An interesting subtext to the election of Donald Trump is one that has been largely ignored by the usual sources. It was not cultural issues, foreign policy or the ineptitude of Kamala Harris that drove the election. It was the economy. Widespread anxiety over the economy is what drove down support for Harris, despite the billion-dollar campaign and the billions spent in media gaslighting. No amount of jawboning could convince the public that the economy is doing as good as claimed.

There is a good reason for this. As some have predicted, inflation has been creeping back up after having moved down for a period. The American economy is experiencing what happened in the 1970’s. Contrary to popular belief, inflation did not rage for the entire decade but ran in spurts. There were periods where inflation rose, plateaued and then fell to a tolerable level. The latest data on the CPI and the PPI indicate the current economy is stuck in a similar pattern.

Regime media dismisses this as a minor blip in an otherwise glorious economy, managed by the wise and noble Biden administration, but that has not convinced anyone who buys things. The government does not measure inflation the same way it used to measure it in the 1970’s, so no talk of stagflation. If they used the old methods, inflation would be a daily feature. Of course, you also have the fact that the government now lies about all of the economic data.

This is why the gaslighting failed so miserably in the election. One of the secrets to trick people is to overcome the expectations gap. This is the difference between what people expect to be the basis of the argument and the actual basis of the argument. If you confirm what people think is true and make your argument from that basis, you can convince people of most anything. If you start from an alternative reality as your basis, then you have little chance, no matter how clever the argument.

That does not alter the fact that the economy may be in worse shape than the government and media are willing to admit. There are systemic problems that go back a long way that may finally being coming to the fore. Twenty years ago, everyone talked about what would happen to the labor force when the baby boomers started to retire, but no one talks about it now that they are retiring. Of course, no one dares talk about is replacing those baby boomers in the workplace.

For his part, Trump talks about the need to reform the economic model away from everyone doing each other’s laundry back to building things again. Part of his approach to China is to bring back important parts of the industrial base. Trump is committed to a form of Abenomics which means massive new spending to attract private capital, along with policies to coerce those investments. He will come to office just as government spending is setting new records.

This sort of worked in Japan because they have a strong industrial base that supports their export economy. They also have a homogenous culture with a commitment to self-sufficiency and a savings rate to prove it. For America, this can only work with low interest rates and that can only happen if the dollar returns to its dominant position in global trade and investment. It is why Trump is threatening to nuke any country thinking about going off the dollar.

The trouble is, people will trade in a currency if it is backed by something accepted everywhere like gold or the issuing country produces things that the rest of the world covets, like food, manufactured goods and energy. Alternatively, as has been the case for decades, countries will transact in a currency if it is viewed as a stable store of value by the rest of the world. The dollar has been the reserve currency because of the petrodollar and because it came with a stable set of rules.

Constant rule breaking by Washington has depressed the trust in the dollar because the rules behind it have collapsed. The only reason that the BRICS countries are working on an alternative payment system is they fear dependence on the dollar makes their governments unstable. Added to this is the fact that the Saudis have not renewed the petrodollar agreement signed in the 1970’s. This has not resulted in a change in policy, but China just sold dollar-denominated bonds in Riyadh.

This is one reason the foreign policy establishment is committed to creating chaos in the Middle East. The United States is not just the world’s banker. It is also the world’s protection racket and the countries that need protection the most are those near places with lots of instability. You can be sure that the collapse of Syria is keeping the sheiks in Riyadh tossing and turning at night. Here you see the connection between foreign policy and economic policy. In the end, it is always about money.

This is what Trump will inherit next month. On the one hand, the economic model of the American empire relies on the world being a dangerous place. This is what makes the world willing to put up with Washington in exchange for protection. At the same time, that model is slowly hollowing out the American middle-class. The imperial model works just fine if American citizens accept being mere subjects alongside the rest of the world’s population. Clearly they do not like this.

To some degree you can understand why permanent Washington has reacted to Trump and the populist movement that has made him possible with such fear. They understand the risks that come with putting the American people first. It is not just the cultural stuff or the paranoid fear of the past. It is the understanding that the imperial economic system cannot prioritize Americans over the others getting protection. Protection rackets must protect everyone inside the racket.

Whether or not Trump understands this is a mystery, but he is committed to an American form of Abenomics. It was not an accident that he hosted Abe’s widow last week at Mar-a-Lago. Scott Bessent, Trump’s pick to run Treasury, is known as “The Man Who Broke the Bank of Japan” because his hedge fund made billions from Abenomics by understanding it in great detail. Whether it can work in America is unknown, but we will know soon enough.

That is the irony of the Trump election. He was elected in large part to fix the economy, by which people mean lower inflation and increase wages. Republicans have done this with tax cuts and corporate giveaways and Democrats have done it with spending programs and corporate giveaways. The Trump plan is to restructure the economy, which will require massive spending and a considerable amount of pain. It is a radical departure from what people have come to expect.

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