“Russia Did It” and Other Crimes

Posted with permission and written by Rory Hall, The Daily Coin

 

 

 

 

 

We haven’t had a system of capitalism since the Federal Reserve and Woodrow Wilson hijacked the US Treasury and US economy in 1913. Our financial, monetary and economic system has morphed into fascism, corporatism or something more akin to communism/socialism. The way our economy operates today, in 2017 - it is certainly not capitalism.

 

Since 2008, the ruling and banking class haven’t even tried to hide the FACT that our system is about oligarchs and theft – anything but capitalism. The same could be said for Europe and most any Western “developed” nation. We have a program called Quantitative Easing, which is a fancy, made-up way of saying money printing and bond market manipulation. We also have, proven in a court of law, rigged FOREX markets – the global currency market. The LIBOR market (loan interest rate market) is also rigged as proven, once again in a court of law.

 

Look at Greece, Venezuela and Zimbabwe for the second time in less than 20 years. These three nations have seen their economies completely collapse. Greece has been propped up by the European Central Bank because if Greece’s economy were to rot away in the same way as Venezuela and Zimbabwe, then Germany and Deutsche Bundesbank, Germany’s central bank, would collapse. This would trigger a global economic collapse that would make 2008 look like a rounding error. This will not do.

 

Until what is explained above is understood, capitalism will continue to be made out to be the bad guy of our economic problems. As long as capitalism is made the enemy, the ruling and banking class criminals can and will continue their global crime sprees uncontested. One can not compare our current economic system to capitalism when it has almost nothing to do with capitalism. If one compares it to fascism, then the truth is more easily understood. Fascism is all about inequality – haves and have nots, with nothing in-between. What do we hear from the mainstream media over and over – the one thing they actually get right – is there is an attack on middle class incomes and middle class America. This is 100% correct. Until the middle class is completely wiped out, the oligarchs can not truly dictate what the masses will accept.

 

The US government does not represent the interests of the majority of the country’s citizens, but is instead ruled by those of the rich and powerful, a new study from Princeton and Northwestern Universities has concluded.

The report, entitled Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, used extensive policy data collected from between the years of 1981 and 2002 to empirically determine the state of the US political system.

After sifting through nearly 1,800 US policies enacted in that period and comparing them to the expressed preferences of average Americans (50th percentile of income), affluent Americans (90th percentile) and large special interests groups, researchers concluded that the United States is dominated by its economic elite.
Source

If you combine this information with what is happening today with the “Russia did it” narrative then we see how these oligarchs push the mass of people to accept whatever lie they are pushing. If there is information that will prove Hillary is a treasonous criminal who should be investigated and then imprisoned for high crimes, well, simply ignore that information and never, ever present credible information on any mainstream media TV or radio. TV and radio are for entertainment, not real information.

 

No one who is promoting the Russiagate allegations is trying to debate William Binney’s allegations.

Instead, all of the news media are plastered with allegations of ‘Russia’s meddling in American democracy’.

William Binney is the mathematician and Russia-specialist, who quit the NSA in 2001 as its global Technical Director for geopolitical analysis, because of the lying about, and manipulations of, intelligence, that he saw — distortions of intelligence by the George W. Bush Administration — in order to ‘justify’ systematic, massive, and all-encompassing, Government snooping into all Americans’ private electronic communications. His, and some colleagues’, efforts to get the Inspector General of the US Department of Defense to investigate the matter, produced FBI raids into their homes, and seizures of their computers, so as to remove incriminating evidence they might have against higher-ups. According to Binney, NSA’s Director, Michael Hayden, had vetoed in August 2001 a far less intrusive and more effective system of signals-intelligence collection and analysis, which might have enabled the 9/11 attacks to be blocked — a more effective system that would have been less expensive, less intrusive, and not violated Americans’ Constitutional rights. Hayden went on to head the CIA, until the end of George W. Bush’s Presidency. Afterward, Hayden joined the Chertoff Group and other military-industrial-complex contractors of the US federal Government. There were no such rewards for any of the whistleblowers. Source

All of these issues are interconnected. If the economy were capitalistic, we would have real news on TV and radio. If we had real news on TV and radio, we would hear from people like William Binney and

reports like Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens would be reported on as well. This would lead directly to the arrest of people like Prescott Bush, George Bush, Sr, George Bush, Jr, the Clinton Crime Family and Obama. This would then lead to the arrest of every banking president and banking “C” level executive for the past 50+ years. This would then lead to the arrest of the “C” level executives of some of the largest corporations in the world.

 

It all begins, as we have stated time and again, with a corrupt currency. Once a currency becomes corrupt, the entire system is forced into a life of corruption and crime to cover up the lies the currency is telling. The currency we have in our wallets is a criminal, corrupt liar. Until we attack this criminal and correct the lies, we will continue to be slaves to the oligarchs.

 

 

 

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“Russia Did It” and Other Crimes

Posted with permission and written by Rory Hall, The Daily Coin

 

 

 

Check out these other articles by our contributors:

 

John Rubino - Gold vs. Bitcoin: The Pro-Gold Argument Takes Shape

Peter Diekmeyer - The 2.4 Trillion Hidden Fed Tax

Ed Steer - Gold and Silver Digest

Eric Sprott"s Weekly Wrap-Up

 

Is Capitalism Dead Or Merely Dying?

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

New Zealand’s new prime minister Jacinda Ardern calls capitalism a blatant failure. Former Greek finance minister Yanis Varoufakis says capitalism is ‘merely’ coming to an end because it is making itself obsolete. Mathematics professor Bruce Boghosian claims that without redistribution of wealth, our market economy would not be stable, because wealth always tends to concentrate. The people at Artemis Capital Management write that the stock market has begun self-cannibalizing like a snake eating its tail, and the only reason we’re not in a recession already is ‘financial alchemy’.

At the very least we can say that the system is under pressure. But what system is that? It would be nice to have a clearcut definition of capitalism, but alas, there are many, about as many as there are different forms of it. That doesn’t make this any easier. Americans call many European economies ‘socialist’, which seems to mean they are not capitalist. But Scandinavian countries don’t function like the Soviet Union either.

And if you see how much money is involved in transfer payments to citizens in the US, the supposed bastion of free market capitalism, it’s tempting to conclude the system has already failed. But even with transfer payments, inequality is at record levels. That would seem to confirm Boghosian’s statement that “even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result..” So what then?

Varoufakis and others want a “universal basic dividend”, or “universal basic income”. Would that be the end of capitalism as we know it? Or is it just a -perhaps more extreme- form of ‘state capitalism’? Varoufakis deems it inevitable because technology will eradicate so many jobs from societies that people won’t be able to make money from work. Personally, I’ve long thought that the pending large-scale demise of pensions systems will lead to some form of UBI.

37-year-young Jacinda Ardern is very clear in her assessment of New Zealand’s form of capitalism. If you’ve got the worst homelessness in the developed world, you have a broken system. If the system fails the people, it’s no good. Other people might argue that capitalism never promised to take care of everyone. Or rather, not through state interference. Labour’s Ardern has her view:

New Zealand’s New Prime Minister Brands Capitalism A ‘Blatant Failure’

[Jacinda] Ardern, has pledged her government will increase the minimum wage, write child poverty reduction targets into law, and build thousands of affordable homes. In her first full interview since becoming prime minister-elect, she told current affairs programme The Nation that capitalism had “failed our people”. “If you have hundreds of thousands of children living in homes without enough to survive, that’s a blatant failure,” she said. [..] “When you have a market economy, it all comes down to whether or not you acknowledge where the market has failed and where intervention is required. Has it failed our people in recent times? Yes. How can you claim you’ve been successful when you have growth roughly 3%, but you’ve got the worst homelessness in the developed world?”

So to which extent should a state interfere in markets, and in society at large? There are obviously wide ideological divides when it comes to answering that one. Does that mean there is no answer possible at all? Perhaps not. Perhaps the answer lies in the fact that the system is predestined to fail, as Boghosian’s mathematical models suggest: “Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair..”

That doesn’t necessarily demand a lot of interference, we could ‘simply’ write the rules of the game in such a way that the ‘natural tendency’ towards wealth concentration is blocked. An example is the history of the top US income tax rate. Arguably, the nation was doing a lot better under Eisenhower and Kennedy, with a top rate of 91%, than it is today. If you put a few rules like that in play, perhaps including Varoufakis’ idea of a ‘common welfare fund’, maybe the state doesn’t have to interfere much otherwise.

One of the main underlying claims of capitalism, and of macroeconomics in general, is that markets -and societies- will sort themselves out if left alone. Bruce Boghosian says this is not true, and that he has the math to prove it. The entire notion of markets tending towards a ‘supply-demand equilibrium’ is nonsense, he says (echoing Minsky, Steve Keen et al). Trickle-down economics is a figment of the imagination, while trickle up-economics flourishes.

This refutes much of what our economic systems are based on, which would appear to indicate that we need an urgent revision of these systems. Unless we would agree that Darwin-on-Steroids is a good idea. We don’t and won’t, because it would mean Stephen Foster’s “frail forms fainting at the door” all over the place. A market ideology that causes widespread misery has no future.

The Mathematics of Inequality

Seven years ago, the combined wealth of 388 billionaires equaled that of the poorest half of humanity , according to Oxfam International. This past January the equation was even more unbalanced: it took only eight billionaires, marking an unmistakable march toward increased concentration of wealth. Today that number has been reduced to five billionaires.

 

Trying to understand such growing inequality is usually the purview of economists, but Bruce Boghosian, a professor of mathematics, thinks he has found another explanation—and a warning. Using a mathematical model devised to mimic a simplified version of the free market, he and colleagues are finding that, without redistribution, wealth becomes increasingly more concentrated, and inequality grows until almost all assets are held by an extremely small percent of people.

 

“Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair,” he said. “Our model, which is able to explain the form of the actual wealth distribution with remarkable accuracy, also shows that free markets cannot be stable without redistribution mechanisms. The reality is precisely the opposite of what so-called ‘market fundamentalists’ would have us believe.”

 

While economists use math for their models, they seek to show that an economy governed by supply and demand will result in a steady state or equilibrium, while Boghosian’s efforts “don’t try to engineer a supply-demand equilibrium, and we don’t find one,” he said. [..] The model tracks the data with remarkable accuracy, he said. He and his team will soon publish a paper on how it relates to U.S. wealth data from 1989 to 2013.

 

“We have also begun to apply it to wealth data from the ECB, and so far it seems to work very well for certain European countries as well,” he said [..] It turns out that when agents do well in early transactions, the odds are so increasingly stacked in their favor that—without redistribution from taxes or other wealth-transfer mechanisms—they will get more money, and keep accruing wealth inevitably.

 

“Without redistribution of wealth, our market economy would not be stable,” said Boghosian. “One person would run away with all the wealth, and it would keep going until it came to complete oligarchy.” And even if a society does redistribute wealth, if it’s too small an amount, “a partial oligarchy will result,” Boghosian said.

If markets and societies cannot survive under current rules, theories and ideologies, what do we do? The Artemis guys strongly suggest we stop the practice of excessive stock buybacks- even if they’re the only thing propping up the whole market system. Because they’re leading us straight into a recession. Because they’re making that recession a lot worse.

Volatility and the Alchemy of Risk

The Ouroboros, a Greek word meaning ‘tail devourer’, is the ancient symbol of a snake consuming its own body in perfect symmetry. The imagery of the Ouroboros evokes the infinite nature of creation from destruction. The sign appears across cultures and is an important icon in the esoteric tradition of Alchemy. Egyptian mystics first derived the symbol from a real phenomenon in nature. In extreme heat a snake, unable to self-regulate its body temperature,will experience an out-of-control spike in its metabolism. In a state of mania, the snake is unable to differentiate its own tail from its prey,and will attack itself, self-cannibalizing until it perishes. In nature and markets, when randomness self-organizes into too perfect symmetry, order becomes the source of chaos.

 

The Ouroboros is a metaphor for the financial alchemy driving the modern Bear Market in Fear. Volatility across asset classes is at multi-generational lows. A dangerous feedback loop now exists between ultra-low interest rates, debt expansion, asset volatility, and financial engineering that allocates risk based on that volatility. In this self-reflexive loop volatility can reinforce itself both lower and higher. In a market where stocks and bonds are both overvalued, financial alchemy is the only way to feed our global hunger for yield, until it kills the very system it is nourishing.

[..] At the head of the Great Snake of Risk is unprecedented monetary policy. Since 2009 Global Central Banks have pumped in $15 trillion in stimulus creating an imbalance in the investment demand for and supply of quality assets. Long term government bond yields are now the lowest levels in the history of human civilization dating back to 1285. As of this summer there was $9.5 trillion worth of negative yielding debt globally. Last month Austria issued a 100-year bond with a coupon of only 2.1%(6) that will lose close to half its value if interest rates rise 1% or more. The global demand for yield is now unmatched in human history. None of this makes sense outside a framework of financial repression.

 

Amid this mania for investment, the stock market has begun self-cannibalizing… literally. Since 2009, US companies have spent a record $3.8 trillion on share buy-backs financed by historic levels of debt issuance. Share buybacks are a form of financial alchemy that uses balance sheet leverage to reduce liquidity generating the illusion of growth. A shocking +40% of the earning-per-share growth and +30% of the stock market gains since 2009 are from share buy-backs. Absent this financial engineering we would already be in an earnings recession.

 

Any strategy that systematically buys declines in markets is mathematically shorting volatility. To this effect, the trillions of dollars spent on share buybacks are equivalent to a giant short volatility position that enhances mean reversion. Every decline in markets is aggressively bought by the market itself, further lowing volatility. Stock price valuations are now at levels which in the past have preceded depressions including 1928, 1999, and 2007. The role of active investors is to find value, but when all asset classes are overvalued, the only way to survive is by using financial engineering to short volatility in some form.

Yanis Varoufakis doesn’t so much argue that capitalism has already failed, he says it is bound to fail in the near future. Because new technology, including artificial intelligence, will destroy too many jobs for society to continue to function intact. That is already happening, in that we both produce and consume Google’s ‘products’, but we get none of the profits. An example:

Google’s Plan To Revolutionise Cities Is A Takeover In All But Name

Alphabet’s weapons are impressive. Cheap, modular buildings to be assembled quickly; sensors monitoring air quality and building conditions; adaptive traffic lights prioritising pedestrians and cyclists; parking systems directing cars to available slots. Not to mention delivery robots, advanced energy grids, automated waste sorting, and, of course, ubiquitous self-driving cars. Alphabet essentially wants to be the default platform for other municipal services. Cities, it says, have always been platforms; now they are simply going digital.

 

“The world’s great cities are all hubs of growth and innovation because they leveraged platforms put in place by visionary leaders,” states the proposal. “Rome had aqueducts, London the Underground, Manhattan the street grid.” Toronto, led by its own visionary leaders, will have Alphabet. Amid all this platformaphoria, one could easily forget that the street grid is not typically the property of a private entity, capable of excluding some and indulging others. Would we want Trump Inc to own it? Probably not. So why hurry to give its digital equivalent to Alphabet?

Google aims at taking over our entire communities, and claims this will be to our benefit. We let the new technology companies expand far and wide, to a large extent because our ‘leaders’ don’t understand what is happening any better than we do. But that is not a good thing, for many different reasons. It’ll be very hard to whistle them back later, both because of the wealth they’re building, and because of the intensifying links they have to government, including -or especially- the intelligence community.

Capitalism Is Ending Because It Has Made Itself Obsolete

Former Greek finance minister Yanis Varoufakis has claimed capitalism is coming to an end because it is making itself obsolete. The former economics professor told an audience at University College London that the rise of giant technology corporations and artificial intelligence will cause the current economic system to undermine itself.

Mr Varoufakis [..] said companies such as Google and Facebook, for the first time ever, are having their capital bought and produced by consumers. “Firstly the technologies were funded by some government grant; secondly every time you search for something on Google, you contribute to Google’s capital,” he said. “And who gets the returns from capital? Google, not you. “So now there is no doubt capital is being socially produced, and the returns are being privatised. This with artificial intelligence is going to be the end of capitalism.”

 

Warning Karl Marx “will have his revenge ”, the 56-year-old said for the first time since capitalism started, new technology “is going to destroy a lot more jobs than it creates”. He added: “Capitalism is going to undermine capitalism , because they are producing all these technologies that will make corporations and the private means of production obsolete. “And then what happens? I have no idea.”

 

Describing the present economic situation as “unsustainable” and fearing the rise of “toxic nationalism”, Mr Varoufakis said governments needed to prepare for post-capitalism by introducing redistributive wealth policies. He suggested one effective policy would be for 10% of all future issue of shares to be put into a “common welfare fund” owned by the people. Out of this a “universal basic dividend” could be paid to every citizen.

Has capitalism failed already, as Jacinda Ardern claims, or will that happen only in the future, as Varoufakis says? It may be a moot question once the system and the markets start collapsing. That they will, and must, is not a question but a certainty, even a mathematical one. Whatever your ideology, that is not a good thing. And the current ideology has caused this, that much is clear.

If the remaining wealth is not divided better than it is today, those who have gathered most of it will also find themselves in non-functioning societies and communities. Unless perhaps you’re George W. and have property in Paraguay.

But even then. We’re eating our tails.

Capitalism - A New Idea

Authored by Jeff Thomas via InternationalMan.com,

Capitalism, whether praised or derided, is an economic system and ideology based on private ownership of the means of production and operation for profit.

Classical economics recognises capitalism as the most effective means by which an economy can thrive. Certainly, in 1776, Adam Smith made one of the best cases for capitalism in his book, An Inquiry Into the Nature and Causes of the Wealth of Nations (known more commonly as The Wealth of Nations). But the term “capitalism” actually was first used to deride the ideology, by Karl Marx and Friedrich Engels, in The Communist Manifesto, in 1848.

Of course, whether Mister Marx was correct in his criticisms or not, he lived in an age when capitalism and a free market were essentially one and the same. Today, this is not the case. The capitalist system has been under attack for roughly 100 years, particularly in North America and the EU.

A tenet of capitalism is that, if it’s left alone, it will sort itself out and will serve virtually everyone well. Conversely, every effort to make the free market less free diminishes the very existence of capitalism, making it less able to function.

Today, we’re continually reminded that we live under a capitalist system and that it hasn’t worked. The middle class is disappearing, and the cost of goods has become too high to be affordable. There are far more losers than winners, and the greed of big business is destroying the economy.

This is what we repeatedly hear from left-leaning people and, in fact, they are correct. They then go on to label these troubles as byproducts of capitalism and use this assumption to argue that capitalism should give way to socialism.

In this, however, they are decidedly wrong. These are the byproducts of an increasing level of collectivism and fascism in the economy. In actual fact, few, if any, of these people have ever lived in a capitalist (free-market) society, as it has been legislated out of existence in the former “free” world over the last century.

So, let’s have a look at those primary sore spots that are raised by suggesting that collectivism will correct the “evils” of capitalism.

Prices Are Driven From the Top Down

This is unquestionably the case in the aforementioned countries, however, it is not so under capitalism. Under capitalism, each producer tries to get as much as he can for his product, but, as others are also creating the same product, those with the lowest price are the ones who will succeed. Therefore, the consumers effectively set the prices, based upon what they’re willing to pay.

But in any country where cronyism exists between big business and government, regulations can squeeze out the competition, allowing a monopoly for a given product. The definition of this marriage between business and government is “fascism.” The government makes it increasingly difficult, through regulation, for the small producer to compete with the larger producer (who gives kickbacks to the government).

Capitalism Only Benefits Those at the Top

Capitalism benefits those who produce the most, but it also benefits all others, as they have a free choice to purchase whatever products they wish, at a price they’re prepared to pay. If the producer demands too high a price, consumers instead buy his competitor’s product, putting him out of business. The consumer is therefore in charge of the price of goods. A producer only rises to the top if he produces the most affordable product (as did Henry Ford, 100 years ago, with his Model T. Through the free market, he lowered his price repeatedly and, in so doing, put America on wheels).

Capitalism Impoverishes the Masses

The free market offers more goods to more people at lower prices, which enriches the lives of all consumers, no matter how rich or poor. In so doing, it raises up the masses over time, providing them with more and better goods, education, health care, etc., enabling them to rise out of poverty. By contrast, overregulation and entitlements enslave those same people to poverty.

Capitalism Can Only Work if It’s Heavily Regulated

The whole idea of the free market is that it’s free from interference by others—most importantly, governments. If left alone, the free market will produce the goods the public are most willing to pay for, which results in an ever-self-levelling of products and prices. As soon as regulation enters the picture, the free market is compromised. What exists today is not a free market, as Adam Smith would have recognised it, but a bloated, dysfunctional socialist/fascist/capitalist mongrel of a system. Of course it doesn’t work.

Fascism is capitalism in decay.

—Vladimir Lenin

Quite so. Regulation is a cancer that slowly eats capitalism until it morphs into fascism.

Do not their leaders deprive the rich of their estates and distribute them among the people; at the same time taking care to preserve the larger part for themselves?

—Socrates to Adeimantus

What was true ca. 400 BC in Athens is true today. Fascism (or corporatist cronyism) results in 99% of the population coming under the diktat of the 1%, which is made up of government leaders and corporate leaders, working in concert, to the exclusion of all others. This is, in fact, the opposite of a free market.

The creation of new wealth is the only functional weapon against poverty.

—Doug Casey

New wealth comes from the bottom up - it’s as simple as someone building a better mousetrap, or building the old one more cheaply. In such a market, both the producer and the consumer benefit.

In a fascist system, the wealth gravitates to the top, eventually choking out the middle class and expanding the poorer class, and that’s just what we’re witnessing today. The solution is not to go further in this direction, but rather to try something new… or at least new to anyone living under the fascist system. Although it still retains some capitalist overtones, it is unquestionably not capitalism.

A last word—capitalism does exist today, but it lives in select countries that have not yet given in to overregulation. In those countries, the average person thrives and has opportunities far beyond what’s allowed in the former “free” world. Should the reader conclude that his present country is unlikely to go in the direction of capitalism, he may choose to vote with his feet in order to prosper the way his ancestors did 100 years ago.

*  *  *

Today, Washington’s dangerous fascist policies have pushed the US economy to the tipping point. Years of overregulation, corporate bail outs, manic money printing, and artificially low interest rates, have bloated and warped the economy. Now it’s about to unravel… That’s why New York Times best-selling author Doug Casey and his team just released an urgent video. Click here to access it now.

Why Wage Growth Is So Weak

The yearly growth rate of average hourly earnings in production and non-supervisory employment in the private sector eased to 2.3% in June from 2.4% in May.

Many experts are puzzled by the subdued increase in workers earnings. After all, it is held the US economy has been in an expansionary phase for quite some time now.

Softer real output growth important reason why hourly earnings remain under pressure

According to the US Government’s own data, since 2000, in terms of industrial production, the US economy has entered a subdued growth phase. (Note that between 1945 to early 2000 the industrial production index had been following a visible uptrend). Therefore, it seems the underlying ability of the economy to grow has been visibly undermined. So from this perspective the slow growth rate in output could be an important reason behind the softer wages growth rate.

Some commentators such as the vice chairman of the US Federal Reserve Stanley Fischer has suggested that slowing productivity could be an important factor behind all this.

That a fall in the productivity of workers could be an important factor is a good beginning in trying to establish what is really happening. It is however, just the identification of a symptom — it is not the cause of the problem.

Now, higher wages are possible if workers’ contribution to the generation of real wealth is expanding. The more a particular worker generates as far as real wealth is concerned the more he/she can demand in terms of wages.

An important factor that permits a worker to lift productivity is the size and the quality of the infrastructure that is available to him. With better tools and machinery, more output per hour can be generated and hence higher wages can be paid.

It is by allocating a larger slice out of a given pool of real wealth towards the build-up and enhancement of the infrastructure, that more capital goods per worker emerges (more tools and machinery per worker). This sets the platform for higher worker productivity and hence to an expansion in real wealth and thus lifts prospects for higher wages. (With better infrastructure workers can now produce more goods and services).

Capital goods formation and monetary pumping

The key factors that undermine the expansion in the capital goods per worker is an ever expanding government and loose monetary policies of the central bank. Yet many believe that both these institutions play a pivotal role in supporting the economy. According to the popular view, what drives the economy is the demand for goods and services. If, for whatever reasons, insufficient demand emerges, then it is the role of the government and the central bank to strengthen the demand to keep the economy going. Or so it is held.

There is, however, no independent category such as demand that drives an economy. Every demand must be funded by a previous production of wealth. By producing something useful to other individuals an individual can exercise a demand for other useful goods.

Any policy, which artificially boosts demand, leads to consumption that is not backed up by the previous production of wealth. For instance, monetary pumping that is supposedly aimed at lifting the economy in fact generates activities that cannot support themselves. This means that their existence is only possible by diverting real wealth from wealth generators. This in turn weakens wealth generation ability to produce wealth.

Note that monetary pumping sets a platform for various non-productive or bubble activities — instead of wealth being used to fund the expansion of a wealth generating infrastructure, the monetary pumping channels wealth towards wealth squandering activities. This means that monetary pumping leads to the squandering of real wealth. Similarly, a policy of artificially lowering interest rates in order to boost demand in fact provides support for various non-productive activities that in a free market environment would not emerge.

The origin of wealth erosion — financial deregulation

The introduction of deregulation of financial markets since early 1980’s has set the platform for massive monetary explosion out of “thin air”. The proponents for less control in financial markets hold that fewer restrictions imply a better use of scarce resources, which leads to the generation of more real wealth.

It is true that a free financial environment is an agent of wealth promotion through the efficient use of scarce real resources, whilst a controlled financial sector stifles the process of real wealth formation. However, it is overlooked by the proponents of the deregulated financial markets that the present financial system has nothing to do with a free market.

What we have at present is a financial system within the framework of the central bank, which promotes monetary inflation and the destruction of the process of real wealth generation through fractional reserve banking.

In the present system the more unrestricted the banks are the more money out of “thin air” can be generated and hence greater damage is inflicted upon the wealth generation process. This must be contrasted with genuine free banking i.e. the absence of the central bank, where the potential for the creation of money out of “thin air” is minimal.

Prior to the 1980’s financial de-regulation we had controlled banking. Banks’ conduct was guided by the central bank. Within this type of environment bank’s profit margins were nearly predetermined (the Fed imposed interest rate ceilings and controlled short term interest rates) hence the “life” of the banks was quite easy, although boring.

The introduction of financial de-regulations and the dismantling of the Glass – Steagall Act changed all that. The de-regulated environment resulted in fierce competition between banks.

The previously fixed margins were severely curtailed. This in turn called for an increase in volumes of lending in order to maintain the level of profits. In the present central banking framework this increase culminated in an explosion in the credit out of “thin air” — a massive explosion in the money supply. (In the deregulated environment, banks’ ability to amplify Fed’s pumping has enormously increased).

Note that the AMS (a measure of money supply growth) to its trend ratio (the trend was calculated from January 1959 to December 1979) hovered very closely at around 1.0 during 1959 to early 1980’s. Since early 1980’s this ratio has been rising visibly, climbing to 2.2 by October 2016 before closing at 2.1 in June 2017.

This massive explosion of money out of “thin air” has severely damaged the pool of real savings. Rather than promoting an efficient allocation of real savings, the current so-called de-regulated monetary system has been promoting the banks’ ability to channel vast amounts of money out of “thin air” across the economy.

From this, it follows that in the present banking system what is required to reduce a further weakening of the real wealth generation process and thus the erosion of workers earnings is to introduce tighter controls on banks. 

According to Murray Rothbard in Making Economic Sense,

Many free – market advocates wonder: why is it that I am champion of free markets, privatization, and deregulation everywhere else, but not in the banking system? The answer should now be clear: Banking is not a legitimate industry, providing legitimate service, so long as it continues to be a system of fractional-reserve banking: that is, the fraudulent making of contracts that it is impossible to honor.

Note that I"m not advocating here for suppressing the free market, but suppressing banks’ ability to generate credit out of “thin air.” This is only an issue because the present banking system has nothing to do with a market-based banking system.

We"re In A Boiling-Point Crisis Of Exploitive Elites

Authored by Charles Hugh Smith via OfTwoMinds blog,

The "fixes" to the stagnation of postwar Capitalism in the 1970s were financialization, globalism, and the sustained expansion of debt--all have run out of steam.

Many of us have written about cycles in the past decade: Kondratieff economic cycles, business/credit cycles, the Strauss–Howe generational theory (an existential national crisis arises every four generations, as described in their book The Fourth Turning), and long-wave cycles of growth and decline, as described in seminal books such as The Great Wave: Price Revolutions and the Rhythm of History and War and Peace and War: The Rise and Fall of Empires.

There is another Rhythm of American History that few recognize: the economic, social and political crises sparked by exploitive Elites. There are two dynamics that drive these crises:

1. The exploitation of commoners by financial/political Elites reaches extremes that create systemic instability as commoners no longer have the means to improve their conditions.

 

2. The economic mode of production that generated Elite wealth no longer functions, but the Elites cling to the failing system and enforce it with increasingly violent suppression of dissent.

Here are the previous Crises of Exploitive Elites:

1. Slavery, 1850 to 1865. Though the toxins generated by slavery are still with us, the existential political, social and economic crisis arose in the years between 1850 and the end of the Civil War in 1865.

In broad brush, the rise of the American West triggered a political crisis in the U.S. as the southern states realized the non-slave West"s rising political power would doom the fragile balance between the non-slave Northern industrial-economy states and the cotton/agricultural slave-economy South.

It was a trend the South couldn"t possibly win, but the South"s exploitive Elites refused to concede any of their power--and that refusal to adapt to changing conditions guaranteed the Civil War.

The first Industrial Revolution radically transformed the source of wealth creation. The plantation agrarian mode of production of the South was eclipsed by the vast wealth-generating might of the rapidly industrializing North.

The Southern political and economic Elites could not win economically or politically, so they attempted a military solution--a war they might have won had it not been for the Westerners Lincoln, Grant and Sherman. (Lincoln was born and raised in the frontiers of Kentucky, Indiana and Illinois; both Grant and Sherman were born in Ohio and served in Army postings along the West Coast.)

The moral tide was rising against slavery. The Christian world had long been divided on the issue of slavery, but the tide turned against slavery in the early-to-mid-1800s, both in Great Britain an the U.S. Moral turnings are powerful instigators of political crises, and once again the Southern Elites attempted to stem this tide with military force.

2. The Crisis of Gilded-Age Exploitation, 1892 to 1914. The dates of this crisis are inexact and open to interpretation, but in broad brush, the Second Industrial Revolution (mass production, integrated industrial corporations, the rising dominance of Finance and Industrial Capital, emergence of monopolies and cartels, etc.) forced millions of commoners into the penury of wage-labor while concentrating the gains of capital and speculation into the hands of the few.

Adjusted for inflation, the wealth of the financier-industrialists in this era exceeds the wealth of today"s billionaires, and is on par with the extremes of wealth concentration that characterize the last stages of the Roman Empire.

Commoners attempting to unionize were brutally suppressed by hired private enforcers and the police/military forces of the American government. Radical unions such as the I.W.W. (Industrial Workers of the World, a.k.a. Wobblies) were destroyed by coordinated, concerted government suppression, much of it by means that are visibly illegal by today"s standards.

The conflict between exploited industrial labor and politically dominant Capital was eventually resolved by progressive anti-trust laws (aided by President Theodore Roosevelt) and the beginnings of social rights and welfare programs--universal education, limits on hours worked per week, etc.

3. The Great Depression and the Failure of Debt-Based Capitalism, 1929 to 1941. Capital was increasingly concentrated in the hands of the Elites in the Roaring 20s, but the commoners had new access to the financial magic of credit: banks sprouted by the thousands, anxious to loan money to fund the purchase of more farmland, new autos, and all the other output of a consumerist economy.

But alas, credit is not collateral, nor is it wealth. When the debt bubble burst, so did the stock market, which was based on highly leveraged margin debt.

The Elite financiers resisted writing down the debt that had made them so rich, and as a result the Depression dragged on, immiserating millions who then turned to fascism or radical socialism as the political fixes to the systemic exploitation and dominance of Elites.

4. Civil Rights and Global Empire, 1954 to 1973. The legacy of slavery"s oppression had lingered on for almost 100 years, and the rising prosperity of the 1950s and 60s generated a social, moral, political and economic movement to throw off the most oppressive aspects of an exploitive social/political order.

At the same time, the costs of maintaining a Global Empire were raised to a boiling point by the war in Vietnam, which destabilized the moral, political, social and economic orders.

In response the Elites instigated waves of violent, suppressive state tactics designed to disrupt and destroy the organized dissent of social movements. These tactics included the FBI"s COINTELPRO programs as well as other blatantly illegal, heavy-handed government enforcement of the dominance of exploitive Elites.

I"ve written extensively about state over-reach and illegal suppression of dissent: remember, the state exists to enforce the dominance of Elites: everything else is propaganda, misdirection and obfuscation.

Welcome to the United States of Orwell, Part 3: We had to Destroy Democracy in Order to Save It (March 28, 2012)

State Over-Reach: Stripmining the Citizenry for Fun and Profit (November 13, 2009)

When It Becomes Serious, First They Lie--When That Fails, They Arrest You (March 16, 2015)

For more on COINTELPRO, please read War at Home: Covert action against U.S. activists and what we can do about it.

Simply put: when lies no longer work, the government devotes its resources not to eliminating wars of choice, cronyism and corruption but to suppressing dissent and resistance to those extractive, exploitive policies.

Which brings us to the present-day Crisis of Exploitive Elites. The "fixes" to the stagnation of postwar Elite/state-dominated Capitalism in the 1970s were financialization, globalism, and the sustained expansion of debt in all sectors--state, corporate and household.

Now all three engines of "growth" have run out of steam. All three greatly exacerbated wealth and income inequality, as these two charts reveal:

Once again, the political and economic Elites are resisting the tides that are undermining their Empires of Debt and Exploitation. The Elite-controlled Corporate Media has been ordered to War Status, an DefCon-5 emergency requiring an endless spew of all-out propaganda designed to distract, disrupt and destroy organized dissent and any resistance to the dominance of Exploitive political and financial Elites.

The Exploitive Elites cannot turn back the clock, so they cling to their failed "fixes" and demand our compliance.

The Exploitive Elites cannot turn back the tides of history, but they can immiserate millions. That seems to be "solution" enough for them, but you cannot destroy rising moral revulsion to soaring inequality and the abject failure of debt-based global capitalism with mere media propaganda.

*  *  *

Of related interest:

Coming Apart: The Imperial City At The Brink

The U.S. Is Where the Rich Are the Richest

The Pin To Pop This Mother Of All Bubbles?

Why Do Half-Measures Work For Markets, But Not For Socialism?

Authored by Ryan McMaken via The Mises Institute,

Socialists have attempted many times to put their ideology into action. Socialism has been applied in the Soviet Union, Cuba, China (before Deng), North Korea, and by many other less-famous regimes.

In each case, the result has been economic impoverishment and political authoritarianism.

But the die-hard socialists refuse to give up. "Don"t judge communism based on these results, " we"re told. "Socialism has simply never really been tried."

Socialism Doesn"t Work Unless It"s Pure Socialism

Indeed, in a recent back-and-forth between John Stossel and Noam Chomsky, Chomsky denied that the Venezuelan regime is socialist at all: 

I never described Chavez"s state capitalist government as "socialist" or even hinted at such an absurdity. It was quite remote from socialism. Private capitalism remained ... Capitalists were free to undermine the economy in all sorts of ways, like massive export of capital.

The thinking goes that socialism cannot work unless it progresses all the way to "full socialism." No partial effort will suffice, we are told, and socialism keeps failing because the some elements of "private capitalism" remained. 

So long as any aspect of a state is not full-on socialism, the thinking goes, then the regime is not really socialist. Moreover, the failure of the regime"s socialist policies — such as expropriation of private companies and expansion of government-owned industries — are to be blamed on capitalism, not socialism. 

Naturally, were socialism able to achieve it"s final state — and all elements of capitalism expunged —  we"d know it by its ushering in of a society marked by unparalleled prosperity and total equality.

Nevermind that for all intents and purposes, Lenin did achieve nearly complete and total nationalization of the economy during the Russian Civil War in 1922. The people began to starve soon after, and Lenin retreated to the partial socialism under his so-called "New Economic Policy." 

The Lenin example is steadfastly ignored, of course, and we"re repeatedly told by the likes of Chomsky that mere half measures don"t work for socialism, and only total socialism works. Anything short of total socialism, it seems, will fail miserably, as it has in Venezuela. Yes, the government can seize many factories, shops, and even whole industries, as has happened in Venezuela. But, unless the state seizes every single shop, then it"s not real socialism. Thus, don"t blame socialism when the whole thing crashes down. 

The Same Logic Need Not Be Applied to Laissez-Faire Liberalism 

Note, however, that this isn"t a problem in the opposite direction. If we take a middle-of-the road interventionist economy and start introducing partial, half-way free-market liberal reforms, does this cause the economy to collapse? 

Certainly not. Indeed, everywhere we look and find a relatively less socialistic economy, the less poverty and more prosperity we find. 

Historically, this is obvious. The countries that embraced free trade, industrialization, and the trappings of market economies early on are the wealthiest economies today. We also find this to be the case in post-war Europe where the relatively pro-market economies such as those in Germany and the UK are wealthier and have higher standards of living than the more socialistic economies of southern Europe — such as Greece and Spain. This is even true of the Scandinavian countries like Sweden, which, as Per Bylund has noted,  historically built its wealth with a relatively laissez-faire regime.

This is all the more true when we compare Western Europe with Eastern Europe.

In none of these cases is any economy totally free-market (or even nearly so) or totally socialistic. What we do find, however, is that in countries where the economy leans more in the direction of markets — the standard of living is higher, there is less inequality, and poverty is less awful in general.  

This is also true in Asia. South Korea and Japan are by no means free-market economies. Both countries" economies are characterized by a wide variety of trade restrictions, crony capitalist deals, and a massive regulatory state. 

But North Korea and Vietnam, which are much poorer, are characterized by far more government ownership of industry, and much smaller private sectors than is the case in Japan and South Korea.

And yet, by the logic of the socialists, the problem with North Korea and Vietnam is that they don"t have enough socialism. If those countries could only rid themselves of the capitalists who are "free to undermine the economy" then North Korea will finally be prosperous and Vietnam will rival Japan in its productivity and wealth. 

This is nonsense, of course. If North Korea wants fewer famines it need only move in the direction of less socialism as South Korea has. 

Even Halfway Reforms Work with Markets

Unlike socialism, market reforms need not be total, complete, or utopian in order for their benefits to be recognized. 

This is why market advocates never need to say "market reforms didn"t work in Country X because that country never achieved full and true capitalism! If only all the socialists been liquidated, then true capitalism would have been realized!" 

This is never said said because even half-measures in the direction of laissez faire improve economic growth and standards of living. 

We saw this in West Germany after World War II with the reforms of Ludwig Erhard, who helped usher in a period of immense economic growth with only half-way reforms. By abolishing price controls and other government-imposed restraints on the economy, the Germany economy took off while more socialistic economies — like that found in the UK at the time — were more stagnant. "If only East Germany had had more socialism!" we can only conclude. Then East Germans wouldn"t have risked death trying to escape to West Germany.   

Obviously, in this case, the West German state did not adopt "pure" capitalism. They merely adopted relatively more laissez-faire. And the economy expanded. In fact, according to Hans Sennholz, the West German state rather accidentally stumbled upon its free market reforms. And yet, we call the results "the German economic miracle." 

Another modern example is Latin America. When we look across the region as a whole, we find repeatedly that the regimes that have embraced even half-hearted pro-market reforms — such as Chile, Peru, and Colombia — are the countries that have seen some of the greatest economic growth in recent decades.

Meanwhile, those countries that have most enthusiastically embraced the so-called pro-socialist "Pink Tide" have seen some of the worst growth rates: 

But what is the excuse for the lack of economic growth in Argentina, Brazil, and Venezuela? All those countries have in recent decades embraced economic populism — namely, more government ownership, more government regulation, and more government control of the economy. 

So why haven"t those countries outpaced the more market-oriented Latin American states? According to the logic of the socialists, the problem is that none of these states has embraced total socialism. 

What a blessing for the socialists, then, that every time some socialist reforms are tried - and fail - the ideology has a built-in excuse: socialism never works unless it"s fully implemented. 

Just imagine if the same were true of markets, though. Since no ideology is ever likely to be fully realized in its entirety, this would mean that humanity would be doomed to abject and grinding poverty forever. 

Fortunately for us, market reforms need only be partial and haphazard to make us all better off. Unfortunately, governments are often committed to moving in the wrong direction with central banks, wage controls, price controls, more regulation and more taxation. The assaults on markets are continuous and widespread. Fortunately, all it takes is movement back in the direction of freer markets to improve matters again. We"d do well to learn from Eastern Europe, West Germany, Latin America, and all the other regimes that have, reluctantly or not, gotten out of the way and allowed markets to work. 

The socialists can keep dreaming about their paradise to be realized some day when total unadulterated socialism is achieved. Meanwhile, markets will continue to improve matters for billions of people in real life.

Remembering A Still Falling Hero: Small Business

Authored by Mark St.Cyr,

On this holiday weekend known here in the U.S. as Memorial Day, I would like to make a slight turn in the narrative that many give little to no attention too, yet, is one of the most important underlying principles or fundamentals which helped shape, lift, mold, sustain, and create one of the world’s greatest economic powerhouses bar none.

That “turn” is in remembering: The liberty to create, and own, one’s own business.

As true as holding the principles of liberty close to one’s heart is near-and-dear to every American. What gets forgotten all too easily is what enabled many of those immigrants that fled here during its rocky beginnings, and still continues today, to shape and mold a better life for themselves and their families. That other foundational principle is this:

The ability to create, and pursue, a business idea that could, or would, allow them to acquire economic liberty based on their own self-expression made manifest via perseverance, and sometimes a little luck. And with that – create a foundation which could either be passed on, or sold, by their heirs, giving them possibly one further step-up, or ahead, onto firmer ground to take another. And maybe another, and another, and so forth.

Only through the pursuit of business was the true circumvention of any stigmatized political or economic class, ethnicity, and more so truly held in one’s own hands. Self-actualization, the pursuit of economic riches, the ability to ingratiated oneself by their own means to not only claim to be part of the American experiment, but to actually be American regardless of where one began, either from abroad or born within – was not inconsequential.

Being an American businessman, regardless of ethnicity, political class, economic class, religious persuasion, gender, or anything else, in many ways was the embodiment for something to be cherished and honored by the owner.

Being the sole-owner of one’s own economic future was either unattainable, or unavailable anywhere else.

It embodied everything the American principle was created for and rose upon. Without it – we would have just been another ruled monarchy; socialist; communist; caste; (fill-in-the-blank) or combination of all system under a different name with better topography. It’s the only thing that separates the U.S. from all others that came before and since.

(Note: The gender neutral term “business-person” just doesn’t flow and only emboldens the gender-sensitivity-police and I’m personally sick-and-tired of them. Women with true business fortitude understand there’s no derogatory slight in the term “businessman.” Period. For those wanting more on my thoughts about women in business see my article “The Bull On Bossy” for more insight.)

The term, as well as structure, that has allowed the U.S. to grow as to become such an economic powerhouse is called: Free Market Capitalism (FMC.) And its foundational starting point is the sole-person who decides to either create their own product, or work with (and yes even for) others who are in need of their talent. Then, decide where, and on what agreed upon price commerce takes place. (Examples of such are Family Dr’s., accountants, bakers, tattoo artists, waiters, waitresses, plumbers, electricians, salespeople, and far too many more to list. And yes, even bankers.)

Again, at its foundational point is the solitary person who decides to take matters and consequences under their own purview and either rise, or fall, on their own business prowess upon the battlefield known as business or commerce.

What is taking shape today, and what’s worse – growing – is anything but.

What most have no understanding of, let alone idea, that’s taking place today is the circumvention of Free Market Capitalism, and in its place, the insertion of its hybrid, ever-morphing, evil twin. e.g, Cronyism, aka Crony Capitalism (CC.)

I could go on for days explaining why this insertion of CC into the FMC model is not only egregious, but dangerous. However, all one has to do is look at the current economic landscape with an eye for truth – and its perversions and consequences can be seen everywhere.

It’s like a visible, metastasized cancer encroaching upon economic liberty. i.e., Forget about the “golden egg” its wrapping its hands firmly around the goose’s neck in broad daylight. And never mind those not bothering to look. What’s worse – is those who can’t turn their eyes away seem to think there’s anything wrong with this picture! e.g., Ivory Towered academics, main stream business/financial outlets, et al.

A few years ago I penned the following article, “It’s The Entrepreneur That Saves An Economy – Not The Fed” and in it I made the following point. To wit:

“The problem that’s taking place right now within the economy is exactly what you get when you take a free market economy and try to impose a command and control blanket over it: you smother it.

The Ivory Tower academics have no real understanding of what “free” actually entails when it’s expressed through the economy as a whole. The ability to build a better mouse trap, or, solve a previously unsolvable riddle all while charging a price two parties can both bear, profit by, and have satisfaction in the transaction does not, nor ever will take place within a command and control base. Ever.

Free markets allow for competition to find equilibrium as to provide and deliver a service or good someone will pay a fair price for. And yes, even for such an item such as a stock price.

Command and control fosters either the “State” to be the only provider, or, a fostered crony capitalism styled arrangement which is nothing more than another iteration of some communist system in prettier buildings wearing better suits. Harsh? Yes. Off point? Hardly. And that’s the problem.

The great capital formation experiment and enterprise known as Wall Street and its Exchanges, once the envy of the world, has now been transformed into nothing more than a rigged casino where Fed fueled “hot money” front runs orders in ways so egregious to the principal of fair play; walking into “a den of thieves” would be considered a step up.”

Here’s a bit more from that article directed squarely at the Fed. (or central banks in general) and its interventionist policies. At the time my accusations were excoriated as derisive, uneducated, (fill-in-the-blank.) However, with that said I’ll let you be the judge as to just whom seems to be “uneducated” when it comes to economic theory and practices. Again, to wit:

“Business people know and understand this intuitively. Ivory Tower academics, intellectuals, and economists are not only clueless, it’s their wanton indignation of these facts that move their policies beyond destructive right into outright dangerous territory for any free market based economy.

The only one’s that can benefit from such a business environment are those that gorge and reward themselves via the availability current Fed. policy fosters. And the name for it is: crony capitalism.

Whether the Fed. wants to admit or not, that’s what their current policy and communication fosters and bolsters which is the antithesis of what the Fed. itself states as its primary objective; for there is no wage growth, no true job creation, no sustainable capital formations, and not stable markets.

The Fed. is killing the economy – not helping it. And as de facto proof I point to their own measurements of achievement. The markets, the labor participation rate, small business formation, wage growth, and on, and on. It’s all pathetic.

The Fed’s QE program has adulterated valuations so much it will be a wonder if we ever get back to a more normalized set of business values let alone their valuations and away from this calamity.

There are entrepreneurs along with CEO’s of companies who are quite literally chomping at the bit to try new or improved innovations – yet don’t dare for either their competitors are being kept alive via cheap money afforded them under current ZIRP policy, or worse, don’t dare hire or spend for who knows if the Fed. will raise out of the blue or announce some new program that runs anathema to basic sound monetary policies.

You don’t invest in cap-ex or hiring for the long-term if you don’t know what the rules might be tomorrow never-mind next year. Period.”

If you gauge the current economy via the abomination now known as “markets” (which the Fed. clearly does) this “success” is all but missing its own “Mission Accomplished” banner. However, if you measure the economy via its true measurements of health like jobs, small business creation, cap-ex, and more? You go from banner to tombstone. Yet – the epitaph reads the same as “banner.” It only depends on perspective as to what the words mean. Think about it.

To make my point even further on just how far economic “thinking” has gone off the rails. I was reminded of it by none other than Mark Zuckerberg of Facebook™ via his latest speech or commencement address.

Nowhere in my recent memory has the idea of small business, along with what it means for the economic health (e.g. Free market Capitalism) been so avoided, so adulterated, so perverted in its messaging and delivery than what I witnessed when viewing Mark Zuckerberg’s address to this year’s graduating class at Harvard University.

In my opinion: It was the epitome of everything going wrong in business today. I also viewed it as one of the most tone-deaf, quasi-political speeches ever given at a commencement speech via someone who should be the embodiment of this time in history’s most celebrated and espousing Free Market Capitalism entrepreneurs.

It was so dreadful, and full of what I view as socialistic laced mumbo-jumbo, I couldn’t listen to much more than a few minutes. Again, via my interpretations; it was agonizingly void of anything resembling free market business principles.

Only a speech delivered by Hilary Clinton compared for substance and delivery. And that’s being kind.

This so-called “address” was anything but “uplifting” for those who are supposedly about to enter the work force and help create the next wave of dynamism for economic growth for the U.S. and subsequently the global business environment.

No, instead, after listening about such themes as “guaranteed universal basic income”, “we are the world”, “save the planet”, and more; it would make perfect sense after receiving their diplomas they simply returned home to their parents basements and waited for the world to offer them a corner office, 7 figure starting salary, trophy-spouse, 2.2 children (gender to be determined) and world peace. Just make sure you’re logged into FB as you wait. Because that’s how Mark gets paid, even if you don’t.

It seemed when listening that in a Zuckerberg vision of the world: Don’t pull on your own bootstraps. Wait! Sooner or later they’ll be able to offer you Utopia. And you’ll thank him for it. Just remember to vote “Like” to show your support behind him if, or when, he decides to run for office. Because for what that speech lacked in spoken words of business ideals, it was laced with more unspoken terms of the political which could not be ignored even when trying. i.e., I couldn’t help but think at any moment I would hear something to the effect of: “And be on the lookout for Zuckerberg for (fill in the blank) in 20??”

Compare Mark’s recent with the one delivered in 2005 by the late Steve Jobs at Stanford University. The two could not be more striking in both tone, as well as delivery. The difference is utterly remarkable and is clearly visible:

One is a businessman explaining via his own words and experiences how one may go about changing the world for the better via FMC principles and ideas eschewing anything to do with the political. The other? The antithesis of the former, delivering a speech more in-tune as if it were written by Mrs. Clinton’s former speech writers.

Don’t take my word for it, view both of them yourself and come to your own conclusions. The differences couldn’t be more striking.

The only way forward for this nation (e.g., U.S.) is for the rebirth of quest and zeal for small business America. It is what built this nation, continues to support it (although it is being waged war upon by crony capitalist benefactors and devotees daily) and is the only way to reassert and preserve the foundations of the Free Market Capital system.

What we are experiencing today is an adulterated, ever-growing, Frankenstein perversion of those once pristine principles that is growing ever-the-more unstable with each passing day and is showing signs that it’s about to break loose of its creators (The Federal Reserve) control at any time.

The current “market” is nothing more than a bull looking for a china shop. Ironically, it may be China that subsequently puts the “bull” into a place which no one “thinks”, let alone, believes.

For those of the newly minted “graduate class” let me offer you an example of just how cronyism works and is prevalent at the very core of what many of you use and treat almost as sacrosanct for entrepreneurialism in today’s business and “market” climate. e.g., Social media, and the companies that fuel it.

If you are one of the few that believed (or still does) Snapchat™ was possibly the next Facebook and invested in its stock, only to see your profits or initial investment go “poof” much like its core product? And yet – have watched simultaneously as FB shares rise and think there must be some “business” reason as to why this happens or “business acumen” you don’t fully yet comprehend? Hint: Welcome to central bank manipulation for picking winners and losers 101.

As I’ve stated too many times to count over the years: This is why having (or picking) a company with a stock price which has a central bankers “bullseye” on it is the only thing that matters. And guess what – Facebook does and Snapchat doesn’t. Want proof. Fair point. To wit:

“Swiss National Bank’s U.S. Stock Holdings Hit A Record $63.4 Billion”

The real issue here as I’ve reiterated time, and time again, is this:

When your investment loses value – you lose money and net worth. When a central banks “investment” loses value – they just print more, and buy more, allowing the pretense of “health” to perpetuate inducing even more to buy alongside them furthering the charade of a “market” based price or demand. Rinse, repeat.

Hint: Facebook is on that “Bullseye” list. Along with a few other notables. Snapchat? See latest stock price for clues. And that’s just the SNB. You still have the Fed’s proxies, ECB, BoJ, PBoC and their proxies buying who knows what else.

Is it any wonder why small businesses are having such a hard time competing with these new-found business behemoths of today? For others, its having to compete with companies which are clearly “over.” e.g., See Sears™ for clues and why it has been able to stay open via cheap capital facilitated via Fed. policies unavailable to small businesses.

So with that all said: Long live small business! It may be badly banged up, battered, and bruised. But it’s far from dead just yet. We only need to remember its importance too all of us. Our nations health, and very survival depends on it. It’s a too often overlooked part of our fundamental liberties. Brave men and women of all stripes have, do, and hopefully will, continue to fight for its preservation along with our other sacred liberties.

To all of them: past, present, and future – you have my sincere gratitude. Both military, as well as business people.

Our State-Corporate Plantation Economy

Authored by Charles Hugh-Smith via OfTwoMinds blog,

We"ve been persuaded that the state-cartel Plantation Economy is "capitalist," but it isn"t. It"s a rentier skimming machine.

I have often discussed the manner in which the U.S. economy is a Plantation Economy, meaning it has a built-in financial hierarchy with corporations at the top dominating a vast populace of debt-serfs/ wage slaves with little functional freedom to escape the system"s neofeudal bonds.

Since I spent some of my youth in a classic Plantation town (and worked on the plantation as a laborer in summer), the concept of a Plantation Economy is not an abstraction to me, but a living analogy of the way our economy works.

Wal-Mart and the Plantation Economy (August 24, 2010)

Colonizing the Plantation of the Mind (August 25, 2010)

We Need a Social Economy, Not a Hyper-Financialized Plantation Economy (November 12, 2015)

Loving Our Servitude in America"s Plantation Economy (February 10, 2017)

The Plantation Economy is extremely hierarchical. Corporations and the state are both extremely hierarchical.

In the Plantation Economy, the Company has access to nearly unlimited credit. Small businesses serving the employees and the employees have enough credit to live on but not enough to buy productive assets. As a result, the Corporation can always buy up any productive assets, expanding its monopoly.

The state also has an essentially unlimited line of credit which it can use to fund its favored cartels and state fiefdoms.

In the Plantation Economy, the Company suppresses any innovation that threatens its monopoly and the state enforces whatever means the Corporation deploys: buying up patents and small companies, predatory pricing to bankrupt competitors, etc.

The Plantation Economy is a mono-culture of large corporations and their partner in rentier skimming, the state. Our economy is a state-cartel finance-debt system; it"s only capitalist on the margins, that is, in the fringes that aren"t profitable enough for corporations to control.

The core feature of this Plantation Economy is the privileges of accumulating capital are all in the hands of the state-cartel elites. The foundation of classical capitalism is the accumulation of capital, which in our era is not just cash, factories, mines, etc.--financial and industrial capital--but knowledge capital: intellectual property, knowledge of processes, creation and control of content, research and development, control of information streams (that is, maintaining information asymmetry) and so on.

Those with unlimited access to low-cost credit can buy up or control all productive capital, including the labor of knowledge-based workers.

When an economy is optimized for global corporations, the only possible result of this arrangement is a Plantation Economy. Our economy is optimized for corporations: they have access to unlimited low-cost credit, their capital can be shifted around the globe at a moment"s notice (i.e. it is mobile), they have the tax advantages of incorporation and complex tax codes, they can declare bankruptcy without any limitations and wipe out their debts, they can engage in fraud, corruption and embezzlement and face no consequence other than a modest fine, they can suppress competition and their size enables dominance of the labor market.

Imagine if all these immense advantages were granted solely to worker-owned collectives and co-ops, and corporations were de-optimized, that is, they no longer had access to credit, their employees and managers could be jailed for systemic fraud and embezzlement, they paid high fees for merely existing and they were denied the ability to buy political influence as easily as an employee buys a loaf of bread.

The problem with a Plantation Economy is that it inevitably stagnates and collapses. Suppressing competition and innovation corrodes productivity, and as productivity and social mobility both fade, so does wealth creation.

The state-cartel Plantation eventually eats all its own seed corn via the vast expansion of credit. What appears to be "wealth" in the state-cartel Plantation is illusory asset bubbles fueled by state-engineered credit expansion.

Beneath this brittle veneer of great "wealth," the real economy is stagnating. These charts reflect this reality:

Productivity: stagnant:

New business growth: stagnant:

New credit-money issued to finance, monopolies and cartels: through the roof:

And the only possible output of the state-cartel Plantation Economy: runaway wealth and income inequality. There is no other possible output of our system.

We"ve been persuaded that the state-cartel Plantation Economy is "capitalist," but it isn"t. It"s a rentier skimming machine. Capitalism enables the accumulation of capital by anyone in a transparent market, and the capitalist state enforces a level playing field.

There"s the get-to-work horn, people. Time to labor for the rentier skimming machine and its enforcer, the state, to pay your taxes, student loans, mortgages, and all your other neofeudal "obligations" to the state-cartel elites.

For more on the inevitable collapse of Plantation economies, please see my book Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print, $5.95 audiobook.

Has Middle Class America Been Fleeced?

Authored by Hunter Lewis via The Mises Institute,

Noah Smith, writing in Bloomberg, says that middle class America has indeed been fleeced by our national economic policies. We agree. But which policies have been responsible?

Smith mentions and immediately dismisses trade, immigration, economic regulation, and welfare policies.

The real villain in his view is an alleged turn toward managing the economy on free market lines: “Your prosperity was taken by the very people who promised to ensure and enhance it. The decades from 1980 through 2008 were the age of neoliberalism -- the ideology of the free market.”

This is a story that we hear more and more. Neoliberals, the favorite new epithet on the left for free market exponents, have ruled the roost for decades ( note how the Obama administration is simply ignored in the preceding quote), and have left the poor and middle class far worse off than they were.

The truth is that the Bush-Clinton-Bush-Obama era had much in common, and it was not free market principles. It was an era of unrestrained crony capitalism, in which special interests formed stronger and stronger alliances with government in order to secure economic monopolies and other privileges.

It was also, not coincidentally, an era of repeated boom and bust, as the Federal Reserve and other central banks created immense amounts of new money to keep the crony capitalist game going. The Fed did not create all the new money to help the poor and the middle class. They did it primarily to support the government debt machine, which they worried was on the verge of collapse in 2008. The result is that government debt has now doubled in the few years since then.

Can Noah Smith, an intelligent writer and economics professor, really believe that free market principles prevailed in recent decades? The only possible excuse for this is that crony capitalists tend to hide their actions behind free market slogans. This is genuinely confusing.

Today, for example, we are told by most commentators that we have a choice between “free trade” and “protectionism,” and the free trade position is represented by people like Hillary Clinton and Hank Paulson, the Bush Treasury Secretary during the last Crash who rescued his old firm, Goldman Sachs, and coincidentally the value of his shares in that firm, and who more recently supported Hillary for president. To describe these people as supporters of “ free trade” is a joke. They are supporters of “ crony trade” in which so-called free trade agreements are actually written by special interests in order to escape the pressures of a genuinely free market.

And does Smith really believe that giving government even more control over the economy will achieve anything other than making crony capitalism worse?

Oh well, at least Smith did not equate what he called “neoliberalism” with fascism, as many on the left are now doing in books and articles. That makes a lot of sense, does it not? Proponents of more liberty in economics and other areas of our lives are somehow like Hitler or Mussolini?

Lewis nails the dismal science but we leave it to econfinjunkie"s comments to sum up the farce...

If anyone needed one more reason to hold Noah Smith and mainstream economics in contempt, read that article.

It is so much easier for those in the mainstream to be ignorant and publish crap like that than for, say, an Austrian economist to do the same. How can anyone with an advanced degree in economics say that our society is based on free market principles? It makes you wonder what they teach after high school.

Starting in intro classes all the way to PhD coursework, didn"t anyone ever think to point out to the future Dr. Smith and his classmates that "oh, by the way, all these principles of free markets we"re talking about, they"re the ideal; they don"t apply to our own economy since we don"t have a free market/society, because we have a central bank, minimum wages, millions of pages of regulations, bank bailouts, and on and on"?

There can be a conversation about whether all these things are justified, but to say that our economy reflects a free market is to put your ignorance on full display for all to see.