Off the keyboard of Jim Quinn
Published on The Burning Platform on April 23, 2013
Discuss this article at the Epicurean Delights Smorgasbord inside the Diner
“The real hopeless victims of mental illness are to be found among those who appear to be most normal. Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives that they do not even struggle or suffer or develop symptoms as the neurotic does. They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted.” – Aldous Huxley – Brave New World Revisited
The political class set in motion the eventual obliteration of our economic system with the creation of the Federal Reserve in 1913. Placing the fate of the American people in the hands of a powerful cabal of unaccountable greedy wealthy elitist bankers was destined to lead to poverty for the many, riches for the connected crony capitalists, debasement of the currency, endless war, and ultimately the decline and fall of an empire. Ernest Hemingway’s quote from The Sun Also Rises captures the path of our country perfectly:
“How did you go bankrupt?”
Two ways. Gradually, then suddenly.”
The 100 year downward spiral began gradually but has picked up steam in the last sixteen years, as the exponential growth model, built upon ever increasing levels of debt and an ever increasing supply of cheap oil, has proven to be unsustainable and unstable. Those in power are frantically using every tool at their disposal to convince Boobus Americanus they have everything under control and the system is operating normally. The psychotic central bankers, “bought and sold” political class, mega-corporation soulless chief executives and corporate controlled media use propaganda techniques, paid “experts”, talking head “personalities”, captured think tanks, and the willful ignorance of the majority to spin an increasingly dire economic descent as if we are recovering and getting back to normal. Nothing could be further from the truth.
There is nothing normal about what Ben Bernanke and the Federal government have done over the last five years and continue to do today. Truthfully, nothing has been normal since the mid-1990s when Alan Greenspan spoke the last truthful words of his lifetime:
“Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”
The Greenspan led Federal Reserve created two epic bubbles in the space of six years which burst and have done irreparable harm to the net worth of the middle class. Rather than learn the lesson of how much damage to the lives of average Americans has been caused by creating cheap easy money out of thin air, our Ivy League self-proclaimed expert on the Great Depression, Ben Bernanke, has ramped up the cheap easy money machine to hyper-speed. There is nothing normal about the path this man has chosen. His strategy has revealed the true nature of the Federal Reserve and their purpose – to protect and enrich the financial elites that manipulate this country for their own purposes.
Despite the mistruths spoken by Bernanke and his cadre of banker coconspirators, he can never reverse what he has done. The country will not return to normalcy in our lifetimes. Bernanke is conducting a mad experiment and we are the rats in his maze. His only hope is to retire before it blows up in his face. Just as Greenspan inflated the housing bubble and exited stage left, Bernanke is inflating a debt bubble, stock bubble, bond bubble and attempting to re-inflate the housing bubble just in time for another Ivy League Keynesian academic, Janet Yellen, to step into the banker’s box. This genius thinks Bernanke has been too tight with monetary policy. It seems inflated egos are common among Ivy League economist central bankers who think they can pull levers and push buttons to control the economy. Results may vary.
The gradual slide towards our national bankruptcy of wealth, spirit, freedom, self-respect, morality, personal responsibility, and common sense began in 1913 with the secretive creation of the Federal Reserve and the imposition of a personal income tax. Pandora’s Box was opened in this fateful year and the horrors of currency debasement and ever increasing taxation were thrust upon the American people by a small but powerful cadre of unscrupulous financial elite and the corrupt politicians that do their bidding in Washington D.C. The powerful men who thrust these evils upon our country set in motion a chain of events and actions that will undoubtedly result in the fall of the great American Empire, just as previous empires have fallen due to the corruption of its leaders and depravity of its people. Creating a private central bank, controlled by the Wall Street cabal, and allowing the government to syphon the earnings of workers through increased taxation has allowed politicians the ability to spend, borrow, and print money at an ever increasing rate in order to get themselves re-elected and benefit the cronies, hucksters and bankers that pay the biggest bribes. None of this benefit the average American, who sees their purchasing power systematically inflated and taxed away. This is not capitalism and it is not a coincidence that war and inflation have been the hallmarks of the last century.
“A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It is no coincidence that the century of total war coincided with the century of central banking.” – Ron Paul
As you can see, the bankruptcy of our country and our culture began gradually, accelerated after Nixon closed the gold window in 1971, really picked up steam in 1980 when the debt happy Baby Boom generation came of age, and has “suddenly” reached maximum velocity as we approach the true fiscal cliff. There were many checkpoints along the way where fatefully bad choices were made. They include the New Deal, Cold War, Great Society, Morning in America, Dotcom New Paradigm, Housing Wealth Retirement Plan, Obamacare, and present belief that creating more debt will solve a problem created by too much debt. The Federal Reserve allowed interventionist politicians to fight two declared wars (World War I, World War II), fight five undeclared wars (Korea, Vietnam, Gulf, Afghanistan, Iraq), conduct hundreds of military engagements around the globe, occupy foreign countries, begin a war on poverty that increased poverty, begin a war on drugs that increased the amount of available drugs, and finally start a war on terror that has increased the number of terrorists and pushed us closer to national bankruptcy. The terrorists have already won, as the explosion of stupidity and irrational fear has allowed those in power to acquire more power and dominion over our lives.
“We live surrounded by a systematic appeal to a dream world which all mature, scientific reality would reject. We, quite literally, advertise our commitment to immaturity, mendacity and profound gullibility. It is as the hallmark of the culture. And it is justified as being economically indispensable.” - John Kenneth Galbraith
When I critically scrutinize the economic, political, financial, and social landscape at this point in history, I come to the inescapable conclusion that our country and world are headed into the abyss. This is most certainly a minority viewpoint. The majority of people in this country are oblivious to the disaster that will arrive over the next decade. Some would attribute this willful ignorance to the normalcy bias that infects the psyches of millions of ostrich like iGadget distracted, Facebook addicted, government educated, financially illiterate, mass media manipulated zombies. Normalcy bias refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to inform the populace about the impending disaster. The assumption that is made in the case of the normalcy bias is that since a disaster hasn’t occurred yet, then it will never occur. It also results in the inability of people to cope with the disaster once it occurs. People tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.
The unsustainability of our economic system built upon assumptions of exponential growth, ever expanding debt, increasing consumer spending, unlimited supplies of cheap easy to access oil, impossible to honor entitlement promises, and a dash of mass delusion should be apparent to even the dullest of government public school educated drones inhabiting this country. I don’t attribute this willful ignorance to normalcy bias. I attribute it to abnormalcy bias. In a profoundly abnormal society, adjusting your thinking to fit in appears normal, but is just a symptom of the disease that has infected our culture. There is nothing normal about anything in our society today. If you were magically transported back to 1996 and described to someone the economic, political, financial and social landscape in 2013, they would have you committed to a mental institution and given shock therapy.
Even though we’ve been in a 100 year spiral downwards, things still appeared relatively normal in 1996 when Greenspan uttered his “Irrational Exuberance” faux pas that so upset his Wall Street puppet masters. The ruling class had not yet repealed Glass-Steagall (pre-requisite for pillaging the muppets), created the internet bubble, fashioned the greatest control fraud in world history (housing bubble unrecognized by Ben Bernanke), or taken advantage of mass hysteria over 9/11 to begin the never ending war on terror and expansion of the Orwellian state. The citizens, and I use that term loosely, of this country have allowed those in control of the government and media to convince them the situation confronting us is just a normal cyclical variation that will be alleviated by tweaking existing economic policies and trusting that Ben Bernanke will pull the right monetary levers to get us back on course. The stress inflicted on their brains in the last thirteen years of bubbles and wars has made the average person incapable of distinguishing between normality and abnormality. What they need is slap upside of their head. Is there anything normal about these facts?
- The Federal Reserve’s balance sheet in 1996 consisted of $422 billion, of which 91% were Treasury securities. Today it consists of $3.25 trillion, of which only 56% are Treasury securities, and the rest is toxic home mortgages, toxic commercial mortgages, and whatever other crap the Wall Street banks have dumped on their books. Their balance sheet is leveraged 57 to 1 and Bernanke has promised his Wall Street bosses he will add another $750 billion before the year is out. Is there anything normal about a central bank adding twice as much debt to its balance sheet in less than twelve months than existed on its entire balance sheet in 1996?
- The National Debt at the end of fiscal 1996 was $5.25 trillion. It increased by $250 billion that year. The GDP of the country was $7.8 trillion. Our national debt as a percentage of GDP was only 67% and our annual deficit was only 3% of GDP. At the time, the country was worried about these outrageous levels of debt. Today the National Debt stands at a towering $16.8 trillion. It has increased by a staggering $1.12 trillion in the last twelve months. The GDP of the country today is $15.7 trillion. Our national debt as a percentage GDP has soared to 107%. Our annual deficits now exceed 7% of GDP on a consistent basis. Our budgets are on automatic pilot, with the $20 trillion level to be breached by 2016. Is it a normal state of affairs when the GDP of your country rises by 100% over seventeen years, while your debt rises by 320%?
- Total government spending (Federal, State, Local) in 1996 totaled $2.7 trillion, or 35% of GDP. Today total government spending is $6.3 trillion, or 40% of GDP. In 1979, before the belief in government became a religion, total government spending was only 31.5% of GDP (27% in 1965). Are you receiving twice the service from government than you received in 1996? Are you safer from terrorists due to the massive expansion of the police state? Are your kids getting a much better education than they did in 1996? Have the undeclared wars benefitted you in any way, other than tripling the price of gas? Are the higher wage taxes, real estate taxes, school taxes, sewer fees, utility fees, phone fees, gasoline taxes, permit fees, and myriad of other government charges worth it? Is it normal for government to account for almost half of our economy?
- In 1996 personal consumption expenditures accounted for 67% of GDP, while private domestic investment accounted for 16% of GDP and we ran small trade deficits of 1% of GDP. Today, consumer spending accounts for 71% of GDP (despite the storyline about consumer retrenchment), while domestic investment has contracted to 13% of GDP and our trade deficits have surged to almost 4% of GDP. The Federal government has expanded their piece of the GDP pie by 130% since 1996, with the Department of War accounting for the bulk of the increase. Saving and capital investment is now penalized in this country. Is it normal for a country to borrow, consume and bleed itself to death?
- Consumer credit outstanding totaled $1.2 trillion in 1996, or $4,500 per every man, woman and child in the country. Today, the austere balance is now $2.8 trillion, or $8,800 per every man, woman and child inhabiting our debt saturated paradise. The more than doubling of consumer debt would be acceptable if wages were rising at a similar rate. But that hasn’t been the case, as wages have only advanced from $3.6 trillion in 1996 to $7.0 trillion today. With even the massively understated CPI showing 50% inflation since 1996 and 23% more Americans in the working age population (45 million), real wages have advanced by 30%. Using a true measure of inflation, real wages have fallen. Total credit market debt in 1996 was $19 trillion, or 243% of GDP. Today total credit market debt sits at an all-time high of $56.2 trillion, or 358% of GDP. Is it normal for credit market debt to increase at three times the rate of GDP?
- In 1996, personal income totaled $6.6 trillion, with wages accounting for 55% of the total, interest income on savings accounting for 12% and government entitlement transfers accounting for 14%. Today personal income totals $13.6 trillion, with wages accounting for 51% of the total, interest income on savings plunging to 7% due to Bernanke’s “Screw a Senior Zero Interest Policy”, and Big Brother entitlement transfers skyrocketing to 18%. In what Orwellian dystopian society is taking money from wage earners and redistributing it to non-wage earners considered personal income? Is it normal for a government to punish savers and makers in order to benefit the borrowers and takers?
- Prior to the financial collapse and during the mid-1990s prudent risk-averse savers could get a 4% to 5% return on money market accounts. Since the Wall Street created worldwide financial collapse, Ben Bernanke, at the behest of these very same Wall Street banks, has reduced short term interest rates to 0%. The result has been to transfer $400 billion per year from the pockets of savers and senior citizens into the grubby hands of bankers that have destroyed our economy. The prudent are left earning .02% on their savings, while the profligate bankers can borrow for 0% and earn billions by re-depositing those funds at the Federal Reserve. In what bizarro world this be a normal state of affairs?
- Total mortgage debt outstanding in 1996, before the epic Wall Street produced housing bubble, was $4.7 billion. Today, even after the transfer of almost $1 trillion of bad debt to the balance sheet of the American taxpayer, the amount of mortgage debt is an astounding $13.1 trillion. Despite home values rising since 1996, there are 20% of all households still in a negative equity position. Total household real estate equity was 60% in 1996, plunged below 40% in 2009, and has only slightly rebounded to 47% today because Wall Street dumped the bad mortgages on the backs of the American taxpayer. Is it normal for mortgage debt to triple and home equity to plunge in a rationally functioning world? Is it normal when 25% of all existing home sales are distressed sales and another 30% are sales to Wall Street hedge funds like Blackrock?
- In 1996 there were 200 million working age Americans, with 134 million (67%) in the labor force, 127 million (63.5%) employed, and 66 million (33%) not in the labor force. Today there are 245 million working age Americans, with 155 million (63%) in the labor force, 143 million (58%) employed, and 90 million (37%) supposedly not in the labor force. The number of working age Americans has increased by 22.5%, while the number of those employed has advanced by only 12.5%. The population to employment ratio has reached a three decade low as millions have given up, been lured into college by cheap plentiful government debt, or developed a mysterious ailment that has gotten them into the SSDI program. Is it normal for millions of Americans to leave the labor force when the economy is supposedly recovering?
- In 1996 there were 25.5 million Americans on food stamps, or 9.6% of the population, costing $24 billion per year. Today there are 47.8 million Americans on food stamps, or 15% of the population, costing $75 billion per year. Historically, the number of people in this program would rise during recessions and recede when the economy recovered, just as a safety net program should function. According to our government keepers the economy has been in recovery since late 2009. The number of people entering the food stamp program has gone up by 7 million since the recession officially ended. This is not normal. Either the government is lying about the recession or they are screwing the taxpayer by encouraging constituents to enter the program in an effort to gain votes. Which is it?
- The price of oil averaged $20 per barrel in 1996 and it cost you $1.20 per gallon to fill your tank. Oil averaged $85 per barrel in 2012 and currently hovers around $90 per barrel. Most Americans are now paying between $3.50 and $4.00 per gallon to fill their tanks. This result seems abnormal considering the propaganda machine is proclaiming we are on the verge of energy independence. After two Middle East wars, 6,700 dead American soldiers, 50,000 wounded American soldiers, and $1.5 trillion of national wealth wasted, this is all we get – a tripling in gas prices and creation of thousands of new terrorists?
You have to have a really bad case of normalcy bias to be able to convince yourself that everything that has happened since 1996 is normal. Every fact supports the reality that we’ve entered a period of extreme abnormality and our response as a nation thus far has insured that a disaster of even far greater magnitude is just over the horizon. Anyone with an ounce of common sense realizes the social mood is deteriorating rapidly. We are in the midst of a Crisis period that will result in earth shattering change, but the masses want things to go back to normal and don’t want to face the facts. The cognitive dissonance created by reality versus their wishes will resolve itself when the next financial collapse makes 2008 look like a walk in the park. But, until then most will just stick their heads in the sand and hope for the best.
Loving Your Servitude
“Liberty is lost through complacency and a subservient mindset. When we accept or even welcome automobile checkpoints, random searches, mandatory identification cards, and paramilitary police in our streets, we have lost a vital part of our American heritage. America was born of protest, revolution, and mistrust of government. Subservient societies neither maintain nor deserve freedom for long.” – Ron Paul
The most disgraceful example of abnormality that has infected our culture has been the cowardice and docile acquiescence of the citizenry in allowing an ever expanding police state to shred the U.S. Constitution, strip us of our freedoms, and restrict our liberties. Our keepers have not let any crisis go to waste in the last seventeen years. They have also taken advantage of the willful ignorance, childish immaturity, extreme gullibility, historical cluelessness, financial illiteracy and techno-narcissism of the populace to reverse practical legislation and prey upon irrational fears to strip the people of their constitutionally guaranteed liberties and freedoms. If you had told someone in 1996 the security measures, laws, and police agencies that would exist in 2013, they would have laughed you out of the room. Every crisis, whether government created or just convenient to their agenda, has been utilized by the oligarchs to expand the police state and benefit the crony capitalists that profit from its expansion. The character of the American people has been found wanting as they obediently cower and beg for protection from unseen evil doers. The propagandist corporate media reinforces their fears and instructs them to submissively tremble and implore the government to do more. The cosmic obliviousness and limitless sense of complacency of the general population with regards to a blatantly obvious coup by a small cadre of sociopathic financial elite and their army of bureaucrats, lackeys and jackboots is a wonder to behold.
The 1929 stock market crash and ensuing Great Depression was primarily the result of excessively loose Federal Reserve monetary policy during the Roaring 20’s and the unrestrained fraud perpetrated by the Wall Street banks. The 1933 Glass-Steagall Act was a practical 38 page law which kept Wall Street from ravenously raping its customers and the American people for almost seven decades. The Wall Street elite and their bought off political hacks in both parties repealed this law in 1999, while simultaneously squashing any effort to regulate the financial derivatives market. The day trading American public didn’t even look up from their computer screens. Over the next nine years Wall Street went on a fraudulent feeding frenzy rampage which brought the country to its knees and then held the American taxpayer at gunpoint to bail them out. The Federal Reserve arranged rescue of LTCM in 1998 gave the all clear to Wall Street that any risk was acceptable, since the Fed would always bail them out. Just as they did in the 1920’s, the Federal Reserve set the table for financial disaster with excessively low interest rates and non-existent regulatory oversight.
The downward spiral of our empire towards an Orwellian/Huxley merged dystopian nightmare accelerated after the 9/11 attacks. Within one month those looking to exert hegemony over all domestic malcontents had passed the 366 page, 58,000 words Patriot Act. Did the terrified masses ask how such a comprehensive destruction of our liberties could be written in under one month? It is apparent to anyone with critical thinking skills that the enemy within had this bill written, waiting for the ideal opportunity to implement this unprecedented expansion of federal police power. Electronic surveillance of our emails, phone calls and voice mails, along with warrantless wiretaps, and general loss of civil liberties was passed without question under the guise of protecting us. Next was the invasion of a foreign country based upon lies, propaganda and misinformation without a declaration of war, as required by the Constitution. Our government began torturing suspects in secret foreign prisons. The shallow, self-centered, narcissistic, Facebook fanatic populace has barely looked up from texting on their iPhones to notice that we have been at war in the Middle East for eleven years, because it hasn’t interfered with their weekly viewing of Honey Boo Boo, Dancing With the Stars, or Jersey Shore. They occasionally leave their homes to wave a flag and chant “USA, USA, USA”, as directed by the media, when a terrorist like Bin Laden or Boston bomber is offed by our security services, but for the most part they can live their superficial vacuous lives of triviality unscathed by war.
The creation of the Orwellian Department of Homeland Security ushered in a further encroachment of our everyday freedoms. They attempted to keep the masses frightened through a ridiculous color coded fear index. Little old ladies, people in wheelchairs and little children are subject to molestation by lowlife TSA perverts. Military units conduct “training exercises” in cities across the country to desensitize the sheep-like masses, who fail to acknowledge that the U.S. military cannot constitutionally be used domestically. DHS considers military veterans, Ron Paul supporters, and Christians as potential enemies of the state. The use of predator drones to murder suspected adversaries in foreign countries, while killing innocent men, women and children (also known as collateral damage), has just been a prelude to the domestic surveillance and eventually extermination of dissidents and nonconformists here in the U.S. We are already becoming a 1984 CCTV controlled nation. DHS has been rapidly militarizing local police forces in cities and towns to supplement their jackbooted thugs. Obama’s executive orders have given him the ability to take control of industry. He can imprison citizens without charges for as long as he deems necessary. Attempts to control gun ownership and shutdown the internet is a prologue to further government domination and supremacy over our lives when the wheels come off this unsustainable bus.
The last week has provided a multitude of revelations about our government and the people of this country. The billions “invested” in our police state, along with warnings from a foreign government, and suspicious travel patterns were not enough for our beloved protectors to stop the Boston Marathon bombing. After stumbling upon these amateur terrorists by accident, the 2nd responders, with their Iraq war level firepower, managed to slaughter one of the perpetrators, but somehow allowed a wounded teenager to escape on foot and elude 10,000 donut eaters for almost 24 hours. The horde of heavily armed, testosterone fueled thugs proceeded to bully and intimidate the citizens of Watertown by illegal searches of homes and treating innocent people like criminals. The government completely shut down the 10th largest metropolitan area in the country for an entire day looking for a wounded 19 year old. The people of Boston obeyed their zoo keepers and obediently cowered in their cages.
The entire episode was an epic fail. The gang that couldn’t shoot straight needed an old man to find the bomber in his backyard boat. The people of Boston exhibited the passivity and subservience demanded by their government. Since the capture of the remaining terrorist, the shallow exhibitions of national pride at athletic events and smarmy displays of honoring the police state apparatchiks who screwed up – allowing the attack to occur and looking like the keystone cops during the pursuit of the suspects, has revealed a fatal defect in our civil character. We are living in a profoundly abnormal society, with millions of medicated mindless zombies controlled by a vast propaganda machine, who seemingly enjoy having their liberties taken away. Most have willingly learned to love their servitude. For those who haven’t learned, the boot of our vast security state will just stomp on their face forever. We’re realizing the worst dystopian nightmares of Orwell and Huxley simultaneously. This abnormalcy bias will dissipate over the next ten to fifteen years in torrent of financial collapse, war, bloodshed, and retribution. Sticking your head in the sand will not make reality go away. The existing social, political, and financial order will be swept away. What it is replaced by is up to us. Will this be the final chapter or new chapter in the history of this nation? The choice is ours.
“If you want a vision of the future, imagine a boot stamping on a human face – forever.
- George Orwell
“There will be, in the next generation or so, a pharmacological method of making people love their servitude, and producing dictatorship without tears, so to speak, producing a kind of painless concentration camp for entire societies, so that people will in fact have their liberties taken away from them, but will rather enjoy it, because they will be distracted from any desire to rebel by propaganda or brainwashing, or brainwashing enhanced by pharmacological methods. And this seems to be the final revolution” -Aldous Huxley, 1961
Off the keyboard of Jim Quinn
Published on The Burning Platform on January 18, 2013
Discuss this article at the Epicurean Delights Smorgasbord inside the Diner
I’ve put off writing an article about what is likely to happen in 2013 so I could peruse the thousands of other articles by reputable bloggers, paid pundits, Wall Street shills and captured charlatans to gather their wisdom. It’s essential that I make predictions for 2013 so I can write another article in December rationalizing why 90% of my predictions failed to materialize. Reading all of these 2013 prediction articles made things much clearer for me. I now know for sure:
- The stock market will reach an all-time high.
- The stock market will fall 42%.
- The economy will strengthen as the year progresses.
- The economy will descend into a depression.
- The USD will strengthen.
- The USD will collapse.
- Gas prices will set new highs.
- Gas prices will fall below 2012 levels.
- Gold will rise to $10,000 per ounce.
- Gold will drop below $1,000 per ounce.
- We will experience hyperinflation.
- We will experience horrific deflation.
- Obama will compromise with the Republicans and put the country on a path to prosperity.
- Obama will create a debt ceiling crisis and assume dictatorial powers as a result.
- Snooki will be a better mother than Kim Kardashian.
- Honey Boo Boo will beat I Didn’t Know I Was Pregnant in the Neilson ratings.
The majority of 2013 prediction articles are written to support the agenda of the writer. Many are trying to sell newsletter subscriptions or investment services. Their predictions will match the theme of their newsletter. Others are Wall Street paid shills who will predict what they are paid to predict by their owners. Then there are the political hacks who tow the party line with their predictions. But no one can top the predictive powers of the CBO. They just put out their ten year updated forecast reflecting the fabulous fiscal cliff deal that saved the country. According to the CBO, the “compromise” to reduce our deficits will add a mere $4 trillion to the national debt over the next ten years. I’m sure this will prove to be accurate. Just take a look at their 2002 projection, after passage of the Bush tax cuts:
The CBO predicted the FY2012 surplus would be $641 billion, the national debt would total $3.5 trillion, the debt held by the public would total $1.273 trillion, and GDP would total $17.2 trillion. They missed by that much.
The actual FY12 results were:
- The true deficit was $1.37 trillion (amount national debt increased – not the phony deficit number reported by the mainstream media).
- The national debt was $16.1 trillion.
- The debt held by the public was $11.3 trillion.
- GDP was $15.8 trillion.
Based on these results, I won’t be asking the CBO for help with my Super Bowl bet. Making ten year predictions is beyond worthless, but public policy in Washington DC is based on these useless CBO projections. The entire fiscal cliff kabuki theater fictitious crisis reveals the politicians and mainstream media pundits to be liars, fools and frauds. The tax the rich to cut the deficit storyline was sold to the public and won the day. Of course, the highly accurate CBO immediately revealed that the Orwellian named American Taxpayer Relief Act of 2012 adds $4 trillion to the national debt over the next ten years. Based on the accuracy of their previous predictions, it’s a guarantee the national debt goes up by $8 trillion, as the rich take advantage of the thousands of loopholes in the IRS code they paid for to avoid paying the taxes expected by the CBO.
Hypocrisy abounds on both sides of the aisle in Washington DC and on the media company propaganda channels. As the national debt soared from $10.6 trillion on the day Obama took office to $16.4 trillion today, I heard shrieking liberal talking heads on MSNBC, CNN, and the rest of the liberal media blame the debt on the Bush tax cuts and the Bush wars. If the Bush tax cuts were so horrific, why did Obama and his minions just make 98% of these tax cuts permanent? Liberals held protest marches across the country against Bush’s wars and burned him in effigy. Obama’s defense budgets have been larger than Bush’s and he doubled down on our miserable failure in Afghanistan. You don’t hear a peep from the liberals about the warmongering Barack Obama who has kill lists and unleashes predator drones, killing women and children across the globe. Liberals pretend to be concerned about the welfare of the citizens, but continue to support a President that uses executive orders to imprison citizens indefinitely without charges, has expanded surveillance on citizens, has kept Guantanamo open, signs the continuation of the Patriot Act, and proposes overturning the Second Amendment by executive order. Liberals shriek about the evils of an unregulated Wall Street, while remaining silent as Obama hasn’t prosecuted a single banker for the greatest financial fraud in world history. You don’t hear a peep about Jon Corzine, who stole $1.2 billion from the accounts of farmers and ranchers. Liberals talk about regulation and then stand idly by while Wall Street lobbyists wrote the Dodd Frank law and insurance and drug company lobbyists wrote the Obamacare law. Liberal hypocrisy knows no bounds and is only matched by Neo-Con hypocrisy.
The Neo-Con controlled Republican Party is a pathetic joke. They have the guts to declare themselves the party of fiscal responsibility, after Bush’s eight year reign of error. He and his fiscally responsible party were handed a budget in surplus and managed to add $4.9 trillion to the national debt by waging undeclared wars, encouraging Wall Street to create the biggest fraudulent financial bubble in history, creating a new $16 trillion unfunded entitlement (Medicare Part D), cutting taxes without paying for them, and creating a massive new government agency (DHS) to take away our liberties and freedom. Federal government spending grew from $1.9 trillion to $3.0 trillion under Bush and the Republicans. Does that sound fiscally responsible?
Does anyone believe the Republican Party is serious about cutting anything? Tough guy Republicans like Big Chris Christie preach fiscal responsibility when going to war with teachers’ unions, but he squeals like a stuck pig when a $60 billion pork filled, unpaid for, Sandy Relief bill is held up in Congress. The courageous fiscally responsible Congress critters passed the entire pork filled, unfunded, bloated, vote buying joke. It included $28 billion to mitigate future disasters, $3 billion to repair or replace Federal assets, and $6 billion for transportation projects completely unrelated to Sandy damage. The hypocrisy of politicians who proclaim the $50 billion of 2013 fiscal cliff tax revenue as deficit cutting, and then immediately piss it away by paying people to rebuild their houses yards from the Atlantic Ocean while funding billions of non-disaster related projects is disgusting to behold. There is nothing like compromise to add another $60 billion to the national debt.
Our entire economic and political system is a farce. The American people are being played by the powerful interests that provide them with an illusion of choice. Both parties serve the interests of their masters and the fiscal cliff show and debt ceiling show are a form of reality TV to keep the masses alarmed, fearful, and believing there is actually a difference between the policies of the ruling class. The charade has played out in its full glory in the last few weeks with Obama convincing the masses he had stuck it to the rich, while in reality the working middle class got it good and hard when they got their January paychecks. This chart details the tax changes that went into effect on January 1.
The funniest part this fiscal fiasco farce is watching the reaction of the sheep who believed Obama and the mainstream media storyline. Obama was able to raise the published top rate on people making over $400,000. The newly defined “rich” laughed heartily as they know only fools pay anywhere near the top rate. The rich just call their tax advisor and instruct them to use one of the thousands of tax loopholes in the 75,000 page IRS tax code to “legally” avoid the new Obama rates. Meanwhile, both parties and their mainstream media mouthpieces downplayed the 2% payroll tax increase on every working American. This tax increase has been a complete surprise to the reality TV zombies and Facebook aficionados. Even college educated professionals in my office had no idea their next monthly paycheck was going to be $150 to $200 lighter. This will wipe out most, or all, of the annual raise they received. The tax will fall heavily on the 75% of households that make less than the $113,700 Social Security cutoff. For a struggling family of four earning the median income of $50,000, the $1,000 less in their paychecks will mean less food, putting off trips to the doctor, driving on bald tires, or not taking the family on a vacation to the Jersey shore. The $2,274 increase in taxes (.57%) for the Wall Street banker making $400,000 probably won’t put too much of a crimp in his Hamptons lifestyle.
The joke is on the American people as the rich will ante up maybe $50 billion of taxes in 2013, while the working middle class will be skewered for $125 billion. How’s that “Tax the Rich” slogan working out for you?
Only in the Orwellian capital of Washington DC would a bill that was supposed to provide tax relief to the middle class and spending cuts to reduce the deficit, actually increase the tax burden of a median household by $1,000 and perpetuate the pork spending payoffs to campaign contributors and friends of the slimy politicians that slither through the halls of Congress. The list of pork and bribes should be nauseating to hard working Americans across the country:
$30 billion extension of the 99 weeks of unemployment benefits, even though we are supposedly in the 3rd year of economic recovery. Continuing to pay people to not work for two years will surely boost employment.
$14.3 billion for a two-year extension of the corporate research credit benefiting large technology companies like IBM and Hewlett Packard.
$12.2 billion one-year extension of the production tax credit for wind power.
$11.2 billion two- year extension of the active financing exception, which lets GE, Caterpillar Inc. (CAT) and Citigroup Inc. (C), among others, defer taxes on financing income they earn outside the U.S.
$1.9 billion extension of the Work Opportunity Tax Credit for hiring workers from disadvantaged groups, benefitting mega-restaurant chains like McDonalds.
$1.8 billion extension of the New Markets Tax Credit for investments in low- income areas, benefitting JP Morgan and other Wall Street shyster banks.
$650 million tax credit for manufacturing energy-efficient appliances, benefitting mega-corps like Whirlpool.
$430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States. Producers can expense up to $15 million of costs for their projects. NBC thanks you.
$331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50% of the cost to maintain tracks that they own or lease.
$248 million in special expensing rules for films and television programs.
$222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.
$78 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”
$59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.
$4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.
So when you see the cut in your take home pay, just comfort yourself knowing that JP Morgan, Citigroup, GE and hundreds of mega-corporations were able to retain their tax breaks. As they have done for decades, Congress and the President agreed to address spending cuts at a future date. Of course, a government spending cut isn’t actually a cut. It’s a lower increase than their previous projection. Nothing is ever cut in Washington DC. The austerity storyline is a lie. Not a dime has been cut from the Federal budget. Intellectually dishonest ideologues try to peddle the wind down of the Obama $800 billion porkulus program as a cut in Federal spending. They sold this Keynesian “shovel ready” crap to a gullible public as stimulus to jumpstart the economy. Federal spending was $3.0 trillion before the Obama stimulus. After the two year stimulus was pissed away without helping the economy one iota, the baseline should have been back in the $3.2 trillion range. Instead, FY13 Federal spending will be $3.8 trillion. This hasn’t kept liberal ideologues like Krugman and his minions in the mainstream media from blaming crazy Tea Party Republicans for inflicting horrendous austerity measures on the poor and disadvantaged.
The chart above reveals a few truths:
- The country has been blessed with two of the worst presidents in U.S. history over the last twelve years.
- When Federal spending as a percentage of GDP is beyond two standard deviations over the normal range during the last sixty years, your problem is not lack of tax revenue.
- Obama and the current Congress are spending at a level of 24% of GDP versus the 18% of GDP when Clinton left office. This amounts to a nose bleed altitude $950 billion higher than the level Clinton was spending in his final year in office.
The Op-eds in liberal rags across the land decry the lack of civility in Washington DC and plead for politicians on both sides of the aisle to come together and compromise for the good of the country. This line of bullshit would be laughable if it wasn’t so wretched in its falsity. Compromise is what has left this country with a $16.4 trillion national debt, $200 trillion of unfunded liabilities, and $1 trillion deficits as far as the eye can see. Democrats have compromised and let the Republicans create a warfare state. Republicans have compromised and let Democrats create a welfare state. The two headed monster living in the swamps of Washington DC just voted to increase taxes on all Americans. They voted to hand criminal Wall Street banks $700 billion. They voted to pass the Patriot Act. They voted to pass the NDAA. They’ve allowed the President to wage undeclared wars in Iraq, Afghanistan, Libya, and now Iran. They voted for a $663 billion Defense bill that includes tens of billions the Secretary of Defense doesn’t even want. They will vote to raise the debt ceiling in the next two months. The last thing this country needs is more compromise. We can’t afford any more compromise. The chart above proves what can happen when gridlock ensues, spending restrictions are enforced, and confrontation displaces compromise. After the 1994 Republican takeover of Congress, gridlock ensued for the next six years. PAYGO restrictions in the Omnibus Budget Reconciliation Act of 1990 didn’t allow unfettered spending increases. The result was Federal spending falling from 22% of GDP to 18% of GDP and a budget surplus. The Pay-Go restrictions expired in 2002 and Democrats and Republicans have compromised to the tune of a $10.2 trillion increase in the national debt in ten years. The hypocrisy of pandering deceitful politicians is boundless and shows utter contempt for the intelligence of the American populace.
“Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to. If congressional Republicans refuse to pay America’s bills on time, Social Security checks, and veterans benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialist who track down loose nuclear materials wouldn’t get their paychecks. Investors around the world will ask if the United States of America is in fact a safe bet. Markets could go haywire, interest rates would spike for anybody who borrows money – Every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire. We are not a deadbeat nation.
It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession. And ironically it would probably increase our deficit. So to even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible. It’s absurd. Republicans in Congress have two choices here. They can act responsibly, and pay America’s bills, or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy.” – President Barack Obama – January 14, 2013
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. The Senate continues to reject a return to the common sense Pay-go rules that used to apply. Previously, Pay-go rules applied both to increases in mandatory spending and to tax cuts.
The Senate had to abide by the common sense budgeting principle of balancing expenses and revenues. But we must remember that the more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours. Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘‘the buck stops here.’’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.” – Senator Barack Obama – March 16, 2006
I could have shown quotes from George W. Bush during the 2000 Presidential campaign talking about a non-interventionist foreign policy and no need for the U.S. to get involved in nation building and then proceeding to pre-emptively attack sovereign countries while wasting trillions and impoverishing unborn generations trying to create “democracy” in the Middle East at the point of a gun as a cover to protect “our” oil. The point is that we are being given the illusion of choice. Everyone knows the debt ceiling will be raised after another episode of Washington DC Kabuki Theater, presented by the corporate mainstream media in breathtaking detail, because the politicians are beholden to their owners and those owners want more of our money. That is why spending will never be willingly cut by the spineless puppet congressmen, as their strings are pulled by the corporate puppet masters and they dance to the tune of the banking oligarchs that own this country.
After witnessing the fighting of undeclared never ending wars, passage of freedom destroying legislation like the Patriot Act & NDAA, approval of pork barrel spending to the tune of hundreds of billions, rule by Executive Order, using ZIRP to extract hundreds of billions from senior citizen savers and give it to criminal Wall Street banks, forcing the American people at gunpoint to replenish the Wall Street banks with $700 billion after they had committed the greatest financial fraud in history, and a continuing trampling of the U.S. Constitution, the American people continue to remain willfully ignorant of the truth. The American Dream is dead. We’ve allowed a rich, privileged, elite few to achieve hegemony over our economic and political system with their control of the media and manipulation of our financial markets. They will collapse the country because they will never be satisfied with the amount of wealth and power they’ve accumulated. Their voracious greed will be their downfall. The sooner we can channel the anger of George Carlin, the sooner we can put an end to this corporate fascist reign of terror.
“Politicians are put there to give you that idea that you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land, they own and control the corporations, and they’ve long since bought and paid for the Senate, the Congress, the State Houses, and the City Halls. They’ve got the judges in their back pockets. And they own all the big media companies so they control just about all the news and information you get to hear. They’ve got you by the balls.
They spend billions of dollars every year lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else. But I’ll tell you what they don’t want—they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interest. You know something, they don’t want people that are smart enough to sit around their kitchen table and figure out how badly they’re getting fucked by a system that threw them overboard 30 fucking years ago.
It’s a big club and you ain’t in it! You and I are not in the Big Club. By the way, it’s the same big club they use to beat you in the head with all day long when they tell you what to believe. All day long beating you over the head with their media telling you what to believe, what to think and what to buy. The table is tilted folks, the game is rigged. And nobody seems to notice, nobody seems to care. That’s what the owners count on, the fact that Americans are and will probably remain willfully ignorant of the big red, white, and blue dick that’s being jammed up their assholes every day. Because the owners of this country know the truth, it’s called the American Dream, because you have to be asleep to believe it.” – George Carlin
I never did get around to making my 2013 predictions. I’ll give it a stab in my next article: Apparitions in the Fog.
Off the keyboard of Jim Quinn
Published on The Burning Platform on December 3,2012
Discuss this article at the Epicurean Delights Smorgasbord inside the Diner
“Eyes blinded by the fog of things
cannot see truth.
Ears deafened by the din of things
cannot hear truth.
Brains bewildered by the whirl of things
cannot think truth.
Hearts deadened by the weight of things
cannot feel truth.
Throats choked by the dust of things
cannot speak truth.”
― Harald Bell Wright – The Uncrowned King
I consider myself a seeker of truth. It isn’t easy finding it in todays’ world. In an alternate version of the famous scene from A Few Good Men, I picture myself telling Turbo Tax Timmy Geithner that I want the truth and his angry truthful response:
“Son, we live in a world that has Wall Street banks, and those banks have to be guarded by puppet politicians in Washington D.C. with lobbyist written laws and Madison Avenue PR maggots with media propaganda. Who’s gonna do it? You? You, Representative Paul? I have a greater responsibility than you could possibly fathom. You weep for the average middle class American family, and you curse the ruling oligarchs. You have that luxury. You have the luxury of not knowing what I know. That the death of the American middle class, while tragic, probably saved the bonuses of thousands of Wall Street bankers. And my existence, while grotesque and incomprehensible to you, increases the wealth of these same bankers who destroyed the worldwide economic system in 2008. You don’t want the truth because deep down in places you don’t talk about in the food bank line, you want me on Wall Street, you need me on Wall Street. We use words like derivative, fiscal stimulus, quantitative easing. We use these words as the backbone of a life spent syphoning off the wealth of the nation. You use them as a punch line. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very debt that I provide, and then questions the manner in which I provide it. I would rather you just said thank you, and went on your way, Otherwise, I suggest you pick up 1000 shares of Apple, and hope our high frequency trading supercomputers can ramp the market for a while longer. Either way, I don’t give a damn what you think you are entitled to.”
I find myself more amazed than ever at the ability of those in power to lie, misinform and obfuscate the truth, while millions of Americans willfully choose to be ignorant of the truth and yearn to be misled. It’s a match made in heaven. Acknowledging the truth of our society’s descent from a country of hard working, self-reliant, charitable, civic minded citizens into the abyss of entitled, dependent, greedy, materialistic consumers is unacceptable to the slave owners and the slaves. We can’t handle the truth because that would require critical thought, hard choices, sacrifice, and dealing with the reality of an unsustainable economic and societal model. It’s much easier to believe the big lies that allow us to sleep at night. The concept of lying to the masses and using propaganda techniques to manipulate and form public opinion really took hold in the 1920s and have been perfected by the powerful ruling elite that control the reins of finance, government and mass media.
Peddlers of Propaganda
“Great is truth, but still greater, from a practical point of view, is silence about truth.” – Aldous Huxley – Brave New World
Adolf Hitler understood the power of the big lie over the ignorant masses who want to believe:
“All this was inspired by the principle–which is quite true within itself–that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying.” – Adolf Hitler – Mein Kampf
We are all liars. We lie to friends, family and co-workers. We convince ourselves they are only small lies and just protect others from being hurt. We would rather be lied to than face the blunt truth about our deficiencies, shortcomings and failures. Willfully believing mistruths allows a person to become dependent upon those promulgating the mistruths. It relieves them of their responsibility to act upon the knowledge that something is wrong and must be fixed. It is a cowardly path to ultimate servitude and destruction. The German people chose this path in the 1930s and the American people have chosen a similar and ultimately destructive path today. The United States Office of Strategic Services prepared a psychological profile report during the war describing Adolf Hitler’s method for controlling the minds of the German masses:
“His primary rules were: never allow the public to cool off; never admit a fault or wrong; never concede that there may be some good in your enemy; never leave room for alternatives; never accept blame; concentrate on one enemy at a time and blame him for everything that goes wrong; people will believe a big lie sooner than a little one; and if you repeat it frequently enough people will sooner or later believe it.”
America’s corruptible politicians, greedy corporate chieftains, criminal banking overlords, and despicable media manipulators all learned the sordid lessons of mass propaganda from the masters. Our willingness to lie and be lied to set us up to be manipulated by those who understood the mass psychology of a nation. Goebbels and Hitler were heavily influenced by the father of propaganda – Edward Bernays. He and his disciples are professional poisoners of the public mind, exploiters of public foolishness and ignorance, and never allow truth to interfere with a good story. What master manipulators realized is that it is easier to change the attitude of millions than the attitude of one man. By analyzing and understanding the process and motives of how the group mind works, the invisible government has been able to manipulate and regulate the masses according to their will without the masses knowing they are being managed. Bernays described this elitist view of the world in 1928:
“Those who manipulate the unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. In almost every act of our lives whether in the sphere of politics or business in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons who understand the mental processes and social patterns of the masses. It is they who pull the wires that control the public mind.” – Edward Bernays – Propaganda
The super-rich elite believe they are more intelligent, more capable of managing the affairs of state, masters of the financial world, and chosen to decide what is best for the masses. In reality, they are egocentric, psychotic, power hungry, myopic, self-serving ravenous vultures, feasting upon the carcass of a once great nation. Truth is inconsequential and irritating to their plans for world domination and control. Therefore, no truth will be forthcoming from any organization or person that is associated with the existing political, economic, financial or social order. Every bit of information that is permitted into the public realm has been vetted, manipulated and spun for public consumption. The public does not like bad news. They do not like hard facts. They do not like to think or do math. They want to be spoon fed mindless sound bites and happy talk. The oligarchs need to keep the masses sedated and subservient while they continue to plunder and pillage, so all data is massaged to provide a happy ending.
This is where I deviate from the ideologue one-trick ponies that refuse to see both sides of the issue. The ruling oligarchs are wealthy, influential, psychotic, amoral, and few. The masses are relatively poor, easily influenced, willfully ignorant, and many. The ruling oligarchs are most certainly evil, but the masses are not the hard working, stoic, downtrodden portrayed by liberal ideologues. One just needs to walk down the street in one of our urban enclaves, saunter through a suburban mall, or click on People of Wal-Mart to witness the tattooed, pierced, butt crack showing, slovenly, obese, and ignorant, attached to their electronic iGadgets, to understand how far our society has deteriorated. Every individual born into this world has the capability to become educated, think critically, not follow the herd, live beneath their means, and not be influenced by propaganda. Aldous Huxley understood in 1931 that those in power could use material goods to invoke passivity and egotism among the populace. He feared that truth would be obscured by an avalanche of irrelevance (500 Reality TV shows), cultural trivialities (Lady Gaga, Lindsey Lohan), distractions (Professional sports), and pharmaceutical enhanced escape (Prozac). He saw the possibility that we would grow to love our servitude as the pleasures of life provided by our controllers overwhelmed any desire to think or question authority.
“There will be in the next generation or so a pharmacological method of making people love their servitude and producing dictatorship without tears, so to speak, producing a kind of painless concentration camp for entire societies so that people will in fact have their liberties taken away from them but will rather enjoy it.” ― Aldous Huxley
By 1962 when Huxley wrote his last book, he was certain that his worst dystopian nightmares had been unleashed. His description of Western society fifty years ago could have been written today and accurately reflected our current economic paradigm. War, debt and consumption still make our world go round, but the end is nigh.
“Armaments, universal debt, and planned obsolescence – those are the three pillars of Western prosperity. If war, waste, and moneylenders were abolished, you’d collapse. And while you people are over-consuming the rest of the world sinks more and more deeply into chronic disaster.” – Aldous Huxley – Island
The pillars are crumbling. The $1.4 trillion wasted on two worthless wars of choice in the Middle East, the trillions wasted and liberties sacrificed for the never ending unwinnable War on Terror, the Keynesian spending frenzy that has driven the National Debt from $9 trillion to $16.3 trillion in the last five years, the looting of the American taxpayer by Wall Street and their co-conspirators at the Federal Reserve and in Congress, and the belief that ramping up the debt driven consumption that drives 71% of our GDP is our path to prosperity is absolutely freaking nuts. The pillars will not be abolished willingly. The ruling class depends upon their continued existence and expansion. There is the rub. The math doesn’t work. We’ve reached the point where continued expansion of debt and money printing no longer works. With a national debt to GDP ratio of 102% and a total credit market debt to GDP ratio of 350%, we have passed the Rogoff & Reinhart point of no return. This time is not different. A country cannot run trillion dollar deficits indefinitely and expect to not suffer the consequences. This is why those in power are increasingly resorting to propaganda, data manipulation, and outright lies to convince the masses of their omnipotence and brilliance in managing the fiscal affairs of the state.
“One believes things because one has been conditioned to believe them.” – Aldous Huxley – Brave New World
Through decades of mass media messaging the masses have been conditioned to believe whatever those in power want them to believe. To our invisible government rulers we are nothing but rats to be manipulated through food pellets and shock therapy. Pleasure and fear of pain are the drivers of our warped society. The ruling oligarchs truly think they know what is best for the masses and believe any means is worthwhile as long as the ends support their agenda. This is blatantly obvious to anyone with their eyes open and their brain functioning. Sadly, the government run educational system produces mostly drones that are barely able to tie their own shoes, spell Cat, or make change from a one dollar bill. Only 20% of all high school seniors score high enough on the SAT test to get a B minus in college and most of these kids come from private and parochial schools. This is exactly what those in power prefer. They want non-critical thinking, mindless consumers, who don’t understand the criminal nature of Federal Reserve created inflation or their enslavement in the chains of debt at the hands of their Wall Street slave owners. They certainly don’t want the masses to understand that real median household net worth is lower today than it was in 1969. Luckily for the oligarchs, 95% of the public couldn’t define the terms: real, median or net worth. Math is hard.
The average person is inundated on a 24/7 basis with pabulum from liberal network media talking heads, CNBC Wall Street shills regurgitating whatever their sponsors desire, Fox News blonde bimbos and neo-con war mongers programmed to spew Rupert Murdoch talking points, MSNBC tingling leg faux journalists, NYT intellectually corrupt Nobel prize winners, NAR nitwits repeating “best time to buy” on a daily basis for the last 12 years, and government agencies whose sole purpose is to manipulate data in a way that supports the agenda of those in power. The intellectually lazy and willfully ignorant masses are no match for those who control the message and the media. How else can you explain their ability to convince millions of drones to line up for hours in front of a store and stampede like crazed hyenas to grab a $5 crockpot, the Chinese produced gadget of the moment or a designer top made by slave labor in safety conscious Bangladesh factories? How else can you explain a population willing to be molested by government TSA dregs in the name of security from phantom terrorists, the passive acceptance of military exercises in US cities, unquestioning submissiveness as Presidential Executive Orders allow the government dictatorial powers based on their judgment, the monitoring of internet and voice correspondence of all citizens, and believing that FBI agents luring clueless teenage Muslim dupes into fake terrorist plots, providing the fake explosives, and then announcing with great fanfare how they saved us from another 9/11?
But, the prize for boldest, most outrageous, blatant use of propaganda and misinformation to cover-up their criminal looting of America goes to Ben Bernanke, his cronies at the Federal Reserve, and the Wall Street banks that own and control our Central Bank. Having the gall to portray themselves as the stabilizer of our economic system over the last 100 years is a putrid joke on the dying and broke middle class. Their mandate has been stable prices, full employment, and avoiding financial crisis. It is a tribute to Bernays and the rest of the public relations swine that the average American actually believes inflation is a good thing and it is under control despite the FACT that 96.2% of their purchasing power has disappeared since 1900, with the most rapid decline occurring since Nixon closed the gold window in 1971.
The average American actually believes Ben Bernanke saved us from a Great Depression when in actuality he saved the owners of the Federal Reserve from accepting the losses they generated through the greatest financial fraud in history. His “solutions” have zombified our economic system, just as the Japanese Central Bank did 20 years ago. He has destroyed the concept of saving, while rewarding the indebted and profligate with his QE to Infinity money printing policies. And the ignorant masses have been convinced by the corporate media and their corrupt government lackeys that Ben did this for them. Kyle Bass knows otherwise. He knows how the Fed and their backers have preyed upon the masses through their understanding of human psychology:
“Humans are optimistic by nature. People’s lives are driven by hopes and dreams which are all second derivatives of their innate optimism. Humans also suffer from optimistic biases driven by the first inalienable right of human nature which is self-preservation. It is this reflex mechanism in our cognitive pathways that makes difficult situations hard to reflect and opine on. These biases are extended to economic choices and events. The primary difficulty with this train of thought is the bias that most investors have for the baseline facts: they tend to believe that the central bankers, politicians, and other governmental agencies are omnipotent due to their success in averting a financial meltdown in 2009.
Central banks have become the great enablers of fiscal profligacy. The overarching belief is that there will always be someone or something there to act as the safety net. The safety nets worked so well recently that investors now trust they will be underneath them ad-infinitum. Markets and economists alike now believe that quantitative easing (“QE”) will always “work” by flooding the market with relatively costless capital. Unlimited QE and the zero lower bound (“ZLB”) are likely to bankrupt pension funds whose expected returns happen to be a good 600 basis points (or more) higher than the 10?year “risk-free” rate. The ZLB has many unintended consequences that are impossible to ignore.
Our belief is that markets will eventually take these matters out of the hands of the central bankers. These events will happen with such rapidity that policy makers won’t be able to react fast enough. The fallacy of the belief that countries that print their own currency are immune to sovereign crisis will be disproven in the coming months and years. Trillions of dollars of debts will be restructured and millions of financially prudent savers will lose large percentages of their real purchasing power at exactly the wrong time in their lives. Again, the world will not end, but the social fabric of the profligate nations will be stretched and in some cases torn. Sadly, looking back through economic history, all too often war is the manifestation of simple economic entropy played to its logical conclusion. We believe that war is an inevitable consequence of the current global economic situation.” – Kyle Bass
What’s Normal in a Profoundly Abnormal Society?
“The real hopeless victims of mental illness are to be found among those who appear to be most normal. Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives, that they do not even struggle or suffer or develop symptoms as the neurotic does.” They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted.” – Aldous Huxley – Brave New World Revisited
No sane person could honestly say that what has happened to our society over the last forty years, and particularly in the last five years, is normal. But somehow those in power have convinced the masses that $1.2 trillion deficits, 0% interest rates, declining real wages, the highest average gas prices in history, pre-emptive wars, policing the world and buying rubber dog shit produced in China with a credit card is normal and beneficial to our economy. It seems that I and a few million other people in this country are the abnormal ones. We choose not to be led to slaughter by our masters. The seekers of truth have turned to the alternative media and are able to connect with like-minded critical thinking individuals on websites like Zero Hedge, Jesse’s Americain Café, Of Two Minds, Mish, Financial Sense, among many other truth seeking blogs. This is dangerous to the powers that be and they are using their political clout and extreme wealth to try and lock down and control free speech on the internet. If this is accomplished all hope at disseminating truth will be lost.
Abraham Lincoln once said that he believed in the people and that if you told them the truth and gave them the cold hard facts they would meet any crisis. That may have been true in 1860, but not today. The cold hard facts are available for all to see:
- A $16.3 trillion National Debt
- 47 million people on food stamps
- Over $222 trillion of unfunded Federal entitlement liabilities
- Over $5 trillion of unfunded State entitlement liabilities
- True unemployment above 20%.
- True inflation above 5%.
- A stock market at the same level as 1999, with a 10 year expected annual return of less than 4% – Stocks for the really, really long run. 10 year bond returns of 0% will be a miracle.
- A savings rate of 3.7% and with Bernanke’s ZIRP, no incentive to save. Real hourly earnings continue to fall.
- Baby Boomers within 10 years of retirement have saved an average of only $78,000, and more than a third of them have less than $25,000. More than half of U.S. workers have no retirement plan at all.
- A crumbling, decaying infrastructure, with 150,000 structurally deficient bridges, bursting water mains, and an overstressed electrical grid.
- Horrific government public education producing millions of low functioning morons.
- Rotting social fabric, with 40% of children born out of wedlock (72% of black children) and a 50% divorce rate.
- An energy policy based upon unicorns farting rainbows and press releases about green energy and the miracle of shale fracking, as average gas prices in 2012 and 2011 were the highest in U.S. history.
As the pitiful excuses for statesmen in Washington D.C. pander and posture about the dreaded fiscal cliff which was purposely created by the oligarchs as a show for the masses, none of the true issues above are being addressed. The dramatic compromise that will ultimately be reached between the equally corrupt parties will be hailed by the corporate media and Wall Street shysters and an HFT supercomputer engineered stock market rally will ensue. The cowardice of these politicians is revolting. As Huxley knew in 1958, politicians and propagandists prefer nonsense and storylines to truth, knowledge and honesty.
“Human beings act in a great variety of irrational ways, but all of them seem to be capable, if given a fair chance, of making a reasonable choice in the light of available evidence. Democratic institutions can be made to work only if all concerned do their best to impart knowledge and to encourage rationality. But today, in the world’s most powerful democracy, the politicians and the propagandists prefer to make nonsense of democratic procedures by appealing almost exclusively to the ignorance and irrationality of the electors.” – Aldous Huxley – Brave New World Revisited
We want to be lied to because the truth is too painful. Hope and denial with a dash of delusion is the recipe the mindless masses prefer. The average person doesn’t want to understand the chart below. They want to believe the U.S. will dominate economically and lead the world for decades to come. We are still the bright shining beacon of democracy on the mountaintop. Even though the facts unequivocally reveal a declining empire, the masses desperately grasp at straws in the wind. The United States share of world GDP will be vastly lower in 2021, as the hubris of declining empires never allows them to take the necessary steps to reverse the decline (Rome, Great Britain).
It is fitting that during this magical Christmas season of fantasy, delusion, debt fueled material over-consumption and fairy tales, we look at the biggest fairy tale of all – the great jobs recovery. I know from the two thousand Obama campaign commercials I was forced to watch in the last few months and 500 robo-calls at dinner every night that we’ve added 4 million jobs due to Obama’s wise economic policies. The magical journey from a 10.3% unemployment rate to a 7.9% rate is a humdinger. I stumbled across a myriad of charts on those truth-telling websites that I had previously mentioned.
“You shall know the truth and the truth shall make you mad.” ― Aldous Huxley
The first chart that grabbed my attention shows the historical relationship between the U3 unemployment rate reported to the masses versus the U6 truer picture of unemployment, along with the percentage of people unemployed for longer than 15 weeks. A funny thing happened shortly after the election of Barack Obama. From 1994 through 2008 the gap between the U3 and U6 rates consistently ranged between 3% and 4%. Suddenly, the gap surged to 7% and currently sits at almost 8%. The figure reported to the masses of 7.9% is so much easier to digest than the 15% to 17% that captures the truer level of unemployment. If the gap between these two figures had remained at the levels of the previous 14 years, the unemployment that should be reported to the masses would be 11%. That is unacceptable to those in power, so the data is massaged and the propaganda machine spins the storyline necessary to confuse and mislead the masses.
The next two charts from Mike Shedlock again reveal truths the existing social order doesn’t want you to know. Even though the working age population has grown by 10 million people since 2008, the BLS expects critical thinking people to believe the labor force has only grown by 1.3 million people. You see, the unemployment rate is calculated using the labor force. If your economic policies don’t create jobs, just adjust the labor force dramatically lower based on nothing. In desperate economic times, people do not voluntarily leave the workforce. Only a non-thinking drone would believe that 8.7 million Americans voluntarily left the workforce since 2008, when only 4 million left the workforce from 2003 through 2007. It is not a coincidence that student loan debt, which was taken over by the Obama administration in 2009 rose by $300 billion. Those in power have doled out these billions with no concern for credit risk or academic credentials in order to reduce the number of people in the labor force. Unemployed union Twinkie workers seeking a new career in lesbian studies can get a $20,000 loan from the American taxpayer to sit in their basement along with the 500,000 other University of Phoenix enrollees. The future $300 billion taxpayer bailout was worth it to keep the unemployment rate low enough to insure Obama’s re-election.
The Obama PR machine never fails to expound upon the fact that the economy added 4.9 million jobs since January 2009. In the same timeframe, uncovered employment rose by 6.6 million. Inquiring minds might want to know what an “uncovered” job entails. Selling your accumulated Chinese crap on Ebay is an uncovered job. Calling yourself a consultant while sleeping until noon is an uncovered job. Day trading Facebook and Apple stock is an uncovered job. Trash picking is an uncovered job. The truth is that real jobs are 1.7 million lower than they were at the depths of the recession, while bullshit jobs paying virtually nothing and offering no benefits have surged by 6.6 million. These facts don’t make a great campaign commercial. The number of employed Americans is at the same level as mid-2005, even though the working age population has grown by 18 million. Since 2008 there are 3 million less full-time jobs and 3 more part-time jobs. This trend is accelerating as small businesses react rationally to the oncoming Obamacare train, resulting in aggregate work hours declining and wage growth stagnating.
Zero Hedge reveals more truth about our glorious jobs recovery with the following two charts. They obliterate the false narrative spun by liberal ideologues that the reason for the increase of those not in the labor force is due to Baby Boomers retiring. The truth is that while those in the 55-69 age brackets have gained nearly 4 million jobs under President Obama, everyone else has lost just over 2.5 million jobs. Is this a positive development or a sign of extreme desperation among older Americans who have seen their interest income vaporized by Ben Bernanke and there food, energy, and healthcare expenses skyrocket?
Those in their prime earning years of 25 to 54 still have a net cumulative loss of 2.2 million jobs since 2009. Recent college graduates, with their billions of student loan debt, have nabbed 400,000 TGI Fridays jobs, singing happy birthday to 3 year olds, with their newly minted college degrees. This is the “normal” healthy jobs market sold to the American public by the propagandists and politicians.
The final jobs chart that portrays the truth of what has been a decades’ long spiral downward paints a picture of a country that once created wealth through producing goods from the 1940s through 1970. Since 1970 we’ve degenerated into a debt creating country that consumes foreign produced goods and makes entitlement promises it can never keep. Selling houses to each other, peddling crap on Ebay, and eating out three times a week has shockingly failed to propel our economy. The jobs picture has deteriorated rapidly since 2008 and is not improving, despite the best propaganda money can buy. There is absolutely no chance of any substantive improvement over the next four years based on the policies in place and refusal to acknowledge the economic realities that we face.
The accumulation of material possessions through the use of consumer debt, peddled by bankers and reinforced through relentless corporate marketing propaganda has left the country’s citizens weary, miserable, greedy, indebted and sick. Our obsession with technology has merely provided another means of distracting ourselves from confronting the dire challenges that must be addressed. We can ignore the facts but that doesn’t mean they do not exist. The abnormality that grips this nation is breathtaking to behold, as the status quo cheer on and encourage consumers to buy more things with money they don’t have in order to support an economic recovery that is dependent upon zero interest rates for Wall Street banks, QE to infinity, and the delusional desire for a miraculous return to the good old days when getting something for nothing was possible. We can no longer deny reality. If we want to add 30 million people to Medicaid, it must be paid for. If we want to wage never ending wars and police the world, it must be paid for. If we want a Federal government to spend $3.8 trillion per year, it must be paid for. Nothing is free in this world, but more than 50% of Americans seem to believe that to be true.
“Our economy is based on spending billions to persuade people that happiness is buying things, and then insisting that the only way to have a viable economy is to make things for people to buy so they’ll have jobs and get enough money to buy things.” – Philip Elliot Slater
We are seen by those in control as nothing more than common house flies caught in their web of lies. Your owners don’t care about you. They only care about their own wealth and power. They want to control and manipulate you. They want to keep you enslaved in debt and running on the treadmill of consumption. They want passive, non-critical thinking drones to do the menial service jobs that remain in this country, while they use their control of our financial, political, tax, and legal systems to ransack and pillage the wealth of the dwindling middle class. The truth is the continuation of our current economic system is mathematically impossible. Your owners know this. This is why the use of propaganda, misinformation, fake data, and false storylines has taken on astronomical proportions. The time for passivity and accepting the deceitfulness of our leaders is coming to an end. While you’re waiting in line this Christmas season at Wal-Mart to purchase a fabulously priced shirt that only required the deaths of 112 Bangladesh slave laborers, try to figure out how we got here. Your owners think they have you by the balls.
“They spend billions of dollars every year lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else. But I’ll tell you what they don’t want—they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interest. You know something, they don’t want people that are smart enough to sit around their kitchen table and figure out how badly they’re getting fucked by a system that threw them overboard 30 fucking years ago. Because the owners of this country know the truth, it’s called the American Dream, because you have to be asleep to believe it.” – George Carlin
How many Americans are awake enough to handle the truth?
All I want for Christmas is the truth.
Off the keyboard of Jim Quinn
Published on The Burning Platform on September 29, 2012
Discuss this article at the Epicurean Delights Smorgasbord inside the Diner
“Now remember, when things look bad and it looks like you’re not gonna make it, then you gotta get mean. I mean plumb, mad-dog mean. ‘Cause if you lose your head and you give up then you neither live nor win. That’s just the way it is.” – Josey Wales – Outlaw Josey Wales
To hell with them fellas. Buzzards gotta eat, same as worms. – Josey Wales – Outlaw Josey Wales
There is a war underway in this country. The working middle class that built this country from the ground up are being systematically eliminated by a small cabal of super rich powerful elite. The middle class was much like Josey Wales, a peaceful Missouri farmer just working his land trying to make an honest living. Then a band of lawless thugs come along and kill his wife and son and burn down his farmhouse. A man can only take so much before he gets mean and vengeful. The rich and powerful, the corrupt Wall Street bankers, the banker controlled Federal Reserve and the bought off politicians in Washington D.C. have been pillaging the middle class for decades.
They’ve killed the middle class and in 2008 they essentially burned down the worldwide financial system. Somehow, they convinced the American public the war was over. A small band of super wealthy individuals on the boulevard of greed, Wall Street, and in the putrid swamp of Washington D.C. blackmailed the American middle class taxpayers by threatening to bring down the financial system unless they were handed $700 billion, saved from bankruptcy by the Federal Reserve buying $1.2 trillion of toxic mortgage debt, and provided free money by their sugar daddy at the Federal Reserve. The politicians then absconded with another $800 billion of taxpayer funds and handed it out to their corporate political cronies in the name of shovel ready projects and adding 3 million new jobs.
At the end of the Civil War, the Confederate guerrillas that Josey Wales had joined agree to lay down their arms with a promise of freedom. Instead the Union thugs began to mow them down with a Gatling gun. This is perfect symbolism for what the ruling elite have perpetrated in the last three years. Within months of nearly destroying the worldwide financial system, the Wall Street desperados were paying themselves hundreds of billions in bonuses for a job well done plundering and sacking the American middle class taxpayer. They certainly earned the bonuses, considering they could borrow from the Fed at 0% and earn 2.5% on Treasuries or pile into stocks and commodities, knowing Uncle Ben would guarantee profits with QE2.
Jim Grant, in early 2009, described the excessive response by those in power to a crisis caused by them:
“To try to exorcise the Great Depression, President Herbert Hoover deployed fiscal and monetary stimulus equivalent to 8.3% of gross domestic product. To banish the demons of 2008-9, successive administrations have spent, or encouraged to printed, the equivalent to 28.9% of GDP. A macroeconomist from Mars, judging by these data alone, would never guess how much more severe was that depression than this recession. The decline in real GDP from August 1929 to March 1933 amounted to 27%; that from December 2007 to date, just 1.8%… so for a slump 1/15 as severe as the Depression, our 21st-century economy doctors administered a course of treatment more than three times as costly.”
Ultimately, GDP fell 3.1% between the 3rd quarter of 2008 and the 3rd quarter of 2009. The government response has amounted to throwing $7 trillion ($4.2 trillion increase in national debt, $700 billion of TARP bailouts, $200 billion of losses taken by Fannie Mae & Freddie Mac, $100 billion of losses taken by the FDIC, and the Federal Reserve increasing their balance sheet by $1.8 trillion) of your tax dollars at the problem. As a side benefit, they have thrown senior citizens under the bus by paying them 0% on their savings, not providing a cost of living increase to their social security for two years, and hitting them over the head with 10% levels of inflation on food and energy.
At this point it looks bad for the working middle class and it looks like they aren’t going to make it through the next banker made financial crisis. The middle class just wants the chance for a new beginning. They want jobs. They know the country has been hijacked by the banking corporatocracy, supported by the corrupt political class in D.C. It is time for the middle class to channel their inner Josey Wales and get plumb mad-dog mean. It is not time to lose your head and give up. The middle class are being pursued by Wall Street bounty hunters and government crooks trying to finish them off. It is time to make a stand and fight. It is essential that we know our enemies and how they achieved their power. It all began in 1913 with the creation of the Federal Reserve and the implementation of the personal income tax. I’ve previously detailed how the baby boom generation contributed to our fiscal plight in Part One – For a Few Dollars More, how the actions of the Federal Reserve’s over the last few decades have impoverished the middle class and placed the country at the brink of collapse in Part Two – Fistful of Dollars and addressed the nefarious creation of a central bank in Part Three – The Good, the Bad, and the Ugly.
How to Buy a Tax Break
“There’s another old saying, Senator: Don’t piss down my back and tell me it’s raining.” – Fletcher – Outlaw Josey Wales
When the Federal government spends more each year than it collects in tax revenues, it has three choices: It can raise taxes, print money, or borrow money. While these actions may benefit politicians, all three options are bad for average Americans. – Ron Paul
The Senator pissing down the backs of Americans while telling us it was raining was named Nelson Aldrich, from Rhode Island. He was a Republican lackey of J.P. Morgan who was the driving force behind the creation of the Federal Reserve and the passage of the Sixteenth Amendment, creating the personal income tax. His daughter married John D. Rockefeller, Jr. and his son became the Chairman of Chase National Bank. I wonder how beholden he was to the banker class. A decade before 1913 Aldrich had declared an income tax as communistic. He was right. Karl Marx published his Communist Manifesto in 1848. It included ten planks. Two of the ten planks were as follows:
- A heavy progressive or graduated income tax.
- Centralization of credit in the hands of the State by means of a national bank with State capital and an exclusive monopoly.
The United States had tinkered with an income tax during the Civil War and the 1890’s, but the Supreme Court declared it unconstitutional. Until 1913, the Federal government was restrained from overspending because it was completely reliant on tariffs and duties to generate revenue. Without the ability to print money and tax its citizens, politicians could not roll out new programs and fight foreign wars of choice.The Sixteenth Amendment changed the game forever.
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
Politicians pulled the old bait and switch on the American people. The initial tax rates of 1% to 7% were low. That did not last long. By 1918, the top marginal rate was 77%, as Woodrow Wilson needed to fund his war of choice. The top tax rate reached 92% during the Eisenhower Administration and today rates are still 500% to 1,000% higher than they were in 1913. The government is addicted to tax revenue. In 2009, they absconded with $1.2 trillion in taxes from American individuals. Does anyone think the bloated government bureaucracy spends these funds more efficiently or for a more beneficial purpose than its citizens could have? The income tax distorts financial planning and business investment, and it encourages tax avoidance and evasion.
|Partial History of
U.S. Federal Income Tax Rates
|2003-2009||6 brackets||10%||35%||Tax Foundation|
The average American thinks income taxes are essential because politicians tell them so. The only discussion is about what the rates should be. But, the country grew tremendously between 1789 and 1913 without a personal income tax. Income taxes do not benefit the average American, they drain wealth from the citizens and hand it to politicians who then use them to bribe constituents for votes with handouts and fund foreign wars of choice. The IRS tax code has progressively been utilized by the rich and influential class to skew it in favor of those with the most lobbyists. Politicians get elected by promising benefits to the masses while being funded by rich people and big corporations. A tax code of 60,000 pages, with over 600 IRS tax forms, and filled with tax breaks for influential constituents (farmers, oil companies, homeowners, foreign corporations, etc.) is not designed to benefit the average American. The tax code is used to pay off those who “contribute” to the politicians that control the tax code.
Congress frequently holds hearings on tax simplification so members can denounce the tax code’s complexity. Congressional experts and impartial think tanks provide useful simplification ideas. When the TV cameras are turned off, Congress swiftly ignores them and votes for more special interest breaks for their biggest contributors. The storyline that is pounded into the minds of all Americans is that 50% of the population pays no taxes and the rich pay an inordinate amount of taxes. The Republicans and Democrats fight a battle of false talking points to confuse and obscure the truth.
The Republican mantra since the Reagan era has been to cut taxes and allow the “free market” to work its magic. They have succeeded in convincing a vast swath of Americans that lowering the highest tax rates have benefitted the masses. This is completely untrue. An unfunded tax cut today is just a tax increase on future generations. Democrats went along with tax cuts as long as the Republicans went along with spending increases. The Democrats hit the jackpot, with a supposedly fiscal conservative president signing a Medicare D bill that added trillions of unfunded liabilities to our national balance sheet. The Republicans are on cloud 9, as a supposedly liberal anti-war president has increased war spending to $1 trillion per year while ramping up our foreign wars of choice. Everyone gets what they want in Washington D.C. This is called bi-partisanship.
The Big Lie
As the chart above shows, at least before Reagan the top marginal rates were kept high to pay for the social programs instituted by Congress and the wars of choice fought by our Presidents. After 1980, in some sort of warped Twilight Zone episode, politicians across the land convinced themselves and the masses they could have lower taxes, more entitlement goodies, never ending war, and an unlimited heaping of material goods, with no adverse consequences. Well, it was a lie.
- The GDP in 1981 was $3.1 trillion, today it is $14.7 trillion.
- The National Debt in 1981 was $907 billion, today it is $14.4 trillion.
- The amount of annual Federal income tax revenue in 1981 was $347 billion, today it is $1.1 trillion.
- The amount of annual Federal spending in 1981 was $678 billion; today it is $3.8 trillion.
- Total consumer debt in 1981 totaled $353 billion, today it is $2.4 trillion.
- Total mortgage debt outstanding grew from $1.5 trillion in 1981 to $14.6 trillion by 2008.
- Median household income was $17,710 in 1980 and is now $49,777.
These facts reveal an empire spiraling out of control, delusional and living on borrowed time with borrowed money. The output of the country has grown by 474% in the last 30 years, while the National Debt has grown by 1,588%. Those two facts alone paint a picture of eventual collapse. The lesson of allowing politicians and bankers unfettered access to unlimited amounts of fiat currency backed by nothing but a hollow promise to pay is clear, in the divergence of income tax revenue and spending. The dramatic slashing of top marginal rates from 70%, which had been in place for a fifty year period when the U.S. economy boomed, was supposed to invigorate the economy and unleash the free market spirit of our entrepreneurs. A funny thing happened on the way to prosperity for all. Federal income tax revenue has only grown by 317% in the thirty years since the Reagan Revolution. The CPI has grown by 289% over this same time frame. Therefore, tax revenue is essentially flat with 1980 on an inflation adjusted basis. This wouldn’t be a problem, except that the politicians we elected ramped up spending by 560% over these same thirty years. Federal spending has grown at almost twice the rate of income tax revenue. Bug meet windshield. I guess this is called supply side economics.
Politicians of both parties have promised the American public they could have low taxes, unlimited social welfare benefits, a house that always appreciated in price, electronic gadgets galore, and the true American dream of getting something for nothing. And it was all made possible by your friendly Wall Street banker and their friends at the Federal Reserve. The data above already paints a dire picture for the American Empire, but the next ten years will finish the job. GDP is stagnant as Federal government spending props up the teetering edifice of economic activity. The National Debt will reach $20 trillion by 2015 and is on course to reach at least $25 trillion by 2019. Both the Republican and Democratic “plans” to “reduce” the deficit are a joke. They don’t reduce anything. They add to the debt.
The citizens of this country should be outraged by such fiscal irresponsibility, and marching on Washington D.C. with pitchforks and torches. But, there is no outrage across the countryside. This is because the vast majority of Americans followed the example of their beloved government leaders and lived far beyond their means in a delusional attempt to borrow their way to material prosperity. The median household income has risen by 281% since 1981, less than inflation over the same time frame. The median household is taking home less than they did in 1981 on an inflation adjusted basis. The McMansions, BMWs, computers, 52 inch HDTVs, and 15 other essential electronic gadgets that represent the current American Dream were financed. Consumer debt, used to buy (rent) luxury automobiles and essentials like 4 TVs and 3 computers, grew by 680%, more than twice the rate of median household income. Mortgage debt grew by an astounding 973% in the last thirty years.
The last thirty years have been a faux American Dream. The madness of crowds has been replaced by the sober reality that the material goods purchased with debt steadily depreciate day by day, while the debt stays firmly in place. Who benefitted and who lost during these thirty years of delusion? There is only one beneficiary from the issuance of trillions in debt – Wall Street bankers. The ten biggest banks in the country hold more than 50% of the mortgage debt and 80% of the credit card debt in the U.S. The poor never had much, and they still don’t. Politicians have averted riots and social unrest by pouring trillions into welfare, social security disability, SNAP programs, earned income credits, and hundreds of other transfer payment bribes to the poor. The middle class has borne the brunt of the banker plundering and pillaging.
The Super Rich Storyline
There are three storylines that are pounded home repeatedly by the mainstream media and the Republican Party ideologues.
- More than 50% of Americans don’t pay any taxes.
- The top 1% pays 38% of all the Federal income taxes.
- Increasing the highest tax rate above 35% would destroy jobs and kill small business owners.
The misinformation spewed forth by the super rich, who control the media, politicians, and media message, to disguise their continued looting of the American middle class, is unrelenting. There are 117 million households in the United States with a median household income of $48,000. Data from the Tax Foundation shows that in 2008, the average income for the bottom half of taxpayers was $15,300. The first $9,350 of income is exempt from taxes for singles and $18,700 for married couples. Politicians of both parties also provided credits for children, earned income credits, mortgage tax deductions, property tax deductions, and a myriad of other tax goodie payoffs for votes. When half the households in the country make less than $48,000 per year in income, of course they won’t be paying any Federal income taxes. There are approximately 151 million Americans earning income. Almost 73 million, or 48%, make less than $25,000. As Wall Street enriched billionaires are interviewed by millionaire journalists on CNBC, scorning those who don’t pay their fair share of taxes, they outsource the blue collar jobs of those on the lower income scale to China and India. Without good paying jobs, the middle class uses debt to maintain their American dream, further enriching the billionaire class in a circle of death.
This chart reveals the true nature of who controls our country. It is a battle between a few thousand of the richest people in America versus the other 150 million. The facts are the middle class and poor pay a much higher percentage of their income in taxes than the rich. The Social Security tax cuts off at $106,800. Therefore, the median household pays 6.2% of their income, while the rich household making $5 million per year pays .13% of their income. This applies to sales taxes, property taxes, state taxes, local taxes and the thousand other taxes and fees charged on utility bills, etc. William Domhoff notes that the top 1% who make $1.3 million per year only pay 30.9% of their income in taxes, while those making $141,000 per year pay 31.5% of their income in taxes. I guess their tax lawyers aren’t as well paid. Even those making $34,000 pay 27% of their income in taxes.
Source: Citizens for Tax Justice
The top 1% does pay 38% of the Federal income tax because they have a 23.5% share of the national income. The last time the top 1% reached this level of income was in 1928, just before the Great Stock Market Crash and the Great Depression. During the glory years of the American Empire, between 1946 and 1971, the top 1% of households’ share of the national income ranged between 8% and 13%. With the era of unbridled greed and debt that began in the 1980s, the inequitable distribution of wealth has risen to new heights. This level of pillaging by those in control of the finance sector of the economy, supported by their mouthpieces in Congress, and championed by their controlled media pundits, has reached a level that will eventually lead to revolution.
The biggest lie pushed forth by the powerful super rich in this country is related to the top marginal tax rate, which is currently 35%. The Republican agenda includes a further cut in the top rate to 25%. It is sold to the American public as a good thing for them. It has nothing to do with them. The 35% rate applies to only taxable income over $379,000. Of the 151 million Americans earning a living, this rate would apply to about 200,000 people. The top marginal tax rates during the glory years of the American Empire (1946 – 1971) were between 70% and 90%. These rates only applied to taxable income above $400,000, when the average income was less than $10,000 per year. These were the best years for the American middle class.
The IRS issues an annual report on the 400 highest income tax payers. In 1961, there were 398 taxpayers who made $1 million or more. Today there are over 78,000 taxpayers who make more than $1 million. The loopholes written into the tax code over decades by lobbyists paid for by the super rich, plus much lower tax rates on the largest sources of income of the wealthy (capital gains taxed at 15%), explain why the average federal income tax rate on the 400 richest people in America was 18.11% in 2008, according to the IRS, down from 26.38% when this data were first calculated in 1992. Among the top 400, 7.5% had an average tax rate of less than 10%, 25% paid between 10% and 15%, and 28% paid between 15% and 20%. The average American’s share of their income going to federal taxes increased from 13.1% in 1961 to 22.5% in 2008. William Domhoff explains how the super rich have paid off Congress to rig the system in their favor:
“According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier. How are these huge gains possible for the top 400? It’s due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it’s not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay.” – Wealth, Income, and Power – William Domhoff
As an added bonus, hedge fund managers like John Paulson, who made $9 billion over two years, paid no income taxes on his windfall. In 2007, Republicans and a key Democrat, Sen. Charles Schumer of New York, fought to keep the tax rate on hedge fund managers at 15%, arguing that the profits from hedge funds should be considered capital gains. Schumer, the ultra-liberal champion of the poor, knows who butters his bread – Wall Street. But it gets better. As long as they leave their money, known as “carried interest,” in the hedge fund, their taxes are deferred. They pay taxes only when they cash out, which could be decades from now. These upstanding citizens access their jackpot winnings by borrowing against the carried interest, often at rates as low as 2%. I’m sure every youngster in America dreams of becoming a hedge fund manager so they can use system risking leverage to make bets on derivatives, reap billions in profits, pay no taxes, and produce no value for the country. The new American Dream.
It is plain to see by anyone without an ideological agenda that a few thousand corrupt individuals have managed to gain control of the American economic system. The introduction of the personal income tax and creation of the Federal Reserve in 1913 have provided the means for the few to dominate the many. Over the last century, a rich super class has created their wealth through issuing debt to the masses, writing the tax code in their favor through their captive politician protectors, using their own private bank to issue trillions in fiat currency and create inflation, and used their control of the mass media to convince the average American that this was beneficial. Chris Whalen in his brilliant economic history of the United States – Inflated – How Money & Debt Built the American Dream sums up what has happened:
“Once the two functions, controlling the amount of currency in circulation, and second the government’s fiscal operations, are housed under the same roof, inflation and a decrease in the value of money are the inevitable result. It is always easier to borrow than to raise taxes. Politicians who have access to the printing press will invariably use it.”
The small cabal of banking elite committed the crime of the century between 2001 and 2008. They used their power over the Federal Reserve and political class to reap hundreds of billions in ill-begotten profits and crashed the worldwide economic system in 2008. They then held the country hostage as they extorted trillions more in bailouts from the taxpayers. As a reward for their chutzpah, they have paid themselves billions in bonuses. While 44 million people try to make ends meet with food stamps, these criminals continue to pillage the countryside attempting to steal the remainder of middle class wealth. As the middle class sinks further into despair, anger is building. The political class has tried to pay off the poor with entitlement payments, but it is the middle class that will revolt when their hope for a better life is destroyed by the moneyed class. With debt in the system expanding at hyper-speed, the American Empire will not decline with a whimper but with a bang. All previous Fourth Turning’s in U.S. history have resulted in tremendous bloodshed. The next ten years will follow this pattern. I’ll address the coming revolution against the criminal banking element in the last part of this five part series – Unforgiven.