Category Archives: economic classes

High stock prices are a danger to the US economy

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How could high stock prices be a danger to the US economy? It just can’t be so, but it is. Paradox? Not really. How could persistently rising stock prices be bad for any economy? That is not possible, because people who own stocks feel wealthy. They will spend more, consumption goes up. Firms rev up production, hire more workers, wages rise, and the virtuous cycle is established; if only this were true!

Persistently rising stock prices suck the blood out of the economy and direct financial energy into the stock market. Corporations buy their own stock with cheap borrowed money, close plants, move operations overseas and leave US cities delapidated ghost towns. Tax revenues collapse, infrastructures collapse and the US slowly turns into a third world nation. This is the dark side of persistently rising stock prices.

In rising stock oriented society, wages do not grow.  In fact, the buying power of wages actually falls. Poverty, anxiety, chronic illnesses, obesity, and violence increase.

Economists, academics, decision makers, politicians sing the same ol’ song: “The US economy is resilient!”, and they point to the rising stock market. It is not!

Another component contributing to the rising stock market are persistently low interest rates, draining savers of their deserved interest income.

It would be better if the stock market was at 5000 and the economy was humming with rising wages, job growth, universal single payer health care system, affordable quality education, massive infrastructure renewal programs, quality affordable housing, etc. but this will never happen.

It will never happen as long as the rising stock market sucks the blood out of the economy, turning the country into an economic desert with areas of oases where the 2% ownership class lives with the 5% overseer class.

It will never happen as long the Federal Reserve and US Treasury’s economic policy is to support the stock market. The stock market will continue to suck the blood out of the economy until the final collapse.

No change will occur without the final collapse.

 

Negative Energy Flow

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The essence of the Universe is energy. This essence is constant, contracting, or expanding, but nobody knows for sure. The essence of our solar system is the sun, and without  the sun there would be no life on the Earth. They say that the energy of the sun is slowly dissipating, but is still good for about several billion years before it dies. But this is just a hypothesis. In fact nobody knows for sure.

We know that economic systems develop, grow, and then go into a collapsing phase and die, but the remnants of the previous systems become key components of the new system. For instance, the chief components of capitalism are usury and a modern version of slavery which are the chief remnants of two previous systems, slavery and feudalism.

Without the discovery of the New World by Christopher Columbus in 1492, capitalism would most likely have not developed. In my earliest posts, I stated that Christopher Columbus is the Father of Capitalism. The center of capitalism became Western Europe and North America, especially, the United States.

The United States had positive energy flow when the first Dutch and English colonists stepped into North America. The land was abundantly rich and it needed  workers to exploit it. Slavery was introduced and for 250 years, slavery was the main source of wealth extraction and accumulation  for the ruling elite of the new country. The tobacco and cotton plantations needed slaves. The trade in slaves  was very prosperous as well. Many Americans were also involved in opium trade with China, which was the monopoly of the British East India Company. It was the first giant global company, a forerunner of modern American and European corporations. Adam Smith who wrote the capitalist bible,’ The Wealth of Nations’ was an officer of the Company. His view of the ‘Invisible Hand’ that runs the market is more to the fact that the British East India Company methods of conquest and control stayed invisible as to how they got control of all of  India, Pakistan, Bangladesh, Sri Lanka, and Burma. They also wanted to keep opium trade with China and the Afghani Wars for control of opium invisible.

Americans wanted to take part in the opium trade with China, and that is one of the main reasons why the Americans wanted independence from Britain. Forget about: ‘ No taxation without representation’; it was just a façade like ‘ the weapons of mass destruction’ in Iraq. British rule of its North American colonies was rather gentle. British taxes were barely one percent on tea. One third of American colonists moved to the Canadian Provinces of Nova Scotia, New Brunswick, Prince Edward Island, Quebec, and Ontario. They were known as United Empire Loyalists. Benjamin Franklin’s son left for England.

After the Declaration of American Independence of 1776, the Slave Trade of the North Atlantic and Opium Trade with China boomed, even though Europeans were losing interest in slave trade on moral and ethical grounds. Remember, ‘Amazing Grace’ was composed by a former slave trader in 1805, but the abuse of Africa still continues.

After the Civil War and the emancipation of the slaves, the US economy exploded. By 1900,  the US was the number one manufacturing nation in the world, by quantity and not by quality.  Germany was number one in quality and second in quantity. Attempts were made to create a private Central Bank of the United States, but failed until December 23, 1913. Alexander Hamilton, the first US Treasury Secretary wanted a private central bank. In a duel with Aaron Burr, the Vice-president, Hamilton lost his life. President Andrew Jackson, the 7th President, aborted the second attempt at creating a private central bank. Abraham Lincoln, probably the greatest President of the US, stopped the third attempt. He used ‘ Green Backs’ to finance the war rather than borrow from private banks. He paid with his life in 1865. James Garfield, the 20th President paid with his life for stopping the private central bank. Finally, Woodrow Wilson, the 28th President of the US acquiesced on Dec. 23, 1913.

The Central Bank of the US would be called the Federal Reserve Bank of the US. It would be composed of 12 regional or district banks. The first amongst equals would be the Federal Reserve Bank of New York, and it would act as a financial life line to Wall Street. The Federal Reserve was key in pushing the US into the First World War. Germany was winning the War. They sank the Lusitania on May 7th, claiming it was carrying weapons to Britain. True! Britain denied it. Lie! The US kept quiet until 1917. Britain panicked that Germany would win the war and Russia, an ally of Britain and France would conquer Constantinople. Britain then promised  Constantinople to Russia but had no intention of keeping it, hence Churchill’s disastrous Gallipoli Campaign to capture Constantinople.

The World Zionist Movement wanted to create a homeland for the Jews in what would be British occupied Palestine. And if the British agreed, it was agreed that the US would enter the war on the side of Britain and France. They would also eliminate Russia from the war and Constantinople would not fall to Russia. Also, Italy, an ally of Germany, would enter war on the side of Britain and France. The Balfour Declaration of Britain in 1916 allowed unrestricted Jewish settlements  of Palestine. As if by magic, the US enters the war under the cry, ‘Remember the Lusitania’, Trotsky leaves New York with 20 million in gold, Lenin leaves Switzerland in a sealed train for St. Petersburg to start a Bolshevik Revolution. Italy enters the war on the side of the Allies, and bank credits to Germany stop.

In 1917, the US enters the war, and the US tobacco industry wants to help ‘our boys’ fighting in the trenches by supplying them with free cigarettes, and tobacco addiction began. When women won the right to vote in 1920, they were supplied with free cigarettes to celebrate their independence. The boom of 1920 began, and the inventions of Nikola Tesla changed the US;  alternating current, fluorescent lighting, the invention of radio, wireless energy, etc. Marconi did not invent the radio, but sent the first radio signal from Liverpool, England to Gander, Newfoundland based on Tesla’s principles. The boom collapsed in 1929, but the US had positive energy flow. It had the most gold in the world, the strongest currency, positive balance of trade, and could interfere in Latin America with impunity. Hence, it had positive energy flow.

The Second World War enhanced this positive energy, and by 1944, it was able with the help of Great Britain to create the Bretton Woods Convention which crowned the dollar as the official currency of the world. The only opponent was the USSR which had won the war against Nazi Germany.

The US had positive energy flow until a gold run in 1968. The European countries wanted to exchange their trade surpluses for gold. By 1971, the US defaulted on its gold promise. By 1973, President Nixon and Secretary of State Kissinger created the petro dollar. The dollar debt finance of the US and the Third World became the Modus Operandi of the day. IMF and World Bank were loan sharking all over the world, including some Communist countries of Eastern Europe such as Hungary, Poland, Romania, and Yugoslavia.

Consumerism or lack thereof in the Soviet Union led to the dissolution of the Soviet State, even though the basic living standard of the Soviet citizen was higher than that of US citizens. The Soviet citizen enjoyed free education, free health care, public transportation, generous maternity leave and generous holidays. US citizens have none of this in 2016. And the irony is that the Soviet State dissolved and the US still stands. Barely. The people of the US are very angry, and they want change, either by evolution or revolution. The 95 percent of Americans which I call the Precariat Class have barely enough money to survive. The energy flow of the Precariat Class is extremely negative, and never in its entire history has the US faced such a situation.

No wonder Mr. Donald Trump is popular and the Ruling Elite and its overseer class is fearful. The US must restructure its economic system and enable the Precariat Class to have a chance. Change in the US is inevitable either by evolution or by revolution. If it is by revolution, fragmentation of the US is inevitable. Only time will tell.

 

The Dollar Armageddon

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The essential plan of the West is total domination of the Earth, which would result in the flow of all natural resources and all natural wealth to the International Community of the West from the rest, as was done under Colonialism. This new phase of exploitation is being carried out under the banner of Globalization. The Anglo-Americans, the British Empire and the US, were the organizers of the new financial system in 1944 at Bretton Woods, New  Hampshire, US., today known as the Bretton Woods Agreement. The chief players were John Maynard Keynes of the UK, Harry Dexter White, and Henry Morgenthau Jr. of the US Treasury.

The Anglo-Americans realized that the Colonized World wanted to be decolonized and independent, and since they could not prevent decolonization, they decided they could slow it down and install their own puppets. Any new leader who rebelled against Western control would be overthrown or even killed. Winston Churchill proclaimed the Cold War against the USSR in 1947 in Fulton Head, Missouri, USA. Patrice Lumumba of the Belgian Congo comes to mind. He was impaled and killed in 1961.

Globalization began. Beautiful phrases, such as “Food for Peace” programs were used to entrap  newly independent states. Foreign Aid was used not to help but to enslave. The International Monetary Fund{IMF}, and the World Bank were the chief agents of debt enslavement.The Cold War was in full swing.

Despite the massive destruction of the USSR caused by the German invasion in the Second World War, the basic living standard of the Soviet Union was higher than that of the US.  Housing was tight, and families lived together in cramped quarters because of the war destruction, but the Soviet People had jobs, free education, free health care, one month vacation, and one year maternity leave with pay. Public transportation was available. Just compare the metro systems of the two countries in the nineteen fifties. Basic consumer goods were available, but an abundance of consumer goods was not. The Soviet People had job security and a sense of serenity which was not available to the West.

Western policy makers decided to push three things on the world: abundant consumerism vs socialist austerity, wide spread debt at home and abroad, and world-wide militarization as exemplified by NATO, SEATO, and CENTO*; in other words globalization. US banks and corporations were everywhere. American Culture, food, and military bases were everywhere; the US was omnipotent. Credit cards were introduced in the 1960’s. (Remember the commercial for American Express? “Don’t leave home without it.”) Western corporations yearned for profit and huge profits were associated with cheap labour. Western factories were moving East to China, when China opened up in 1979, and to other countries of the East and South as well.

Wages in the US were deteriorating for the working class since the early sixties of the last century, but the US corporation has been doing great. In the 18th and 19th centuries Western corporations were moving slaves from Africa to the plantations of North America, the West Indies, and South America. In the latter half of the 20th Century and the beginning of the 21st Century, corporations have been moving their plantations, factories, to the slaves. 95% of Americans today belong to what I call the Precariat Class, a totally dispossessed economic class.

In 2016, Americans still don’t have tax based universal health care, no free education of superior quality, no affordable housing, no public transportation, and outright home ownership is only around 11%. No wonder Americans are angry, and this is why Donald Trump is winning. The ownership class cannot stop him in an “honest way”, so they will try to stop him either by hook or by crook. Massive demonstrations may occur in defense of Trump. Martial law may be imposed, and the presidential election may be postponed or even cancelled.

Economic conditions are no better. Real unemployment is high, anywhere from 20% to 42%. Wages are stagnating. Ninety million Americans are not working. Obesity, a side effect of the American economic system, is in epidemic mode. Sixty six percent are obese and thirty seven percent are morbidly obese. Chronic diseases such as diabetes, hypertension, cancer are rampant. Life expectancy is going down. Basic infrastructure is collapsing. People are over medicated. Grocery stores are full of embalmed, genetically modified food ( but beautifully packaged!). All for profit, and without giving a damn about people or the environment. Just look at Flint, Michigan and their drinking water. The US, the hope of mankind, is becoming a third world country.

The world economy is no better. Much of the world is either in severe recession or depression. The Baltic Dry Index has imploded, with slight improvement lately. World consumption has collapsed, hence massive slowdown from South Korea to Germany. Japan is in perpetual depression. China is slowing down. Latin America, Africa, and South Asia are either in near or full depressions. Canada, Australia, the European Union are either in severe recession or are entering one. The Ukraine is on the verge of exploding. The Middle East is a cauldron that will enlarge. The only area of stability is Russia and the Commonwealth of Independent States. Sanctions against Russia are great blessings in disguise. Import substitution and self reliance are engines of growth and power. Presently, Brazil and Venezuela are being destabilized from outside and inside.

In summary, unnecessary consumption is collapsing world wide. Debt in dollar terms is still growing  but at a snail’s pace. World wide trade is collapsing. Countries with an independent foreign policy such as India, Iran, China, Russia, and others are accumulating gold and shunning the dollar. This is a nightmare for the US. It is quite possible that some obscure company somewhere in the South Asian region will reject trade in dollars, but will accept gold or Chinese yuan. Panic will set in. The dollar could drop by twenty percent in overnight trade. Gold and silver would sky rocket. Trade between the US and the world would collapse. Interest rates in dollars would rise to an unbelievable level, but would not help the dollar. The US could not import anything with its currency, but only with gold or some foreign currency which was convertible to gold. The Armageddon of the dollar is coming. The ownership elite of the US will know for the first time in its history what it’s like to actually work for a living rather than living off the suffering and labor of others. My analysis is very, very correct and true but only time will reveal that.

 

*= NATO: North Atlantic Treaty Organization SEATO: Southeast Asia Treaty Organization

     CENTO: Central Treaty Organization

 

 

 

The Precariat Class

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In my previous posts I stated that the economic system of the US is based on three pillars of paper, and all three are based on debt. The three pillars of paper are the dollar, the bond and the stock market. If one falters, all three will collapse, and the economic system which is so blindly venerated will collapse. The capitalist system of the West has become totally parasitic, and it no longer can  grow  at the rate that is needed to sustain itself. The debt or usury rate has to grow. Every year the growth of debt has to be much bigger than the previous year. If debt grows but not as fast as in previous years crisis develops which may lead the system into total collapse. This is happening right now.

The Western economic system since 1980 has had no real growth. Immense debt growth has been used to claim that there was real growth. Reaganomics was the last “hurrah.” The middle class has collapsed because the good jobs have disappeared. Now we have three economic classes in the US: the ownership class {one percent], the overseer class {five percent}, the Precariat class {ninety four percent}. Precariat means uncertain in Latin. Ninety four percent of Americans live in great uncertainty, hence, the Precariat Class.  The country is decaying: infrastructure, education, health, housing. The Precariat class senses that there is something profoundly wrong with the country, and that it will get worse. No recovery but great upheaval is awaiting the country.