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The Growing Threat to Capitalism

American exceptionalism, the country's qualitatively demonstrable advantage over other nations, used to be characterized by individualism.

Not to mention egalitarianism, republicanism, and populism.

All of this was supported by the government's laissez-faire approach to America's capitalist economic system.

That's all changed. And not for the better.

Now, top-down technocratic government manipulation of civil liberties, and the American economy, is pushing the nation towards the pernicious charms of socialism.

And America, investors and non-investors alike, will suffer from its impact…

The Government ATM Is Funding It

Yes, socialism has its charms in the neo-liberal political model sweeping the country.

It's evident in government's interference in free markets.

It's resulted in bailouts becoming intrinsic to capitalism.

The too-big-to-fail mentality in risk taking and decision making is now built not only into our banking system, but other industries may also "opt in" to that economic fail-safe category.

It's proof that an incompetent and corrupt majority in Congress compensate capitalist elites. Those same elites reinvest their gross wealth back into the political system.

It's more commonly referred to as "socialism for the rich." And it's the new normal.

Both Republicans and Democrats aided and abetted the new order, especially the new economic order.

Starting in 1980 Republicans began the systematic dismantling of regulations that had been effective in bridling banks and bankers' greed and scheming.

The final prying open of Pandora's Box, killing the last vestiges of the Glass-Steagall Act that separated commercial and investment banks, occurred in 1999. This came from the signing into law by Democratic President Bill Clinton of the Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999.

The ensuing bankers' bacchanal "ended" with the credit crisis in 2008. Of course, the crisis spawned the Great Recession in America and imposed hardship globally.

In the new ersatz capitalism, banks were bailed out in the name of saving capitalism.

Only this time, given the scale of their greed, leverage, and derivative scheming, taxpayers saw first-hand how the new economic sociology worked. Losses were socialized.

Big banks and government-sponsored enterprises of unimaginable proportion and power were made whole, larger, and more systemically lethal.

And as if that wasn't evidence enough of the socialization for the preservation of the corrupt system's richest and most protected political paymasters, the newly elected Democratic President Barack Obama crammed down the public's gullible gullet his sweeping socialist agenda.

He got into bed with the medical-industrial complex so they could profit at the expense of taxpayers.

Capitalism's Best Hope Remains

The jury is out on the effectiveness of Obamacare… and way out on the cost of it.

But what isn't a matter of judgment is that the Affordable Healthcare Act is a socialist agenda that may or may not serve better health in America. It definitely will serve up what will be gross profits to another protected class of business elites.

Whether it's the Federal Reserve acting on the de facto wishes of crony capitalists in business and Congress, or presidents and their administrations pandering to institutional political power dynamics, the direction America is headed is further and further away from American exceptionalism and right into a socialist gulag.

In case we forgot, Dr. Costas Panayotakis wrote in his 2010 essay, Capitalism Nature Socialism, "The failings of the Soviet model were intimately connected to its undemocratic organization of social and economic life. This model was undemocratic because of its lack of political pluralism as well as its failure to give ordinary workers and citizens a say over the priorities of the economic system and the use of the economic surplus."

He adds, "Rather than subordinating the economy to the democratically-determined priorities of their citizens, the societies of the Soviet bloc ended up being run by a relatively small political and technocratic elite."

It's a lesson well-learned. Fortunately America's individual, democratic investors provide a great truss work for "true" capitalism…

Join the conversation. Click here to jump to comments…

About the Author

Shah Gilani is the Event Trading Specialist for Money Map Press. He provides specific trading recommendations in Capital Wave Forecast, where he predicts gigantic "waves" of money forming and shows you how to play them for the biggest gains. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.

Read full bio

  1. Gerald Davies | April 18, 2014

    Capitalism has failed so many times and will fail again. All the other "ISMS" have failed too and it is always the innocent masses who suffer. Anyone can become President of USA- absolute nonsense, Time for a fair system of government and financial system where cooperatives and mutuals serve all the people. It is also time to reqrite the USA Constitution which is hundreds of years out of date

    • JC Vaughan | April 18, 2014

      This all sounds very good. The only problem is there absolutely is no such thing as "a fair system of government and financial system where cooperatives and mutuals serve all the people" and there will never ever be any such thing, except in the minds of very stupid females and their equally stupid offspring. All of history and everything known about human nature is the utterly undeniable proof of this. Of course, denial can always be made by those stupid enough or evil enough to base their entire philosophy on lies and propaganda. The problem is not in any constitution, religion, or system of government or economics. The problem is you. The solution is very simple and very obvious, and it starts with "S" and no, this does not stand for "hope", although for you as a human it is in fact the only hope.

      • Greg | April 18, 2014

        Does being a subliterate, misogynist paranoid get you very far, JC? Call me stupid or evil, but thinking like that IS the problem. We can do a helluva lot better than what we're doing now, and we can work to establish a system that's fairer, more representative of the will of the people. Since you never quite get around to articulating what you think "all of history and everything known about human nature" actually is, let me tell you that it's also replete with examples of people of all kinds working to better their situation and their world. Go jump in a lake.

      • DazeTrippin | April 22, 2014

        JC Vaughan,

        Its apparent to me, in reading your comment, (that makes me laugh) that you should take up on the advise of "Seeking Therapy" as to lose the "Equally Stupid Offspring" syndrome you obviously carry around. I see a couple of symptoms within your comment, one being of which is transparent as you "Carry it on Your Shoulder" & the second symptom would be the "Ignorant words You Spewed"….
        No Charge for Advise

    • Al | April 18, 2014

      Capitalism failed when it was no longer allowed to be real capitalism. The creative destruction aspect was eliminated when certain favored businesses became immune to failure, rendering capitalism null and void. And re-writing the constitution? How about an attempt to abide by it before tearing it up and starting over?

      • DazeTrippin | April 22, 2014

        I Love You!! How about an attempt to ABIDE by it, ( the Constitution) before tearing it up & starting over…
        Perfectly Said,

      • fallingman | April 22, 2014


        Bailout capitalism … the ultimate oxymoron. But people are so brainwashed and propagandized that they slap the label "capitalism" on what is actually "fascism" and blame the former for our ills. That's absurd.

        It's like blaming the guy who got his identity stolen for the crimes of the thief. Keep reading and you'll see several comments below that reflect this "thinking."

        The state is becoming all powerful and the rule of law is dead. Pretty ironic given that "protection" from predators was the sales pitch the state has made for its existence from the very beginning.

        And look at what's happening now that the servant has become the master … and only serves the connected few. That ain't capitalism's fault. Capitalism, to the extent it has ever really existed in unsullied form, is, in fact, the great equalizer.

        Right on Shah. We may quibble about the virtues of regulation vs. people taking personal responsibility … caveat emptor … but you're shining a bright light in a very dark and dank place, and I appreciate it.

  2. Jim Ernest | April 18, 2014

    I disagree. Capitalism has always worked. It worked in the USSR too, though it was controlled by the elite and/or the black marketers. When you impose regulation and controls that benefit a small segment of the capitalistic base that is when it begins its downhill slide.

    The Constitution is not out of date, what is wrong is the current trend of interpreting the constitution, as opposed to following its guidance, by judges appointed for life with no checks and balances at all.

    There is a saying that history repeats itself. Back in the day, as the morals, laws, and lifestyle of the ancient Romans declined into hedonism at the expense of the workers, and taxes rose, the empire began its down fall. The US is doing the same thing as this society accepts, more and more, any excuse for a lack of responsibility. Add to that the obvious control of the public being implemented using entitlement programs, and not only responsibility suffers, but the initiative and self reliance that used to be the hallmark of this society.

  3. Jim N. | April 18, 2014

    I believe that the root of the problem is that our society has shifted from being based on Protestant theism to atheism. When I was in public grammar school in the 1950's it was evident that the laws and practices were based on theistic principles even though they were not always followed. There were atheists then, but that was their private affair. The "standard" was theism. Now, it is reversed. The "standard" is atheism in the practical sense. Religious beliefs are a private matter. You can't "impose your morality" on society. We operate as if God does not exist. Of course, an individual atheist could a very moral and fair minded person. But that is different from a society based on atheism. There is no "higher power" or standard. It is not self-evident that we are "endowed by the Creator with certain inalienable rights". Of course, we still need rules and laws for society to operate. In an atheistic society, the rules have to be determined by power, money, and politics. We see this in the tax code and certainly in the financial system which you constantly write about. It has to be that way in an atheistic society. Someone could set up principles and standards, but why should people accept them, unless you have the power to enforce them? Many people like the sexual freedom which a society based on atheism gives them, but they also are getting the slavery which you write about so often.

  4. Allan | April 18, 2014

    I am inclined to the view that 1. American attitude is aloof and 'too big to fail', & 2. China will be 'MC' sooner than anyone thinks. Watching CCTV tonight I noted a report that Chinese Government expenditure on cars, planes, travel, functions etc is down from 7.7 billion to 7.1 bn CNY, about a 10 % reduction. Now thats the way to lead and govern, methinks. Co-operation, sharing, pulling together. Thats not the Communistic way and not the Capitalistic way. It the ONLY way.

  5. Joe Crescenzi | April 18, 2014

    Capitalism only fails when it becomes corrupt. That only is happening in the US today due to the fact that We the People are not watching over our elected officials like a Republic requires.

    As to our Constitution, it will only become out of date, when Man becomes free from SALIGIA.

    Of course the Amendments 14 to 27 and too many bad SCOTUS decisions have done immeasurable harm to the proper functioning of that timeless document.

    • Robert WIlliams | April 19, 2014

      When has the United States of America really had a true capitalistic system? I hear people talking "free enterprise", but it does not exist, and never has existed.

  6. yngso | April 18, 2014

    Some years ago a guest on CNBC said that he preferred the term "free market over"capitalism. I agree with that!

  7. jj | April 18, 2014

    oh no we are not goyim to make it

  8. Neutron Jack | April 18, 2014

    People and Businesses always achieve more when regulation is held to a minimum and the rewards for success remain with the workers and risk takers. As governments interfere more and more with operations and feel free to dip into the earnings with ever increasing taxes and regulations, the result becomes exactly where America is today. A corrupt government with many able bodied folks who could work or create jobs……instead waiting on the government to take care of them. Unencumbered Capitalism leads to growth and more jobs, socialism leads to mediocrity.

    For real life examples of this, check socialized medical care in the United Kingdom, Canada, and France. It's available to everyone, but you may be dead before they get around to treating you if anything is seriously wrong.

    • OldJack | April 18, 2014

      Your comment about medical care in Canada is completely untrue. It is ridiculous and you should be ashamed of having made such a STUPID uneducated statement!!!

      The reason why America cannot deal with this problem is because of all the ignorance shown by people like you who pray on the fears of others because of your own misguided and misinformed greed.

      I wouldn't trade Canada's medical system for that of the US for anything in the world. Not even $1B because I care about my family and my fellow citizens … all of them!!!!

      • Robert in Vancouver | April 18, 2014

        Old Jack apparently hasn't had much experience with Canada's unionized government run medical system.

        Like waiting 4 months to see a specialist, another 3 months to get tests done that were ordered by the specialist, another month to get the test results, then another month to review the test results with the specialist.

        Or family doctors who have signs posted saying you are allowed to discuss only one ailment per visit. If you have a bad fever and a sprained ankle – you have to decide which one your family doctor will treat that day.

        Or over-crowding in hospitals so bad that patients are laying on their beds in hall ways and coffee shops for days waiting for a room which they may never get.

        Or cleaning services so bad that family members come in to clean the room.

        Or large piles of dirty laundry in hallways sitting for hours at a time waiting for a person with the right union jurisdiction to pick it up. Nobody is allowed to pick it up unless the union says OK.

      • E. L. Swendsen | April 19, 2014

        Yes! yes! YES! For 25 years I worked in Canada AND in the US. I am a dual
        citizen of US and Canada. For years whenever I worked in the US I heard all kinds
        of "horror stories" about our Canadian medical system. People were always
        very curious abut "that socialized medicine" we have up here!….Of course, I was
        honest and told them the ONLY time I heard of bad stories about our system was when
        I went to the states!…THEN in the early 2000's, I lived most of the time in the US.
        The medical system is SOOOOO cumbersome with administrivia, confusing, costly,
        and sometimes debatable whether or not one is getting good advice. The actual
        care was quite good; but "getting there" was confusing, contradictory in some cases, fraught with many opportunities for errors, etc. I managed much of the
        administrivia for elderly in-laws and very ill husband….I am ever sooooooo very
        grateful for our Canadian medical system! Thank you, Canada!

  9. jim | April 18, 2014

    American exceptionalism? LOL What a joke!! You must be a student of Newt Gingrich. I would call it "American stupidity and thievery", a much more appropriate term. Property rights haven't existed in the US for decades. A worldwide recession was caused by the government's overreaching involvement in the real estate market, and the stupid taxpayers, not having a clue as to how the system works and made dumber every day by reality TV, get to foot the bill while blaming it on the one percent. Only in America.

  10. RUSS SMITH | April 18, 2014

    Hi!, Patrons Of Money Morning Et Al:

    If anyone may be interested in the "IDEALS" surrounding socialism in today's world, you are encouraged to read World Revolution; The Plot Against Civilization by Nesta H. Webster regards Adam Weishampt's culmination of ideals he called The Aluminati. Civilization is the problem according to the theme of this publication and its' destruction as we've come to know it is the only answer to man's social dilemma. Add in Fiat Money Inflation In France by Andrew Dixon White, to be found under Literature & author @ The Von Mises Institute's PDF file copy online (some 70+ pages) and you have an almost perfect perception of how the present World Revolution is managed, in order to unfold right in front of all of us.

    RUSS SMITH, CA. (One Of Our Broke, Fiat Money States)

  11. OldJack | April 18, 2014

    I can only say that this article, more than any other, clearly articulates just exactly why the US is headed straight toward the largest collapse since the Roman Empire. The problem is that the author is completely wrong about the reasons. Fortunately for most of us today we won't live long enough to see it but if you care about your grandchildren or great grandchildren, don't have any.

    The subject of society's decline is very complex but in a nutshell the earth can only support so many people and we have already proven that human greed, both in socialism and capitalism, cannot even support what we have today yet alone when it doubles in another 10-20 years. Combine this with an economic system that runs on population expansion and what do you think is going to happen?

    On another subject, it never ceases to amaze me how in the US the ruling class seams to think that it's alright to have a 100% gold plated medical plan entirely paid for by the taxpayers but any plan for those same taxpayers will bankrupt the country. If they would look to the north they would see a Canadian medical system which, albeit is not perfect, serves all of its citizens very well and has not bankrupted the country. One of the largest things that makes it challenging financially is having to constantly compete with the US over the required tax rates to support it just so a few "capitalists" can continue to accumulate unconstructive wealth. Is not the medical industry a good business? Isn't it just as good as say, the National Football League or Coca Cola? If the Americans could only get over the cost of certain services as being money well spent they would contibute the required costs (taxes) to pay for it and we'd all still be on an even playing field.

    Finally, why is it that the American ruling class think that it's alright to collect billions of dollars to support a military that goes about the world fighting wars it cannot win and trying to force its own agenda on the rest of the world? If the US had all of the money it has spent since the Vietnam war and looking after its wounded veterans there would have been a great deal more prosperity for all. I ask all you who have more than you need or even really want, to listen to Warren Buffet. If you can't stand taxes give it away. If you can't stand a state run medical system, buy a medical insurarance company and run it like a non profit foundation. You don't "need" that $1,000,000 toy when a $500,000 one is just as good. Your neighbours will not snear and if they do who wants them for neighbours. And use the other $500,000 to provide help for several of your fellow citizens who don't even understand how much $500,000 really is.

    Thought of the day when considering a person's worth in society. If all of the lawyers in the world went on strike and all of the garbage collectors in the world went on strike at the same time who do you think would be missed the most? If you chose the logical answer then you must ask yourself why lawyers earn 10X plus what a garbage collector earns.

    • Wayne | April 18, 2014

      Right on! I agree with most of what you say. But Shah made his points also.

    • E. L. Swendsen | April 19, 2014

      Old Jack, your thinking is wonderful! Wish there were more like you in the US of A!!

  12. Jon | April 18, 2014

    In response to your obvious bias against Socialism,stop confusing it with Stalinism. The teachings of Lenin, Marx, and others may be the only thing saving us from the demon of capitalism…Capitalism destroys rather than nourishes…always has always will

  13. sheila dickson | April 18, 2014

    Capitalism without reasonable and transparent regulations becomes

    economic tyranny for the masses. Politicians bought by the capitalists are

    the handmaidens to that tyranny. This is how democracy dies.

  14. Wayne | April 18, 2014

    The truth is that unregulated capitalism will result in the 1% owning all and the rest of us working for the company store. Teddy Roosevelt understood that as did FDR. Common sense regulations were put into place and in the next 30 years we built the greatest economy the world has ever seen. This was with a 92% effective top tax rate! (Ask your selves why this worked so well) As Shah said, Ronald Reagan, The Great Communicator, sold the public on Trickle Down, supply side economics. Then he combined that with convincing a great many that Democrats/Liberals were godless Pagans. Democrats and rational people just laid down and let it happen. Since then it has been a downward spiral for the middleclass. Warren Buffet has said he wondered when they would wake up. Well it is time!

    • don | April 19, 2014

      Can I chime in? Buffett recently said that in America there IS Class Warfare going on; and, our Side started it; and, we are Winning!"

      Capitalism is amoral; it can be a force for Good . . . or Evil! Just depends who is at the Controls. When Nixon took the U.S., off the Gold Standard in 1971; Classic Capitalism underwent a "Deformation," (Stockman's Word); and, it was all down hill from there. This ole' Dude could talk intelligently on this subject; but, in your case, I be just preaching to the choir.

      American Exceptionalism? Don't make me Laugh! Let me turn the concept on it's head; to reflect reality in this Country: Record number of people in Prison – budget doubled since 1980; U.S. has largest National Debt in World at $17.3 Trillion; 146 Million living in Poverty; or, on the Edge – – just a paycheck away; a W/S that was permitted to literally bilk (steal), Trillions from the Moms & Pops on Main Street; Deregulation that brought the Beasts out in every Economic Sector. Nothing more impure that the Rise of Predator Capitalism in America. And, again; so much more. One final comment: The Four Horsemen of the Economic Apocalypse in America have been identified as: Financial Sector, Health Care, Higher Education, &, the sacrosanct, Military Industrial Complex! These four Sectors of the Nation's Economy have been pillaging Tax Payers for years!


  15. Bugsey Seagull | April 19, 2014

    Subsidies cause inflation, price controls cause shortages, and wage limits cause unemployment. No matter how you slice it, socialism is a stupid system that should have been put to rest a long time ago.

  16. JS | April 19, 2014

    Interesting points from everyone. I'll just sit back and wait for some to realize that every empire is destined to pass the torch to the next until the end of time. No law or clever panel or individual can ever change that. We can debate and discuss things, reasons and solutions all day. Learn the overall themes of history and you will come to this fact. The problem is we don't prepare ourselves and our family for this reality. We get too comfortable which makes us mentally lazy. Learn and accept the lessons from history. The only difference between empires is time but they are all the same.


  17. Brad M | April 28, 2014

    Capitalism failed in America because we failed to keep our government and large corporate entities from becoming one interest. We also allowed our tax law to become rediculous and cumbersome and uncompetitive on a global scale. Add in a central bank that has systematically destroyed the value of our dollar, and an increasing welfare society, and here you are today in the decline of a once great nation. And religion and morales always play a role. If we take God out of the equation, the constitution says " endowed by their creator with certain unalienable rights"… well if we remove remove God from everything, then who dictates those rights? Oh yeah, a central government, and of course they always have our best interest at heart! Careful what you wish for sometimes atheists, you might get it! History pretty much shows every government of substantial power is eventually either overthrown by the people, slaughters its people, blows up the currency and collapses, or is conquered. Which happens here?

  18. CALARISTOS | June 26, 2014

    Agree entirely. Neomarxism is endemic in our universities and the left-coasts elites. Equality, not Freedom, is their agenda.

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