Category Archives: the Ownership Class

High stock prices are a danger to the US economy

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.

 

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The Age of Survival Economics

Survival economics have been in existence since life began on Earth. The primary instinct of all life on Earth, be it plant or animal, is survival, and perpetuation of its own kind. Mankind has been no exception.

With the discovery of the New World, the Colonial powers of the West extracted immense wealth from the rest of the World. New settlements and new countries were founded. The new countries rose to immense prominence such as the US, and others such as Brazil, Argentina, Canada, Australia, etc. to lesser prominence. They prospered and grew, along with the US, as the Lands of Opportunity. Nobody, but nobody could equal the growth, the innovation, the power, and the wealth of the US. The dollar became the Reserve and Official currency of the World in 1944, and was proclaimed as such in Bretton-Woods, New Hampshire, USA. All the world’s debt and trade was denominated in US dollars. The dollar was convertible to gold at 35 dollars an ounce. The US became the master of the world. The only country that would not buckle was the war damaged USSR. The Cold War was instituted to destroy USSR. The Soviet Union collapsed in 1989 through it own internal decay and weakness. The End of History was proclaimed and Western Liberal Ideas were proclaimed as supreme and immutable like the Laws of Nature.

But it was not to be so. Man made concepts cannot be compared to the Laws of Nature. Economic systems are concocted to serve the economic interests of the ruling elite. Laws and ideas are created to brainwash the masses. Eventually, the system starts breaking down and no laws or recycled ideas can save it. We are at such a period now.

Despite denials, the world is in recession. Actually, some areas of the world are in depression. Wages have stagnated, especially in the EU, Canada, and the US. Jobs created in the US are low wage and part time. Attempts to stimulate the economy through quantitative easing have not worked. SNAP {food stamps} have been expanded to help the poor. Under President Obama, the SNAP program has expanded from twenty three million in 2008 to nearly forty five million in 2016. The food program is a double edged sword. It keeps the poor from starvation but it entices them to buy junk food and drinks which leads to obesity and ill health. They buy processed food because it is cheap. At the same time, the SNAP program is a huge subsidy for giant Agri business, food processors, and giant food chains.

There can be no recovery because the US is suffering from negative energy flow which is reflected in the growth of debt, individual, corporate, and governmental at all levels. Wages are stagnating. Whatever positive energy there is, goes mostly to one percent of the population, the ownership class. Some energy goes to around five percent of the population, the overseer class. The overseer class faithfully serves the ownership class, and some members are abundantly rewarded. The Precariat Class which is around ninety percent of the population gets very little, if any, of the positive energy flow. The Precariat Class has some positive energy flow in the form SNAP, etc, which is a form of subsidy to giant corporations.

In the end, everything flows to the ownership class. Tax cuts, deregulation, and infrastructure renewal will not help because it will be based on more debt. Survival Economics is already the Modus Vivendi for the Precariat Class. Massive violence in society could be next.

US average income in gold terms from 1960 to 2016

Average annual US income in 1960 was around 4500 dollars. In gold terms, this was 128.5 ounces of gold. Gold being fixed at 35 dollars an ounce. In 1960, the US had the highest living standard in the world. A worker could support a family of five or so members. An income sufficient to support a family today would have to be 128.5 ounces of gold multiplied by 1200 dollars, the price of gold, and one gets an income of 154,200 dollars.
In 1960, wealth disparity was around 25 to 1. Wealth disparity in 2016 is over 350 to 1. Wealth disparity in the last 50 to 60 years has grown so fast and so high, it has no parallel in human history.
Average annual income today, in 2016, is 52,000 dollars. In gold terms that is 43.33 ounces of gold, derived by dividing 52,000 dollars by the average price of gold which is 1200 dollars.
In 1960, the US had a large middle class but today, it is almost non existent, apart from an Overseer Class, the five percent, which is in the service of the Ownership Class, the one percent. The poverty rate was high in 1960, around 15 percent, but in 2016 it is over 25 percent. It is evident that the standard of living of Americans has collapsed over the last 50-60 years, and is approaching that of the Third World.

In 2016, the US has three economic classes: the ownership class of about one percent, the overseer class of around five percent, and the Precariat class of around 90 to 95 percent. The Precariat class has no wealth, lives from hand to mouth existence, and, if lucky, holds two or three jobs, working themselves to an early death. Some members of the overseer class talk nonsense on TV programs glorifying the ownership class, assuring their own cushy existence and brainwashing the Precariat class. Meanwhile the ownership class, travelling in their private jets like Greek gods, scheme how to take over natural resources, control other countries, and, possibly, start wars.

The Precariat Class has elected Mr. Trump the President of US because they desperately need change. Will he deliver? That’s difficult to say. Tax cuts of 30%, deregulation, and more defense spending will not do the trick. What would possibly do the trick is to maintain present spending, but cut defense spending by fifty percent. Also, to cut all discretionary spending and invest that money into infrastructure rejuvenation and new industries that would produce the useful products that the world needs and wants. Also they would pay a living wage to American workers with government sponsored health care. Private, parasitic insurance companies have no business to being in “healthcare”. Good, quality education with high standards must be established. All forms of private parasitism must be eliminated. Whether this will be enacted, remains to seen. The hour grows late and patience is running thin…

Is the US facing the same problems as Third Century Rome?

The world, but particularly the US, is entering a period of great uncertainty, as did Rome in the third century AD. There were external threats and internal instability. Inflation was destroying the internal fabric. The coinage was diluted of its precious metals, silver and gold. People lost faith in its institutions, its army and its emperors. Through such inflation, the people were getting poorer. The longevity of its emperors was very short after the assassination of the Emperor Alexander Severus in 235 AD  The Empire fragmented and was in danger of collapsing. Two external threats were ever present: the Tribes of Northern and Eastern Europe were pressing on the Empire and in the East, there were Persian threats. Three emperors lost wars with Persia, and one, Emperor Valerian, was even captured by the Persians in 260 AD through a ruse.

The 42nd Emperor Claudius Gothicus, (268-270), stabilized the frontiers by defeating the Alemani and the Goths, but unfortunately, died of some kind of infection.  The 51st Emperor Deocletian, (284-305), further strengthened the Empire by reducing inflation, further stabilizing the frontiers, and introducing tetrarchy to government. Tetrarchy is four person rule.  Deoclitian split the administration into a Western Empire centered in Rome, and an Eastern Empire centered in the future city of Constantinople to be founded by Emperor Constantine the Great in 330 AD. When the Western Empire fell in 476 AD, the Eastern Empire or Byzantine Empire lasted for almost one thousand years until Contantinople fell to the Turks in 1453.

Is the US in a similar situation? Possibly?  The US has been in decline since President Nixon defaulted on the gold obligation of 35 dollars for one ounce of gold. Nixon proclaimed it would be temporary, but almost 50 years later is still going. As a result inflation became rampant, Congress became generous and passed the law that allowed Americans to own gold again. President Roosevelt and Congress banned ownership of gold except in jewelry in 1933.

Economic conditions were deteriorating slowly. Inflation in the seventies, Reaganomics in the eighties, Clintonomics in the nineties, subprime mortgages and the tech bubble in the first decade of the new millennium and a severe bust in 2007-09 that nearly collapsed the entire system. Throughout this period, living standards for Americans were going down. The main culprits were debt, public and private, quality job losses, inflation, lack of affordable universal health care, expensive education, and foreign military interventions.

As I mentioned in my previous posts, the three pillars of paper, all based on debt, are keeping this system afloat, but just barely, and they are the dollar, the stock market, and the bond market. The Federal Reserve and the Treasury are keeping the system going by shunting new money into stocks and bonds creating conditions for a financial shock that is becoming inevitable. Zero interest rates and quantitative easing are propping up the system, but not curing it; it cannot be cured.

One could call the US economy a “mirage” because there has been no actual growth since the late 1960’s. The living standards of the people have been going down and down, but the lies and deceptions have been going up. One does not know whom to believe. In socio-economic terms, three economic classes have developed in the US: the owner class of 1%, the overseer class of 4-5%, and the Precariat class of around 95%. The Precariat Class is composed of all ethnic groups, religions, and races, but it is kept divided by the Ownership Class for its own interests. The Precariat is on the whole totally dispossessed, and they live from pay cheque to pay cheque, with the loan sharking firms eating them in between.

The present recovery after the almost system collapse 0f 2007-8, has been nothing but “a mirage”, a statistical “recovery” propped by a series of quantitative easings and zero interest rates. The ownership class and the overseer class are doing extremely well, but the precariat class is barely surviving.

In foreign policy, the US, a hegemonic power, has become a reactionary force in order to maintain its world wide empire based on dollar indebtedness and exploitation of the rest of the world. Through its policy in the Middle East, it has lost Iran and now may lose Turkey, two large countries dominating the key strategic areas of the Afro-Eurasia. It is true, the US has gained  eastern Europe through the European Union and NATO, but Europe itself has become unstable.

In the Middle East, some claim that the US and Israel have created ISIS and Al-Qaeda  to destroy Syria and Iraq in order to get to Iran, and take total control of the Middle East and its natural resources. If Turkey switches to Eurasia, and a compromise is reached between Syria and Turkey, the US will lose the Middle East. The next shoe to drop will be Saudi Arabia because of its disastrous war in Yemen, as well as internal dissension.

Never before in its history has the US faced such complex problems as a dying economy  reflected in dying cities, dilapidated infrastructure, poor but costly education and health care; city violence could be a precursor to a general revolt.

The world is waiting with bated breath the results of the US presidential elections, The precariat class is flocking to Mr. Trump for salvation and the ownership class is in a panic. How the elections will turn out nobody knows, but if there is a financial collapse Trump would win massively. In that case, it is quite likely that martial law would be proclaimed and the elections postponed. Only time will tell.

Donald Trump, A Force of Nature

In previous posts I have stated that the US socio-economic system is based on three economic classes: the ownership class, 1%, doing extremely well; the overseer class,4%, doing quite well; and the PRECARIAT class, 94%, doing very badly. The middle class is gone or it never existed. What existed from 1945 to 1980 were high paying jobs which were the envy of the world. I do believe that 1980 was the first year that the US experienced annual account deficits, and they have been negative ever since on a larger and larger scale. The Precariat class is getting angrier and angrier.

If one watches American media, one sees the members of the overseer class bloviating and pontificating about how things are great. Occasionally, they will have members of the ownership class on these programs in whose presence they will prostrate themselves.

2016 is the Presidential Election Year and the Precariat class has a chance to express itself. They are up against the status quo. All candidates, Democratic and Republican, are beholden to the ownership class or oligarchy except for one: Donald Trump. Mr. Trump is very unusual in that he is very intelligent, emotionally honest, has a sense of justice, and appears to be very common as if he were a member of the Precariat class. In Mr. Trump, they see hope.  The Republican establishment is in panic mode. The modus operandi of the establishment is no longer working. If the ruling elite allows the democratic process to continue, Donald Trump will win the Republican Nomination and the Presidency of the US. He might just be the person that will be able to restructure the US economic system and bring peace to the world.

If the oligarchy, also known as plutocracy, tries to prevent him from becoming the Republican candidate, violence and revolution are inevitable. The Precariat Class will say: BASTA. If an economic black swan occurs, the upheaval will be inevitable. Some advice to the plutocracy: embrace The Donald, A Force of Nature, he might save your sinful souls and the nation. Only time will tell.