Questions, Questions, Questions! Why We Must Question.

“If we understand the mechanism and motives of the group mind, is it not possible to control and regiment the masses according to our will without their knowing about it? The recent practice of propaganda has proved that it is possible, at least up to a certain point and within certain limits.” –Edward Bernays

While we are being programmed into economic slavery by propaganda, Wall Street, and a crony compliant government, a skeptical critical thinking individual might ask a few questions or point out a few inconvenient facts the government purveyors of propaganda might not want us to ponder:

  • The non-manipulated, non-seasonally adjusted number of jobs in November FELL by 270,000. The BLS added 600,000 jobs as an adjustment to achieve the headline grabbing result.
  • If the jobs market is so good, why is the labor participation rate at a 30 year low of 62.8%?
  • Since 2007 the number of working age Americans has risen by 17 million, while the number of employed has risen by less than 1 million, but the unemployment rate is about the same.
  • Why would almost 14 million working age Americans leave the labor force since 2007 if the economy is booming and jobs plentiful, with 1.2 million leaving in the last 12 months?
  • Why would payroll tax receipts be flat last year if millions of new jobs have been created?
  • If the country has really added 8 million jobs since 2010, how could real median household income FALL by 2.3%?

According to the government reported figures, the economy hasn’t been this strong since 2007. GDP has supposedly grown at greater than 4% over the last two quarters. Anyone who is sentient knows consumer spending accounts for 68% of GDP. Capital investments that lead to long term prosperity continue to decline as a percentage of GDP from 20% in 2000 to 16% today. This fact leads to some observations:

  • If GDP has actually grown by 20% since 2008 how does this correlate with a 6.9% decline in real median household income?
  • GDP has been goosed by a $69 billion increase in government spending, with the majority going to the military industrial complex. ISIS has been a godsend for our GDP and arms dealer profits.
  • GDP was increased retroactively by $500 billion last year based on a new way the government accounts for intangibles.
  • The surge in consumer expenditures over the last two quarters has been in the purchase of services.
  • The trade deficit has fallen as exports of petroleum products have temporarily provided a boost to GDP. The collapse in oil prices will reverse that trend rapidly. Just look what happened after the 2007 collapse of oil prices.

According to the quasi-governmental mouthpieces at the Conference Board, consumer confidence is near a 5 year high, reflecting what should be robust spending. So we are told by the representatives of corporatism that we are confident about the economy and the future. How does that measure up to the facts on the ground:

  • Black Friday weekend sales collapsed by 11% versus the previous year. As the pundits tried to blame it on on-line sales (10% of total retail sales), Cyber Monday also proved to be a dud. You only need to see how retailers are touting the EXTENSION of their Black Friday Sales.
  • If the average person is confident about the future and happy with their economic circumstances, why did they just vote to throw out the bums in November? In their uninformed desperation though they just replaced old bums with new ones, as we will see soon.
  • If consumers are confident, why have real retail sales, excluding subprime debt goosed auto sales, been flat for the last three months and up only 1% in the last year?
  • If consumers are so confident, why are credit card balances still $138 billion BELOW where they were in 2008? If all these new jobs are being created why is credit card debt lower than it was in mid-2010? Maybe consumers are so desperate they are using credit cards to pay utility and tax bills and not using them for frivolous Chinese crap at big box retailers.
  • The increased spending at grocery stores and restaurants is driven by food inflation, not foot traffic. Discretionary spending at furniture, electronics, and sporting goods stores is flat.
  • Department store sales continue to fall. Sears and JC Penney teeter on the verge of bankruptcy. Sears is closing 230 stores in the next three months. Delia’s is liquidating and Radio Shack isn’t far behind. The major chains have completely stopped building new stores. The great bricks and mortar unwind relentlessly plods forward. In addition, online growth is stalling as states implement sales taxes.

According to the government, the deficit was ONLY $483 billion in 2014. This is where government accounting is used by apparatchiks to mislead the public and obscure the truth. A few pertinent facts are always left out by the politicians touting deficit reduction:

  • Because of the budget impasse in 2013, the Federal government stopped updating the national debt on a daily basis, but we know from when they started counting again, the debt went up by $2.3 billion per day. Therefore, the national debt on October 1, 2013 was approximately $17.038 trillion. On October 1, 2014 the national debt was $17.875. Therefore, the national debt went up by $837 billion in 2014. Just a smidge higher than the reported deficit of $483 billion.
  • Interest is not paid on reported deficits. It’s paid on the national debt, so the massaged, manipulated and made over deficit is meaningless. The national debt was always slightly higher than reported deficits, but in the last few years the deviation has grown to a Grand Canyon size.
  • The deficit number has been artificially lowered by nothing other than accounting entry hocus-pocus. The Federal Reserve increasing its balance sheet to $4 trillion out of thin air creates approximately $80 billion of phantom interest profits that are paid to the Treasury. Why don’t they increase their balance sheet to $40 trillion and eliminate deficits all together?
  • The biggest accounting scam is Fannie and Freddie. Just as the Wall Street banks have created fake profits through accounting entries regarding future losses, Fannie and Freddie have gone the extra mile in helping fake deficit reduction. These bloated insolvent government run pigs required a $187 billion taxpayer bailout in 2009. Amazingly, when you allow criminals to value their assets at whatever they choose, phantom profits flow like honey.
  • These two horribly run institutions of fraud “generated profits” of $129 billion in 2014 which were “paid back” to the Treasury. That is four times more than Apple or Exxon’s profits during a non-existent housing recovery. Why are their stocks trading at just over $2 per share if they are generating vastly more profits than they were in 2007 when their stocks were north of $70 per share? It’s because the profits are fake. Everyone knows it, but the Federal Deficit is reported $129 billion lower because these insolvent entities pretended to pay the taxpayer back. Accounting entries do not reduce deficits. Spending less than you generate in revenues reduces deficits.

According to the government, we’ve experienced a strong housing recovery since 2010. The supposed housing recovery storyline continues to be beaten like a dead horse by the Wall Street media (CNBC) and the shills at the NAR. Anyone with a functioning brain (eliminates CNBC bimbos, hacks, and Ivy League economists) can see there has been no real housing recovery:

  • The 24% rise in home prices (Case Shiller Index) since the 2012 low has been nothing more than a Wall Street hedge fund/Federal Reserve scheme to elevate prices and make Wall Street bank balance sheets less insolvent. Wall Street banks withholding foreclosures from the market while Wall Street hedge funds (Blackstone) use free money from the Fed to buy up housing and rent it out to former homeowners has enriched the .1% while destroying the dream of home ownership for millions.
  • The percent of first time home buyers remains near record lows, while speculators, flippers, hedge fund managers, and rich Chinese businessmen make up a record number of purchasers. The fact this is a fake housing recovery is proven by mortgage applications to purchase a home sitting at 1995 levels and 30% below 2009 recession lows. Maybe the fact real median household income is also at 1995 levels, real wages keep declining, and labor force participation is at 1978 levels has something to do with real people not being able to purchase a home.
  • Even with the artificial hedge fund demand, existing home sales are lower than 2013 and languishing at 1999 levels. They are still 25% below 2005 levels, despite the lowest mortgage rates in history. New home sales are a disaster, with no appreciable increase in two years. Apartment construction has far outpaced single family housing construction. After a five year housing recovery, new home sales languish at levels seen at the bottom of our last six recessions. New home sales are 65% below the 2005 peak and at levels seen in the early 1960’s when there were 130 million less people living in the country.

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According to the corporate media, the auto market is hitting on all cylinders with annual sales of 16.4 million, the highest since 2006. Pretending to sell automobiles to people without the means to pay you for the automobile is always a good business idea. Of course, when you have Ally Financial and the rest of the Wall Street banking cabal doling out 7 year 0% loans and subprime auto loans like candy, it’s easy to move inventory. The temporary boost to GDP by issuing more bad debt always works out in the long run. Right?

  • If the auto business is booming why have GM profits fallen from $9.2 billion in 2011 to $5.4 billion in 2013, and on course to fall to $4 billion in 2014? Record levels of channel stuffing produces sales gains, but no profits. Why is their stock 25% below its 52 week high and lower than it was in 2010 when it was IPO’d after being rescued by the government?
  • If the auto business is booming why are Ford’s profits falling by 35% versus last year and lower than they were in 2010? Why is their stock price 16% below its 52 week high and still 20% below its 2010 price?
  • Auto loan debt is at an all-time high of $950 billion, up 33% since 2010 when the Fed, Wall Street, and the political class decided they needed new debt bubbles in auto loans and student loans to jump start our moribund economy.
  • There are 65 million auto loans outstanding, and the average debt now stands at $17,352. Over 30% of auto “sales” are actually leases. The rest are financed over an average of 65 months. Virtually all new car sales are nothing more than 3 to 7 year rentals. It’s amazing what easy money from the Fed can produce.
  • Over 31% of all new auto loans this year were to subprime borrowers. They now account for 36.5% of all outstanding auto loans. You become a subprime borrower by defaulting on previous debt obligations. In a shocking development, auto loan delinquencies surged by 13% in the last quarter, with subprime loan delinquencies skyrocketing by 18%. When has issuing billions of debt to subprime borrowers ever caused problems before?
  • Only a University of Phoenix African Studies major is more of a subprime risk than the millions of ecstatic Escalade drivers cruising around our urban ghetto paradises. The average student loan debt is now $33,000. Until the Obama administration went Keynesian, student loan debt was primarily in the private sector. When Obama entered the White House total student loan debt was $620 billion and delinquencies totaled $50 billion. There are now $1.3 trillion of student loans outstanding, with the Federal government accounting for $830 billion and guaranteeing a large portion of the rest. Delinquencies have skyrocketed to $125 billion, as another taxpayer bailout beckons.

 

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These are just a few of the facts that are being manipulated to make you do two things. First, not panic and run your bank. If you did that, game over for the bankers and politicians. Two, stay compliant with the false belief that you are OK and things are getting better soon. They are not and you, the average American, are falling deeper and deeper into economic poverty. Extend these trends to your grandchildren at the current rate of declining real income and they will be indentured slaves.

It is, to say the least, very frustrating to point out these realities over and over again, with real facts, and everyone seems to remain so docile. It seems we are all suffering from a fatal case of apathy. Maybe we just don’t want to face the reality of what is happening. Maybe we all understand intuitively that the only way out is some radical resistance with all of the hardships and unknowns associated with that reality. What we do know is that if we don’t begin to resist soon, there will be dire consequences for our children and grandchildren..that is if they are allowed to be in the first place.

The Real Killer in the Economy – Income Inequality

Four years of so-called stimulus, a record setting stock performance, banksters racking in record profits but still on the edge of economic collapse. What is the real deal killer here? Growing income inequality in the United States has Americans talking about justice and economic fairness, but a new study suggests the burgeoning wealth gap is threatening more than just our pocketbooks. It might be raising our risk for an early death.

In one of the few studies to track the health effects of income inequality over time, one Ohio State University (OSU) researcher has discovered that an increase in inequality leads mortality rates to begin rising after five years. Inequality-linked mortality peaks about two years later, before tapering off five years after that. All told, even a modest increase in American societal inequality more than doubles an average individual’s cumulative risk of death over the next 12 years.

Drawing data from the U.S. National Health Interview Survey for the years 1986 to 2004, the study found that for every 0.01 increase in the Gini coefficient — a standard measure of a country’s economic disparity where 0 represents perfect societal equality and 1 represents maximum inequality — an average person’s cumulative risk of death increased by 112 percent in the next dozen years. Hui Zheng, the OSU sociologist who ran the study, replicated the results using three different measures of inequality across a sample of more than 700,000 Americans aged 30 and older. He then ran the same test on 18- to 25-year-olds, with similar results.

The possibility may be precisely the argument Occupy Wall Street protesters have taken up for themselves: that the accrual of wealth to the nation’s elites creates further incentives to preserve that wealth at the expense of the disadvantaged. Inexplicably, the effect of income inequality on death rates drops off after a dozen years. But, Zheng said, the point is that income inequality doesn’t simply have an immediate impact on public health, as previous studies have suggested. Income inequality may increase over time.

Since 1980, the Gini coefficient in the United States has grown from 0.403 to 0.469 in 2010. Even if inequality were held constant for the foreseeable future, Zheng’s research suggests that Americans will be likely to feel the knock-on mortality effects of past inequality increases through at least 2021. Add that to the growing list of things that are killing us slowly.

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Here’s a finding that would have made for great occupy sign last year: American income inequality may be more severe today than it was way back in 1774 — even if you factor in slavery.

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That stat’s not actually as crazy as it sounds, but it might upend some of the old wisdom about our country’s economic heritage. The conclusion comes to us from a newly updated study by professors Peter Lindert of the University of California – Davis and Jeffrey Williamson of Harvard. Scraping together data from an array of historical resources, the duo have written a fascinating exploration of early American incomes, arguing that, on the eve of the Revolutionary War, wealth was distributed more evenly across the 13 colonies than anywhere else in the world that we have record of.  Suffice to say, times have changed.

In this case, Williamson and Lindert use occupational directories, tax lists, post-revolutionary census documents, and earlier scholarship, among other resources, to build approximations of what people earned when we were getting ready to start turning our muskets on the British. Inherently, such a process involves lots of conjecture.

In the end, the pair find that the colonies were an exceedingly egalitarian place, financially, if not politically. Williamson and Linderts compares the original 13 colonies to contemporary England and the Netherlands (including the former Kingdom of Holland) using a popular measure of inequality known as the Gini coefficient.

Not only was income more equally divided in the colonies, but Americans across the economic spectrum tended to be richer than their European counterparts. Even slaves, who were occasionally paid a tiny sum for their forced labor in addition to shelter and food, technically earned more than the poorest Europeans, Lindert and Williamson write. (From a human rights perspective, they were obviously worse off).* The single big exception to this rule was the top 1 percent: Europe’s elite were still wealthier than ours.

On measures of equality, the colonies also compare extremely well to the latter-day United States. By the time the Civil War came, the top 1 percent of U.S. households laid claim to 10 percent of the nation’s income, versus about 7 percent during the founders’ era. Today, the same group accounts for about 19 percent. Even if you use more conservative measures of American income inequality from the Census Bureau, it still appears we were more of a middle-class society back when tri-corner hats were actually considered high fashion. 

We are a much richer nation, and much better off today, than 240 years ago. In the 1770s, America was a heavily agrarian country of yeoman farmers, merchants, and tradesmen, with an economy that accounted to just a few billion dollars in present values. Like India or Russia today, both of which technically enjoy more income equality than the United States, early Americans were relatively poor compared to us. They were just relatively poor together. The first wave of industrialization in the 19th century increased living standards, but also offered bigger rewards to factory owners than their workers. That pattern neatly fits our classic understanding of what’s supposed to happen when economies move from farming to manufacturing. And by now, we’ve gone through several epic rounds of economic upheaval that have left us with a vast gulf between the rich and the rest, as well as a welfare state that tries to mitigate some of the side effects of that difference.

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Politically, though, there may be a lesson in this. Some would argue that income inequality is an acceptable sacrifice to make in return for income mobility — the ability for children and families to work their way to better stations in life. But as Chrystia Freeland has noted, the founding fathers evidently formed their ideas about democracy in a social context very different than our own, when distinctions of wealth simply weren’t as sharp. It’s possible they expected an equal society to remain considerably more equal than it is today.

Income inequality is not a uniquely American problem. Over the past 30 years, it’s surged across the developed world, driven by everything from the insane wealth generated by big finance to the victory of computers (and offshoring) over blue-collar labor.

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That said, there’s a case to be made that U.S. income inequality is in fact exceptional, and not just because of its severity.  A 2008 report by the OECD tells us is that in many developed countries, a rising tide has truly lifted all boats, with the wealthy rising a bit faster. In the United States, the tide is lifting up the rich, while drowning many of the poor.

Like their peers across the developed world, American women’s earnings rose as they broke into the labor force — though less so for lower-income women. For American men, it was a different story. Among the upper-middle-class and rich, male earnings inched up on the whole. Among the lower-middle class and poor, their incomes shrank. The only other country that saw a similar phenomenon was Canada, where incomes seemed to stagnate in general.

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That’s what’s so frightening about the way the U.S. economy was changing even before the Great Recession. It’s not just that the rich saw their finances improve faster than everyone else’s. It’s that many Americans were seeing the value of their work, and in some cases their standard of living, decline. And that makes us at least a little bit special, in a very unfortunate way.

Perhaps the most politically contentious aspect of President Barack Obama’s new proposed legislation, aimed to revive the still-struggling U.S. economy, is $1.5 trillion in tax increases, much of it aimed at wealthy Americans. The White House is calling this “the Buffett rule.” Named for super-investor Warren Buffett’s complaint that he pays a lower tax rate than some of his most menial wage employees, the legislation would be designed to ensure that anyone making more than $1 million per year will pay at least the same rate as middle-income taxpayers.

Obama’s “Buffett rule” is a response to a number of U.S. economic issues related to the recession. One of the most severe is income inequality — the gaps between wealthy, super-wealthy, and everyone else — a serious, long-worsening problem that makes the recession more painful and recovery more difficult. To get a sense of just how bad our income inequality has become, it’s worth taking a look at how we stack up to the rest of the world.

Viewed comparatively, U.S. income inequality is even worse than you might expect. Perfect comparisons across the world’s hundred-plus economies would be impossible — standards of living, the price of staples, social services, and other variables all mean that relative poverty feels very different from one country to another. But, in absolute terms, the gulf between rich and poor is still telling. When you look at the US, we are comparable income inequality to countries like Cameroon, Madagascar, Rwanda, Uganda, and Ecuador. A number are currently embroiled in or just emerging from deeply destabilizing conflicts, some of them linked to income inequality: Mexico, Côte d’Ivoire, Sri Lanka, Nepal, Serbia.  Perhaps most damning is China, which is significantly more equal than the U.S. with a Gini coefficient of 0.415, where the severe income gap has been a source of worsening political instability for almost 20 years. Leagues ahead of the U.S. on income inequality is India, Gini coefficient 0.368, where outrage over corruption and income inequality recently inspired a protest movement that shook the world’s largest democracy. Russia, which has seen three popular revolutions in the last century against the caviar-shoveling oligarchs who still run everything, is also less unequal than the U.S., at 0.422 Gini.

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These are the facts, and they don’t paint a rosy picture for “the world’s leading economy”. These are facts verified by scholars, not politicians, banksters, or those pseudo-scientists called economists. These are facts that should outrage the American people. To you tea party folks, I would suggest THIS is the issue you should focus on, instead of being dupes to the very oligarchy that is crushing you and cajoling you to say big government is the issue.  The fact of the matter is you are the masters of your own demise and you don’t even know it. To those who are “blindly” conservative, WAKE UP!

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There are only two possibilities to put this ship back on course to a vibrant economy. First, we can foment a revolution, but the elites have armed themselves well and have a very well planned “martial law” scheme to handle that contingency OR we can educate ourselves correctly and deal with these issues politically by putting people in office that will demand our GOVERNMENT take the necessary steps to deal with the real KILLER issue- INCOME INEQUALITY. Duh, how hard is this to understand when you have the facts.