Tag: economics

The Reason Socialism Appeals to the Youth

The establishment continues to dismiss the growing support for socialism among young people as nothing more than college indoctrination. That is only part of the story. If we refuse to understand why an entire generation is losing faith in capitalism, then we are destined to repeat the very mistakes that gave rise to socialism throughout history. The Fox News analysis citing Heartland Institute and Rasmussen polling noted that 53% of Americans aged 18 to 39 said they would support a Democratic Socialist for president, while 76% favored nationalizing industries such as health care, energy, and big tech. The overwhelming motivation is not ideology, it is economic despair.

Young Americans have entered adulthood during one of the most distorted economic periods in modern history. Housing has become unattainable for millions. According to the same polling, 74% of young voters believe America is facing a housing crisis, 62% say the economy is unfair to young people, and 36% describe themselves as struggling financially or in outright crisis. When asked why they supported democratic socialism, the most common answer was simple: housing costs. This is precisely what governments never want to admit. People do not abandon free markets because they suddenly become Marxists. They lose faith when the system no longer appears to reward hard work or provide a realistic path toward owning a home, raising a family, or building wealth.

This is hardly unique to the United States. Across Europe, Canada, Australia, and much of the developed world, younger generations face soaring rents, stagnant real wages after inflation, enormous student debt, and some of the weakest housing affordability on record. Many graduates cannot find careers matching their education, while others remain trapped in temporary work or are forced to live with their parents well into adulthood. Governments spent decades inflating asset prices through endless debt expansion and artificially low interest rates. Those who already owned homes and financial assets became wealthier, while those entering the workforce found themselves permanently priced out. That is not capitalism functioning properly. It is the direct consequence of governments manipulating markets and accumulating unsustainable debt.

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Japan’s Keynesian Mirage: How Debt, Inflation, & A Collapsing Yen Expose A Failed Model

Japan’s yen crisis exposes the long‑running failure of the Keynesian strategy that has dominated the country’s economic policy: chronic deficits, exploding public debt, and engineered inflation are now eroding Japan’s purchasing power, competitiveness, and monetary stability.

For decades, many mainstream analysts pointed to Japan as proof that a rich, “monetarily sovereign” country could keep an extremely high public debt without relevant consequences. The argument was simple: as long as the state can issue its currency, it can always print whatever is needed to cover deficits, refinance debt, and support public spending.

In reality, that has meant public debt soaring to around 250% of GDP, one of the highest levels in the developed world, while repeatedly increasing government expenditure and leaving large, persistent deficits. Even the IMF notes that, even after several years of moderate growth, prudence is “key to keep debt‑to‑GDP on a firmly downward path,” admitting that the current level is a structural vulnerability.

Japan’s apparent stability depended on a crucial external factor, the country’s enormous exporting capacity.

As a leading exporter of cars, technology, and capital goods, the country attracted a continuous inflow of US dollars and foreign capital that supported a stable currency and kept inflation low, despite fiscal excess. That protective layer is eroding fast. Headline inflation has edged up from 1.4% in April 2026 to 1.5% in May, while core inflation has held at 1.4%, still below the Bank of Japan’s 2% target but clearly positive after three decades of near‑zero price growth.

A key factor of the Japanese model was its export engine and the “golden goose” of capital inflows.

These two factors allowed the country to live with large debt and deficits without immediately triggering high inflation. However, that mirage is vanishing as external performance falters and inflation, though moderate, bites into real incomes.

Keynesianism did not spur growth or improve Japanese citizens’ lives. It just bloated an unsustainable government machine.

Recent data show that price increases are now broad‑based, not confined to a few categories. In May 2026, overall CPI inflation was 1.5% year-on-year. However, food prices rose 3.5% year-on-year, which is a heavy burden for households. Goods inflation stood at 2.0%, while services inflation was around 1.0%.

Underlying inflationary pressures, particularly in services and wage‑sensitive sectors, are now embedded in the system rather than an isolated energy shock. Meanwhile, real net wages are stagnant or declining. Japanese citizens face an affordability crisis.

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Deflation Is Not The Villain – The Overleveraged Fiat System Is

It is important to clarify something here.

While mainstream economists, the financial media, academia, and other gatekeepers of the rotten fiat currency system howl about the dangers of deflation, it is worth taking a moment to consider whether it is really such a bad thing.

First, it is important to define our terms.

The correct and true meaning of inflation is an increase in the money supply. So the correct and true meaning of deflation is a decrease in the money supply. But that is not what most people mean when they refer to deflation, because the money supply rarely contracts in a fiat monetary system. When most people say deflation, they mean a general fall in prices.

One of the biggest popular misconceptions in economics is that a general fall in prices is a “bad thing.”

It is an enormous misnomer. Falling prices caused by increases in productivity are actually a good thing. Who does not want to see their money go farther?

Technology is naturally deflationary. It drives down costs, increases efficiency, and makes goods and services cheaper over time.

In an honest monetary system, that would mean falling prices and rising purchasing power. In other words, your money would buy more as technology advances.

But that is not how the current system is designed to work. In fact, it does the opposite. It is like running on a treadmill that keeps accelerating.

In a fiat currency system, deflationary increases in productivity are more than offset by inflation, which benefits people who own stocks, houses, and other assets that rise with inflation, and hurts those who depend on wages denominated in the debased currency.

In short, in a fiat currency system, the benefits of deflationary technology primarily accrue to asset holders, because the forced inflation created by central banks pumps up asset values.

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The Myth Of Price Controls

The Cuban dictator Miguel Díaz-Canel’s recent admission that Cuba’s generalized price caps failed to contain inflation, generated shortages, encouraged illegal markets, and reduced tax revenues is another confirmation of a much older economic lesson: price controls do not solve inflationary pressures, and they intensify the distortions they are meant to prevent.

The Cuban case is especially revealing because the criticism comes not from ideological opponents but from the regime that imposed the controls and later conceded their failure.

According to Díaz-Canel’s own remarks, price controls in Cuba produced the opposite of their intended effect: instead of stabilizing prices, they encouraged product scarcity, illegal-market activity, higher effective prices, and falling tax revenues. The government’s decision to eliminate price controls therefore amounts to an empirical acknowledgment that administrative decrees could not keep pace with economic reality.

This episode matters beyond Cuba because it captures the core mechanism of price control failure. When official prices are fixed below levels that would clear the market, legal suppliers reduce availability, quality deteriorate, and transactions migrate to informal channels where the real market price reappears, often with a premium for risk and scarcity. Thus, inflation is not abolished by decree but only transferred from the official statistics into queues, shortages, and the underground market.

The Austrian School of Economics has long argued that prices are not arbitrary numbers but indispensable signals coordinating dispersed knowledge across an economy. Ludwig von Mises claimed that intervening against market prices does not eliminate the underlying forces of supply and demand but rather creates secondary distortions that generate demands for additional intervention. Friedrich Von Hayek reminded us that market prices transmit information that no planner can centrally aggregate in real time, making administrative price fixing structurally destructive.

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Trump Will Slap French Wines With 100% Tariff Over France’s Digital Services Tax – Macron Is Defiant, But Wine Producers Are VERY Afraid

Tech versus Wine is the geopolitical arm-wrestle.

US President Donald J. Trump is in France for the G7 Summit and to meet French counterpart Emmanuel Macron, as you can read in 

Among the many issues that will be discussed, there is one economic war that is on the outing: Trump is demanding that France drop its tax on American tech firms or face a 100% tariff on its wine.

FOX Business reported:

“The U.S. will ‘have no choice’ but to apply the tariffs if French President Emmanuel Macron does not end its 3% levy on large digital services companies. ‘I asked him not to charge American companies, and if they do, I have no choice but to charge a 100% tariff on all champagnes and all wines coming out of France’, Trump told the New York Post in an interview. ‘All [Macron] has to do is get rid of the sales tax, and he wouldn’t have that kind of pressure’.

[…] ’The president has been unequivocally clear on digital services taxes and other forms of extortion against American tech firms’, a senior White House official told FOX Business on Monday, when reached for comment. ‘The administration is committed to using the many legal authorities at our disposal to defend American workers and businesses’.”

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The Rule of One Price and the Donald’s ‘F’ In Energy Economics 101

The Donald seems to think he has all the time in the world to end the conflagration he and Bibi started in the Persian Gulf. Today he even told the mullahs to take a hike when they suspended any further negotiations owing to Bibi’s brutal strikes on civilian targets in southern Lebanon and continued violations of the so-called April 13th truce in the Persian Gulf.

Thus, regarding the meandering negotiations of the last 45 days, the Donald averred,

“I don’t care if they’re over, honestly… I really don’t care. I couldn’t care less,”

Brave words, these. And completely, totally and hideously out to lunch, too.

What’s actually just around the corner is an explosion of oil and related energy prices that will make the 1970s look like a Sunday school picnic, but here we have the Donald talking just plain barking idiocy about what comes next:

He also said he wasn’t worried about oil prices, which spiked following the report in Iranian state media that Tehran is vowing to “completely block” the Strait of Hormuz in addition to halting negotiations.

“I think the oil will be dropping like a rock in the very near, you know, the very near distance,” Trump said.

The president of the United States – the alleged sagacious businessman we have purportedly been waiting for – couldn’t be more sadly mistaken about something as basic and straight forward as the price of crude oil, its refined products and related energy commodities: To wit, the Donald is absolutely clueless about the cardinal fact that there is one world oil market and ONE PRICE the planet over.

And that’s regardless of the fact that the US is now a large scale net exporter of crude oil, refined products and nat gas liquids. In recent weeks, in fact, the Persian Gulf outages have caused exports to soar 12.9 mb/d, which is up nearly 20% from the 10.8 mb/d average during 2025. In all, current net exports of petroleum liquids at 5.7 mb/d leave not doubt that the USA is solidly “energy independent”.

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‘We Outright Grabbed The Wallets’: Bessent Boasts $1BN In Iran State Crypto Seized To Date

Washington’s economic war on Iran and its ‘shadow’ banking network continues, as on Friday Treasury Secretary Scott Bessent announced the US has seized $1 billion in Iranian cryptocurrency assets as part of the economic component of President Trump’s Operation Epic Fury.

The billion dollar figure represents the running total seized to date, building on prior milestones in the conflict, particularly a recent major April 2026 freeze of $344 million in USDT on the Tron blockchain. By close of April, $500 million total had been seized.

And so clearly with the addition since then of some half-billion dollars more in seized digital assets, the US Treasury program has only greatly accelerated in the last several weeks.

During his Friday speech before the Reagan National Economic Forum, Bessent stated:

“Just outright grabbed the wallets. Some of them may be typing in right now and might not realize their wallet had been grabbed.”

Assets are held “on behalf of the Iranian people” – he described, while framing that the Iranian government had ‘stolen’ the money from the Iranian populace.

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This Is Why the U.S. Can’t Use the Oil It Produces

The United States produces more oil than any other country in the world—averaging 13.3 million barrels per day (MMb/d) in 2024. But strangely, the U.S. also imports about 6.5 MMb/d of crude. This paradox confuses many Americans. Why doesn’t the U.S. just use its own oil? The answer lies in infrastructure mismatches, refinery design, trade economics, and federal laws that restrict the flow of domestic oil.

  1. 🧪 Light Oil vs. Heavy Oil: Not All Crude Is Created Equal
    The U.S. primarily produces light, sweet crude oil, which is low in sulfur and viscosity. Meanwhile, many American refineries—especially those built in the 1970s and 80s—were designed to handle heavy, sour crude, the kind that comes from countries like Venezuela, Mexico, and Canada.

Over 60% of U.S. refinery capacity is optimized for heavy crude processing.
Upgrading a single refinery to handle lighter crude can cost between $100 million to $1 billion.
This means that even though the U.S. produces oil, it’s the wrong kind of oil for its aging refinery infrastructure. So we export light crude (often to Asia and Europe) and import heavy crude to feed our refineries.

  1. 🏗️ Refinery Location and Infrastructure Gaps
    The second major problem is geography. Much of America’s oil production comes from inland fields like the Permian Basin (Texas/New Mexico) or the Bakken Formation (North Dakota). Meanwhile, many of the refineries that need oil are located on the East and West Coasts, far from those production zones.

California, despite being a top 5 oil-producing state, imports ~75% of its crude due to limited pipeline access.
The Keystone XL cancellation and other pipeline delays exacerbate this logistical mismatch.
It’s often cheaper to import oil from the Middle East or Latin America to coastal ports than it is to move domestic crude across the U.S. via expensive trucking, rail, or limited pipelines.

  1. ⚖️ The Jones Act: A Shipping Law That Backfires
    The Jones Act, passed in 1920, requires that any goods (including oil) transported between U.S. ports must use ships that are U.S.-built, -owned, and -crewed. These ships are vastly more expensive to operate than foreign tankers.

A Jones Act tanker costs up to $75,000 per day—nearly 3x more than foreign vessels.
This makes it cheaper to ship oil from Saudi Arabia to New Jersey than from Texas to New Jersey.
The law, originally meant to support the American maritime industry, now creates bottlenecks in the oil supply chain—making domestic crude more expensive to move than imported oil.

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Trump Is Embracing ‘Daddy State’ Economics

The question of whether President Donald Trump has turned the United States toward a new “state capitalism”—one in which the government is not just economic referee but active player—has been answered. His second term brings policies that go well beyond traditional Republican pro-market orthodoxies, such as tax cuts and deregulation, and into direct involvement with production and capital. Yet this doctrine is less a coherent grand strategy than a set of ad hoc deals, sometimes pro-market and sometimes interventionist.

Some Trump policies—tax cuts, deregulating, talk of budget-deficit reductions—retain a traditional Republican tone. On the other hand, this administration’s protectionism and tariffs would have been inconceivable a decade ago. Republicans would also traditionally label the government’s acquisition of a 10 percent stake in Intel as socialism if proposed by anyone other than Trump. And other policies have the feel of mafia tactics made possible by the exercise of leverage, like letting Nvidia and AMD sell their chips to China in exchange for a 15 percent cut back to the U.S. government.

Trump also departs markedly from the past GOP playbook in his lack of recognition that the market allocates resources much better than politicians and bureaucrats do. He treats the market as a stage for negotiation to reorganize the world’s economies. Old-guard Republicans were globalists, whereas Trump built his appeal on “America First” nationalism and protectionism.

Earlier Republicans valued predictable rules, but as Cambridge legal scholar Antara Haldar noted in a Project Syndicate symposium this month assessing the direction of “Trumponomics,” the president “is willing to break any rule, norm, or promise…in the name of striking ad hoc corporate-style ‘deals.'” Where conservative-minded leaders of the past obscured the state’s role, Trump “flaunts it.”

Yet Haldar correctly argues that Trump’s approach differs from other forms of heavy-handed state control. It is neither the Chinese model nor that of the developmental state. It is “erratic, transactional, and short-sighted” and a rejection of the “quietly overbearing ‘Nanny State’…in favor of a commanding, patriarchal ‘Daddy State.'”

Princeton University historian Harold James, another participant in the symposium, sees Trump as a break from the past due to his revival of state-directed “industrial policy.” This started under former President Joe Biden’s administration, but there is no doubt that Trump’s pursuit of a manufacturing revival and reshoring of global supply chains, along with his tariffs and equity stakes in private companies and his overall aim to rebuild U.S. strategic capacity, fall well into that category.

Unfortunately, as James argues, Trump’s brand of industrial policy encourages “hyper-activist corporate lobbying, with large and well-connected enterprises getting the best ‘deals.'” In my opinion, all industrial policies end up this way, not just Trump’s.

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National debt to rise to 120% of GDP by 2035, budget watchdog warns

The national debt is projected to rise from 100% of the U.S. Gross Domestic Product (GDP) at present to 120% of GDP by 2035, according to the latest figures from the Committee for a Responsible Federal Budget (CRFB), a nonpartisan fiscal policy think tank, based on baseline budget data from the Congressional Budget Office.

The CRFB released an adjusted August 2025 baseline, which found that annual deficits will “remain above 6% of GDP throughout most of the decade,” which is “more than twice the 3% target advocated by some policymakers.”

The budget watchdog group estimated that bringing the federal deficit down gradually to 3% of GDP would require around $3.5 trillion in savings over five years, including interest, or $7.5 trillion over ten years.

“To hold debt at 100% of GDP, approximately $4 trillion is needed over five years, or $9 trillion over the decade,” read their analysis.

The CRFB found that achieving a deficit equal to 4% of GDP would require about $5 trillion in savings while balancing the full federal budget, including interest, would require about $15.5 trillion in total savings.

The watchdog group noted that economic growth alone cannot solely take the place of major fiscal policy changes to get the fisacl situation in the U.S. under control. The CRFB recommended that the U.S government implement “super PAYGO” as well as trust fund reform and other spending reduction initiatives.

“Under Super PAYGO, every dollar of new spending or tax cuts would be offset by at least two dollars of revenue increases or spending reductions, thus ensuring that new tax cut and mandatory spending legislation also includes deficit reduction,” the CRFB said.

CRFB noted that “faster growth can make these fiscal goals easier.” However, the watchdog group said that “thoughtful pro-growth deficit reduction and reform is likely the best way to put the country on a sustainable fiscal path.”

The CBO recently released a separate estimate which found that the Trump administration’s tariffs will cut the U.S. federal deficit by $4 trillion through 2035. 

The analysis found the tariffs would lead to $3.3 trillion in direct tariff revenue and $700 billion in savings from lower interest payments on borrowing. These projections are revised from CBO’s earlier estimates. In June, the CBO had estimated that tariffs would offset budget shortfalls by $3 trillion.

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