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U. S. National Covid Economic Collapse and the Collapse of the U. S. Dollar.
Episode 45 April 13, 2020.
CLP Topic Category: Economic Collapse.
U. S. National Covid Economic Collapse and the Collapse of the U. S. Dollar.
Our podcast today is titled, U. S. National Covid Economic Collapse and the Collapse of the U. S. Dollar.
This podcast audio and text is just the introduction to a much longer article, available at the clpnewsnetwork.com.
The other sections of the longer article are:
Section 1. The Origins of the Economic Collapse.
Section 2. The Collapse of the National GDP.
Section 3. The Effect of the GDP Collapse on the U. S. Dollar as International Reserve Currency.
Section 4. The Collapse of the U. S. Dollar.
Section 5. Trump’s Economic Goals for Economic Growth.
The full audio and text of this podcast is available for free, for one week. The entire historical archive of all CLP podcasts is available for an annual subscription of $30.
Introduction: How The Covid Political Public Relations Panic Damaged the U. S. Economy.
Our podcast extends the analysis of Angelo Codevilla about the economic effect of Trump’s initial March 15, 2020, “15 days to stop the spread,” decision to shut the U. S. economy down, and his subsequent decision to shut the nation’s economy down for an additional 30 days, on March 30, 2020.
In his article, “Is the President Forgetting Politics 101?” Codevilla combines a political analysis with an economic analysis in order to describe President Trump’s decision to shut the U. S. economy down.
Codevilla’s analysis begins with the identification of an American “ruling class” that is at war with President Trump’s effort to defend the sovereign national economic interest.
The ruling class wants globalism, not Trump’s economic nationalism.
Codevilla writes,
“The ruling class savors the grip on us that it has achieved during the past three weeks—above all the presumption that we must quietly accept non-legal decrees from on high. It will not give up that grip without a fight. President Trump has placed himself on a path that leads to political suicide. He did this by surrendering to the ruling class—Drs. Anthony Fauci, Deborah Birx, et al, not to mention House Speaker Nancy Pelosi, his judgment on whether and for how long, the country should be shut down.”
We extend Codevilla’s analysis of the ruling class to include their motivation to damage Trump, politically. Trump had been having campaign rallies where he touted the stock market and economic growth as benefitting working class Americans.
It was imperative for the political forces who hate Trump to take those two issues away from him.
TABLE B-56. Common stock prices and yields, 2000-2019
The Dow Jones increased from 24,719, in 2017, to 28,538, at the end of 2019.
The GDP was increasing at an average annual growth rate of 3%.
TABLE 8-9. Real gross domestic product by industry, value added, and percent changes, 1997-2018
After the ruling class unleashed the fear panic, the Dow Jones dropped to a low around 18,000, and GDP is expected to decline about 35% by the end of 2020.
The ruling class used the public relaltions panic of Covid to destroy Trump’s two main political issues, and the damage to the economy, via shutting the economy down, was collateral damage to their main goal of damaging Trump.
As Bill Gates also suggested, banning large public gatherings, such as Trump rallies, may also be a good idea to stop the spread and flatten the curve.
Prior to the Covid panic, the ruling class had already damaged the economic structure of America with its political promotion of disastrous trade deals.
The trade deals caused the American economy to bifurcate into a component of big companies that benefit from global trade, and the rest of the economy that is not connected to global markets.
After the economy split into two parts, the labor market shifted from a diversified job structure to a job structure where 80% of all jobs were in the service sector.
The ruling class had soothingly murmured, in 1992, that the loss of U. S. manufacturing jobs would be replaced by high-paying, stable jobs in the service sector, commonly called the gig economy.
That was a lie, on the same order of magnitude as the lies of the Bill Gates-funded IHME model that Trump relied upon to shut the economy down.
The shift to a service sector economy left the labor market and economy much weaker to recover from an economic collapse because the service sector does not generate the same level of income and employment multipliers as manufacturing.
For example, in order to produce a dollar of output, each of the six service sectors requires about 3cents from the manufacturing sector. The economy, after the trade deals, was entirely dependent on consumer spending, much of which was spent on cheap Chinese imports.
Every dollar of consumer spending delivered to the finished goods, final demand market in services, like bars and retail shops, generates an additional 15 cents in indirect income in other sectors.
The consumer spending services part of the economy became disconnected from the manufacturing economy because manufacturing was now in China.
In order to produce a dollar of output, the manufacturing sector requires 34 cents from its own supply chain and only about 9 cents from the 6 service sectors.
Every dollar of output delivered by manufacturing to the final demand markets creates about $2 worth of indirect income benefits, and an additional 50 cents in induced, or third round benefits.
Bureau of Economic Analysis
Commodity-by Industry Direct Requirements, After Redefinitions (in producers' prices)
The transition to the services sector, as a result of trade with China, weakened the U.S. economy because services are not well integrated into the rest of the economy, and have very few income multiplier linkages with manufacturing.
The national economy is weak because 70% of all GDP is in the services sector, and about 80% of all jobs are in the services sector.
Even if the economy is opened back up, the economic structure is already too weak to transmit employment and income multipliers throughout the gig economy.
Large global corporations, and the ruling class, will not suffer to the same extent as the gig economy because the global corporations still have their global interindustry supply chains to transmit economic growth to that part of the economy.
In other words, as a result of the bifurcation, about 100% of all future GDP will be related to the 30% of the economy that is connected to the global market.
The U. S. economy, and the social structure, will look just like the European economy and social structure, with large corporations conducting business as usual, and the rest of society making a living cutting each other’s hair and painting each other’s toenails.
The reason that Kudlow and Navarro are wrong about the U. S. economy “bouncing back,” whenever Trump gets around to opening the economy back up is that the economic structure of the American economy was already damaged by the trade deals, and the gig service sector does not have interindustry multiplier linkages with the rest of the economy.
Just like Chicago’s economy, in the 1980s, the U. S. economy has been “hollowed out” by the trade deals. Trump’s Covid economic stimulus, that would have worked in America, prior to 1992, is wasted because the employment and income multipliers are gone.
We argue that this will not be a hockey stick, V-shaped, economic recovery. The income pathways to distribute income across all social classes no longer exist.
This argument about the economic importance of supply chains and multipliers is similar to the argument about the economic weakness caused by the global corporations moving the biotech and pharma interindustry supply chains to China.
The economic sovereignty of the nation is damaged by having the medical supply chains in China, and the crony capitalists who are responsible for moving the supply chains to China are the same forces that are undermining Trump’s Presidency.
It will take years to rebuild the national economic interindustry linkages, even if Trump is successful in compelling the companies to move manufacturing production back to the U. S.
The structural weakness of the service sector in generating economic growth is made even more damaging because the service sector does not generate technological innovation.
Almost 75% of all future economic growth is caused by technological innovation, not productivity improvements.
And, that technological economic growth is caused by private business capital investments in new technology ventures, not increased government spending.
Trump’s massive new government spending stimulates fleeting, transitory, increases in consumer consumption, but does not increase private sector investment in technology innovation.
The ruling class has been successful in consolidating technology innovation in a big business-university closed loop of research, where the benefits of innovation are tightly controlled by the global companies.
In the same way that the Covid stimulus is wasted because the economic structure has been damaged, the large corporations direct the benefits of innovation to themselves, and not to the broader domestic economy.
In other words, the global corporations, and the ruling class, benefit from this closed innovation platform, while the rest of the American society suffers.
This is one explanation of why Gates and Fauci want a university-corporate research based vaccine to deal with Covid, and are not interested in promoting the existing malaria drug to treat the disease.
Gates and Fauci are globalists, intent on protecting globalism, not Trump’s national economic sovereignty.
That unelected big business power over technology innovation is not going to bounce back, when Trump finally decides to open up the economy.
As both Codevilla, and Rush Limbaugh have noted, the only person that can peel away Trump voters from Trump, is Trump.
Trump is on the verge of going from being a great President to being the world’s greatest magician, who made the greatest economy, in history, disappear in 60 days.
I am Laurie Thomas Vass, and this is the copyrighted Citizen Liberty Party News Network podcast for April 13, 2020.
View all episodes
By CLP News Network with Laurie Thomas VassEpisode 45 April 13, 2020.
CLP Topic Category: Economic Collapse.
U. S. National Covid Economic Collapse and the Collapse of the U. S. Dollar.
Our podcast today is titled, U. S. National Covid Economic Collapse and the Collapse of the U. S. Dollar.
This podcast audio and text is just the introduction to a much longer article, available at the clpnewsnetwork.com.
The other sections of the longer article are:
Section 1. The Origins of the Economic Collapse.
Section 2. The Collapse of the National GDP.
Section 3. The Effect of the GDP Collapse on the U. S. Dollar as International Reserve Currency.
Section 4. The Collapse of the U. S. Dollar.
Section 5. Trump’s Economic Goals for Economic Growth.
The full audio and text of this podcast is available for free, for one week. The entire historical archive of all CLP podcasts is available for an annual subscription of $30.
Introduction: How The Covid Political Public Relations Panic Damaged the U. S. Economy.
Our podcast extends the analysis of Angelo Codevilla about the economic effect of Trump’s initial March 15, 2020, “15 days to stop the spread,” decision to shut the U. S. economy down, and his subsequent decision to shut the nation’s economy down for an additional 30 days, on March 30, 2020.
In his article, “Is the President Forgetting Politics 101?” Codevilla combines a political analysis with an economic analysis in order to describe President Trump’s decision to shut the U. S. economy down.
Codevilla’s analysis begins with the identification of an American “ruling class” that is at war with President Trump’s effort to defend the sovereign national economic interest.
The ruling class wants globalism, not Trump’s economic nationalism.
Codevilla writes,
“The ruling class savors the grip on us that it has achieved during the past three weeks—above all the presumption that we must quietly accept non-legal decrees from on high. It will not give up that grip without a fight. President Trump has placed himself on a path that leads to political suicide. He did this by surrendering to the ruling class—Drs. Anthony Fauci, Deborah Birx, et al, not to mention House Speaker Nancy Pelosi, his judgment on whether and for how long, the country should be shut down.”
We extend Codevilla’s analysis of the ruling class to include their motivation to damage Trump, politically. Trump had been having campaign rallies where he touted the stock market and economic growth as benefitting working class Americans.
It was imperative for the political forces who hate Trump to take those two issues away from him.
TABLE B-56. Common stock prices and yields, 2000-2019
The Dow Jones increased from 24,719, in 2017, to 28,538, at the end of 2019.
The GDP was increasing at an average annual growth rate of 3%.
TABLE 8-9. Real gross domestic product by industry, value added, and percent changes, 1997-2018
After the ruling class unleashed the fear panic, the Dow Jones dropped to a low around 18,000, and GDP is expected to decline about 35% by the end of 2020.
The ruling class used the public relaltions panic of Covid to destroy Trump’s two main political issues, and the damage to the economy, via shutting the economy down, was collateral damage to their main goal of damaging Trump.
As Bill Gates also suggested, banning large public gatherings, such as Trump rallies, may also be a good idea to stop the spread and flatten the curve.
Prior to the Covid panic, the ruling class had already damaged the economic structure of America with its political promotion of disastrous trade deals.
The trade deals caused the American economy to bifurcate into a component of big companies that benefit from global trade, and the rest of the economy that is not connected to global markets.
After the economy split into two parts, the labor market shifted from a diversified job structure to a job structure where 80% of all jobs were in the service sector.
The ruling class had soothingly murmured, in 1992, that the loss of U. S. manufacturing jobs would be replaced by high-paying, stable jobs in the service sector, commonly called the gig economy.
That was a lie, on the same order of magnitude as the lies of the Bill Gates-funded IHME model that Trump relied upon to shut the economy down.
The shift to a service sector economy left the labor market and economy much weaker to recover from an economic collapse because the service sector does not generate the same level of income and employment multipliers as manufacturing.
For example, in order to produce a dollar of output, each of the six service sectors requires about 3cents from the manufacturing sector. The economy, after the trade deals, was entirely dependent on consumer spending, much of which was spent on cheap Chinese imports.
Every dollar of consumer spending delivered to the finished goods, final demand market in services, like bars and retail shops, generates an additional 15 cents in indirect income in other sectors.
The consumer spending services part of the economy became disconnected from the manufacturing economy because manufacturing was now in China.
In order to produce a dollar of output, the manufacturing sector requires 34 cents from its own supply chain and only about 9 cents from the 6 service sectors.
Every dollar of output delivered by manufacturing to the final demand markets creates about $2 worth of indirect income benefits, and an additional 50 cents in induced, or third round benefits.
Bureau of Economic Analysis
Commodity-by Industry Direct Requirements, After Redefinitions (in producers' prices)
The transition to the services sector, as a result of trade with China, weakened the U.S. economy because services are not well integrated into the rest of the economy, and have very few income multiplier linkages with manufacturing.
The national economy is weak because 70% of all GDP is in the services sector, and about 80% of all jobs are in the services sector.
Even if the economy is opened back up, the economic structure is already too weak to transmit employment and income multipliers throughout the gig economy.
Large global corporations, and the ruling class, will not suffer to the same extent as the gig economy because the global corporations still have their global interindustry supply chains to transmit economic growth to that part of the economy.
In other words, as a result of the bifurcation, about 100% of all future GDP will be related to the 30% of the economy that is connected to the global market.
The U. S. economy, and the social structure, will look just like the European economy and social structure, with large corporations conducting business as usual, and the rest of society making a living cutting each other’s hair and painting each other’s toenails.
The reason that Kudlow and Navarro are wrong about the U. S. economy “bouncing back,” whenever Trump gets around to opening the economy back up is that the economic structure of the American economy was already damaged by the trade deals, and the gig service sector does not have interindustry multiplier linkages with the rest of the economy.
Just like Chicago’s economy, in the 1980s, the U. S. economy has been “hollowed out” by the trade deals. Trump’s Covid economic stimulus, that would have worked in America, prior to 1992, is wasted because the employment and income multipliers are gone.
We argue that this will not be a hockey stick, V-shaped, economic recovery. The income pathways to distribute income across all social classes no longer exist.
This argument about the economic importance of supply chains and multipliers is similar to the argument about the economic weakness caused by the global corporations moving the biotech and pharma interindustry supply chains to China.
The economic sovereignty of the nation is damaged by having the medical supply chains in China, and the crony capitalists who are responsible for moving the supply chains to China are the same forces that are undermining Trump’s Presidency.
It will take years to rebuild the national economic interindustry linkages, even if Trump is successful in compelling the companies to move manufacturing production back to the U. S.
The structural weakness of the service sector in generating economic growth is made even more damaging because the service sector does not generate technological innovation.
Almost 75% of all future economic growth is caused by technological innovation, not productivity improvements.
And, that technological economic growth is caused by private business capital investments in new technology ventures, not increased government spending.
Trump’s massive new government spending stimulates fleeting, transitory, increases in consumer consumption, but does not increase private sector investment in technology innovation.
The ruling class has been successful in consolidating technology innovation in a big business-university closed loop of research, where the benefits of innovation are tightly controlled by the global companies.
In the same way that the Covid stimulus is wasted because the economic structure has been damaged, the large corporations direct the benefits of innovation to themselves, and not to the broader domestic economy.
In other words, the global corporations, and the ruling class, benefit from this closed innovation platform, while the rest of the American society suffers.
This is one explanation of why Gates and Fauci want a university-corporate research based vaccine to deal with Covid, and are not interested in promoting the existing malaria drug to treat the disease.
Gates and Fauci are globalists, intent on protecting globalism, not Trump’s national economic sovereignty.
That unelected big business power over technology innovation is not going to bounce back, when Trump finally decides to open up the economy.
As both Codevilla, and Rush Limbaugh have noted, the only person that can peel away Trump voters from Trump, is Trump.
Trump is on the verge of going from being a great President to being the world’s greatest magician, who made the greatest economy, in history, disappear in 60 days.
I am Laurie Thomas Vass, and this is the copyrighted Citizen Liberty Party News Network podcast for April 13, 2020.