Trump's Economic Recovery - A Dead End? (Michael Hudson, Alexander Mercouris & Glenn Diesen)

The limits of Trump's understanding of economics...particularly tariffs. The prediction: price inflation without re-industrialization. The first five minutes makes the summary case, but the whole thing is worth a look.

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Dennis Kuchinich comments on Trump's proposal to cut the Pentagon budget in half

Dennis Kuchinich, a "Democrat" so distasteful to the corporate branch of the party he's been gerrymandered out of his congressional seat comments on Trump as a peacemaker.

Small excerpt: "For the first time, there is a sitting president who is starting to walk this path. If he follows through, this could mark the most significant shift in American military policy in decades."

The entire link is worth reading. Personally, I think this is a big deal and a real game changer. It's been a systemic problem for generations now, and as is typical of systemic problems, the solution is not always direct. Trump's negotiating style appears to be mafia-inspired extortion, but he's willing to step up and make the "ask."

Scott Ritter makes a similar, but more psychedelic point here:

"Trying to explain what happened the past few days in Munich is like trying to explain an acid-infused trip down the rabbit hole with Alice.

"You can’t.

"Especially to those who didn’t drop the tab and join you on that magic carpet ride.
 

"'Understanding Trump' is an exercise in futility for those who still choose to see the world through a prism of what passes for normalcy.

"Who believes in norms defined by established practice?

"There is nothing normal about Trump.

"And he is breaking with established practice at a pace that belies comprehension.

"There is no more room for established practice.

"It’s a revolution, baby."

The Trouble with Minions

 (c) by Mark Dempsey

All the baddies in films seem to have a built-in posse of gang members--their minions-- that accompany them and make them powerful by carrying out their orders. And the baddies apparently have no difficulty recruiting them. 

But that's fiction, not reality. Most people--even those poor, desperate, and under duress--resist recruiters asking them to risk life and limb for someone who doesn't have at least something good to offer in all their badness. This may also motivate the oligarchy running the US to keep a good portion of the population poor--at least the oligarchs can rely on poverty to make people desperate.

It was the certainty that God and goodness was on our side that made recruiting soldiers for the American military so easy in the great World Wars. But that started to change when the Vietnam war came along. Compulsory minion-hood--the draft--was not received favorably by the population of recruits. Draft resistance made the "volunteer" military something equally inevitable. People seldom sign up to do empire building for its own sake. At least those recruitment bonuses do something to alleviate poverty.

The massive amount of propaganda that tells us cops are always good guys, and the military may have a few bad apples, but they're good guys too, that all gets swept aside in the heat of current events when it's finally clear that promoting genocide (Gaza) or proxy wars (Nicaragua, Ukraine) are on the agenda. 

I'd even suggest that Dr. Spock, who advised treating children humanely, was a contributor to minion-resistant youngsters. Who would put up with a rude drill sergeant? The Private Benjamin film announced this too was ending.

One might even conclude the difficulty of recruiting minions to do mean things is one of the primary reasons to avoid doing mean things in statecraft. While it's nice to be good for goodness' sake, it's even better to be good so recruits don't resist recruiting, or, once recruited, don't get rid of their commanders with "friendly" fire.

David Graeber observed that states are always ambiguously a utopian project and an extortion racket. Why extortion? If nothing else, they always have to collect taxes, or their primary means of action--money--is valueless. Lately, the utopian aspect of the American project ("give me your huddled masses yearning to breath free") is taking a back seat to the extortion. And extortion may be successful for a bit, but it will ultimately fail because no one will re-enlist. 

This may explain some of the difficulty the US military and CIA now experience getting recruits.

It might also explain why people are voting for the "wrecking ball" presidency of Donald Trump. They would rather have destruction than a continuation of a system that obscures the utopian project the USA once embodied.  Having a large population praying for sabotage doesn't bode well for the American future. 

On the other hand, economic meltdown, and a military attack (Pearl Harbor) previously persuaded the oligarchs sponsoring this latest attack on the lower orders to reconsider immiserating the population in the pursuit of profit. That dislocation in the USA fortunately brought us the New Deal, and the Great Society--guardrails for what emerged as the Middle Class. Perhaps that's the destination past the inevitable suffering of the innocents that's baked in the current public policy cake. We'll see.

Update: Just spotted this headline: Sicily’s gangsters complain they can’t get the staff

QE with Chinese Characteristics: How to fund an economic miracle

After reading Jung Chang's biography of Mao (Mao: The Unknown Story), I'd dismissed Mao's communism as the same kind of aberration the Germans had with Hitler. In fact, Ms. Chang estimates Mao's pretended knowledge of agriculture cost 70 million Chinese lives, so Mao was arguably worse than Hitler in visiting death on his nation. 

Nevertheless, Mao sparked a departure from the ossified Confucian culture in China that rejected any changes brought by its Western colonizers, and embraced changes in public policy that traditional culture would never have even entertained. Update: Saying Confucius (Kung Fu-tse) counseled blind obedience to authority is a mistake. "Confucianism, often misunderstood as a philosophy of blind obedience, actually emphasizes moral righteousness over mere submission to authority." (from here)

With one of Mao's successors, Den Xiaoping, the Chinese returned to a less-centrally-planned modified market economy, although state planning and regulation remained far more present than in the neoliberal West. Here is an excerpt of Ellen Brown's account of the result that appeared in Scheerpost, here. The whole thing is worth reading. My one quibble is that Ms. Brown somehow believes currency isn't part of national debt. It is, in fact the dollars say so. A "note" is legalese for an IOU, and dollars are Federal Reserve Notes. If you're a note holder, the Federal Reserve, our central bank, owes you something--typically a dollar's worth of relief from taxes. Here's that excerpt:

‘Quantitative Easing with Chinese Characteristics’: How to Fund an Economic Miracle

 By Ellen Brown 

China went from one of the poorest countries in the world to global economic powerhouse in a mere four decades. Currently featured in the news is DeepSeek, the free, open source A.I. built by innovative Chinese entrepreneurs which just pricked the massive U.S. A.I. bubble.

Even more impressive, however, is the infrastructure China has built, including 26,000 miles of high speed rail, the world’s largest hydroelectric power station, the longest sea-crossing bridge in the world, 100,000 miles of expressway, the world’s first commercial magnetic levitation train, the world’s largest urban metro network, seven of the world’s 10 busiest ports, and solar and wind power generation accounting for over 35% of global renewable energy capacity. Topping the list is the Belt and Road Initiative, an infrastructure development program involving 140 countries, through which China has invested in ports, railways, highways and energy projects worldwide.

All that takes money. Where did it come from? Numerous funding sources are named in mainstream references, but the one explored here is a rarely mentioned form of quantitative easing — the central bank just “prints the money.” (That’s the term often used, though printing presses aren’t necessarily involved.)

From 1996 to 2024, the Chinese national money supply increased by a factor of more than 53 or 5300% — from 5.84 billion to 314 billion Chinese yuan (CNY) [see charts below]. How did that happen? Exporters brought the foreign currencies (largely U.S. dollars) they received for their goods to their local banks and traded them for the CNY needed to pay their workers and suppliers. The central bank —the Public Bank of China or PBOC — printed CNY and traded them for the foreign currencies, then kept the foreign currencies as reserves, effectively doubling the national export revenue.

Investopedia confirms that policy, stating:

One major task of the Chinese central bank, the PBOC, is to absorb the large inflows of foreign capital from China’s trade surplus. The PBOC purchases foreign currency from exporters and issues that currency in local yuan. The PBOC is free to publish any amount of local currency and have it exchanged for forex. … The PBOC can print yuan as needed …. [Emphasis added.]

Interestingly, that huge 5300% explosion in local CNY did not trigger runaway inflation. In fact China’s consumer inflation rate, which was as high as 24% in 1994, leveled out after that and averaged 2.5% per year from 1996 to 2023.

(from here:)

China Inflation Rate 1987-2025

Inflation as measured by the consumer price index reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. The Laspeyres formula is generally used.

• China inflation rate for 2023 was 0.23%, a 1.74% decline from 2022.
• China inflation rate for 2022 was 1.97%, a 0.99% increase from 2021.
• China inflation rate for 2021 was 0.98%, a 1.44% decline from 2020.
• China inflation rate for 2020 was 2.42%, a 0.48% decline from 2019.
  
  ....

Also worth a look, economist Michael Roberts' article 

The Exceptional Economy

here. An excerpt:

Next week US president Joe Biden finishes his term of office, to be replaced by the Donald. Biden would have been extremely popular with the American public and probably would have run and got a second term as president, if US real GDP had increased by 4.5-5.0% in 2024, and if during the whole of his period of office since end 2020, real GDP had risen 23%; and if per American, real GDP had risen 26% over those four years. And he would have been congratulated if the Covid death rate during the 2020-21 pandemic had been one of the lowest in the world, and the economy avoided the pandemic slump in production.

Above all, he would have been feted if the inflation of prices in goods and services after he came into office was just 3.6% in total over four years. That would have meant that, with wages rising at 4-5% a year, real incomes for average American households would have risen significantly. At the same time, strong growth would have allowed the financing of important new infrastructure spending in the US that could have led to an extensive rail network across the country using super fast trains; and with bridges and roads that did not collapse or crumble along with environmental projects to protect people and homes from fires and floods, and the introduction of cheap electric vehicles and renewables. How Biden would have been popular.

And with extra revenue from strong growth, the Biden administration would have been able to balance the government budget and curb or reduce government debt. And with zero to low inflation, interest rates on borrowing would have been near historic lows, enabling households and companies to afford mortgages and finance investment in new technologies.

And what if US companies had sold a record level of exports of goods and services to the rest of the world, running up a sizeable surplus on trade, despite various tariffs and sanctions against American companies from other trading nations. In running trade surpluses, American banks and companies would have been able to build up foreign exchange reserves and invest in projects abroad, strengthening America’s influence in the world in a beneficial way.

Unfortunately, none of these things happened to the US economy in the four years of Biden’s presidency. Instead these were features of China’s economy. In 2024, China’s real GDP rose about 4.5%, while the US was up 2.7% (faster than anywhere else in the top G7 economies, but still only 60% of China’s growth rate). And throughout Biden’s term, China’s growth rate outstripped the US.

 

Moreover, the gap betweeen China and the US on real GDP growth per person was even greater. 

 

US annual inflation has been way higher than in China. Indeed, US prices rose a cumulative 21% since 2020 compared to just 3% in China.

Interest rates set by the US Fed are still at 4.5%, while the People’s Bank of China has a 3% rate. And interest rates on mortgages and corporate debt in the US are well above 5% compared to 1.5% in China. Average real disposable income in the US has been flat since 2019, while it has risen 20% in China. Under Biden, bridges fall down, roads crumble and rail networks hardly exist. Far from running a trade surplus of $1 trillion as China does, the US runs a sizeable trade deficit of $900bn.

,,.,And yet, despite all this, we are continually told by Western ‘expert’ economists and the media that China is on the brink of financial meltdown (George Magnus); or alternatively going into permanent stagnation like Japan has done over the last three decades (Michael Pettis); and that China is producing too much that it cannot sell ie. it has overcapacity (Brad Setser). And China has a corporate debt crisis that will eventually bring the whole economy down (said by just about everybody). And China will stagnate because of a ‘lack of demand’, even though wage and consumption growth is way faster than in the US