‘CHAZ’: Seattle’s New Autonomous Zone Shows A Nation ‘Fed’ Up

Things are really falling apart now, folks.

Protesters in Seattle have declared an autonomous statelet where everything is free. One imagines this will be a short-lived experiment, but it’s well worth documenting.

As The Seattle Times recounts, “CHAZ” (an acronym for the newly-christened Capitol Hill Autonomous Zone), was offering “free snacks at the ‘No-Cop Co-op’, free gas masks from some guy’s sedan, free speech at the speaker’s circle, and a free documentary movie showing after dark”, on Wednesday. Sounds like a good time.

The Times goes on to explain that the “new protest society has been born from the movement to push the Seattle Police Department out of its East Precinct building”.

Earlier this week, CHAZ “residents” (if that’s the right word) hung a banner on the policy station reading “THIS SPACE IS NOW PROPERTY OF THE SEATTLE PEOPLE”.

People’s assembly at #CHAZ today ft. community garden, pay phone stations converted into sanitizer stations.

“We are the ones we’ve been waiting for” – speaker at assembly. pic.twitter.com/EKZE2Ki5f1

— Christy Carley (@christy_carley) June 11, 2020

In some ways, this plays directly into Donald Trump’s narrative. Mark Esper didn’t see the need to talk about an “insurrection” a week ago, but now, citizens are claiming entire blocks of major cities for themselves and declaring autonomous communities — perhaps they’ll hire some Kurdish advisors to help them work out the logistics.

Trump will doubtlessly dramatize the situation in an effort to castigate the “radical left” and claim the city is on the verge of being lost entirely to hippies and ne’er-do-wells. His base will buy that story. This episode will be a centerpiece of the White House’s “law and order” pitch to voters.

“This is now a community center” reads one sign hanging outside the East Precinct in the #CHAZ pic.twitter.com/P77zgYUaMk

— Shauna Sowersby (@Shauna_Sowersby) June 11, 2020

Rabobank’s Michael Every cites this story in a characteristically colorful global daily note out Thursday. Frankly, it sounds like Every has spent some time perusing these pages, and if he has, he’s found himself cited quite a bit.

“When the rich get everything free, why shouldn’t everyone else? It’s a good question”, he said Thursday, adding that “some people aren’t waiting for MMT from on high — they are trying to get it moving themselves”.

That underscores a point I’ve been keen to make (albeit in less hyperbolic terms) on quite a few occasions lately. Eliminating the middleman (banks) from the quantitative easing equation and dropping the pretense that the Fed isn’t simply monetizing government debt, would short-circuit the perpetual motion machine which has been feeding inequality for the last decade.

Every cites a statistic I’ve used here repeatedly over the past month – namely that the top 1% control 50% of the stock market. It goes without saying that the vast majority of Trump voters do not belong to the 1%. Indeed, statistically speaking, the vast majority of all voters do not belong to the 1%, which is precisely the problem.

The numbers from that simple visual deserve your attention. They underscore why this situation continues to perpetuate itself. When ownership is skewed, the benefits of stocks’ doubling and tripling accrue disproportionately to the folks who own most of them.

Rabobank’s Every cites a Gallup poll which shows that 55% of the US owns some stock – the key word is “some”. The breakdown is as follows:

• 66% of those aged 50-64
• 32% of those 18-29;
• 58% of men and 52% of women;
• 64% of whites;
• 42% of blacks;
• 28% of Hispanics;
• 85% of post-graduates;
• 33% of those with no college education

But, as Every points out, that “is far from genuine equality of ownership by any means”. The chart above shows you that the demographic breakdown of who owns “some” stocks is meaningless in a country where the vast majority of the market is controlled by just 1% of society.

Put simply: Your 100 shares of Apple are irrelevant. Let’s say you have $350,000 in a retirement fund (an amount America’s working poor cannot even conceptualize, by the way). That too is irrelevant. Perhaps more poignant than the chart above is the visual below, which shows that since 2008 (i.e., since the dawn of the Fed’s experiment in extraordinary monetary policy), the share of wealth controlled by the 90-99% has flat-lined, while that controlled by the super-rich has expanded steadily.

The point: The very rich are getting much richer, while the “merely” rich are seeing their fate converge with that of the middle-class they so readily shun. Pretty soon, the 90-99% won’t even be invited to the cocktail parties anymore.

Even the statistics on ownership of any stocks (retirement plans inclusive) aren’t particularly encouraging. “Including 401(k)’s and individual retirement accounts, only 55% of Americans are investors in the market, down from 62% in the early-to-mid 2000s”, The New York Times recently wrote, picking up on the same dynamics discussed here exhaustively for years.

“Not surprisingly, stock ownership has become even more concentrated in the hands of the affluent during this period”, the article goes on to say. The title of The Times‘s piece: “What Is The Stock Market Even For Anymore?”

Every has an answer for that question. To wit, from his Thursday missive:

Could we please have the intellectual honesty just to admit the system as it exists today functions to give more money to ultra-rich people? This is no longer a ‘free market system’. Water does not find its own level. It is channelled through canals cut by an establishment, and some fields are watered very well and others left arid. This is not ‘capitalism’ as anyone teaches or models it, where money is made from productively investing in making things. It is speculative financial capitalism, where money is made by watching money being made by central banks, which is then channelled into the stock of firms who often don’t make things. Given the homilies that central banks are now coming out with about inequality, one could even say it is even oligarchy excreting noblesse oblige. Yet perhaps it is even worse: central banks saying “Let them eat stocks.”

Yes, “Let them eat stocks”.

Regular readers may recognize the allusion to one of history’s most infamous quotables . In “There Can Be No Change“, I seared it into the top of a chart showing that if you add the stocks owned by the 90-99% to the shares owned by the top 1%, you discover that 88% of the US equity market is controlled by just 10% of the population.

On Wednesday, I talked a bit about Powell’s reluctance to write policy prescriptions for Congress.

Although he was careful to emphasize that the Fed does not presume to dictate fiscal policy, there was little ambiguity about what he believes personally. More fiscal stimulus is necessary.

When asked specifically about the proposed extension of extra unemployment benefits provided by the federal government, he demurred. “I wouldn’t try to give Congress specific advice on that”, he said. “We’re happy to give advice if people ask for it, but probably not publicly”.

Some would like to see the Fed chair (and other central bankers) be a bit more assertive. For example, Every suggests the following:

Yes, Powell did say more needs to be done on the fiscal side. What we did NOT get was a clear message aimed at the public, who would then demand it of their government: “Spend more on infrastructure, and/or national security supply-chain on-shoring, and/or social programs to narrow inequality: we will buy all the bonds needed to pay for it.” You know, “Whatever it takes” — but this time for the many and not the few. It was more of a “Whatever” as the Fed described a bleak future US economic landscape where many millions of jobs may never come back…and the response is still to channel more money to the rich via asset bubbles.

Documenting the post-FOMC presser on Wednesday, I described the problem for Powell and his colleagues. While we don’t know what would have happened in the absence of their intervention in 2008/2009, and again in March of 2020, what we do know is that the rich are getting richer, and the poor poorer.

The US reached a reckoning during the pandemic, where inequality of opportunity and racial injustice has triggered massive street protests. I recently cited a piece in The New Yorker called “Reality Has Endorsed Bernie Sanders”.

This is no longer a drill. If policymakers don’t wake up and start figuring out a way to implement redistributive initiatives (and yes, you can do that without “killing” capitalism, so let’s not traffic in straw men), society is simply going to make this change for itself.

Trump, a billionaire who spent most of his adult life reveling in luxury and making it a point to tell the public how rich he is, threatened to take Seattle back from “ugly Anarchists” on Wednesday.

“Radical Left Governor Jay Inslee and the Mayor of Seattle are being taunted and played at a level that our great Country has never seen before”, the president said.

“Take back your city NOW. If you don’t do it, I will. This is not a game. These ugly Anarchists must be stooped”, he added.

One assumes he meant “stopped”.

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