Guest Post by Jim Kunstler
A 25 percent tariff on Chinese goods coming into the USA. That’ll git her done, all right — if you mean pulling the plug on America’s holographic economy. For about thirty years this is how it worked: China sent a massive volume of finished goods to us and we paid them with a massive volume of US Treasury bonds at ever-lower interest rates. A great deal for us while it lasted. Or so it seemed. Eventually, China caught onto the swindle and began liquidating its US bond holdings to buy gold and other real goods like African mining rights and farmland, Iranian oil, and port facilities in strategic corners of the world.
Now China has obviously designed a policy to dissociate itself as much as possible from the losing trade racket with us and replace the American market by increments with whatever customer base it can cobble together from the rest of the world. The Belt-and-Road initiative to physically link China with Central Asia (and beyond) with railroad lines and highways through some of the most forbidding terrain on earth was an out-front part of the plan, which we haplessly financed by buying all that stuff they sent over here for decades, and giving them the time to complete that colossal project.
Buying all those cheap toaster-ovens, patio loungers, sneakers, sheet-rock screws, alarm clocks, croquet mallets… well, you name it, naturally made it uneconomical for America to make the same stuff, with all our silly-ass sentimental attachment to union wages, eight-hour workdays, and pollution regs, so we just steadily let the lights go out and the roofs fall in, and ramped up the “financialized” economy, with Wall Street parlaying Federal Reserve largess into an alternative universe of Three-Card-Monte scams using multilayered derivatives of promises to repay loans (that have poor prospects of ever being paid back).
The outcome of that was two Americas: the hipsterocracy of the coastal elites and the suicidal deplorables of Flyoverland. The hipsterocracy sustains itself on the manufactured hallucinations of the holographic economy — that is, on the production of images, TV psychodramas, news media narratives, status competitions, public relations campaigns, law firm machinations, awards ceremonies, and other signaling systems to maintain the illusion that the financialized economy has everything under control as we transform into a nirvana of ultra high tech pleasure-seeking and endless leisure.
Meanwhile, out in Flyoverland, the holograms aren’t selling so well anymore. Nobody has the scratch to pay for them, not even those indentured to the neo-feudal empires of WalMart and Amazon. The children keep coming, though it’s nearly impossible for a man to support them, and increasingly the fathers just take themselves out of the picture. The women ferment in single-parent hopelessness. The children turn more feral by each generation. All remaining economic opportunity is diverted back into the leveraged buy-out mills of the Coastal Elsewhere. Even growing food out of the land was long ago converted into an Agri-Biz hustle based on practices with no future. And now the spring weather is drowning out that hustle and driving the corporatized farms into bankruptcy.
The two Americas have turned a formerly workable political system into a divorce court and for the past three years nothing of value has come out of that negotiation except more mutual grievance and animus. The hipsterocracy, drunk on craft beer, has concentrated its hologram production on an operatic extravaganza of racial and sexual melodrama and the stupendously dishonest campaign to vilify the deplorables’ champion, Mr. Trump. If it was originally designed to just divert the deplorables from their economic injuries, it actually succeeded in focusing their dwindling energy into wrathful, righteous rage against those who foreclosed their future.
As I write, the stock markets have opened up in what looks like the beginning of a very bad week — apparently a reaction to Mr. Trump’s floundering trade deal talks. When these markets go emphatically south, both Wall Street and its hipsterdom subsidiary will find themselves reduced to their own special hell of deplorability. The realignment that emerges from that unholy mess will be the surprise of our lives.
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THE KUNT:
Surgical wordsmith raconteur par deux. Scalpel phrases slicing through the flesh of his subject’s leaving them bleeding, exposed and in desperate need of disinfectant and stitches before reality infects them with terminal truth.
Is “America’s holographic economy” headed for hospice?
The surgeon said: “The realignment that emerges from that unholy mess will be the surprise of our lives?”
Not for Preppers…who are also Stackers…who are also men and woman who are ready to fight…in a Mad Minute.
https://www.urbandictionary.com/define.php?term=mad%20minute
There’s a word used by knitters, SABLE: stash acquisition beyond life expectancy. I’m there. I also have some useful skills so if SHTF I’ll be ok for awhile. Beyond awhile, well, who knows. The Zimbabwean stock market ran into the stratosphere while the economy tanked to the point of cholera and dining on garbage.
So long as the PPT is around the Stock Market will never crash, unless ‘they’ want it to. Outsourcing to China and the third world happened because manufacturers in America couldn’t compete with goods produced by slave, or near slave labor in other countries.
Mygirl…maybe,
There is another ‘Sable’ that I found intriguing and a kinship towards.
“The Sable (Martes zibellina) is a species of marten, a small carnivorous mammal.” (I’m a short husky carnivorous mick/wop mammal…AKA…Mickish Adagio).
“Sables inhabit dense forests (just like me) dominated by spruce, pine, larch, cedar, and birch (mostly pine some hardwoods but over 40 fruit & nut trees for me) both lowland and mountainous terrain.” (All lowland for this Mickish Adagio).
“They defend home territories that may be anything from 4 to 30 square kilometers (1.5 to 11.6 sq. mi) in size (I will defend my 14 acres to the death) depending on local terrain and food availability.” (Got the food availability covered).
“However, when resources are scarce they may move considerable distances in search of food.” (Hmmm… I have a Bug Out Bag for natural disasters but if other carnivorous mammals come calling after crawling out of the northern swamp or fleeing the distant government plantation/hood…AKA…Marxist Scumsuckers or the Horde that is Golden and ditty bops not walks…the fight for dominance will be to the death).
https://en.wikipedia.org/wiki/Sable
Wall Street never loses. They’ve been winning this whole time and will continue to win. They are the ONLY winners in this economy. They even win when they lose. It’s called a “bailout”. The current system does not work as long as there are no consequences for bad actors. Instead we have a system where you are a billionaire and if you stand to lose everything or most of your wealth you get a bailout to remain a billionaire.
Once a billionaire always a billionaire. It’s a no risk investment.
“I think the human race has squandered its gift, and I think this country has squandered its promise. I think people in America sold out very cheaply, for sneakers and cheeseburgers. And I don’t think it’s fixable” ~ George Carlin
It’s not supposed to be fixable. That’s the Plan.
Destroy the family unit in any nation and its culture collapses – completely.
“The children keep coming, though it’s nearly impossible for a man to support them, and increasingly the fathers just take themselves out of the picture. The women ferment in single-parent hopelessness. The children turn more feral by each generation.”
NAILED IT!
He repeats what I’ve often said.
Exporting manufacturing to China was a way to disguise the vast credit inflation since 1981. Borrow-to-spend took off (creating two dollars of wealth for every dollar borrowed and spent) but because manufactured goods’ prices collapse in real terms, we didn’t notice consumer goods prices rise.
What did rise were the prices of IOU’s and of common stocks. Bull markets in bonds and stocks created the illusion that vast wealth was being created there without monetary inflation (which apparently only counts if it cause consumer goods prices to spike higher.)
We appeared to have a Perfect System. Wealth spiraled higher even as the “cost of living” held relatively static. It was a vast lie, and readers of TBP know it.
Most wealth today is actually just a pile of IOU’s.
GDP is meaningless because it counts spending that exists due to borrowing, but it doesn’t back out the borrowing. It’s the equivalent of saying I’m flush with wealth because I borrowed a million dollars and spent it…all it counts is the SPENDING!!!!
But GDP is important to the parasite class. Banksters, financiers like John Mauldin and everyone who feasts at the many tits of Uncle Sam and other taxing bodies are made RICH by all the taxes and interest and fees generated by GDP rising. It doesn’t matter to them if we’re indenturing ourselves as chattel slaves.
They’re scum. Each and every one of them.
Deter – the US exported little manufacturing to china. Manufacturing as a percent of GDP in the US is largely unchanged. The vast majority of jobs lost in mfg were lost to automation. The US has lost the equivalent of a round 65 million manufacturing jobs since 1960. You think that we lost 65 million jobs to China? I agree with the rest of what you said, but the idea that we lost vast swathes of manufacturing jobs to China is incorrect, and is the basis for the false idea that somehow vast swathes of jobs can be returned to the US. That is not possible. Any additional mfg done in the US will be done with very little labor indeed.
As you note, what happened is that the US purchased EXTRA goods bought via credit (those Treasuries Kunstler mentioned in the article plus a lot of private debt was used).
Agreed.
When Motorola shipped manufacturing from local to China, the local plant already had almost zero human jobs. It was all automated.
Why were factories shipped overseas? Because the Chinese promised to produce at a radically lower cost so that the arbitrage between low-cost-manufacture and high-price-retail (in the USA) was massive.
The entire point was to enhance asset-stripping people in the USA.
Americans cropped grass and chewed cud while the parasites created a system by which we, in order to live, hocked the entire country at the Multi-National-Corporation Pawn Shop.
Great article.
But what I really want to say is that we have several commenters here who appear to be Newbies … and they are damned fine contributors. No IQ test for them!!
Deter Naturalist is an old commenter using a different name.
For more than two decades I heard and read that the weakness of China was in the disparity between the coastal population and the interior folks. Interesting to hear it said about the USA with frequency. Deplorable.
The financialization of our economy is very telling and cannot bode well for my peers and myself.
Well as Colonel Angus said there is nothing better than going south, way down to the deep south where it is hot and steamy.
Kunstler says above: “Buying all those cheap toaster-ovens, patio loungers, sneakers, sheet-rock screws, alarm clocks, croquet mallets… well, you name it, naturally made it uneconomical for America to make the same stuff, with all our silly-ass sentimental attachment to union wages, eight-hour workdays, and pollution regs”.
Now, I do not know if he is being sarcastic, but he is largely right with that comment. A nation has to do whatever is required to compete. If the competition is working longer, harder and smarter, hanging on to 8 hour days while getting your ass kicked because you refuse to work as hard as they do is insane.
This will only change when people actually start starving.
Deter – was my better half . Both of us thank you Stucky for the sincere compliment. God bless and carry on.
Who knew this site had so many liberal writers ?
Many simply defy classification or categorizing. The Barr flap seems to have caused a number of Never Trumper plants to unmask themselves. Some might say crawl out from under their flat RINO rocks. Sorry, JEB! will never be President.
I am fairly certain our increasing coterie of Jew haters are trolls from leftist organizations seeking to discredit the site.
Harrington – never thought of that. You could be right.
Going South, Obama Style:
You could do what every other non-anglo nation does, like germany and japan, vat tax, which is a defacto tariff, or just do the tariff, or enforce property and intellectual IP laws, or like Trump said he would do, have a reverse tax on goods coming in from domestic foreign subsidaries. the ruling class wanted this one way free market death because it made them profits. the other twin of capital–labor, can be seen in the same context of unlimited “free” movement of humans into the first world. Capital is a lowest common denominator instrument.