The Trump Candidacy

I am in the throes of finishing a book on the upheaval represented by the Trump candidacy and movement. It is an exploration of how 30 years of Bubble Finance policies at the Fed, feckless interventions abroad and mushrooming Big government and debt at home have brought America to its current ruinous condition.

It also delves into the good and bad of the Trump campaign and platform and outlines a more consistent way forward based on free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.

In order to complete the manuscript on a timely basis, I will not be doing daily posts for the next week or two. Instead, I will post excerpts from the book that crystallize its key themes and which also relate to the on-going gong show in the presidential campaigns and in the financial and economic arenas.  The seventh of these is included below.

I am also working with my partners at Agora Financial on a new version of Contra Corner. More information on that will be coming early next month.

 Donald Trump’s Candidacy—–The Good And The Bad Of It

In the next sections, we shall document at length why the US is a nation on the brink of financial ruin. Our purpose at this point, however, is to dispel any illusion that Donald Trump—–the man and his platform—-offers any semblance of a remedy.

In the great scheme of history, Donald’s great purpose may be to simply disrupt and paralyze the status quo. And that much he may accomplish whether he is elected or not.

For what is actually happening is meta-political. The bipartisan ruling elites are being Trumped.

Their entire regime of casino capitalism, beltway racketeering, and imperial hegemony is being unmasked. The unwashed masses are catching on to the “rigged” essence of the system, and have already become alienated enough to rally to outlaw politicians—– like Bernie and Trump—–peddling ersatz socialism and reality-TV populism, respectively.

To be sure, the metaphor of Shock and Awe and the idea of “regime change” have been given a bad name by Bush the Younger and his bloody henchmen. Yet there is no better way to describe Donald Trump’s rise and role than with exactly those terms.

The current regime arose in the 1980s from Ronald Reagan’s regrettable decision to rebuild the nation’s war machine——along with the GOP’s conversion to “deficits don’t matter” and Alan Greenspan’s discovery of the printing press in the basement of the Eccles Building. Those deplorable, illicit and unsustainable departures from sound policy have subsequently morphed into a full-blown mutant state that is fundamentally anti-capitalist and anti-democratic.

Its many deformations are undeniable. They include soaring public and private debts at home; the peace-destroying and fiscally crushing American Imperium abroad; serial financial bubbles that have gifted mainly the 1%; and rampant beltway influence peddling and a PAC-based campaign finance system that amounts to money racketeering, among countless other ills.

This entire misbegotten regime is now well past its sell-by date; it’s waiting to be monkey-hammered by an unscripted and uninvited disrupter.

For at least that role, Donald Trump is eminently qualified. He represents a raw insurgency of attack, derision, impertinence, and repudiation.

He’s the battering ram that is needed to shatter the polite lies and delusions on which the current regime rests. If he had been ordered from central casting for that role, in fact, it would have been difficult for Hollywood to confect anything close to the brash, egomaniacal rabble-rouser that is now heading the GOP ticket.

It is no wonder the elites are virtually screeching that he is “unqualified”. Yes, Donald Trump is rude, impulsive and loutish to a fault. That’s why, in fact, his is unsuited for the establishment’s job definition. That is, to preside over another four years of the kind of risible, kick-the-can fantasy-world that serves the interests of our Wall Street/Washington rulers.

The latter would have the left-behind legions in Flyover America believe that everything is all fixed and that the financial crisis and the Great Recession were but a random and unrepeatable bump in the night that will never recur. As Obama blatantly fibbed at the Democratic convention, America is already great and America is already strong.

No, not even close. America is heading for a devastating financial collapse and prolonged recession that will make the last go-round look tame by comparison. Under those circumstances, the very last thing it will need in 2017-2018 when the brown stuff hits the fan is a lifetime political careerist and clueless acolyte of the state who knows all the right words and harbors all the wrong ideas.

Indeed, during the coming crisis, America will need a brash disrupter of the status quo, not a diehard defender. Yet when the stock market drops by 7,000 points and unemployment erupt back toward double digits, Hillary Clinton’s only impulse will be to double down.

That is, to ignite the printing presses at the Fed from red hot to white heat, plunge the nation’s fiscal equation back into multi-trillion deficits and crank-out Washington’s free stuff like never before. A combination of a Clinton White House and the devastating day of reckoning just ahead would result in Big Government on steroids.

It would also tilt the Imperial City toward war in order to distract the nation’s disgruntled voters in their tens of millions.

After all, Hillary has fatuously likened Vladimir Putin to Hitler. She and her government in waiting are also now deeply invested in the dubious claim that the Russian government was behind the hacking of the DNC’s trove of email gossip and skullduggery. And her prospective war cabinet—including Victoria Nuland and Michelle Flournoy—–is comprised of the actual architects of Washington’s unprovoked NATO siege on Russia’s own doorsteps.

So Hillary Clinton may be perfectly qualified to wonk and conciliate her way through the fantasyland jabber of the New York Times editorial board room. But that’s the wrong venue entirely.

The next four years, by contrast, will be a time when Washington connections, manners, and an extensive official resume will not count for anything at all. Nor will a facility for establishment double-talk about how Uncle Sam is riding to the rescue be a virtue.

In fact, the credibility of every financial institution along the Acela Corridor will be in tatters. That includes the fiscal firemen of Capitol Hill, the money printers at the Fed, the IMF bailout brigades headquartered in DC, the global banking cartels domiciled in NYC and the gambling houses and fast money hedge funds of Wall Street.

In that context, Donald Trump’s overwhelming virtue is that he is not Hillary Clinton and does not carry a bulging 30-year old bag of bad ideas. Hillary’s ideas—–and those of the establishment for which she shills——about how to fix the coming economic and foreign policy crises, in fact, are so unequivocally and irremediably bad that it is not possible that there is anything worse.

That’s not to say that Donald Trump’s economic policy ideas—-to the extent that they are semi-coherent and describable—-aren’t plenty dubious. You can find much that is pretty awful in his public quips and bromides.

Indeed, if you are a “low-interest rate man”, as he claims to be, you are clueless about the central menace of our times. To wit, the rogue central banks and the massive falsification of financial markets that have resulted from their heavy-handed intrusion, ZIRP, and money-pumping.

If you don’t want to touch social security and medicare—-ever—-you have your head buried in the fiscal sand. On that score, even Trump’s prodigious comb-over has disappeared below the surface.

If you think that fraud, waste and abuse have anything to do with the nation’s suffocating national debt, you are not thinking at all; you are channeling Ronald Reagan.

If you think, in fact, that giant corporate and individual tax cuts will pay for themselves in higher economic growth you are also channeling Ronald Reagan. Despite the subsequent GOP revisionism, the Reagan tax cuts didn’t come close to self-funding. The only reason that the national debt rose by a mere 250% on the Gipper’s watch is that upwards of 40% of the original revenue loss was rescinded with tax increases later in his term.

If you think a $10 minimum wage is warranted, as apparently, the GOP candidate does on alternating days of the week, you haven’t met any robots lately. The minimum wage was always a job killer because it causes capital substitution for labor, but with today’s breakthroughs in robotics, a big minimum wage hike will literally ionize millions of low-skill jobs.

If you think a big public infrastructure program is needed to prime the economic pump, you don’t understand Federalism or even where productivity comes from.

The only genuine Federal infrastructure responsibility is the Interstate highway system, but that’s generally in good shape already and could be perfected with a modest hike in the gas tax. The rest of it is either pork or public works, and the difference can only be sorted out by local governments, affected voters, and taxpayers who actually foot the bill.

Finally, if you think that the $8 trillion in cumulative current account deficits that the US has run without interruption for the last 35 years is due to bad trade deals, you are essentially clueless as to why America is on the brink of economic ruin. The $60 billion we import from Mexico and $500 billion from China is a symptom of the nation’s rotten regime of Bubble Finance, not its cause.

Unfortunately, Donald Trump appears to be an economic blank slate who can embrace any and all of the above errors and delusions. That’s because his economics are purely glandular. Insofar as it is possible to discern, he has never been troubled by any kind of economic model or coherent philosophy at all.

But, alas, that is also his virtue. What needs to happen when the next recession and stock market plunge unfolds is exactly nothing. “Policy” is what is ruining American capitalism, and the corpulent state is it creating is what is an eviscerating political democracy.

If Donald Trump is elected President, there will be no shovel-ready stimulus plan or any other economic policy fix within the first 100 days. Instead, there will be a gong show of such fury and fractiousness as to immobilize the Imperial City indefinitely.

If Hillary Clinton wins, the GOP-controlled House of Representatives will lapse into a partisan killing field for any economic topics the White House may offer.

Either way, both ends of Pennsylvania avenue will end up in political trench warfare. And either way, the Fed will end up even more paralyzed.

If in the face of recession it attempts negative interest rates, Flyover America will finally erupt with torches and pitchforks.

On the other hand, if it goes for another massive QE campaign it will be an admission that $3.5 trillion of it was an utter failure. Even the Wall Street gamblers will stampede for the exits.

In a word, the historic virtue of Donald Trump is that win or lose, his candidacy means that the illicit Washington/Wall Street “policy” regime will finally come to a grinding halt.

In that event, the Great Liquidation of crushing debts, insanely inflated assets prices, rampant carry-trade speculation, debilitating malinvestments and unspeakable windfalls to the gambling classes will finally commence. And none too soon.

Reprinted with permission from David Stockman’s Contra Corner.

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