The Simon Lectures. Series I, Part 3.

posted 2 years ago by simon_says 2 years ago by simon_says +41 / -0

Originally published on greatawakening.win, 2022 August 17.

This is Part 3 of Series I of The Simon Lectures.

Part 2 can be found here: https://greatawakening.win/p/15JAEy4lN4/the-simon-lectures--series-i-par/

Part 1 can be found here: https://greatawakening.win/p/15IrUHyPbl/the-simon-lectures--series-i-par/

By way of brute-force reasoning, in Part 1, we determined that the United States federal government is insolvent, and that all of our assets bear illusory valuations, in that they’re all overvalued. Meanwhile, in Part 2 we used economic and historical investigation to observe that the United States Dollar is backed by nothing other than the “full faith and credit” of an insolvent federal government; we further observed that we have compelled use of the dollar by imposition of the petrodollar arrangement, thereby creating synthetic demand for the dollar in order to keep it artificially strong.

At the outset, I promised that all of this would go somewhere. That – in due time – I would explain the rise of China, the crisis on the Southern Border, The Great Reset and the stolen election. So it’s not enough for me to point out threatening economic and social phenomena. I’ve got to show that these things add up to something, that they’ve had real effect, continue to have effect, and are determining the large-scale dynamics of our country and our world.

We’ve got more looking to do, more hidden realities left to uncover. But they’re not the topic of Part 3. I want to momentarily divert our attention to the real world. We’ve looked – just a little bit – at our society and economy, and we’ve found some cracks. What do you do if you find cracks in a wall at your house? You evaluate them. Are they serious? Are they harmless? Can they be taped over and painted? Or do they suggest you’ve got a significant problem with the foundation of your house?

Let’s start with our over-valued dollar. And let’s keep some perspective. America has the world’s largest economy and has been more or less stable for a century. And we are the world’s leading superpower. So our dollar should be strong. But my point in Part 2 was that by virtue of having linked our dollar to the purchase of OPEC oil, our dollar is not merely strong in a manner befitting of the world’s leading superpower, it is artificially strong. Our dollar is on steroids, folks. And oil is our performance enhancing drug.

I can hear you from here. You’re saying: So what? Who cares if our dollar is overvalued? It keeps the European vacations manageable. Let it be overvalued for all I care. If this is a “crack” in our social or economic “wall,” it’s nothing serious. Our foundation’s just fine. Surely a little tape will do.

Cheap European vacations come at a cost, my friend. By way of illustration, I refer you to the chart I’ve posted here: https://greatawakening.win/p/15JAllbcye/figure-1/c/

That chart depicts our nation’s trade deficit as a percentage of GDP on a historical basis. Something strange happened right about the time we secured full OPEC cooperation with our petrodollar plan in 1975. We began running unrelenting annual trade deficits that continue to this day. That’s what happens when the strength of your dollar reflects not only your nation’s productivity and ingenuity, but also reflects your nation’s cunning might. Our economics flipped upside down on our workers in the immediate wake of 1975. Sure, our workers were the most productive in the world. And it would stand to reason that their productivity should permit them a reasonable standard of living and a competitive advantage – at some reasonable price point for their goods. But no. But we couldn’t sell a thing overseas. And we still can’t. Why not? Our dollar is not just strong, not just appropriately strong, it’s hopped up on amphetamines. Put simply: it is not appropriately strong, it is too strong. And what is the correlative of our dollar being too strong? Every other nation's currency is too weak. The Pound is too weak; the Yen is too weak; the Peso is too weak; and so on. They're all artificially weak. Too weak to buy our goods.

So all of our exports are too expensive to sell anywhere else in the world. We can’t sell them to any buyers that don’t use a currency inflated by black gold. Your currency’s backed by gold? The yellow kind? Not good enough. You need a currency backed by the black kind, if you want to be able to afford our stuff. So the U.S. remains the sole viable marketplace for domestic manufacturers. The cheese stands alone. We sealed the fate of our nation’s workers in 1975 with the petrodollar. That’s why our manufacturing sector began flagging in the mid-70’s. That why the great cities of the Industrial Mideast corroded into the Rust Belt in the mid-70’s. And that’s why our manufacturers “just don’t win anymore.”

John Donne famously wrote that “Any man’s death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee.” Those are nice sentiments. But the bell didn’t toll for everyone in 1975. Maybe for our workers. Maybe for our manufacturing sector as a whole. But not for everyone. Let’s think together. Any domestic sector that exported any good would be systematically disadvantaged by an artificially propped up dollar. Any good? Any good at all? Wouldn’t that hurt everyone? Who would possibly benefit from this? Let’s see. It would have to be someone who exported no good. Someone who exported only dollars, themselves. No goods, but only exaggeratedly strong dollars. Who would that be? Oh. That’s right. Wall Street. Wall Street makes nothing anyone would have to buy. So a strong dollar doesn’t disadvantage it. In fact, it just shuffles dollars around like a complex deck of cards. And in 1975, Wall Street gazed into its hand, and found itself in possession of straight aces. Globalization began in earnest at that moment because Wall Street found itself sitting on dollars that would – over night – buy foreign business interests and foreign labor with propped up strength. Straight aces.

It's time for another chart. Last one for today, I promise. Take a look at this: https://greatawakening.win/p/15JAllbcyh/figure-2/c/

This chart shows the contribution of three financial “sectors” to aggregate market capitalization of the U.S. equities market: (1) Finance; (2) Resources (oil); and (3) everything else (Other). Look at the blue line. That’s the finance sector. That’s Wall Street. In 1970, it made up less than 10% of the aggregate market capitalization of the U.S. equities markets. Today? It hovers between 40% and 50% and is the single largest sector (by wealth – not by employment) in America. Whew! That was fast! Petrodollars are a hell of a drug.

Our bankers play with dollars they know to be artificially strong. And they have made strategic moves in view of this knowledge. And they have profited enormously from this artifice, while many have suffered. An entire ownership class on a scale not known in history has emerged because of all of this. The point I'm trying to make is not an object lesson in fairness or unfairness, if you will. The point is that these are the large-scale dynamics governing much of what you see. The implications are far-reaching, and are the source of reactions and counterreactions and counter-counterreactions. This is just getting good, and requires much elaboration on the evolution and extraordinary growth of our financial sector. I’m dying to tell you more. And when I do, we’ll reach one of our first explanatory conclusions about the mess we’re in. But this is getting long, and I’m committed to moving in manageable chunks. So I’m calling it quits here.

The takeaways from Part 3 are: (1) that the artificially strong dollar has decimated the U.S. manufacturing sector; but (2) has fueled the stratospheric growth of Wall Street.