A version of this article first appeared on February 27, 2019 in the Stansberry Digest, published
by Stansberry & Associates Investment Research, an independent investment research firm. You
can visit them at www.stansberryresearch.com.
The collapse of Union of Soviet Socialist Republics – or the Soviet Union, as it was commonly
known – in the early 1990s proved it beyond a doubt: Socialism, as an economic model, was an
unmitigated failure.Of course, that doesnt mean it suddenly disappeared. Despite its “Cold War” opposition to the
Soviet Union, even the U.S. had adopted many socialist principles decades earlier. And this
strange blend of capitalism and socialism has continued – and grown even stronger – in the
Capitalism vs New American Socialism?
Porter explained this system – which he dubbed ” New American Socialism” – nearly eight years
ago in the June 2011 issue of Stansberry Investment Advisory. As he wrote … “You can’t just
call our economic system ‘socialism.’ It’s not. Theres a profit motive and private ownership of
nearly all assets. Socialism has neither of these. Besides, far too many people have become far
too rich in our system to simply label it socialism.”
Our system isnt truly capitalism either, though. The State intervenes in almost every industry,
often in a big and expensive way. With government at all levels making up more than 40% of
GDP, its fair to say we live in a State-dominated society.
A certain class of people has the power to not only protect itself from these policies but to profit
as well. These people have used the last 40 years to produce massive amounts of paper wealth.
And they are now desperately trying to convert those paper accounts into real wealth, which
explains the exploding price of farmland and precious metals.
New American Socialism is fueled by paper money and the constant expansion of debt, Porter
explained in 2011. It also features a kind of corruption thats hard to police because it occurs
within the boundaries of the law. And the “explosion” of wealth at the top of the food chain was
a key characteristic of this system…
In the New American Socialism, the power of the system produces private profits. In this way, it
provides a huge incentive to entrepreneurs and politicians to work together on behalf of the
system. This is what keeps the system going. This is what keeps it from collapsing upon itself.
And this, unfortunately, is why the imbalances in the world economy will continue to grow until
the entire global monetary system itself implodes.
At the time, Porter was still optimistic. He believed Americans would eventually recognize these
problems for what they were – a perversion of capitalism, rather than a failure of capitalism.
Eventually they would say enough is enough, and turn back the power of the federal
government before it was too late.
Unfortunately, that has not happened. Instead – forgetting the clear lessons of history – many
Americans have been moving in the other direction.
The New Socialist Movement
A new socialist movement has suddenly taken hold in this country. And there is no better face
of this movement than freshman congresswoman Alexandria Ocasio-Cortez.
The 29-year-old former Bernie Sanders activist trounced 10-term Democratic incumbent Joe
Crowley to win New Yorks 14th district last year. She did so on a radical platform that included
just about every socialist scheme imaginable, including free health care and college for all…
subsidized housing for all… and a guaranteed federal job for every American.
More recently, she went even further…
She has now proposed a “Green New Deal” which aims to reduce Americas carbon emissions to
net-zero through getting rid of farting cows and airplanes,t; among other measures.
The scheme also initially promised economic security; – aka free money – for all Americans
who are unable or unwilling to work; but this particular bullet point was later removed from
her website after a public backlash.
However, ‘AOC’ (as she has become known) is not alone. Unfortunately, a number of other
notable politicians are suddenly proposing similar policies. As Bloomberg recently reported.
A leader of House Democrats’ progressive wing is proposing “Medicare for all” legislation that
would replace almost all private health insurance, an idea that galvanizing the party’s liberal
base and winning endorsements from many of its top presidential contenders.
What Would it Cost?
The legislation by Congressional Progressive Caucus co-chair Pramila Jayapal would steer all
Americans – not just those 65 and older – into the Medicare program in two years. It would
cover comprehensive health care services and, in a radical departure from the existing system,
limit private insurance to supplemental benefits not provided by the government-run program…
She said the measure will be introduced Wednesday with more than 100 co-sponsors.
Not surprising, Jayapal didnt explicitly say how much such a program would cost.
Nor did she say how it would be funded, other than to say options include a wealth tax and
higher marginal income tax rates.
However, the reality is these measures alone wouldn’t come close to paying for even the most
conservative cost estimates of this program, let alone free college, job guarantees, or any of these
other proposed schemes.
What these politicians wont admit is that these promises would require significantly higher tax
rates for all Americans taxpayers, as well as a complete; of our entire financial system.
History has proven again and again, the heaviest burden of that would fall not on the rich, but
rather on hardworking, middle-class Americans.
To be clear, none of these programs are likely to become a reality under the current Congress and
administration. But it looks increasingly likely these ideas will become a deciding factor in the
2020 elections… and a large and growing number of Americans are now in favor of them.
If you are not concerned, youre simply not paying attention.
[AOA: If you are not paying attention, you are not aware that the same thing is taking place in
California. The politicians here want to pay for it all by taking it from housing providers. They use Tenant Welfare (rent control) and are now planning to take even more by changing the tax laws to allow huge property tax increases!]