Climate Change Is Happening - And Trump Is Making It Worse For The U.S.

 

From economic Paul Krugman. For more you can go here.

Trump's Corrupt Crypto "Pump and Dump" Scheme

The following is by Nobel Prize-winning economist Paul Krugman: 

Donald Trump has distinguished himself in many ways. One of them is that he is our first pump and dump president.

Obviously no president has enriched himself from office the way that Trump has. That’s common knowledge. One of the things that is really amazing about it, however, is the way in which he enriched himself — a lot of which has to do with crypto.

So the New York Times had a report just the other day on Trumpcoin, the memecoin issued on Trump’s behalf which got a lot of buyers, a lot of money came flowing into it.

It should have been obvious from the beginning that the coin was inherently worthless, and at this point it essentially is worthless. It has lost 97 percent of its value. But a lot of people did buy in at the high prices.

What was special about the New York Times story was two things. First, they put a number on how much money naive investors have lost on the coin, which is 3.8 billion dollars. And even more surprising is the number of people who were in effect suckers here — almost a million.

That’s really amazing. I mean, I was completely cynical but I didn’t think there were that many suckers out there. But it turns out there were really a lot. A few people made money off the coin — basically insiders who got to buy it early and then were able to cash in before the broader retail market realized that this was a worthless token. There’s another token, the World Liberty Financial coin — which has also crashed, although the Times had difficulty in tracking down how many people have lost how much money. There’s the Melania coin.

Okay, all of this is amazing. As Trump would say, it’s like nothing anybody’s ever seen before. I think we should say, however, that this is a bigger story than just the Trump coin, and it’s a bigger story than just Trump himself.

What we’re witnessing is or has been a really enormous pump and dump scheme, I would argue, involving more or less all of crypto.

So if you don’t know the background, Trump used to be highly critical of cryptocurrency, saying it was worthless and a scam, which was true. But then when it became clear that there was money in it for him, he reversed course. And during the 2024 election, crypto interests contributed a lot of money to Trump. They then after the election poured a lot of money into his own enrichment, into his own projects. And the administration came in with a very pro crypto stance: deregulation encouraging uses of crypto, at least talk about a national bitcoin reserve, all of that. And the price of bitcoin doubled after the election; the valuation, the market cap of cryptocurrency in general went from a little over two trillion to more than four trillion.

And then starting last fall it all came crashing down. Not all the way to zero — the price of Bitcoin right now as I record this is about what it was on the eve of the 2024 election; it’s about half what it was at its peak. That’s also true, roughly speaking for the market cap. So we’ve seen about two trillion dollars of market valuation wiped out.

Why is this a pump and dump story? Well what is cryptocurrency good for? As you know, I’ve been on this for a long time. Bitcoin was introduced in 2009 — this is a seventeen year old idea which has yet to find any legitimate use cases. Illegitimate use cases, yes. There was also a report in the Wall Street Journal about the extent to which Iran and North Korea have been making use of cryptocurrency to evade U.S. sanctions, so there is that. But it’s still not enough to justify a multi-trillion dollar asset.

Anyway, it was trendy, it was exciting, it was fashionable and particularly after November 2024 it was pushed with the encouragement of the Trump Administration. It was just a heavy marketing campaign that had the advantage of also having the authority or whatever, the credibility — such as it was but among some people real —of Donald Trump behind it. They all evaporated.

I think we can say that to some extent what happened was that Trump kind of moved on to other things. There also is some distracted boyfriend meme: the guy looking over his shoulder. A lot of the excitable, fear of missing out, latest thing money has probably moved from crypto to AI. So that might have happened even without Trump. But the basic story is that Trump guided, pushed people into a whole asset class, crypto, of which a large part is Bitcoin, but other stuff as well.

We don’t know how much, or I don’t know, how much crypto was bought during this period, but it has to be substantial. And then it crashed. And at this point, essentially anybody who bought crypto during this era, since the 2024 election, has lost money.

It’s a lot of money; we know that on paper — it’s not really paper, but anyway — in principle two trillion dollars has been lost in crypto. Now a lot of that is probably money just given back, imaginary gains that took place during the run-up. But a substantial amount of additional money was from people who did buy in during this whole episode. So this has to be many times the size of the losses on the Trump coin. And it is, I would say, at a functional level another pump and dump scheme.

In this case the beneficiaries were people who were already in crypto. Clearly some of the crypto interests that bought themselves a president probably stayed fully invested. But others must have cashed out, and a lot of innocents — well a lot of a lot of suckers, let’s not mince words here — a lot of suckers clearly lost a lot of money.

It’s an extraordinary thing. There have been pump and dump schemes forever, probably going back to the Phoenicians or something. But this is on a scale we’ve never seen, and with the president of the United States in the center of it. Which I guess given everything else comes as no surprise.

Why Does The U.S. Public Hate AI?

 

Why does the United States public hate AI?  Economist Paul Krugman gives us five reasons why that is true. He writes:

First, we fear that AI will do terrible things because the companies selling it told us it would do terrible things. Last year, for example, Anthropic CEO Darius Amodei declared in an interview with Axios that AI could wipe out half of entry-level white-collar jobs and drive overall unemployment as high as 20 percent within 1 to 5 years.

More recently Amodei and OpenAI’s Sam Altman have tried to walk back their predictions of a “jobs apocalypse”. But why were they so willing to promote apocalyptic visions in the first place? The answer is money. They pushed the idea that they had a technology that would quickly and utterly transform the economy partly to dazzle Wall Street and secure financing, and partly to scare businesses into rushing into AI adoption for fear of being left behind.

Second, many ordinary people view AI negatively because they feel that it is being forced on them.

It’s true that many people are voluntarily using large language models for personal convenience or as a business productivity tool. But a significant part of AI use isn’t voluntary.

Why are companies doing this? Presumably they believe that AI will raise productivity. But just as importantly, they’re responding to pressure from financial markets, which are rewarding companies for quickly adopting AI, apparently without regard to demonstrated results.

And while Americans workers are being dragooned into using AI, American consumers are being force-fed AI whether they want it or not. Most dramatically, Google has replaced its search engine with AI, without offering the option to opt out. 

Third, datacenters are a highly visible reminder of AI’s costs. Datacenters occupy huge tracts of land — one proposed site in Utah will be twice the size of Manhattan. They guzzle electricity and water. When they generate some of their own power, they create major local pollution. Not surprisingly, there is intense opposition to datacenter construction. According to a Reuters Ipsos poll, 57 percent of Americans — two-thirds of Democrats and half of Republicans — would oppose a datacenter in their neighborhood. 

Only 14 percent would support one.

Fourth, even before the advent of AI, tech companies had lost the public’s trust. Over the years Pew has regularly surveyed the public for its views on technology companies, asking whether they have a positive or a negative effect “on the way things are going.” In 2015 public opinion of tech companies was overwhelmingly positive. By 2022, the year ChatGPT was released, that goodwill had evaporated.

Finally, AI is tightly linked in the public mind with the tech oligarchs who are pushing it. There is widespread awareness of the growing concentration of wealth and power at the top and how this is distorting our politics and harming our society. Aside from the MAGA faithful, Americans overwhelmingly favor government policies to reduce wealth inequality.

And AI is widely perceived, for good reason, as a technology that will increase the concentration of wealth at the top. Indeed, as I said, the AI companies themselves have already told us that the technology will have extremely negative effects on workers.

"SpaceX Is Essentially All About Hype. It Is, In Effect, A $2.75 Trillion Meme Stock.

 Economist Paul Krugman has a warning for those who think Space X is a good investment:

While I don’t know anyone who loves Microsoft or its products, it’s a wildly successful company with a long track record. Last year Microsoft earned $125 billion in profits on $318 billion in revenue.

In that same year SpaceX lost $4 billion on $19 billion in revenue. Robin Wigglesworth, editor of the Financial Times blog Alphaville, memorably described Elon Musk’s company as a

very successful but fairly small satellite launch company, bolted onto a stagnant money-losing social media company [X, formerly Twitter] and a money-incinerating AI company [xAI, operator of the widely despised model Grok], and then sprinkled with a lot of hype about humankind going interplanetary.

And yet at the end of trading yesterday the stock market placed almost as high a value on SpaceX, which went public last Friday, as it did on Microsoft, and slightly more than it placed on Amazon, which made $78 billion in profits last year.

What can explain this valuation? Many investors appear to believe that Musk is a wizard who can conjure up world-conquering inventions on a regular basis. But while Musk has done some impressive things, his track record for more than a decade has been one of failed venture after failed venture. And his current big ideas, like data centers in space, fundamentally don’t make sense. A recent Government Accountability Office report is carefully worded, but as I read it basically says “this is another Hyperloop [Musk’s absurd, failed attempt to reinvent public transportation].”

Granted, Musk has enormous political influence through his close ties to Donald Trump. So might SpaceX’s valuation be justified, not by Musk’s technological prowess, but by his access to the fruits of crony capitalism?

Nobody should doubt the Trump administration’s willingness to tilt the playing field in favor of its friends, especially those who enrich Trump personally. But there are limits to what even blatant favoritism can deliver.

Consider the current fate of the crypto industry. Trump, who once called Bitcoin a “scam,” became a passionate booster of cryptocurrency once it became clear that it was a channel through which he could profit from the presidency. The fighting cage he had erected on the White House lawn was “wrapped in cryptocurrency advertisements.” And cryptocurrency valuations soared after he won in 2024.

But the Trump bump for crypto has now vanished. Here’s the total market capitalization of Bitcoin over the past two and a half years:

At its peak, Bitcoin had a market capitalization similar to that of SpaceX now. Yet the fact that Bitcoin is economically useless for anything other than money-laundering meant that its soaring valuations rested on the belief that the crypto-friendly Trump administration would subvert regulations in its favor, for example by allowing crypto companies to effectively operate as unregulated banks. Hence, as I wrote last year, crypto became a Trump trade, operating under the belief that Donald Trump’s patronage would overcome both economic logic and the opposition of the banking industry and many Democrats in Congress.

Sure enough, as Trump’s poll numbers began to sink, along with his political leverage, so did the value of Bitcoin. But those who got in on the Trump trade early, and sold their holdings to the Trump believers, made big money.

The particulars of SpaceX are different from those of Bitcoin – SpaceX does have one profitable division, Starlink, which was touted as the money-engine behind the SpaceX IPO. Only incredible growth in Starlink can justify SpaceX’s valuation. Yet an analyst who has dug deep into the numbers has shown that the Starlink valuations in the SpaceX IPO imply that Starlink will eventually dominate 80% of the global internet service market. That’s not remotely possible,

So the moral here is that SpaceX is essentially all about hype. It is, in effect, a $2.75 trillion meme stock. The only winners will be those who got in early, stoked a market frenzy, and exit before the bottom inevitably falls out.

The Vast (And Growing) Wealth Inequality Must Be Fixed Before It Destroys Our Democracy

Economist Paul Krugman warns about the huge wealth gap in the United States and its danger to our democracy: 

On Sunday Donald Trump celebrated his 80^th birthday with a cage match on the White House lawn. The match and the events that surrounded it — especially the press conference with UFC fighters, shown above, held on the steps of the Lincoln Memorial — were a desecration of America’s capital, whose monuments and buildings have always endeavored to represent small-r republican virtues. The whole affair was an affront to the values on which this nation was founded and also unspeakably vulgar.

That last criticism may strike some readers as elitist and trivial. Yet the vulgarity that is the hallmark of Trump and his surrounding circle of oligarchs is a symptom of something not at all trivial: The collapse of social norms. As I argued yesterday, these norms historically played a key role in mitigating abuses of power and privilege during the Gilded Age, the last time America suffered from extreme income and wealth inequality (though not nearly as extreme as what we have now).

Norms matter. In his classic book The Theory of the Leisure Class — published in 1899, at the apogee of the Gilded Age — Thorstein Veblen famously argued that much of the behavior of his era’s elite was driven not by the desire to enjoy life but by the desire to impress others. Partly they did this through conspicuous consumption. Thus they built lavish mansions staffed by legions of servants.

However, members of the Gilded Age elite didn’t solely aim to display their wealth. They also tried to appear respectable. There were surely many private affairs and betrayals we will never know about. But the important point is that the super-wealthy of that era presented to the American public an image of being responsible members of society.

The contrast with the public behavior of Trump’s band of uber-wealthy is startling.

In addition to modeling upstanding behavior, the extremely rich of the Gilded Age were expected to have, or pretend to have, some virtues that were part of the aristocratic ideal, including a sense of noblesse oblige displayed by good works. 

Today’s oligarchs, by contrast, have largely given up on the old norms of social and individual responsibility. They give very little money to good causes and their vulgar taste reflects their in-your-face attitude towards the public. In our current hyper-Gilded Age, extreme vulgarity and the decline of philanthropy are really different aspects of the same phenomenon: the rise of an elite so disconnected from ordinary Americans that it feels no need to even appear to be honorable.

So in a real sense we are living in the midst of a reenactment of the decline and fall of the Roman Republic, not a second American Gilded Age. No, I’m not one of those men who thinks about ancient Rome all the time. But there are some obvious parallels.

While the causes of the decline of republican government and Rome’s eventual transition to one-man rule were doubtless complex, there is broad consensus among historians that a key factor was the emergence of extreme inequality. A handful of men became incredibly wealthy from the spoils of Rome’s eastern conquests, and their wealth and power eventually became too great for the rules of constitutional, republican government to contain. Sound uncomfortably familiar?

The death throes of the Republic went on for many years. Politicians declared their rivals enemies of the state, deployed violent gangs to disrupt the rule of law, established temporary dictatorships, and more. The installation of Augustus as emperor in 27 BC was just the final act.

And during this long twilight of constitutional government, one of the ways the extremely wealthy and powerful sought both to demonstrate their wealth and to curry favor with the mob was by sponsoring gladiatorial games.

Today's Oligarchy Is Worse Than The One In The "Gilded Age'

 

Nobel Prize-winning economist compares today's oligarchy with that of the Gilded Age (which led to the Great Depression):

Many people have compared our current era to the Gilded Age. But that analogy is deeply unfair to the Gilded Age. Like the robber barons of yore, today’s oligarchs are immensely wealthy — even wealthier, relative to the economy as a whole, than their predecessors. And extreme wealth corrupts our democracy. But the corruption is deeper and more destructive now than it was then: The mitigating factors that once put some brakes on the harm done by excessive wealth concentration are now mostly gone.

About wealth concentration: The standard source for information on extreme wealth is the Forbes 400 list. Forbes only began compiling that list in its current form in 1982, but it published its first listing of America’s top fortunes in 1918. The chart above compares the wealth of the richest 5 Americans in 1918 with that of the richest 15 in 2025 — 15, not 5, because the total U.S. population more than tripled over that period. I scale their wealth both as a percentage of total wealth and as a share of GDP.

Either way, the concentration of wealth at the very top is much higher now than it ever was during the Gilded Age. And these are numbers from last year, before the SpaceX IPO. The robber barons were pikers compared with today’s oligarchs.

This level of wealth brings with it immense political influence. A New York Times analysis found that 300 billionaires accounted for 19 percent of political contributions in the 2024 election. And since the election the power of money has grown even stronger.

In part this reflects the way great wealth has been used to corrupt the media. Elon Musk bought Twitter, not as a financial investment, but to turn it into the right-wing fever swamp it has now become. Larry Ellison, America’s second-richest man, purchased CBS basically to destroy it as an independent news source and convert it into Fox News 2.0, a goal he is achieving — and he is now on track to do the same to CNN.

On top of this, the presidency is now more or less openly for sale. “Donald Trump,” writes Forbes, “has presided over the most lucrative presidency in history,” adding $4.2 billion to his personal wealth since regaining the White House.

There were many corruption scandals during the Gilded Age, but none on this scale.

What do today’s uberrich do with their political power? Much of what they push for involves their own self-interest. In 2024 Mark Zuckerberg basically used his financial clout to kill bipartisan legislation that would have tried to protect children from psychological harm due to social media and, of course, put some restrictions on Meta. The Koch family has spent decades doing everything it can to prevent action against climate change and keep America burning fossil fuels.

Beyond this, some megabillionaires use their power to push political extremism.

True, Elon Musk is something of an outlier; you have to go some ways down the list to find someone comparably extreme (Peter Thiel is #40.) And he isn’t the first incredibly wealthy man to be deeply bigoted and an avid consumer of conspiracy theories: Henry Ford was a rabid anti-Semite who published and distributed The Protocols of the Elders of Zion, a forgery probably concocted by the Russian secret police.

Still, it’s remarkable that the world’s richest man has passionately embraced the “Great Replacement” theory of a sinister conspiracy to replace whites with nonwhite immigrants.

And it’s equally remarkable that our political system accepts it as a fact of life that such a person should command such power, even leaving on one side the dubious roots of his wealth. Where’s the outrage?

Obviously some Americans are outraged, but the backlash against a highly corrupt, rigged system is far weaker than one might have expected. Why?

I’ll return to this question in later posts, but it’s clear that modern America suffers from a combination of cynicism — “everybody does it” — and fatalism — “that’s just how the world works” — far worse than anything we experienced in the robber baron era.

You can see this moral malaise in the shrugs with which all too many politicians, especially but not only Republicans, greet each new revelation of presidential scandal. You can also see it in the behavior of the ultrawealthy themselves.

Make no mistake: the men on that 1918 Forbes list were, without exception, ruthless businessmen. The term “robber barons,” popularized in the 1930s by the historian Mattew Josephson, was apt. The great fortunes of the late 19^th and early 20^th centuries were accumulated by men who functionally played the same role as feudal warlords extorting tolls from travelers passing their castles. In particular, John D. Rockefeller, the world’s richest man, in effect controlled an essential economic choke point, a sort of financial Strait of Hormuz, through his monopolization of oil refining.

Yet many of the robber barons also possessed a sense of noblesse oblige, believing that they should deploy some of their riches on behalf of the public good.

Many of the robber barons gave huge sums to philanthropy. These included large donations to cultural institutions, which continue to enrich our society to this day. 

Mention Andrew Carnegie or Henry Clay Frick to a modern New Yorker and the first things they think of will probably be Carnegie Hall and the Frick Collection of fine art.

No doubt this was in large part a public relations exercise, but the fact that the robber barons believed that this PR effort was necessary was itself a symptom of a society less cynical than it is today. And the Gilded Age wealthy left a lasting legacy of good deeds to set against the history of their ruthless business practices.

By contrast, today’s oligarchs spend very little on good works, according to Forbes. Musk and Ellison have both given away less than 1 percent of their fortunes.

And Musk in particular is the opposite of a philanthropist. Not only doesn’t he spend any of his own money to help others, he used his power when running DOGE to cut off aid to poor countries, condemning hundreds of thousands of children to avoidable death. And he was gleeful about it:

Again, where is the outrage?

So, are we living in a second Gilded Age? If only. We surpassed Gilded Age levels of income and wealth inequality decades ago. We’re now in an era of oligarchy in which the power of great wealth and the abuse of that power by a tiny elite eclipse anything we saw in the late 19^th and early 20^th century. And the super-wealthy themselves are far more lacking in redemptive qualities than their predecessors.

Meet the new bosses, worse than the old bosses.