Fascism displaces Neoliberalism
Written by Alfonso Elizondo
Created on Monday, November 14, 2016, 16:46
Although many factors contributed to Trump’s victory in the November 8 election, as usually happens with major social and political mutations in empires that are coming to an end, most of the people who report to the general public agree that the indecent and provocative way in which Trump conducted his campaign triggered the anger and frustration of a small white minority that has been losing economic and social ground since the late 1980s. At that time the small elite of US billionaires that control the banking and monetary system established the neoliberal model that has been gradually reducing the income of the middle class and relegating them to an economic and social level well below that of the generation immediately preceding them. This minority of impoverished whites is barely 22% of the total US voting population, but they have caused a crisis that undoubtedly has a global dimension and will generate unpredictable conflicts.
Of all the experts in economics and politics who have so far analyzed the unexpected outcome of the US election, there is no doubt that Economics Professor, Steve Keen of Kingston University London, is the one who has made the most profound and level-headed assessment of what has happened in the United States. Keen published an article in Forbes Magazine on November 9, titled ‘To Make America Great Again. Write off the Private Debt.’ Professor Keen points out that the huge, uncontrolled increase in private debt in recent years has been the real source of weakness in the US economy where private debt has already reached 150% of GDP.
In the chart below, Keen demonstrates that private debt is the main reason why middle class demand has fallen so much. He says that the current conflict is due to the rising private debt that continues out of control as the main firms are refusing to lend or invest, while households are reluctant to use credit for consumption purposes. Credit demand has now returned to a level similar to where it was in the period between 1950 and 1970 which was considered the ‘Golden Age’ of the United States, when there was good credit and well-paid jobs. But it easily turned into a negative reality like the reality of the Great Recession of the 1930s, because the government put more effort into rescuing Wall Street rather than ordinary citizens walking along the street.
This situation can be clearly seen in the following chart, while Washington economists tell the public that the debt does not matter and nothing can be done about it, which is totally wrong. The Government says that when someone owes money, it is other people’s assets, so the total level of debt does not matter. But the United States Government is trying to ignore the evidence shown in this chart. While the current great recession started a decade ago – in early 2006 – they are trying to hide the fact that the Fed is sending Wall Street the money for that debt instead of giving it to consumers on the street, and so the money is going back to the billionaires who own most of the shares on Wall Street.
Addendum: These two graphs created by Professor Keen explain why no conflicts emerged with the currency speculation systems of the US and global Stock Markets. Without knowing why, Trump continues to think that the State must compensate the Central Bank for all the losses arising from the misuse of speculative capital by expediting its replacement with Treasury bills that are still denominated in US dollars around the world.