The Democratic wing of the elite will continue to exert pressure on Trump through its powerful media organs and its deep connections with and influence within the State bureaucracy (FBI, NSA, State and Justice departments, DEA, military intelligence arms, etc.). This second front against Trump and his former right populist allies is reflected in the on-going investigation into a Russia-Trump connection during the 2016 election cycle—which that wing of the elite hopes will lead, if not to outright collusion with the Russians, then to evidence of some form of obstruction of justice by Trump; or perhaps uncover in the process past criminal activity by the Trump business organization with regard to tax evasion or foreign bribes for contracts with Russian oligarchs and mafia. This second front has recorded some success over the past year, as former FBI director, Mueller, has been able to extract evidence from suspected principals, Michael Flynn, Paul Monafort, and Papadopoulos.

The second major development of the past week was the publication of the Michael Wolf book on Trump. With the publication a new issue has been thrown into the political hotpot: Now it is not just whether Trump has colluded with the Russians, or obstructed Justice to stop the Mueller investigation, or engaged in illegal bribes and deals with Russian oligarchs. Now the new mantra is Trump is psychologically unbalanced—as evidenced in his own Tweets and in the constant flow of leaked statements by his own administration about his basic ‘child-like character’(Senator Corker), his functioning at a level of ‘an idiot’ (Secretary of State Tillerson), or that he “has lost it” (Bannon).

In the months ahead the Republican wing—for whom Trump has nicely delivered in the form of tax cuts in the trillions of dollars and with whom Trump is now playing ball with regard to free trade—will circle the wagons on behalf of Trump. The Republican party wing of the traditional elite don’t want to drive Trump from the White House. They want him tamed and continuing to deliver their policy agenda. So they have already begun to circle the wagons on Trump’s behalf—and to launch a counteroffensive in his defense. The past week’s reopening of the investigation of Clinton’s foundation and demands to indict the author of the ‘Trump dossier’ published over a year ago are but two examples of the counteroffensive.

And watch what happens after Trump eventually fires FBI investigator, Mueller, should he provide evidence of obstruction of justice or, more likely, fraudulent Trump tax returns and/or bribes to Russian oligarchs. They’ll block the appointment of an independent prosecutor once Mueller is gone. And that means there won’t be any impeachment in 2018 regardless what Trump does. All that could change, however, should Trump’s historic low approvals slip still further and result in the Republican loss of either the House or Senate in November 2018. Then watch the two wings of the elite unite in efforts to push Trump out and replace him with their preferred man, vice-president Pence.

Jack Rasmus,
January 7, 2018

Dr. Rasmus is the author of the August 2017 book, ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression’, Clarity Press, August 2017. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions, on the Progressive Radio Network. His twitter handle is @drjackrasmus.

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Listen to my 11 minute interview with ‘Loud and Clear’ radio on the current stock market bubble, and my estimations of when, and by how much, it is likely to correct, as well as the consequences for the real economy in 2019-20.


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Listen to my December 29, 2017 Alternative Visions Radio show for my comments on the major economic developments, for US and global economies, of the past year. (Listen to my January 5, 2018 show for commentary on 2017 political events, as well as my early predictions for 2018).

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Dr. Rasmus reviews the major economic developments of the past year. Included are the major economic consequences of Trump’s first year in office: tax cuts, environmental, financial and other deregulations, Goldman Sachs running the economy, the Trump ‘bump’ and Trump ‘trade’, Trump free trade policies re. NAFTA, Trump’s replacement of Fed chair Yellen with Powell, the low dollar and Emerging Markets and US multinational corporations gains, education and union labor policy shifts, Obamacare-ACA gutting, etc. Rasmus also reviews US and global economic developments, including US GDP, productivity, wages, stock markets and Bitcoin, household debt and collapse of savings rates, and the narrowing (and eventual inverting) of the important ‘yield curve’. Global developments are commented on, including Brexit, the continuing collapse of social democracy in Europe and rise of nationalisms, the US counter-offensive in Latin America, Russia’s rising role in Syria and partnership with Saudi Arabia and OPEC on oil prices, China’s party conference and shift to attack its financial speculators and shadow banks again, US foreign policy failures in Turkey and the US-No. Korea continuing drift to military confrontation. (Next Week: Dr. Rasmus makes his predictions for 2018)

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