Contrary to its capitalist branding, the U.S. economy functions as a Keynesian system. It relies on money printing and implicit market support (a 'plunge protection team') to inflate asset prices and maintain the illusion of growth, masking real-term devaluation.
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The primary driver of wealth inequality isn't income, but asset ownership. Government money printing to cover deficit spending inflates asset prices. This forces those who understand finance to buy assets, which then appreciate, widening the gap between them and those who don't own assets.
Excessive debt forces governments to print money, which inflates asset prices. This process mechanically enriches the asset-owning class while devaluing currency for wage earners, hollowing out the middle class into either the wealthy or the poor.
Printing money doesn't create value; it inflates the price of finite assets like stocks and real estate. Those who own these non-inflatable assets see their net worth skyrocket, while those holding cash or earning wages are robbed of purchasing power, creating a widening wealth gap.
Governments with massive debt cannot afford to keep interest rates high, as refinancing becomes prohibitively expensive. This forces central banks to lower rates and print money, even when it fuels asset bubbles. The only exits are an unprecedented productivity boom (like from AI) or a devastating economic collapse.
U.S. economic policy is no longer aimed at broad prosperity but at ensuring the S&P 500 index continues to rise. This singular focus creates negative side effects, like suffering for the majority of the population who rely on wage growth rather than asset appreciation.
The anti-capitalist narrative offers a simple but incorrect villain for a complex problem. The true cause of widespread economic pain is a debt-based system that punishes savers with inflation, forcing citizens into a stock market they do not understand.
Large, ongoing fiscal deficits are now the primary driver of the U.S. economy, a factor many macro analysts are missing. This sustained government spending creates a higher floor for economic activity and asset prices, rendering traditional monetary policy indicators less effective and making the economy behave more like a fiscally dominant state.
Since WWII, governments have consistently chosen to print money to bail out over-leveraged actors rather than raise taxes or allow failure. This long-term policy has systematically devalued currency and concentrated wealth, creating today's deep economic divide.
The system often blamed as capitalism is distorted. True capitalism requires the risk of failure as a clearing mechanism. Today's system is closer to cronyism, where government interventions like bailouts and regulatory capture protect established players from failure.
Communism seizes wealth overtly, like a lion. In contrast, Keynesianism, through inflation and money printing, is a 'camouflage predator.' It drains wealth so subtly via currency devaluation that citizens, like a host to a mosquito, often don't even perceive the attack until it's too late.
