Bitcoin, Billionaires, and Trump

Donald Trump is assembling a government of the ultra-rich whose collective wealth is estimated at $344.4 billion, nearly 3,000 times greater than that of Joe Biden’s cabinet.  So how did an incoming administration go from populism to hyper-oligarchy in the blink of an eye?

The reasons are many.  One is the poverty of American political debate while another is a two-party system that forces voters to choose between awful and even worse.  Deep anger over inflation is a third, while the fact that Dems were beholden to Silicon Valley mega-donors is a fourth since it prevented them from criticizing Trump’s ties to the super-elite.  

But yet another factor is at work: a financial boom that’s growing more manic by the week.  Not only is the frenzy boosting the US economy relative to all other bourgeois nations, but it’s boosting Trump relative to all other bourgeois politicians.  The result is a combined national, political, and financial upsurge unprecedented since the Republican heyday of the 1920s.

It was not always thus.  As recently as the 1980s, the United States accounted for just 30 percent of the leading global stock index according to Financial Times columnist Ruchir Sharma, while the US share of world markets lagged behind that of Japan in the mid-90s and behind China for much of the aughts.  But “quantitative easing” in the wake of the 2007-08 financial meltdown altered the relationship by injecting vast quantities of central-bank capital in an effort to stabilize markets.  QE critics cite it as a classic example of the “Cantillon effect” – so called for a pioneering eighteenth-century Irish-French economist named Richard Cantillon – in which financiers closest to the source are the ones who benefit most. 

Richard Cantillon

Since the US Federal Reserve was among most aggressive in pushing QE, American banks and corporations therefore pulled out ahead.  The US bourgeoisie benefited from the boom and then benefited from the bailout as well. 

The results have been dramatic.  Financial markets are now soaring, economic polarization is shooting through the roof, while the US share of total stock-market capitalization has risen by nearly 30 percent over the last decade according to Bloomberg columnist John Authers.  With $1 trillion in foreign capital pouring into the US per year, Sharma notes, “the term ‘American exceptionalism’ is hotter than ever” among international investors.

But American exceptionalism has grown hotter still since Election Day, with the Dow, S&P 500, and Nasdaq – up 4.9, 5.9, and 9.6 percent respectively – outpacing almost all other major international indices, which have either been flat or down over the same period.

And then there’s bitcoin, up a stunning 46 percent beginning on Nov. 5.  Back in 2021, Trump called bitcoin “a scam,” but now he’s filling his administration with crypto enthusiasts.  Elon Musk, who will be in charge of slashing the federal workforce, is a major backer of Dogecoin, a crypto currency or “memecoin” created in 2013 as a joke but which has rocketed up 267 percent since Election Day.  Vivek Ramaswamy, his partner in staff reduction, is peddling bitcoins via a wealth management business he’s starting called Strive.  Scott Bessent, Trump’s choice for treasury secretary, is an outspoken crypto advocate, while Howard Lutnick, who is being tagged as secretary of commerce, is a major backer of a crypto firm called Tether.  Other crypto boosters include Paul Atkins, Trump’s choice to head the Securities and Exchange Commission; David Sacks, a venture capitalist whom he has just named AI-crypto czar, and Steve Witkoff, a real-estate magnate who has been appointed as a special Middle East envoy.  Indeed, Witkoff is teaming up with Trump’s no-less-enthusiastic sons Eric and Don Jr. to launch a crypto platform called World Liberty Financial. 

“I think America will be the crypto capital of the world,” Eric recently told CNBC.  “I fully support it.  My father fully supports it.”  With bitcoin recently surging past $100,000 before pulling back slightly, he said at a crypto conference in Abu Dhabi that he is “confident” it “is going to hit $1 million.” *

When rhetoric reaches such heights, it’s a sure sign that markets are overheating, and trouble is on the way.  With the crypto and Artificial Intelligence bubbles intersecting and interacting in new and unexpected ways, the financial scene is outdoing the feverish run-up to the 2008 meltdown when traders bought and sold mortgage-backed securities that turned out to be worthless.

 

If so, three things seem clear.  One is that with bitcoin far outpacing stocks and bonds, it’s plain that the growing stream of capital entering the United States is heading straight for the boom’s frothiest sector.  After all, crypto is the ultimate in fictitious capital, a pseudo-currency that is useless as an instrument of exchange other than on black markets and whose only function is financial speculation.  Created in August 2008 at the height of the financial crisis, it has already seen one crash, a dizzying 74-percent plunge from November 2021 to December 2022, and will undoubtedly see another.

 

A second thing that’s clear is that Eric Trump’s prediction that bitcoin will hit $1 million may be a self-fulfilling prophecy since his father’s backing will likely send it even higher.  A third is that the magic is rubbing off on Trump himself. 

 

The last is essential to any understanding of the Trump phenomenon.  The president-elect has not backed down from his threats to round up 11 million immigrants, to use the Justice Department to go after political enemies, or to pardon more than 1,200 “J6’ers” who have either pled guilty to or been convicted of crimes stemming from the January 2021 Capitol Hill insurrection.  If anything, he’s doubling down, telling “Meet the Press” on Sunday that members of a congressional committee that investigated the uprising “should go to jail” on the ludicrous grounds that they “deleted and destroyed” evidence pointing to Nancy Pelosi as the real culprit.  Among the questions that the Trump transition team is now asking high-level defense and intelligence appointees, according to the New York Times, whether they agree that the 2020 election was stolen and that the January 6 insurrection was justified.  If they say no to either, the clear implication is that they’re out.

 

This is a dictatorship in the making.  Yet the financial boom amounts to a capitalist roar of approval.  Jamie Dimon, CEO of JPMorgan Chase, the country’s largest bank, says that bankers are “dancing in the street” because Trump is promising to lower interest rates.  Authers agrees: 

 

“The return of Donald Trump to the White House ... has underpinned the recent surge in US assets.  Deregulation and tax cuts, coupled with a miserable dose of protectionism to hit everyone else, are ample reason to expect another US triumph.”

 

So capitalists like what they see in the new administration and are driving up US financial markets in response.  But the phenomenon is built on sand.  As the Marxist economist Michael Roberts points out, real GDP growth in the US is lagging in historical terms, slipping from an average of four percent per year during the “golden age” of the 1950s and 60s to three percent during the early 2000s and less than two percent since 2008.  With US corporate bankruptcies in 2024 surpassing 2020 pandemic levels, he says, “the US economy is doing worse than in the 2010s and worse again compared to the 2000s.”  His conclusion: “The story of US exceptionalism is really a story of Europe’s collapse.”

The Trump boom is likewise a story of Washington’s collapse.  After a generation of gridlock, Trump looks good because he is now bullying Congress into submission.  The higher markets go, the more he looms over Capitol Hill and the more Republicans fall into line.  Like an insect caught in a spider’s web, a decrepit legislative branch is yielding to the powers of hyper-presidentialism without a fight.  Indeed, Trump’s most odd-ball cabinet nominees – Christian warrior Pete Hegseth for secretary of defense, anti-vaxxer Robert F. Kennedy Jr. for health and human services, GOP hitman Kash Patel for director of the FBI, etc. – are advancing so smartly at this point that he may not have to follow through on threats to forcibly adjourn the Senate in order to ram through appointments on his own.

But what happens once markets crash, as they inevitably will?  No one knows although the damage is certain to be extreme.  But where lesser men would slink away in embarrassment, Trump is made of sterner stuff.  Instead, he’s far likelier to use the crisis to ram through rightwing measures that will be even harsher and more extreme.  For the proletariat, the message is clear.  The bourgeoisie will do its best to foist the costs on the working class rather than on the capitalists who caused the crisis in the first place.  It’s the old story of privatizing benefits and socializing costs.  The more capitalism destabilizes, the more dangerous Trump will grow.

 *As of the time of publication of this essay, midnight Dec, 16, 2024, bitcoin was valued at $104,525.60

 

Meltdown

Steve Bannon, Donald Trump, Sebastian Gorka

Daniel Lazare

12.08.24

More than four weeks after Donald Trump’s election victory, it is increasingly clear where America is heading: toward militarization and authoritarian rule.

Trump’s strong-man tendencies have long been evident.  Although largely forgotten, he repeatedly accused Democrats of rigging the vote during the 2016 presidential campaign, warning that he might not concede even if the official tally went against him.  Such threats grew more and more ominous in 2020 until Trump finally sent his forces crashing across Capitol Hill in early 2021 in a last-ditch attempt to block Joe Biden’s victory and force Congress to name him the winner.  If Trump had lost in 2024, there would have been every reason to expect more of the same, i.e. more violence, more phony accusations of electoral theft, and more attempts to overturn the results. 

But now that he has won, Trumpian authoritarianism is in full view.  Examples include:

--  His ultra-confrontational cabinet picks;

--  His plans to force the Senate to adjourn so he can bypass the confirmation process and appoint cabinet members on his own;

-- His vow to use the military to round up as many as 11 million illegal aliens;

-- His promise to pardon hundreds of January 6 insurgents the moment he takes office;

 

-- And his close ties to the authors of Project 2025, the rightwing Heritage Foundation’s proposal for a sweeping purge of the federal bureaucracy and a “unitary executive” that will infuse the government with Christian nationalist values.

 

Trump’s cabinet choices run the gamut from ultra-right to centrist.  They include Marco Rubio, one of the most rightwing members of the Senate, who is his pick for secretary of state, and Pete Hegseth, his choice for defense secretary, who is a Christian nationalist who believes that “just like the Christian crusaders who pushed back the Muslim hordes in the twelfth century, American Crusaders will need to muster the same courage against Islamists today.”  But they also include relative moderates such as Tulsi Gabbard as director of national intelligence and the ever-cranky Robert F. Kennedy Jr. as head of health and human services, who, despite his anti-vax views, is not otherwise illiberal.  Scott Bessent, his choice for treasury secretary, is openly gay while Howard Lutnick, his pick for commerce secretary, is a former Democrat -- as, of course, is Trump.

 

They're an eclectic mix that only have one thing in common: each in his or her own way is an affront to the Washington establishment, whether it's the “intelligence community” up in arms over Gabbard,  the healthcare industry terrified by the accession of RFK , or homophobic sectors of the Trump coalition .  The result is a take-it-or-leave-it approach in which Trump fairly dares the old guard on Capitol Hill to just say no.

If they do, the next step is plain: a constitutional showdown.  With the help of Mike Johnson, the ultra-conservative speaker of the House, Trump is bruiting plans to force the Senate to adjourn against its will so he can use his recess powers to ram through \ appointments on his own.  The strategy, based on an obscure constitutional clause in Article II, section three, is setting off alarms throughout official Washington, with even the libertarian Cato Institute describing it as a “norm-defying abuse” that would trigger “a full-blown constitutional crisis.”

But that is what Trump wants.  With the Supreme Court likely on his side, Trump wants a crisis so he can cow Congress into submission and stretch the Constitution to the limits so as to accommodate his authoritarian designs.  If the maneuver works, the upshot result will be a giant step toward Argentine-style neo-Peronism in which the chief executive casts off constitutional restraints and rules on his own by decree.   

Using the military to round up illegal aliens would cement authoritarianism even more firmly in place.  Article I, section nine, gives the president emergency powers to suspend habeas corpus “in cases of rebellion or invasion [as] the public safety may require it.”  So it's a perfect opportunity for a president armed with unilateral powers to denounce illegal immigration as a foreign invasion and announce that he is suspending judicial review so that he can round up millions of people and place them in special detention camps.  And if Trump rounds up millions of immigrants, then it's not too difficult to imagine other roundups that might follow, e.g. leftwing activists who defend immigrants and their interests, anti-Zionists, etc.

. 

As for Project 2025, it is a 1,000-page plan whose ultimate goal is to turn the federal bureaucracy into a conservative battering ram.  Among the goals is banishing DEI, i.e. diversity, equity, and inclusion programs, and other such “woke” initiatives and prosecuting “anti-white racism” instead.  Project 2025 also calls for barring the National Institutes of Health from engaging in stem cell research, rejiggering environmental regulations so as to favor fossil fuels, and criminalizing pornography.  Heritage Foundation president Kevin Roberts is explicit about Project 2025's goals.  “The long march of cultural Marxism through our institutions has come to pass,” he writes in the introduction.  “The federal government is a behemoth, weaponized against American citizens and conservative values, with freedom and liberty under siege as never before.”  

“Conservatives have just two years and one shot to get this right,” he adds.  “With enemies at home and abroad, there is no margin for error.”  

 

Then there are Trump’s plans to enlist Elon Musk and Vivek Ramaswamy in a Javier Milei-like assault on the federal workforce along with his refusal to cooperate with federal agencies like the General Services Administration that traditionally oversee the transition process.  The plan is to decimate a government apparatus that he views as little more than enemy territory while elevating himself high it. 

“He should not trust the politicized and weaponized intelligence and law enforcement agencies that hobbled his presidency the first time,” declares Mike Davis, the leader of another pro-Trump outfit called the Article III Project.  “It’s a hostile takeover on behalf of the American people.”

Finally, there is Special Prosecutor Jack Smith’s decision to drop charges related to the Capitol Hill insurrection and Trump’s promise to pardon hundreds of “J6’ers.”  Together, they show how the federal government has given up holding Trump to account for the most serious constitutional breach since the Civil War and how the uprising itself is well on its way to being officially vindicated.  The very idea of free elections is coming under assault.  Henceforth, the only elections Republicans regard as valid will be elections they win.

What does it all add up to -- authoritarianism, Bonapartism, or out-and-out fascism?  With ostensible Marxist organizations all over the map with regard precisely what Trumpism at this stage represents, the answer in this writer's view is the first.  One reason is structural.  Broadly speaking, authoritarianism (or hyper-presidentialism to use the academic term) operates within existing constitutional guidelines.  Both Juan Perón of Argentina and Rodrigo Duterte of the Philippines submitted to regular elections, for instance, and even January 6 would have ended on a constitutional note even if Trump had succeeded in throwing the election into the House since Republicans would no doubt have followed the procedures outlined in the Twelfth Amendment to the letter.

 

This is not to say that those constitutional procedures are anything other than obsolete, arcane, and undemocratic.  Considering that the Twelfth Amendment dates from 1803 and has never been updated, they are all those and more.  But what's important is that America’s weak and decrepit constitutional structure would have remained formally intact.  By contrast, Napoleon III, the subject of Marx’s famous study, The Eighteenth Brumaire of Louis Bonaparte, overthrew the existing constitution after launching a coup d’état in 1851 so that he could draft a new constitution from scratch, one that allowed him to serve an unlimited number of ten-year terms and gave him have total authority to declare war, sign treaties, form alliances, and initiate laws.  The result was not authoritarianism under the existing constitution but dictatorship over it.  As for fascism, it dispenses with constitutionalism entirely by positing a mystical union between führer and volk that is above the law, one characterized by “unconditional authority downwards, highest responsibility upwards.”  Goebbels thus described Hitler as “the greater German, the führer, the prophet, the fighter, that last hope of the masses, the shining symbol of the German will to freedom” – anything, that is, except a mundane politician or officeholder.

 

Class relations are also key.  Trotsky described fascism as an attempt to resolve the contradictions of capitalism within the confines of the bourgeois state.  Since “[t]he productive forces are in irreconcilable contradiction not only with private property but also with national state boundaries,” the result is an effort “to solve this contradiction through an extension of boundaries, seizure of new territories, and so on.  The totalitarian state, subjecting all aspects of economic, political and cultural life to finance capital, is the instrument for creating a super-nationalist state, an imperialist empire, the rule over continents, the rule over the whole world.”

 

But Trump is not remotely there yet.  He is not a military expansionist, for example, and indeed attacked neocon hawk Liz Cheney during the campaign for launching “forever wars” from the comfort of Washington.  His choice of middle-of-the-road Wall Streeters like Lutnik and Bessent to head up negotiations with China indicates that, for now at least, he is intent on using financial rather than military means in dealing with the “threat” posed by the PRC.  

 

Bonapartism is meanwhile classically associated with a high pitch of class conflict in which the would-be ruler plays off the warring elements against one another so as to maintain himself in power.  Yet the current period is marked by working-class quiescence in which strikes, despite a recent uptick, are still running at a rate 75 percent or more below that of the late 1960s and early 70s.  

None of which is to say that Trump will not “graduate” to Bonapartism in the event of an economic or foreign-policy crisis or other disruption.  In fact, with the world in growing turmoil, such crises are more likely than not, which is why Bonapartism, i.e. outright political dictatorship, is plainly on the agenda.  Fascism, similarly, cannot be ruled out either although it will take political breakdown and a massive upsurge in revolutionary class struggle before it advances to the fore.

To sum up: Trumpism has not yet reached the Bonapartist stage, much less the fascist.  Nonetheless, constitutional constraints have been cast aside so forcibly.  The reason is the political breakdown of the last 30 years or so, which has been unprecedented.  The legislative branch is paralyzed, corruption is soaring, economic polarization is out of control, while ordinary citizens have rarely been more pessimistic.  An eighteenth-century constitution that is increasingly at odds with the needs of modern society is making a mockery of anything resembling democratic self-government.  If we toss in global warming, imperial overstretch, economic instability, and an increasingly powerful drive to war, then it is evident that capitalism is entering into the greatest crisis in history, a perfect multi-dimensional storm involving everything from high finance and the environment to political structure.  With its limits and contradictions, American democracy was never more than a crude facsimile.  But even that it is collapsing under the strain of a growing capitalist breakdown.

 

As far as the US is concerned, this means that mass repression, cultural reaction, and crude expressions of racism, sexism, and homophobia will all follow.  Life in America is changing rapidly, and there is nothing that middle-class radicals, “progressive” journalists, or the washed-up liberals who constitute the Democratic Party’s left wing can do to return it to anything resembling normalcy.

The only force capable of combatting such tendencies is the proletariat.  But it can do so not by restoring the old pseudo-democracy but by replacing it with a real democracy in the form of a workers’ state.  The more repressive and unstable the Trump administration grows, the more the working class must take the lead.  Five programmatic elements are absolutely crucial:

-- No to one-man rule.

 

-- No to mass deportations.

 

-- No to war.

 

-- Yes to workers’ solidarity on both sides of the US-Mexican border.

 

-- Yes to a democratic constituent assembly elected on the basis of strict proportional representation whose task will be to reconstruct America’s broken system of government from the ground up.