Socialism is the New Economic System of the US
It's a movement that is rapidly spreading with massive government backing.
Some call it the new Republican Socialism. Traditionally, it was called Economic Fascism. Whatever you want to call it, it has rapidly leaped from an experiment in government ownership in a major corporation to the norm as Trump creates new shared ownership agreements with corporations Left and Right now.
Karoline Leavitt said on Wednesday. “The president is focused on how can the United States government make more money, how can we make our country wealthy and rich again? Cutting some of these unique, creative deals with companies around the world and here at home is just one way that the president is seeking to do that.”
Of course, that’s how you present it, but that means the government is taking those investments out of the reach of private share-holders who might’ve bought those shares and turning the dividends from those shares into public income, not private income. Still, it’s a positive spin on what this might do to resolve the US debt.
However, at the present rate of stock acquisitions, by the end of Trump’s fourth year, there won’t be a single Fortune-500 company (except the “losers”) in which the US government doesn’t own, at least, a 10% stake. And who will determine the losers? How about the guy who invests money from the one source that is infinite, if you don’t care what it does to the dollar, into the companies he wants to see succeed, like the ones that are not run by those who have acted as his enemies.
These types of “creative deals” have become a hallmark of the second Trump administration.
So far, here is a list of some of the government’s large share acquisitions:
U.S. Steel,
Intel and a few other chip makers,
Lithium Americas, a Canadian mining company,
Trilogy Metals
The government cannot pass a budget, but apprarently it should be helping run US corporations at their top level as the largest stakeholder in many companies. That way Trump can appoint his own designees to take board positions in every major US company. The cost of not going along with Trump on this, is that your opportunity for new ventures, mergers, whatever, gets tabled.
The deals have been justified as a way to protect America’s economic and national security interests, and the Lithium Americas announcement is no different. “It’s in America’s best interest to get that mine built,” Wright told Bloomberg. “Lithium Americas needs to raise some more capital so the mine is financially sound….We’re leaning in with a large amount of debt capital, so it’s just a more commercial transaction.”
And what better source than the entity that can order the printing of physical money? Or get enough people on the Fed to steer the Fed’s creation of computer-click money.
Like the other government stakes before it, the economic justification for this deal is flimsy. At the time of the initial Energy Department loan in 2024, global lithium demand was experiencing unprecedented growth, which has continued and is expected to continue as the use of semiconductors, electric vehicles, and renewable energy sources becomes ubiquitous. With the mine expected to produce 400,000 metric tons of battery-grade lithium carbonate each year and generate over $2 billion in revenue (according to a January estimate), there is no reason why taxpayers need to finance a project that the market seems to think will be profitable.
Plus …
Scott Lincicome, vice president of general economics at the Cato Institute, tells Reason that taking a 5 percent stake in a $2 billion project is a “rounding error for our debt problem.” The national debt currently stands at over $30 trillion held by the public. Lincicome points out that “the only way to get money back is by selling the stake, which [the Energy Department] doesn’t plan on doing.” At the end of the day, he adds, this deal has less to do with addressing the national debt and “everything to do with exercising more control over private businesses.”
Who benefits and how?
“And how” is more of an exclamation here than a question.
One of the big risks is how these stock purchases stuff the pockets of president’s biggest donors and how bigly they stuff those pockets. In the latest deal, John Paulson, a Trump donor who was once short-listed to lead the Treasury Department, saw the value of his Trilogy shares leap from $30-million to $100-million as the government sucked publicly available shares out of the market and put its imprimatur on the Trilogy.
What a slick and potent way to gain campaign donors and pay them back their political donations in full!
I can’t even fully imagine the number of ways this ill-gotten marriage between government and big business is going to cause corruption in both government and business to explode. Think about just a few of likely conflicts of interest and where they will go as examples:
A corporation where a major donor is CEO is competing for the acquisition of a major television network against a corporation where the CEO made no donation to the president. The FCC and FTC approve the merger of the corporation where the CEO was a major donor. (Corruption? Who knows when the regulating authority owns a share in the approved company.)
A few midterm elections are looking sketchy for candidates the president needs in order to retain or expand a congressional majority. The president slips word to the CEO of the company that a $100-million donation might just help approval of that gold mine they are striving to get, and, “You know how the government likes to buy into those deals. We’ve seen CEO stock values triple when the government does buy in.” Suddenly there is a $100-million donation spread across the various candidates on the president’s side who needed it, and the new mining lease gets approved a month or two later. (Did the president have that secret conversation as one source claims or not?)
The president is enraged at the CEO of a network that accused him of criminal activity. A major corporation the government has a large stake in does a hostile takeover of the network that published the accusations, and the CEO is fired. (Did the president use his board proxy to steer the major corporation that bought the lesser one into that action just so he could fire his enemy?)
Or flip it the other way. A major news network really needs to publish a legitimate story about the president’s likely illegal activity, but the US government owns a 12% voting share in the company. The CEO orders the story killed. Was it because she was afraid of being fired by a board vote, should the government cast its 12% against her?
The president sees a way for himself to profit and his family by getting the corporation to do something that is against the best interest of all other shareholders. (Did he use his influence to convince the other major shareholders to vote with his proxy by giving inside information to them about the government’s next move that he intends to decree that will allow them to benefit from the move?)
The president and his family and friends and clients load up on a great stock. A month later, the federal government loads up on the stock, and its price goes through the roof because everyone believes the Federal government will certainly support its own stocks now that all investors have seen that is exactly what the government has been doing. The president claims it was not insider training as evidenced by the fact that he bought the stock well before the government made any decision to buy it. No problem, even if it was, because he is immune from anything done as an official act. His argument publicly: the stock did so well after he and his friends loaded up on it that he could hardly let the US government pass up such a great buy for the taxpayers.
The possibilities of conflicts of interest are as endless as the imagination.
Did you think I was talking about Trump doing those things … as if he would ever act with a vengeance like that? No, I was thinking about what happens in 3+ years when a Democrat is voted into office to rule over by the time the government owns major shares in most Fortune-500 companies. Surely, the innumerable potential conflicts of interest don’t end when a Democrat takes over. But, oh yeah, I suppose those kinds of things could happen under Trump, too. Not that he would ever do that!
Fascist economics
Welcome to your new world! That’s why it worked so well for Hitler that it became the centerpiece of Fascist economics. What better way to control as much of the world as possible than to gain control over most of the corporations that used their influence to control government—switch the balance of power.
It does raise a nice prospect for the top 1% right as JPMorgan’s CEO says he is now more worried than most people about a crash in the stock market. The Treasury can just take out debt with the backing of the Fed and directly use it to buy up falling stocks. No need for the “arm’s-length” plunge protection team that was formed in the Reagan days anymore. The government will now be comfortable with just hosing up shares wherever prices are falling … unless the CEO has the misfortune of having made a public disagreement with the president. Good way to silence your powerful critics and get them all on your side.