Jack Rasmus

By Dr. Jack Rasmus
Copyright 2019

Invasion of Venezuela by US and its proxies is just around the corner! This past week vice-president Pence flew to Colombia once again—for the fifth time in recent weeks—to provide final instructions to US local forces and proxy allies there for the next step in the US regime change plan.

Evidence that the ‘green light’ for regime change and invasion is now flashing are supportive public statement by former president, Barack Obama, and several high level US Democratic party politicians and candidates, directly attacking the Maduro regime. They are signaling Democrat Party support for invasion and regime change. Events will now accelerate—just in time perhaps to coincide with the release of Mueller Report on Trump.

Behind the scenes it is clear, as it has been for months, that US Neocons are once again back in charge of US foreign policy, driving the US toward yet another war and attempt at regime change of a foreign government.

US Strategy in Brief

The US Neocon-led strategy is increasingly clear: establish a ‘beach-head’ on the Colombian-Venezuelan (and Venezuelan-Brazilian) border under the guise of providing humanitarian aid. Use the aid to get Venezuelans on the border to welcome the US proxy forces to cross over. Set up political and military structures thereafter just inside the Venezuelan borders with Colombia and Brazil, from which to launch further similar efforts deeper into Venezuela. Repeat this province by province, step by step, penetrating Venezuela space until enough local units of the Venezuelan military change sides and convince one or more of the Venezuelan military hierarchy to join them. Establish a dual state and government within and along the border of the Venezuelan state this way. A breakaway State and dual power within the country. Make it appear, by manipulating the media, that the Venezuelan people are rising up against the Maduro government, when in fact it is US proxy forces invading and using opportunist local politicians, military, and others in the ‘conquered’ zones, as the media covers for their invasion.

The main ideological justification being used for the invasion and regime change is that the Maduro government has grossly mismanaged the Venezuelan economy and driven its people into poverty. With Democrats now joining Trump and Republicans in support of invasion, the liberal mainstream US media, as well as the rightwing alternative media, are both pushing the same line, to blunt US opposition to invasion and yet another war before the final military assault is launched. Somehow the democratic elections less than a year ago, which returned the Maduro government to power, did not represent the ‘will of the people’. Explanations how they did not are thin and unconvincing, moreover. Nor is any explanation given how US policies and actions have played the central role in destroying Venezuela’s currency and economy. And the financial measures used to destabilize the economy are especially opaque.

Financial Imperialism: The Case of Venezuela

Venezuela today is a classic case how US imperialism in the 21st century employs financial measures to crush a state and country that dares to break away from the US global economic empire and pursue an independent course outside the US empire’s web of entangling economic and financial relations.

Here’s how US ‘financial imperialism’ has worked, and continues to work, with the intent of assisting regime change in the case of Venezuela.

In a world where US Capitalism is the dominant hegemon the US currency—the dollar—is the centerpiece of the US global economic empire. The dollar serves as the global trading currency as well as the global banking reserves currency. More than 85% of all global trade (export and import) is done in dollars. Certain commodities, like global oil and oil futures contracts, are traded virtually only in dollars. Recently more countries have begun to peg their own currency to the dollar, allowing it to move in tandem with the dollar. Some have even eliminated their currency altogether and now use only the US dollar as their domestic currency. Increasingly as well, more countries are issuing their domestic bonds in dollars (i.e. dollar denominated bonds). And their central banks follow the US central bank, the Federal Reserve’s, policy as it raises or lowers US interest rates that in turn cause the US dollar to rise and fall. They do so even if rising US interest rates mean rising rates in their own economies that precipitate recessions and mass unemployment. These are all examples of the growing financial integration with the US Imperial State and economy.

But even those economies that maintain their own currency are at the mercy of the US dollar. Since the dollar is the global trading and reserves currency, whenever the dollar rises in value due to US monetary policy changes, or US inflationary pressures, or just changes in supply or demand for the dollar, the currencies of other countries fall in value. As the dollar rises in value, other currencies fall. That’s how global exchange rates work in the 21st century global US empire where the dollar is the trading-reserves currency. Other currencies—the British pound, Euro, and even less so the Japanese Yen or China Yuan—are still largely insignificant as reserves or trading currencies. And it appears very unlikely they will soon replace the dollar—one of the key pillars of the US empire.

The US has the power to engineer a collapse in a country’s currency. A collapse in its currency means the price of imported goods rises rapidly, especially those goods it can only be obtained by imports—i.e. medicines, critical food commodities, intermediate business goods necessary for domestic manufacturing, etc. Accelerating import inflation in turn leads to domestic businesses cutting back production due to lack of affordable resources, commodities, or parts. Mass layoffs follow production cutbacks. Rising inflation brought on by currency collapse is thus accompanied by rising unemployment. Wage income and consumption in turn collapse and thereafter the economy in general.

Widespread shortages of key imports, inflation, and domestic production decline and unemployment brought on by the shortages and inflation simultaneously lead to social discontent and loss of support for the government. Opposition groups and parties proclaim these problems are due to the mismanagement of the economy by the government, or corruption by its leaders, or just socialist policies in general. But in fact the economic crisis—i.e. shortages, inflation, production, unemployment—is traceable directly to the root cause of the collapse of the currency engineered by US imperialist policies intent on crashing the economy as a prelude to regime change and economic reintegration to the US global economic empire.

There are many ways the US can, and does, cause a collapse of a country’s currency. One set of measures are designed to cause a severe shortage of dollars in the target country’s economy.

A shortage of dollars drives up the value of the US dollar in the target economy which, in turn, drives down the value of the country’s own currency. The US has been engineering a collapse of Venezuela’s currency, the Bolivar, now for years—first by causing dollars in Venezuela to flow out of the country and, secondly, by measures preventing Venezuela from obtaining dollars from abroad.

US policy over the last several years at least has been to force US companies doing business in Venezuela to repatriate their dollars back to the US or else divert them elsewhere globally among subsidiaries. Or just to leave Venezuela and take their dollars with them. US policy has also been to publicize and promote wealthier Venezuelans with dollars to take them out of the country and invest them in Colombia, where the US has arranged an online investment firm with the assistance of its Colombian government ally. Rich Venezuelans have been encouraged as well to send their money to Miami banks. And to move there in large numbers, which they have, taking their dollars with them or dumping their Bolivars in exchange for dollars. The outflow of dollars from Venezuela has raised the value of dollars that remain in Venezuela on the black market there, thereby helping to depress the value of the Bolivar in Venezuela even further.

These measures pale, however, to US imperial efforts to prevent Venezuela from obtaining dollars in global markets in an effort to try to offset the outflow of dollars from the economy.

For example, the US has taken action to prevent US and global banks from lending dollars to Venezuela, or from participating in underwriting and insuring Venezuelan bond issues which would also raise dollars for Venezuela if allowed. Bank loans and bond funding thus dry up, depriving the government of alternative sources of dollars. More dollar shortage; more Bolivar domestic currency collapse—i.e. more expensive imports, more inflation, more shortages, declining production, rising unemployment….more discontent.

The main effort by which the US is attempting to deprive Venezuela of dollars is to impose sanctions on other countries that try to buy Venezuelan oil. Oil sales are the number one source of the country’s dollar acquisitions, since all oil trade is done in dollars and Venezuela depends on 95% of all its government revenues from selling its oil. The US imposes sanctions on would be buyers and thus cuts off access to dollars, as it simultaneously through other policies works to encourage dollar flight out of Venezuela and cut off bank loans and bond issuance by the country. And if the prior bonds and loans were ‘dollar denominated’, then the lack of dollars to pay the interest and principal coming due leads directly to defaults and in turn to business collapse and even more unemployment.

Venezuela has turned to selling its oil to China and Russia and a few other countries. It has been forced to resort to paying its interest and principal on past loans from these governments with shipments of oil instead of payments in dollars. As the US turns to sanctions as an economic ‘weapon’ to enforce its will on other countries, which it has been doing in recent years, more countries are become aware of the tactic and are taking countermeasures. They are dumping dollars (or reducing their purchases of dollars in world markets) and buying gold. China and Russia are leading this way, while experimenting with non-currency dependent trade.

Another recent move by the US to deny Venezuela dollars and collapse its currency has been to seize the Venezuelan oil distribution company, CITGO in the US. Its remittances back to Venezuela have been in dollars. By seizing CITGO, the US deprives the country of yet another source of dollars, with which Venezuela might otherwise have been able to purchase imports of food, medicines, and other economically critical goods. So Venezuelans in this case are clearly forced to forego these critical imports due to US policy—not due to economic mismanagement by its government. Moreover, adding insult to injury, the dollar funds from CITGO seized by the US are being delivered to the Venezuelan government’s opponents and its hand-picked ally of the US, Guido. The opposition now gets to finance its counter-revolution with the money formerly remitted to Venezuela. The counter-revolution is financed at the expense of critical goods and services that otherwise might have been made available to the Venezuelan people.

Seizure of the CITGO asset is not the only such example of dollar deprivation. Other assets in the form of inventories, investments, cash in US banks, etc. are also being impounded. And not just from the Venezuelan government. Individual Venezuelan companies and individual citizens have been having their assets in the US impounded as well. And the US is increasing its pressure on foreign governments to impound and seize assets as well—of the government, businesses, and citizens.

The impoundment and seizure has recently been extended as well to Venezuelan gold stocks held offshore in other countries, in direct violation of international law. Recently the US company and mega bank, Citigroup, has been forced to withhold Venezuelan gold in violation of its contracts with the country. The Bank of England has also been asked, and is complying, with the US demand to freeze Venezuelan gold deposited in the UK. And countries like Abu Dhabi, where gold is traded globally, have been asked to stop trading in Venezuelan gold. Gold is a substitute money for the US dollar. So preventing gold access to Venezuela is like preventing dollar access as well. With its gold, Venezuela could more easily buy dollars, or trade for goods directly, than with using Bolivars that are falling in value and sellers are less likely to take as payment.

Countries with economies whose currency is seriously declining in value are able to get a loan to stabilize its currency from the International Monetary Fund, the IMF. Recent examples are Argentina, Turkey, South Africa, and even Pakistan. But the IMF is an institution set up by the US in 1944. The US maintains with its close European allies a majority vote on IMF decisions. The IMF does nothing the US does not approve. Its mission is to lend to countries in need of stabilizing their currencies. The IMF, however, as an appendage of the US global empire, has refused to lend Venezuela anything to help stabilize its currency.

This is in contrast, for example, to the record loan of more than $50 billion recently provided to Argentina once that country put in its current business and US-friendly Macri government. (The record IMF loan, by the way, was so that Argentina could pay off debts owed to US and other speculators in the early 2000s. So Argentina saw little of that $50b. What the payoff did enable, however, was for Macri and other Argentinian bankers to go to New York to get new loans from US banks once it repaid the speculators, from which Macri and friends no doubt personally benefitted immensely).

As the Venezuelan currency collapses due to US arranged dollar shortages, Venezuela must print even more Bolivars to enable it to purchase what goods from abroad it might still be able to buy. A collapsed currency means the price of imported goods rises proportionately. So more Bolivars are needed to buy the goods that are continually rising in price. Printing more Bolivars adds to the supply of Bolivars in the economy which raises domestic price inflation even further. But the excess printing is in response to the currency collapse which is engineered by the dollar shortage and the falling exchange rate in the first place. The over supply of Bolivars is not due to mismanagement; it is due to the shortage of dollars and the desperate effort by the Venezuelan government to somehow pay for inflating import goods.

The falling price of crude oil in 2017-18 added further pressure on the Bolivar. The collapse of oil prices globally appears unrelated to US policy. But it wasn’t. The oil Venezuela has been able to continue to sell, mostly to China or Russia, declined by 40% in price in 2018. The global oil deflation of 2018 thus generated less oil revenue for the country and thus fewer dollars.

But that too was due indirectly to US policy and economic conditions. The collapsing price of oil in 2018 is directly attributed to US shale oil producers raising their output by more than a million barrels a day, which increased the world oil supply and depressed world oil prices. The US then attempted to manipulate world oil output with Saudi Arabia but that exacerbated the over-production and deflation problem still further. Here’s how: The US attempted to impose sanctions on Iranian oil in 2018. Saudi Arabia believed it would capture the customers that Iran would lose, and therefore it, Saudi Arabia, also raised its output of crude as US shale producers raised theirs. But Iran was able to continue to sell its oil, as US sanctions broke down. The result of the US shale overproduction plus Saudi overproduction was a 40% collapse in world oil prices in 2018 that further deprived Venezuela of much needed government revenue—apart from US sanctions on Venezuela oil sales.

US monetary policy in 2018 further exacerbated the currency crisis in Venezuela—as it did elsewhere in Latin America and emerging markets in general. In 2017-18 the US central bank launched a policy of raising interest rates. Since other world central banks respond to the US central bank, world rates began to rise as well. Rising US interest rates caused a rise in the US dollar, and as the dollar rose in 2017-18 emerging market currencies fell. They fell for Venezuela in part due to this effect, as well as due to other causes mentioned.
Falling currencies precipitate what is called ‘capital flight’ out of the country. Less money capital means less available for investment and thus lower production output and more unemployment. So currency collapse precipitates not only inflation but recession as well. To prevent the capital fight, emerging market economies raise their own domestic interest rates. This led to recession, for example, throughout Latin America in 2017-18. Capital flight out of Venezuela has been significant since 2016, as wealthy Venezuelans sent more of their dollars out of the country to Miami, thus exacerbating dollar shortages in Venezuela and further driving down the value of the Bolivar left behind.

US sanctions on other countries, banks, and companies offshore are designed not only to prevent Venezuela access to dollars and money capital offshore. Sanctions also target real goods trade, like oil and other key commodities. But there’s another means by which the US shuts down the flow of real goods into and from a country, causing shortages of critical goods. It’s the US controlled international payments exchange system, called SWIFT. This is where US banks arrange the exchange and transfer of payments for goods and services by converting from one currency to the other and transferring the funds from one bank to another across countries. The US has been preventing Venezuela from normally using the SWIFT system. So even if another country is willing to buy Venezuela goods, including oil, and exchange Bolivars for its own currency, it is prevented from doing so by the US bank-controlled SWIFT system.

Summing Up

Financial imperialism has been waged against Venezuela for decades, but the attack on Venezuela employing financial measures has recently intensified as the US neocons and imperialists have accelerated their plans to launch a more direct attack by political means, including military, to force regime change in Venezuela. At the center of the on-going, and now intensifying, financial warfare against the country by the US are measures designed to destroy Venezuela’s currency.

Imperialism is often thought of as military conquest and colonialism. That’s 19th century British and European imperialism. But the American Empire in the 21st century does not need colonialism. It has a more efficient system for forcing the integration of other economies and for extracting value and wealth from the rest of the world. The US empire is increasingly knitted together in the 21st century by a deep web of financial relationships that afford it multiple levers of economic power it can pull if and when it desires. And when those economic and financial levers prove insufficient to overthrow domestic forces and governments that remain intent on pursuing a more independent path outside the Empire’s economic and political relations, then the breakaway State is attacked more directly once the economy is sufficiently wrecked. Such is the case of Venezuela today. Financial imperialism has paved the way for more direct political and military action.

Dr. Jack Rasmus
February 27, 2019

Dr. Rasmus is author of the recently published book, ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression’, Clarity Press, August 2017, and the forthcoming ‘The Scourge of Neoliberalism: US Policy from Reagan to Trump’, Clarity Press, 2019. He hosts the weekly radio show, Alternative Visions, on the Progressive Radio Network in New York, blogs at jackrasmus.com, and tweets at @drjackrasmus. His website is http://www.kyklosproductions.com.

Recently I have had several journalists, academics and progressive activists ask me my opinion on some of the key economic questions of the day. Here are some of my replies: on Trump tax cuts and US growth, current immigration debates, wages, expanding income inequality in the US, on what is the real rate of inflation today, and whether proposals for universal guaranteed income, debt jubilee, Modern Money Theory, green new deal are solutions to today’s economic problems.

Question 1: Is US economic growth under Trump due to his tax cut policy and what is the future of average or low wage Americans today?

Dr. Rasmus: The nominally higher US GDP growth in 2017-18 has little to do with the Trump tax cuts. The Trump tax cuts passed in early 2018 amounted to more than $4.5 trillion over the decade, targeting to wealthy households, businesses, investors and corporations, which have been ‘front-loaded’ in 2018. Offsetting this are $1.5 trillion in tax hikes for wage earners, that begins to hit this year and accelerates after 2022. Assumptions about 3% GDP growth for another decade, with no recession, produces a further offsetting of $1.5 trillion. The net result supposedly is the $1.5 trillion reported by the press. But the $4.5 trillion cuts for business and investors have not gone into real investment and generated the Trump 2017-18 GDP growth rates.

Real investment in structures and equipment declined steadily over 2018 as the Trump tax cuts took effect: measured in percent terms compared to the preceding quarter, residential construction was negative every quarter in 2018. Commercial construction, with a lag, turned negative in the second half of 2018. And equipment spending fell from 8.5% in the first quarter to 3.4% by October 2018.

So if the Trump tax cuts did not go into real investment, creating real employment and real GDP where did it go? It went into stock buybacks, dividend payouts, and M&A activity. Several US banks’ research departments estimate buybacks plus dividends for just the Fortune 500 largest companies in the US will reach a record $1.3 trillion in 2018. Add the largest 2000 or 5000 companies and its close to $2 trillion. Hundreds of billions more for M&A. This diversion of the Trump tax cuts to financial markets is the main determinant driving stock markets (even after corrections) and other financial asset markets.

The government grossly over-reports wage gains for the average and low paid workers in the US. Independent source reports show that more than half of US workers received no wage gain at all in 2018. The official reported wage gains of 3% are skewed to the top 10% of the labor force, dragging up the ‘average’ wage. Moreover, the data is for full time employed only, leaving out tens of millions of part time-temp workers’ wages. And it doesn’t adequately account for local taxes and interest on debt that reduces the take home wage further. Then inflation is under-estimated, making the real wage appear higher. So average workers at best stagnated, with most experiencing a decline in real wages. The rate of inflation in the US is especially under-estimated for median worker family households, while inflation is rising for rents, medical, education, and other major items in household budgets. So the immediate future will mean even less real wage gains for the majority of US workers. If workers were doing so well today, as Trump and the business and mainstream press report, why is it that 7 million of them have defaulted on their auto loans? Probably a like amount for education loans, the defaults of which are grossly under-reported. And why is credit card, auto loans, and education loan debt now all over $1 trillion each? And total household debt load approaching $14 trillion?

Question 2: With undocumented immigrants at 10-12 million, do you believe Trump’s claim that immigrants are invading the US economy?

Dr. Rasmus: Immigrants are certainly not invading the US. The 10-12 million number has been stable for several years. And for immigrants for some countries, like Mexico, the numbers are in sharp decline. It is true that more immigrants are coming from central American countries like Honduras, Salvador and Guatemala. But that is due to the economic crises and violent breakdown of the social order in those countries, which is due largely to US support for the corrupt elites of those countries who encourage the gang violence in their countries and do nothing about the economic crises. If there is a problem with immigration in the US, it is a problem of highly educated tech workers being brought in on H1-B and L-1 visas, and rich Asians who can buy themselves a ‘green card’ residency by promising to spend $50,000 when they come. These groups are taking the best jobs, the high paying tech and other professional jobs, and have been since the 1990s. But Trump is agreeing with the US tech companies to keep bringing them in, taking jobs US workers should and could get. Trump’s immigration policy and draconian action against immigrants from Latin America and elsewhere is about his re-election plans in 2020. By creating ‘enemies’ within and outside the US, he diverts his political base from the real problems of America. Blame the foreigner in our midst has always been a useful fascist argument. And Trump is marching down that road, as witnessed in his latest Constitutional power grab by declaring national emergencies to build his Wall and invoking phony national security to justify his trade wars.

Question 3: Do you believe the widening gap between rich and poor in the era of Trump can boost Americans interest in socialism?

Dr. Rasmus: The income and wealth gaps in the US are not only widening but doing so at an accelerating pace. US neoliberal policy under Obama was to subsidize capital incomes through Federal Reserve cheap money and by extending and expanding his predecessor, George W. Bush, tax cuts for business and investors. He gave more than $5 trillion in tax cuts to business and investors, more than even Bush. Trump policy has accelerated the tax cuts even further and he’s now stopped the Fed from raising interest rates. So we have subsidization on steroids now by both fiscal and monetary policy. The direct consequence is booming stock and corporate bond markets, fed by $1 trillion annual stock buybacks and dividend payouts every year since 2011 (now at record $1.3 trillion in 2018). As wage incomes for the 90% of Americans remain stagnant, barely rise, or decline, the direct consequence is accelerating income inequality and wealth gaps. But it’s mainly due to the shift toward financial profits by American (and increasingly global) capitalists that’s been building since the 1980s.

Will this boost interest in socialism? It already has. A clear majority, well over 60%, of people aged 34 and younger in the work force, have indicated in various recent polls that they prefer socialism over capitalism. It’s not by accident, therefore, that Trump and the US business press has been launching an offensive to attack the idea of socialism once again. This shift in public opinion will continue as the Trump policies continue to create a growing gap in income, wealth and opportunity in America.

Question 4: Some critics of US economic statistics on inflation say that inflation may be as high as 9.6% or at least more than 5%. What’s your view on this?

Dr. Rasmus: I agree the CPI rate is actually higher. I don’t think it’s 9.6%, but certainly not 2.1% (core) or 2.4% (headline). The Shadow Stats source has long critiqued US stats, including inflation. Also, employment and wage data, both of which I’ve been criticizing this past year. The CPI is higher than reported for several reasons. First, as Shadow Stats notes, they make arbitrary assumptions about product quality improvements that lower the actual rate. Second, they use what’s called ‘chain price indexing’ that smooths out, and lowers, the rate over time. Third, the weights for the basket of goods in the CPI is outdated. This is especially true for median income and below families. There should be different weights and definition of the basket for different levels of income, but there isn’t. Middle income and below families are experiencing greater inflation due to rising drug and health prices, rising local taxes and utilities, rising interest rates on mortgages, and rising rents. Rent prices are under-reported in particular since they are smoothed out by including what’s called ‘imputed rents’; that is, assumptions about home owners paying themselves a rent (yes, that’s illogical but true in the methodology), which hasn’t changed much for years but, when added to direct rents, results in a lower average. There’s also issues with how the data is collected on prices.

Of course, we’re talking here about prices for goods and services. Not prices for financial assets which have accelerated several fold since 2009, as bubbles have grown. I suspect that real CPI is about 3.5% to 4%, not the 2.1%. That of course means that real US GDP is not 3% in 2018 but actually less than 1% in real terms. (The price index for GDP real adjustment is the GDP deflator index, which is notoriously even lower than the CPI (or the PCE, which the Fed uses).

Watch the first quarter 2019 GDP come in closer to 1% in official reporting later this spring. That means the Trump tax cuts of more than $4 trillion over the coming decade, front loaded in 2018, have had very little effect on real GDP. Most of it has gone to stock buybacks, dividend payouts and M&A financing. Buybacks pus dividends for the just the Fortune 500 will equal around $1.3 trillion for 2018, a record. Real investment has been sliding throughout 2018, when the tax cuts took effect. Residential construction contracted every quarter. Commercial construction lagged, but turned negative as well in the second half of the year. And equipment investment declined from 8.5% at the beginning of 2018 to 3%-4% by the end. It’s a real fiction that Trump tax cuts are responsible for the 3% plus growth in 2018. It’s mostly been due to government spending, especially defense, and to consumption driven by household debt for the bottom 80%, although nicely rising compensation for the top 10% has driven consumption as well. Trump cut paycheck withholding in 2018 so that average households would think the tax cut was putting more money in their wallets. But it wasn’t. And now, in 2019, most households will start feeling the bite of more taxes. The $4 to $4.5 trillion actual Trump tax cuts are going to the wealthiest individuals, businesses, and corporations, especially the US multinationals. That will be offset by $1.5 trillion in tax hikes for wage earners, which really starts to hit about 2022. Plus phony assumptions about 3% plus GDP growth rates for the next decade, with no recession. That’s how Trump gets his $1.5 trillion total deficit from the tax cuts. It’s a big fiction that the press also fails to report. Reporters are either stupid or the policy is to report the $1.5 trillion.

In other words, it’s not just price stats that are inaccurate, but GDP, wages and jobs data as well. The only thing holding up the house of cards is debt. For households now approaching $14 trillion. For the national government now $22 trillion (and going to $34 trillion by 2028). For state and local governments, trillions more. And for private business well over $20 trillion more. A big problem with leveraged loan debt, junk rate corporate debt, half of investment grade (i.e. BBB) which is also ‘junk’, and who knows what in derivatives and margin borrowing by investors.

Question 5: Progressive proponents of public banking, and what’s called modern monetary theory, both believe that the Federal Reserve could simply create money for all citizens’ economic benefit, not just for the banks. What’s your view on this? And specifically on the idea of a guaranteed basic income, what’s called a debt jubilee of legal forgiveness of debts of households, and a green new deal?

Dr. Rasmus: The Fed isn’t feeding the banks to avoid a recession; the Fed is feeding the financial markets to prevent a third major contraction since Feb. 2018 that is coming. Cheap money in excess keeps rates low (or in this case prevents them from rising further). But the money doesn’t go into real investment. It goes into asset markets (or flows offshore to emerging markets), or into M&A activity, or into stock buybacks and dividend payouts in the trillions annually (this year $1.3 trillion, after 6 years of an average of a trillion a year).

Yes, the Fed could provide credit to households and non-banks, but that’s not why it was created. It was created, like all central banks, to subsidize the banks with cheap credit and to bail them out when they binge too much and create a crisis. In the postscript to my 2017 book, ‘Central Bankers at the End of Their Ropes’, I provide language for legislation (and a constitutional amendment) that would radically change the mission of the Fed to serve all society not just bankers and investors. But the Fed was set up in 1913 to only lend to the banks, and since 2018 the shadow banks which now control more assets than the commercial banks like Chase, Wells, Citi, etc.

As for proposing a Debt Jubilee that’s just nonsense. So long as there’s a capitalist system the capitalists will never allow a debt forgiveness on a major scale. You’d have to change the system before to allow it.

What about guaranteed basic income? Something like that is inevitable. McKinsey Consultants recently estimated that Artificial Intelligence technology, or AI, will destroy 30% of all the job occupations in the US by 2030. Already more than 50 million of the US labor force are part time, temp, gig or what’s called ‘contingent’ or precariat labor force. They’re working two and three part time jobs to make ends meet and still can’t. AI will drive that total to well over half of the labor force. The system just can’t manage that many low and underpaid workers. Consumption will collapse, despite providing ever more household debt to fund consumption. However, as most are proposing guaranteed basic income now, it smacks of welfare and that makes it an easy ideological target for capitalists. It’s all about raising wages and creating real jobs that families can survive on. We need to be more creative than just UBI. But it does bring attention to the crisis of insufficient wage income for tens of millions of Americans, mostly young workers and the older that are forced to work into their seventies and until they drop.

Funding medicare for all? It’s possible to envision how the Fed, as the epicenter of a public banking system (part of my proposal) could provide funding for the infrastructure for medicare for all, in a new layer of clinics and public doctor offices locally. But the real funding for Medicare for all should come from taxing financial markets. That would be more acceptable to voters. Ditto for Green New Deal initiatives.

Progressives enamored with public banking or other monetary solutions (i.e. Modern Monetary Theory advocates) tend to over estimate the potential for monetary solutions to the economic crisis now maturing long run, as real investment continues to slow, productivity falls, prices tend toward stagnation and deflation (wages, interest rates, goods & services), global growth slows, and capitalists turn increasingly to financial asset markets to make their profits instead of past approaches of making things and new services that are useful and provide income for consumption. That is the ‘slow grinding crisis’ of capitalism today.

I support a public bank, but only as a small part of a larger solution that must include fiscal policy, industrial policy, and external (trade, exchange rate, money flows) policies. Money and banking are only part of the new program needed. But the program means nothing without political organization. The lack of that is the key characteristic of the time we live in. It all comes down to the organization question. Where can people turn to participate in realizing the new ideas? Not the Democratic Party. Certain not the Trumpublicans (there’s no Republican Party left, it’s now Trump’s). And the unions, as they grow weaker, turn to the Dems to save their ass. So forget a labor party based on the unions. That’s nostalgia of the 1930s. Won’t come again.

MMT theory is just another equilibrium theory that concludes that money can be created without limit, just use it for progressive programs. I don’t believe that. The Fed’s free money for the bankers and investors since 1980, and especially since 2000, and accelerating after 2009, is leading to unsustainable deficits and debt. The $22 trillion will be $34 trillion in less than ten years. And the interest on it will be $900 billion a year, per the CBO. That means capitalists will either have to give up their tax cuts, reduce their war spending budget, or….massively attack social security, medicare, education, etc. Guess which one is coming? The Trumpublicans make no apologies for it; and the Dems lie about how they won’t either.

Meanwhile, Sanders keeps acting the political Don Quixote tilting at the Dem party, trying to reform it, which keeps shitting on him and will do so perpetually. The Warrens, Bookers, and other ersatz progressives will ‘talk the talk’, the Dem party moneybags and leaders will encourage them to do so in order to outflank and dissipate Sanders’ progressive message, but in the end whomever of the progressives gets the next Dem presidential 2020 nomination, the Party leaders will ditch their proposals and programs and bring them in line. Don’t forget Obama in 2008, sounding like a progressive, but once in office put the bankers back in charge of his administration. But Biden’s the front runner anyway. So it’s not likely the party will even choose Warren, Booker, or any of the other ersatz progressive wannabes and Sanders clones.

In short, while I’ve probably written more about central bankers and financial markets than most ‘on the left’ (latest book coming in March is ‘Alexander Hamilton and the Origins of the Fed’), I’m not a proponent of primary reliance on monetary policy and banking system restructuring as a solution. And nothing matters without having first resolved the ‘organization question’.

Alternative Visions Radio Show, February 15, 2019, on Trump’s National Emergency Declaration, Amazon v. New Yorkers, the latest on US economy indicators (retail sales, inflation, jobs), the global economy, & predictions re. Brexit, China trade, and Venezuela.

GO TO:

http://prn.fm/alternative-visions-predictions-forecasts-us-global-economies/

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Dr. Rasmus reviews his prior prediction that Trump will declare a ‘National Emergency’ to get funds to build his wall. What it means for the US Constitution and the continuing drift toward the decline of US democracy. (How the Dems were complicit for decades enabling the declaration and what they won’t now do). Rasmus applauds New Yorkers for driving out Amazon. What big tech has done to San Francisco and the bay area in California. The danger of ‘OpenAI’ (Elon Musk’s company) and its machine learning-deep learning ‘fake news’ creation potential. Rasmus addresses the US retail sales recent numbers, a fall of -1.2%, the biggest since 2009 and what it means for the US economy in 2019. Also, the Fed now clearly has ‘thrown in the towel’ (as have other central banks) leaving monetary policy dead in the water for the next recession. Krugman now agrees with Rasmus re. recession. As recession looms, US Treasury faced with an additional $12 trillion in bonds it must sell (as China, Russia and others reduce purchases and buy gold). Recession now imminent in Eurozone, Germany, Italy, UK, and Japan. The latest Brexit vote, China trade negotiations, and US strategy in Venezuela.

Just leaked today that Senator McConnell, Trump’s echo, has indicated that Trump will declare a national emergency today, even as he signs a compromise bill with Pelosi and the Dems to fully fund his Wall. Mainstream media thinks this is big time news. Comes as a surprise. But I predicted it back on January 7, 2019 in a tweet @drjackrasmus.com.

To quote myself in response to talk whether Trump will declare a national emergency to get his way on the Wall:

“Can (and will) Trump declare national emergency to fund his wall? Yes and Yes. Dem Congress in 1976 law gave him wide powers. 100s laws since say which. He’ll move $ from Defense budget to wall. Dems to be outmaneuvered again. US slouching further toward dictatorship”

Pelosi and Dems will act indignant. But as the historical record is clear, the Dems gave him this authority decades ago. Congress has been steadily giving up its authority to an Imperial Presidency for decades. Now we’re about to move into an era of legislation by Executive-Presidential action. So much for checks and balances and the basic structure of the US Constitution.

Under the US Constitution only the House of Representatives can initiate spending authorization and define how much will be spent on what. That era is over. Now the President can declare emergency and spend on whatever he wants. That’s another drift in US democracy toward dictatorship. That is, where the executive accretes legislative function to itself and ‘dictates’ what will be spent on what and when.

Trump has deep proclivities toward tyranny (ie. sees himself above the law, the definition of a Tyrant) and toward rule by dictate (where he declares law and spends as he wants, not the elected legislature).

So what will the Dems do now? Essentially nothing, I predict. They will huff and puff and file legal suits and use it all as ammunition for their re-election plans in 2020. But will they impeach Trump? Not a chance. They’ll just hold hearings now until November 2020.

What about the Mueller Report and forthcoming indictment? Will they use that to go after Trump now that he’s taking over some of their legislative function by declaring national emergency? Don’t expect much there either. There already are signs that the Mueller ‘Report’ the public gets to see will be an abridged, edited, and carefully whitewashed version. The real report will be shown to only a select few Congresspersons, in secret behind closed doors. And they will have to agree not to discuss it publicly as a condition of reading it. But without public pressure, nothing will happen. There can be no Democracy without public access to what the government is doing.

Meanwhile the Neocons are back in the drivers’ seat in the Trump administration. Bolton, Pompeio, Navarro, Lighthizer,–with mouthpieces like Coulter, Hannity, and others shouting in the background–are running policy. On the foreign policy front, preparations for deploying tactical nuclear war are moving forward, early stages of a proxy invasion of Venezuela are underway, the US is pulling out of treaties with Russia and moving forces closer to its border, phony negotiations pervade the mainstream media, for public consumption, about negotiations with North Korea, the US is adopting a hard line to thwart and stop China technology development, US allies in Europe and elsewhere being ‘brought into line’ to accept US policies or pay the price of sanctions or worse. In short, the US empire is gathering up its loose ends and preparing for a new phase, to restore its global hegemony in a more aggressive foreign policy form.

On the domestic US front, as neoliberal economic policies are being intensified under Trump (i.e. tax cuts for the rich and their corporations, more war spending, more free money from the Fed to subsidize the markets, coming attacks on social security, medicare, educations, etc.) in what is becoming increasing clear is an more aggressive, Neoliberal 2.0 form, the domestic political and Democracy landscape is being whittled away and reconstructed in order to make way and ensure the more aggressive neoliberal economic policies become embedded and institutionalized for another decade.

In other words, what we see happening in the US today in a more aggressive and confrontational US foreign policy, and an intensifying subsidization of capital incomes, amidst an atrophying of Democratic Rights and civil liberties at home. The new, nasty, more aggressive foreign policy and further destruction of US democratic rights are just the consequence of Trump’s new, aggressive neoliberal economic policies. The US elite know the next recession, coming soon, will significantly exacerbate the economic problems at home, while intensifying the political instability abroad. And they are preparing–at home and abroad.

Trump’s imminent declaration of national emergency to get his wall–a big leap toward circumventing the US House and Congress and the US Constitution–is just the latest event in this historical economic and political drift.

US Treasury was warned by its advisory committee this past week that it will have to sell an extra $12 trillion of US government T-bonds over the coming decade as the US federal government debt increases from current $21 trillion to $33 trillion. On same day, US Senators, Sanders and Shumer, introduced a bill to require corporations to pay more wages and benefits if they want to keep buying back their stock and paying dividends. The total combined buybacks-dividends in 2018 was $1.4 trillion, up from $1.1 trillion in 2017 and from $500 billion in 2009. And all that just for the Fortune 500 largest US corporations. Since the 2008 crisis nearly $9 trillion has been distributed by US corporations to their shareholders.

Listen to my Alternative Visions radio show of February 8, 2018 for the discussion on these and related topics of the past week.

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SHOW ANNOUNCEMENT

As the main topic of the show, Dr. Rasmus discusses the letter to the US Treasury by the Treasury Bond Advisory Committee (TBAC) this past week, warning that $12 trillion more in US Treasury bond sales will be needed over the next decade in order to finance rising US government debt. The $12T more per the TBAC is about equal to the net increase in federal debt (from current $21T to $33T) that Rasmus has been predicting will occur by 2028 due to Trump tax cuts, rising defense spending, and the next recession around the corner—with Interest payments on that debt alone equaling $900 billion a year, per the CBO. In a related topic, Rasmus discusses the latest data that show that Fortune 500 corporations’ stock buybacks plus dividend payouts will reach $1.4 trillion for 2018—up from $1.1 trillion in 2017 and from $500 billion in 2009. How the two trends of escalating government debt and accelerating $trillion a year plus buybacks-dividends are connected. The latest on Trump-Powell confrontation over rate hikes and coming breakdown of Russia-Saudi agreement on oil production are also addressed.

How the US manipulates its dollar, the global reserve and trading currency, to crash the economy of targeted countries for regime change and prepare domestic discontent to enable legal coup d’etats; How US sanctions intensify the pressure b y denying the target country essential consumer and business goods, and closing off access to export markets; How ideological offensives charging ‘corruption’ provide the political cover; And how US allies are lined up in the final phase. Venezuela today as a classic case example of 21st century US imperialism strategy and tactics.

To Listen to the discussion on my Feb. 1, 2019 Alternative Visions radio show,

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Dr. Rasmus and guest, Alan Benjamin, discuss the latest efforts of Trump administration to engineer a regime change in Venezuela. Rasmus explains how the US employs financial imperialism to destabilize regimes, using the US dollar, sanctions, freezing of assets, cutting off access to trade and markets, denial of loans by US and world banks, and other measures as a prelude to creating an economic crisis in the target country to foster domestic political unrest and opposition forces to topple existing governments. Rasmus explains how this has been developing in Venezuela, and why it has recently intensified over the past six months. Guest Alan Benjamin describes recent political developments in Venezuela and the growing potential for military intervention there using US proxy governments, Brazil and Colombia. Efforts by Europe and Mexico to mediate. Possible responses by Russia and China. And solidarity movements emerging in the US to avoid a US proxy war against Venezuela. (go to jackrasmus.com blog for 2016 article: “How the US Destabilizes Argentina, Brazil, & Venezuela). For emerging US solidarity movements, check outwww.USlaboragainstwar.org)

Senior negotiators of the US (Lighthizer) and China (Liu He) have been meeting in Washington this past week (Jan. 30-31) as the US-China trade war approaches a climax. China continues publicly to offer concessions to the US on market access to China, US corporate and bank majority ownership of China companies, and China resumption of purchases of US farm and other goods. Meanwhile, the US continues to assume a hard line on China technology development, going after China companies and arranging US allies to do the same. The US also began proceedings to extradite from Canada the co-chairperson of the giant China tech company, Huawei. But news of what’s been agreed to or not thus far in negotiations has been tightly controlled, apart from Trump tweets and typical hyperbole that discussions have been ‘great’. No meeting has been scheduled yet between Trump and China president, Xi–which would be the true indicator that a tentative agreement has been reached. Reportedly, negotiators will continue at a high level mid-February in Beijing, and US trade ambassador, Lighthizer, has announced he will travel to China to continue discussions.

On the eve of last week’s negotiators, I was asked to give an hour interview on TV by the Peninsula Peace and Justice center in Palo Alto, California. Topics focused on China-US trade, NAFTA 2.0, and Trump policies in general. That hour interview can be viewed on Youtube at the following link:

https://youtu.be/xoR2eMIBgPk

Dr. Jack Rasmus

Watch my latest TV interview on ‘Other Voices TV’ on January 16, 2019 discussing latest developments on US trade-budget deficits, Trump’s ‘dual track’ trade policy, and upcoming US-China Trade negotiations scheduled for January 30.

TO LISTEN, go to Youtube at:

(My just published piece on Davos and the global economy’s instability and risks)

“At Davos, Switzerland every year the global capitalist elite gather to party…and to prepare for the year ahead. This year more than 1500 private jets will reportedly fly in. Thousands more of their underling staff will travel via business class to handle their personal, and corporate, logistics. Shielded from the media and the pubic, the big capitalists share views in back rooms and listen to experts on finance, government policy, technology, and the economy. The experts are especially probed to identify and explain the next ‘black swan’ or ‘gray rhino’ event about to erupt. Wealthy celebrities are invited to entertain them as well after evening dinner and cocktails. But the real networking goes on privately afterwards, in small groups or one on one, among the big capitalists themselves or in private meetings with heads of state, finance ministers, and central bank chairmen.

Typically each annual meeting has a theme. This year there are several: the slowing global economy, the fracturing of the international trade system, the growing levels of unsustainable debt everywhere, volatile financial asset markets with asset bubbles beginning to deflate, rising political instability and autocratic drift in both the advanced and emerging economies, accelerating income inequality worldwide—to mention just a short list.

On the eve of this year’s World Economic Forum gathering, some of the most powerful, wealthy, and more prescient capitalists have begun to speak out to their capitalist cousins, raising red flags about what they believe is an approaching crisis.

Ray Dalio, the billionaire who found and manages the world’s biggest hedge fund, Bridgewater Associates, warned that he and other investors had squeezed financial markets to such “levels where it is difficult to see where you can squeeze” further. He publicly admitted in a Bloomberg News interview that, in the future profits will be low “for a very very long time”. The era of central banks providing free money, low rates, and excess liquidity have run their course, according to Dalio. He added the global economy is mired in dangerously high levels of debt, comparing it to the 1930s.

Paul Tudor Jones, another big finance capitalist, similarly warned of unsustainable debt levels—created by companies binging on cheap credit since 2009—that “could be systemically threatening”. Not just government debt. But especially corporate debt, where levels in the US alone have doubled to more than $9 trillion since 2009 (most of it high risk ‘junk bond’ and nearly as risky ‘BBB’ investment grade corporate bond debt).

Almost as worrisome, one might add, is the now more than $1 trillion leverage loan market debt in the US (i.e. loan equivalent of junk bonds). US household debt is also now approaching $15 trillion. And US national government debt, at $21 trillion, is about to surge over the next decade to $33 trillion due to the Trump 2018 tax cuts. And that’s not counting trillions more in US state and local government debt; or the tens of trillions of new dollarized debt undertaken by emerging market economies since 2010; or the $5 trillion in non-performing bank loans in Europe and Japan; or the even more private sector debt escalation in China.

Corporate debt levels are not alone the problem, however. Debt can rise so long as financial asset prices and real profits do so—i.e. provide the cash flow available to service the debt. But when profits and asset prices (of stocks, bonds, derivatives, currency exchange rates, commodity futures, etc.) no longer rise, or start to turn down, then debt service (principal & interest) cannot be repaid. Defaults often follow, causing investor confidence to slide. Real investment, employment, and household incomes thereafter collapse, and the real economy is dragged down in turn. The real decline further exacerbates the collapse of financial asset prices, and precipitates a mutual feedback of financial and real economic collapse.
And financial markets began to deflate in 2018; and it is now becoming increasingly clear that the real side of the global economy is slowing rapidly as well.

In February 2018 the first early warning appeared for financial markets. Stocks plunged in the US, Europe and even China. They temporarily recovered—a ‘dead cat bounce’ as they say before an even deeper decline in the fall. Then oil and commodity futures prices collapsed by 40% or more in late summer-early fall 2018. Stock markets followed again in October-December 2018 by 30-40% in US, China, Europe, and key emerging markets. Key emerging market currencies—Argentina, Turkey, Indonesia, Brazil, South Africa—all fell precipitously as well. And housing prices from the UK to Australia to China to New York began to implode as the year ended. In January 2019 stock markets recovered—i.e. a classic, short term, bull market recovery in what is today’s fundamentally long term global bear market.

Dalio’s and Jones’ worries of unsustainable debt and pending crisis have started to become real, in other words.

Becoming real as well is evidence of emerging defaults, a critical phase that typically follows asset markets’ decline and slowing profits. In the US there’s the Sears default, with JCPenney in the wings. And the giant corporation, once the largest in the world, the General Electric Corp., slouching toward default. Its global profits slowing and stock price imploding, GE is now desperately selling off its best assets to raise cash to pay its excess debt. It’s not alone. Scores of energy companies involved in US shale oil and gas production are teetering on the brink. In Europe, there’s deepening troubles at Deutschebank, and just about all the Italian banks, and UBS in Switzerland, and the Greek banks. In Japan, there’s trillions of dollars in non-performing bank loans as well, which Japan’s central bank continues to cover up. And then there’s China, with more than $5 trillion in bad loans held by local governments, by shadow bankers, and by its state owned enterprises that the China central bank and government keep bailing out by issuing ‘trusted loans’ (i.e. equivalent of junk bonds in US).

Default cracks have begun to appear everywhere in the global economy, in other words, major indicators that the excess debt accumulation and financial bubbles of the past decade cannot be ‘serviced’ (principal-interest paid) and have begun to negatively impact the global economy.

What’s becoming clear is that the next crisis will not emerge from the housing sector with excess debt and price bubbles driven by subprime mortgage loans and related financial derivatives. What’s more likely is that the next crisis will emerge from debt defaults and collapsing real investment by non-financial corporations. Moreover, the tipping point is nearer than most in business or media will admit.

Trump’s 2018 tax cuts simply threw a veil over the real condition of corporate performance in the US this past year. The tax cuts provided a windfall, one time subsidy to corporations’ bottom line. It is estimated that US S&P 500 corporations’ profits were boosted 22% by the Trump windfall tax cuts alone. Since S&P 500 profits for 2018 were roughly 27%, it means actual profits were barely 5%. That’s the real situation going into 2019—a condition that assures US stock markets, junk bond markets, and leveraged loan markets in particular will experience even greater contraction in 2019 than they did in 2018. The bubbles will continue to pop.

In the global economy, it is even more evident that by the end of 2019 it is likely there will be recession in wide sectors of the real global economy amidst further asset markets’ price declines.
In Europe, the growth engine of Germany is showing sure signs of slowing. Manufacturing and industrial production in the closing months of 2018 fell by 1.9%. After a GDP decline in the third quarter 2018, another fourth quarter 2018 German contraction will mean a technical recession. Equal to at least a third of all the Eurozone economy, as goes Germany goes Europe. France and Italy manufacturing are also contracting. Nearly having stagnated at 0.2% in the third quarter, the Europe economy in general may have slipped into recession already. And all that before the negative effects of a UK Brexit or an Italian banks’ implosion or deepening protests in France are further felt.

In emerging market economies, the steady rise of the US dollar in 2018 (driven by rising US central bank interest rates) devastated emerging market economies across the board. Rising dollar values translated into corresponding emerging market currency collapse. That triggered capital flight out of these economies, and their falling stock and bond markets in turn. To stem the outflow, their central banks raised interest rates, which precipitated deep recession in the real economy, while their collapsing currencies generated higher import prices and general inflation in their economies as well. That was the story from Argentina to Brazil to Turkey to South Africa and even to Asia in places.

The US halting of interest rate hikes in 2019 may relieve pressure on emerging market economies somewhat in 2019. But that easing will be more than offset by China’s 2019 economic slowdown now underway. In the second half of 2018 investment, consumer spending, and manufacturing all slowed markedly in China. Officially at 6.6% for 2018, according to China statistics, China’s real economy is no doubt growing less than 6% due to the methods used to estimate growth in China. Its manufacturing began to contract in late 2018, and with it a significant slowdown in private investment and even consumer spending on autos and other durable goods. China’s slowing will mean less demand for emerging market economies’ products and commodities, including oil and industrial metals. A respite for emerging market economies from the US dollar rising will thus be offset by China slowing.
When both financial asset markets and the real economy are together slowing it is a particularly strong ‘red flag’ warning for the economic road ahead. And more contractions in stocks and other financial assets, together with slowing of manufacturing, housing, and GDP in Europe, US, and Japan in 2019, are likely which means trouble ahead in 2019.

Along with all the data increasingly pointing to financial asset deflation gaining a longer term foothold—and with real economy indicators like manufacturing, housing, GDP, exports as well now flashing red—there is also a growing list of political hotspots and potential ‘tail risks’ emerging in the global economy. Some of the ‘black swans’ are identifiable; some yet to be.

In the US, the government shutdown and the prospect of policy deadlock between the parties for two more years could qualify as a source of further economic disruption. In Europe, there are several ‘tail risks’: the Brexit situation coming to a head in April, the challenge to the Eurozone by the new Italian populist government, the chronic and deep street protests continuing in France, and the general rightward social and political drift throughout eastern Europe. In Latin America there’s the extremely repressive policies of Bolsonaro in Brazil and Macri in Argentina, which could end in mass public uprisings at some point. In Asia, there’s corruption and scandals in Malaysia and India. And then there’s the US-trade war with China, which some factions in the US are trying to leverage to launch a new Cold War. Not least, there’s the potential collapse of negotiations between the US and North Korea that could lead to renewed threats of military conflict. All these ‘political instabilities’ , given their number and scope, if left unresolved, or allowed to worsen, will have a further negative effect on business and consumer confidence—now already slowing rapidly—and in turn investment and therefore economic growth.

Ray Dalio’s and Tudor Jones’ warnings on the eve of Davos have been echoed by a growing list of capitalist notables and their government servants and echoes. IMF chairperson, Christine Lagarde, has been repeatedly declaring publicly that global trade and the economy are slowing. Reflecting Europe in particular, where exports are even more critical to the economy, she has especially been warning about a potential severe US-China trade war disrupting the global trading system—and global economy in turn. The IMF has been issuing repeated downward adjustments of its global economic forecasts. So too has the World Bank. As have a growing number of big bank research departments, from Nomura Bank in Japan to UBS bank in Europe. Former US central bank chairs, Janet Yellen and Ben Bernanke, have also jumped in and have been raising red flags about the course of the US and global economies. Former Fed chair, Greenspan, has even declared the US is already on a recession path from which it can’t now extricate itself.

Given all the emerging corroborating data, the red flags and warnings about the current state of the global economy, and the growing global political uncertainties, the Dalios, the Jones, and others among the Davos crowd are especially worried this year.
On the eve of the Forum’s first day on January 23, 2019, a leading discussion topic among the cocktail parties is the buzz about the just leaked private newsletter from billionaire Seth Klarman, who heads one of the world’s biggest funds, the Baupost Group. In his newsletter leaked to the New York Times, and widely circulated among early Davos crowd attendees, Klarman reportedly chides his readers-investors about not paying more attention to the social and political instabilities growing worldwide, about Trump’s direction which is “quite dangerous”, and the US in effect retreating from global leadership, leaving a dangerous vacuum behind. Investors have also become too complacent about global debt and risk levels now rising dangerously, he argues. It could all very well lead to a financial panic, he adds. The US in particular is at an ‘inflection point’. He ominously concludes, “By the time such a crisis hits, it will likely be too late to get our house in order”.

The recent statements by Dalio, Tudor Jones, Klarman, and the others reminds one of the last crisis and crash of 2008. When Charlie Prince, CEO of Citigroup, the biggest bank at the time, was asked after the crisis why he didn’t see it coming and do something to avoid the toxic mortgage-derivatives bomb and protect his investors and customers, Prince replied he did see it coming but could do nothing to stop it. His investors and customers demanded his bank continue—like the other banks were—investing in subprime mortgages, lending to shadow banks, selling risky derivatives and thereby continuing to make money for them, just as the other banks were doing. Charlie’s response why he did nothing to stop it or prepare was, ‘when you come to the dance, you have to dance’.

No doubt the Davos crowd will be partying and dancing over the next several days in their securely gated, posh Switzerland retreat. After all, the last ten years has increased their capital incomes by literally tens of trillions of dollars. And capitalists are driven by a mindless herd mentality once they’ve made money. They believe they can continue doing so forever. They believe the money music will never stop. One can only wonder, if they’ll be dancing later this year to the same song as Charlie’s in 2008.

Jack Rasmus
January 23, 2019

Dr. Rasmus is author of the book, ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression’, Clarity Press, August 2017, and the forthcoming ‘The Scourge of Neoliberalism: US Policy from Reagan to Trump’, 2019. Jack hosts the Alternative Visions radio show on the Progressive Radio Network. He blogs at jackrasmus.com and his twitter handle is @drjackrasmus.com

byJack Rasmus
Copyright 2019

Summary Part I

In 2018 China and the US came to the brink of a bona fide trade war and then halted at the precipice. At the G20 meeting in Buenos Aires in late November 2018, Trump and China President, Xi, met offsite. The outcome was an agreement to put off further escalation of tariffs on both sides for another 90 days during which their trade teams would meet to try to seek a resolution. Economies of both countries were showing signs of growing weakness and instability by November. The indicators worsened notably in December. Trump agreed to postpone US announced tariffs on an additional $200 billion of China imports, effective January 1, 2019, and suspend increases on already existing tariffs from 10% to 25%, also scheduled for January 1. China agreed as well to postpone further its scheduled tariffs. In early weeks of January 2019, middle level officials of both China and the US began meeting to discuss details for subsequent higher level negotiations set for Washington on January 30, 2019.

What follows is Part II of the analysis of Trump’s Déjà vu China-US trade ‘war’ from last March 2018 through mid-January 2019.

The Real Trade War: China Technology

Trump’s trade strategy in relation to China has always been to pressure China on technology transfer and slow its nextgen technology development. Reducing the US-China trade deficit and getting China to open its markets to US financial interests have been objectives as well, but of secondary importance.

Early in 2018 China signaled publicly it would buy $100 billion a year more US products and open its markets to US corporate majority 51% or more ownership. It even granted 51% ownership to select global companies while negotiations with the US were underway. But it refused to make concessions on the technology issue. US defense companies, the Pentagon, the US military-industrial complex interests on the one hand, and US banks on the other, are the major players in determining US trade policy.

Throughout 2018 US trade policy is best described as schizophrenic. Was it Trump driving policy? His anti-China neocons and hawk advisors–Lighthizer, Navarro, and later John Bolton, appointed to the post of National Security Advisor to Trump in 2018, who later joined the administration? Was it Treasury Secretary, Steve Mnuchin, who represents US banking and multinational corporate interests on the US trade team? Larry Kudlow, Trump’s interface to his domestic base? And what about Jared Kushner, son-in-law of Trump who has Trump’s closest ear, who has been serving as Trump’s interface to the three major factions on the US trade team? Throughout 2018, the factions contended for Trump’s support, with influence shifting and fluid among the various factions.

Pre-negotiations with China started in early March with Trump’s announcement of the steel-aluminum tariffs. After the tariff announcement, Trump began tweeting the idea that China should reduce its imports to the US by $100 billion. A day after the Office of US Trade Representative (OUST report) was issued by chief Trade Representative, Robert Lighthizer, Trump announced tariffs of $50 billion on China imports recommended by Lighthizer. However, a window of at least 60 days was required before any definition of the $50 billion or actual implementation by the US might occur, giving ample time for unofficial negotiations to occur between the countries’ trade missions. (Technically, the US could even wait for another six months before actually implementing any tariffs). Announcing intent to a dollar amount of tariffs is one thing; providing a list and definition of what goods would be tariffed is another; and setting a date they would take effect is still another.

China immediately sent its main trade negotiator, Liu He, to Washington and assumed a cautious, almost conciliatory approach at first. China responded initially in March with a modest $3 billion in tariffs on US exports. It also made it clear the $3 billion was in response to US steel and aluminum tariffs previously announced by Trump, and not Trump’s $50 billion tariff threat specifically targeting China. But China noted more action could follow, as it forewarned it was considering additional tariffs of 15% to 25% on US products, especially agricultural, in response to Trump’s $50 billion announcement.

China was waiting to see the US details. At the same time in April it signaled it was willing to open China brokerages and insurance companies to US 51% ownership (and possibly even 100% within three years). It also announced it would buy more semiconductor chips from the US instead of Korea or Taiwan. It was all a carefully crafted public response, designed not to escalate trade negotiations with the Trump administration prematurely. A series of token concessions and minimal tariff responses.

Behind the scenes China and US trade representatives continued to negotiate. By the end of March, all that had actually had occurred was Trump’s announcement of $50 billion in tariffs on China imports, but without details, plus China’s $3 billion token response to prior US steel-aluminum tariffs. From there, however, events began to deteriorate.

On April 3, 2018 Trump defined his threat of $50 billion of tariffs—25% on a wide range of 1300 of China’s consumer and industrial imports to the US. It was Lighthizer’s OUST Report’s recommended March list that launched Trump’s trade offensive with China. Influential business groups in the US, like the Business Roundtable, US Chamber of Commerce, and National Association of Manufacturers immediately criticized the move, calling for the US instead to work with its allies to pressure China to reform—not to use tariffs as the trade reform weapon. The anti-China hardline US factor brushed aside the criticism.

China now responded more firmly, promising an equal tariff response, declaring it was not afraid of a trade war with the US. That was an invitation for a Trump tweet and declaration he believed the US would not “lose a trade war” with China and maybe it wasn’t such a bad thing to have one. He suggested that another $100 billion in US tariffs might get China’s attention.

China’s initial $3 billion tariffs, and China’s suggestion of more billions of 15%-25% tariffs, targeted US companies and agricultural production in Trump’s Midwest political base. This may have especially aggravated Trump, disrupting his plans to mobilize that base for domestic political purposes before the November 2018 elections. Trump’s typical approach to negotiating—employed repeatedly during his private business dealings before being elected—is to never let his adversary ‘one up’ him, as they say. He always keeps raising the stakes until the other side stops matching his demands. Then he negotiates back to original positions, controlling the negotiating agenda and maintaining the upper hand in the process.

China initially fell into Trump’s trap, responding to Trump’s $50 billion of tariffs announcement with its own $50 billion tariffs on 128 US imports to China. This time targeting US agricultural products and especially US soybeans, but also cars, oil and chemicals, aircraft and industrial productions—the production of which is also heavily concentrated in the Midwest US. China noted further it was prepared to announce another $100 billion in tariffs as well if Trump followed through with his threat of imposing $100 billion more tariffs. In less than a month, the character of negotiations had shifted.

In response to the ‘tit for tat’ tariff threats, the US stock markets plummeted during the first week of April. Trump advisors, Larry Kudlow and Steve Mnuchin, intervened publicly to dampen the effect of Trump’s remarks on the markets. Kudlow tried to assure investors, “These are just first proposals…I doubt that there will be any concrete actions for several months”. Kudlow said negotiations were continuing. The stock markets recovered again.

But who were investors supposed to believe—Trump or his advisors? They seemed to be talking in different directions. And how long would investors continue to believe the Kudlows and others that matters (and Trump) were under control, and there would be no trade war? China representatives noted that, contrary to Kudlow’s assurances to US markets and investors, there were no ongoing discussions between the two countries.

By the end of the first week of April, US trade objectives and strategy was becoming increasingly murky: US multinational businesses restated what they wanted was more access to China markets. US defense establishment, NSA and the Pentagon, and the Trump administration ‘hawks’—Lighthizer, John Bolton and Peter Navarro—retorted they wanted an end to strategic technology transfer to China—both from US companies doing business in China and from China companies purchasing or partnering with American companies in the US.

It appeared what Trump himself wanted anything was something to exaggerate and brag about to his domestic political base emphasizing nationalist themes—to keep his popular ratings growing, to ensure Republican retention of seats in Congress in the November elections, and to whip up his base.

So what was the real US priority? Whose trade war was it? The neocons and China hawks aligned with the US military-industrial complex? Midwest agribusiness and manufacturing interests? Or US finance capital wanting to escalate its penetration of China markets?

However, by mid-April it was all still talk, with tariffs actions on paper, and not yet implemented. The next step would be defining the announced tariffs in detail. Announcing tariffs was only like waving a gun, to use a metaphor. Defining the tariffs was like loading a gun, putting the ‘safety’ lock on, but not yet pulling the trigger. Tariff implementation dates were when the shoot-out would really begin.

As of mid-April the negotiations by trade representatives continued in the background, while US capitalists in the Business Roundtable and other prime corporate organizations added their input to the public commentary process that was scheduled to continue in the US until May 22.

US Treasury Secretary, Steve Mnuchin, went to Beijing in the weeks prior to May 22. He returned declaring there was an agreement. Mnuchin kicked Peter Navarro, one of the hawks, from the US trade team. The China hawks and military industrial complex immediately responded, with help of their friends in Congress. They went after China’s ZTE corporation doing business in the US, charging it with technology espionage and transfer. The tech faction on the US trade team took over from Mnuchin. Navarro was put back. Any tentative deal was scuttled.

What happened in the subsequent six months from June to November 2018 was a steady escalation of threats, and subsequent actions, by Trump to raise tariffs, while he simultaneously kept saying his relationship with China president Xi was great and he expected a trade deal at some point: His response to China’s $50 billion tariff announcement—the counter to Trump’s $100 billion more tariffs—was to publicly declare the US should consider an additional $100 billion in tariffs. The additional $100 billion were implemented thereafter.

China again responded tit-for-tat, as its Commerce Ministry spokesman, Gao Feng, declared it would not hesitate to put in place ‘detailed countermeasures’ that didn’t ‘exclude any options’. And, in the most ominous comment to date, it was made clear that should Trump impose the additional $100 billion, ‘China would not negotiate’! And as China Foreign Ministry spokesman, Geng Shuang, following up Gao Feng, indicated in an official news briefing, “The United States with one hand wields the threat of sanctions, and at the same time says they are willing to talk. I’m not sure who the United States is putting on this act for”…Under the current circumstances, both sides even more cannot have talks on these issues”.

Trump’s $150 billion in tariffs on China was played to his domestic political base, in the weeks prior to the November midterm US elections, as evidence of his tough policy of US economic nationalism. Trump further announced reaching an agreement with Mexico and Canada replacing the NAFTA free trade deal—exaggerating and spinning the new terms and conditions as major improvements while, in fact, the details were token much like the prior changes to the US-South Korean free trade agreement. No new tariffs were implemented on Mexican goods imports to the US.

Trump tried desperately to get the Chinese to return to the negotiating table during the months immediately preceding the US elections. However, China refused to be ‘played’ like Mexico and Canada for Trump’s election objectives and refused to return.

Trump threatened to raise tariffs on the second $100 billion implemented, from 10% to 25% and threatened another 25% on an additional $200 billion in China imports. Still no China agreement to negotiate.

By the early fall 2018 it was clear that the China hawks—Lighthizer, the military-industrial complex-the Pentagon & Co.—were in control of Trump trade policy. Regardless of China concessions on reducing the trade deficit or granting 51% access to its markets, their primary demand was slowing (or ideally subverting) China technology develop—stopping tech transfer in China and elsewhere in the US, as well as among US allies. The side-lining of Mnuchin over the summer, the restoration of Navarro to the trade team, and the adding of notorious anti-China hawk, John Bolton, all strengthened the tech development faction, led by Lighthizer, on the US trade team. They were in effect in control as the US midterm elections approached.

In the run-up to the US elections it was also clear Trump was focused on his domestic political base, repeatedly tweeting his ultra- economic nationalist rhetoric. Trump’s nationalist rhetoric also contributed to preventing the relaunch of trade negotiations with China. Part of this threatening rhetoric included Trump public statements that he would implement a third round of $200 billion more 25% tariffs by January 1, 2019 on China. In that environment of escalating threats, anti-China hardliners clearly in control of US policy, and pending US elections, it was virtually impossible China would agree to negotiate.

Following the November US elections, a meeting was now possible. The G20 nations gathering in Buenos Aires scheduled for late November presented the opportunity. Intense maneuvering occurred between the anti-China technology hawks and the Mnuchin bankers-multinational corporations factions. Lighthizer released a new report criticizing China tech policy and appeared to have the upper hand and opposed a meeting between Trump and China president, Xi, at a side venue dinner in Buenos Aires. That reflected a new effort and breakthrough by the Mnuchin faction of big US banks, tech, and aerospace corporations. From mid-October through November the US stock markets began a precipitous fall, which would continue through December, and amount to the worst stock correction since 2008 and even 1931. That financial and the real slowing of the US housing, construction, and auto industries likely shifted Trump administration strategy. The momentum of negotiations strategy began to shift from the Ligthizer faction.

Elements of Trump Trade Strategy

Apart from the three main objectives of Trump China trade policy noted—i.e. China purchases of more US goods, opening markets to 51% ownership for banks and other US corporations, and the nextgen tech development issue—there are various additional objectives behind the strategy.

First, the steel-aluminum tariffs that launched the Trump trade offensive in March 2018 were a signal to US competitors that they should prepare to ‘come to the table’ and renegotiate current trade arrangements, since the US now plans to change the rules of the game again—just as Reagan and Nixon did before in the 1970s and 1980s. But once they ‘came to the table’, the changes in rules of the game with regard to trade relations with US allies did not result in a fundamental restructuring of the US-allies trade relations. The South Korean deal (see Part 1 of this article), the following revised NAFTA treaty, the suspension of negotiations on auto and other tariffs with Europe and Japan, plus the thousands of exemptions to steel and other tariffs allowed by the Trump administration to date all reveal that trade renegotiation with US allies is mostly for show. However, the effort throughout 2018 all made for good campaign speech ‘economic nationalist’ hyperbole in an election year.

Trump has been pursuing a ‘dual track’ trade offensive: a ‘softball’ approach to US allies and an increasingly hard line with China. However, by January 2019 it appears the China hardline track may also fall well short of the threats and hyperbole to date. Trump simply does not have the kind of leverage over China negotiations in 2018-19 that Reagan had over Japan in the 1980s and even Nixon had in the early 1970s with Europe.

A second development impacting Trump trade strategy has to do with the inevitable slowing of the US real economy in 2019-20. The floodgates of fiscal policy have been reopened in 2018 with Trump’s $4.5 trillion corporate and investor tax cuts, plus hundreds of billions $ more in defense and war spending hikes. Annual deficits of more than $1 trillion a year for another decade are now baked into the US budget. The deficits in turn have required the Federal Reserve US central bank to raise interest rates to fund those annual trillion dollar and more deficits and debt. It is becoming increasingly clear that the Trump tax cuts have not stimulated real US economic growth very much. Most of the $4.5 trillion business-investor tax cuts are going toward buying back corporate stock ($590 billion forecast 2018 by Goldman Sachs), paying out more dividends ($400 billion plus forecast), and financing record levels of merger & acquisition deals ($1.2 trillion in 2018)..

In short, rising interest rates, ineffective tax cuts not producing projected real investment and growth, and escalating annual deficits and debt will need a major expansion of US trade exports to offset the rate hikes, deficits, and inevitable slowing US economy by late 2019. Trump needs desperately to get an agreement with China, to avert a trade war, and boost trade as the US economy slows.

Third, Trump trade policy comes as global trade has been slowing. Global commodity prices are in retreat once again. 2017’s much hyped ‘synchronized’ global recovery is falling apart—in Europe, Japan and key emerging market economies as well. Another recession is coming, possibly as early as late 2019 and certainly no later than 2020. So US trade policy is shifting, attempting to ensure that US business interests retain their share of what will likely be a slower growing (or even declining) world trade pie. Trump and US business are repositioning before the global cycle next turns down.

US domestic and global economic objectives are not the only forces influencing Trump’s trade policy. There are just as important US political objectives behind it as well.

The 2018 tariff announcements represent Trump’s leap into his 2020 re-election campaign, a return to intense nationalist themes, and a move to mobilize his domestic political base once again around nationalist appeals. Electoral politics are also in play here, in other words. The steel and aluminum tariffs were announced within 48 hours of Trump’s speaking to the ‘America First’ coalition of ultra-conservative and aggressive capitalist interest groups that were meeting in Washington the same week of the steel-aluminum tariff announcements. The ‘American Firsters’ promised to raise $100 million for his re-election campaign; Trump rewarded them within hours of their meeting and financial commitment to his campaign with his latest bombast on trade. Escalating threats and implementing tariffs on China in 2018 also cannot be separated from Trump efforts to influence the outcomes of the 2018 November midterm elections. Trade policy is about Trump re-election strategy as much as anything else—including trade deficits, market access, and tech transfer.

Less obvious perhaps is Trump’s leveraging of trade policy and nationalist themes as a way to agitate and mobilize his base, in preparation to counter the Mueller investigation once it’s concluded. As a possible Mueller indictment of Trump approaches, Trump has been clearly preparing his base. He is also cleaning house within his administration, surrounding himself with like-minded aggressive conservatives, former Neocons, and various sycophants—in anticipation of the ‘street fight’ he’s preparing for with the traditional liberal elite in the US once he (or his Justice Dept. Secretary) creates a political firestorm by firing Mueller.

What’s Next for US-China Trade?

What Trump is doing is what US capitalists periodically have done throughout the post-1945 period: i.e. change rules of the game in order to ensure US corporate interests are once again firmly in the drivers’ seat of the global economy for at least another decade and dto ensure US global political hegemony remains unchallenged. Nixon did it in 1971-73 targeting European challengers. Reagan did it in 1985 targeting Japan. Now Trump is replaying a similar scenario, targeting China. But China may prove a more difficult adversary for the US in trade negotiations. The US is relatively weaker today than it was in 1971 and 1985; moreover, China is in a far stronger position today relative to the US than were Europe and Japan earlier.

China is not as economically or politically dependent on the US in 2018 as was Japan in 1985. Nor as fragmented and decentralized as was Europe in 1971. Both Japan and Europe were also politically dependent on the US for their military defense at the time. China today is none of the above. Thus the US lacks important levers in negotiations with China it formerly had with Europe and Japan. Not only is China not economically or politically as dependent, but Trump’s initial $150 billion of US tariffs levied on China represents only 2.4% of all China trade with the world. It will therefore take more than US tariffs, even the $400+ billion of Trump’s total threatened tariffs on China, to get China to capitulate on trade as Japan did in 1985—a capitulation that eventually wrecked Japan’s economy and led in part to Japan’s 1991 financial implosion as a consequence.

And there’s the matter of North Korea. If the US expects China’s ‘help’ in getting North Korea to the negotiating table and de-nuclearizing the regime, it certainly won’t get it by provoking a trade war with China.

China has notable cards to play in its economic deck. For one thing, it could significantly slow its purchases of US Treasury bonds. That would require the US central bank to raise rates even further to entice other sources to buy the bonds China would have. That will pressure US interest rates to rise even further, and slow the US economy even more so than otherwise. China could also reverse its policy of keeping the value of its currency, the Yuan, high. A downward drift of the Yuan would raise the value of the dollar and thus make US exports less competitive. It could impose more rules on US corporations in China, give import licenses to European or other competitors, hold up mergers and acquisitions worldwide involving US corporations.

Another response by China might be to raise the requirements of technology transfer for US corporations located in China. There’s a long term strategic race between China and the US over who’ll come to dominate the new technologies—especially Artificial Intelligence, 5G wireless, and cyber security tech. China files about the same number of patents as the US every year, with Germany third and the rest of the world well behind. Who files the most AI, 5G and other patents may prove the winner in future global economic power. AI, 5G, cyber security are the technology that will ensure military dominance for years to come. The US sees China as its biggest threat in this sphere. The US wants to prevent China from capturing these critically strategic technologies. Trump China trade policy is thus inseparable from a US policy of launching a new military Cold War with China.

The outcome of the Trump-Xi Buenos Aires meeting in late November 2018 was an agreement by Trump to suspend raising tariffs on the second $100 billion, from current 10% to 25%, and in addition to impose an additional 25% on the remaining $267 billion of China goods—all by January 1, 2019. Instead it was agreed to continue negotiating again for another 90 days, until March 2. In return, China agreed in Buenos Aires to what it had already ‘put on the table’ during 2018: to open its markets to 51% foreign ownership and buy more US farm products.

Mid-level US-China trade delegations met in Beijing and began negotiations once again. By mid-January China clarified and added further concessions: It publicly declared it would purchase a $1 trillion more in US products over the course of the next six years. That’s apparently in addition to the already several hundred billions of dollars annually it purchases in US goods and services. It began buying US soybeans again, conceded to buy for the first time US GMO farm products, and to increase its purchase of US energy. It announced lower tariffs on US car imports, began awarding companies 51% ownership officially and scheduled to pass a new foreign investment law by January 29. It also has reportedly amended its laws to ban enforced tech transfer in China.

Despite China’s major concessions to date, the Lighthizer-Hawks-Military Industrial Complex faction has continued to push its hard line. With friends in Congress, the US has attacked the China corporation, Huawei, in an escalation greater than the prior attack on China’s ZTE corporation. It has even gotten US allies in Europe and Canada to initiate bans on Huawei as well. The US ally, Canada, arrested Huawei’s co-chairperson, while in Canada and is holding her as a common criminal. This has provoked counter-arrests of Canadians in China in return. The Huawei events likely represent attempts by US trade hardliners to scuttle again any potential agreement between the US and China by March 2. The fighting within the US trade factions also continues. US Treasury Secretary, Mnuchin, on January 17, 2019 publicly floated the proposal to lift all US tariffs on China as a concession in the negotiations. This has enraged the Lighthizer-Military faction in the US. The outcome is still uncertain. Lighthizer-Navarro still technically lead the US negotiations and will be the lead negotiators with China’s Vice-Premier for trade, Liu He, who is scheduled to come to Washington on January 30 to begin high level discussions. Whether Mnuchin and US big corporations and bankers can prevail with Trump and get a deal, or whether the Lighthizer faction can convince Trump the tech issue concessions by China are not sufficient for a deal, remains to be determined.

Which faction succeeds influencing Trump will determine the outcome. Jared Kushner, Trump’s son-in-law and interface between the two factions, may play a decisive role as well. It is highly unlikely a deal will be struck January 30 or soon after. The key will be how far China is willing to go with tech concessions. And whether the wording will satisfy the Lighthizer anti-China hawks who want a Cold War with China. Thus US military policy may be the deciding factor in any US-China trade deal. Negotiations will almost certainly continue up to the March 2, 2019 deadline. They may even be extended. Much will depend on the condition of the US and China economies in the coming months (and the US stock markets which Trump absurdly sees as the key indicator of US economic health).

This writer has predicted, and continues to predict, that a trade deal will be reached between the two, given that the US (and China) and global economies will continue over the long run to slow, and a global recession is on the horizon by 2020 and perhaps earlier by late 2019. The anti-China factor, Lighthizer &Co., do not want a trade deal. They want trade as an issue that pushes US and China toward a new Cold War. Whether US bankers and big business can demand the US and Trump accept China’s significant economic concessions will determine the outcome as well. A final deal is in no way assured, however, given Trump’s instability and the fact he has surrounded himself with neocon advisors and sycophant, lightweight cabinet replacements. In the end they may prevail and get their China-US Cold War.

Dr. Jack Rasmus
November 19, 2019
Dr. Rasmus is author of the book, ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression, Clarity Press, August 2017, and the forthcoming ‘The Scourge of Neoliberalism: US Policy from Reagan to Trump’, also by Clarity Press, 2019. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions, on the Progressive Radio Network. His twitter handle is @drjackrasmus.