Is the U.S. Economy Powered by Dark Matter?

For indispensable reporting on the coronavirus crisis and more, subscribe to Mother Jones' newsletters.


Karl Smith is bullish on America:

“The Great Takedown” […] is the not yet realized bombshell that the US in general and the US Federal Government in particular made out like gangbusters in the Great Recession. I am still trying to tie this all together but a full accounting of US Treasury “profits” from the Global Financial Crisis look to number in the trillions.

This is based on a theory that if you value assets correctly, based on their financial return, the apparent multi-trillion dollar increase in the U.S. current account deficit over the past few decades hasn’t actually happened. It’s been offset by exports of “Dark Matter” that aren’t included in official accounts:

The US is a net provider of knowledge, liquidity and insurance. As the world became more global financially, the increasing asset value of these services underlies the spectacular increase in dark matter over the last two decades.

As a result, foreign-owned U.S. assets are worth less than official accounts suggest and U.S.-owned foreign assets are worth more. Karl is excited because Paul Krugman kinda sorta endorsed this theory today, but it’s worth noting that Krugman leaves open the question of whether there’s really been a mis-valuation of assets, or whether this is basically a dangerous leverage play that relies on using cheap U.S. debt to buy risky foreign assets, assuming that those risky assets will pay high returns forever.

Beats me. This is way above my pay grade. But interesting!

Thank you!

We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

The months and years ahead won't be easy. Far from it. But there's no one we'd rather face the big challenges with than you, our committed and passionate readers, and our team of fearless reporters who show up every day.

Thank you!

We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

The months and years ahead won't be easy. Far from it. But there's no one we'd rather face the big challenges with than you, our committed and passionate readers, and our team of fearless reporters who show up every day.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

We have a new comment system! We are now using Coral, from Vox Media, for comments on all new articles. We'd love your feedback.