Four years ago, in March of 2016, on this very blog, i warned that if people did not open their eyes to the new economic and political reality, Donald Trump would not only win the nomination, but the Presidency. This assumption was predicated on one crucial observation: Trump was tapping into a deep well of economic suppression that boiled all over the country, while Obama was insisting that anybody who said the economy was weak was selling 'snake oil' (Feb 2016). Instead, Democrats started casting aspersions on broad swathes of the country, explaining Trump's unlikely rise as a racist and sexist phenomenon, with a spattering of white nationalism thrown in. People who followed the real economy and the numbers behind it, few as they were, understood the meteoric rise of Trump much better than political analysts on TV. The writing was on the wall, but it might as well have been written in hieroglyphics as far as the pundits were concerned. An upset was coming.
And it did. And now, it seems we're headed for another one.
A few months ago, very few would have been concerned with the prospects of a Bernie Sanders Presidency. Bernie has been an avowed socialist for all his long career in politics. Nobody really believed that somebody with those credentials could ever get the Democratic nomination, leave alone the Presidency. But the exact same phenomenon and set of circumstances that brought Trump to power as the anti-establishment candidate, are now propelling Bernie to the top of the heap.
How could this be, you ask? Why would the average American, who we're told by one and all now lives in a booming economy, deliberately push a known socialist into the White House? Why would they risk such a massive shift in the status quo, when the status quo is working so great right now? Isn't that what we're told day and night? The economy is booming, manufacturing is back, stocks are at an all time high, unemployment is at an all time low. It's the 'greatest economy ever', if Trump and Co. are to be believed. So what gives?
You know what gives. Because you live in the real world. A world where wages stay stagnant, or barely keep up with inflation. Where healthcare costs can sink you. Where most of the jobs offered are low wage part-time jobs, and you often have more than one to make ends meet. Where credit card debt keeps you up at night, but there's nothing to be done but add more. Where student loans are an albatross across your neck that may never come off. You can't even declare them in bankruptcy. Yes, the stocks are high, but you don't own many. Yes house prices have gone up but you can't afford one. You're being told that you live in a golden era of economic opportunity, yet it doesn't feel like it in your bones. You feel like you're being screwed. And you're not wrong.
Aside from the top 10-15% of wage earners, the average American continues to suffer in the EXACT same way he was suffering under Obama. The Fed and Wall St continue their financial engineering, getting rich off money printing and artificially low rates, while you can't get a return on your savings to save your life. They say that high-paying manufacturing is back. But in reality Trump has presided over a manufacturing recession. They say jobs are being created at the highest rate ever. But in reality Obama created more jobs in his last 3 years than Trump did in his first 3. Government debt continues to spin out of control. We now have Trillion dollar deficits as far as the eye can see, but you don't see a dime of that money. Our soldiers continue to die in wars far away from our shores. Nothing has changed. People are still angry, still struggling.
But Trump and the Republicans have taken the exact same self-defeating approach that Obama and the Democrats took in 2016. Talk endlessly about the stock market and unemployment and berate anyone who disagrees with them on the state of the economy. Trump, who thought the stock market under Obama was a 'big fat ugly bubble', now thinks the same market much higher is the sign of a 'booming economy'. While the rest of the industrialized world is teetering on the edge of a depression, Trump continues to tout his GDP numbers that he bought via massive deficit spending. It's all set up exactly the same it was 4 years ago.
So what's the problem, you ask? If Bernie sees the issues, let him speak truth to power, and in fact be that power.
The problem is that Bernie is an ideologue. He understands nothing outside of his own socialist echo chamber of talking points. He may see the problems, but he doesn't have the faintest clue what caused them, and is very likely to exacerbate them. Do you think Bernie understands how government intervention in healthcare via Medicare and Medicaid distorts prices of drugs? Or how government backstopping of student loans let banks burden children with loans they had no prayer of paying back, with zero risk to the banks? That by 'loan forgiveness', what he really means is 'pay back the banks on their ridiculously large loans by putting the taxpayer on the hook'? Does he understand that our debt/GDP ratio is 3 times the Scandinavian countries that he wants to emulate? 'Affordability' is not a word in Bernie's dictionary. Does he know that the Fed keeping rates down has created an economy of bubbles? We have bubbles in stocks, in corporate debt, in pension funds, in bonds, in auto loans, in housing. If there is a credit event, do you think Bernie is going to say to himself .... 'hey, let the markets do their work and reallocate capital'. Hell no. Bernie knows one thing, and one thing only. State Power. It's part of his ideological fabric. Every problem you throw at him, in his mind, it can be solved by state power. He will never understand the role government has played in messing up the markets and creating these great wealth inequalities we see today. His solution to everything will only be more government, sucking up more limited capital, to the detriment of the economy that is still able to limp along. If Bernie comes to power, the face of American economy will change forever, not because of Bernie, but what his election represents at the grass roots across America. A loss of faith in the market, and the institutions that were supposed to protect it. Bernie will be the one big pin that pops all the bubbles, and we may not see growth for years, or decades.
So, there's a lot at stake. And if you have a rational bone in your body, you know that you don't fix the gangrene in your arm by taking a hammer to your head in anger. All said and done, America is still one of the few harbors in the world for individuals seeking freedom from state tyranny. It's capitalist roots have been a shining beacon for all those who have suffered under socialist/communist/fascist regimes across the planet. Let's find a way to fix things by first understanding what's making us sick, instead of running to the local witch doctor, who has come into sudden prominence because a plague has broken out and we want to do 'something'. Don't panic. Sometimes doing nothing is better than the alternative.
I'll come back after 4 years. Hopefully with better tidings. Cheers.
