WASHINGTON, DC – DECEMBER 05: Businessman Vivek Ramaswamy (C), Co-Chair of the newly announced Department of Government Efficiency (DOGE), arrives at the U.S. Capitol for a media availability with Tesla CEO Elon Musk, Co-Chair of the newly announced Department of Government Efficiency and Speaker of the House Mike Johnson (R-LA) on December 05, 2024 in Washington, DC. Musk and Ramaswamy are meeting with members of the U.S. Congress today about DOGE, a planned presidential advisory commission with the goal of cutting government spending and increasing efficiency in the federal workforce. ( (Photo by Andrew Harnik/Getty Images)
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Amy Acton, Vivek Ramaswamy’s opponent in the Ohio governor’s race, should make Ramaswamy own his recent Wall Street Journal opinion piece. It sadly denigrates enormous U.S. economic progress, and worse coming from a conservative, it ties investment success to government waste.
Ramaswamy writes that the “greatest driver of inequality over the past five years was exactly what the socialists now demand more of: large-scale government spending.” The latter won’t age well. Think about it.
Over the last five years artificial intelligence (AI) has reached the marketplace, and plainly caught investors by surprise as the rise of a former unknown like Nvidia attests, countless other hyper-unicorns given life by Nvidia’s genius (OpenAI, Anthropic perhaps?), not to mention rising investor excitement about growth potential off of planet earth. But to read Ramaswamy, the latter was rather quaint i a stock market sense relative to government spending that apparently tricked the deepest markets in the world.
In Ramaswamy’s version of reality, “When Washington floods the economy with borrowed and freshly printed dollars, the money flows first into assets owned by the wealthiest Americans.” Except that if asset rallies were this simple, every country would do as he imagines the U.S. has. Actually, Japan did it for decades amid falling stocks. Yes, investors disdain the central planning of resources (government spending) that Ramaswamy claims boosts markets.
Furthermore, and as Ramaswamy has long correctly noted, the top 1% account for 40% of federal tax revenue. From the previous truth, we can extrapolate that government spending doesn’t enrich the rich not just because central planning is a market negative, but because the rich per Ramaswamy are routinely fleeced so that the federal government can spend.
Moving on, and returning to Ramaswamy’s overwhelmingly absurd assertion that “When Washington floods the economy with borrowed and freshly printed dollars, the money flows first into assets owned by the wealthiest Americans,” he seems to have forgotten a basic lesson of markets surely learned at Goldman Sachs that for money to flow “into assets owned by the wealthiest Americans,” then equal amounts of money must be flowing out. It’s something about there being a seller for every buyer, and since the “top 1 percent” per Ramaswamy account for “roughly 30% of the nation’s net worth,” it seems the money flows he naively imagines are taking place due to government spending tricking markets are pessimistic rich selling to optimistic rich.
Ramaswamy wisely disdains monetary debasement, but then claims that “borrowed and freshly printed dollars” yet again drive up the value of assets. Global stock markets continue to mock Ramaswamy’s certitude, so do U.S. returns in the 1970s and 2000s when the dollar was most substantially debased, after which logic must intrude: when investors invest, they’re buying future returns in dollars. Based on the previous truth, can Ramaswamy seriously believe debasement is the path to booming asset markets? If so, he imagines rampant market stupidity in addition to myriad other falsehoods.
From there, it’s notable that five years ago total federal debt was roughly $28 trillion versus $39 trillion today. While agreeing with Ramaswamy once again that dollar-price stability would trump any other policy today in terms of profound economic meaning, can he really believe investors would so readily buy income streams that are being rapidly shrunken by the U.S. Treasury?
There’s so much more contradiction in a piece that Ramaswamy’s opponent should be most gleeful about, but the need for brevity intrudes. For now, Ohio voters beware.