How Trump's Destroying America, or Why Capitalism's Obsolete

We’ve been talking about why America collapsed. How a society can’t be built on nothing. What does nothing create, make, build? Nothing.

What’s going to happen next to the US economy? Things are going to go from bad to worse. Trump’s destroyed America’s near and medium term prospects. And now America’s long term prospects are about to be flattened into dust.

I understand that when I write like this, Americans aren’t accustomed to thinking this way. They’re used to thinking about predatory capitalism the way that predatory capitalism wants them to think of it, that is, in terms of numbers. Economics and finance aren’t really about numbers. They are about relationships.

Trump’s destruction of America’s near and medium term prospects—and that means two to five years—is already happening before Americans’ eyes. “Nobody has any money!”, a MAGA influencer shrieked, breaking from Trump, at last. 

America’s facing what Americans call “an affordability crisis,” which is more accurately called, formally and technically, a “crisis of capitalism.” This is an old term from European sociology and economics, and it means: when capitalism extracts so much from people that a hole is punched in the heart of an economy itself. Left relatively poor, demand shrinks, while prices perpetually rise.

This is where America is. The modern term, the American one for a “crisis of capitalism” is “stagflation.” And now stagflation is trapping Americans in its pincers. They are going to lose a great deal of wealth very fast now, as inflation erodes it from the bottom, while stagnation flattens it from the top.

Please take a moment to understand that relationship. I am teaching you for a reason, and the reason is that you learn. Finance and economics aren’t about numbers, remember? They’re about relationships. I’ve just introduced you to some of the most crucial—what a “crisis of capitalism” is, how it’s called “stagflation” by capitalism, and how that means wealth erodes from the bottom and the top both.

This is what America’s affordability crisis is really about.

Now. When people cry, even the fools who voted for Trump, that “nobody has any money!”, this is the relationships above in action. Stagnation means that economies don’t grow, which means people don’t earn higher incomes. Meanwhile, inflation means that of course prices rise, usually for the necessities, most. And as a result of both mechanisms, “nobody has any money.” (Another way to think about that is the recent post you might have read which calculated a new poverty line at $140K, but again, please don’t focus on the numbers, understand the relationship.)

This stagflationary relationship is what will define America’s near and medium term prospect, and eviscerate them. And it is largely the result of Trump’s catastrophic economic decisions. Tariffs, trade wars, the fracturing of decades-old trade and financial relationships. Not so long ago, the Trumpists crowed “tariffs haven’t had an effect!” Today, they’re crying about not having any money. That’s not irony, though you can chuckle if you like. It’s stupidity in action. They didn’t understand the relationship, or what relationships mean.

They mean that causes and effects continue in tandem. And effects often outlast causes, because they have momentum and inertia. America’s descent into “stagflation,” or this crisis of capitalism, is going to last now for the better part of the remainder of the decade. Once this chain reaction is set off, it reaches its eventual culmination, which are financial crises, banking crises, stock market crashes, widespread deprivation, usually depressions, because these are all what wealth eroding from the bottom and the top are.

Now. I want you to think about the above with me. Wealth eroding from the bottom and the top isn’t just theoretical, nor is it abstract. It’s happening to you. I imagine that your stock portfolio is up maybe 10%. And that sounds good. But is it? The real rate of inflation for most of the things you consume is probably far higher than that. Childcare, healthcare, food, education, transportation, doesn’t matter. That’s wealth eroding from the bottom.

Meanwhile, how much you make certainly isn’t keeping pace, if it’s growing at all. That’s wealth eroding from the top.

The destruction of American wealth is lethally real. Right now, a stock market bubble is masking it, and people aren’t thinking it about it clearly or well.

So let’s ask the question above now in a different way. Your stock portfolio’s up 10%, but after the crash, and yes, we all know it’s a bubble, meaning the world’s good economists—what will be down? 20%? 30%? Probably. The dot com crash came in at 50%, by the way.

When I put it to you that way, you immediately understand, I think, what “wealth eroding from the bottom” means. And you should adjusting your wealth to account for this risk, if not taking action about it. That your finance guys probably aren’t doing either is a pretty bad sign when it comes to competence, service, and insight, by the way.

Now imagine that you’re going to lose that much, but prices continue to rise. Because of course Trump has decided that America won’t be a modern part of the global economy anymore. Now you’re down by double digit percentages, but prices are up, up, up. Meanwhile, it’s hard to imagine that as the economy stagnates that you’re going to earn more, because that’s what stagnation is.

That’s wealth eroding from the top.

Crises of capitalism destroy wealth. Over the long run. They destroy it at a generational level. People often never recover. They’re on a permanently different trajectory after such crises, because economies are. And of course you should think of fascism as a long-run cost of just such a crisis, which destroys wealth in the form of democracy itself.

Think of the Great Depression, and again, I’m not trying to be hyperbolic, I’m trying to teach you something. It was the devastating result of a textbook crisis of capitalism. Crises of capitalism have predictable sequences and patterns: stock market bubble, crash, financial crisis, real economic depression, the decades-long aftermath. The scale of wealth that’s destroyed takes decades to rebuild.

I’’m not saying “there’s going to be another Great Depression.” I’m teaching you about another key relationship.

How is it that subsequent crises of capitalism didn’t produce Great Depressions? For a very simple reason. During the depression, we learned the principle of stimulating an economy so as to prevent and avert one.

But now we have Trump.

Imagine now that the economy goes into the spiral of depression that crises of capitalism produce, and remember, even MAGA types are saying “nobody has any money!” A smarter leadership would stimulate an economy fast and hard to prevent it—this is how depressions were averted after the crashes and crises of 2008, 1999, and 1987, for example.

Trump is different. Not only is he unlikely to stimulate the economy in time, or at all—and no, “tariff refund checks” don’t count, LOL, they’re nothing—he probably won’t be able to, even if he cared. That’s because politics isn’t likely to let him. And nor is America’s fiscal position.

Trump’s already spent America’s future wealth on massive amounts of debt. He did that during his first term, and he just did it again with his “Big Beautiful Bill.” Can a highly indebted America afford another round of stimulus? It can, technically, but only at a severe set of costs. Its bond market would destabilize, the world would demand higher interest rates, which would only accelerate the inflationary spiral, to name just one set of costs. Trump already spent America’s wealth enriching himself and his buddies, in short.

So this crisis of capitalism is likely to be more severe than the ones preceding it. The playbook isn’t likely to be used in time, nor is it likely to be able to be used fast and properly. And that means that pretty catastrophic levels of wealth are likely to be destroyed.

This is what I mean by the destruction of America’s long-term prospects. Please, again, think about this in terms of relationships, not numbers. That is how we think clearly and well about economics and finance. Crises of capitalism destroy wealth, by ripping holes in the heart of an economy.

When we say that life is becoming “unaffordable,” we are already talking about the destruction of wealth, from both the top and the bottom, though we might not fully know it. 

Capitalism produces such crises by its very nature: its exploitative nature takes so much in moments of euphoric greed that little is left over for people, society, the future, or debtors. Hence, “nobody has any money!”

And in this way, capitalism is becoming obsolete.

It is putting your wealth at risk, and those risks are accelerating. 1929. 1987, 1999, 2008, 2023. The time between crises gets shorter, and it costs more and more to prevent each one from spiraling into depression.

This is a key reason why America’s so heavily indebted now. It’s true that countries like France, for example, also have high debt levels, but they have a functional social contract, from healthcare to education to retirement, to show for it. 

America has nothing to show for it’s incredibly high debt levels, precisely because it has been staving off the rising price of capitalism’s crises, instead of investing in itself.

This is another key relationship to understand. 

Capitalism itself comes at a steeper and steeper cost now, so much so that America’s collapsing. One of those prices is fascism, another is widespread deprivation, another is ruthless exploitation, another is stagflation, and yet another is indebtedness-with-nothing-to-show-for-it.

These are real costs. They are what you bear when your wealth erodes from the bottom and the top.

The future of wealth isn’t going to be about capitalism. That’s a hard lesson for Americans to grasp, I’d bet, since they’re indoctrinated to believe in it the way Soviets were in communism. But if they want to preserve their wealth, they will have to learn it. 

It is too risky, too costly, and offers too little real return for all that. Its crises are unaffordable. That’s what the little chart I drew for you says, and it summarizes the history of how and why.

Americans are trapped in the jaws of this last key relationship, which is the most crucial of all. I’d wager that they don’t quite know it or understand it. And in that, by the way, I include the left, which is critical of capitalism in America in the sort of earnest way of a zealous college freshman, but doesn’t really understand the power and weight of the intricate

lessons of history I have tried to teach you above. The intelligent ones will learn. The rest will sink with the ship. I doubt you have to guess what my advice for you is.

Love,

Umair (and Snowy!)

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