So where are corporate profits going to come from as globalization, price-gouging, planned obsolescence, shrinkflation and immiseration run out of rope? We all know there's a time lag between the moment Wile E. Coyote runs off the cliff at full speed and the moment he realizes there's nothing but thin air beneath his feet. His expression in the second before he begins his descent communicates surprise, fear and a woeful awareness of impending impact with unforgiving ground. This is an apt description of the present moment. The economy has already run off the cliff, but we haven't yet experienced that second of realization that there's nothing but thin air below. We can call this the Wile E. Coyote Recession, as there is a time lag of around one quarter between the moment we left the cliff edge and the moment we start falling. The economy has momentum, as what's in transit and in the warehouses is already in the pipeline. But now that Deglobalization has disrupted supply chains, once what's in the pipeline has been distributed, the new realities start playing out. Legions of economists and financial pundits are claiming to measure the odds of a recession. This is akin to Wile E. Coyote attempting to measure his odds of catching the Roadrunner in mid-air: the recession is already a matter of gravity. Similar prognostications are being issued about the stock market, which depends on many factors, but the one that looms largest is corporate profits. If profits rise, this justifies higher stock valuations. If profits fall sharply, then stock valuations will adjust downward. Two charts reveal the primary sources of soaring corporate profits: globalization from 2001 to 2024, and profiteering from 2020 to 2025. Here we see that corporate profits were in the $700 billion to $800 billion range all through one of the greatest booms in American history, 1995 to 2000. This was sufficient to spark an economic boom and a booming stock market. Then globalization kicked into high gear in 2001 with China's entry into the WTO (World Trade Organization). As corporations rushed to offshore production. profits soon tripled to the $2.2 trillion - $2.4 trillion range, a range that held steady through the 2010-2019 boom in GDP and stocks. The Covid pandemic lockdown triggered a mini-crash which was reversed by unprecedented monetary and fiscal stimulus. In the span of a few years, corporate profits nearly doubled. Since globalization had been a force for two decades, this extraordinary rise can't be attributed to that factor. The reality was much uglier, and so we don't dare discuss it in polite company. Corporations boosted profits not by increasing productivity or generating higher quality goods and services; they boosted profits by: 1. profiteering / price-gouging 2. Shrinkflation 3. Crapification of goods and services (a.k.a. planned obsolescence) 4. Immiseration: reducing the quality of standard services to force consumers to "upgrade to premium," and forcing consumers to agree to subscription services via mafia-type extortion. With globalization reversing and prices / inflation set to rise as consumers run out of savings and credit, what happens to corporate profits going forward? As for jacking up profiteering, planned obsolescence, shrinkflation and immiseration / extortion, these strategies have already been pushed to 11 (recall the dial stops at 10). What's next--a can of tuna the thickness of a slice of bread? A cereal box so thin it can no longer be stood up on a shelf? Shrinkflation has already reached absurd extremes, and there isn't much left to squeeze out of this gimmick. As for immiseration, that's been pushed to the limits of human endurance as well. Once the reverse wealth effect and layoffs start taking a toll on consumers' incomes and willingness to spend, the most miserable services will be the first ones to be axed. So where are corporate profits going to come from as globalization, price-gouging, planned obsolescence, shrinkflation and immiseration run out of rope? Maybe corporate profits will experience a Wile E. Coyote type impact with reality as gravity takes hold. Note that if corporate profits had kept pace with inflation since 2002, they would be around $1.26 trillion annually, not $4.3 trillion. Maybe reversion will re-align corporate profits with inflation since 2001. My recent books: Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site. The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF) Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF) The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF) When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF) Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF). A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF). Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF). The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF) Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free Become a $3/month patron of my work via patreon.com. Subscribe to my Substack for free NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency. Thank you, Tina S ($70), for your splendidly generous subscription to this site -- I am greatly honored by your steadfast support and readership.   Thank you, Mario C.G. ($70), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership. Thank you, Jeffrey S. 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Now that the entire economy depends on these hyper-normalized speculative bubbles for its "growth" and "wealth," there is a profound fear of a future based not on artifice but on the real world. Humans are quick to habituate to current conditions, i.e. consider them normal. This rapid normalization has advantages and disadvantages. Normalization is an adaptive strategy, enabling humans to adapt readily to conditions that are considerably different from their previous "normal" state of affairs. So those ripped out of their "normal" lives and thrown into the Gulag soon consider the wretched conditions of the prison camp "normal." The downside of normalization is that it erects a defensive barrier between the real world and the perceived i.e. normalized world. In systems that have failed but are incapable of real reform, normalization phase-shifts into Hyper-normalization (generally one word, Hypernormalization), a peculiar adaptative state described by Alexei Yurchak, a Russian anthropologist who used the term in his 2005 book Everything was Forever, Until it was No More: The Last Soviet Generation. Documentary filmmaker Adam Curtis described Hypernormalization in this way: "'HyperNormalization' is a word that was coined by a brilliant Russian historian who was writing about what it was like to live in the last years of the Soviet Union. What he said, which I thought was absolutely fascinating, was that in the 80s everyone from the top to the bottom of Soviet society knew that it wasn't working, knew that it was corrupt, knew that the bosses were looting the system, know that the politicians had no alternative vision. And they knew that the bosses knew that they knew that. Everyone knew it was fake, but because no one had any alternative vision for a different kind of society, they just accepted this sense of total fakeness as normal. And this historian, Alexei Yurchak, coined the phrase 'HyperNormalisation' to describe that feeling." I submit that the U.S. economy and stock market have been hypernormalized to the degree that what is now viewed as "normal" is completely detached from the real world. What we inhabit is a system that has lost all authenticity and survives entirely on the ceaseless marketing of artifice, a.k.a. narrative control that benefits the few at the expense of the many. In effect, "normal life" is stripped of authenticity in favor of a simulacrum "normal" that supports those at the top of the status quo. This "new normal" reaches extremes of artifice, hence hyper-normalization. As long as everyone thinks there are no alternatives to this hyper-normalized simulacrum, this artificial construct appears to be immutable--everything is forever. But once the power structure admits, however minimally, that it no longer has the answers to the decay of the social-economic order, then the entire artificial construct collapses in a heap. This is the sociology of collapse: people accept a facade of artifice and propaganda without actually believing any of it, though they do have a limbic loyalty to the founding ideals of the nation. What's real is denial, repression of non-conforming realities, group-think, virtue-signaling and a profound loss of competence. In this hyper-normalized state, madness of crowds speculative bubbles are now considered normal, not just in stocks but in housing, commodities, quatloos and everything else that can be commoditized, marketed and sold: So Housing Bubble #2 is not viewed as an insane extreme that is bound to succumb to gravity, it's "normal." Here is the real world: speculative frenzies are abnormal and the collapse of these bubbles is normal and predictable. Now that the entire economy depends on these hyper-normalized speculative bubbles for its "growth" and "wealth" (two additional examples of hypernormalization), there is a profound fear of a future based not on artifice but on the real world. My recent books: Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site. 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Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF). The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF) Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free Become a $3/month patron of my work via patreon.com. Subscribe to my Substack for free NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency. Thank you, Les C. ($70), for your splendidly generous subscription to this site -- I am greatly honored by your support and readership.   Thank you, W.B. ($7/month), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership. Thank you, Tom M. 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The deflation of asset bubbles and higher costs are foreseeable, but the magnitude of each is unpredictable. With the rise of financialized asset bubbles as the source of our "growth," family home went from shelter to speculative asset. This transition accelerated as financialization (turning everything into a financial commodity to be leveraged and sold globally for a quick profit) spread into the once-staid housing sector in the early 2000s. (See chart of housing bubbles #1 and #2 below). Where buying a home once meant putting down roots and insuring a stable cost of shelter, housing became a speculative asset to be snapped up and sold as prices soared. The short-term vacation rental (STVR) boom added fuel to the speculative fire over the past decade as huge profits could be generated by assembling an STVR mini-empire of single-family homes that were now rented to tourists. Now that housing has become unaffordable to the majority and the costs of ownership are stair-stepping higher, housing has become a liability. I covered the increases in costs of ownership in The Cost of Owning a Home Is Soaring 11/11/24). Articles like this one are increasingly common: 'I feel trapped': how home ownership has become a nightmare for many Americans: Scores in the US say they're grappling with raised mortgage and loan interest rates and exploding insurance premiums. The sums of money now required to own, insure and maintain a house are eye-watering. Annual home insurance for many is now a five-figure sum; property taxes in many states is also a five-figure sum. As for maintenance, as I discussed in This Nails It: The Doom Loop of Housing Construction Quality, the decline in quality of housing and the rising costs of repair make buying a house a potentially unaffordable venture should repairs costing tens of thousands of dollars become necessary. Major repairs can now cost what previous generations paid for an entire house, and no, this isn't just inflation; it's the result of the decline of quality across the board and the gutting of labor skills to cut costs. Here's the Case-Shiller Index of national housing prices. Housing Bubble #2 far exceeds the extremes of unaffordability reached in Housing Bubble #1: Here's a snapshot of housing affordability: buying a house is now an unattainable luxury for those without top 20% incomes and help from parents. The monthly payments as a percentage of income are at historic highs: Property taxes are rising in many locales as valuations bubble higher and local governments seek sources of stable revenues: Home insurance costs vary widely, but all are skewing to the upside. As I often note, the insurance industry is not a charity, and to maintain profits as payouts for losses explode higher, rates have to climb for everyone--and more for those in regions that are now viewed as high-risk due to massive losses in fires, hurricanes, wind storms, flooding, etc. All credit-asset bubbles pop, and that inevitable deflation of home valuations will take away the speculative punchbowl. What's left are the costs of ownership. As these rise, they offset the rich capital gains that home owners have been counting on for decades to make ownership a worthwhile, low-risk investment. The deflation of asset bubbles and higher costs are foreseeable, but the magnitude of each is unpredictable. The ideas that have taken hold in the 21st century--that owning a house is a wellspring of future wealth, and everything is now a throwaway destined for the landfill--are based on faulty assumptions, assumptions that have set a banquet of consequences few will find palatable. My recent books: Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site. The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF) Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF) The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF) When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF) Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF). A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF). Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF). The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF) Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free Become a $3/month patron of my work via patreon.com. Subscribe to my Substack for free NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency. Thank you, Roger H. ($70), for your splendidly generous subscription to this site -- I am greatly honored by your steadfast support and readership.   Thank you, Jackson T. ($7/month), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership. Thank you, John K. 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Add in the doom loop of an unprecedented credit-asset bubble and housing as a sector is in trouble. Sorry for the punnish-ment, but this nails it: How Contracting Work Became a Race to the Bottom The reality of being a contractor includes labor shortages, brutal competition and low, low margins. This is not a new or unique trend, but it's accelerating into a Doom Loop where the resources needed to reverse the decay are no longer available at the needed scale. As a former builder, I experienced this same dynamic back in the 1980s, after the 1981-82 recession gutted the auto and construction industries. The 1981-82 recession was the deepest economic decline since the Great Depression in the 1930s, as the Federal Reserve jacked up interest rates to snuff out the inflation expectations that were becoming embedded in the economy. Sectors that depended on consumer borrowing--autos and housing--tanked. Contractors' sunk capital--the investment of time and effort required to learn the tradecraft, the financial investment in tools and equipment, office leases, etc. and the social capital of relationships forged with subcontractors, suppliers, lenders, etc.--is substantial and not easily replaced. So everyone in the trades tries to survive the downturn by cutting costs, as the alternative--walking away from the construction industry and trying to establish a new career in a field that pays as well as construction--was difficult enough in good times, but in a recession became nearly insuperable. The building trades are unique in a number of ways. Skilled labor still commands a higher-than-average wage, which offers a rare leg up for those (mostly men due to the physical demands of the work) with little interest or aptitude for classrooms or white-collar office work. While manufactured housing and kit homes have been around for decades (Sears sold kit homes in the early 1900s with great success), the trades cannot be fully automated. Housing is one of the few things that's still expected to be durable, and so as dwellings age, repairs are needed, and each situation has both commonalities with similar repairs and aspects unique to the specific problem. All dryrot is the same, but each instance of rot is unique, and it takes a great expanse of varied experience to figure out the most efficient and effective solution. Those with deep tradecraft skills are naturally reluctant to abandon their livelihood, but recessions leave many with no choice. Before giving up, contractors will lower their bids to get work just to pay the bills, never mind make a profit. Offices can be given up, but there isn't much fat to be cut out of bids, as labor, materials and overhead expenses cost what they cost. There is one big expense that is temptingly open to arbitrage: labor overhead, the non-wages costs paid by employers for tradecraft workers. Due to the physicality and inherent risks of construction, injuries are common and so construction workers compensation insurance rates are high--generally between 25% and 50% of the hourly wage, but can approach 100% for high-risk work categories. There's a raft of other labor overhead expenses: disability insurance, unemployment insurance, and the employer's share of Social Security, currently 7.65%. In recessions, state unemployment funds are drawn down and so the rate paid by employers increases sharply to replenish the fund. Some states mandate healthcare insurance coverage for all full-time workers (or all employees working more than 20 hours, etc.), which is another labor overhead. Add these up and the cost may equal or exceed the wages paid to the worker. To pay a worker $25 an hour, the contractor is paying $50 per hour. So to survive lean times and not go bankrupt from a low bid, contractors either pay workers cash (i.e. under the table) to avoid paying the labor overhead, or they hire quasi-legal subcontractors who do the same thing--pay all their workers as 1099 independent contractors who are responsible for their own insurance, Social Security taxes, etc. The subcontractors aren't paying their workers $50 an hour, they're paying them $25 an hour, and the 1099 workers don't pay any overhead except the Social Security / Medicare taxes, if that. This was my experience in the early 1980s as the Great Recession crushed new housing and remodeling. The only contractors who made money were those who avoided paying labor overhead. The rest of us scraped by doing all the work ourselves or we lost money. (The old joke: we lose money on every job but we make it up on volume.) As the article describes, the same dynamic gutted the sector in the aftermath of the 2008-09 Global Financial Meltdown, with one key difference: many of the older, experienced tradecraft workers have retired or left the construction industry, and the people doing the work now often lack the kind of deep, varied experience needed to do work above the most routine kind. I've discussed the crippling long-term consequences of this under-competence at some length: workers are trained just enough to competently complete routine tasks, but they lack the training and experience needed to problem-solve / do demanding work outside the narrow boundaries of routine tasks. The Catastrophic Consequences of Under-Competence (8/17/24) Automation Institutionalizes Mediocrity (2/14/25) The soaring costs of materials and construction-related regulatory burdens have now systemically optimized construction-worker under-competence as contractors cannot afford to hire competent workers and still win bids. Homeowners facing sticker-shock on bids for repairs, additions and remodels gravitate to the lowest bid regardless of such niceties as contractors paying all the required labor overhead. The combination of high costs, optimization of under-competence and the scarcity of truly experienced workers generates a doom loop: shoddy workmanship and low-quality materials cause leaks, but few have the experience to make the needed difficult repairs. The cultural penchant for McMansion-style homes with complicated roofs generate more opportunities for slipshod workmanship to cause leaks, and the substitution of cheap materials adds to these risks, many of which remain hidden until major damage has been done behind the drywall or siding. McMansion-style homes built in a hurry by inexperienced crews may pass the purchaser's home inspection, but harbor defects that will manifest later as horrendously costly repairs. As for who can do the work competently and on time--good luck finding "old timers" who are still in the trades. Those few who can do the work have high costs and are often booked far in advance, and so they can charge a premium. As a result, you hear about roof replacement bids in the $40,000 to $60,000 range--sums that would have been considered astronomical in decades past. Many homeowners can't swing the costs of repair, so the house rots away. Personally, I wouldn't do any work in this environment by bid; I'd only work by the hour. This requires an element of trust in the contractor to not pad the daily expenses, but unfortunately it's boiling down to either take a chance on the low bid, knowing the workers are likely getting stiffed because the labor overhead costs that protect them aren't being paid, or the customer pays the contractor the full costs plus a fee for their time and expertise. There aren't many old hands left in the trades who have the decades of experience necessary to do a wide range of tasks. Add in the doom loop of an unprecedented credit-asset bubble and housing as a sector is in trouble. Here's a snapshot of housing affordability, which is in the basement: The monthly payments are at historic highs, while the cost of non-mortgage expenses such as home insurance and property taxes soar. If you can find an old hand who's still working, don't try to chisel their price down or hurry them. Be grateful you'll only pay once, cry once rather than pay later and cry a river. My recent books: Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site. The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF) Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF) The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF) When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF) Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF). A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF). Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF). The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF) Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free Become a $3/month patron of my work via patreon.com. Subscribe to my Substack for free NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency. Thank you, Roger H. ($70), for your splendidly generous subscription to this site -- I am greatly honored by your steadfast support and readership.   Thank you, Jackson T. ($7/month), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership. Thank you, John K. ($350), for your beyond-outrageously generous subscription to this site -- I am greatly honored by your steadfast support and readership.   Thank you, Bryan ($70), for your superbly generous contribution to this site -- I am greatly honored by your support and readership. Go to my main site at www.oftwominds.com/blog.html for the full posts and archives.

The present-day tariff-trade-war conflicts boil down to Neocolonial strategies to gain control of markets for exports and resource extraction on terms that are only favorable to the Neocolonial power. The title of today's essay pays homage to the inimitable John D. MacDonald's novel The Girl, the Gold Watch & Everything in which the gold watch has the power to stop time. In the context of today's keening cries of tariff-trade-war agony, let's use this imaginary power over time to return to the ancient world's many long, dangerous and immensely profitable trade routes, for example the (mostly) sea route from Rome to the ports and riches of the southern coast of India, an enduringly profitable trade bonanza ably described in The Roman Empire and the Indian Ocean: Rome's Dealings with the Ancient Kingdoms of India, Africa and Arabia. Let's start by dispensing with the conveniently pliable fantasy of "free trade." Though some reckon the author's estimate that 30% of the Imperial income resulted from Rome's duties on foreign trade exceeds the actual percentage, the trade's great volume through the customs offices in Alexandria are described in ancient texts. On the Indian side of the trade, various restrictions limited Roman access to approved ports and local merchants' dealings with visiting Roman ships and merchants, who established permanent polyglot colonies of Mediterranean traders in Indian ports. What characterized this trade was not that it was "free" but that it was mutually beneficial and not within the control of either side of the trade. Rome ruled the Mediterranean largely by extending the mutual benefits of commerce to the territories it had conquered. Pay your taxes and customs duties, and all would be well. Try to eliminate the Imperial slice of the pie--now that would bring trouble in the form of legions. Even if Rome had hankered to control the coast of southern India, it could not project power that distance with the modest craft of the day, and to what benefit when trade delivered goods and income without the horrendous expenses of transporting troops and supporting permanent garrisons? For their part, Indian merchants established trading communities in ports on the Red Sea but relied on Roman policing to protect the land route across the desert to the Nile. Once technologies enabled imperial ambitions to extend across the globe, then two profitable possibilities emerged in the form of Mercantilist Colonialism. Once an imperial power wrested power from local rulers and established a colony, two profitable forms of commercial control could be imposed: 1) The colonial subjects could be forced to buy manufactured / finished goods produced by the imperialist nation's home economy, guaranteeing a reliable market for its value-added exports, and 2) The colony's natural resources could be secured at low prices for the express use of the Imperialist domestic economy. In the post-colonial era, mercantilist advantages were gained by severely restricted imports while flooding the domestic economies of trading partners with below-cost goods, driving domestic competitors out of business and establishing a quasi-monopoly that could be exploited once the competition had been eliminated. These mercantilist strategies were typically hidden within regulatory thickets rather than visible tariffs. For example, in the 1960s and 70s, Japan mastered the art of limiting goods imported from the U.S. via various bureaucratic subterfuges while making full use of the relatively open door to Japanese exports. (As I have explained in numerous essays, this policy was the direct result of America's Cold War with the Soviet Union, which incentivized the U.S. to support its allies' postwar economic recovery by opening the vast American market to their exports.) Currency manipulation plays a key role in the mercantilist strategy of restricting imports while flooding others' economies with exports. By devaluing one's currency, the cost of imports rises while the cost of one's exports priced in competing currencies declines. In effect, currency devaluations act as a hidden tariff on imported goods which soar in price, while slashing the price of exports in economies with strong currencies. The quasi-monopolies created by mercantilist policies are forms of Neocolonialism--colonialism imposed not by military force but by currency manipulation and state support for exports and bureaucratic thickets that limit finished-goods imports. The profits from this mercantilist Neocolonialism are then used to buy up mines, ports, agricultural land, etc. in resource-rich nations--another form of Neocolonialism, that is, control of markets and resources by means of mercantilist finance rather than military force. Another mercantilist strategy is to demand transfers of intellectual property / patents as the price of access to local markets, which turn out to be heavily restricted via bureaucratic thickets. Financialization is another form of Neocolonialism: flood a smaller target economy with low-cost credit at a scale never before available, indebt the target populace as they snap up motorbikes and other goods previously out of reach, then as they default in the inevitable bubble pop / recessionary hangover, buy up land and other assets on the cheap. (For example, the Thai Baht lost half its value in the complex Asian Financial Crisis of 1997-98, plummeting from 25 to 56 to the US dollar. Thai assets were then "on sale" for those holding US dollars.) Once the ensuing sovereign debt crisis crashes the local currency, this too is advantageous, as the financiers' currency gains purchasing power, in effect putting all assets priced in the local currency on sale. The present-day tariff-trade-war conflicts boil down to Neocolonial strategies to gain control of markets for exports and resource extraction on terms that are only favorable to the Neocolonial power. If everything else fails, Mercantilist Exporters will devalue their currencies to raise the cost of imports and slash the costs of its exports in targeted economies. The danger here of course is a race to the bottom as other mercantilist nations dependent on exports devalue their currencies. Neocolonialism also plays out in the home economies in perverse ways. When American corporations chose to offshore the nation's industrial base to increase their profits, this in effect gutted Flyover America in the same way a Neocolonial power guts a rival's domestic economy. I addressed many of these dynamics 13 years ago in The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012). Welcome to Neocolonialism, Exploited Peasants! (October 21, 2016). Let's call it what it is: a struggle of Mercantilist-Financial Neocolonialism that manifests as Trade, Tariffs, Currencies, Colonialism and Everything. As for the gold watch, we can't stop time but we can imagine the end-game of currency devaluations and the demise of Mercantilist-Financial Neocolonialism. My book Global Crisis, National Renewal discusses America's opportunity to establish a sustainable economy that will dominate not by force or the subterfuge of mercantilism but by becoming a model of efficient use of resources, capital and labor: the opposite of the Mercantilist Landfill Economy that now dominates the global economy. My recent books: Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site. The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF) Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF) The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF) When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF) Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF). A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF). Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF). The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF) Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free Become a $3/month patron of my work via patreon.com. Subscribe to my Substack for free NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency. Thank you, Laura D. ($70), for your splendidly generous subscription to this site -- I am greatly honored by your steadfast support and readership.   Thank you, Guy W. ($7/month), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership. Thank you, John M.G. 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