ROB URIE
JULY 17, 2026

When American politicians state that terrorism is a threat, what they need is a mirror and an introductory economics textbook to understand that there are many different ways to destroy a nation. From NAFTA to financialization to crypto grifts, the US has been led from one economic catastrophe to another by people claiming to know what they are doing.While you and I know that AI isn’t going to cause 50% – 60% of the jobs in the US to disappear, what astonishes is that this is considered an acceptable outcome by Donald Trump and the US Congress.

For context, the US unemployment rate at the worst point in the Great Depression was 25%. This led to mass protests, a dramatic rise in the fortunes of organized labor, the White House being surrounded by former soldiers wanting to be paid, and WWII. Most governments begin worry about political instability when unemployment rises to 10%. That Trump and Congress heard the 50% – 60% unemployment projection and still thought AI a brilliant idea is testament to an absence of political accountability. There is something deeply broken in US politics.

Graph: surprise, the class war is real. Illustrated is that capital’s share of national income (GDP) has been rising for five decades as labor’s share has been falling. Oligarchs own the capital stock. Labor owns labor. When payments to capital rise, oligarchs benefit. When payments to labor fall, labor loses. As the graph illustrates, labor has been losing in the US for fifty years. Source: economycharts.

Fifty percent unemployment would instantly overwhelm state unemployment insurance systems. These systems divide their perpetually underfunded pools between the number of people eligible to collect, meaning that no one would receive enough in insurance payouts to survive. Every town, city and state affected would be in full-on economic collapse within a few months. Car loans, student loans and mortgages would no longer be paid. The US would be in full-scale economic collapse within six months.

The political effect of this should in theory be analogous to handing someone an empty gun, telling them that it is loaded, and then forcing them to shoot their spouse. The spouse will live because the gun is empty. But the relationship will have ended the second that the trigger is pulled. Trust will have been permanently broken. With the predicted job destroying impact of AI, Donald Trump and the US Congress pulled the trigger. They are fine with the nation disappearing in a puff of smoke as long as their stock portfolios keep rising. If this reads like ‘America first,’ please chime in.

No government would withstand 50% employment without massive social upheaval. This implies that the current US leadership has no stake in the US beyond what can be extracted through looting. Should this read as harsh, you probably aren’t paying attention. The productivity math rigs the capital versus labor game. Through what are called hedonic adjustments, the value produced by capital (e.g. AI) is systematically overstated. The largest possible value is taken away from labor and assigned to capital.

While Trump has long claimed that he opposed NAFTA, the question now is why? 50% unemployment from AI would be far more socially destructive than NAFTA has thus far been. The ‘capital investment’ theory whereby AI represents an investment in the broader economy falls apart above 8% unemployment. The math has it that at 50% unemployment, a 200% increase in productivity would be needed to avoid an economic decline from AI. Last year, with AI in the mix, this value was 3%. This is not going to happen.

Moreover, the gains from AI (if there ever are any) would be directed to capital while the costs would be borne by the newly unemployed. This is Class Warfare 101. Trump and the ‘communists’ (his term) in Congress see their fortunes being bolstered by destroying the US. But they have the math all wrong. They imagine that the stock market would rise in the midst of 50% unemployment. What they should be imagining is every major city in the US being burnt to the ground by newly immiserated citizens. As the saying goes, three days without food and no government will stand.

Graph: between 1948 and the end of 2025, the annual rate of Real (inflation-adjusted) GDP growth fell from 4% to 2%. While this might not read as problematic, the US hasn’t prospered outside of finance and tech heavy cities since 1980 or thereabouts (46 years). And financialization means that houses that cost $100,000 twenty years ago cost $400,000 today after ordinary (CPI) inflation has been taken out. This is the flip side of crypto grifts and national stock market obsessions. Source: St. Louis Federal Reserve.

The reason why the US is in this mess is because American leaders misread the unique position that the US was in at the end of WWII as evidence that capitalism actually works. What gave the US its economic prowess was geography, history and luck. By the end of WWII, industrial infrastructure abroad lay in ruins. Because the US was far away, lies between two oceans, and joined the war late, its industrial infrastructure was in better condition after the war ended than before it. To confuse this with grace, intelligence or hard work is a category error.

By the 1980s, the choice for the US was between manufacturing and asset stripping. The leadership at the time (Reagan) chose asset stripping (finance capitalism). With crypto grifts now having reached their natural limit, the US rediscovered war as a business plan— but without the manufacturing base needed to turn military production back into a business. When the political leadership represented the interests of the nation, the New Deal, public schools and a functioning healthcare system were possible. With crypto grifts, only more crypto grifts are possible.

That American capitalism has been redefined as using asymmetrical power to arrange circumstances such that guaranteed gains go to the few while the hollowed-out shell of a looted economy is left for the rest of us, is to empty the term of descriptive value. That this is a result of American imperialism turned inward brings to the fore the source of the social logic of looting. Having been educated in neoclassical economics, almost none of what is today called capitalism fits the theories of academic capitalism. In that version, a large and intrusive state is required to keep capitalism ‘capitalist.’

Monopoly power has long been the economic proxy for the political power of capitalism. In neoclassical theory, a powerful and intrusive state is needed to prevent concentrated wealth from closing the door on new competitors. Neoliberalism thus holds the paradoxical view that 1) economic power doesn’t exist but that 2) the purpose of the state is to support the interests of the economically powerful. The result is that economic ‘freedom’ now means the freedom to loot (e.g. crypto grifts) without legal consequences.

Readers may recall the ‘Great Powers’ framing of the contest for power when the US went to war against Russia in 2022. While the frame makes limited sense with respect to China and Russia, it misses that the US no longer ‘does’ the national interest. The evidence: the few dozen oligarchs whose interests Donald Trump represents are willing to see half of the US population be unemployed through the implementation of AI as long as their fortunes are intact. That they are set up to benefit while the rest of us are set up to lose illustrates the predatory nature of this willingness.

In fact, the oligarchs’ interests are antithetical to those of the US. Trump wants to permanently levitate the stock market because it is the source of the oligarch’s fungible wealth. Bartering a coal mine for goods and services is complicated and cumbersome. But selling shares in the coal mine to the public and then cashing in through stock options is easy, quick and rewarded with tax incentives (discounted capital gains tax rate). The richest 1% owns half of the stock market and the richest 10% owns about 90%. The stock market is central to continuing oligarch control.

To date, the promise of AI has been prospective, that if A, B and C happen, AI will produce a social benefit. Maybe. Maybe not. But the people who haven’t yet demonstrated a social benefit are already billionaires. The heads of AI company Anthropic have $15 billion apiece following a recent fundraising round. Do they have a profitable business? No. AI commenter Ed Zitron argues that Anthropic’s margins scale linearly. In other words, costs rise 1:1 with revenues. Implied is that the current trajectory provides no path to profitability. So, in capitalist terms, why are these people rich?

To be clear, the issue isn’t envy over fat wallets. It is concern over the aggregating impact of the mis-allocation of social resources. If the greed-heads want a sixth yacht, who would care except for the social power that their wealth gives them to force their self-serving decisions onto the rest of us. Automation AI and a wee bit of enterprise AI likely represent our shared future. So do the coming financial crash and its economic fallout from AI funny money (circular) financing. The problem with circular financing is that it sets off a game of musical chairs once one or more or the participating parties begins to take money out.

The relevant question is what it is that the American political leadership imagines that the US will do for a living in coming decades. The fantasy that has been sold is that ‘markets’ decide this. In the 1990s, outsourcing was claimed to be the product of nature (wage competition) when it was in fact the result of specific policies promoted by specific interests. American industrialists imagined that they could rid the US of organized labor by ridding it of jobs that pay. Now, with crypto grifts being what it is that Americans ‘do,’ the solution from above is political repression.

This political repression would have different social meaning if the sense was that those imposing it had the people’s interests at heart. But they don’t. We, the people. are viewed as annoying complainers who interfere with stock market gains and persistently rank the people running the place lower than venereal disease and serial killers. And the sense that one of America’s political parties will save us has been replaced with the understanding that nothing in the current political mix is going to do so. We are on our own.

Deindustrialization is a form of looting through Wall Street’s role in asset stripping and pirate finance. Financialization is looting through those closest to the money creation machine (banking) taking the money so created for themselves (e.g. crypto grifts). AI is looting through companies that haven’t turned a profit and plausibly never will receiving trillions in realized and prospective ‘investment’ without having produced a public benefit (like toilet paper or toothbrushes). The common theme here is fortunes made through uncreative destruction. US ‘leaders’ are destroyers, not creators

Since the plan for what Americans will do for a living going forward at least theoretically involves firing half of the US workforce, how precisely is this supposed to work? The claim is that AI will replace enterprise (call centers, accounting firms, law firms) workers. Nonsense. These companies are creating tiered service where the customers who don’t matter (like yours truly, apparently) hang up and forget that there is a problem because there is no way to fix it except by ceasing to do business with the offending vendor.

AI is tiering precisely this way. Industrial automation and enterprise AI are already quasi-commodity businesses. The AI finance folks (e.g. Ed Zitron) argue that these businesses will never be profitable because their costs (‘compute’) rise with revenues, leaving margins flat. (With flat margins, a $1 rise in revenues means a $1 rise in costs and a $2 rise in revenues means a $2 rise in costs. With these companies currently losing money, rising revenues mean rising losses. The imagined solution is to cut costs, which finds OpenAI cutting prices on its products to stay competitive. But AI is a growth business?

This leaves only the models being sold as ‘thinking machines’ to produce the return on what will soon be several trillion dollars of investment. Are these thinking machines? It doesn’t help that the CEOs of the two main competitors in the thinking machine space, OpenAI and Anthropic, are philosophically ignorant fabulists who don’t appear to understand how the products that they are selling actually work. Anthropic’s Dario Amodei argues that finer gearing for the AI automaton will cause a conversion from dumb machine to human like consciousness. Are cookies set out on Christmas eve for Santa Claus as well?

But little of what these people believe actually matters. The trillions in financing are premised in all of these AI types earning huge profits for their developers. With the enterprise AI sales people backing off of the claim that AI will replace workers wholesale, it is difficult to see where the value proposition that would support fat margins will come from. Having worked for large corporations, it is guaranteed that the only reason that the AI sales people are getting meetings is on the promise that large numbers of workers will be permanently replaced with AI.

While the gearing in ‘thinking machine’ AI can be ever better refined, the product will always and in every case be a better automaton (mechanical robot), not a thinking machine. An analogy is to build a bridge 90% of the way without having a clear understanding of how the remaining 10% will be built. Continental philosophers explained a century ago both how and why building the final 10% (inanimate to animate) of the bridge is impossible. American AI companies built 90% of the bridge with no way to get to the other side. Brilliant?

Again, the reason why this matters is because the US has put all of its hopes for future economic growth into the AI basket. Capital expenditures of one trillion dollars to date, with another two trillion in theory coming behind it, put the wider economy at risk for what at present looks like a stupid gamble. Further, Chinese AI company DeepSeek has partially solved the cost problem, giving it a large pricing advantage over its competitors. As I understand it, DeepSeek’s architectural advantage over US competitors is across the board in automation, enterprise and generative AI.

What DeepSeek did process-wise was to turn a pig in a python into a mouse in a python until the pig hits the digestive tract, at which point it is turned back into a pig. This allows it to move through the python (AI model) with a low expenditure of effort to be revitalized when it is time for dinner (to produce the query response). Because compute is the major cost of the ‘thinking machine’ AI, this gives DeepSeek a cost advantage that US AI companies probably cannot match in the time needed to do so.

The DeepSeek solution is mathematically clever and likely points the way forward for the US AI companies that survive the next few years. But again, the finance people aren’t going to be in a position to care what happens after loans default and equity values go to zero. The time to pledge, borrow, and cross-collateralize US based AI was after the business case has been demonstrated. FOMO (fear of missing out) is a financial bubble ethos. As Will Rogers put it, once the bubble bursts, people stop worrying about the return on their money to focus on the return of their money.

Where does this leave the US? With 1) an implausible public – private industrial policy that will cause major economic dislocations over the next few years, 2) a commodity AI business that was sold as a high growth (high margin) business, 3) an all new group of entitled billionaires who have never created a product that earned a profit but who now get to tell the rest of us what to do and 4) with a Chinese competitor that built a superior product at lower cost than US firms. As with BYD and the $10,000 EV, who needs a Tesla when you can buy a car that works better for 15% of the cost.

Graph: deindustrialization has been the articulated policy of the US and was codified through serial trade agreements since the 1970s. When it finally took hold around 2001, its impact on the US workforce was utter devastation. In 2016 Donald Trump was elected on his promise to reindustrialize the US. But Trump has the attention span of a gnat and was likely sidetracked by a cheeseburger placed in front of him. The result: manufacturing employment in the US remains about where it was in 2016. Source: St. Louis Federal Reserve.

For those imagining that the US is re-industrializing, think again. Manufacturing employment in the US has fallen under Trump, not risen. Readers who search will find a body of literature from mainstream economists claiming that the US moved up the value chain in recent decades and that US manufacturing is flourishing. This is (Mitt) Romneyesque fantasy. See my recent Substack articles on the ‘China Shock’ for details. The claim about manufacturing is based on hedonic (qualitative) adjustments made to computer chips. Economists confused a dubious financial statistic (hedonic adjustments made to computer chips) with wider productivity growth.

The math has it that valuing the hedonic adjustment at 100% of the increased functionality while users only use 15% of it overstates the increase in the productivity of capital on its own terms. When applied to AI, assuming that the full theoretical change in the value of capital is 100% of the hedonic adjustment, and therefore allocating 100% of productivity gains to AI, is to overstate the change in productivity from AI (15%) and to understate the change in productivity of labor (85%) in the production process. This same point applies to all technology shocks. The game is rigged for capital.

The fall in US GDP growth from 4% in 1948 to 2% today (graph above) is why the US is saber rattling against China, Russia and BRICS. The punchline is that China, Russia and BRICS didn’t deindustrialize the US. The American ruling class did. China, Russia and BRICS didn’t financialize the US. The American ruling class did. China, Russia and BRICS didn’t force the crypto grift economy onto the US. The American ruling class did. And it is the American AI developers who made generative AI a tool for top-down social control. China is using AI to automate factories. Which nation is authoritarian?

To tie this together, AI seems a weak foundation upon which to build a future economy. In the first place, unlike computers, telephones and the internal combustion engine, AI won’t be transformative. What it does well is digital automation. What is does less well and even then, only in particular industries, is enterprise automation. The executives who imagine that AI will replace workers know absolutely nothing about what ‘their’ workers actually do. The US is to the point where class stratification is making the nation unworkable.

Looking forward, expect and prepare for an AI related financial calamity within the next year or two. This will be the result of AI financing, not AI per se. The catalyst could be the economic consequences of the re-shutting of the Strait of Hormuz. Or it could be the implosion of AI financing in the presence of shrinking promises about what AI can do. Either way, the US has been placed very, very far out on the limb of a dying tree. Trump the destroyer is the product of the American turn toward internal predation. My American neighborhood resembles DRC through economic extraction by external forces.

What are the solutions? The re-localization of agriculture. Rationalizing the consumer economy to match social and environmental constraints. A Federal guarantee that all who are willing to work be provided jobs that pay doing the work that the US needs to be done. Public schools from pre-K – PhD that educate the public in the broad attributes of human civilization. A healthcare system that raises life expectancy instead of lowering it. And a Department of Peace with the authority and purpose of ending US military adventurism abroad. Murder is the business of the mafia. It’s time to get the gangsters out of government.

Rob Urie is an artist and political economist. His book Zen Economics is published by CounterPunch Books.

First published on Counterpunch.org.

Shared via Creative Commons.

ELLEN BROWN
June 26 2026

As Americans prepare to celebrate the 250th anniversary of the Declaration of Independence, few are paying attention to a bill moving through Congress that could seriously impinge on our financial independence.

The Clarity for Payment Stablecoins Act, H.R. 4766, is slated to make privately issued stablecoins a major component of the U.S. monetary system. Supporters see stablecoins as a way to strengthen the dollar’s global role while creating a vast new market for U.S. Treasury securities. Critics see the rise of programmable private money that can be monitored, frozen, or restricted by its issuers. Banks fear the loss of the deposits that are essential to advancing affordable credit. What appears to be a debate about digital tokens has thus become a battle over the future of banking itself and finance.

Why Stablecoins Matter.

Stablecoins are privately issued digital tokens that can circulate on blockchain networks independently of the banking system. They are designed to maintain a stable value, typically one dollar per token. Unlike Bitcoin and other cryptocurrencies, whose values fluctuate wildly, stablecoins are usually backed by reserve assets such as cash and short-term U.S. Treasury securities.

Their growth has been explosive. The stablecoin market now measures in the hundreds of billions of dollars and continues to expand rapidly. Advocates see them as the next stage in the evolution of money: faster, cheaper, available around the clock, and capable of moving across borders without relying on traditional banking networks.

For users in countries suffering from inflation, currency controls, or banking instability, dollar-denominated stablecoins can function as digital dollar savings accounts. Residents of Argentina, Turkey, Nigeria, and other countries may trust a Treasury-backed dollar token more than their own national currency. In some countries suffering from inflation, merchants quote prices in dollar stablecoins and accept them directly through mobile apps.

The Push from Cryptocurrency Advocates: Ending “Regulation by Enforcement”.

The stated goal of the CLARITY Act is to establish a statutory framework that clarifies whether digital assets are securities, commodities, or payment stablecoins. Before this legislation, regulators—primarily the SEC—often applied decades-old laws to modern blockchain technology. Because the rules weren’t explicitly written for crypto, companies would discover they were in violation only when they were served with a lawsuit or a fine.

The most prominent example is SEC vs. Ripple Labs. Ripple launched its XRP token in 2012 and operated for nearly a decade without specific guidance that its token was considered a security. In 2020, the SEC sued Ripple, alleging they had been selling unregistered securities for years. Ripple was forced into years of litigation and hundreds of millions in legal fees to determine if a rule applied to them retroactively.

The CLARITY Act, alongside the GENIUS Act (which focuses on stablecoins), represents a shift from “Regulation by Enforcement” to “Regulation by Guidance,” where firms have a clear rulebook to follow before they launch products rather than waiting for a subpoena to understand their legal status.

The Government’s Interest.

he push for passage of the Clarity Act has come not only from crypto advocates but from policymakers, because every stablecoin backed by Treasury securities creates another buyer for U.S. government debt. Treasury Secretary Scott Bessent has embraced stablecoins as a means of strengthening the dollar’s global role. The Treasury Department projects that the stablecoin market could eventually reach trillions of dollars. If that happens, stablecoin issuers could become some of the largest buyers of Treasury bills in the world, helping to replace losses from those central banks that have been “de-dollarizing” by selling their reserves of U.S. debt.

Another advantage of stablecoins from the government’s perspective is their ability to reassert U.S. monetary sovereignty over the eurodollar market — the massive, offshore market where dollars are created through bank lending without direct oversight from the Fed. This is a complicated subject for a later article, but the bottom line is that by shifting global demand from uncollateralized eurodollar bank promises to tokens backed 1 to 1 by U.S. Treasuries, stablecoins effectively force privately-issued offshore dollars back onto the U.S. government’s balance sheet.

Promise or Threat? 

Those are some of the upsides, but stablecoins are not neutral payment tokens. Part 3 of this series discussed Project Hamilton, which showed what a public digital dollar could look like — fast, privacy-protected and democratic. The stablecoin system rising in its place looks very different. It is private, not public; programmable, not cash-like; surveilled, not anonymous.

Every stablecoin transaction is permanently recorded on a public blockchain. Tokens can be frozen, seized, or destroyed. Users can be blocked. Circle (USDC) maintains a blacklist function and has frozen addresses at the request of law enforcement or at its own discretion. Tether (USDT) has frozen billions of dollars’ worth of tokens across thousands of addresses. PayPal’s PYUSD includes explicit “freeze” and “wipe” functions in its smart-contract code.

This is the sort of “programmability” that CBDC critics fear – the ability to embed code into the money itself, causing it to execute transactions automatically when specific conditions are met. In fact, stablecoins could potentially be more invasive than a CBDC, since private issuers are not subject to the constitutional obligations imposed on the U.S. government by the 4^th and 5^th Amendments. In a June 23, 2026 podcast, Catherine Austin Fitts, former Assistant Secretary of Housing and Urban Development, called stablecoins “much more terrifying than CBDCs because you have complete non-accountability.” Private stablecoins operate via private contracts and “terms of service” that often bypass traditional due process. They can embed algorithmic terms that are enforced automatically, without recourse to a court or even a human teller.

A Digital Gold Mine for Issuers.

Under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), passed in July 2025, stablecoins must be backed 1 to 1 with dollar collateral. That collateral can take various forms, but stablecoin issuers typically maintain their reserves in highly liquid, short-term instruments—primarily 3-month U.S. Treasury Bills—to ensure they can satisfy redemptions quickly. As of June 18, 2026, the 3-month Treasury yield is 3.83% (down from 5%+ in 2024-25).

Stablecoin issuers make huge profits under this arrangement. The issuer sells stablecoins, uses the proceeds to buy Treasuries, and keeps the interest. Tether, the largest stablecoin issuer, has achieved a market cap of $120 billion with a staff of only about 50 employees. It reported a record-breaking net profit of $6.2 billion for the full year of 2023, and quarterly profits reaching $4.52 billion in Q1 2024 alone. A significant portion of this income is derived from its massive holdings of U.S. Treasuries, estimated at over $100 billion.

Particularly controversial are the stablecoin and crypto businesses of the president’s own family, and the potential conflicts of interestinvolved.

Who Should Receive the Interest – Private Middlemen or the Public?

Cornell Law professor Robert Hockett proposes a different model. He suggests that TreasuryDirect accounts could function as digital wallets, allowing individuals to hold Treasury-backed digital dollars directly and receive the Treasury yield themselves rather than through private intermediaries.

It is a promising idea, but it would require major changes to the existing financial architecture to preserve the credit system now managed by the banks. For more on Prof. Hockett’s proposals, see Digital Greenbacks: A Sequenced ‘Treasury Direct’ and ‘Fed Wallet’ Plan for the Democratic Digital Dollar and The Citizens’ Ledger: Digitizing Our Money, Democratizing Our Finance.

The Issue of Yield and Deposit Flight.

This is also the major concern of the banking establishment with the pending Clarity Act. A provision allowing stablecoin issuers to pay their customers “rewards,” considered the equivalent of yield or interest, could suck away their deposit base. Issuers collecting nearly 4% interest on their Treasuries could pay rewards of 2% or 3% to investors and easily outcompete banks paying 0.1 or 0.2 percent on deposits. Banking-industry estimates of potential deposit flight into stablecoin platforms range from $65 billion to over $1 trillion, with some analysts warning that in a fully developed stablecoin system, as much as $6 trillion could migrate out of the banking system.

But wait: if banks can create deposits on their books just by making loans, as the Bank of England has confirmed, why are deposits so important to them?

This is another complicated subject for a follow-up article, but the bottom line is that while a bank can create deposits, it cannot create the “reserves” necessary to transfer the loaned funds out of the bank. Deposits created when a bank makes a loan are a liability of the bank – its promise to pay on demand. What it pays with are reserves, which only the central bank can issue – either as vault cash (coins and dollar bills) or as digital reserves held in a “master account” at the Fed. The reserves are the payment rails for transferring deposits, and the cheapest way for banks to get them is through deposits transferred from other banks.

Deposits are thus considered the lifeblood of banks, and we need banks for our credit requirements. Stablecoin issuers don’t create new dollars or extend credit. They just tokenize existing dollars drawn from chartered banks, invest them in government securities, and keep the interest. Banks are the only institutions that create credit for the real economy.

If deposits leave the banking system, lending capacity shrinks; and the most vulnerable institutions are the community banks that extend credit to local businesses. Megabanks have other ways to acquire cheap reserves, including the repo market and the Fed discount window. Community banks rely heavily on incoming deposits to provide the reserves to move their loans, and they cannot compete with stablecoins in attracting deposits because they have substantially higher costs than issuers working with algorithms in the cloud.

Why We Need the Community Banks That Stablecoins Could Undermine.

Richard Werner, Prof. of Economics at the University of Winchester in the UK, argues that community banks are particularly important for economic growth. Large banks prefer large deals with large customers. A banker can spend time arranging a billion dollar transaction for a hedge fund or private equity firm, or spend the same time processing dozens of small loans to local businesses. Small and medium-sized businesses today account for the majority of jobs; and without community banks, they often struggle to get the financing to adopt new technologies and expand production.

Werner points to the German model, where small businesses typically work with local community banks, cooperative banks, and savings banks that lend only within their local areas. Because the bank and its customers share the same economic fortunes, the banks have an incentive to support local productive enterprises. When a business identifies a promising investment opportunity, it can present its plan to a local bank that already knows the company and understands the local economy. Funding decisions can sometimes be made within days, allowing firms to adopt new technologies quickly and remain globally competitive.

The result, he says, is visible in Germany’s remarkable number of “hidden champions”—small and medium-sized firms that nevertheless rank among the top companies in the world within their specialized market niches. Germany’s success, Werner argues, is closely tied to the fact that roughly 80 percent of German banks are small local institutions that lend locally.

Werner extends the same argument to China. After coming to power in 1978, Deng Xiaoping sought to improve economic performance by decentralizing credit allocation. Rather than relying on a handful of central planners to determine where financing should go, China created thousands of local banks, village banks, cooperative banks, and regional institutions. The result was a vast network of local loan officers making lending decisions based on local knowledge. Werner contrasts “five central bankers” making decisions with “five million loan officers” evaluating opportunities throughout the country. He argues that this decentralized approach played a crucial role in China’s sustained high growth and poverty reduction over the following four decades.

The same has been true in the United States, which had a record 30,456 banks in 1921. Today, however, that number has shrunk to only 9,082 insured financial institutions (banks and credit unions). Small banks have had to merge with much larger banks to stay solvent, largely due to higher regulatory costs and the competitive pressure of the megabanks.

Werner observes that bank size also affects where credit is directed. A banking sector dominated by a few large institutions tends to channel credit toward financial speculation and large corporate borrowers. A banking system composed of many small local banks tends to channel newly created money toward productive local enterprises. When credit goes into new technologies, equipment, and productive capacity, the result is to increase output, employment, and sustainable economic growth without triggering inflation.

Werner concludes that if governments want stronger productivity growth, more small-business formation, greater regional prosperity, and less inequality, they need to encourage the creation of local community banks and adopt a lighter regulatory regime for smaller institutions.

Productivity and the Burgeoning Federal Debt.

Economic growth is also particularly important for dealing with the federal debt. Stablecoins may help finance the debt, but they do not shrink it. They just fill some of the gap left by the People’s Bank of China and other central banks that have been selling U.S. Treasuries. The unsustainable $1.2 trillion interest tab must still be paid and continues on its exponential upward growth trajectory.

Treasury Secretary Scott Bessent has argued that the U.S. can “grow our way out of the debt” by increasing production and expanding the economy faster than the debt grows. President Trump has similarly argued that economic growth can reduce the relative burden of the national debt, much as occurred after World War II.

The federal debt exceeded 100% of GDP at the end of the war. But the debt burden gradually declined as the economy expanded faster than the debt, shrinking the debt-to-GDP ratio. And for that sort of growth in today’s economy, preserving the viability of community banks is essential.

Currency Backed by Debt or Productivity?

As artificial intelligence and automation replace jobs while dramatically increasing productive capacity, however, policymakers may one day question whether money must be issued against debt at all – or whether some portion of it could be issued directly against the productive capacity of the economy itself.

That is not a new idea. In fact it represents a return to our revolutionary roots. It was how the American colonists broke free of the “British system” that exploited the colonies for the production of commodities. Rather than relying on foreign currencies, the American colonial governments paid for goods and services with paper scrip they issued themselves. When the king banned that practice, the colonists rebelled – and they won.

Abraham Lincoln used the same funding mechanism to avoid usurious interest rates from British-backed banks that would have re-colonized the States by debt. He paid for the Civil War effort and major national infrastructure with government-issued Greenbacks (U.S. Notes).

When these government notes exceeded the production of goods and services, the supply and demand curve was skewed toward price inflation. But in a world of AI abundance, the curve will tilt the other way – toward too little money chasing too many goods and services. In an economy of that sort of unprecedented productivity, the government will need to issue new money just to balance the scales. And this money will need to be paid to the consumers who will buy the products, not only to close the wealth gap but to provide the demand to absorb the hyper-abundant supply.

Thus this series comes full circle, to the need for a “universal high income” or “sovereign wealth dividend” to solve an AI-induced unemployment crisis – and for a government-issued digital currency to fund it, built on the cash-like, privacy-protected model of Project Hamilton and the ECASH Act.

Be sure to check Ellen Brown’s earlier posts here on the AI Abundance Paradigm.

First published on Scheerpost.com.

Shared via Creative Commons.

HENRY GIROUX
JUNE 19, 2026

You can’t have capitalism without racism.

–Malcolm X

Elon Musk is less an aberration than the grotesque byproduct of a capitalist order that converts inequality into virtue, exploitation into spectacle, and mistakes its own deepest failures for its greatest successes. The media frenzy surrounding the prospect of Musk becoming the world’s first trillionaire is not a celebration of human progress or individual initiative. It is a symptom of a deeper social and political crisis, one that exposes the power of class privilege, the corrupting forces of gangster capitalism, and a culture increasingly incapable of distinguishing wealth from worth or exploitation from human flourishing.

Musk is symptomatic of the rot of a capitalist system that generates staggering inequalities while concentrating wealth and power in the hands of a tiny elite whose fortunes depend not simply on markets, but on public subsidies, collective labor, social institutions, and shared resources, all sustained by an authoritarian culture animated by white supremacy, ultranationalism, and the mobilizing passions of fascist politics, especially in the age of Trump.  As Dan Dinello argues, Musk has become an “avatar of chaos, cruelty, and death.” The description is difficult to dismiss. How else are we to understand his role as Trump’s chief enforcer?

 In this case, the world’s richest man played a crucial role in closing and slashing aid for the U.S. humanitarian assistance agency (USAID). To be sure, USAID embodied the contradictions of American power. While it funded vital global health and humanitarian programs, it also functioned as an instrument of U.S. soft power, advancing development agendas and political arrangements often aligned with American geopolitical and economic interests. Its history reminds us that humanitarianism under capitalism has frequently been entangled with empire, shaped as much by the imperatives of power and profit as by the demands of justice and human need. Yet acknowledging these contradictions does not diminish the catastrophic consequences of dismantling the agency. The consequences have been almost unimaginable. Becky Ferreira states that:

“According to monitoring models, the collapse of USAID may have already caused 762,000 preventable deaths, 500,000 of which are children, while the cuts could lead to more than nine million preventable deaths by 2030, according to a study published in February 2026….[In addition], after USAID closed, there was a rapid increase in the likelihood of violence, the severity of conflict, and the lethality of conflict, in nearly a thousand administrative regions across Africa.”

Yet the mythology surrounding Musk erases these social foundations. The self-made billionaire is transformed into a heroic figure, while the workers, public investments, and democratic institutions that made his fortune possible disappear from view. Jenni Krithara is right in stating that:

“Elon Musk has become a symbol of success! In reality, however, he is nothing more than a symbol of inequality and exploitation. No billionaire created the wealth he possesses alone. Behind every corporate empire are workers, public infrastructure, universities, research programs, natural resources and entire societies.”

At the same time, Musk’s ascent reveals the power of a culture and public pedagogy that normalizes and celebrates massive inequities in wealth and power. In a society saturated by myths of entrepreneurial genius and limitless success, extreme concentrations of wealth and power are legitimated as objects of admiration rather than outrage. The scandal is not simply that one person can possess more wealth than entire nations while millions struggle to survive and are relegated to life-threatening poverty and lack of adequate health care.

As Thomas Piketty makes clear in Capital in the Twenty-First Century, people are taught to view the grotesque imbalance and staggering levels of inequality and power as natural, inevitable, and even desirable. At work here is a politics that normalizes economic injustice, while depoliticizing any attempt to analyze it and hold a system and individuals responsible for propagating it. It is hardly surprising that Musk regards empathy as a threat to the authoritarian ethic of white Christian nationalism and treats free speech as a disposable principle, useful only when it serves the interests of power.

Under these conditions, inequality becomes a spectacle sustained by a lethal public pedagogy in which exploitation is rebranded as achievement and democracy itself is endangered as economic power increasingly shapes politics, public discourse, and everyday life. The media’s celebration of Musk’s wealth is not innocent reportage. It teaches people to admire concentrations of wealth that earlier generations would have regarded as obscene. It transforms plutocracy into aspiration and dispossession into a private failing rather than a public injustice. Under such conditions, private issues rooted in a celebrity discourse are severed from the broader systems of power and inequality that produce them. To understand Musk’s appeal, however, requires examining the spectacle through which his power is organized and legitimized.

Spectacle in the age of Musk no longer functions simply as distraction. It has become a mode of governance. Musk understands that power today depends less upon persuading people than upon occupying the circuits of attention through which people experience reality itself. The billionaire is no longer merely an owner of capital. He is an engineer of attention, a curator of affect, and an architect of the public imagination.

What Debord once called the society of the spectacle has entered a new phase. Spectacle is no longer confined to television screens, political rallies, or advertising campaigns. It is now embedded in algorithms that organize desire, shape perception, and reward outrage. In Musk’s universe, visibility itself becomes power. Every provocation, conspiracy theory, racist insinuation, or theatrical gesture feeds an economy of attention in which shock displaces thought and notoriety becomes indistinguishable from authority.

The spectacle no longer hides domination. It glamorizes it. Wealth appears as genius, cruelty as authenticity, and the dismantling of democratic institutions as evidence of courage. Politics becomes performance while the public sphere collapses into a marketplace of emotions organized around fear, resentment, and manufactured grievance.

Yet Musk’s wealth is inseparable from the politics it enables. Economic power at this scale does not merely influence public life; it reshapes the very conditions under which democracy can survive. Musk’s politics intensify these dangers.He has used his immense wealth and control over digital platforms to amplify conspiracy theories, attack democratic institutions, and lend support to far-right and nationalist movements in the United States and abroad. He has embraced the language of racial panic, amplified antisemitic and white nationalist narratives, promoted accounts trafficking in racist conspiracy theories, and used X to normalize forms of hatred once relegated to the political margins. Wealth at this scale is not simply economic. It is political, cultural, and pedagogical. It shapes public consciousness while insulating itself from democratic accountability.

Musk represents something historically new: the fusion of celebrity culture, algorithmic power, and authoritarian politics into a single figure whose influence extends across nations and institutions. He is not simply a capitalist with political opinions. He is a spectacle unto himself, a brand organized around excess, provocation, and the performance of transgression. The appeal of such figures cannot be understood through economics alone. It must also be understood aesthetically.

Susan Sontag once argued that fascist aesthetics transforms politics into an intoxicating drama of style, ritual, and emotional intensity. The attraction lies less in ideas than in sensations: the thrill of power, the seduction of force, the glamour of transgression. Musk updates this tradition for the digital age. He stages himself as the outlaw billionaire, the rebellious genius unconstrained by norms, laws, or democratic accountability. What he offers his followers is not merely a politics but an affective experience: the pleasure of belonging to a movement that mistakes cruelty for courage and domination for freedom.

The spectacle’s greatest deception is that it draws attention to Musk the personality while obscuring Musk the architect of a new political economy. Behind the oscillating images of genius and martyr lies a project aimed not merely at dismantling parts of the public sphere but at reorganizing them around private power—integrating his companies into state and military infrastructures, weakening the institutions charged with regulating them, and converting public resources into engines of oligarchic wealth and influence.

Musk’s rise is not a triumph of individual initiative or entrepreneurial genius. It is the product of a social order in which public resources, state subsidies, collective labor, and technological infrastructures are privatized and redirected toward the enrichment of a tiny oligarchic elite. He despises the social contract because it places obligations on wealth and imposes democratic limits on power. As Quinn Slobodian and Ben Tarnoff note in Muskism: A Guide for the Perplexed, in its place, Musk advances a far-right vision that fuses state power with technological control, elevates algorithmic governance over democratic accountability, and normalizes racialized exclusion as a principle of social order. Musk’s political project promises freedom while producing new forms of dependence, claiming to democratize technology even as it concentrates unprecedented power in private hands.

Will Bunch is right in stating that Musk has transformed X into a global amplifier for racial resentment and white nationalist politics. Under the guise of defending “free speech,” he has repeatedly elevated far-right influencers, reinstated accounts banned for hate speech, and promoted narratives that depict immigrants and racial minorities as existential threats to Western civilization. Just before the Belfast anti-immigrant riots in 2026, Musk amplified calls by the far-right agitator Tommy Robinson for people to “hit the streets,” adding his own exhortation: “Only by protesting REPEATEDLY and LOUDLY will there be any change!!” The consequences were immediate and terrifying: attacks on immigrant communities, immigrant addresses posted online and  homes set ablaze, and an online culture of racial hatred legitimated and endorsed by the world’s richest man.

Zadie Smith has observed that the propaganda machinery of fascism once relied on posters, radios, and megaphones, crude instruments compared to what Elon Musk now commands. The comparison is instructive. The danger today lies not simply in extremist messages but in the infrastructures that circulate them. Algorithms reward outrage, synchronize emotions, and impose forms of conformity that often operate invisibly. The propaganda machine no longer shouts at citizens from a distance. It lives in their pockets, curates their desires, and quietly organizes their fears.

Musk presides over precisely such a machinery. X functions not simply as a platform for communication but as an apparatus for manufacturing attention, resentment, and ideological belonging. The result is a culture in which people increasingly surrender the burdens of judgment and critical thought to the emotional rhythms of the feed. Spectacle becomes a form of social organization, teaching individuals to react rather than reflect and to experience political life as an endless theater of outrage and enemies.

X is no longer merely a communication network. It has become an infrastructure of authoritarian politics, normalizing racism, rewarding outrage, and converting white grievance into a global spectacle of resentment and cruelty. The richest man on the planet has become one of the chief architects of a politics of white victimhood, one in which white people are perpetually under siege by dangerous invaders who happen to be Black, Brown, and immigrants. How else to explain his barrage of racist posts and conspiratorial rhetoric, along with his support for far-right anti-immigrant movements such as Restore Britain?

X has become one of the most powerful pedagogical apparatuses of the digital age, teaching millions to equate cruelty with courage, racial hierarchy with common sense, and hatred with truth. What is marketed as free speech increasingly operates as a machinery of authoritarian desire that erodes the civic and ethical foundations of democratic life. The symbolism surrounding Musk has become increasingly ominous. After making a gesture at a political rally that was widely condemned as echoing a Nazi salute, Musk responded to the ensuing criticism with mockery rather than reflection. The episode was revealing because it exposed an authoritarian politics in which provocation becomes spectacle, cruelty becomes a public virtue, and historical amnesia becomes a precondition for making fascist ideas appear ordinary, even commonsensical. Fascism rarely begins with concentration camps or military coups. It begins with the normalization of contempt, the trivialization of violence, and the celebration of power unmoored from ethical responsibility.

Musk’s growing influence has become a warning sign of a new form of oligarchic rule in which immense wealth, technological power, and political influence converge to hollow out democratic life from within. The danger lies not only in his embrace of far-right movements and authoritarian figures abroad, but in the extraordinary capacity of a single billionaire to distort public debate, destabilize democratic institutions, and shape political life across national borders. Musk is not the real issue. He is the symptom. The larger question is whether any vestige of democracy can survive when private wealth acquires such immense power over the institutions and cultures that sustain public life.

The spectacle of the world’s richest man accumulating unimaginable wealth while endorsing politics that deepen social divisions and undermine democratic norms exposes the moral bankruptcy of a gangster capitalism that rewards accumulation while abandoning social responsibility. Trillionaire politics is not simply the concentration of wealth. It is the concentration of power, influence, and the capacity to shape the stories societies tell about themselves.

The gravest danger is not Musk himself but the culture that celebrates him. Citizens are increasingly schooled to applaud the very forces that diminish their agency and erode their social protections. They are encouraged to admire those who dominate them, to mistake cruelty for strength, and to equate democracy with the freedom of billionaires to exercise unchecked power. Trillionaire politics is the end point of a society inhabited by what might be called the walking dead: citizens politically numbed and morally anesthetized, taught to applaud their own dispossession, embrace loneliness as freedom, and accept misery as the price of greatness.

The first trillionaire is not a monument to human achievement. He is an indictment of a corrupt social order that mistakes accumulation for greatness, toxic masculinity for leadership, and domination for success.  Is it any wonder that Musk views empathy as a weakness and free speech as a disposable principle? Both stand in the way of the politics of cruelty, white nationalism, and unchecked power he increasingly champions.

Musk is the product of a culture that worships wealth, mistakes spectacle for truth, and increasingly confuses domination with freedom. He represents the emergence of a new authoritarian formation in which capitalism, digital technologies, and fascist sensibilities converge in unprecedented ways. He is the avatar of a techno-fascist order, an updated form of neoliberal gangster capitalism in which state power, digital technologies, and oligarchic wealth converge to erode democratic institutions and remake society in the interests of a predatory elite.

The danger he poses lies not only in the policies he supports or the movements he amplifies. It lies in the world he helps create: a world in which algorithms replace judgment, cruelty becomes entertainment, racism is repackaged as realism, and democracy is hollowed out by spectacles of resentment and manufactured consent.

If Trump embodies the theatrical politics of authoritarianism, Musk represents its technological future. He is the engineer of a new machinery of spectacle, one capable of shaping consciousness on a planetary scale. In this sense, Musk is not simply the world’s richest man. He is among the most powerful public pedagogues of the twenty-first century, educating millions in the pleasures of unfreedom and the aesthetics of authoritarian desire.

Musk is not an exception to our time. He is the most visible symptom of a society in which cruelty is celebrated as strength, democracy is hollowed out by oligarchic power, and freedom is reduced to the prerogatives of the rich. This is more than a failed society. It is capitalism stripped of its myths and revealed in all of its gangster, authoritarian, and fascist impulses.

First Published on CounterPunch.org.

Shared via Creative Commons.

CAPITOL HILL CITIZEN
by Ellen Brown.  JUN 14, 2026

Not So Wonderful for Taxpayers

In early May, BlackRock quietly froze redemptions in several of its private-credit funds, limiting withdrawals in vehicles that had been marketed as offering easy liquidity.

The move was legally valid, but investors felt that the contractual fine print had been weaponized against them. It was the most visible stress fracture to date in a $3 trillion shadow-banking market that has grown almost entirely outside federal oversight.

The financial press treated it as an isolated liquidity issue, but it is the same structural weakness that brought down the Savings and Loan industry – only scaled up, securitized, and deeply embedded inside today’s financial system.

The S&L collapse of the late 1980s established the template that has governed every major crisis since: deregulate, speculate, collapse, bail out, consolidate, repeat. That bailout cost taxpayers an estimated $124 billion to $160 billion, much of it still carried on the federal debt today.

The public was told the industry would repay the cost over forty years, but it never did. The bill was simply pushed into the future, and that future is now.

The BlackRock freeze is the latest chapter in this never-ending bailout saga. The same regulatory forbearance that enabled junk-bond speculation in the 1980s has allowed today’s shadow-banking giants to grow without meaningful oversight.

And when the bets turn sour, the risks will again migrate toward the public balance sheet. To understand why the system keeps breaking in the same way, we need to return to the moment when the old community-based banking model was dismantled and replaced with a crisis-driven, bailout-dependent regime.

The S&L bailout normalized the idea that the public would absorb the losses while private actors captured the gains. It set in motion a forty-year transformation of American banking that has continued through the 2008 derivatives crisis to the collapse of Silicon Valley Bank to the current private equity crisis to the quadrillion dollar derivatives time bomb.

To understand how this transformation evolved, we need to return to the moment when the old community-based banking model was dismantled and replaced with a crisis-driven, bailout-dependent regime.

The World George Bailey Built and How It Was Destroyed.

For most of the 20th century, America’s savings-and-loan industry operated like the Bailey Building & Loan in It’s a Wonderful Life. Federally chartered thrifts took in local deposits and made long-term home mortgages.

Ceilings on deposit interest rates kept things stable, while the Federal Savings and Loan Insurance Corporation (FSLIC) backstopped depositors. It was a form of banking that was boring, local, and safe. Thrifts financed the postwar housing boom that created the American middle class.

That system began to crack in the late 1970s, when doubledigit consumer price inflation driven by the 1973 OPEC oil embargo prompted Federal Reserve Chairman Paul Volcker to aggressively raise interest rates.

By 1981, the prime interest rate had reached 20%. Thrifts were stuck with low-yield, longterm mortgages generating lower interest than they would have to pay to keep depositors from fleeing to higher-yielding money-market funds.

Where to find the money to fill this gap? Congress’ response was the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) and the Garn-St. Germain Depository Institutions Act of 1982. These laws demolished the interest- rate caps and dramatically broadened the investment powers of the thrifts, allowing them to chase risky but lucrative deals in commercial real estate, junk bonds, and other speculative ventures.

The grift was detailed by Michael Waldman in his 1990 book Who Robbed America? A Citizen’s Guide to the Savings and Loan Scandal. Waldman documents how the new rules turned sleepy community institutions into high-stakes casinos almost overnight. S&Ls could now pay whatever rates they wanted to attract “brokered” deposits – “hot money” from anywhere.

They could invest in anything from shopping centers to Michael Milken’s junk-bond machine at Drexel Burnham Lambert. Regulatory forbearance and political pressure from a handful of senators called the Keating Five fanned the flames. By the mid-1980s, roughly one-third of the nation’s 3,800 thrifts were in serious trouble.

Waldman viewed the S&L crisis not as a market failure but as a deliberate heist enabled by deregulation, greed, and political capture. Hundreds of thrifts were looted, billions of dollars vanished into junk bonds, and real-estate speculation and outright fraud ran rampant, leaving ordinary depositors and taxpayers holding the bag. In his introduction to Waldman’s book, Ralph Nader called it “an unprecedented frenzy of speculation and business criminality.”

Through his decades of advocacy, Nader repeatedly exposed the pattern – financial deregulation that turns community institutions into casinos, bailouts that socialize losses while privatizing gains, and the rise of a derivatives-fueled shadow banking system that dwarfs the real economy.

Charles Keating and the junk-bond leveraged buyout boom.

Charles Keating embodied the new “greed is good” mentality. In 1984, he used Drexel junk bonds – high-interest, high-risk debt securities issued by the investment firm Drexel Burnham Lambert – to acquire Lincoln Savings & Loan of Irvine, California.

Within years, he had leveraged $51 million into a $454 million junk-bond portfolio. Much of this was Drexel paper – junk bonds issued by his associates at Drexel – creating a circular, self-sustaining market for risky investments.

This expansion was made possible by federal deregulation, which allowed S&Ls to gamble with federally insured deposits. Keating took Lincoln’s assets and pivoted away from safe mortgages, ballooning the balance sheet with speculative real estate and risky development loans. When these high-stakes bets failed, Lincoln’s collapse alone cost taxpayers more than $2 billion.

Keating ultimately served prison time for securities fraud, but many others followed his playbook. Blackstone Group, founded in 1985, jumped into distressed thrifts early. That same year, Larry Fink incubated BlackRock inside Blackstone to manage fixed-income and mortgage-backed securities.

Dozens of thrifts loaded up on the high-yield junk bonds that Michael Milken’s machine at Drexel churned out. These bonds were the fuel for leveraged buyouts (LBOs) – hostile takeovers by Wall Street banks and the new private-equity shops – firms that specialize in buying companies to restructure them.

They would acquire a target company using massive amounts of borrowed money, then place the debt used to buy the company on the targeted company’s own books, forcing it to pay for its own takeover.

Waldman’s book catalogs the human cost: small businesses crushed by predatory lending, retirees wiped out when thrifts sold them worthless debt disguised as “safe” investments, and entire communities hollowed out when real-estate bubbles popped.

The bailout that protected the wrong people.

When the music stopped, the government moved fast. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 created the Resolution Trust Corporation (RTC) to deal with the insolvent thrifts. The RTC ultimately resolved 747 of them, holding more than $400 billion in assets.

Depositors were made whole through FSLIC/FDIC insurance – about $123.8 billion in taxpayer funds by the end of the decade, plus another $29 billion borne by the thrift industry itself. The ultimate net cost to taxpayers has been estimated at around $124 to 160 billion.

To calm public anger, Congress and the regulators insisted that the bailout would not be a permanent burden. The banking industry, they said, would repay the cost over forty years through assessments and fees. The problem was that there was no enforcement mechanism – no dedicated trust fund, no transparent accounting, no requirement that the money actually be tracked or reported. As the years passed, the promise faded.

The RTC was dissolved. The accounting was folded into general government operations. The public’s memory dimmed. And the banking industry, far from repaying the cost, emerged from the crisis larger, more concentrated, and more politically powerful than before.

The S&L crisis was the turning point when the United States shifted from a system of community-based finance to one dominated by megabanks, speculative capital, and a regulatory apparatus that treats crises as opportunities for consolidation.

The “forty-year repayment” plan was less a financial plan than a political talking point — a way to defuse outrage and move the crisis off the front pages and far into the future. But that future is now, and the bill has come due.

The forty year payoff that never happened.

The RTC was supposed to sell off the seized assets and recoup as much as possible to offset the FSLIC/FDIC insurance payouts. Instead, it dumped distressed real estate, loans, and junk-bond portfolios at firesale prices – often pennies on the dollar in the weakest markets – to quickly get the needed cash. Private investors, including early private-equity players like Blackstone, scooped up the bargains.

As markets eventually recovered, those buyers turned the assets into windfalls, while taxpayers ate the permanent loss on the difference between market value and what was actually recovered. Official numbers show the RTC ultimately recovered roughly 85 percent of the “appraised value” of the assets it handled.

That sounds respectable, but it is misleading. When compared to the original “book value” – what those assets were worth before the crisis – the recovery was closer to 50 percent. The buyers were sophisticated Wall Street operators who could wait out the real estate cycle.

The government socialized the losses to protect depositors (a worthy goal), but privatized the upside to the very firms that had helped fuel the speculation, so that the losses fell on the taxpayers rather than on the perpetrators of the fraud.

The S&Ls themselves were liquidated, while their executives and owners often walked away with “golden parachutes” or light penalties. But the real winners were the Wall Street firms that had supplied the junk bonds, advised on the deals, and now bought the distressed assets cheaply.

The balloon payments are due now.

Lawmakers assured the public that the bailout would not become a permanent burden. The cost, they said, would be repaid “over time,” largely by the financial industry itself.

To make that promise credible, Congress created two special financing vehicles – the Financing Corporation (FICO) in 1987 and the Resolution Funding Corporation (REFCorp) in 1989 – which issued thirty and forty year bonds to cover the losses.

The thrift industry would pay the interest, and the long maturities would give regulators time to recover assets and rebuild the insurance fund. In practice, the repayment never happened. Banks did pay the interest on the FICO bonds through mandatory assessments on deposits, in fees that continued until 2019.

But the fees were imposed on all banks, not just the wrongdoers. So it was a hidden tax on the people, since to balance their books banks had to reduce the interest paid to depositors – and the principal on those bonds was always scheduled to be paid by the Treasury.

The REFCorp bonds – the largest portion of the bailout financing – were zero coupon instruments, meaning no interest was paid annually. Instead, the entire principal plus the imputed interest would come due at maturity.

Those maturities fall between 2026 and 2030. As the Peter G. Peterson Foundation notes, “payments for the S&L crisis will cease in 2030, when all REFCorp bonds will have matured.”

The thrift industry never repaid the bailout. The cost was simply pushed forty years into the future, buried in the federal debt, and forgotten. Now, as the final balloon payments come due, the Treasury – already overextended – will almost certainly roll the remaining obligations into long term government debt, where they will accrue interest indefinitely. The bill for the S&L crisis was not eliminated. It was deferred. And the public is paying it now.

The pattern repeats — 2008, 2023 and now.

The S&L crisis established a template that has repeated ever since. In 2008, deregulation, securitization, speculative excess, and outright fraud produced a housing market collapse that dwarfed the S&L disaster.

The public was told that a bailout was necessary to prevent economic catastrophe. The assets of failed institutions were sold at steep discounts to larger, better connected firms. The result was further consolidation and even greater concentration of financial power.

In 2023, the failures of Silicon Valley Bank, Signature Bank, and First Republic were symptoms of the same structural fragility: interstate mismatches, concentrated depositor bases, and a regulatory rollback that exempted midsized banks from enhanced oversight.

When these banks failed, the response followed the familiar pattern. Regulators guaranteed deposits, arranged emergency acquisitions, and assured the public that the system was sound. JPMorgan Chase – already the largest bank in the country – absorbed First Republic with government assistance.

The private equity crisis and the shadow banking reckoning.

The predatory leveraged buyout culture born in the Savings & Loan era has metastasized into a private equity industry that now dictates the stability of the U.S. financial system. Today, firms like Blackstone and BlackRock represent the logical endpoint of a decades-long regulatory retreat: a system designed to socialize massive losses while privatizing the gains for a handful of billionaire fund managers.

Congress and federal regulators are currently sleepwalking into a slow-motion banking crisis. At its center is a collapsing commercial real estate (CRE) market, where over one trillion dollars in debt is set to mature by the end of 2027. These office towers and retail centers, hollowed out by a shifting economy and high interest rates, no longer support the massive debt loads placed on them by private equity landlords.

The danger is not just to the buildings, but to the regional and midsize banks that hold the bulk of these loans. These banks are the primary lenders to our local communities, and their balance sheets are being poisoned by the aggressive, high-leverage gambles of firms like Blackstone, which has already begun defaulting on high profile office bonds.

The derivatives casino – the S&L playbook on steroids.

The same mechanism that fueled the S&L collapse is now supercharged in the derivatives market. Unlike traditional hedging, modern derivatives allow institutions to bet on the price of oil, stocks, mortgages, or interest rates without owning the underlying asset. These synthetic bets can be created in unlimited volume.

The result is a global derivatives book whose notional value is now estimated by some analysts to exceed a quadrillion dollars – many times larger than the real economy. Collateral posted to back these bets can be rehypothecated – pledged, repledged, and repledged – multiplying leverage exponentially.

One market shock, margin call, or geopolitical upset can cascade through the chain, turning phantom assets into very real losses. This is not hedging in the traditional sense – farmers hedging against bad weather at harvest time. It is speculation layered on speculation, built on the assumption that the public will always be there to absorb the losses.

What we lost and what could have been built.

A little-discussed consequence of the S&L collapse is the erosion of community banking. Before the crisis, local lenders played a central role in financing small businesses, affordable housing, and local development.

They knew their communities, understood local conditions, and were accountable to their depositors. The S&L crisis wiped out thousands of these institutions. The survivors were absorbed by larger banks with no local ties.

The result was a decline in relationship based lending and a rise in standardized, algorithm driven credit decisions. Small businesses face greater barriers to credit. Rural and low income communities struggle to attract investment.

Local economies have become more vulnerable to national and global financial trends. There was another path available – a public interest banking model that would have preserved the strengths of the S&Ls while eliminating the vulnerabilities that made them easy targets for speculation and fraud.

The state-owned Bank of North Dakota offers a century long example of how public banking can stabilize a financial system, support community banks, and keep credit flowing during crises.

North Dakota has six times the national average of community banks per capita, largely due to the BND’s partnership loans with community banks, credit unions, and CDFIs, strengthening rather than competing with local lenders.

The BND acts as a “miniFed” for the state’s banks, providing liquidity, loan participations, and support during downturns. At the federal level, postal banking once provided safe, low cost services to millions of Americans. Globally, public infrastructure banks have shown that public lending can be efficient and fiscally responsible.

The forty year reckoning.

The S&L crisis was the beginning of a new era in American finance – an era defined by deregulation, moral hazard, and the steady erosion of democratic control over the financial system.

The failures of 2008 and 2023 were the predictable outcomes of a system designed to privatize gains and socialize losses. The question for 2026 is whether we will continue to accept a financial structure that treats the public as a perpetual guarantor of private risk, or whether we will finally build a system that serves the public interest. The forty year window is closing, the bill is still due, and the public deserves an accounting.

Ellen Brown is an attorney, author of 13 books, and founder of the Public Banking Institute. Her website is EllenBrown.com.

First Published on Capitol Hill Citizen Substack.

Shared via Creative Commons.

Project Hamilton, ECASH, and the Quest for a Privacy-Protected Digital Dollar

 Ellen Brown
JUNE 12, 2026

The first two articles in this series explored the proposition that artificial intelligence and robotics will soon be ushering in an economy of unprecedented abundance, and examined the resource and energy constraints that could limit that voluminous growth. If machines eventually replace most of the workforce, society may need some form of Universal High Income (UHI), as Elon Musk and others have suggested, simply to keep purchasing power aligned with productive capacity. In a world where goods and services can be produced in abundance, the challenge may no longer be creating supply. It may be creating enough consumer demand (money) to purchase that potential supply.

A UHI or UBI (Universal Basic Income) would have to be issued digitally by the government. This third article addresses the fear that such a currency would come with strings attached – that it could be programmed to restrict purchases, limit movement, or enforce political conformity, imposing a “digital prison.”

The question posed here is, could a government-issued digital currency be created in a way that is privacy-protected, not programmable, and tradable like cash?

The answer is that it could. In fact, between 2020 and 2022, such a public digital-dollar system was in development. Project Hamilton, a collaborative effort of the Boston Fed and MIT, created a digital dollar that stored no personal data or transaction history, was not programmable to control how the money was spent, could be used without an intermediary, and was also the fastest payment system ever built. It was a digital money design that made a financial control grid impossible.

In late 2022, however, the program was quietly shelved – not because of a failure of design, but because it was thought to threaten the business models of banks and private payment networks. That was the belief, but a public money system built with Hamilton-style digital dollars could actually strengthen local banks, as will be shown here.

Why does all this matter? Congress is currently debating legislation that could make privately issued stablecoins a major component of the future dollar system. Supporters, including Treasury Secretary Scott Bessent, see Treasury-backed stablecoins as a way to strengthen the dollar and create new demand for U.S. government debt. Banks worry that if stablecoins are allowed to pay competitive yields, depositors could move their money out of traditional bank accounts and into digital wallets. But both sides share a common assumption: that future digital dollars must be backed by government debt. There is another possibility—a privacy-protected, non-programmable digital dollar issued directly by the Treasury and designed to function like cash.

The irony is that the privately-issued stablecoins now being implemented by Congress actually are programmable and do threaten the business model of private banks. That subject in order will be explored in a follow-up article. This article will look at the non-programmable alternative that was demonstrated and then abandoned, and at how it could be the only mathematically viable alternative for funding a UHI, if or when that option becomes necessary to maintain economic stability.

The Digital Control Grid We Already Have.

For years, the loudest warnings about a central bank digital currency (CBDC) have centered on the fear that a government-issued digital dollar would create an unprecedented surveillance system. However, a surveillance system is already built into the digital money we use today. Hamilton-style digital dollars could have bypassed that invasion of privacy.

More than 95 percent of the money supply is now digital, and the payment rails it runs on — Visa, Mastercard, PayPal, Stripe, Zelle, the major banks — already track what you buy and where you buy it. Every purchase is tagged with a merchant category code (MCC), which forms a detailed behavioral map of your life. Behind the scenes, companies like Plaid and Yodlee sit between your bank and the apps you use. When you connect a budgeting or payment app, these intermediaries often copy years of your transaction history — every pharmacy purchase, every restaurant bill, every utility payment. They store it, analyze it, and build profiles of your spending habits that can be shared or sold.

Payment processors use automated systems to flag and sometimes freeze accounts based on activities designated as suspicious by algorithms. PayPal’s Acceptable Use Policy, for example, allows it to seize funds for a wide range of activities defined by the company. These decisions are made under corporate policies buried in complicated fine print that few people actually read, policies executed by the company without due process or a clear right of appeal.

Project Hamilton, the Privacy-protected Alternative that Was Shut Down.

In contrast, under Project Hamilton a public digital-dollar system was built, tested and proved that could have blocked surveillance, protected privacy, and given Americans a cash-like digital option. Developed by the Federal Reserve Bank of Boston and MIT’s Digital Currency Initiative, Project Hamilton was a working prototype. Phase 1 delivered something no private payment network has ever offered: 1.7 million transactions per second, with settlement in under a second, no personal data stored on the ledger, no transaction history, no account numbers, and no surveillance architecture.

Instead of numbered accounts, it used opaque 32-byte hashes — a fixed-length string of 32 bytes that is cryptographically generated, random-looking, and impossible to link to a person or decode into meaningful information. It might look something like this: 0xA3F9C1E4B7D2F8C9E1A4F3B2C7D9E0F.

The system validated payments without knowing who was making them, and identity checks happened outside the transaction layer, meaning the core ledger never touched personal information. MIT released the entire codebase publicly, so that anyone could inspect it and verify that it was designed to protect users, not monitor them.

In short, the United States successfully built a digital dollar that was fast, private, and not traceable to the user.

In a 2023 report in the MIT Technology Review titled “Is the Digital Dollar Dead?”, Mike Orcutt wrote, “Hamilton’s first phase demonstrated a feasible technical approach, and the researchers promised a ‘Phase 2’ that would explore sophisticated approaches to privacy. But late last year, shortly after the project came under scrutiny from anti-CBDC legislators, the Boston Fed ended Hamilton.”

The Independent Community Bankers of America warned that a CBDC “could destabilize the existing banking system that serves as the backbone of the U.S. economy.” Members of Congress sent letters to the Boston Fed expressing concern that Hamilton’s architecture could bypass commercial banks entirely. Orcutt wrote that CBDC research suddenly became “political red meat.” Bills were introduced to ensure that a digital dollar “never sees the light of day.” And in 2022, the Boston Fed quietly ended the project.

Opponents of developing a U.S. CBDC questioned the need for it. They argued that dollars are already digital. You can pay with a debit card or credit card.

In response, Orcutt quoted Willamette University law professor Rohan Grey, who observed that  5.9 million U.S. households are “unbanked” and limited to using cash, and cash won’t work on Amazon and other online shopping outlets. He added that the non-traceability of cash is a “social good” that needs to be preserved as we transition to a digital world.

The ECASH Act: A Treasury-issued Digital Dollar.

In 2022, Grey helped author a U.S. House bill called the Electronic Currency and Secure Hardware Act (ECASH). Introduced by Rep. Stephen Lynch of Massachusetts, the legislation directs the Treasury to create and issue a digital dollar that functions like physical cash. According to the ECASH Act Fact Sheet:

“The bill mandates several e-cash features, e.g.:

• Legal Tender: E-cash must be legal tender, created and issued into circulation by Treasury, and payable to bearer.

•Financial Inclusion: E-cash must be distributed and used directly by the American public via widely available hardware devices. It must also be capable of peer-to-peer, offline transactions and interoperable with all existing financial institution and payment provider systems. Moreover, in developing e-cash, the Security must prioritize technologies that promote universal access and usability – particularly as relating to  individuals with disabilities, low-income individuals, and communities with limited access to internet or telecommunications networks.

• Privacy: E-cash must incorporate key security and functionality safeguards that are generally associated with the use of physical currency – including anonymity, privacy, and minimal generation of data from transactions. E-cash must also be distributed through secure hardware devices that are secured locally via cryptographic encryption or other similar technologies and cannot contain personal identifiable information or be subject to surveillance, transactional data collection, or censorship-enabling features.  “

Grey envisioned cards that could be tapped together or to smart phones to transfer value anonymously, online or off-line. That such an “ecash” system would work was demonstrated in the 1980s and became available through Credit Suisse in Switzerland in 1998, then through Deutsche Bank in Germany and other banks in Europe, where cash is more often used than in the United States.

The U.S. ECASH Act has not yet been passed, but it is still alive. It is a minority-party bill in a Republican-controlled House that has never passed committee, but it has been reintroduced in subsequent sessions of Congress, including the current 119^th Congress.

The Public Option – Still on the Table?

Another bill that has not yet passed – H.R. 1122, the CBDC Anti-Surveillance State Act – would prohibit the Federal Reserve from issuing a retail CBDC, ever. But even if that bill passes, there is a public option that is still available. A modern Greenback could be issued through the Treasury, the fiscal arm of the government, rather than through the central bank. This is what is mandated in the ECASH Act – Treasury-issued digital currency.

Far from a new idea, government-issued currency is actually the oldest American monetary tradition we have, dating back to the American colonists and Abraham Lincoln. During the Civil War, the United States had no Federal Reserve, no central bank and no lender of last resort. But it did have a Treasury, and the government was facing an existential crisis. To finance the war without crushing the economy with debt, the Lincoln administration issued Greenbacks: Treasury-created dollars that required no borrowing and paid no interest. They were sovereign, debt-free, interest-free, and issued directly into circulation.

Greenbacks (U.S. Notes) kept the Union solvent, stabilized prices, and funded the war effort as well as a great deal of national infrastructure. They showed that the Treasury can issue money directly when the public interest requires it.

A modern version of that option, a Treasury-issued digital dollar, is not only possible under the Constitution and pending ECASH Act; but if we are heading into an AI-driven economy where Universal High Income becomes necessary to maintain consumer demand, Treasury issuance may be the only model that makes mathematical sense. Treasury-backed stablecoins and the Fed’s Quantitative Easing are both debt-based. With stablecoins, the interest on the Treasuries flows to private issuers. With the bank reserves the Fed issues to buy Treasury debt from banks, the interest flows to the banks. With Treasury-issued dollars, government interest flows to no one, because the government owes it to no one. This is the cleanest, most democratic form of money creation, and it falls squarely within the American monetary tradition.

The age-old objection to that solution is that it would devalue the currency and inflate prices from too much money chasing too few goods. But in an age of unprecedented AI-generated abundance, that maxim would be turned on its head. When too little money is chasing too many goods, the system actually needs an infusion of new money in order to maintain economic balance.

A Public Payment System that Preserves Private Local Banking and Serves the People.

How would Treasury dollars reach consumers, and how would they connect to community banks?

One possibility is through postal banks. The United States once had a very popular postal savings system, and Japan still has one. Japan Post Bank, one of the largest deposit-taking institutions in the world, provides universal access, simple accounts, basic payments, and a public option for savings. Yet it coexists with private banks, which continue to make loans and serve as the credit engines of the economy.

A U.S. postal banking system could do the same. The Postal Banking Act is a legislative bill reintroduced in 2022, aimed at re-establishing basic financial services at the United States Postal Service (USPS). Championed by lawmakers including Senators Kirsten Gillibrand and Bernie Sanders, the act seeks to provide safe, low-cost alternatives to predatory services like payday loans and check-cashing companies. According to Sen. Gillibrand, it could also generate nearly $19 billion per year for the USPS.

For a UHI, the Treasury could issue the digital dollars, and postal banks could distribute them. Balances above a modest threshold (say $500) could be automatically swept into the customer’s chosen community bank each night. Community banks would remain the lenders, keep lending local while ensuring universal access to public money. Local banks could have access to a public liquidity window through a state-owned public bank, similar to the Bank of North Dakota model.

To prevent fraud, the banks would also continue their function of monitoring large money flows, following the “two-tier” model in which banks handle the Know Your Customer (KYC) and AML monitoring envisioned in Project Hamilton’s documentation.

Conclusion: Stablecoins or Digital Greenbacks?

A stablecoin is a privatized claim on public debt, on which the U.S. government pays interest to the issuer. A Treasury-generated Greenback would be a public claim on public productivity, backed by “the full faith and credit of the United States” – the agreement of U.S. citizens to accept those Treasury-dollars in payment.

Treasury-issued digital dollars built on Project Hamilton architecture could support a UHI or UBI in an AI-driven economy without raising taxes or increasing the federal debt, and without the exponentially growing interest that leads to boom and bust cycles in a debt-based money system. If administered through a public banking model, a digital Greenback system could preserve community banks, provide universal access to the unbanked and under-banked, protect privacy, and keep monetary sovereignty in public hands.

Project Hamilton’s design was the opposite of the surveillance-heavy systems we use today. It used opaque 32-byte tokens that carried no personal information, a ledger that stored no transaction history, and a core that never saw names or account numbers. In other words, Hamilton would have been less programmable and more privacy-preserving than either the bank-created digital dollars Americans already use or the stablecoins being legislatively negotiated now.

Part 4 of this series will look more closely at the stablecoin legislation now pending, and at how that option can serve to strengthen the dollar’s reserve currency status abroad and ease the federal debt crisis without impairing the domestic lending business of local U.S. banks.

Be sure to check Ellen Brown’s earlier posts here on the AI Abundance Paradigm.

First Published on ScheerPost.com.

Shared via Creative Commons.

HENRY GIROUX
MAY 29, 2026

“Tradition is not the worship of ashes. It is the preservation of fire.”

…Gustav Mahler

Corruption as Authoritarian Spectacle.

Corruption has never been far from the center of American politics. Some of the most notorious scandals stretch from the cronyism of Warren G. Harding to the abuses of power exposed during the Watergate scandal under Richard Nixon. Yet many historians argue that what distinguishes Donald Trump from earlier corrupt presidencies is that corruption no longer operates behind closed doors, shielded by the liberal rituals of institutional legitimacy and the euphemisms of political decorum. Under Trump, corruption is performed openly as spectacle, celebrated as a sign of strength, wealth, vengeance, and personal loyalty.

Trump’s ever-expanding regime of corruption is no longer simply hidden financial misconduct but a public display of sociopathic avarice designed to normalize greed, lawlessness, unconstrained power, and the collapse of civic accountability. It reflects a politics of moral nihilism in which fascism no longer appears as a distant threat, but as the future already taking shape.

As a badge of honor, Trump embraces corruption not simply as a mode of governance, but as a spectacle designed to legitimate greed, cruelty, and unchecked power. It functions as what Dominic Wetzel has called the “pornification of the American dream,” a culture in which excess, lawlessness, and predation are celebrated as signs of success and strength. In Trump’s America, corruption metastasizes into a theater of cruelty and violence, saturating political life with the values of fear, spectacle, and disposability. It feeds a broader architecture of domination rooted in toxic hierarchies of race, class, misogyny, and white Christian nationalism, while turning lawlessness and untethered aggression into forms of political entertainment.

Corruption, in this sense, is more than a symptom of institutional decay, moral depravity, or political vulgarity. It becomes one of the central pedagogical and political mechanisms through which fascist politics takes hold, eroding democratic values while legitimating a culture organized around brutality, humiliation, and civic abandonment. In this formulation, corruption functions as a kind of fascist staging ground, creating the conditions that nourish what Jonathan Crary calls in Scorched Earth an “implacable engine of addiction, loneliness, false hopes, cruelty, psychosis, indebtedness, squandered life, the corrosion of memory, and social disintegration.”

The Criminalization of Governance.

What defines the Trump regime, then, is not merely corruption in the conventional sense of bribery or financial misconduct. Rather, it is the systemic fusion of authoritarian power, organized greed, spectacle, state-sponsored cruelty, and impunity, a fusion that transforms corruption into a governing principle and a cultural ideal. The display  of greed and the ensuing scandals are staggering in scope: the use of Trump hotels and resorts as political cash machines for lobbyists, foreign governments, and Republican operatives seeking influence; the funneling of taxpayer money into Trump-owned properties through Secret Service and government expenditures; the diversion of inauguration funds into private enrichment schemes; the use of cryptocurrency ventures and opaque political action committees as modern slush funds; the acceptance of lavish gifts, luxury travel, and aircraft linked to billionaire benefactors and foreign interests;and the open monetization of political access itself.

Added to this are Jared Kushner’s multibillion-dollar Saudi investment connections following his White House role, Ivanka Trump’s trademark deals and business expansions during the administration, and the nepotistic appointment of family members to positions of immense political influence. What emerges is a scale of self-dealing and lawlessness unprecedented in modern American politics. But these scandals are not isolated abuses of office. They point to a deeper transformation in which corruption becomes institutionalized as a governing logic, a mode of public pedagogy, and a defining feature of authoritarian power.

Trump’s corruption reaches beyond the traditional language of political scandal and increasingly resembles the operational logic of a criminal enterprise. The proposed $1.786 billion slush fund, tied to settlements for insurrectionists, corrupt opportunists, and other Trump allies, signals more than financial gangsterism; it reveals a governing structure in which enormous pools of money function as instruments of loyalty, reward, intimidation, and political protection. Walter Olson quoting Nick Catoggio is right in stating that “It’s simple theft packaged in the argle-bargle of “weaponization” and “compensation.” … The president behaves with impunity because he believes most of his party will unthinkingly defend anything he does, and he’s correct.”

Taken together, these actions reveal a regime that increasingly resembles a criminal enterprise. Such practices build upon Trump’s decision to pardon more than 1,600 individuals convicted in connection with the January 6 attack on the Capitol, including participants involved in violent assaults on police officers defending the democratic process. The pardons transformed political violence into a badge of allegiance, signaling that acts committed in defense of the leader would not only be excused but sanctified as patriotic service.

At the same time, Trump has repeatedly used the pardon power to shield political allies, wealthy donors, and figures associated with spectacular forms of criminality. Among the most notorious was the pardon of Ross Ulbricht, associated with one of the largest online drug trafficking operations in American history. Added to this were pardons and commutations granted to numerous allies and supporters convicted of fraud, corruption, and financial crimes. For example the pardon of  Philip Esformes, who was convicted in one of the largest Medicare fraud schemes in U.S. history involving roughly $1.3 billion in fraudulent claims. Esformes became emblematic of a politics in which white-collar criminality is treated not as a threat to the public good but as negotiable currency within a system of transactional loyalty.

As journalist David D. Kirkpatrick reported in The New Yorker the Trump family has pocketed roughly $4 billion through a vast network of business dealings, political branding operations, cryptocurrency ventures, and influence-based transactions linked directly or indirectly to Trump’s political power. What emerges from these revelations is not merely a pattern of isolated ethical violations but the consolidation of a political culture in which corruption becomes normalized as both spectacle and governance. Wealth extraction, patronage, legal immunity, and political violence converge into a single authoritarian machinery fueled by fear, manufactured grievance, and ritualized loyalty to the leader.

Corruption, Fascist Culture, and the Death of Civic Conscience.

If one face of fascist politics appears in the transformation of the state into an instrument of domestic terrorism, the other emerges in the fusion of political power and systemic corruption. Here, gangster capitalism reveals itself in its most predatory form as public institutions are hollowed out to enrich ruling elites, reward loyalists, punish dissenters, and normalize lawlessness as a mode of governance. Yet corruption under fascist politics does not operate only through institutions and economic arrangements; it also works through culture, emotion, spectacle, and the shaping of everyday consciousness.

In this sense, corruption cannot be reduced to isolated scandals or individual acts of criminality. It becomes a cultural force and pedagogical weapon that assaults civic consciousness, erodes the social bonds essential to democratic life, and legitimates the mobilizing passions of fascism through spectacles of degradation, disposability, cruelty, and manufactured hatred.  It functions as part of a broader neoliberal pedagogy in which civic life is reorganized around the values of self-interest, commodification, hyper-individualism, and ruthless competition. Decades of market-driven propaganda, celebrity culture, anti-intellectualism, and disimagination machines have normalized a moral language in which greed becomes aspiration, cruelty becomes entertainment, and public goods become objects of contempt. Under such conditions, corruption becomes woven into everyday consciousness as common sense rather than recognized as an assault on the ideal and promise of a strong democracy.

Under fascist politics, corruption performs an even deeper and more insidious function. It not only rots institutions but destroys the ethical and civic sensibilities necessary for democratic life itself. By collapsing the distinction between public service and private plunder, between social responsibility and criminality, it deadens conscience, normalizes dishonesty and cruelty, and strips politics of any moral obligation to the common good.

What emerges is a culture in which greed becomes a civic virtue, lawlessness a measure of power, and the suffering of others merely collateral damage in the pursuit of domination. It is precisely this collapse of conscience into moral numbness and thoughtlessness that, as Hannah Arendt argued in Eichmann in Jerusalem and later in Responsibility and Judgment, creates the conditions in which authoritarianism flourishes.

In Trump’s political universe, corruption becomes an authoritarian performance of raw domination, flaunted openly because the point is not to hide criminality but to normalize it. The endless grifts, payoffs, family profiteering, intimidation campaigns, pardons, and transactional loyalties send a clear message to the public: democracy is no longer a shared ethical project but a marketplace of cruelty, patronage, and gangster capitalism.

As historian Ruth Ben-Ghiat has argued, these payoffs and pardons should not be viewed merely as rewards for past loyalty. They function as retainers for future acts of political violence and authoritarian allegiance. Like organized crime syndicates and autocratic regimes across the globe (particularly Hungary before recent Orban’s defeat in recent elections), such systems bind followers to the leader by making their legal troubles disappear while preparing them for future service to the movement. Pardons, financial settlements, political favors, and selective protections become mechanisms for constructing what amounts to a state-funded loyalty network, one designed to secure obedience not through democratic consent but through fear, dependency, corruption, and shared complicity.

Corruption as Public Pedagogy.

Under such conditions, corruption takes on a pedagogical force. It teaches that democracy is for sale, that injustice is more important than justice, and that power belongs to those wealthy and ruthless enough to place themselves above accountability. The danger lies not only in the criminal practices involved, but in the broader cultural lessons they impart: that gangsterism can function as statecraft, that loyalty to the leader overrides loyalty to the law, and that democracy can be hollowed out through a fusion of choreographed outrage, corruption, and organized forgetting—fostered by an endless array of disimagination machines. To understand how such corruption secures mass consent, it is necessary to examine the cultural and media apparatuses that circulate its values and transform authoritarianism into a form of everyday pedagogy  and language that colonizes consciousness.

Digital Authoritarianism and the Culture of Spectacle.

Corruption in the Trump regime does not operate in isolation from culture, media, and everyday life. It is enabled and amplified through a vast network of cultural apparatuses, digital platforms, and billionaire-owned media systems that normalize greed, celebrate ruthless self-interest, and elevate the values of neoliberal capitalism into a governing common sense. The tech oligarchs who dominate social media and digital communications do more than control information; they shape the emotional and pedagogical landscapes through which people learn how to see themselves, others, and the very meaning of politics. In this environment, corruption is no longer viewed primarily as a violation of public trust. In this environment, algorithmic domination and digital feudalism are presented as entrepreneurial cunning, personal branding, and competitive success, and the unapologetic pursuit of power in a winner-take-all culture. In reality, it represents a hyper charged form of instrumentalized evil.

The contemporary pedagogical terrain of gangster capitalism overwhelmingly favors the rich, the reactionary, and the politically powerful. Increasingly, large segments of the public, especially swing voters and younger audiences, no longer receive political information through traditional journalism or democratic public spheres, but through social media platforms, YouTube channels, influencer networks, and podcasts dominated by right-wing personalities such as Tucker Carlson, while algorithm-driven systems controlled by tech oligarchs such as Elon Musk and Mark Zuckerberg amplify outrage, misinformation, and authoritarian resentment. Some of the most listened-to political podcasts are hosted by reactionary figures who traffic in conspiracy theories, manufactured grievance, white nationalism, misogyny, and anti-democratic rhetoric.

At the same time, conservative political forces exercise enormous influence across YouTube, Facebook, TikTok, and X, where outrage, fear, resentment, and spectacle circulate with extraordinary speed and emotional intensity. These platforms reward sensationalism, aggression, and emotional manipulation because outrage generates clicks, attention, and profit. They foster social fragmentation, alienation, atomization and, as Jonathan Crary notes, increasingly represent a “comprehensive global apparatus for the dissolution of society.”

In doing so, they create a cultural and pedagogical environment in which authoritarian values acquire enormous legitimating force while critical thought, historical memory, and civic literacy are increasingly erased, punished, or rendered suspect. At the same time, they reproduce and normalize the poisonous grammar of fascist politics: lawlessness elevated to a governing principle, racial hatred and fantasies of racial cleansing shamelessly defined as matters of security and national purity, critical ideas banned or criminalized, genocidal violence in Gaza rationalized as policy, and the killing of journalists in war zones normalized as collateral damage in an age of organized barbarism. Under these conditions, digital culture no longer merely communicates politics; it becomes one of the primary pedagogical forces through which authoritarian identities, desires, and emotional investments are produced.

MAGA Aesthetics and the Pedagogy of Cruelty.

What emerges under Trumpism is not simply a politics of corruption but a broader pedagogical cultural regime of criminality and state terrorism. Unlike older forms of authoritarian propaganda that demanded ideological belief and disciplined obedience, contemporary authoritarian culture demands shallow participation, emotional surrender, anti-intellectual performance, and compulsive circulation through the endless flows of digital media and the dangerous use of AI. Politics is transformed into political theater, meme warfare, and performative outrage. Participation no longer requires informed judgment or critical literacy; it requires emotional investment in spectacles of humiliation, cruelty, resentment, and tribal loyalty. Corruption becomes part of the ritualized displays of domination, flaunted openly as a sign of power, unchecked control, and immunity from accountability.

The endless circulation of memes, AI-generated fantasies, conspiracy theories, staged outrage, and celebrity-driven political performances creates a culture in which authoritarian values are absorbed affectively before they are ever examined critically. In this mediated universe, the language of democracy dissolves into branding exercises and algorithmically engineered emotional reactions. Here Guy Debord’s notion of the spectaclebecomes indispensable because politics no longer functions primarily through reasoned argument but through a theater of commodified images, manufactured emotions, and endless distraction. Equally important, Jean Baudrillard’s work helps explain how AI-generated fantasies and hyperreal political imagery circulate not because they are believable in any conventional sense, but because they produce emotional gratification untethered from truth, evidence, or historical memory. At the same time, Neil Postman foresaw a culture in which public life would dissolve into amusement and spectacle, eroding the very capacities necessary for democratic judgment and critical thought.

Increasingly, the corruption of politics is mirrored in the corruption of civic culture, public conscience, and moral judgment. The grotesque AI-generated videos and staged spectacles circulated endlessly by Trump and amplified through right-wing media ecosystems do more than entertain. They function as forms of authoritarian public pedagogy that normalize humiliation, cruelty, racism, hypermasculinity, and civic illiteracy as public virtues. In these digitally manufactured fantasies, Trump appears as a divinely ordained savior embraced by Jesus, critics are reduced to targets of ridicule and fantasies of degradation, and aggression against dissenters is staged as a source of popular amusement and emotional gratification. In one egregious AI-generated racist video, Trump portrays former President Barack Obama and Michelle Obama as apes. Such spectacles matter because they erode the ethical foundations of democratic life, replacing civic responsibility, compassion, historical memory, and critical judgment with a politics of mockery, resentment, manufactured rage, and authoritarian pleasure. Politics no longer appeals to informed consent, ethical responsibility, or reasoned debate. Instead, it trains audiences to take pleasure in humiliation, celebrate unchecked power, and embrace cruelty as entertainment.

Disimagination Machines and Neo-Fascist Culture.

Under this pedagogical regime, neoliberal values of toxic competition, unchecked self-interest, disposability, a commodified culture of immediacy, and market-driven survival merge seamlessly with authoritarian politics. Celebrity culture, algorithmic media systems, Christian nationalism, anti-intellectualism, and fascist theatricality fuse into what I have elsewhere called a disimagination machine, a powerful apparatus of public pedagogy that educates people emotionally before it persuades them intellectually. Its deepest power lies not merely in disseminating lies, but in shaping desires, identities, and emotional dispositions that render corruption, cruelty, and gangster capitalism commonplace features of everyday life. Authoritarianism becomes pleasurable, white nationalist movements and cult-like loyalties replace democratic solidarity, and public life is reduced to a brutal game organized around humiliation, extraction, and the thrill of domination.

What emerges from this machinery is a form of neo-fascist politics in which corruption is no longer a deviation from governance but one of its central organizing principles. Yet mainstream media often treats corruption as little more than scandal and spectacle, obscuring its role within a broader politics of disposability, extraction, and authoritarian control. What is at stake is a predatory system that hollows out democratic institutions while concentrating wealth and power in the hands of a financial and political oligarchy bound together by fear, loyalty, and organized greed. But corruption alone is not the deepest threat. The greater danger lies in the cultural and pedagogical conditions that normalize it. In an age dominated by neoliberal disimagination machines, spectacle-driven politics, and manufactured ignorance, gangsterism is recast as strength, cruelty as authenticity, and lawlessness as freedom.

In an age dominated by neoliberal disimagination machines, media-driven politics, and manufactured ignorance, fascist values and passions are no longer hidden; they are marketed, performed, and celebrated. In this scenario, corruption functions as political theater, a site where politics dissolves into the visual grammar of fascism.

Militarism, Hypermasculinity, and White Christian Nationalism.

At its extreme, this culture of corruption and authoritarian spectacle converges with a politics that glorifies militarism, violence, and hypermasculine domination. One of the driving forces behind the systemic corruption that defines the Trump regime is the fusion of toxic militarism, white Christian nationalism, and a hypermasculine politics that glorifies violence, domination, and war. This deadly convergence is visible in Trump’s appeals to divine authority, biblical rhetoric, and crusader imagery used to justify military aggression and war-crime-level violence in Iran. It also appears in the militarized language of Pete Hegseth, Trump’s self-styled “Secretary of War,” for whom war becomes a theater of masculine redemption in which cruelty is defined as a badge of strength. Hegseth’s swaggering militarism might appear absurd were it not tied to the power of the state and its capacity to unleash violence at home and abroad. As Jasper Craven observes, his rhetoric is steeped in “Islamophobia, misogyny, and a distinctly toxic version of masculinity,” a poisonous language that turns militarism into a spectacle of aggression while elevating authoritarian brutality into a model of national identity and civic virtue.

Toward a Politics of Resistance and Struggle for Democratic Socialism.

It is worth repeating that the crisis we face is not simply one of corruption, but of the accelerating destruction of democracy, as justice, historical memory, civic agency, and public conscience are hollowed out by the forces of predatory neoliberalism and authoritarian rule. Trumpism reveals how gangster capitalism, fused with authoritarian politics, transforms the state into an instrument of domestic terrorism, economic predation, and moral nihilism. It colonizes consciousness, erases historical memory, and rewrites history. Under such conditions, resistance cannot be reduced to legal reforms, ethics commissions, or appeals to civic decorum. History has shown where such forces culminate: in torture chambers, mass incarceration, concentration camps, and the institutionalization of cruelty as a governing principle.

What is needed is a fundamental rupture with a political and economic order that concentrates wealth and power in the hands of financial oligarchs while dismantling public goods, social protections, and democratic institutions in the service of organized greed. This is a struggle that must make education central to politics in order to change public consciousness as part of a wider struggle to dismantle the economic and political institutions of gangster capitalism.

In the end, the corruption at the heart of the Trump regime cannot be separated from the broader authoritarian and neo-fascist culture that both nourishes and legitimates it, a culture in which militarism, apocalyptic nationalism, toxic masculinity, gangster capitalism, and a politics of disposability fuse into a machinery of domination. This is a politics that wages war not only on democratic institutions, critical ideas, and public values, but also on the very conditions that make justice, solidarity, compassion, and collective freedom possible.

The struggle against authoritarian corruption must therefore become part of a broader struggle to reclaim politics as a moral, social, and collective project rooted in historical memory, economic justice, shared responsibility, and the radical promise of democracy life. Yet, this struggle must heed Frederick Douglass’s admonition that “power concedes nothing without a demand.” For Douglass, oppressive power never retreats on its own. It yields only when confronted by a collective force capable of disrupting its authority, exposing its injustices, and making domination increasingly difficult to sustain. In this instance, resistance becomes dangerous to authoritarian power not simply because it opposes domination, but because it embodies a collective moral and political energy capable of unsettling the very foundations upon which that power rests.

What is at stake is not merely the defense of liberal democratic norms, but the creation of a fundamentally different future. The challenges before us are to dismantle gangster capitalism and the fascist politics it breeds. In its place, there is the task of building a democratic socialist vision rooted in human dignity, solidarity, compassion, justice, equality, and the common good. As Douglass famously noted, “if there is no struggle, there is no progress.” This is the power of critical thought, mass resistance, and militant hope.

Henry A. Giroux currently holds the McMaster University Chair for Scholarship in the Public Interest in the English and Cultural Studies Department and is the Paulo Freire Distinguished Scholar in Critical Pedagogy. His most recent books include: The Terror of the Unforeseen (Los Angeles Review of books, 2019), On Critical Pedagogy, 2nd edition (Bloomsbury, 2020); Race, Politics, and Pandemic Pedagogy: Education in a Time of Crisis (Bloomsbury 2021); Pedagogy of Resistance: Against Manufactured Ignorance (Bloomsbury 2022) and Insurrections: Education in the Age of Counter-Revolutionary Politics (Bloomsbury, 2023), and coauthored with Anthony DiMaggio, Fascism on Trial: Education and the Possibility of Democracy (Bloomsbury, 2025). Giroux is also a member of Truthout’s board of directors.

First published on CounterPunch.org.

Shared via Creative Commons.

Ellen Brown
May 26, 2026

Part 1 of this “Abundance Paradigm” series discussed predictions that artificial intelligence and robotics will in the relatively near future produce an economy of extraordinary abundance – one in which most labor is automated. The contention of Elon Musk is that this development will require some form of government-issued “Universal High Income” (UHI) to provide the consumer demand necessary to keep the economy functioning in a world where machines do most of the work.

Based on those projections, I argued that if a UHI were to become necessary, it could not realistically be financed through taxes or debt alone, but would require some form of debt-free sovereign money issuance — a modern version of Lincoln’s Greenbacks. The usual objection to government-issued money is that it would drive up prices and devalue the currency due to “too much money chasing too few goods.” But in this case, we would have too many goods and not enough money to provide the consumer demand to move them off the shelves. A source of abundant new money would actually be needed to keep trade flowing.

Objections came thick and fast. Some critics saw the AI revolution not as liberation but as a technocratic nightmare: AI surveillance, programmable digital money and “smart cities,” centralized control systems, and a future in which most people will own nothing while a tiny elite owns the machines, the data, and even the government. Others challenged the underlying premises: Would AI really generate such extraordinary abundance? Would productivity rise enough to justify something like a UHI? Or is this simply another round of Silicon Valley hype detached from economic reality?

Those are legitimate questions that deserve serious consideration, serious enough to require more than one sequel to address them. But whether or not we approve of Elon Musk, Sam Altman, or the AI industry itself, the AI revolution is already underway, driven by forces far larger than any individual actor. Businesses want AI because it lowers costs and increases productivity. Governments want it because they view it as strategically essential. Consumers increasingly rely on it because it saves time and improves convenience. The genie is out of the bottle.

Commentators say the AI boom is unlikely to disappear even if parts of it are overhyped. Investment firms, technology analysts, and economists increasingly describe AI not as a passing fad but as a foundational technological transition comparable to the invention of electricity or to the internet itself. Even skeptical analysts who question short-term productivity claims generally acknowledge that businesses are rapidly reorganizing around AI-assisted production.

The question now is not whether AI should exist but how we can adapt to it without falling into economic collapse or digital feudalism.

AI is Challenging the Fundamentals of the Capitalist Model.

For centuries, industrial economies have depended on a productive cycle based on work for pay. People work for wages, wages create consumer demand, and demand sustains production. But if machines increasingly perform not only factory labor but office and laboratory work — drafting contracts, diagnosing disease, designing products, writing software, driving vehicles, conducting research — then labor income will steadily decline even as productivity rises.

That creates a paradox for the capitalist model: Who buys the products if fewer and fewer people earn wages from producing them?

Historically, technological revolutions created new forms of employment even as they destroyed old ones. The automobile displaced blacksmiths but created mechanics, highway engineers, gas stations, motels, and suburbs. Computers eliminated typists but generated software industries and millions of office jobs. But AI is not confined to one sector. It is predicted to take jobs across the board.

We are not at that stage yet. But China, the world’s largest manufacturing power, is getting close, and Chinese commentators are beginning to grapple with the issue.

China as Forerunner and Test Case.

In a July 2025 opinion piece in the South China Morning Post titled “As AI Replaces Workers, China Could Consider Universal Basic Income,” Tech Editor Zhou Xin writes:

“In the past, Chinese officials have rejected proposals to distribute cash to households, even when many families were clearly in need of support. But while the term universal basic income has yet to appear in any official Chinese policy documents, it may become less foreign in the coming years because of the increasing replacement of entry-level jobs by machines.

Advances in technologies such as artificial intelligence (AI) and automation are expected to render many traditional labour roles obsolete ….

While new technologies will create new job opportunities, these roles are often unsuitable for workers displaced from traditional sectors. The pace at which old jobs are eliminated also outstrips the creation of new ones, which could lead to significant structural unemployment.”

A March 2026 article in ThinkChina raised a related issue. In “When AI Replaces Workers, Who Pays the Taxes?”, Chinese entrepreneur Simon Lin asks if AI systems and robots perform an increasing share of productive work, where will governments obtain tax revenue? Lin’s proposal is to tax the companies that profit from automation. That would help finance the government, but it doesn’t solve the distribution problem. Consumers still need purchasing power. Henry Ford understood this a century ago, when he said he needed to pay his workers enough to buy the cars they produced.

Another article in ThinkChina, titled “Socialism and Universal Basic Income: Creating Happy Societies in the Age of the Knowledge Economy,” addressed this issue in 2020. The article summary states:

“… [T]he knowledge economy offers great potential for bettering the lives of people. But capitalism may not be the best route to take. Power in the hands of a few, income gaps, job losses and wage cuts in the digital age bear this out. Can China offer a third way as it seeks to marry socialism with a market economy? The West is already considering some proposals with a socialist bent such as the Universal Basic Income (UBI). Surely, proponents of socialism can think of even more revolutionary ideas.”

The article continues:

“… China has a substantial low-income demographic. 600 million people live on about 1,000 RMB per month, which is insufficient even for housing rent alone. What we have here is inadequate demand from those with spending power, coupled with a tremendous surplus of production capacity.…”

The author observes that knowledge, once created, can be reused repeatedly at close-to-zero marginal cost, and that the AI-driven “knowledge economy” grows exponentially. That makes it possible for social productivity to grow exponentially as well, eliminating want and greatly enriching material and spiritual life. But capitalism poses some serious constraints on that promising future:

“… [A]s the knowledge economy becomes increasingly “smarter” (AI-driven), the share of wage income in the total distribution of income will continue to decline, while investment returns will be a constantly growing piece of the pie. This means the lion’s share of society’s wealth will be swallowed by capital. In the long run, only jobs with wages lower than the cost of automation have any chance of being kept.… This means that wage levels are bound to be kept low, even to the point of being inadequate for feeding oneself and one’s family.”

he article concludes: “China should kick-start preliminary research on universal basic income (UBI), as soon as possible. … What is UBI, after all, if not an attempt to rise above capitalism?”

Resource Constraints: Energy.

China may need to consider some sort of UBI, but in the United States the biggest practical hurdles to AI abundance may not be political but physical. Where will the U.S. find sufficient resources to produce the goods?

Critics point to the enormous energy consumption of AI data centers, the water demands of cooling systems, the mining requirements for batteries and semiconductors, and the environmental costs of rapid electrification. Some large data centers consume millions of gallons of water daily for cooling. Communities near rapidly expanding facilities have already reported stress on local water systems, and public pushback is growing.

Elon Musk has argued that the water problem is basically an energy problem, noting that once you have enough energy, desalination becomes cheap and simple. His proposed energy solution is solar. At a July 2017 National Association of Governors meeting, he said, “If you wanted to power the entire U.S. with solar panels, it would take a fairly small corner of Nevada or Texas or Utah; you only need about 100 miles by 100 miles of solar panels to power the entire United States. The batteries you need to store the energy, to make sure you have 24/7 power, is 1 mile by 1 mile. One square-mile. That’s it.” Not that all this equipment would need to be in one place, but that shows the projected scale.

The chief constraints to rapid and broad-scale solar development are political and regulatory. The solution being pursued now is solar collection in space, where the sun never sets, massive amounts of energy are available, cooling the equipment is not a problem, and there are no regulatory constraints.

Solar is not, however, the only possible energy solution. Advanced fission and fusion technologies are also in rapid development, largely due to AI-assisted engineering.

Small modular nuclear reactors (SMRs), once largely theoretical, are now moving into commercial development. SMRs are factory-built, standardized systems small enough in some cases to be transported by truck and assembled on site. Supporters argue that modular manufacturing could dramatically reduce both cost and construction time compared to conventional nuclear facilities.

Fusion energy, long mocked as perpetually “thirty years away,” is also advancing. Experimental reactors are already generating plasma temperatures hotter than the core of the sun, while major advances in magnetics are steadily improving stability. The main challenge is that superheated plasma behaves chaotically inside reactors, but AI systems are being used to predict these disruptions and make adjustments before they occur.

That doesn’t mean limitless energy is just around the corner. But the assumption that civilization is approaching an unavoidable energy ceiling may be outdated. In fact AI itself is becoming a key tool in creating the next generation of energy systems needed to support AI-driven productivity.

Physical Resources for Batteries, Electrical Grids and Agriculture.

AI is actually becoming a primary tool for solving resource problems in general. Modern AI-driven systems are dramatically improving electrical grid efficiency, agricultural productivity, recycling systems, and battery management. Precision agriculture reduces fertilizer and water use while significantly increasing yields. AI-managed electrical grids reduce wasted energy. Robotics improve mining precision and materials recovery. Advanced recycling systems increasingly recover rare earth minerals and lithium-ion battery materials that were once discarded as waste.

Thus while AI uses more power, the efficiency it creates in the rest of the physical economy may actually lead to a net reduction in total global resource consumption.

Solving the Water Crisis.

Singapore’s NEWater program is the gold standard for wastewater recycling, turning sewage into ultra-clean, drinkable water. It has now successfully “closed the water loop,” making the island nation resilient against external water shocks.

AI data centers are also now pivoting away from evaporative cooling to water recycling. Modern “closed-loop chilling systems” allow data centers to operate with near-zero direct water consumption once the system is filled. New major projects are marketing themselves as “water-neutral” by using closed-loop cooling technology that recirculates water rather than evaporating it in cooling towers.

Some analysts argue that the location of data centers is wrong. Unused areas are available that have abundant water supplies, existing industrial zoning, and underutilized energy infrastructure. But for communities already under stress from data centers that probably aren’t going anywhere, my own proposal would be to drill for primary (juvenile) water for residential needs. Continuously generated deep in the earth and rising through faults, primary water offers a clean, renewable, locally tappable water source independent of the surface cycle, easily accessible with robotic drilling and abundant energy. The model has been proven primarily in Africa. See my earlier article here.

Wind Power.

Meanwhile, China has successfully launched the world’s first commercial underwater data center powered directly by offshore wind. The Shanghai project was completed for less than half the cost of an equivalent 24-megawatt land-based facility, and by using seawater for cooling, it is about 30% more efficient and cuts electricity consumption by over 22%.

However, underwater data centers were not pioneered by the Chinese. Microsoft’s Project Natick, a 2018–2020 trial off the coast of Scotland, was a technically successful test that demonstrated higher reliability and lower failure rates than land servers. But Microsoft announced it was abandoning the project in mid-2024.

In the U.S., a private company like Microsoft must negotiate with local utilities and typically must pay for its own grid upgrades, which can add years and millions of dollars to a project. In China, state-owned power companies provide special energy pricing and dedicated high-voltage lines for data center clusters. There are also regulatory hurdles in the U.S. and Europe, where complying with environmental regulations is a slow and costly process.

In China, by contrast, the government designates specific areas where environmental reviews and construction permits are fast-tracked specifically for “Green AI” projects. As a result, construction is often 30% to 50% faster than for their Western counterparts. The Chinese underwater data centers are part of a massive state-led industrial policy called the “East-to-West Computing Resource Transfer,” a highly coordinated top-down strategy that treats data centers as a critical national utility integrated directly into the national energy grid. Besides providing direct subsidies and grants, the Chinese government has built offshore wind farms specifically designed to plug into data center units. Placing the AI servers directly at the base of the wind turbines eliminates the energy loss and cost of transmitting power back to the shore.

This is another real-world example demonstrating the need for public investment in infrastructure, ideally through a national infrastructure bank, to fund projects that private markets find too risky or too expensive to build alone.

The Road to Creative Freedom or to Digital Feudalism?

The potential for AI/robotic productivity is promising, but it will not automatically benefit the public. Productivity has already risen dramatically over the past century, while wealth has concentrated at the top.

The future emerging around AI contains two radically different possibilities. One is a highly centralized technocratic system in which wealth and power become highly concentrated, while citizens are managed through digital currencies, surveillance, and algorithmic governance. The other is a civilization in which automation gradually liberates human beings from monotonous labor, shortens work time, expands access to education and creativity, and allows technological abundance to serve broad human flourishing rather than narrow financial interests.

Both futures are technologically possible. Which one emerges will be determined not by the machines themselves but by the political and monetary systems governing them.

Part 3 will examine what is probably the most emotionally charged issue involved in the AI revolution: digital money, central bank digital currencies, surveillance fears, and whether an AI-driven economy inevitably leads to a programmable financial control grid.

Be sure to check Ellen Brown’s earlier posts here on the AI Abundance Paradigm.

Originally published on ScheerPost.com.

Shared via Creative Commons.

ELLEN BROWN
April 10 2026

“The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.”

—Prof. Caroll Quigley, Georgetown University, Tragedy and Hope (1966)

In February 2026, the United States and Israel launched surprise airstrikes on Iran. The officially proffered reasons — preventing Iran’s acquisition of a nuclear weapon and forestalling its aggression — have not held up under scrutiny. As James Corbett documented in recent Corbett Report episodes, the nuclear pretext appears to be recycled propaganda, and the scale and timing of the strikes raise deeper questions about motive.

The thesis that “All Wars Are Bankers’ Wars” was popularized by Michael Rivero in a 2013 documentary by that name. His accompanying article begins with a quote from Aristotle (384-322 BCE):

“The most hated sort [of moneymaking], and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest.”

Rivero then traces how private banking interests have financed and profited from conflicts on both sides for centuries — from the founding of the Bank of England in 1694 to fund William III’s wars to modern regime-change wars.

Full-Spectrum Financial Dominance

Other commentators point to the report of the Project for the New American Century (PNAC) titled “Rebuilding America’s Defenses” (September 2000), which called for “full-spectrum” U.S. military forces to achieve global preeminence. It postulated the need for a “catastrophic and catalyzing event — like a new Pearl Harbor” to accelerate the military transformation the authors envisioned.

This was followed by a 2007 Democracy Now interview in which Gen. Wesley Clark revealed that weeks after 9/11, he had been shown a classified Pentagon memo outlining plans to “take out seven countries in five years”: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and finishing off with Iran. The first six have since been destabilized or regime-changed. Iran, considered the ultimate prize for Middle East dominance and oil control, remains the last one standing.

Why those seven, and why was Iran the ultimate prize? Greg Palast’s 2013 article titled “Larry Summers and the Secret ‘End-Game’ Memo” supplied the missing financial logic. In 1999, the world was opened to unregulated derivatives trading, so that sovereign bonds, oil flows, shipping routes, and war-risk policies could all be collateralized, rehypothecated (pledged multiple times over), and gambled upon. The lynchpin was the 1997 WTO Financial Services Agreement (the Fifth Protocol to GATS), which became operational in 1999.

None of the seven targeted countries joined the WTO, and they were also not members of the Bank for International Settlements (BIS). That left them outside the long regulatory arm of the central bankers’ central bank in Switzerland. Other countries that were later identified as “rogue states” were also not members of the BIS, including North Korea, Cuba, and Afghanistan.

As for Iran, it is not only the largest and strongest of the Islamic countries but operates the world’s only fully interest-free (riba-free) banking regime. This stands in direct contrast to the conventional Western model, which relies on interest as its primary revenue mechanism. “Money making money out of itself” underpins the global derivatives complex, which is built on rehypothecated, collateralized debt-at-interest.

The last piece in the financial control grid was detailed in David Rogers Webb’s 2024 book The Great Taking. The Everything Bubble, including what some commentators estimate to be more than a quadrillion dollars in derivative bets, is just waiting for a pin. When it bursts, it will trigger large institutional bankruptcies; and under the legal machinery Webb documents, the derivative players will take all.

The 2026 Hormuz insurance crisis triggered by Lloyd’s of London could be that pin. More on all that below.

The City of London and Lloyd’s Weaponize Chaos

For more than three centuries, the City of London – the “Square Mile” that is London’s financial center — has financed both sides of wars and sold insurance against the destruction that would follow. Lloyd’s of London is the insurance pillar of the City’s financial control grid. It is not actually an insurance company but is a corporate body that “operates as a partially-mutualized marketplace within which multiple financial backers, grouped in syndicates, come together to pool and spread risk.”

Lloyd’s has built its reputation on always performing, but it performs at a cost. In 1898, it formalized long-standing practice by introducing the “Free of Capture and Seizure” clause, stripping war risks from standard policies so it could charge extortionate premiums when conflict erupted. It exercised that clause in both world wars and is exercising it in 2026.

After the strikes on Iran, Lloyd’s Joint War Committee expanded its “high-risk” zone in the Middle East. Several of its underwriters issued 72-hour cancellation notices effective March 5, and war-risk premiums for Hormuz transits jumped from 0.25% to 1–5% of hull value. Lloyd’s has stressed that coverage remains available — at the right price. But for a $100 million oil tanker, that means an extra $1–5 million per voyage, a premium the owners are understandably reluctant to pay.

The Private Credit Spark

Meanwhile, other dark clouds are hovering over the market. Financial analyst Stephanie Pomboy warns that the $1.5-3 trillion private credit market is in lockdown, forcing fire sales of liquid assets; and the much larger $5 trillion BBB-rated corporate bond market is teetering. Downgrades will force mass selling, and pensions face a $4 trillion shortfall.

The Hormuz crisis supplies the perfect accelerant to this collateral crisis: higher oil prices create inflation, which raises bond yields (interest), collapsing the value of collateral and triggering margin calls across the derivatives game board. Margin calls then force private credit funds into fire sales.

This is one reason some commentators point to the City of London as the real architect of the Middle East chaos. The old war-insurance machine and the new derivatives machine operate together. One creates the chaos premium; the other harvests it through rehypothecation and legal seizure.

Palast and the End Game Memo: Making the World Safe for Derivatives 

Guaranteeing against shipping loss is one type of insurance, but a much bigger insurance trap is the derivatives market. Sold as a form of insurance against market risk, derivatives are a speculative betting game that extracts rents from all major economic flows.

In his 2013 article, Greg Palast presented evidence of a secret 1997 memo to Deputy Treasury Secretary Larry Summers from Timothy Geithner (then U.S. Ambassador to the WTO acting for Summers) describing the “End-Game” of the WTO Financial Services negotiations. Geithner wrote to Summers, “As we enter the end-game… I believe it would be a good idea for you to touch base with the CEOs ….” The memo then listed the private phone numbers of Goldman Sachs, Merrill Lynch, Bank of America, Citibank, and Chase Manhattan, numbers which Palast confirmed were real.

What was the end-game? Palast wrote:

“US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks.  That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks.  It was like replacing bank vaults with roulette wheels.

Second, the banks wanted the right to play a new high-risk game: “derivatives trading.” … Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.

But what was the use of turning U.S. banks into derivatives casinos if money would flee to nations with safer banking laws?

The answer conceived by the Big Bank Five:  eliminate controls on banks in every nation on the planet – in one single move.… The bankers’ and Summers’ game was to use the Financial Services Agreement, an abstruse and benign addendum to the international trade agreements policed by the World Trade Organization.

The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products.”

And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.”

The WTO Financial Services Agreement became the battering ram for opening global markets to this derivative play. Every member nation was forced to open its banking system or face sanctions. In 1999, the portion of Glass-Steagall separating investment banking from depository banking in the U.S. was repealed, leaving depositors’ money vulnerable to speculative risk. Derivatives then exploded. Sovereign bonds, oil contracts, shipping insurance policies, and war-risk premiums were all sliced into credit-default swaps, hedges, and other derivative products.

Derivatives trading has since become one of the most concentrated and profitable businesses on the planet, and it is almost entirely controlled by a handful of megabanks. According to data from the Bank for International Settlements and the Office of the Comptroller of the Currency, the top five U.S. banks alone hold roughly 90% of all U.S. bank derivatives, with JPMorgan, Citigroup, Goldman Sachs, Bank of America, and Morgan Stanley dominating the global over-the-counter market. These institutions capture the lion’s share of derivative profits, especially during periods of volatility when the “chaos premium” spikes.

“The Great Taking” — the Legal Trap Granting Derivatives Super-Priority in Bankruptcy 

In The Great Taking, David Rogers Webb lays bare the final piece in this financial control grid: virtually every security today is dematerialized (digitized) and pooled in central depositories. Quiet changes to the Uniform Commercial Code and equivalent E.U. rules have turned ordinary investors into mere “entitlement holders” holding only a legal claim against their brokerages.

As for bank depositors, they have for centuries been categorized as mere “creditors” of their banks. Once the money is deposited, legal title passes to the bank. The depositor holds only a contractual claim (a demand liability) that ranks as an unsecured creditor position in the event of insolvency.

In any insolvency, stocks, bonds, and deposits are legally collateral for the derivatives complex — collateral that has been rehypothecated multiple times over. And when the derivative collateral fails, the rehypothecated house of cards that has been built on it collapses. Margin calls cascade, super-priority is triggered, and the Great Taking begins. (For more on this quite complicated subject, see Webb’s book and my earlier article here.)

Iran’s Interest-Free Islamic Banking: The Structural Obstacle

So what did it matter if Iran and a handful of other countries declined to join in this lucrative bankers’ game? The risk was that when depositors and shareholders realized that they did not actually own their funds, they would move their assets to those safe zones. The holdout countries were also safe from the sort of sanctions imposed by Western governments (and enforced by Western banks and clearing houses) on Russian central bank assets after Russia’s invasion of Ukraine in 2022.

Leading this band of holdouts was Iran, which since its 1983 Law for Usury-Free Banking Operations has run the world’s only fully interest-free (riba-free) banking regime. Its banks use Sharia-compliant contracts — profit-sharing (musharakah), cost-plus financing (murabaha), and leasing (ijara) — instead of charging or paying interest. This banking model stands in direct contrast to the conventional Western model, which relies on interest as its primary revenue stream and underpins the global derivatives complex with collateralized, rehypothecated debt.

Iran’s system was designed to eliminate usury and align finance with real economic activity and risk-sharing rather than speculative debt. It has long been viewed as structurally incompatible with the interest-based, collateral-heavy architecture of City of London and Wall Street finance — an architecture that requires perpetual debt servicing and easily rehypothecated assets to feed the derivatives machine.

By rejecting interest at the national level, Iran has thus insulated itself and its financial partners from the control grid that has made the global “Great Taking” possible.

The Insurance Chaos Has Softened but the “Black Swan” Still Hovers 

The Strait of Hormuz is not fully closed, but traffic remains severely reduced under Iran’s selective, permission-based transit regime. Only vessels from “friendly” or non-hostile nations are being cleared after prior coordination with Iranian authorities. Significant backlogs persist, with more than 1,000 vessels reported waiting or diverted and over 34,000 shipping routes rerouted in the first four weeks of disruption.

President Trump’s $20 billion reinsurance facility announced on March 6 is now operational and has been doubled to $40 billion. Additional major U.S. insurers have joined, while Lloyd’s of London has engaged in related discussions. The facility remains centered on American carriers with U.S. government backing. But analysts doubt it will restart widespread commercial traffic without broader liability protection and safer conditions.

In short, the “insurance chaos” trigger has eased but has not vanished. Premiums remain elevated, uncertainty lingers, and the collateral and derivatives pressures Webb described are still in play.

Conclusions and Resolutions

The 2007-08 Global Financial Crisis (GFC) is now widely regarded as having been triggered by the unchecked explosion of unregulated derivatives — especially credit default swaps and collateralized debt obligations — which turned subprime mortgages into a systemic time bomb. The damage was not confined to the United States: developing countries suffered heavily as well.

Today the risk of a crash is even greater than during the GFC. The global OTC derivatives market has officially ballooned to a notional value of $846 trillion, more than seven times the size of the entire world economy.

Long-range political solutions are possible. Congress could restore Glass-Steagall and impose a financial transaction tax. State governments could withdraw their approval of relevant portions of the UCC and form public banks that can protect against local bank bankruptcies. (See my earlier articles here and here.)

But the immediate need in the current context is to settle the conflict with Iran, and settle it fast, before another black-swan shock ignites the derivatives daisy chain and activates the final Great Taking on a global scale.

Ellen Brown is an American author, attorney, and activist known for her work on financial reform and public banking. She is the founder of the Public Banking Institute and the author of books like Web of Debt and The Public Bank Solution, advocating for publicly owned banking systems.

First published on Scheerpost.com.

Shared via Creative Commons.

How to Read Scrooge McDuck in the Age of Donald Trump

BY ALFRED MCCOY

Writers often try to gild their tawdry times or dignify their flawed leaders with lofty literary analogies — notably, America as the New Jerusalem; Lincoln as Moses leading his people through the wilderness of the Civil War; the Kennedy White House as an incarnation of King Arthur’s “Camelot“; or Lyndon Johnson living his last years as a latter-day King Lear, cast off by his ungrateful children into the moors of south Texas.

But what are we going to do with Donald Trump? Wouldn’t his vanity, his vulgarity, and his relentless pursuit of money and minerals in every corner of the globe turn any literary analogies into soggy clichés? Like the showman P.T. Barnum, Trump is an American original, whose true metaphors can be found only in comic books (America’s one true art form), not literature. As Ariel Dorfman reminded us once upon a time in How to Read Donald Duck, that classic guide to U.S. cultural imperialism in Latin America, there was always more to a Disney comic book than gags.

To understand Trump’s America, we need our own comic guidebook to his global misadventures, which might be titled something like “How to Read Scrooge McDuck.” After all, in case you never had the pleasure of his acquaintance, Scrooge McDuck was the predatory billionaire in Disney comics, who was amazingly popular among teenagers in Cold War America. In that era when American corporations scampered around the global economy extracting profits wherever they saw fit, Scrooge McDuck put a friendly face on U.S. imperialism, making covert intervention and commercial exploitation look benign, even comic.

From 1952 to 1988, a period coinciding almost precisely with the Cold War, the comic’s creator, illustrator Carl Barks, filled the country’s magazine racks with more than 220 comic books celebrating Scrooge’s schemes to accumulate ever more billions by dispatching Donald Duck and his triplet nephews (Huey, Dewey, and Louie) to scour the world for riches — gems, minerals, oil, and lost treasure. No place on the planet was too remote, not even the Arctic or the Amazon, and no people too poor or obscure, not even Hondurans and Tibetans, to escape his tight-fisted grasp. And yet in that innocent world of the comic book, every adventure, no matter how twisted the plot, always ended with a light laugh for those duckling heroes and the diverse peoples they encountered on their global travels.

Let’s visit a few of my favorite comic books from my Cold War childhood, starting with the 1954 story “The Seven Cities of Cibola.” Its initial panels show a butler showering the billionaire duck with coins while he swims around in his Money Bin’s “three cubic acres” of cash. At first, Scrooge McDuck seems content as he gloats about making money from “about every business there is on Earth” (from “oil wells, railroads, gold mines, farms, factories”).

Suddenly, however, saddened by the realization that he’s exhausted every possible domestic path to profit, Scrooge decides to lead his nephew Donald and the triplets into the desert borderlands between Mexico and the U.S. There, they come upon a lost Eldorado, a towering, multitiered city with gold-paved streets and a cistern filled with opals and sapphires. But caution intrudes when Huey, Dewey, and Louie discover that the whole edifice is poised dangerously atop a spindly stone pillar. Then, at their moment of near triumph, the ducks are denied any treasure by Scrooge’s recurring nemesis, the comically criminal Beagle Boys, who break in and grab the city’s bejeweled idol, triggering a hidden mechanism that fractures the pillar. As those fabled cities collapse into a heap of rubble, our duckling heroes escape unharmed, ready for their next adventure.

The first panel in a 1956 comic book, the “Secret of Hondorica,” shows Scrooge McDuck pointing to a map of the Caribbean as he dispatches Donald Duck and his three nephews deep into tropical jungles near — yes, how sadly appropriate almost seven decades later — Venezuela to recover his lost deeds to the region’s rich oil wells. After crossing steep mountains and crocodile-infested creeks, the Ducks happen upon a Mayan temple filled with spear-carrying “savages” arrayed around their idol. By translating the “picture writing” on the temple walls with the help of their handy encyclopedic “Junior Woodchuck Guidebook,” the nephews deceive the natives with incantations in their own language and escape with the idol’s crown of gold.

President Donald Trump is, of course, our real-life Scrooge McDuck. Mar-a-Lago is his Money Bin. And the world is his playground for schemes to add another billion or two to his and his family’s growing fortune. Just as Scrooge McDuck scoured the world in a relentless, even ruthless search for wealth, so our real-life Donald has made mineral deals everywhere on the planet his top presidential priority — rare earthsfrom Ukraine, oil from the Middle East, and (someday perhaps) a frozen treasure trove of minerals in Greenland. And just as Scrooge dispatched Donald Duck on a mission to recover his lost oil wells from the jungles of “Hondorica,” so our real Donald did indeed send U.S. special forces to capture President Nicolás Maduro and win yet more of Venezuela’s oil fields for American companies.

Back to the Reality of the Old Cold War

Alas, my innocent childhood is long gone. The world is no backdrop for comic book adventures and imaginary heroes don’t flit from frame to frame to amusing endings. In the real world of 2026, we are already deep into a “new Cold War” against nuclear-armed powers, and President Donald J. Trump’s comedic foreign policy is dragging us toward a dismal defeat.

First, let’s snap back to reality by taking stock of the world we’ve actually been living through all these years and review how we got here. During the real Cold War, the global conflict that lasted from 1947 to 1991 (when the Soviet Union collapsed), the one I describe in my new book, Cold War on Five Continents, Washington’s geopolitical strategy was brilliantly ruthless in its basic design. After fighting quite a different global conflict, World War II, for four years with the aim of defeating the Axis powers (Germany, Italy, and Japan) entrenched at both ends of Eurasia, America’s leaders of General (and future president) Dwight D. Eisenhower’s generation knew instinctively that geopolitical control over that vast continent was indeed the key to global power.

Guided by that fundamental strategic principle (which had, in fact, held true for the last thousand years or so), Washington’s early Cold War leaders worked hard to “contain” the Sino-Soviet communist bloc behind an “Iron Curtain” that stretched for 5,000 miles around the rim of Eurasia. With the armed forces of its NATO alliance securing that continent’s Western frontier and five bilateral military pacts ranging along the Pacific littoral from Japan to Australia for its eastern border, Washington bottled up the communist superpowers. That strategy freed the U.S. to make the rest of the planet into its very own “free world.” In exchange for open access to the markets and minerals of the countries in much of that free world, the U.S. distributed a few development dollars of aid to the emerging nations of Asia, Africa, and Latin America, which often served to fatten up the bank accounts of their nominally “democratic” dictators.

After two decades of being locked up inside Eurasia, however, Beijing and Moscow tried to break out of their geopolitical isolation by arming allies for revolutionary warfare on Cold War battlegrounds stretching from South Vietnam across the Middle East and through southern Africa, all the way to Central America.

To counter that gambit and push those communist powers back behind the Iron Curtain, the U.S. sometimes sent in its own troops, whether successfully to the Dominican Republic in 1965, or disastrously to South Vietnam from 1965 to 1973. But most of the time, Washington dispatched individual CIA operatives armed with impunity to do whatever — and I do mean whatever — they wanted to deflect Moscow’s and Beijing’s gambits and secure contested terrain. Usually misfits, even oddballs at home, those surprisingly significant historical actors, whom I’ve come to call “men on the spot,” often proved quite successful abroad. Using the cruelest instruments in the toolkit of modern statecraft — assassinations, coups, surrogate troops, torture, and psychological warfare — those covert operatives fought for control of foreign capitals as diverse as Kinshasha, Luanda, Saigon, Santiago, San Salvador, Tegucigalpa, and Vientiane. And then, with the Soviet Union significantly “contained” geopolitically within its borderlands, Washington could just sit back and wait for Moscow to make a strategic blunder.

That blunder came in 1979 in one of those classic military misadventures that often hasten the deaths of empires in decline. When Moscow sent 100,000 troops to occupy Afghanistan, Washington sent just one CIA operative, Howard Hart, to defeat that occupation. Acting as Washington’s “man on the spot,” he used the agency’s millions of dollars to form a guerrilla army of 250,000 Afghan fighters. By the time the Red Army was bled dry and left Afghanistan a decade later, defeated and demoralized, Moscow’s satellite states in Eastern Europe were erupting in mass, anti-communist protests. With the Red Army generally unable or unwilling to intervene, the Soviet bloc broke apart as the Soviet Union broke up, ending the Cold War with an unqualified U.S. victory.

Toward a New Cold War

If Washington’s strategy for waging the Cold War was a successful exercise in geopolitics, its use of “unipolar” power in the decades to come was, as I also argue in Cold War on Five Continents, much less so. After the collapse of the Soviet Union in 1991, Washington stood astride the globe like a Titan of Greek legend — the sole superpower on earth, at least theoretically capable of remaking the world as it wished. Convinced that “the end of history” would make its free-market democracy the future of all mankind, America’s leaders, “drunk with power,” advanced sweeping plans for a new world order, grounded in a globalized economy that served their short-term interests but would have deleterious long-term consequences for their global hegemony.

Only a decade after the Cold War ended, Washington started facing serious strategic challenges across the Eurasian continent, which, then and now, has been the epicenter of geopolitical power. In the heady aftermath of its Cold War victory, the U.S. attempted some bold strategic gambits that would soon prove to be distinctly ill-advised. Above all, Washington’s leaders believed that they could co-opt Beijing’s rising power by recognizing China as an equal trading partner. In a parallel attempt to curb any of Moscow’s future imperial ambitions, the U.S. also presided over NATO’s expansion until that alliance surrounded Russia’s western borders, sparking security concerns in Moscow. Such ill-fated initiatives, combined with ill-considered military interventions in Afghanistan and also Iraq, created conditions for the revival of a great-power rivalry that, since Russia’s annexation of Crimea in 2014, many observers have called “the new Cold War.”

After the collapse of the Soviet Union and its socialist economy in 1991, Washington seemed to feel its post-Cold-War globalization would both promote democracy there and integrate that country into an emerging American world order, perhaps as a secondary power supplying cheap commodities, including oil, to the global economy. For the Russians, however, such globalization produced the dismal decade of the 1990s that would be marked by what economist Jeffrey Sachs has called a “serious economic and financial crisis” and a privatization of state enterprises “rife with unfairness and corruption,” creating a coterie of predatory Russian oligarchs.

When Vladimir Putin became prime minister amid the post-Soviet malaise of the late 1990s, he reverted to Russia’s centuries-old imperial mode. He found his vision for the country’s revival as a “great power” in the sort of geostrategic thinking that Washington’s leaders seemed to have forgotten in the afterglow of their great Cold War victory. Following a 2005 address calling the collapse of the Soviet Union the “greatest geopolitical catastrophe of the century,” Putin set about systematically reclaiming much of the old Soviet sphere — invading Georgia in 2008 when it began flirting with NATO membership; deploying troops in 2020-2021 to resolve an Armenia-Azerbaijan conflict in favor of a pro-Moscow regime in Baku; and dispatching thousands of Russian special forces to Kazakhstan in 2022 to gun down pro-democracy protesters challenging a loyal Russian ally.

Concerned above all with securing his western frontier with Europe, Putin pressed relentlessly against Ukraine after his loyal surrogate leader there was ousted in the 2014 Maidan “color revolution.” First seizing Crimea, next arming separatist rebels in Ukraine’s eastern Donbas region adjacent to Russia, and finally invading Ukraine in 2022 with nearly 200,000 troops, he would spark a protracted war that has yet to end.

At first, as Kyiv fought the Russians off, Washington and the West reacted with a striking unanimity by imposing serious sanctions on Moscow, dispatching armaments to Ukraine, and expanding NATO to include all of Scandinavia. Moreover, Ukraine showed a formidable flair for unconventional operations — clearing Russian ships from the Black Sea with naval drones and sabotaging that country’s massive gas pipeline under the Baltic Sea.

As Russia’s war on Ukraine reverberated across Eurasia and beyond, geopolitical tensions also rose in the Western Pacific, sparking a renewed great power rivalry that became worthy of the phrase “the new Cold War.” In a striking parallel with the 1950s, in February 2022, just before the Russian invasion of Ukraine, Beijing and Moscow forged a multi-faceted economic and strategic alliance that they claimed had “no limits.” In an eerie reprisal of the early Cold War years, Russia and China were in that way united against a Western alliance, once again led by Washington with its military forces still deployed in Western Europe and East Asia.

After two years of continuous combat in Ukraine, however, cracks began to appear in the West’s anti-Russian coalition. Most critically, American domestic support for Ukraine started to falter under partisan political pressures, amplified by a rising populist opposition in both the U.S. and Europe to the globalized economy and its military alliances. After successfully rallying NATO to stand with Ukraine, President Joseph Biden opened America’s arsenal to Kyiv until Republican legislators, at Donald Trump’s behest, delayed military aid throughout much of 2024.

President Trump’s Second Term

Following his second inauguration in January 2025, President Trump’s initial foreign policy initiative was a unilateral attempt to negotiate an end to the Russia-Ukraine war — an effort that would be complicated by his underlying hostility toward NATO and his sympathy for Russian President Putin. On February 12th, Trump launched peace talks through a “lengthy and highly productive” phone call with the Russian president, agreeing that “our respective teams start negotiations immediately.” Within days, Defense Secretary (or do I mean Secretary of War?) Pete Hegseth announcedthat “returning to Ukraine’s pre-2014 borders is an unrealistic objective,” and Trump added that NATO membership for Kyiv was no less unrealistic — in effect, making what a senior Swedish diplomat called “very major concessions” to Moscow before any talks even began.

At month’s end, those tensions culminated in a televised Oval Office meeting in which Trump berated Ukrainian President Volodymyr Zelenskyy, saying, “You’re either going to make a deal or we’re out, and if we’re out, you’ll fight it out. I don’t think it’s going to be pretty.” That unilateral approach not only weakened Ukraine’s ability to defend itself, but also degraded NATO, which had, for the previous three years, supported Ukraine’s resistance to Russia. Recoiling from the “initial shock” of that utterly unprecedented breach, Europeans quickly appropriated $160 billion to build up their own arms industry in collaboration with both Canada and Ukraine, thereby reducing their dependence on U.S. weaponry.

For the rest of the year, Putin continued to work on Trump. He even scored a state visit and meeting with the American president in Alaska, without making any concessions whatsoever. In the process, he reduced U.S. envoys to messenger boys for his unyielding demands, while using disinformation to drive a wedge between Washington and Kyiv. Even if the Trump administration does not formally withdraw from NATO in the years to come, the president’s repeated hostility towards it, particularly its crucial mutual-defense clause, may yet serve to weaken, if not eviscerate the alliance.

Amid a torrent of confusing, often contradictory foreign policy pronouncements from the White House, the design of Trump’s de facto geopolitical strategy soon took shape. Instead of focusing on mutual-security alliances like NATO in Europe or NORAD with Canada, Trump seems to prefer a globe divided into three major regional blocs, each headed by an empowered leader like himself — with Russia dominating its European periphery, China paramount in Asia, and the United States controlling the Americas. That aspiration to hemispheric hegemony lent a certain geopolitical logic to Trump’s otherwise quixotic strikes on Venezuela (and his capture of its president and his wife), as well as his overtures to claim Greenland, reclaim the Panama Canal, and even to make Canada the 51st state.

Last November, formalizing that approach, the White House released its new National Security Strategy, which proclaimed a “Trump Corollary to the Monroe Doctrine” aimed at achieving an unchallenged “American preeminence in the Western Hemisphere.” Think, of course, the Donroe Doctrine. To that end, the U.S. will reduce its “global military presence to address urgent threats in our Hemisphere,” deploy the U.S. Navy to “control sea lanes,” and use “tariffs and reciprocal trade agreements as powerful tools” to make the Western Hemisphere “an increasingly attractive market for American commerce.” In essence, “the United States must be preeminent in the Western Hemisphere as a condition of our security and prosperity.”

For over a century, the Caribbean region had consistently experienced the most brutal, least benign aspects of U.S. foreign policy and now that reality has only worsened. Not only has Trump reverted to the gunboat diplomacy of Teddy Roosevelt and Woodrow Wilson, but he’s done so with a caricatured cruelty — sinking boats in the Caribbean in the name of drug interdiction and sending troops to invade Venezuela, a sovereign state.

Just as Theodore Roosevelt used the Navy to seize land from Colombia for the Panama Canal, so Trump sent Special Forces into Venezuela to gain control over its oil. “We’re going to have our very large United States oil companies… go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country,” Trump said at a January 3rd press conference just hours after President Maduro’s capture. “We’re gonna rebuild the oil infrastructure, which will cost billions of dollars. It will cost us nothing. It’ll be paid for by the oil companies directly.” Such a caricatured assertion of economic interest is likely to inflame resentment in a region where anti-imperialist sensibilities remain strong.

Although it has little chance of success, Trump’s attempt at a tricontinental grand strategy will likely leave a residue of ruin — alienating allies in Latin America, weakening NATO’s position in Western Europe, and ultimately corroding Washington’s global power. From a strategic perspective, a staged U.S. retreat from its military bastion in Western Europe would end its long-standing influence over Eurasia, which remains the epicenter of geopolitical power in this new Cold War era, just as it was in the old one. Such a retreat, at the very moment when Russia and China are expanding their influence over that strategic continent, would be tantamount to a self-inflicted defeat in this era of a new and intensifying Cold War.

To return to those Donald Duck comic books for an appropriate analogy: just as that bungled grab for a bejeweled idol collapsed the spindly stone pillar holding up the “Seven Cities of Cibola,” so the Trump administration’s inept foreign policy is potentially destabilizing a fragile world order with dangerously unpredictable consequences for us all. And count on one thing, unlike in the comic books, it won’t be even a little bit funny.

Copyright 2025 Alfred McCoy

First published on TomDispatch.com.

Shared via Creative Commons.

The future seems to free the mind from reality’s restraints and let the imagination soar. Yet it has also proven full of political pitfalls.

For writers, the future has long been a tricky terrain. While the past can prove unsettling and the present uncomfortable, the future seems to free the mind from reality’s restraints and let the imagination soar. Yet it has also proven full of political pitfalls.

Sometimes writers can tweak a trend of their moment to produce a darkly dystopian future, as with George Orwell’s omniscient tyranny in 1984, Margaret Atwood’s institutionalized misogyny in The Handmaid’s Tale, or Ray Bradbury’s book-burning autocracy in Fahrenheit 451. And ever since H.G. Wells’s novel War of the Worlds (about technologically advanced Martians invading this planet) was published in 1898, space has been a particularly fertile frontier for the literary imagination. It has given us Isaac Asimov’s seven-part galactic Foundation fable, Frank Herbert’s ecological drama Dune, and Philip K. Dick’s post-nuclear wasteland in Blade Runner, opening us to possible techno-futures beyond our mud-bound presence on this small planet.

From the time that Henry George published his influential futuristic treatise Progress and Poverty in 1879, inspiring many of the Progressive Era’s key reforms, American writers across the political spectrum have used the future to frame an agenda for present-day political action, sometimes progressive, sometimes violently regressive. Published in 1938, Ayn Rand’s second novel, Anthem, was a futuristic saga whose hero, named “Equality 7-2521,” rejected the socialist society that raised him and struggled to rediscover his inherent individuality, articulating libertarian ideals that would inspire generations of American conservatives. And amid the social turmoil of the 1970s, William Luther Pierce’s The Turner Diaries imagined a future armed revolt against the U.S. government that has provoked violence from generations of White nationalists.

So, with some trepidation, let me venture into the immediate future and imagine what the United States will be like when President Donald J. Trump finally leaves office (if, of course, he does) in January 2029. To keep such projections within the bounds of possibility, let’s clip the wings of our imaginations and hew closely to Trump’s policies and policy statements.

America’s place in the world of 2029

In just 11 action-packed months since his January inauguration, President Trump has already demolished the fundamental geopolitics that have undergirded U.S. global hegemony for the past 80 years. Even if he simply persists in his policies for another 37 months, his impact on the American version of a world order will undoubtedly prove so profound that it will strain the limits of language.

To grasp something of the scope of his impact, it’s necessary to briefly outline the world order Washington built over those 80 years. After fighting for four years and sacrificing 400,000 lives during World War II, Washington captured vital bastions at both ends of the vast Eurasian land mass and spent the next 40 years of the Cold War ensuring its control of that strategic continent with circles of steel — military alliances like NATO, hundreds of overseas military bases, powerful naval fleets, and a massive armada of nuclear-armed aircraft and missiles. With the Sino-Soviet communist bloc largely trapped behind what came to be known as the Iron Curtain, Washington crushed most of their attempts to break out of geopolitical isolation with deft covert operations. As the communists flailed, the U.S. continued to build a global order, while patiently waiting for those socialist economies to implode.

When the Cold War finally ended in 1991, Washington got busy knitting the world into a unified market through massive capital exports, free-trade agreements, and a grid of global communications, thanks in part to satellites and fiber-optic cables. Beyond its awesome array of raw economic and military power (and the distinctly less than successful wars that it fought), Washington prettied-up its intrusions into sovereign societies worldwide through its advocacy of universal human rights, its commitment to the rule of law (unless it got in the way of American interests), and its support for international institutions like the United Nations that assured inviolable sovereignty for even the smallest of countries. Thanks to a delicate balance of force, beneficence, and self-interest, the United States would enjoy both great national wealth and historically unprecedented global dominance.

Washington’s world order, like any complex global system, was distinctly flawed and its failings were (to say the least) legion, but its achievements weren’t inconsequential either. After two world wars that left 100 million dead, there has not been a major global conflagration for 80 years (though from Korea and Vietnam to Afghanistan and Iraq, there were all too many disastrous American-inspired local or regional wars). The share of the world’s population living on less than $3 a day dropped markedly from 43 percent in 1990 to just 11 percent in 2020. Reflecting those improved conditions, average life expectancy worldwide rose sharply for the first time in several centuries, from 46 years in 1950 to 72 years in 2020. Similarly, the world literacy rate climbed from 66% in 1976 to 87 percent in 2020. Whether from choice or necessity, we humans have enjoyed increasing freedom of movement, with the number of migrants globally reaching a record 304 million in 2024, representing nearly 4% of the total global population.

Not only did the U.S. have the largest economy and military budget, but until recently, it was the world’s leading donor for public health and poverty eradication, sparing many millions of the world’s poor from the worst kinds of hunger and disease. All of those significant improvements in the human condition had complex causes, but the fundamental fact remains that they were products, direct or indirect, of Washington’s world order.

Then came President Donald Trump. From the first day of his second term in office in January 2025, he set out to tear down the U.S. global order and transform America’s place in the world. With billionaire Elon Musk serving as his in-house wrecking ball, he quickly demolished the U.S. Agency for International Development (USAID), slashing more than 80% of American nutritional and medical aid in ways expected, by 2030, to lead to a staggering 14 million extra deaths globally (including more than 4.5 million children). The misery now being inflicted on poor people crowded into cesspool camps from the Congo to Bangladesh defies description. In addition, by shutting down Voice of America broadcasts along with those USAID programs, the U.S. has committed what one former NATO official called “soft power suicide,” clearing the way, as political scientist Joseph Nye put it, for China “to fill the vacuum that Trump is creating”.

Throughout the Cold War and its aftermath, a key U.S. force multiplier was its global network of alliances—the Rio Pact for the Americas, five key bilateral pacts along the Pacific-island chain from Japan to Australia, and, above all, the extraordinarily effective NATO alliance for Europe. In 11 short months, Trump has already ruptured all the alliances that assured America’s security for some 75 years. On April 2nd (or what he called “liberation day”), the president also slapped punitive tariffs on imports from loyal allies, ranging from 20% for the European Union to 24 percent for Japan.

Reflecting his longstanding hostility to the NATO alliance, particularly its Article Five mutual-defense clause, Trump’s recently released National Security Strategy (NSS) states that Europe faces “the stark process of civilizational erasure,” battered by “regulatory suffocation,” multi-racial migration, and “cratering birthrates” that raise the question of whether its nations will stay “strong enough to remain reliable allies.” Through their supposed “subversion of democratic processes,” the president has also claimed that European governments are resisting U.S. attempts “to negotiate an expeditious cessation of hostilities in Ukraine.” To save Europe from itself, in that NSS the Trump administration came out for the growth of “patriotic European parties” (in other words, far-right ones), while discouraging the very idea of NATO “as a perpetually expanding alliance”.

In case anyone missed the meaning of that message, Trump told a Politico interviewer on December 8th that some European leaders are “real stupid” because their tolerance of immigrants from places like the “prisons of the Congo” will ensure that key European nations like Germany “will not be viable countries any longer”.

The Trump corollary to the Monroe Doctrine

More broadly, President Trump has put forward a tricontinental geopolitical vision for the world’s major powers—with Russia dominant in the old Soviet sphere, China acting as an Asian hegemon, and the U.S. securing the Americas. By claiming Greenland, branding Canada “the 51^st state,” and threatening to reclaim the Panama Canal during his first weeks in office, Trump articulated a strategy grounded, not in global hegemony, but in geopolitical dominance over the Western Hemisphere.

Formalizing that strategy in the recent NSS, the White House proclaimed a ”Trump Corollary to the Monroe Doctrine” aimed at a “potent restoration of American power” to achieve an unchallenged “American preeminence in the Western Hemisphere”. To that end, the U.S. will reduce its “global military presence to address urgent threats in our Hemisphere”, deploy the U.S. Navy to “control sea lanes”, and use “tariffs and reciprocal trade agreements as powerful tools” to make the Western Hemisphere “an increasingly attractive market for American commerce”. It will also push out “non-Hemispheric competitors” (think: China), giving the U.S. distinctly preferential access to the region’s “many strategic resources”. In essence, according to the NSS, “the United States must be preeminent in the Western Hemisphere as a condition of our security and prosperity”.

In reality, Trump was miming the convoluted Victorian rhetoric of President Theodore Roosevelt’s famed corollary to the Monroe Doctrine. In a December 1904 message to Congress, Roosevelt disdained any “unmanly” inclination to a “peace of tyrannous terror, the peace of craven weakness, the peace of injustice”. Instead, he embraced the manly duty of the “great civilized nations of the present day” to ensure that the countries of the Western Hemisphere remain “stable, orderly, and prosperous”. Cases of “chronic wrongdoing… may… force the United States, however reluctantly… to the exercise of an international police power”. Faced with the “intolerable conditions in Cuba” (then under Spanish rule), T.R. proclaimed it “our manifest duty” to take “justifiable and proper” action “in asserting the Monroe Doctrine”.(Think Venezuela at the moment!)

Though he promised the use of only a restrained “police power” in the Western Hemisphere, Roosevelt opened the door to decades of U.S. interventionism, with the Marines occupying Nicaragua for 20 years (1912-33), Haiti for 19 years (1915-34), and the Dominican Republic for nine years (1916-24). Just as Trump’s chatter about making Canada the “51st state” has sparked “anger and incredulity” in America’s closest ally, so his proclamation of a Trump Corollary to the Monroe Doctrine, exemplified by his recent devastating gunboat diplomacy in the Caribbean Sea, is likely to inflame the anti-imperialist sentiment that lies just beneath the skin of Latin America, thereby corroding relations with our southern neighbors.

Trump’s Asia-Pacific policy

While Trump’s posture toward Latin America is grimly clear, his Asia-Pacific policy seems muddled by ambiguity, if not outright confusion. In early October, oblivious to the rapid erosion of U.S. hegemony in Asia, Trump declared a “trade war” with China, imposing a 130 percent tariff on its imports and a complete ban on exporting “critical software” to that country. By month’s end, however, he had to swallow his bravado after Beijing retaliated by barring the export of strategic rare earth metals needed for the U.S. military’s weaponry (and so much else). That forced Trump to “fold” during his October 30th summit with China’s President Xi Jinping in South Korea—quickly rescinding his high tariffs and removing the ban on the export of Nvidia’s semiconductor chips that China desperately needs for Artificial Intelligence.

In the seven years since Trump’s last trade war with China in 2018, as the Wall Street Journal reported, that country has pursued “greater self-reliance in food and energy… for an era of sustained hostilities with the U.S.” According to the New York Times, the vivid diplomatic defeat at that South Korean summit was an historic inflection point, showing that “China could now face America as a true peer” and had already become “America’s geopolitical equal”.

Trump’s delusions of dominance over China pervade his recent National Security Strategy. Amid all its self-indulgent palaver, it displays a dangerously willful ignorance about fast-changing geopolitical realities in the Asia-Pacific region. By the time Trump leaves office in 2029, China’s gross domestic product will already be larger than America’s and it’s expected to become 36 percecnt bigger in the years to follow.

Trump’s domestic legacy

Just as Trump’s “America First” foreign policy is damaging the country’s diplomatic relations with Asia, Europe, and Latin America, so his domestic policies are likely to cripple this country’s economic competitiveness. Despite his stated commitment to building “the world’s most robust industrial base,” his energy policy is damaging, if not destroying, the country’s largest industry—automobile manufacturing. In 2024, the U.S. automobile industry produced 3% of the country’s gross domestic product, created more than 8 million jobs, supplied transport for 92 percent of all American households, and accounted for $1.6 trillion in consumer finance, second only to home mortgages.

By his aggressive attack on the very idea of climate change and on America’s once-promising green-energy infrastructure, President Trump is inflicting serious damage on Detroit’s future capacity to compete against China’s rapidly rising production of electric vehicles (EVs). According to the International Energy Agency, EV purchases will reach 20 million in 2025, or one-quarter of world auto sales, and are on track to hit 40% by 2030, with China already accounting for 70 percent of global EV production. While EVs are still 30 percent more expensive than gas vehicles in the U.S., in China they are less expensive and now account for 60 percent of that country’s car sales (compared to just 11 percent in the U.S.).

With massive robotic factories cranking out EVs by the millions, a fleet of dedicated ships to carry those low-cost cars to global markets, and new factories opening in Asia, Africa, Europe, and Latin America, China seems poised to conquer the global car market with models like BYD’s self-driving Seagull EV priced at only $9,000. Just as making an iPhone in America now seems almost unimaginable, by the time Trump leaves office, the U.S. automotive industry could find itself incapable of producing a competitive EV, potentially losing access to half the world’s auto market. “I have 10,000 dealers around the world,” said Ford’s CEO Jim Farley recently. “Only 2,800 are in the U.S. So you do the math.” And given Trump’s costly tariffs on steel and aluminum imports (among other things), that core American manufacturing industry is likely to be in truly unsettled shape by 2029.

More broadly, the Trump administration is crippling this country’s overall economic competitiveness by cutting its scientific research and conducting a shotgun wedding between fossil fuels and the nation’s electrical grid. According to the International Renewable Energy Association, in 2024, solar power was 41% less expensive (and onshore wind 53% less) than the cheapest form of fossil fuel. When backed by cost-effective storage batteries, those alternative energies now provide the quickest, most affordable means to expand electrical infrastructure in developed and developing nations.

But by slashing EV tax credits, blocking offshore wind farms, and opening yet more federal lands for oil and natural gas drilling, President Trump is using the full powers of his presidency to derail America’s adoption of cost-competitive green energy. And keep in mind that he’s doing so at the very moment when a boom in energy-intensive data centers for Artificial Intelligence (AI) is straining the national grid, while simultaneously raising electricity costs for households and businesses. By the time he leaves office in 2029, American industry, still wedded to costly fossil fuels, could be paying double the price of foreign competitors for energy, rendering its products unaffordable, even at home.

Through a mix of ignorance and arrogance, the Trump administration is also hampering this country’s ability to conduct basic scientific research, the seedbed of its economic innovation for more than a century. Although immigrants have won 36 percent of the country’s Nobel Prizes in science over the past 125 years, the White House has now restricted H-1B visas for skilled immigrants and imposed a nearly 20 percent cut in foreign graduate students at U.S. universities. By denying university science labs such critical student workers and slashing the nation’s budget for basic science by up to 57 percent, the Trump White House is liquidating the world’s most successful research industry and effectively ceding the rest of the twenty-first century to China.

A witch’s brew of failure

Since the start of his second term, Donald Trump has used a seemingly random mélange of policies to mix a malevolent brew. Think of it as akin to the one that the witches in Shakespeare’s Macbeth cast into their cauldron to see the future, as they chanted:

“Eye of newt and toe of frog, wool of bat and tongue of dog… For a charm of powerful trouble, like a hell-broth, boil and bubble.”

Indeed, by 2029, Trump’s inept mix of foreign and domestic policies will confront American workers with a “hell-broth” of powerful economic troubles not seen since the Great Depression of the 1930s. By 2030, Trump’s tariffs will have cut U.S. consumption by a projected 3.5 percent and, over the longer term, are likely to reduce average wages by 5 percent and GDP by 6 percent—a major change for an economy that has long enjoyed steady growth. With AI data centers projected to consume as much as 12 percent of the nation’s electricity by 2029, and Trump blocking the green energy that’s the only quick fix to meet rising demand, consumers could face an average increase of 20 percent in their electric bills by 2030 (and a possible 25 percent rise in states with data centers). While AI might raise living standards over the long-term, its unchecked expansion, as mandated by one of Trump’s executive orders, could contribute to the loss of 300 million full-time jobs globally and negatively impact two-thirds of all employment in the United States.

Worse yet, his demolition of the Biden administration’s attempt at a green energy revolution will have untold consequences for the U.S. economy (not to say for the planet itself). As China, with its low-cost, high-efficiency EVs, conquers the global auto market by 2030 (and the larger green-energy production market as well), it will become the world’s largest economy, with exports surpassing its present record-breaking trillion-dollar mark and its currency increasingly dominant in global trade.

With the U.S. global retreat leaving China and what’s likely to become its satellite state, Russia, dominant on the Eurasian land mass, home to 70 percent of the world’s population, Washington will be forced to fall even more fully back on the Western Hemisphere (where its welcome is already wearing ever thinner). With its presence certain to shrink across the planet, the dollar’s role as the global reserve currency will, as J.P. Morgan noted in a recent study, certainly “come into question.” With erratic U.S. government policies undermining “the perceived safety and stability of the greenback” and U.S. tariffs causing “investors to lose confidence in American assets,” there are already clear market signs of a global “de-dollarization” that will raise the cost of servicing this country’s national debt and cut into every aspect of the American economy. By 2030, the sum of those changes—compounded by a 20% increase in household electricity prices, soaring health care costs, and a “white collar bloodbath” as AI kills off half of all entry-level jobs—will have distinctly begun to reduce the quality of life in this country.

As Shakespeare’s witches saw the future in their cauldron’s bubbling brew and said of Macbeth, a man who would be king (whatever the cost), “Something wicked this way comes,” they also caught our Trumpian moment so many centuries later.

First published on TomDispatch.com.

Shared via Creative Commons.