American Children Have No Idea What Capitalism Is

Dear Fellow Traveler:

The Financial Times printed an article this week…

The newspaper is apparently confused about why the Democratic Socialists of America (DSA) are have so many fans.

Right now, the DSA has about 130,000 members…

That’s up from roughly 5,000 over 15 years...

We have data that shows about 66% of younger Democrats have a favorable view of socialism. And one third have a favorable view of communism.

They’re winning races in New York, Colorado, and Michigan.

Over and over, the same question is how this happened in the nation of rugged individualism.

Now, before you blame the education system… and that might be fair, consider the economics of it all…

I can answer this for free… in two sentences.

The kids aren’t rejecting capitalism. Americans under 30 don’t really know what it is…

Like the aunt who they wonder… who she was. They have zero understanding of what capitalism is… because we’re told what we are enduring right now is capitalism.

It isn’t.

And let me explain the three important parts of what a capitalistic system should be…

With capitalism, markets discover prices… we allow failure… and risk takers are responsible for their own losses without a bailout function.

Oh, and we don’t have a centralized mechanism driving everything… and that centralized mechanism today is a central bank that just can’t get out of the way.

The capitalism we knew died in September 2008.

There was no wake. There were no speeches.

There was only Quantitative Easing.

What’s worse… it got terminal illness back in 1987, and we failed to take notice.

It’s up to us to have these discussions… and I know from the world that if you’re explaining… you’re losing. But this is just too important.

We now operate in a world where a centralized committee called the Fed sets the price of money, and that price of money impacts the price of everything else… and it’s no shock at all that while they count inflation - they do it in a way that fails to account that the things that really matter (housing, food, energy, education) are outpacing the inflation that they claim to be combatting. It isn’t just a centralized plan…

It’s a centralized lie.

We have a group of people, starting with Alan Greenspan and then running fast and loose to Ben Bernanke who basically banned failure for anyone big enough to matter.

Meanwhile, risk was socialized while the gains have stayed private.

Congratulations…

We have just built “central planning” with better branding…

I’ll say this about the DSA.

They at least put central planning on the warning label.

Whatever this is… has hidden ingredients that are hazardous to your financial health.

We’ve sold this bullshit as “market functioning” and “price stability” for 18 years.

And that is how we got here.

The DSA kids were eight years old in 2008.

That’s when I lost my mind and went back to grad school for seven years across three universities. I was sold a lot of misunderstandings of how the system functions along the way…

Since then, the U.S. has fallen in the Heritage Economic Freedom Index from about 8th in the world all the way down to the mid-20s, to a classification that is barely “capitalism” or “economic freedom” anymore.

The kids screaming about the world now are the children of crisis… of a nation that has moved from one crisis and the ensuing bailout… over and over… from 2008 to 2011 to 2016 to 2018 to 2019 to 2020 to 2022 to 2023 to 2024 to 2025 and 2026.

It is the same thing over and over again.

The kids cheering for the economic illiterates calling for the government to solve all of their problems have witnessed an entire economic life that actually would placate their own policies…

We’ve rescued asset owners on one side, while we put payment plans on the other, houses priced out of reach because the planners inflated assets on purpose and called it the “wealth effect.”

Now we hand them a poll asking if they like capitalism.

They have no idea what it is… they only know this imposter.

The week that we hit $40 trillion in debt, the FT fails to ask the most basic question about all of this socialistic demand.

How does the socialist program get paid for?

We’re talking about paying for other people’s labor… and making people work for them… as if that is a right. That means free college, universal healthcare, and housing for everyone. Some people think these are rights.

I believe it’s demanding another person’s labor through transfer payments.

The problem for these dreamers is that you really can’t tax paper wealth that evaporates the moment you reach for it.

So look for these individuals to do what every government does when the promises exceed the receipts. All while, we would likely see a major reset in valuations because we are already stretched to the tilt, and America itself is the real financial bubble.

So, these politicians would also borrow, and the borrowing will be printed.

That’s a foregone conclusion.

The revolution would be funded by the very money printer that radicalized it, and the debasement would land hardest on the same young people who voted for the rescue.

American children were robbed by the Money Printer.

But their solution seems to be to seize the damn thing and then run it harder.

There’s only so much wealth you can tax… and we have enough historical evidence of this to know how it ends. That said, I’m not really worried about socialists…

I’m worried that we’ve destroyed the beauty of capitalism and then replaced it with something else that is wearing its skinsuit and making other people angy.

So, I’m now done writing about this subject…

For all of my friends in the back, every road in American politics ends at the printer.

It doesn’t matter if the leader is left, right, red, or blue.

So, vote with your money, and own the things they can’t print.

Oh… and buy this dip on gold.

I like Sprott Physical Gold Trust (PHYS) if you’re interested in gold.

Stay positive,

Garrett Baldwin