America's Perfect Storm?

Some analysts —especially those employed by Wall Street— will tell you the economy is just fine and if there's a recession it will be barely noticeable. Other analysts predict a major crash – a “ perfect storm”.

Who is right?

The American state has lost the capacity for concentrated and decisive effort at the forefront of technology and the associated science.

For forty years – and especially since the early 1990s “Gingrich revolution” in Congress and the triumph of neoliberalism in the Clinton and Bush years – the US government has been working hard to eliminate its own technical capacities. In their place, a constellation of lobbies, privately funded think tanks, and tax-subsidy farmers has grown up, many of them talented at projecting the impression of scientific authority, which crowds out whatever genuine authority may still exist. We can see this in every domain, including climate, public health, and the cyber-sphere. And behind the cacophony of a “marketplace of ideas,” legions of economists chime in to advocate for decentralized, competitive, market-based solutions, guided by price incentives, taxes, tax breaks and subsidies.

It can be little wonder, then, that when the government is called upon to specify exactly how to proceed – for instance, to evaluate grant applications or to judge the viability of a major private initiative, it doesn’t know how – except, perhaps, by the path of least political resistance. James K Galbraith

In my upcoming special article, I looked first at Biden's State of the Union speech which came before he released his budget. Then I looked at the budget and the rationale for, which is notable or misleading statistics, Pollyanna thinking, and the attempt to make the Rich in US richer using other people's money--both in the US or abroad. Who pays? You do!

Who benefits? Certainly, not you.

Biden’s triad of major programs —the Bipartisan Infrastructure Law, the Inflation Reduction Act, and the CHIPS Act all depend on “decentralized, competitive, market-based solutions, guided by price incentives, taxes, tax breaks and subsidies.”

And, no, Biden can’t specify how to proceed — what exactly to do —which it why these initiatives appear to be much ado about nothing. And maybe even make things worse.

In both Russia and China, free enterprise is free— but not free to exploit— subject to state guidance to ensure the public good.

Bidenomics might indeed work. In fact it has been working—for the lobbyists and their wealthy patrons- just as Trumpenomics did..

But things are changing fast.

The Hegemon is walking around without pants waving his withered dick —and fewer and fewer countries want to trade in dollars. Should trade in dollars dip decisively below the 50% mark, then the US faces a crisis in global confidence — and therefore a debt crisis. It is now just 59%,

Wait a second!

Why is the dollar so strong relative to other currencies!

One reason is simply that the US has been hollowing out European economies forcing them to buy American LNG and weapons, and destroying their industries-- with capital flight to the US and US markets.

However, that can only go on so long. And will certainly end when the Russians finish their SMO in Ukraine.

American policies, including flouting every rule their rule-based order — do not exactly inspire trust .

For the time being many countries will continue using the dollar for transactions and Swift-- but they won't do that if there are reasonable alternatives-- which have already appeared in the form of BRICS. But things go slowly. This new work is less brave than timid.

Still, more and more countries are dumping US treasuries.

As the US isolates itself from the rest of the world economically, diplomatically, and morally, it weakens its ability to withstand the effects of a huge economic crash.

What can you do?

The problem is timing. For example, in 2008 I predicted a major crash but stupidly I thought it would happen after Obama won the election not before – assuming the government would do everything it could to prevent the fiscal crisis happening. That assumes that's just wrong thinking. Neither the government nor Wall Street are that smart. So I lost a bundle of money.

However, the Rich came out of 2008 wealthier than ever.

This year – if there is a crash it is likely to occur in late August or September.

If it doesn't happen in 2024 – which is quite possible, depending on geopolitical circumstances, then it will surely happen the next year, also in August or September.

There is not really that much difference between Biden and Trump in terms of economic policy.

It is more a difference of style and nuance.

More Family Pics

Yes, the big orange guy is another member of my family, who shares my good looks – and also my love of otters.

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For a long time, I was very good at making money. Turns out I was also really good at losing money! No matter. You can't take it with you! There are more important things like purpose, good friends, humor, and most of all health!

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