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VIDEO: The Fed’s Evil Juggernaut

VIDEO: The Fed’s Evil Juggernaut

Don’t let it crush your future

Juggernaut: (n) massive inexorable force, campaign, movement, or object that crushes whatever is in its path

The US Federal Reserve is once again force-feeding liquidity into the system. At its fastest rate ever.

The result? Record high stock prices whose valuations defy all logic.

What’s wrong with that? Shouldn’t we just enjoy the party and be grateful for our rising 401ks?

What’s wrong is that the Fed’s actions are dooming us. Their poisonous cocktail of endless cheap money and rock-bottom interest rates is hastening a terminal breakdown of the economy, while deliberately enriching a tiny cadre of elites to the ruin of everyone else.

Though most remain blind to this, Fed policy (and the similar ones pursued by the other major world central banks) is directly responsible for, or a major contributor to, many of the biggest challenges society is facing.

Tens of millions of Boomers who can’t afford to retire. Tens of millions of Millennials who can’t afford to purchase a home. History’s largest wealth gap between the 1% and everyone else. Relentless increases in the cost of living while real wages remain stagnant. Depletion and degradation of our key natural resources by zombie companies run without profits. We can thank the Fed for all of these ills, plus many more.

All we’re offered in return is the fake reassurance that “everything is awesome” because stocks are higher today than they were yesterday. As if that really makes a difference when the top 1% owns 50% of all stocks and the top 10% owns over 90%.

And when today’s epicly distorted markets reach their breaking point — which may be imminent given the truly manic action recently — not only will the resulting damage be commensurately epic, but it will injure the 99% FAR more than the 1% who benefitted from it.

Mass layoffs. Bankruptcies. Destroyed retirement portfolios and pensions. State and city budget crises. Higher taxes. More fees. Cancelled social services. Hollowed-out communities.

…click on the above link to read the rest of the article…

A Survival Guide For 2019

A Survival Guide For 2019

How to safely navigate the ‘Year Of Instability’ 

As the first month of the year concludes, it’s becoming clear that 2019 will be a very different kind of year.

The near-decade of ‘recovery’ following the Great Financial Crisis enjoyed a stability and tranquility that suddenly evaporated at the end of 2018.

Here in 2019, instability reigns.

The world’s central banks are absolutely panicking. After last year’s bursting of the Everything Bubble, their coordinated plans for Quantitative Tightening have been summarily thrown out the window. Suddenly, no chairman can prove himself too dovish.

Jerome Powell, the supposed hardliner among them, completely capitulated in the wake of the recent -15% tantrum in stocks, which, as Sven Henrich colorfully quipped, proved what we suspected all along:

The global tsunami of liquidity (i.e. thin-air money printing) released by the central banking cartel has been the defining trend of the past decade. It has driven, directly or indirectly, more world events than any other factor.

And one of its more notorious legacies is the massive disparity and wealth and income resulting from its favoring of the top 0.1% over everyone else. The mega-rich have seen their assets skyrocket in value, while the masses have been mercilessly squeezed between similarly rising costs of living and stagnant wages.

How have the tone-deaf politicians responded? With tax breaks for their Establishment masters and new taxes imposed on the public. As a result, populist ire is catching fire in an accelerating number of countries, which the authorities are anxious to suppress by all means to prevent it from conflagrating further — most visibly demonstrated right now by the French government’s increasingly jack-booted attempts to quash the Yellow Vest protests:

Meanwhile, two other principal drivers of the past decade’s ‘prosperity’ are also suddenly in jeopardy.

 …click on the above link to read the rest of the article…

Breaking the Chains of Debt: Lessons from Babylonia for Today’s Student Crisis

How Can They Lie to us so Blatantly? The Strange Case of Wealth Inequality in Russia

How Can They Lie to us so Blatantly? The Strange Case of Wealth Inequality in Russia

The figure is taken from the “Independent” dated 23 November 2016. It looks like a serious chart, but it is not. It is pure propaganda or, more simply, a lie. It is just an example of how blatantly they can lie to us and get away with it. We live today in a true Empire of Lies.

By mere chance, I happened to stumble into the graph you see above. It bothered me: can it really that Russia is, by far, is the most unequal country in the world? It just didn’t fit with what I know of Russia.

Yet, the power of well-presented graphic information is such that for a while I tried to rationalize these data in my mind. Maybe the fall of Communism caused the ancient rich nobles, the Boyars to reappear in Russia? Or maybe there returned the huge masses of destitute muzhiki living in poor izbas in the countryside?

Scratching my head, I thought that I could just check the data. And I found that the “high wealth inequality” of Russia is a lie. A complete, shameless, utter lie.

I checked with the World Bank, I checked with the “World Inequality Database,” I even checked the  CIA Factbook, not exactly sites known for their sympathies for those evil Russians. The result was always the same: Russia is NOT the most unequal country in the world. There are several indices that can be used to measure inequality, all show that Russia is somewhat more unequal than most Western European countries but at about the same level of the United States and much lower than countries like India or Brazil. The share of wealth of the top 1% of the Russian population reported by WID is around 42%, very far from the value of 74.5% given by the Independent.

…click on the above link to read the rest of the article…

Here’s How We Ended Up with Predatory, Parasitic Elites

Here’s How We Ended Up with Predatory, Parasitic Elites

Combine financialization, neoliberalism and moral bankruptcy, and you end up with predatory, parasitic elites.

How did our financial and political elites become predatory parasites? Some will answer that elites have always been predatory parasites; as tempting as it may be to offer a blanket denunciation of elites, this overlooks the eras in which elites rose to meet existential crises.

Following in Ancient Rome’s Footsteps: Moral Decay, Rising Wealth Inequality(September 30, 2015)

As historian Peter Turchin explained in his book War and Peace and War: The Rise and Fall of Empires, the value of sacrifice was a core characteristic of the early Republic’s elite:

“Unlike the selfish elites of the later periods, the aristocracy of the early Republic did not spare its blood or treasure in the service of the common interest. When 50,000 Romans, a staggering one fifth of Rome’s total manpower, perished in the battle of Cannae, as mentioned previously, the senate lost almost one third of its membership. This suggests that the senatorial aristocracy was more likely to be killed in wars than the average citizen….

The wealthy classes were also the first to volunteer extra taxes when they were needed… A graduated scale was used in which the senators paid the most, followed by the knights, and then other citizens. In addition, officers and centurions (but not common soldiers!) served without pay, saving the state 20 percent of the legion’s payroll.

The richest 1 percent of the Romans during the early Republic was only 10 to 20 times as wealthy as an average Roman citizen.”

Now compare that to the situation in Late Antiquity Rome when

…click on the above link to read the rest of the article…

We Are All Lab Rats In The Largest-Ever Monetary Experiment In Human History

We Are All Lab Rats In The Largest-Ever Monetary Experiment In Human History

And how do things usually work out for the rat?

There are ample warning signs that another serious financial crisis is on the way.

These warning signs are being soundly ignored by the majority, though. Perhaps understandably so.

After 10 years of near-constant central bank interventions to prop up markets and make stocks, bonds and real estate rise in price — while also simultaneously hammering commodities to mask the inflationary impact of their money printing from the masses — it’s difficult to imagine that “they” will allow markets to ever fall again.

This is known as the “central bank put”: whenever the markets begin to teeter, the central banks will step in to prop/nudge/cajole the markets back towards the “correct” direction, which is always: Up!

It’s easy in retrospect to see how the central banks have become caught in this trap of their own making, where they’re now responsible for supporting all the markets all the time.

The 2008 crisis really spooked them. Hence their massive money printing spree to “rescue” the system.

But instead of admitting that Great Financial Crisis was the logical result of flawed policies implemented after the 2000 Dot-Com crash (which, in turn, was the result of flawed policies pursued in the 1990’s), the central banks decided after 2008 to double down on their bets — implementing even worse policies.

The Largest-Ever Monetary Experiment In Human History

It’s not hyperbole to say that the monetary experiment conducted over the past ten years by the world’s leading central banks (and its resulting social and political ramifications) is the largest-ever in human history:

(Source)

This global flood of freshly-printed ‘thin air’ money has no parallel in the historical records. All around the world, each of us is part of a grand experiment being conducted without the benefits of either prior experience or controls. Its outcome will be binary: either super-great or spectacularly awful.

…click on the above link to read the rest of the article…

The Pie Is Shrinking So Much The 99% Are Beginning To Starve

Melissa E Dockstader/Shutterstock

The Pie Is Shrinking So Much The 99% Are Beginning To Starve

How much longer until the pitchforks come out?

Social movements arise to solve problems of inequality, injustice, exploitation and oppression. In other words, they are solutions to society-wide problems plaguing the many but not the few (i.e. the elites at the top of the wealth-power pyramid).

The basic assumption of social movements is that Utopia is within reach, if only the sources of the problems can be identified and remedied.  Since inequality, injustice, exploitation and oppression arise from the asymmetry of power between the few (the financial and political elites) and the many, the solution is a reduction of the asymmetry; that is a tectonic realignment of the social structure that shifts some power—economic and/or political—from the few to the many.

In some instances, the power asymmetry is between ethnic or gender classes, or economic classes (for example, labor and the owners of capital).

Social movements are characterized by profound conflict because the beneficiaries of the power asymmetry resist the demands for a fairer share of the power and privileges, while those who’ve held the short end of the stick have tired of the asymmetry and refuse to back down.

Two dynamics assist a social, political and economic resolution that transfers power from those with too much power to those with too little power: 1) the engines of the economy have shifted productive capacity definitively in favor of those demanding their fair share of power, and 2) the elites recognize that their resistance to power-sharing invites a less predictable and thus far more dangerous open conflict with forces that have much less to lose and much more to gain.

In other words, ceding 40% of their wealth-power still conserves 60%, while stubborn resistance might trigger a revolution that takes 100% of their wealth-power.

…click on the above link to read the rest of the article…

“Wealth Effect” = Widening Wealth Inequality

“Wealth Effect” = Widening Wealth Inequality

Note that widening wealth and income inequality is a non-partisan trend.

One of the core goals of the Federal Reserve’s monetary policies of the past 9 years is to generate the “wealth effect”: by pushing the valuations of stocks and bonds higher, American households will feel wealthier, and hence be more willing to borrow and spend, even if they didn’t actually reap any gains by selling stocks and bonds that gained value.

In other words, the mere perception of rising wealth is supposed to trigger a wave of renewed borrowing and spending.

This perception management only worked on the few households which owned enough of these assets to feel wealthier–the top 5%, the top 6 million out of 120 million households. This chart shows what happened as the Fed ceaselessly goosed financial assets higher over the past 9 years: the gains, real and perceived, only flowed to the top 5% of households earning in excess of $200,000 annually.

Spending by the bottom 95% has at best returned to the levels reached a decade ago in 2007.

By focusing on boosting financial assets to the moon as a means of goosing spending, the Federal Reserve has widened wealth and income inequality to the breaking point. Perception management doesn’t actually boost the inflation-adjusted wages of the bottom 95%, which have stagnated for decades. Nor does boosting assets do much good for the vast majority of households which have modest holdings of stocks and bonds, usually in IRA or 401K retirement accounts they can’t touch without paying steep penalties.

As the charts below illustrate, the Grand Canyon between the top 5% and everyone else is widening. Let’s say a househould has $12,000 in retirement funds and $5,000 in a savings account. (Many households have less than $1,000 in savings, so this example-household is doing pretty well to have $17,000 in cash and financial assets.)

…click on the above link to read the rest of the article…

The Problem Isn’t Populism: the Problem Is the Status Quo Has Failed

The Problem Isn’t Populism: the Problem Is the Status Quo Has Failed

The top 5% who have benefited so immensely from the consolidation of wealth and power cannot confess the status quo has failed the bottom 95%.

The corporate/billionaires’ media would have us believe that the crisis we face is populism, a code word for every ugly manifestation of fascism known to humanity. By invoking populism as the cause of our distemper, the mainstream media is implicitly suggesting that the problem is “bad people”–those whose own failings manifest in an attraction to fascism. If we can successfully marginalize these troubled troglodytes, then our problem, populism, would go away and the wonderfulness, equality and widespread prosperity of pre-populist America will be restored.

The problem isn’t populism–the problem is the status quo has failed 95% of the populace. Life isn’t wonderful, prosperous and filled with expansive equality except in the Protected Elite of the top 5% of technocrats, corporate executives, tenured academics, bureaucrats, financiers, bankers, lobbyists and wealthy (or soon to be wealthy) politicos.

The bottom 95% need a time machine to recover any semblance of prosperity.They need a time machine that goes back 20 years so they can buy a little bungalow on a postage-stamp lot for $150,000 on the Left and Right Coasts, because now the little bungalows cost $1 million and up.

Housing valuations have become so detached from what people earn that even the top 5% has trouble qualifying for a jumbo mortgage without the help of the Bank of Mom and Dad or the family trust fund.

The bottom 95% need a time machine to return to the days when college tuition and fees were semi-affordable–say, 30 years ago.

The bottom 95% also need a time machine to return to a time when they could afford healthcare insurance without government subsidies–a generation ago, or better yet, two generations ago.

…click on the above link to read the rest of the article…

What’s Driving Social Discord: Russian Social Media Meddling or Soaring Wealth/Power Inequality?

What’s Driving Social Discord: Russian Social Media Meddling or Soaring Wealth/Power Inequality?

The nation’s elites are desperate to misdirect us from the financial and power dividethat has enriched and empowered them at the expense of the unprotected many.

There are two competing explanatory narratives battling for mind-share in the U.S.:

1. The nation’s social discord is the direct result of Russian social media meddling– what I call the Boris and Natasha Narrative of evil Russian masterminds controlling a vast conspiracy of social media advertising, fake-news outlets and trolls that have created artificial divides in the body politic, or exacerbated minor cracks into chasms.

2. The nation’s social discord is the direct result of soaring wealth/power inequality– the vast expansion of the wealth and power of the nation’s financial elites and their protected class of technocrat enablers and enforcers (the few) at the expense of the unprotected many.

Core to this narrative is the view that the elites and technocrats have engaged in a massive, coordinated official/media propaganda campaign of fake newsaimed at persuading the bottom 95% that their prosperity and financial security are expanding when the reality is they have lost ground they will never be able to recover.

This propaganda campaign includes official (i.e. gamed/distorted) statistics such as unemployment and inflation, a reliance on the manipulated stock market to “signal widespread prosperity” and a steady drumbeat of corporate media coverage promoting the Boris and Natasha Narrative as the primary source of all our troubles.

The reality the elites must mask is that the few (the elites) have benefited at the expense of the many. The rising tide of financialization, globalization and neofeudal-neocolonial neoliberalism has not raised all boats; the yachts have floated higher while the rowboats have either sunk or are leaking badly.

The Boris and Natasha Narrative is the primary propaganda tool of the ruling elites and their technocrat/ corporate media enablers.

…click on the above link to read the rest of the article…

What Could Pop The Everything Bubble?

A crisis that can’t be solved by just printing more dollars

I’ve long held that if a problem can be solved by creating $1 trillion out of thin air and buying a raft of assets with that $1 trillion, then central banks will solve the problem by creating the $1 trillion out of thin air—nothing could be easier.

This is the lesson of the past eight years: if a problem can be solved by creating new money and buying assets, then central banks will solve that problem.

Problem: stock market is declining. Solution: create new money and buy, buy, buy stock index funds. Problem solved! Market stops falling and quickly rebounds as “central banks have our backs.”

Problem: interest rates are inhibiting lending and growth. Solution: create a few trillion units of currency and buy enough sovereign bonds to drop interest rates to near-zero.

Problem: nobody’s left who can afford to buy the new nosebleed-priced flats that underpin China’s miracle-grow economy. Solution: create new currency, lend it to local government agencies who then buy the empty flats.

Problem: stagnant employment and deflation. Solution: create a trillion in new currency, buy a trillion in new government bonds that then fund infrastructure projects, i.e. bridges to nowhere.

And so on. Any problem that can be solved by creating a few trillion out of thin air and buying assets will be solved.  The mechanism to solve these problems—creating currency out of nothing—is like a perpetual motion machine: there are no intrinsic limits on the amount of new money that can created at near-zero interest, as the interest payments can be funded by new money.

Even better, the central bank (the Federal Reserve) buys Treasury bonds with the new currency that generate income, which is then returned to the Treasury: a perpetual-motion money machine!

…click on the above link to read the rest of the article…

The Central Banks Face Unwelcome Realities: Their Policies Boosted Wealth Inequality and Failed to Generate “Growth”

The Central Banks Face Unwelcome Realities: Their Policies Boosted Wealth Inequality and Failed to Generate “Growth”

Rather than be seen to be further enriching the rich, I think central banks will start closing the “free money for financiers” spigots.
Take a quick glance at these charts of the Federal Reserve balance sheet and bank credit in the U.S. Notice what happened to bank credit after the Fed “tapered” and stopped expanding its balance sheet?
Bank credit exploded higher:
Now look at corporate profits:
Once the Fed ended its $3.7 trillion “experiment” of vastly expanding its money-creation and bond-buying in early 2014, what happened to bank credit? Bank credit had expanded by a bit over $1 trillion in the early years of the Fed’s quantitative easing, but it really took off after QE3 ended, soaring roughly $2 trillion.
This was the policy goal all along: the Fed would do the heavy lifting to keep credit and the financial markets from imploding, and eventually private-sector credit would expand enough to fuel a self-sustaining recovery.
While measures of employment and production have lofted higher, productivity, profits and wages for the bottom 95% have all stagnated. Is it coincidental than corporate profits began weakening once the Fed’s QE3 ended? Perhaps.
How about the stagnation of household median income during the Fed’s expansion and the rise of private bank credit from 2014 to the present? Was that also a coincidence?
If the economy was expanding smartly as the Fed was goosing credit higher, it certainly wasn’t trickling down to households.
What’s happening beneath the happy-happy surface is that the returns on expanding credit are diminishing rapidly. The Fed’s QE “free money for financiers” never did “trickle down” to the bottom 95%, and the enormous expansion of bank credit is no longer driving corporate profits higher.

…click on the above link to read the rest of the article…

The Panama Papers: This Is the Consequence of Centralized Money and Power

The Panama Papers: This Is the Consequence of Centralized Money and Power

Technologies such as the blockchain are enabling alternative ways of creating and distributing money outside central banks and states.

If we don’t change the way money is created and distributed, we will never change anything. This is the core message of my book A Radically Beneficial World: Automation, Technology and Creating Jobs for All.

The Panama Papers offer damning proof of this: increasing concentrations of wealth and power that are free of any constraint (such as taxes) is not just the consequence of centralized money and state power–this inequality is the only possible output of centralized money and state power.

Here is a graphic portrayal of just how concentrated global wealth really is: the top .7% (less than 1%) own 45% of all global wealth, and the top 8% own 85%.

Here is a depiction of wealth in the U.S.:

Here is my description of how centralized money and finance inevitably creates debt-serfdom as its only possible output:

…click on the above link to read the rest of the article…

A short lesson on wealth creation

A short lesson on wealth creation

This morning on CBC Newsworld business reporter John Northcott was describing, in horror, a recent OXFAM report indicating that 62 of the world’s richest people have as much wealth combined ($1.76 trillion) as the poorest half of the planet (3.625 billion). Mr. Northcott and lead anchor Suhana Meharchand made comments about the unfairness of this distribution of wealth. Indeed, if only that amount of wealth could be distributed evenly, this would solve so many of the poverty problems in the world.

One of the benefits of studying economics is the insight it provides in identifying, precisely, how wealth is created and the logical consequences of legally expropriating created wealth and transferring it to other individuals.

The only way that wealth can be created in a free market is producing at profit something that satisfies the wants of your fellow man. Profit is the signal that resources are being used efficiently in production. If a person cannot produce a good or service at a profit, this reveals that costs are too high, the price consumers wish to pay is too low (they have other, more urgent priorities) or both. In other words, losses reflect that resources (including the labour of the resource owners the entrepreneurs bringing necessary inputs together) are not being put to their highest valued used as judged by consumers.

That 62 of the richest people have generated $1.76 trillion is something to be celebrated, not denigrated. A moments thought to how much poorer would be not only the 3.625 billion, but everyone else too if individuals like Bill Gates never created Microsoft. Without Bill Gate’s magnificent impact on humanity I could have been typing this on an Olympia manual typewriter. If #62 ranked Bill Li of China never developed his Chinese internet search engine, countless numbers of welfare improving transactions in China would not occur.

…click on the above link to read the rest of the article…

My Financial Road Map For 2016

My Financial Road Map For 2016

Over the holidays, I had the opportunity to stay away from airports and hike Runyon Canyon with my dogs. For those of you that have never traversed Runyon’s peaks and dips, they are nature’s respite from the urban streets of Los Angeles, yet located in the heart of the City of Angels. It’s a place in which to observe, reflect, and think about what’s coming ahead.

As a writer and journalist covering the ebbs and flows of government, elite individual, central bank and private industry power, actions, co-dependencies, and impacts on populations and markets worldwide, I often find myself reacting too quickly to information. As I embark upon extensive research for my new book, Artisans of Money, my resolution for the book – and the year – is to more carefully consider small details in the context of the broader perspective. My travels will take me to Brazil, Mexico, China, Japan, Germany, Spain, Greece and more. My intent is to converse with people in their respective locales; those formulating (or trying to formulate) monetary, economic and financial policy, and those affected by it.

We are currently in a transitional phase of geo-political-monetary power struggles, capital flow decisions, and fundamental economic choices. This remains a period of artisanal (central bank fabricated) money, high volatility, low growth, excessive wealth inequality, extreme speculation, and policies that preserve the appearance of big bank liquidity and concentration at the expense of long-term stability. The potential for chaotic fluctuations in any element of the capital markets is greater than ever.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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