India Test-Fires Nuclear-Capable Hypersonic Missile As Border Tensions Rise 

India Test-Fires Nuclear-Capable Hypersonic Missile As Border Tensions Rise 

Tyler Durden

Sun, 10/04/2020 – 08:45

For decades, India has feared a multi-front war with China and Pakistan. By modernizing its military, along with investments in nuclear weapons and hypersonic missiles, New Delhi could be on a pathway to deter or manage conflict with either one of its nuclear-armed neighbors. 

In what appears to be the second hypersonic missile test in weeks, India successfully test-fired its indigenously developed nuclear-capable hypersonic missile dubbed “Shaurya,” defense sources told Hindustan Times

“The surface-to-surface tactical missile was blasted off from a canister strapped to the ground launcher from launch complex 4 of the Integrated Test Range (ITR) in the APJ Abdul Kalam Island around 12.10 pm and covered the desired range,” the source said.

The state-of-the-art missile, with speeds of March 7.5 (5,754 mph), was able to conduct a “maneuver” at the “closing stages of its flight before striking a predefined target in the Bay of Bengal. 

A Defence Research and Development Organisation official said Shaurya is one of the top ten missiles in the world “with high-performance navigation and guidance systems, efficient propulsion systems, sophisticated control technologies and canisterised launch.” 

The missile can be launched from canisters mounted on a truck or from missile silos buried deep underground. The source said the missile could easily be transported by truck, allowing the mobile platform to continually be moved and making it harder for China or Pakistan to detect them with satellite imaging. 

The New Indian Express said, “the missile is capable of deceiving enemy radar aims to give India more options to hit back, in case it is attacked with nuclear weapons.”

Just weeks ago, India “successfully” test-fired a Hypersonic Technology Demonstrator Vehicle that was capable of hitting speeds over Mach 6 (4,600 mph). 

The early September launch came as India and China have been locked in a military standoff along the Line of Actual Control, a 2,175 mile disputed border between both countries, that stretches from the Ladakh region in the north to the Indian state of Sikkim.

In terms of geopolitical instabilities, the world is focused on the developments surrounding the Armenian-Azerbaijan war, but a close eye should also be kept on the Sino-Indian border. 

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The Idiotic Claim That Other Nations Are “Disrupting The Public Conversation” On US Politics

The Idiotic Claim That Other Nations Are “Disrupting The Public Conversation” On US Politics

Tyler Durden

Sun, 10/04/2020 – 08:10

Authored by Caitlin Johnstone via Medium.com,

Twitter claims that it has suspended 130 Iranian accounts for “attempting to disrupt the public conversation” during the US presidential debate.

“Based on intel provided by the FBI, last night we removed approximately 130 accounts that appeared to originate in Iran,” a thread by the Twitter Safety account reads. “They were attempting to disrupt the public conversation during the first 2020 US Presidential Debate. We identified these accounts quickly, removed them from Twitter, and shared full details with our peers, as standard. They had very low engagement and did not make an impact on the public conversation. Our capacity and speed continue to grow, and we’ll remain vigilant.”

This evidence-free claim aligns with the narrative popularized by the Russiagate conspiracy theory that foreign governments seek to “sow discord” in the United States by amplifying controversial political opinions from both sides of mainstream US discourse, and it is idiotic for a number of reasons.

Firstly, anyone who watched America’s trainwreck of a first presidential debate knows the argument that a few social media accounts could make the US political conversation any more polarized, hostile and toxic than mainstream news outlets and elected officials have already made it is like saying a tsunami was exacerbated by someone throwing a thimble full of water in the ocean.

The much-touted Russian social media election interference in 2016 was shown to be a joke, consisting of a few thousand dollars going toward silly memes and posts amplifying both sides of the political conversation, and much of it happening after the election itself. The few sample tweets provided by Twitter in this latest so-called attempt to disrupt the public conversation from Iran are vastly less significant than even that, saying nothing particularly noteworthy and bizarrely appearing to side with Trump.

The idea that any of this could have any effect worth mentioning on the gibbering vortex of irrational vitriol that is American political discourse makes no sense whatsoever, and again Twitter itself admits that it “did not make an impact on the public conversation”. Twitter’s response is a melodramatic swinging at shadows which did nothing but help manufacture the US State Department-friendly narrative that Iran is working to interfere in American democracy.

Secondly, the entire premise is bogus because other nations have every right to influence US political discourse. The US uses its military and economic might to bully and manipulate the world into compliance with its agendas; this by itself is an outrage, and at the very least people around the world should be allowed to exert influence on the political conversation of people who, unlike themselves, are able to cast votes which influence the US government. Anyone in any nation on earth is well within their sovereign boundaries to influence the political discourse of a nation whose government does not honor the national sovereignty of any other nation.

This is especially true of nations like Iran, because it is no exaggeration to say that US politics affect Iranians more than they affect Americans. The lives of Americans have been impacted by the Trump administration far less than the people of Iran, for example, as more starvation sanctions are being pushed while crucial goods are already skyrocketing in price, sick Iranians are having difficulty obtaining life-saving medicine, and life in general has been getting much more difficult for the poorest and frailest Iranian civilians.

When Trump nearly started a war with Iran earlier this year, Americans worried about the price of oil while Iranians worried about their children getting ripped apart by explosives dropped from the sky. These things are not equal, and it’s not even close.

To claim that Iranians — or even the Iranian government — should not be allowed to exert any influence over how people are talking about the government that did this is absurd. Such a viewpoint only looks acceptable through the American supremacist worldview which sees Americans as better, more worthy, and more important than the people who live in other nations.

Thirdly, it is not legitimate for monopolistic tech corporations to align themselves with the US government and then censor speech in a way which always benefits that government. These mass social media purges consistently target accounts from nations which have resisted absorption into the US-centralized power alliance, while known troll operations like the fake “Heshmat Alavi” Twitter account from the MEK terror cult are left free to influence US political discourse because its anti-Tehran focus aligns with the US government.

When you’ve got monopolistic tech giants aligning with government agencies like the FBI to implement censorship which aligns with the US government, what you have is government censorship. There is nothing else you could reasonably call it. We learned back in August that Twitter, Facebook, Google and other massively influential platforms are collaborating with the US government to prevent foreign influence in the lead-up to the US election, and there’s no reason to believe this corporate-state relationship will get any less cozy after November third.

In a corporatist system of government, where corporate power is inseparably intertwined with state power, corporate censorship is state censorship. Every horrible thing the US government accuses other nations of doing is something it itself does as a matter of routine. Increasingly authoritarian control over information and communication is just one more example of this.

*  *  *

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US Brings New Sanctions On Belarusian Officials Who “Undermined Democracy”

US Brings New Sanctions On Belarusian Officials Who “Undermined Democracy”

Tyler Durden

Sun, 10/04/2020 – 07:35

Both the US and EU have said they refuse to recognize Alexander Lukashenko after his Sept. 23 swearing in ceremony,  pulling in essence the same thing it did in Venezuela (where the US still sees Juan Guaido as valid “interim president” instead of Maduro).

“The United States cannot consider Aleksandr Lukashenko the legitimately elected leader of Belarus, the State Department said last month. “The path forward should be a national dialogue leading to the Belarusian people enjoying their right to choose their leaders in a free and fair election under independent observation.”

Despite no clear or firm evidence of election rigging and Lukashenko’s favor yet to emerge from the disputed early August vote, the United States on Friday imposed sanctions on eight Belarusian officials

President Alexander Lukashenko delivers a speech during a swearing-in ceremony in Minsk, BelTA via Reuters.

The eight are accused of corruption and vote-rigging, and the EU imposed its own similar sanctions on 40 Belarusian officials.

“The United States and our international partners stand united in imposing costs on those who have undermined Belarusian democracy for years,” U.S. Treasury Secretary Steven Mnuchin said while unveiling the sanctions.

According to Reuters over 13,000 people have been arrested, including prominent opposition leaders and activists, in a crackdown which has left the streets calmer in the past week than it had been the two months prior.

The 26-year ruling strongman Lukashenko has actually already long been under select US sanctions going back to 2006, but Washington’s newest round did not target him, only some officials around him. However, UK and Canada did target him specifically with sanctions of their own this week. The official election tally gave Lukashenko about 80% of the vote, giving him victory and the start of a sixth term.

Already there’s talk of recognizing Lukashenko opponent Sviatlana Tsikhanouskaya, who fled to Lithuania:

Last Sunday French President Emmanuel Macron said he must step down. “We are witnessing a power crisis in Belarus with an authoritarian administration that is not able to accept democracy logic,” Macron said. “It is clear that Lukashenko must go.”

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Escobar Warns Of ‘Explosive Stakes’ On Armenia-Azerbaijan Chessboard

Escobar Warns Of ‘Explosive Stakes’ On Armenia-Azerbaijan Chessboard

Tyler Durden

Sun, 10/04/2020 – 07:00

Authored by Pepe Escobar via The Asia Times,

Pulling Russia back into the Nagorno-Karabakh morass means more Turkish freedom of action in other war theaters…

Few geopolitical hot spots across the planet may rival the Caucasus: that intractable, tribal Tower of Babel, throughout History a contentious crossroads of empires from the Levant and nomads from the Eurasian steppes. And it gets even messier when one adds the fog of war.

To try to shed some light into the current Armenia-Azerbaijan face off, let’s crisscross the basic facts with some essential deep background.

Late last month Ilham Aliyev, Azerbaijan’s proverbial “strongman”, in power since 2003, launched a de facto war on the territory of Nagorno-Karabakh held by Armenia.

At the collapse of the USSR, Nagorno-Karabakh had a mixed population of Azeri Shi’ites and Armenian Christians. Yet even before the collapse the Azerbaijani Army and Armenian independentists were already at war (1988-1994), which yielded a grim balance of 30,000 dead and roughly a million wounded.

The Republic of Nagorno-Karabakh declared independence in 1991: but that was not recognized by the “international community”. Finally there was a ceasefire in 1994 – with Nagorno-Karabakh entering the gray area/no man’s land of “frozen conflict”.

The problem is that in 1993, the United Nations had approved no less than four resolutions – 822, 853, 874 and 884 – establishing that Armenia should withdraw from what was deemed to be roughly 20% of Azerbaijani territory. This is at the core of Baku’s rationale to fight against what it qualifies as a foreign occupation army.

Yerevan’s interpretation though is that these four resolutions are null and void because Nagorno-Karabakh harbors an Armenian-majority population who wants to secede from Azerbaijan.

Historically, Artsakh is one of three ancient provinces of Armenia – rooted at least in the 5th century B.C. and finally established in 189 B.C. Armenians, based on DNA samples from excavated bones, argue they have been settled in Artsakh for at least 4,000 years.

Artsakh – or Nagorno-Karabakh – was annexed to Azerbaijan by Stalin in 1923. That set the stage for a future powder keg to inevitably explode.

It’s important to remember that there was no “Azerbaijan” nation-state until the early 1920s. Historically, Azerbaijan is a territory in northern Iran. Azeris are very well integrated within the Islamic Republic. So the Republic of Azerbaijan actually borrowed its name from their Iranian neighbors. In ancient history, the territory of the new 20th century republic was known as Atropatene, and Aturpakatan before the advent of Islam.

How the equation changed

Baku’s main argument is that Armenia is blocking a contiguous Azerbaijani nation, as a look in the map shows us that southwest Azerbaijan is de facto split all the way to the Iranian border.

And that plunges us necessarily into deep background. To clarify matters, there could not be a more reliable guide than a top Caucasus think tank expert who shared his analysis with me by email, but is insistent on “no attribution”. Let’s call him Mr. C.

Mr. C notes that, “for decades, the equation remained the same and the variables in the equation remained the same, more or less. This was the case notwithstanding the fact that Armenia is an unstable democracy in transition and Azerbaijan had much more continuity at the top.”

We should all be aware that “Azerbaijan lost territory right at the beginning of the restoration of its statehood, when it was basically a failed state run by armchair nationalist amateurs [before Heydar Aliyev, Ilham’s father, came to power]. And Armenia was a mess, too but less so when you take into consideration that it had strong Russian support and Azerbaijan had no one. Back in the day, Turkey was still a secular state with a military that looked West and took its NATO membership seriously. Since then, Azerbaijan has built up its economy and increased its population. So it kept getting stronger. But its military was still underperforming.”

That slowly started to change in 2020: “Basically, in the past few months you’ve seen incremental increases in the intensity of near daily ceasefire violations (the near-daily violations are nothing new: they’ve been going on for years). So this blew up in July and there was a shooting war for a few days. Then everyone calmed down again.”

All this time, something important was developing in the background: Armenian Prime Minister Nikol Pashinyan, who came to power in May 2018, and Aliyev started to talk: “The Azerbaijani side thought this indicated Armenia was ready for compromise (this all started when Armenia had a sort of revolution, with the new PM coming in with a popular mandate to clean house domestically). For whatever reason, it ended up not happening.”

What happened in fact was the July shooting war.

Don’t forget Pipelineistan

Armenian PM Pashinyan could be described as a liberal globalist. The majority of his political team is pro-NATO. Pashinyan went all guns blazing against former Armenian President (1998- 2008) Robert Kocharian, who before that happened to be, crucially, the de facto President of Nagorno-Karabakh.

Kocharian, who spent years in Russia and is close to President Putin, was charged with a nebulous attempt at “overthrowing the constitutional order”. Pashinyan tried to land him in jail. But even more crucial is the fact that Pashinyan refused to follow a plan elaborated by Russian Foreign Minister Sergey Lavrov to finally settle the Artsakh/Nagorno-Karabakh mess.

In the current fog of war, things are even messier. Mr. C stresses two points: “First, Armenia asked for CSTO protection and got bitch slapped, hard and in public; second, Armenia threatened to bomb the oil and gas pipelines in Azerbaijan (there are several, they all run parallel, and they supply not just Georgia and Turkey but now the Balkans and Italy). With regards to the latter, Azerbaijan basically said: if you do that, we’ll bomb your nuclear reactor.”

The Pipelineistan angle is indeed crucial: for years I have followed on Asia Times these myriad, interlocking oil and gas soap operas, especially the BTC (Baku-Tblisi-Ceyhan), conceived by Zbigniew Brzezinski to bypass Iran. I was even “arrested” by a BP 4X4 when I was tracking the pipeline on a parallel side road out of the massive Sangachal terminal: that proved British Petroleum was in practice the real boss, not the Azerbaijani government.

In sum, now we have reached the point where, according to Mr. C,

“Armenia’s saber rattling got more aggressive.” Reasons, on the Armenian side, seem to be mostly domestic: terrible handling of Covid-19 (in contrast to Azerbaijan), and the dire state of the economy. So, says Mr. C, we came to a toxic concourse of circumstances: Armenia deflected from its problems by being tough on Azerbaijan, while Azerbaijan just had had enough.

It’s always about Turkey

Anyway one looks at the Armenia-Azerbaijan drama, the key destabilizing factor is now Turkey.

Mr. C notes how, “throughout the summer, the quality of the Turkish-Azerbaijani military exercises increased (both prior to July events and subsequently). The Azerbaijani military got a lot better. Also, since the fourth quarter of 2019 the President of Azerbaijan has been getting rid of the (perceived) pro-Russian elements in positions of power.” See, for instance, here.

There’s no way to confirm it either with Moscow or Ankara, but Mr. C advances what President Erdogan may have told the Russians:

“We’ll go into Armenia directly if a) Azerbaijan starts to lose, b) Russia goes in or accepts CSTO to be invoked or something along those lines, or c) Armenia goes after the pipelines. All are reasonable red lines for the Turks, especially when you factor in the fact that they don’t like the Armenians very much and that they consider the Azerbaijanis brothers.”

It’s crucial to remember that in August, Baku and Ankara held two weeks of joint air and land military exercises. Baku has bought advanced drones from both Turkey and Israel. There’s no smokin’ gun, at least not yet, but Ankara may have hired up to 4,000 Salafi-jihadis in Syria to fight – wait for it – in favor of Shi’ite-majority Azerbaijan, proving once again that “jihadism” is all about making a quick buck.

The United Armenian Information Center, as well as the Kurdish Afrin Post, have stated that Ankara opened two recruitment centers – in Afrin schools – for mercenaries. Apparently this has been a quite popular move because Ankara slashed salaries for Syrian mercenaries shipped to Libya.

There’s an extra angle that is deeply worrying not only for Russia but also for Central Asia. According to the former Foreign Minister of Nagorno-Karabakh, Ambassador Extraordinary Arman Melikyan, mercenaries using Azeri IDs issued in Baku may be able to infiltrate Dagestan and Chechnya and, via the Caspian, reach Atyrau in Kazakhstan, from where they can easily reach Uzbekistan and Kyrgyzstan.

That’s the ultimate nightmare of the Shanghai Cooperation Organization (SCO) – shared by Russia, China and the Central Asian “stans”: a jihadi land – and (Caspian) sea – bridge from the Caucasus all the way to Central Asia, and even Xinjiang.

What’s the point of this war?

So what happens next? A nearly insurmountable impasse, as Mr. C outlines it:

1. “The peace talks are going nowhere because Armenia is refusing to budge (to withdraw from occupying Nagorno-Karabakh plus 7 surrounding regions in phases or all at once, with the usual guarantees for civilians, even settlers – note that when they went in in the early 1990s they cleansed those lands of literally all Azerbaijanis, something like between 700,000 and 1 million people).”

2. Aliyev was under the impression that Pashinyan “was willing to compromise and began preparing his people and then looked like someone with egg on his face when it didn’t happen.”

3. “Turkey has made it crystal clear it will support Azerbaijan unconditionally, and has matched those words with deeds.”

4. “In such circumstances, Russia got outplayed – in the sense that they had been able to play off Armenia against Azerbaijan and vice versa, quite successfully, helping to mediate talks that went nowhere, preserving the status quo that effectively favored Armenia.”

And that brings us to the crucial question. What’s the point of this war?

Mr. C:

“It is either to conquer as much as possible before the “international community” [in this case, the UNSC] calls for / demands a ceasefire or to do so as an impetus for re-starting talks that actually lead to progress. In either scenario, Azerbaijan will end up with gains and Armenia with losses. How much and under what circumstances (the status and question of Nagorno-Karabakh is distinct from the status and question of the Armenian occupied territories around Nagorno-Karabakh) is unknown: i.e. on the field of battle or the negotiating table or a combo of both. However this turns out, at a minimum Azerbaijan will get to keep what it liberated in battle. This will be the new starting point. And I suspect that Azerbaijan will do no harm to the Armenian civilians that stay. They’ll be model liberators. And they’ll take time to bring back Azerbaijani civilians (refugees/IDPs) to their homes, especially in areas that would become mixed as a result of return.”

So what can Moscow do under these circumstances? Not much,

“except to go into Azerbaijan proper, which they won’t do (there’s no land border between Russia and Armenia; so although Russia has a military base in Armenia with one or more thousand troops, they can’t just supply Armenia with guns and troops at will, given the geography).”

Crucially, Moscow privileges the strategic partnership with Armenia – which is a member of the Eurasia Economic Union (EAEU) – while meticulously monitoring each and every NATO-member Turkey’s movement: after all, they are already in opposing sides in both Libya and Syria.

So, to put it mildly, Moscow is walking on a geopolitical razor’s edge. Russia needs to exercise restraint and invest in a carefully calibrated balancing act between Armenia and Azerbaijan; must preserve the Russia-Turkey strategic partnership; and must be alert to all, possible US Divide and Rule tactics.

Inside Erdogan’s war

So in the end this would be yet another Erdogan war?

The inescapable Follow the Money analysis would tells us, yes. The Turkish economy is an absolute mess, with high inflation and a depreciating currency. Baku has a wealth of oil-gas funds that could become readily available – adding to Ankara’s dream of turning Turkey also into an energy supplier.

Mr. C adds that anchoring Turkey in Azerbaijan would lead to “the creation of full-fledged Turkish military bases and the inclusion of Azerbaijan in the Turkish orbit of influence (the “two countries – one nation” thesis, in which Turkey assumes supremacy) within the framework of neo-Ottomanism and Turkey’s leadership in the Turkic-speaking world.”

Add to it the all-important NATO angle. Mr. C essentially sees it as Erdogan, enabled by Washington, about to make a NATO push to the east while establishing that immensely dangerous jihadi channel into Russia: “This is no local adventure by Erdogan. I understand that Azerbaijan is largely Shi’ite Islam and that will complicate things but not render his adventure impossible.”

This totally ties in with a notorious RAND report that explicitly details how “the United States could try to induce Armenia to break with Russia” and “encourage Armenia to move fully into the NATO orbit.”

It’s beyond obvious that Moscow is observing all these variables with extreme care. That is reflected, for instance, in how irrepressible Foreign Ministry spokeswoman Maria Zakharova, earlier this week, has packaged a very serious diplomatic warning: “The downing of an Armenian SU-25 by a Turkish F-16, as claimed by the Ministry of Defense in Armenia, seems to complicate the situation, as Moscow, based on the Tashkent treaty, is obligated to offer military assistance to Armenia”.

It’s no wonder both Baku and Yerevan got the message and are firmly denying anything happened.

The key fact remains that as long as Armenia proper is not attacked by Azerbaijan, Russia will not apply the CSTO treaty and step in. Erdogan knows this is his red line. Moscow has all it takes to put him in serious trouble – as in shutting off gas supplies to Turkey. Moscow, meanwhile, will keep helping Yerevan with intel and hardware – flown in from Iran. Diplomacy rules – and the ultimate target is yet another ceasefire.

Pulling Russia back in

Mr. C advances the strong possibility – and I have heard echoes from Brussels – that “the EU and Russia find common cause to limit Azerbaijani gains (in large part because Erdogan is no one’s favorite guy, not just because of this but because of the Eastern Med, Syria, Libya).”

That brings to the forefront the renewed importance of the UNSC in imposing a ceasefire. Washington’s role at the moment is quite intriguing. Of course, Trump has more important things to do at the moment. Moreover, the Armenian diaspora in the US swings drastically pro-Democrat.

Then, to round it all up, there’s the all-important Iran-Armenia relationship. Here is a forceful attempt to put it in perspective.

As Mr. C stresses, “Iran favors Armenia, which is counter-intuitive at first sight. So the Iranians may help the Russians out (funneling supplies), but on the other hand they have a good relationship with Turkey, especially in the oil and gas smuggling business. And if they get too overt in their support, Trump has a casus belli to get involved and the Europeans may not like to end up on the same side as the Russians and the Iranians. It just looks bad. And the Europeans hate to look bad.”

We inevitably come back to the point that the whole drama can be interpreted from the perspective of a NATO geopolitical hit against Russia – according to quite a few analyses circulating at the Duma.

Ukraine is an absolute black hole. There’s the Belarus impasse. Covid-19. The Navalny circus. The “threat” to Nord Stream-2.

To pull Russia back into the Armenia-Azerbaijan drama means turning Moscow’s attention towards the Caucasus so there’s more Turkish freedom of action in other theaters – in the Eastern Mediterranean versus Greece, in Syria, in Libya. Ankara – foolishly – is engaged in simultaneous wars on several fronts, and with virtually no allies.

What this means is that even more than NATO, monopolizing Russia’s attention in the Caucasus most of all may be profitable for Erdogan himself. As Mr. C stresses, “in this situation, the Nagorno-Karabakh leverage/’trump card’ in the hands of Turkey would be useful for negotiations with Russia.”

No question: the neo-Ottoman sultan never sleeps.

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The Case Against Trump: Donald Trump Is an Enemy of Freedom

featureTrump

We do not view Lyndon Johnson’s presidency through the lens of the Texan’s legendary vulgarity; the Great Society and Vietnam War loom much larger on his scorecard. Nor do we judge George Washington’s generalship by the Continental Army’s autumn 1776 squandering of New York—every leader of consequence has bad days or weeks in the face of unprecedented challenge.

So before assessing Donald Trump’s worthiness to receive a second term, let us set aside the two cudgels wielded most often by his media and Democratic tormentors: the 45th president’s polarizing personality, and his administration’s scattershot response to a once-in-a-century pandemic.

Focusing on Trump’s deeds, instead of words, from Inauguration Day until just before the first reported U.S. death from COVID-19 on February 29, is a clarifying, even liberating, exercise. At a time when so much of American discourse is about symbolism instead of policy, adjectives instead of nouns, feelings instead of facts, this approach waves away the toxic political fog and drills down into the bedrock of this presidency. What has the Manhattan real estate developer actually built in Washington; how has that already impacted the lives of his constituents; and what lasting changes are likely if his job performance is ratified by the voting public in November?

Working through those questions will produce different answers for everyone, but here’s a preview of mine: On the broad federal issues I care about most—limiting the size and scope of government, protecting individual liberties, allowing for peaceable exchange between willing partners, and contributing to international peace and human flourishing—Trump has been not just passively suboptimal but actively malign. Rewarding his record will cement bad policy and complete the Republican Party’s transformation into a vehicle for big-government nationalism that’s openly suspicious of free markets and perceived enemies.

The Trillion-Dollar Tax

“Keep your eye on one thing and one thing only: how much government is spending,” economist Milton Friedman famously said during the Carter administration. “Because that’s the true tax.”

Under Trump’s signature, even before the coronavirus, the sticker price on that annual levy was jacked up by almost $1 trillion.

The Constitution tasks Congress, not the president, with initiating all federal expenditures. The Budget Control Act of 1974 further instructs the legislature to pass a dozen specific appropriations each year by certain deadlines. The last time those deadlines were met was in 1994. This is a “broken system that Congress has created,” Rep. Justin Amash (L–Mich.) says.

Instead of budget deliberations with debates and amendments and votes, there are closed-door negotiations between House and Senate leadership that typically produce either last-minute continuing resolutions to keep the federal apparatus functioning or must-pass omnibus bills that no member has enough time to read. But if the core blame for our budgetary dysfunction rests squarely on the shoulders of those choosing to fritter away the legislative branch’s prerogatives, that should not let this or any president off the hook.

Congressional terror at making recorded votes on issues of potential controversy consciously offloads decision-making responsibility onto the executive. Which means that presidents have real power to shape legislative behavior. When asked in September 2019, for example, about taking up a gun bill that had been passed by the House of Representatives, Senate Majority Leader Mitch McConnell (R–Ky.) sounded more like a White House spokesman than the leader of a co-equal branch: “The administration is in the process of studying what they’re prepared to support, if anything.”

Republicans, of whom Trump is by far the country’s most popular within the party, held a majority in both chambers on Capitol Hill during his first two years of office. In the waning days of that 114th Congress, McConnell’s No. 2 in leadership, Sen. John Cornyn (R–Texas), was queried by reporters about the Senate’s approach to funding the federal government past a December 22, 2018, deadline. “I don’t know of a specific plan yet,” Cornyn said, just days before the lights went out. The legislative branch was waiting on appropriations instructions from the White House.

So what has Trump done with his considerable leverage to affect the level of federal expenditures? Sign a half-dozen continuing resolutions, plus a few longer-term omnibus deals, that together eliminated Obama-era spending caps, suspended the debt ceiling borrowing limit, and ratcheted up the size of government, all at the tail end of a historically long economic expansion and stock market bull run.

Federal spending under Barack Obama went from $2.98 trillion in George W. Bush’s last full fiscal year of 2008 to $3.52 trillion in the stimulus-weighted fiscal year of 2009, an increase for which Obama and the Democratic-controlled 111th Congress deserve the lion’s share of responsibility. Since the 44th president’s last full fiscal year of 2016 saw expenditures of $3.85 trillion, we can say that during his two terms of office—which included a major federal response to an economic crisis—annual spending went up by around $900 billion.

Trump matched that increase in just one term, before his own crisis hit.

Fiscal 2017 featured spending of $3.98 trillion, with most of the $140 billion increase over the previous year coming under Trump’s sharpie. Then things really took off—$4.11 trillion in 2018, $4.45 trillion in 2019, and a whopping $4.79 trillion destination at the halfway point of fiscal 2020. And then came the pandemic.

Discretionary spending—meaning that part of the budget (roughly one-third) requiring explicit congressional approval, as opposed to “mandatory” items such as Social Security, Medicare, and Medicaid—never topped $1.2 trillion during Obama’s second term. Trump’s wholly owned, pre-virus budgets saw the discretionary portions rise from $1.28 trillion to $1.36 trillion to $1.44 trillion.

Congressional Republicans, who had put the budgetary screws on Obama as soon as they won a House majority in January 2011, lost their appetite for hardball the moment the GOP regained control of the Senate four years later. Trump in 2015–16 then ran and won handily on the least fiscally conservative platform of a crowded presidential primary field, serially mocking the entitlement-reform mantras mouthed by a generation of fiscal conservatives. “We’re going to save your Social Security without killing it, like so many people want to do,” he vowed at a June 2016 rally. “And your Medicare.”

The reason that Republicans and Democrats alike (if not quite in equal measures) spent decades before 2015 talking about the need to restructure the country’s old-age transfer programs is that, as the historically large baby boom generation shifts from contributor to recipient, these programs are on an inexorable trajectory toward insolvency. In 1950 there were 16.5 workers paying into Social Security for every one retiree receiving benefits; in 2019 that ratio was just 2.9 to 1. In an annual report finished just prior to the pandemic, the Social Security Administration Trustees projected that the trust fund, if politicians continued doing nothing, would be forced to enact automatic, across-the-board cuts to recipients beginning in 2035.

Yet doing nothing has been Trump’s intention all along. In March 2017, Robert Draper of The New York Times Magazine suggested to the president that conservatives should not expect entitlement reform during his first term. “I think you’re right,” Trump accurately forecasted, before pivoting to the virtues of government spending: “We’re also going to prime the pump. You know what I mean by ‘prime the pump’? In order to get [the economy] going, and going big league, and having the jobs coming in…we’re going to have to prime the pump to some extent. In other words: Spend money to make a lot more money in the future. And that’ll happen.” You can’t say he didn’t warn us.

The president did flex his muscles on two notable occasions during congressional budget negotiations, each leading to government shutdowns. But that wasn’t because Congress was spending too much—it was because lawmakers were spending too little for his liking on immigration enforcement.

Conservatism during Obama’s first term was all about blocking Obamacare, forcing conversations about entitlement solvency, and raising the alarm over trillion-dollar budget deficits. Republicans in Trump’s first term have failed to reform Obamacare, sidestepped conversations about long-term fiscal sustainability, and brought trillion-dollar deficits roaring back.

In December 2018, when there were still at least some advisers inside the White House mouthing concerns about a future debt crisis, the president reportedly dismissed them by saying, “Yeah, but I won’t be here.” There is only one sure way to make that prediction come true.

Industrial Policy Making

Donald Trump in 2016 became the first GOP presidential candidate to successfully campaign on trade protectionism since Herbert Hoover. And though he doesn’t have a Smoot-Hawley tariff on his ledger, the president has made consumer goods more expensive, export markets more difficult to access, and government subsidization of industrial sectors more likely, both here and abroad.

Republicans during the Obama presidency made great hay, and rightly so, over the $11.3 billion the federal government lost in its post–financial crisis takeover and restructuring of General Motors. Trump’s trade wars have topped that number three years running on agriculture bailouts alone—$12 billion to compensate for the retaliatory clampdowns on export-market access in 2018, $16 billion in 2019, and $19 billion in 2020 pre-COVID.

“We now have a huge $20 billion-plus farm subsidy program that most experts are worried is never going to disappear,” says trade lawyer and Cato Institute analyst Scott Lincicome. “There’s nothing so permanent as a temporary government program. That old Milton Friedman line is certainly true in the case of farm subsidies.”

The president has expanded the latitude for his successors and America’s trade partners alike to use bogus justifications for erecting tariffs. In March 2018, Trump exercised the little-used Section 232 national security exemption to the 1962 Trade Expansion Act in order to enact a 25 percent tariff on imported steel and a 10 percent tariff on aluminum. This despite the fact that his own military rejected the security argument, that six of the top 10 foreign suppliers of steel are NATO allies, and that two months later the president himself tweeted that the tariffs were in response to a Canadian tariff on dairy products.

“For decades, presidents, and governments in general around the world, were extremely hesitant to invoke national security in order to achieve economic protectionism for really not national-security-related grounds,” Lincicome says. “The Trump administration has really opened Pandora’s Box with respect to Section 232.”

The move “has provided future administrations a really easy way to unilaterally implement certain policies,” Lincicome continues. “So, for example, you could quite easily see a Biden administration determining that climate change is a national security threat and thus imposing national security tariffs on imports from countries that don’t sign under the Paris agreement.” With courts generally deferential to the executive branch’s national security claims (and with Congress dispositionally unwilling to take on the president), future trade wars now have a template.

As predicted by the vast majority of trade economists, Trump’s tariffs have failed in their stated intent to prop up domestic producers and jobs, triggered reciprocal actions that have punished American exporters, and created a cottage industry of lobbying in Washington for exemptions.

Trump campaigned against the seven-decade Washington-led international system of mutual tariff reduction without ever having a coherent plan to replace it. His promised bilateral trade deals have mostly failed to materialize; other countries and blocs are now signing pacts that freeze out American producers; and the dispute-resolution body at the World Trade Organization (WTO), which has historically proven favorable to U.S. claims, has ground to a halt because of Trump’s unwillingness to appoint representatives.

Sen. Josh Hawley (R–Mo.) and his allies like to say “we should get out of the WTO” and “replace it with something that doesn’t kowtow to China,” Lincicome says. “The problem is, [Trump has] done none of that. Instead, it’s all just might-makes-right unilateralism.”

The president’s troubled negotiations with China, in addition to materially harming U.S. consumers and producers, have by his own admission discouraged him at several key moments from speaking out about the communist country’s human rights atrocities against its Uighur population and its ongoing crackdown against Hong Kong. Now that talks have broken down in an election year, the administration is ratcheting up its aggressiveness, including through an August executive order to kick out the Chinese-owned social media video giant TikTok within 45 days.

The president’s trade record and hands-on approach to industrial policy threaten to overrun one of the best aspects of his first term—his conscious, system-wide slowdown of the ever-expanding administrative state.

“Trump’s regulatory streamlining,” the Competitive Enterprise Institute stated in May in its annual regulations survey The Ten Thousand Commandments, “is being offset by his own favorable comments and explicit actions toward regulatory intervention in the following areas: Antitrust intervention, financial regulation, hospital and pharmaceutical price transparency mandates and price controls, speech and social media regulation, tech regulation, digital taxes, bipartisan large-scale infrastructure spending with regulatory effects, trade restrictions, farming and agriculture, subsidies with regulatory effect, telecommunications regulation, including for 5G infrastructure; personal liberties: health-tracking, vaping, supplements, and firearms; industrial policy or market socialist funding mechanisms (in scientific research, artificial intelligence, and a Space Force), [and] welfare and labor regulations.”

Trump’s shocking win in 2016, particularly in an industrial Midwest that Democrat Hillary Clinton barely visited, may have led political commentators to overcorrect for their previous blind spots by convincing themselves voters were against free trade. In fact, public approval of international trade has reached record polling highs during Trump’s first term. The president is once again campaigning to the left of the Democratic nominee on tariffs; another victory would likely turn a decisive majority of the political class against the single greatest global anti-poverty measure ever invented.

Immigration Cruelty

On his eighth day in office, Trump signed an executive order asserting that “whenever the President finds that the entry of any aliens or of any class of aliens into the United States would be detrimental to the interests of the United States, he may by proclamation, and for such period as he shall deem necessary, suspend the entry of all aliens or any class of aliens as immigrants or nonimmigrants, or impose on the entry of aliens any restrictions he may deem to be appropriate.”

First up for suspension were all travelers—including, during the first 48 hours, a half-million legal U.S. permanent residents—from Syria, Iran, Iraq, Sudan, Libya, Somalia, and Yemen, plus any refugee from anywhere on earth. College students, green-card holders, and people who had finally gained admission after years of waiting for permission boarded flights under one set of conditions, only to discover upon landing in an American city that the rulebook had changed and they had to turn back. The move caused chaos and anguish at airports and in immigrant communities all over the country.

The travel ban was challenged and rewritten several times, but in 2018’s 5–4 Trump v. Hawaii decision, the Supreme Court codified the chief executive’s power to select which foreigners can and cannot enter the country, including based on factors (such as religion or political beliefs) that if applied to legal U.S. residents would be deemed unconstitutional.

Though Trump emphasized cracking down on illegal immigration during the 2016 campaign, in fact his deportation numbers pale in comparison to Barack Obama’s. Instead, his “biggest contribution” has been restricting the legal variety, according to Cato Institute immigration policy analyst David Bier. “We’re talking about just an incredible number of actions to reduce legal immigration,” he says. Beginning, most ungenerously, with refugees.

Fueled by grisly wars in the Middle East and Africa, the global population of refugees doubled between 2012 and 2017, from 10 million to 20 million, a historically high level where it has remained ever since. The incoming president, having won on the most restrictionist platform since World War II–era Franklin Roosevelt, promptly slashed America’s refugee intake to historic lows—22,000 in fiscal year 2018, down from 85,000 in 2016.

The last time worldwide refugees doubled in so short a span, in the late 1970s and early 1980s, presidents Jimmy Carter and Ronald Reagan took lead roles in organizing the global response, and America welcomed into the country roughly 1 out of every 70 refugees—from Vietnam, Cambodia, the Soviet Union, Iran, Cuba, and so forth. Under Trump, the U.S. has withdrawn from anything like leadership of the free-world response, and its refugee intake is more like 1 out of every 900.

Though the Trump administration had already reduced just about every category of legal immigration, some of the most significant restrictions went into effect only this year. The new “public charge” rule, wherein applicants for visas are required to prove that they’ll never go on welfare, will precipitate massive reductions in by far the most common type of immigration: the family-sponsored visa, which traditionally has accounted for six out of every seven legal immigrants to the United States.

“This rule basically makes it impossible to get around it if you’re poor and you don’t have a college degree,” Bier says. “We’re forcibly separating U.S. citizens from their spouses, from their parents….It is something [that], if it was imposed on any other U.S. citizen, would be considered an affront to liberty and an imposition that we wouldn’t tolerate for a second if the spouse was born in the United States or a parent was born in the United States.”

Trump has changed asylum rules so that even those with ironclad cases of being persecuted back home will be automatically returned there if they enter America via a third country. Asylum seekers who arrive at ports of entry to make their cases are now routinely turned away instead of processed. The number of foreign college students has been chopped down. And most shockingly, in numbers never before seen, the White House made a conscious policy to separate minor children from their asylum-seeking parents.

“This was an intentional effort by the Trump administration to target parents with children,” Bier says. “And not based on any kind of risk factor or criminal history or prior crossings or anything. It was, ‘If you’re a parent and you are crossing with a kid, we’re going to target you for prosecution specifically.’…The zero-tolerance justification was just a facade to justify what they wanted to do, which was terrify these asylum seekers into not coming, basically.”

Even more than trade, immigration was a signature Trump campaign issue in 2016, and it’s been a focus of his attention in the Oval Office. If you believe it humane for U.S. citizens to be able to import their foreign-born immediate family, or for children to not be separated from their parents, or for America to extend a helping hand to the world’s wretched, or for deserving asylum seekers to be able to make their cases, then Donald Trump is anathema to your values. Like trade, immigration has on balance contributed to the wealth of America and lifted tens of millions of people out of poverty. The president’s opposition to the free movement of people from countries he disfavors will, if he receives another term, be translated into policy that actively harms millions of U.S. citizens, for many years to come.

Crisis Management

In considering Trump’s presidency through February 2020, it is fair to ask what he did to prepare for a crisis such as the one now crippling the country. Because no matter what or when or how, the crisis always comes.

Here the president’s erratic temperament comes into play. He has proven an alienating figure in the international arena, repeatedly insulting America’s traditional allies while cultivating a more dodgy and less powerful band of cronies in places like Hungary and Saudi Arabia. Pandemics require urgent global cooperation; instead the president has spent precious time dubbing COVID-19 the “China virus” and doubling down on supply chain–damaging trade wars.

“Let’s face it—we’ve pissed off almost every other country in the world at a time when global collaboration for a vaccine or a cure is most needed,” Lincicome says. “And that type of action has consequences. If a vaccine is developed outside of the United States, and it’s developed in a country with which we’ve had pretty hostile trade and economic relations, will Americans be disadvantaged in terms of access?”

Economic crises are like margin calls, exposing where governments have left themselves out of position and creating sharp new demands for government services even as the tax base dwindles. Trump inherited a growing economy, a bullish market, a massive debt burden, and a certain future implosion of the old-age entitlement programs. Instead of saving for the inevitable rainy day, the president primed the pump, ran deficits back over $1 trillion, and put the country in a historically vulnerable position to make the biggest economic policy gamble—and commitment—since the New Deal.

Meanwhile, his preexisting management style—demanding private loyalty and public flattery from his ever-revolving Cabinet, personalizing policy responses and entire federal departments, contradicting himself and the available facts on a daily basis—has shown itself to be a tangible governing handicap. The first rule of pandemic crisis response is that public officials must be sane, sober, and truthful in communicating with the public. Trump did not build his remarkable career around these traits.

Republican voters will flatter themselves this fall by imagining that they’re striking a blow against socialism and doddering old men. And it’s true: The Democrat in this race looks a few cards short of a full deck while sitting atop a party desperate to fulfill generations’ worth of big-government fantasies.

But we don’t need to conjure up an erratic authoritarian to fight off. He’s sitting right there in the Oval Office.

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The Case Against Trump: Donald Trump Is an Enemy of Freedom

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We do not view Lyndon Johnson’s presidency through the lens of the Texan’s legendary vulgarity; the Great Society and Vietnam War loom much larger on his scorecard. Nor do we judge George Washington’s generalship by the Continental Army’s autumn 1776 squandering of New York—every leader of consequence has bad days or weeks in the face of unprecedented challenge.

So before assessing Donald Trump’s worthiness to receive a second term, let us set aside the two cudgels wielded most often by his media and Democratic tormentors: the 45th president’s polarizing personality, and his administration’s scattershot response to a once-in-a-century pandemic.

Focusing on Trump’s deeds, instead of words, from Inauguration Day until just before the first reported U.S. death from COVID-19 on February 29, is a clarifying, even liberating, exercise. At a time when so much of American discourse is about symbolism instead of policy, adjectives instead of nouns, feelings instead of facts, this approach waves away the toxic political fog and drills down into the bedrock of this presidency. What has the Manhattan real estate developer actually built in Washington; how has that already impacted the lives of his constituents; and what lasting changes are likely if his job performance is ratified by the voting public in November?

Working through those questions will produce different answers for everyone, but here’s a preview of mine: On the broad federal issues I care about most—limiting the size and scope of government, protecting individual liberties, allowing for peaceable exchange between willing partners, and contributing to international peace and human flourishing—Trump has been not just passively suboptimal but actively malign. Rewarding his record will cement bad policy and complete the Republican Party’s transformation into a vehicle for big-government nationalism that’s openly suspicious of free markets and perceived enemies.

The Trillion-Dollar Tax

“Keep your eye on one thing and one thing only: how much government is spending,” economist Milton Friedman famously said during the Carter administration. “Because that’s the true tax.”

Under Trump’s signature, even before the coronavirus, the sticker price on that annual levy was jacked up by almost $1 trillion.

The Constitution tasks Congress, not the president, with initiating all federal expenditures. The Budget Control Act of 1974 further instructs the legislature to pass a dozen specific appropriations each year by certain deadlines. The last time those deadlines were met was in 1994. This is a “broken system that Congress has created,” Rep. Justin Amash (L–Mich.) says.

Instead of budget deliberations with debates and amendments and votes, there are closed-door negotiations between House and Senate leadership that typically produce either last-minute continuing resolutions to keep the federal apparatus functioning or must-pass omnibus bills that no member has enough time to read. But if the core blame for our budgetary dysfunction rests squarely on the shoulders of those choosing to fritter away the legislative branch’s prerogatives, that should not let this or any president off the hook.

Congressional terror at making recorded votes on issues of potential controversy consciously offloads decision-making responsibility onto the executive. Which means that presidents have real power to shape legislative behavior. When asked in September 2019, for example, about taking up a gun bill that had been passed by the House of Representatives, Senate Majority Leader Mitch McConnell (R–Ky.) sounded more like a White House spokesman than the leader of a co-equal branch: “The administration is in the process of studying what they’re prepared to support, if anything.”

Republicans, of whom Trump is by far the country’s most popular within the party, held a majority in both chambers on Capitol Hill during his first two years of office. In the waning days of that 114th Congress, McConnell’s No. 2 in leadership, Sen. John Cornyn (R–Texas), was queried by reporters about the Senate’s approach to funding the federal government past a December 22, 2018, deadline. “I don’t know of a specific plan yet,” Cornyn said, just days before the lights went out. The legislative branch was waiting on appropriations instructions from the White House.

So what has Trump done with his considerable leverage to affect the level of federal expenditures? Sign a half-dozen continuing resolutions, plus a few longer-term omnibus deals, that together eliminated Obama-era spending caps, suspended the debt ceiling borrowing limit, and ratcheted up the size of government, all at the tail end of a historically long economic expansion and stock market bull run.

Federal spending under Barack Obama went from $2.98 trillion in George W. Bush’s last full fiscal year of 2008 to $3.52 trillion in the stimulus-weighted fiscal year of 2009, an increase for which Obama and the Democratic-controlled 111th Congress deserve the lion’s share of responsibility. Since the 44th president’s last full fiscal year of 2016 saw expenditures of $3.85 trillion, we can say that during his two terms of office—which included a major federal response to an economic crisis—annual spending went up by around $900 billion.

Trump matched that increase in just one term, before his own crisis hit.

Fiscal 2017 featured spending of $3.98 trillion, with most of the $140 billion increase over the previous year coming under Trump’s sharpie. Then things really took off—$4.11 trillion in 2018, $4.45 trillion in 2019, and a whopping $4.79 trillion destination at the halfway point of fiscal 2020. And then came the pandemic.

Discretionary spending—meaning that part of the budget (roughly one-third) requiring explicit congressional approval, as opposed to “mandatory” items such as Social Security, Medicare, and Medicaid—never topped $1.2 trillion during Obama’s second term. Trump’s wholly owned, pre-virus budgets saw the discretionary portions rise from $1.28 trillion to $1.36 trillion to $1.44 trillion.

Congressional Republicans, who had put the budgetary screws on Obama as soon as they won a House majority in January 2011, lost their appetite for hardball the moment the GOP regained control of the Senate four years later. Trump in 2015–16 then ran and won handily on the least fiscally conservative platform of a crowded presidential primary field, serially mocking the entitlement-reform mantras mouthed by a generation of fiscal conservatives. “We’re going to save your Social Security without killing it, like so many people want to do,” he vowed at a June 2016 rally. “And your Medicare.”

The reason that Republicans and Democrats alike (if not quite in equal measures) spent decades before 2015 talking about the need to restructure the country’s old-age transfer programs is that, as the historically large baby boom generation shifts from contributor to recipient, these programs are on an inexorable trajectory toward insolvency. In 1950 there were 16.5 workers paying into Social Security for every one retiree receiving benefits; in 2019 that ratio was just 2.9 to 1. In an annual report finished just prior to the pandemic, the Social Security Administration Trustees projected that the trust fund, if politicians continued doing nothing, would be forced to enact automatic, across-the-board cuts to recipients beginning in 2035.

Yet doing nothing has been Trump’s intention all along. In March 2017, Robert Draper of The New York Times Magazine suggested to the president that conservatives should not expect entitlement reform during his first term. “I think you’re right,” Trump accurately forecasted, before pivoting to the virtues of government spending: “We’re also going to prime the pump. You know what I mean by ‘prime the pump’? In order to get [the economy] going, and going big league, and having the jobs coming in…we’re going to have to prime the pump to some extent. In other words: Spend money to make a lot more money in the future. And that’ll happen.” You can’t say he didn’t warn us.

The president did flex his muscles on two notable occasions during congressional budget negotiations, each leading to government shutdowns. But that wasn’t because Congress was spending too much—it was because lawmakers were spending too little for his liking on immigration enforcement.

Conservatism during Obama’s first term was all about blocking Obamacare, forcing conversations about entitlement solvency, and raising the alarm over trillion-dollar budget deficits. Republicans in Trump’s first term have failed to reform Obamacare, sidestepped conversations about long-term fiscal sustainability, and brought trillion-dollar deficits roaring back.

In December 2018, when there were still at least some advisers inside the White House mouthing concerns about a future debt crisis, the president reportedly dismissed them by saying, “Yeah, but I won’t be here.” There is only one sure way to make that prediction come true.

Industrial Policy Making

Donald Trump in 2016 became the first GOP presidential candidate to successfully campaign on trade protectionism since Herbert Hoover. And though he doesn’t have a Smoot-Hawley tariff on his ledger, the president has made consumer goods more expensive, export markets more difficult to access, and government subsidization of industrial sectors more likely, both here and abroad.

Republicans during the Obama presidency made great hay, and rightly so, over the $11.3 billion the federal government lost in its post–financial crisis takeover and restructuring of General Motors. Trump’s trade wars have topped that number three years running on agriculture bailouts alone—$12 billion to compensate for the retaliatory clampdowns on export-market access in 2018, $16 billion in 2019, and $19 billion in 2020 pre-COVID.

“We now have a huge $20 billion-plus farm subsidy program that most experts are worried is never going to disappear,” says trade lawyer and Cato Institute analyst Scott Lincicome. “There’s nothing so permanent as a temporary government program. That old Milton Friedman line is certainly true in the case of farm subsidies.”

The president has expanded the latitude for his successors and America’s trade partners alike to use bogus justifications for erecting tariffs. In March 2018, Trump exercised the little-used Section 232 national security exemption to the 1962 Trade Expansion Act in order to enact a 25 percent tariff on imported steel and a 10 percent tariff on aluminum. This despite the fact that his own military rejected the security argument, that six of the top 10 foreign suppliers of steel are NATO allies, and that two months later the president himself tweeted that the tariffs were in response to a Canadian tariff on dairy products.

“For decades, presidents, and governments in general around the world, were extremely hesitant to invoke national security in order to achieve economic protectionism for really not national-security-related grounds,” Lincicome says. “The Trump administration has really opened Pandora’s Box with respect to Section 232.”

The move “has provided future administrations a really easy way to unilaterally implement certain policies,” Lincicome continues. “So, for example, you could quite easily see a Biden administration determining that climate change is a national security threat and thus imposing national security tariffs on imports from countries that don’t sign under the Paris agreement.” With courts generally deferential to the executive branch’s national security claims (and with Congress dispositionally unwilling to take on the president), future trade wars now have a template.

As predicted by the vast majority of trade economists, Trump’s tariffs have failed in their stated intent to prop up domestic producers and jobs, triggered reciprocal actions that have punished American exporters, and created a cottage industry of lobbying in Washington for exemptions.

Trump campaigned against the seven-decade Washington-led international system of mutual tariff reduction without ever having a coherent plan to replace it. His promised bilateral trade deals have mostly failed to materialize; other countries and blocs are now signing pacts that freeze out American producers; and the dispute-resolution body at the World Trade Organization (WTO), which has historically proven favorable to U.S. claims, has ground to a halt because of Trump’s unwillingness to appoint representatives.

Sen. Josh Hawley (R–Mo.) and his allies like to say “we should get out of the WTO” and “replace it with something that doesn’t kowtow to China,” Lincicome says. “The problem is, [Trump has] done none of that. Instead, it’s all just might-makes-right unilateralism.”

The president’s troubled negotiations with China, in addition to materially harming U.S. consumers and producers, have by his own admission discouraged him at several key moments from speaking out about the communist country’s human rights atrocities against its Uighur population and its ongoing crackdown against Hong Kong. Now that talks have broken down in an election year, the administration is ratcheting up its aggressiveness, including through an August executive order to kick out the Chinese-owned social media video giant TikTok within 45 days.

The president’s trade record and hands-on approach to industrial policy threaten to overrun one of the best aspects of his first term—his conscious, system-wide slowdown of the ever-expanding administrative state.

“Trump’s regulatory streamlining,” the Competitive Enterprise Institute stated in May in its annual regulations survey The Ten Thousand Commandments, “is being offset by his own favorable comments and explicit actions toward regulatory intervention in the following areas: Antitrust intervention, financial regulation, hospital and pharmaceutical price transparency mandates and price controls, speech and social media regulation, tech regulation, digital taxes, bipartisan large-scale infrastructure spending with regulatory effects, trade restrictions, farming and agriculture, subsidies with regulatory effect, telecommunications regulation, including for 5G infrastructure; personal liberties: health-tracking, vaping, supplements, and firearms; industrial policy or market socialist funding mechanisms (in scientific research, artificial intelligence, and a Space Force), [and] welfare and labor regulations.”

Trump’s shocking win in 2016, particularly in an industrial Midwest that Democrat Hillary Clinton barely visited, may have led political commentators to overcorrect for their previous blind spots by convincing themselves voters were against free trade. In fact, public approval of international trade has reached record polling highs during Trump’s first term. The president is once again campaigning to the left of the Democratic nominee on tariffs; another victory would likely turn a decisive majority of the political class against the single greatest global anti-poverty measure ever invented.

Immigration Cruelty

On his eighth day in office, Trump signed an executive order asserting that “whenever the President finds that the entry of any aliens or of any class of aliens into the United States would be detrimental to the interests of the United States, he may by proclamation, and for such period as he shall deem necessary, suspend the entry of all aliens or any class of aliens as immigrants or nonimmigrants, or impose on the entry of aliens any restrictions he may deem to be appropriate.”

First up for suspension were all travelers—including, during the first 48 hours, a half-million legal U.S. permanent residents—from Syria, Iran, Iraq, Sudan, Libya, Somalia, and Yemen, plus any refugee from anywhere on earth. College students, green-card holders, and people who had finally gained admission after years of waiting for permission boarded flights under one set of conditions, only to discover upon landing in an American city that the rulebook had changed and they had to turn back. The move caused chaos and anguish at airports and in immigrant communities all over the country.

The travel ban was challenged and rewritten several times, but in 2018’s 5–4 Trump v. Hawaii decision, the Supreme Court codified the chief executive’s power to select which foreigners can and cannot enter the country, including based on factors (such as religion or political beliefs) that if applied to legal U.S. residents would be deemed unconstitutional.

Though Trump emphasized cracking down on illegal immigration during the 2016 campaign, in fact his deportation numbers pale in comparison to Barack Obama’s. Instead, his “biggest contribution” has been restricting the legal variety, according to Cato Institute immigration policy analyst David Bier. “We’re talking about just an incredible number of actions to reduce legal immigration,” he says. Beginning, most ungenerously, with refugees.

Fueled by grisly wars in the Middle East and Africa, the global population of refugees doubled between 2012 and 2017, from 10 million to 20 million, a historically high level where it has remained ever since. The incoming president, having won on the most restrictionist platform since World War II–era Franklin Roosevelt, promptly slashed America’s refugee intake to historic lows—22,000 in fiscal year 2018, down from 85,000 in 2016.

The last time worldwide refugees doubled in so short a span, in the late 1970s and early 1980s, presidents Jimmy Carter and Ronald Reagan took lead roles in organizing the global response, and America welcomed into the country roughly 1 out of every 70 refugees—from Vietnam, Cambodia, the Soviet Union, Iran, Cuba, and so forth. Under Trump, the U.S. has withdrawn from anything like leadership of the free-world response, and its refugee intake is more like 1 out of every 900.

Though the Trump administration had already reduced just about every category of legal immigration, some of the most significant restrictions went into effect only this year. The new “public charge” rule, wherein applicants for visas are required to prove that they’ll never go on welfare, will precipitate massive reductions in by far the most common type of immigration: the family-sponsored visa, which traditionally has accounted for six out of every seven legal immigrants to the United States.

“This rule basically makes it impossible to get around it if you’re poor and you don’t have a college degree,” Bier says. “We’re forcibly separating U.S. citizens from their spouses, from their parents….It is something [that], if it was imposed on any other U.S. citizen, would be considered an affront to liberty and an imposition that we wouldn’t tolerate for a second if the spouse was born in the United States or a parent was born in the United States.”

Trump has changed asylum rules so that even those with ironclad cases of being persecuted back home will be automatically returned there if they enter America via a third country. Asylum seekers who arrive at ports of entry to make their cases are now routinely turned away instead of processed. The number of foreign college students has been chopped down. And most shockingly, in numbers never before seen, the White House made a conscious policy to separate minor children from their asylum-seeking parents.

“This was an intentional effort by the Trump administration to target parents with children,” Bier says. “And not based on any kind of risk factor or criminal history or prior crossings or anything. It was, ‘If you’re a parent and you are crossing with a kid, we’re going to target you for prosecution specifically.’…The zero-tolerance justification was just a facade to justify what they wanted to do, which was terrify these asylum seekers into not coming, basically.”

Even more than trade, immigration was a signature Trump campaign issue in 2016, and it’s been a focus of his attention in the Oval Office. If you believe it humane for U.S. citizens to be able to import their foreign-born immediate family, or for children to not be separated from their parents, or for America to extend a helping hand to the world’s wretched, or for deserving asylum seekers to be able to make their cases, then Donald Trump is anathema to your values. Like trade, immigration has on balance contributed to the wealth of America and lifted tens of millions of people out of poverty. The president’s opposition to the free movement of people from countries he disfavors will, if he receives another term, be translated into policy that actively harms millions of U.S. citizens, for many years to come.

Crisis Management

In considering Trump’s presidency through February 2020, it is fair to ask what he did to prepare for a crisis such as the one now crippling the country. Because no matter what or when or how, the crisis always comes.

Here the president’s erratic temperament comes into play. He has proven an alienating figure in the international arena, repeatedly insulting America’s traditional allies while cultivating a more dodgy and less powerful band of cronies in places like Hungary and Saudi Arabia. Pandemics require urgent global cooperation; instead the president has spent precious time dubbing COVID-19 the “China virus” and doubling down on supply chain–damaging trade wars.

“Let’s face it—we’ve pissed off almost every other country in the world at a time when global collaboration for a vaccine or a cure is most needed,” Lincicome says. “And that type of action has consequences. If a vaccine is developed outside of the United States, and it’s developed in a country with which we’ve had pretty hostile trade and economic relations, will Americans be disadvantaged in terms of access?”

Economic crises are like margin calls, exposing where governments have left themselves out of position and creating sharp new demands for government services even as the tax base dwindles. Trump inherited a growing economy, a bullish market, a massive debt burden, and a certain future implosion of the old-age entitlement programs. Instead of saving for the inevitable rainy day, the president primed the pump, ran deficits back over $1 trillion, and put the country in a historically vulnerable position to make the biggest economic policy gamble—and commitment—since the New Deal.

Meanwhile, his preexisting management style—demanding private loyalty and public flattery from his ever-revolving Cabinet, personalizing policy responses and entire federal departments, contradicting himself and the available facts on a daily basis—has shown itself to be a tangible governing handicap. The first rule of pandemic crisis response is that public officials must be sane, sober, and truthful in communicating with the public. Trump did not build his remarkable career around these traits.

Republican voters will flatter themselves this fall by imagining that they’re striking a blow against socialism and doddering old men. And it’s true: The Democrat in this race looks a few cards short of a full deck while sitting atop a party desperate to fulfill generations’ worth of big-government fantasies.

But we don’t need to conjure up an erratic authoritarian to fight off. He’s sitting right there in the Oval Office.

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Financialization & The Road To Zero, Part 1: The Evolution Of Commerce

Financialization & The Road To Zero, Part 1: The Evolution Of Commerce

Tyler Durden

Sat, 10/03/2020 – 23:30

Authored by ‘ICE-9’ via The Burning Platform blog,

This is Part 1 of a 4-part series.

fi·nan·cial·i·za·tion

/fəˌnanCHələˈzāSHən, fīˌnanCHələˈzāSHən/

noun

The process by which financial institutions, markets et cetera increase in size and influence.

This definition is about as complex as one finds in the popular financial media, nestled in a hyperlink somewhere between a continuous onslaught of graphs, numbers, and opinions shouted from frenetic podcasts.  One enters financialization’s surface world as if it is the natural and evolved state of things, and leaves believing every increase in that buzz and energy must be good, progressive, and lead to some kind of a collective better tomorrow. 

There is this perpetual urge and ever present push to “do something”.  Everyone’s piling in – get in now or you’ll miss the boat.  Thirty year mortgage refi rates are at historic lows.  It has never been a better time to buy a house.  Zero commission brokerage accounts click here (fees and restrictions apply).  Buy, sell, or hold?  What are you waiting for?  Another all-time high!  Synergies, paradigm shifts, raising the bar, the deal of a lifetime, low hanging fruit, win-win.  Get off the fence, get your ducks in a row, step up to the plate, and think outside the box and push the envelope because failure is not an option.  The business of America – is business.

Somewhat “deeper” discussions about financialization exist within the Fourth Estate front page editorials filled with explanations of its effects and non-explanations of its causes penned by an assortment of well-compensated Nobel Laureates, PhDs, think tank advisors, and Wall Street promoters.  After reading such well-crafted pieces one barely senses the authors’ constrained yet directed criticisms of financialization nudging one’s doubts towards acceptance of “reforms” and away from underlying systemic issues.  Adjustments and a minor compromise are always the solutions.  A tweak here, a Congressional rider there, a new regulation or two should patch things up.  Who could possibly argue against such esteemed credentials?

And then there are the “learned” journal tomes full of lofty enumerations of financialization’s effects, theories as to its complex workings complete with equations full of Greek letters and predicate logic, and so many competing ideas that the sum total of all this erudite thinking is a zero sum non-consensus that for all the tens of thousands of pages does not definitively identify causa principalis.  Here are some random examples –

“Financialization refers to the increasing importance of finance, financial markets, and financial institutions to the workings of the economy.”

“A pattern of accumulation in which profit making occurs increasingly through financial channels rather than through trade and commodity production.”

“The fusion of the interests of domestic and foreign financial capital in the state apparatus as the institutionalized priorities and overarching social logic guiding the actions of state managers and government elites, often to the detriment of labor.”

The above three sentences penned by distinguished scholars took a combined twenty-four years of college to construct, so it is little wonder why it is so difficult for the uninitiated layman to compile the true workings and objectives of financialization.  The more one reads, the closer one comes to this educated zero sum non-consensus and no closer to unlocking the secrets of not only why does financialization exist, but also why has a mass edifice of confusion been purpose built to hide these secrets?

Profits and risk mitigation are standard replies to that existential why, spoken with all the confidence bestowed by Fourth Estate economists.  Mockery and conspiracy theory accusations follow every mention of the purpose built mass edifice of confusion surrounding financialization.  But these are the ground level foot soldier answers that push one squarely back into financialization’s surface world, just more of that buzz and energy that is the perceived natural and evolved state of things.  Profit motive – case closed.  But profit and risk mitigation were achieved with the old industrial production and export model, so why has financialization today risen to supremacy?  Higher profits and greater risk mitigation – just more begging the question, ad infinitum.  But could there be hidden mechanisms at work facilitating this rise of financialization and, is there a larger opaque objective to it?

At a ground level perspective one generally sees the accumulation of money as power.  But when one looks at “wealth” from a higher level perspective, it is actually vouchsafed, gathered up in that “free market” scrum called “competition” from the invisible hands of those with the ability to conjure money out of thin air and throw it into the general arena.  And the working mechanisms within “wealth” accumulation also hold the mechanisms of “wealth” destruction and confiscation, so “wealth” cannot be power in of its self, as it can be both granted and denied, and therefore is only a tenuous grant of privilege.  And granted by whom, by what higher authority?  What class of people are above the power of money, control the mechanisms of “wealth” accumulation and destruction and confiscation, and are able to both vouchsafe and expropriate this privilege that money provides?  Is there a higher order level design at work within financialization, and if so, what are its means and end goals?

This series examines and defines what financialization is, identifies what has enabled it to rise above all other economic activity in stature, and binds together financialization with the role it plays in this higher order design for the nation.  The preceding essay The Evolution of Fiat Money, Endless War, and the End of Citizenship provides much of the underlying philosophical premises upon which this present work is constructed.  It is necessary background towards a comprehensive understand of how financialization is ultimately regressive, dehumanizing, and will not lead to a better collective tomorrow – rather, it will serve as an evolutionary societal dead end for the bulk of humanity.

The Evolution of Commerce

For untold millennia the human economic condition remained that of the hunter-gatherer where simple goods of utility were produced and consumed by their users.  Sharing produced goods among tribal members or stealing them from other tribes were probably about as complex as commerce got during this long stretch of pre-history.  Then roughly 40,000 years ago cave paintings and sculpted objet d’art began to appear in the archeological record indicating some amount of leisure was afforded our ancient ancestors.  This advent of leisure appears to have led to the development of other time consuming and non-essential activities like ritualistic burial practices and simple jewelry craft.  Soon afterward the first instances of proto-industrial labor specialization appears where flint, chert, and obsidian were quarried to mass produce a surplus of sophisticated arrowheads, stone axes, spear tips, and implements used to skin and dismember hunting kills.  It is this first indication of surplus that suggests some form of trade existed between our Mesolithic brethren and is supported by the wide distribution of these manufactured tools far beyond their quarry and production sites.   From analogy to Mesolithic peoples encountered during European colonialization of the Americas, our ancestors did not use money and therefore, surplus was not produced to obtain profit, but instead was an ancient form of “foreign policy” that brought the various scattered tribes together and served as a means of maintaining cordial relations.  Thus in the Mesolithic world, our ancestors did not prosecute trade wars, but likely practiced a kind of trade peace.

Our Neolithic ancestors developed additional survival skills like animal husbandry and proto-farming so they tended to spend more time in one place and their settlements began to take on a permanent nature.  They depended less on hunting and gathering and more on tending animals and crops for their existence.  Surplus food was stored as reserve for times of scarcity and individual private ownership is not well defined in the archeological record.  Proto-industry now matured into industry where labor specialization expanded with the rise of cities requiring large amounts of standardized building materials, pottery stockpiles, and large scale meat, cooking oil, and grain processing capabilities.  Within these cities we begin to see the development of a managerial class – the priests and their administrators – who control the cities’ collective food surplus but do not own it.  Using this control over food surplus the theocratic-managerial class were able to entice workers away from their own food producing activities to instead undertake civil works projects like digging and maintaining irrigation canals, excavating cisterns, constructing perimeter fortifications, erecting public buildings, the provision of sanitation, and maintenance of a bureaucracy to provide project services like design, procurement, and execution.  Again by analogy with Neolithic peoples encountered during colonialization, all of this occurred in a world without money and would not have been possible without the rise of barter trade and most importantly – the advent of labor barter.

The civilized Neolithic world had a quasi-collective property ownership structure evidenced by large repositories of unearthed clay pots used to store grain, cooking oil, and wine with no identifying ownership markings, a prevalence of communal buildings in the city layout – possibly mess halls, interconnected housing units et cetera.  Barter was the sole form of commerce, and is defined here as the mutually agreed exchange of goods and / or services between individuals without the aid of an intermediate exchange means (i.e., money).  Thus barter suggests some nascent concept of private ownership, and labor barter implies a notion of independence from the collective where one “owns” his labor to offer in exchange for rations from the collective stores.  With the growth of cities and the collection of groups of cities into civilizations, labor barter became the primary economic transaction in the civilized Neolithic world where money and private ownership of large surplus does not appear to exist.  Thus labor barter is one of humanity’s oldest and most fundamental social interactions and is a critical component to what it means for an individual to belong to a complex society – a necessary part of being human among one’s fellow men.

Labor barter allowed individuals to temporarily walk away from their personal food producing activities to provide collective labor for civil projects, yet still procure food from the city surplus for them and their families and was the necessary prerequisite for the development of both cities and industry.  E.g., it was common practice in ancient Egypt for Nile Valley farmers to move to the mountain quarries during the flood season and work there until the waters subsided, where they would then return home to survey their fields and plant, sow, and harvest that year’s single crop.  A societal equilibrium was established where the laborer received food for his labor and the theocratic-managerial class got the manual labor they needed for their public works projects, and more elaborate benefactor schemes were provided to full time skilled laborers and the administrative bureaucracy.  This equilibrium worked successfully for several millennia as archeology suggests there was no need for slavery in the civilized Neolithic world, nor was there the need to force people into a labor corvée to accomplish these ancient civil works projects.

As cities grew and our Neolithic ancestors entered the Bronze Age, it did not take long for larger families to become predominate under the barter trade system as they could pool their superior collective resources to accomplish more ambitious endeavors.  Over time these large families accumulated a surplus to themselves and used it to purchase the labor of others in pursuit of accumulating further surplus to themselves with which they then exchanged for land, animals, implements, and materials to build larger homes.  This development is evident in the archeological record in Bronze Age cities where for the first time there are clearly demarcated housing units and the clay pots in grain repositories bear ownership markings.  With the advent of bronze in faraway mountain lands these families assembled some of their surplus into caravans for export and trade with early metallurgists, salt workers, and native metal and gem miners.  Laden with goods for their return journey, these early traders picked up other exotic goods from cities along the route home.  Once home, these traders then exchanged the metals, salt, and exotic goods with other families possessing surplus and generated a “profit” in these exchanges  – e.g., 50 jars of commonly available wine could be traded for scarce brass ingots that were brought back home and traded again for 200 jars of wine.  Thus begins the dawn of private property and private enterprise embodied in this surplus of goods accumulated through one’s own endeavors – the mercantile period of human history.  Mercantilism is defined here as the exchange of goods for the purpose of generating a profit where the merchants and creditors of goods assume full liability and risk in the event of loss, theft, spoilage et cetera.  There is no mechanism within mercantilism to lessen or adsorb these potential risks and real losses.

Trade between cities and civilizations flourished through the Bronze Age into the Iron Age with labor barter, goods and service barter, and mercantile commerce all practiced simultaneously and settling into a similarly ordered societal hierarchy with the theocratic-managerial class now replaced at the highest level with kings and their royal lieutenants.  These kings assumed ownership over the collective surplus that was used more and more to provision standing armies and provide for a coterie of advisors and enforcers.  And for the first time, we observe not only a surplus in food stuffs but a surplus in gold and silver accumulated by the sovereign obtained through war, tribute, and the collection of taxes.  Thus it appears that this change in ownership of the communal surplus is the seminal factor in the formation of standing armies and prosecution of wars of conquest.  And with the advent of standing armies and taxes, we also observe the first instances of slavery and people forced into a labor corvée.

With rising Iron Age trade, networks of extensive, well maintained, and secured overland trade routes were constructed complete with toll and excise stations, and port cities proliferated for the transport of goods by sea.  It is safe to assume that with the expansion of trade facilities, the profits from mercantile endeavors were expanding as well and so too was the tax take from these activities as cities grew larger and better fortified and offered increased public amenities.  So the rhythm of civilized Iron Age humanity was established by the activities of trade, supported by the actions of agricultural, pastoral, and industrial producers with piracy, highway robbery, and war always lurking to disrupt this rhythm.  And thus the mercantile story remains consistent for approximately 4,500 years from the kings of Akkad to the French Revolution where the mercantile model operated and spread to nearly every corner of Eurasia and North Africa.  Despite the many advents and inventions to facilitate mercantile trade – usury, credit vehicles, precious metal coins and their use as a store of value in of its self, coin debasement and inflation, et cetera – this commercial model in its essential form as defined earlier continued unabated despite a kaleidoscope of empires, peoples, and technologies rolling through it.  That was, until the late 17th century arrived to the City of London Corporation and a small group of bankers and promoters would change the world forever.

At the onset of the end of mercantilism all modes of commerce described up to this point were practiced at some place in the world.  The hunter-gatherers remained active with the Bushmen of southern Africa, the arctic Eskimo, and the Australian Aborigine.  Mesolithic cultures were predominant in what was to become the United States and Canada, and civilized Neolithic peoples were predominant in Mesoamerica and the northern Andes mountains of South America, although they had declined significantly from their technological and cultural zeniths.  Thus a great swath of the world lay open to musket, canon, and credit based ventures seeking unlimited stocks of exotic goods and undiscovered gold and silver reserves for the taking.  But that taking was expensive, dangerous, and represented a significant risk and not unlikely loss of large quantities of gold and silver to both entrepreneur and creditor.  To get at these exotic goods and untouched mineral resources, one had to first invade and subjugate these regions, and due to the extreme investment risk inherent in colonization, a new commercial model was needed to make these endeavors profitable – to generate a “positive expected value”.  And that new commercial model was capitalism.

The imperative for the development a new commercial model was presented with the “conquest funded by physical money” rapid rise and failures of the Spanish and Portuguese states.  Although the 16th century Spanish conquest of the Americas brought the crown tremendous amounts of silver and gold, the costs to support their navy flotillas to protect and transport these riches were great, and losses through piracy and storms at sea occurred regularly.  These losses could have been adsorbed and profits maintained had colonial extraction been the only pursuit of the Spanish kings.  However, these riches soon drew the envy of rivals and grew the European continental aspirations of the Spanish kings themselves.  So when the high operating costs of colonial wealth extraction were combined with the very high costs of prosecuting wealth depleting wars closer to home – wars paid for in physical silver and gold – the mercantile commercial model began to show its flaws when applied to modern super-states as the Spanish treasury depleted with every battle.  This mature mercantile commercial model could not simultaneously secure extensive colonial trade networks and simultaneously prosecute large scale wars of attrition, and it inevitably led to state bankruptcy and military defeat.  The sovereign existing in the mercantile commercial world therefore had to choose between either trade or war, but ego generally led to the sovereign choosing both and therefore secured the downfall of many prosperous mercantile states.  And, as Spain was a Catholic country, foreign creditors were rare that would lend money to a nation that had banned usury and had not long before expelled its nascent bankers en masse.  The Portuguese experience was even more convoluted as their empire delivered little in the way of silver and gold and all commodities extracted like spices and textiles had to first be sold and converted into physical gold and silver to cover the costs to secure its colonial holdings and fund its wars on the European continent.  So if there were no buyers, there was no secure colonial empire and no European wars other than defensive, which did not last long as national gold and silver reserves depleted.  In the end, when the silver ran low, defeats at home and abroad mounted and the bankrupt states fell to those countries that could afford to continue to pay for these wars of attrition.  Some other funding solution was needed if a nation was to conquer the world, keep hold of it while extracting every conceivable thing of value from it, while at all times prosecuting wars of attrition on the European home front.

Capitalism is specifically defined here as a commercial model whereby investment risk is not wholly borne by entrepreneurs and their creditors, but instead spread over the entirety of society through the deployment of fiat money connected to a fractional reserve banking system.  Fiat money acts as the mere representation of some physical underlying store of value held in trust by the controllers of this fractional reserve banking system.  Under capitalism, investment losses transacted in fiat money do not jeopardize the physical holdings of real value – stockpiles of gold and silver – but only depreciate the perceived exchange “value” of that fiat money relative to some unit price, again in fiat money, of the underlying gold and silver reserve assuming a transparent and impartial banking system.  Thus as credit based business ventures in the aggregate progress into “profits” or “losses”, in the transparent and impartial banking system, fiat money will either appreciate or depreciate in purchasing power relative to the underlying unit reserve of real value held in gold and silver.  For those who control this fiat money, capitalism is a risk free proposition as the real value – gold and silver held in “trust” – never leaves their possession as fiat money losses accumulate.  It is instead the populace and especially the peripheral fiat empire satellites that bear the full effects of inflation and inevitably “pay” for aggregate commercial losses through their erosion of purchasing power.  Unlike mercantilism, losses are pushed onto both participants and non-participants in commerce which makes capitalism the ultimate “heads we win, tails they lose” banking hedge.  This hedge against any real value loss is the core mechanism of modern “free enterprise” as it is indeed enterprise free of risk and loss at the highest level of its system – the central bank cross-ownership nexus.  So unlike mercantilism where creditors lose physical gold and silver, under capitalism entrepreneurs lose chits of paper and credibility, and the central banks lose only chits of paper and continue to hold their gold and silver reserves regardless of all aggregate gains or losses transacted in fiat money.

Three mechanisms were required to enable this new capitalism to operate effectively – an opaque central bank, an empire forced to import value added goods from and export raw commodities to the home country, and a fiat currency used throughout the empire to pay for all these goods exchanges that tolerates no rival.  The central bank exercises full macroscopic control regarding who it will issue credit to or withhold credit from, is the sole agency that sets interest rates to its primary dealers who then devolve this fiat money down to all hopeful debtors, and provides the only store and account for gold and silver held in “trust” that theoretically gives fiat money its “value”.  Private ownership of the central bank is required to ensure the home country government does not interfere in monetary policy and risk the central bank’s power and profitability.  And besides discretely making its owners the most powerful unseen men in their home country, private ownership provides the opacity required to shield the true amounts of gold and silver held in “trust”, allows the initiation of economic “crises” as political weapons with reduced interference from the home government, and enables the covert manipulation of foreign exchange rates and commodity prices.  The empire was needed to cycle the fiat money out of and back into the home country via a “virtuous cycle” that provided underwriting to the aggregate credit-based export ventures domiciled in the home country.  The home country’s value added export economy was necessary for the return of the fiat money as this “virtuous cycle” underpins “growth” within the home country, increases the “value” of all goods and services including labor simultaneously through inflation, and acts as a dampener on inflationary pressures for imported raw materials at home.  And the fiat currency itself required only a printing press and a formidable standing army to assure its supremacy.

A special note on communism.  Both communism and capitalism are unnatural commercial models invented by monetary and political scientists and forced upon the world through conquest, revolution, legislation, incrementalism, and subterfuge.  Capitalism is no more a natural and evolutionary progression from mercantilism as is communism a natural and evolutionary progression from capitalism.  As capitalism is not a natural commercial evolution, it follows that neither is communism.  When one compares the nature of both commercial models using the definition of capitalism provided earlier, one finds that in both systems investment risk is not wholly borne by entrepreneurs or state entities and their creditors, but instead spread over the entirety of society through the deployment of fiat money connected to a fractional reserve banking system.  The aggregate accumulating gains or losses in fiat money from commercial activity in both systems never puts the underlying reserves of gold held by either capitalist or communist central banks at risk.  Furthermore, both systems employ opaque central banks to set monetary policy and both systems have fiat empires attached to their home countries.  Additionally, as both systems issue loans at interest, the accumulating amount of loans grows much faster than the underlying value of reserves held in “trust”, and this widening disparity depreciates the “value” of each systems fiat money equally.  This depreciation generates the inflation required in each system to simulate economic “growth” and the illusion of “prosperity”.  All aggregate losses from individual or state commercial activities are socialized to both participants and non-participants of commercial activity through this process of inflation.  Both systems tax their subjects, both systems rely heavily on war for economic “stimulus”, and both systems will tolerate no rival to their fiat empires.  Both see the other as the enemy, both strive for the destruction of the other, and both claim the moral and righteous prerogative.  Despite nearly 100 years of animosity, wars both hot and cold, and entire military infrastructures designed at the ready to destroy the other, there is at their fundamental cores no operating difference between communism and capitalism, and for all practical purposes they are identical systems.  Thus communism and capitalism are, in fact, the equivalence of choice between baked and boiled potatoes in political economy.

Thus with the advent of the capitalist commercial model of debt-based fiat money enterprise, the world stage was set for the consolidation of the colonial empires into an integrated nexus, the industrial revolution was set to proceed, and the prosecution of endless wars that no longer depleted national treasuries could be undertaken in earnest all thanks to the magic formula of unlimited fiat money…

Read Part 2: From Capitalism to Financialization tomorrow…

via ZeroHedge News https://ift.tt/33sXpGX Tyler Durden

Here’s What Happens Every Minute On The Internet In 2020

Here’s What Happens Every Minute On The Internet In 2020

Tyler Durden

Sat, 10/03/2020 – 23:00

In 2020, an unfathomable amount of digital activity is occurring at any given moment. As Visual Capitalist’s Aran Ali details below, this ongoing explosion in activity is the aggregate output of 4.5 billion internet users today, a number that’s projected to increase even further in coming years.

This powerful visual from Domo helps capture what happens each minute in today’s hyper-connected internet era, and it’s actually the eighth edition produced since the year 2012.

What can we learn from the evolution of what happens in an internet minute?

How Times Have Changed

Over its relatively short history, the internet has been a catalyst for both the rise and demise of new companies and platforms.

By looking at which brands have appeared in the graphic in earlier years, we can roughly chart the prominence of certain tech segments, as well as observe brands with the most staying power.

As you can see above, platforms like Tumblr, Flickr, and Foursquare showed some promise, but eventually got omitted from the graphic as they dropped off in relevance.

Meanwhile, tech companies like Facebook, Amazon, and Google have had impressive staying power, evolving to become some of the biggest companies in the world. In the process, they’ve caught up to longer-standing titans like Apple and Microsoft at the top of the food chain.

The New “New Thing”

Not surprisingly, much of the internet landscape looks different in 2020. Here are a few of the digital hot spots today.

Cash Transfers
Nearly $240,000 worth of transactions occur on Venmo per minute. This has served as a catalyst for parent company PayPal, which evolved along successfully with fintech trends. PayPal’s stock now trades at near all-time highs.

E-Commerce
Even before COVID-19 resulted in shuttered storefronts and surging online orders, e-commerce was a booming industry. It’s now estimated that $1 million is now spent per minute online. Amazon ships an astounding 6,659 packages every minute to keep up with this demand.

Collaboration Tools
In a predominantly remote-working environment, tools like Zoom and Microsoft Teams host 208,333 and 52,083 users each minute respectively. Particularly in the pandemic era, it seems that this trend is here to stay.

Accelerated Turnover

The accelerated world we are in today means that many companies do not sustain a competitive advantage for as long. Social media companies have dwindled as observed above, and this is similarly reflected in the average lifespan of an S&P 500 company.

A typical company’s tenure on the S&P 500 is expected to shrink rapidly in the next few years:

  • 1964: 33 years

  • 2016: 24 years

  • 2027E: 12 years

Companies are shaving anywhere between 15-20 years off those highs, with estimates of further declines. This metric symbolizes the rapid evolution of the business landscape.

What Lies Ahead

It’s seemingly easy to forget mankind is still very early in the developments when it comes to the internet. But in this short period, its rise to prominence and the broad digitization of the world has left us with a very eventful timeline.

If the last decade serves as a reference point, one can expect further and intensifying competition among tech companies. After all, the reward—winning in today’s digital economy—reaps much greater value.

All signs point to internet activity advancing to further heights, if not because of 5G and its associated breakthroughs, then perhaps due to the steady rise in people gaining internet access.

via ZeroHedge News https://ift.tt/34pXcDo Tyler Durden