Two Filthy Men, Two Filthy Regimes
Image captured in late 2016, retrieved from phorum.vietbao.com
on 21 June 2020. Similar images from 2016 and early 2017
*Note: I noticed this weekend that this blog had several dozen visits from people who live outside of the United States. Thanks very much for reading my posts! If English is not your first language, please let me explain the title of today's post more clearly. The word "whadja" is not actually proper English. It is instead an American slang contraction of the words, "what did you...", or of "what do you..." So my title in standard English would read, "What did you do with the money?!" And now, on to today's post.
From the time I was six years old to the time I turned eight years old, my parents sent me to Catholic school. The schools I attended provided lunch for their students, but this was contingent on the families of each of the students paying a weekly lunch allowance. It's been a long while since those days, but I vaguely remember that the usual procedure for families was to put each week's "lunch money" into an envelope, and attach the envelope to each child's clothes with a safety pin on each Monday morning before the kid went to school. I think my parents used to admonish me to give the envelope to the nuns the moment I got to school.
But one morning I became curious to know what was in the envelope, and so I opened it before my arrival. When I found out what was inside, I became full of ambitious ideas of how I would like to spend the money. The result was that when I got to school, I handed the nuns an empty envelope. Little did I know that the school was not going to feed me just because of my good looks. Little did I also know that they would place an urgent call to my parents. But what I did know was that my parents were firm believers in the laying on of hands in order to cure their children from foolishness. When I got home that day, hands were therefore laid on me.
These events should have served as a valuable lesson, namely that money is a means of transmitting the benefits of honest labors between two people. My dad had worked hard in order to earn the money which was given to me to give to the nuns in exchange for the hard work that other adults had done in making a nutritious lunch for a bunch of kids. Money therefore could be seen as a reliable transmitter of value only as long as it symbolized an exchange of the value of one kind of necessary work for the value of other kinds of necessary work. Empty lunch money envelopes, on the other hand, were not a symbol of exchange of one kind of value for another. I wish I could say that the events of that day had taught me right then this valuable lesson, but at the age of six, I was still just a goofy, gel-brained boy out "raising Cain", to put it euphemistically.
I do understand the lesson now. But as I look at the uses to which American money have been put lately, I am not sure that very many of the people at the top of the American economic pyramid understand this lesson. Nor am I quite sure that some of these people are not still gel-brained six-year-old Cain-raisers trapped in adult bodies. For it increasingly appears that the exchange of money between the most powerful players no longer represents an exchange of differing kinds of necessary, valuable labor. American money is therefore increasingly not a reliable transmitter of value between two parties who both do various kinds of necessary work.
I am thinking of the American stock exchanges (NYSE, S&P 500, and NASDAQ, to name a few) in the aftermath of Donald Trump's seizure of the White House in 2016. What is interesting to note is that the Dow Jones Industrial Average (DJIA) shot up over 2,000 points from November 2016 to February 2017. (Source: Statista. See this also from MarketWatch.) Since January 2017, the DJIA has closed below 20,000 only once. The DJIA has instead flown on a somewhat phugoid trajectory within a range from 22,000 to 28,000 points for most of Trump's presidency. During the upswings in the DJIA and other exchanges, Trump has boasted of these upswings as proof that he is indeed "Making America Great Again!" But what has really been going on behind the scenes? (Aside from the exploding numbers of tent cities and homeless encampments throughout the United States!)
First, it is no secret that much of the increase in corporate asset prices has been driven by stock buybacks, as noted in the following stories:
This is even clearer when we consider what has happened to U.S. productivity during Trump's presidency. The U.S. Bureau of Labor Statistics reported widespread declines in American manufacturing productivity in 2018. This is a reflection of a decline in global worker productivity during 2018 and 2019. American worker productivity also declined during the last half of 2019. The decline in productivity extends also to the construction industry, according to this source. And Servaas Storm of the Institute for New Economic Thinking states his view that the reasons for falling American productivity are "‘under-consumption’ driven by stagnating real wages, rising inequality and greater job insecurity and polarization." In other words, falling American productivity is being caused by the very factors which Donald Trump has maximized.
But as I said in a previous post tracing the outworkings of damnation on American society, I am not here to editorialize or to moralize. I write this post only to hypothesize how this situation might end. For "the wages of sin is death", and the regime of Donald Trump is based on the premise of America's most privileged holders of wealth and power sinning against the rest of humanity by making themselves great at everyone else's expense. I am therefore wondering how this one special group of parasites is about to die. For the most powerful economic players in the United States have made it clear in 2020 that one of their main objectives is to prop up the value of the financial assets of their cronies at all costs. Therefore, the Fed has this year made itself a purchaser of corporate bonds. This includes buying the debt of corporations which should have crashed and burned because the value of the things they produced declined to the level of junk. This is also why the DJIA for instance has consistently closed above 23,000 over the last two months even as the coronavirus pandemic deals a shattering blow to the actual productive capacity of the U.S. economy. (Note: it is not only the U.S. central bank which is propping up asset prices. See this also.)
Now, if the financial "bodily organ" which creates U.S. dollars uses them to prop up stock prices of corporations which produce no real value, what does that do to the U.S. dollar as a reliable transmitter of value? (To put it another way, what would happen to your body if your bone marrow suddenly began producing red blood cells that could not carry oxygen to your vital organs?) Consider also that the Fed's ability to prop up asset prices depends on the Fed's ability to sell U.S. debt to foreign governments. And consider that the U.S. government is already hopelessly in debt (especially due to huge deficits under Trump), with the likelihood of repayment growing more distant by the day. What happens when foreign governments begin to refuse to buy any more U.S. debt and start asking, "Whadja do with the money?!"
First, it is no secret that much of the increase in corporate asset prices has been driven by stock buybacks, as noted in the following stories:
- "Why Stock Buybacks Are Dangerous For The Economy," Harvard Business Review, January 2020. (Note: this essay was published before the coronavirus pandemic became a major economic issue.)
- "Companies Have Been Buying Back Massive Amounts Of Stock This Year," CNBC, July 2019.
- "S&P 500 Q4 2018 Buybacks Set 4th Consecutive Quarterly Record at $223 Billion; 2018 Sets Record $806 Billion," S&P Global, March 2019
This is even clearer when we consider what has happened to U.S. productivity during Trump's presidency. The U.S. Bureau of Labor Statistics reported widespread declines in American manufacturing productivity in 2018. This is a reflection of a decline in global worker productivity during 2018 and 2019. American worker productivity also declined during the last half of 2019. The decline in productivity extends also to the construction industry, according to this source. And Servaas Storm of the Institute for New Economic Thinking states his view that the reasons for falling American productivity are "‘under-consumption’ driven by stagnating real wages, rising inequality and greater job insecurity and polarization." In other words, falling American productivity is being caused by the very factors which Donald Trump has maximized.
But as I said in a previous post tracing the outworkings of damnation on American society, I am not here to editorialize or to moralize. I write this post only to hypothesize how this situation might end. For "the wages of sin is death", and the regime of Donald Trump is based on the premise of America's most privileged holders of wealth and power sinning against the rest of humanity by making themselves great at everyone else's expense. I am therefore wondering how this one special group of parasites is about to die. For the most powerful economic players in the United States have made it clear in 2020 that one of their main objectives is to prop up the value of the financial assets of their cronies at all costs. Therefore, the Fed has this year made itself a purchaser of corporate bonds. This includes buying the debt of corporations which should have crashed and burned because the value of the things they produced declined to the level of junk. This is also why the DJIA for instance has consistently closed above 23,000 over the last two months even as the coronavirus pandemic deals a shattering blow to the actual productive capacity of the U.S. economy. (Note: it is not only the U.S. central bank which is propping up asset prices. See this also.)
Now, if the financial "bodily organ" which creates U.S. dollars uses them to prop up stock prices of corporations which produce no real value, what does that do to the U.S. dollar as a reliable transmitter of value? (To put it another way, what would happen to your body if your bone marrow suddenly began producing red blood cells that could not carry oxygen to your vital organs?) Consider also that the Fed's ability to prop up asset prices depends on the Fed's ability to sell U.S. debt to foreign governments. And consider that the U.S. government is already hopelessly in debt (especially due to huge deficits under Trump), with the likelihood of repayment growing more distant by the day. What happens when foreign governments begin to refuse to buy any more U.S. debt and start asking, "Whadja do with the money?!"
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