Kevin Phillips has been one of the most important political strategists and commentators for generations. He served as a senior strategist for Richard Nixon’s 1968 campaign, and authored the book The Emerging Republican Majority, which predicted a conservative realignment in national politics thanks in large part to an alliance between Southerns and Northern “white-ethnics.” He later turned against the GOP, in part because he perceived it as overly influenced by Wall Street.
Now, though, he says its the Democrats who have become the party of Wall Street.
“The Democrats have replaced the Republicans as the big benefactors to the financial community,” said Phillips tells Reuters. “The financial community is donating more to Democrats than ever before and you’ve got more Democrats in the financial community, creating a very powerful pattern there. I don’t think you’re going to see the Obama administration and Congress willing to be tough enough in dealing with these things.”
His last book, Bad Money, warned of a that a 25-year financial “multibubble” had been built on over-leverage and easy credit. During the bubble the financial sector grew from 10 per cent to 12 per cent of the U.S. economy to 20 per cent to 21 per cent. Now he thinks that Bernanke’s war against deflation will result in hyper-inflation once the recession ends.
“My theory is that if we are in a commodities cycle, what you will get will be more like 1973-74-75 … where as soon as the recovery begins you get rising inflation because you’re going to play havoc with all money supply and liquidity that’s been unleashed ” he added.
Meanwhile, the taxpayer and small investor have little defence.
“The average person is going to be on the periphery of concern and I think that’s rotten,” Phillips said.
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