The True State of the U.S. Economy: Caviar Facials and Desperate Fire Sales on Craigslist

By now, it must be completely obvious to anyone paying even the slightest bit of attention that the so-called “recovery” we have supposedly been witnessing for the past several years is nothing more than a wealth transfer to a handful of oligarchs and their political minions. While I am intimately familiar with the process in the U.S., it appears to be a global phenomenon as well.

Domestically, this process has been driven by the complete corruption and insanity of those calling the public policy shots in Washington D.C. At the heart of that process, resides a group of unelected economic Central Planners known as the Federal Reserve, or the lender of last resort for oligarchs and cronies who make bad business decisions.

Before I get to the title of this post, I want to highlight a very important article published last week that demonstrates how college graduates are forcing their lesser educated peers out of the workforce by taking jobs that do not require secondary education. If you read this and still can’t be honest that this economy is a total distorted shitshow, I don’t know what to tell you.

From Bloomberg:

Recent college graduates are ending up in more low-wage and part-time positions as it’s become harder to find education-level appropriate jobs, according to a January study by the Federal Reserve Bank of New York.

The share of Americans ages 22 to 27 with at least a bachelor’s degree in jobs that don’t require that level of education was 44 percent in 2012, up from 34 percent in 2001, the study found.

The New York Fed researchers said it isn’t clear whether two decades of increasing underemployment for recent graduates “represent a structural change in the labor market, or if they are a consequence of the two recessions and jobless recoveries in the first decade of the 2000s.”

Two “jobless recoveries.” I’m still trying to figure our how you can have a “jobless recovery.” Perhaps they aren’t recoveries in the first place. Bear in mind that these are the unelected people running the economy.

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An Open Letter to Sam Zell: Why Your Statements are Delusional and Dangerous

The 1 percent are being pummeled because it’s politically convenient to do so. The problem is that the world and this country should not talk about envy of the 1 percent. It should talk about emulating the 1 percent. The 1 percent work harder. The 1 percent are much bigger factors in all forms of our society.

- Sam Zell yesterday on Bloomberg Television

Mr. Zell,
I’ve seen clips of you on television several times in the past. I can’t say those appearances elicited strong reactions from me. I can recall being offended at things you have said, and I can remember agreeing with you on other occasions. However, yesterday I found your statements on “class warfare,” “envy” and the “1%” delusional and dangerous. I will address these two points separately.

Why Your Statements Are Delusional

Individuals, social classes, even cultures and nation-states develop storylines and so-called “myths” about themselves and how they fit into the bigger picture of current events and human history. We all see ourselves and whatever group(s) with which we identify within a particular social, political and economic context. This is obvious, yet it is much more difficult to look at your owns myths and question them. It is far easier to look at other groups’ myths and heap criticism on them. That is basically all you do.

For the purpose of this letter, I will focus on socio-economic groups that people are now using in these contemporary United States. Ever since Occupy Wall Street popularized the terms, many people have divided themselves into two overly-simplistic groups, the so-called 99% and the 1%. However, this isn’t the real struggle. I was always against the 1% label, because the true cancer, the true problem comes from a much smaller slice of the population. It comes from what I call the “oligarchs,” the 0.01%, and the politicians that do their bidding. This is your class Mr. Zell, so let’s get that straight right off the bat. That doesn’t mean everyone in the 0.01% should be vilified. I am certain there are many well meaning, decent and honestly good people in that bucket. Nevertheless, what the past five years have proven without a shadow of a doubt is that this class collectively represents the most destructive, delusional and counter-productive members of our society.

Your statements on Bloomberg yesterday prove my point exactly. Let’s start with the most offensive and asinine statement. You said:  

The problem is that the world and this country should not talk about envy of the 1 percent. It should talk about emulating the 1 percent. The 1 percent work harder.

First of all you talk of envy. Now without a doubt, there is a significant portion of the so-called 99% that would want nothing more than to have the riches and the power of the 1%, but certainly not all of them, or even necessarily the majority. In my life I have had various experiences and met a lot of people. I lived most of my life in Manhattan and the last three years in Boulder, Colorado. What defines Manhattan more than anything else is that it is a money-chasing place. People who live there are generally obsessed with money as well as materialism, and want as much as they can get in the shortest period of time. People in Colorado are not this way. When I lived in NYC, almost every conversation I overheard would consist of how to make more money or get a bigger bonus. In three years in Colorado, I cannot recall ever hearing a similar conversation. Of course this is an over-generalization, but there is certainly truth to it.

It’s fine to want to make money, and it’s also fine to just want to be comfortable, content and fulfilled in what you do. I’m not making a judgement call here. What I am saying is that people like you, who are constantly surrounded by people that think just like you, people who obsess 24/7 about how to make more money on money, you think that everyone thinks just like you. Sorry to break it to you, they don’t.

So this is where your delusion begins. You think everyone that has issues with you oligarchs and how the 0.01% is destroying our economy and society is simply envious because you assume they think like you do. Certainly, if you were poor you would be envious of the the rich. You’ve made that clear. However, that is not the primary motivation of the anger and resentment swelling up from the underclasses.

I will use myself as an example. I worked on Wall Street from the moment I graduated Duke University. By the time I was in my mid-20s my career was taking off. I was well into the “1%” by my late-20s and if I had continued along that path, who knows maybe one day I could’ve been an oligarch like you. If you were me, you would have continued to pound the pavement of the world’s financial centers to one day become a “master of the universe.” But I don’t want to be you Sam Zell. I voluntarily took myself off that career path, at the very top of my game because I became so disillusioned by the monetary and financial system after the crisis and the bailout of the crooks (your socio-economic class) that caused it. I’m not trying to portray myself as special or some sort of a hero. I am just making the point that from your point of view my choice was completely irrational, and probably one you could never comprehend. Yet there are plenty of people like me out there and you don’t seem to understand this because your entire worldview revolves around wealth.

Your misdiagnosis of the root cause of the current dissent in America is a result of your obliviousness to the actual concerns of the 99%. A group about which you speak with such certainty, yet certainly know almost nothing about. In fact, my website is dedicated to highlighting all of the destructive trends happening in this nation today. From record high food stamp participation, to declining real wages and the reality that young people need to take on so much debt they become indentured serfs from the moment they enter the workforce. From a loss of 4th Amendment rights due to illegal NSA spying, to the militarization of the police force. From oligarch immunity from serious financial crimes that average citizens would be thrown in jail for life for, to trillion dollar bailouts with zero strings attached for the financial community. From the over-prosecution of some of our bravest citizens such as Aaron Swartz, Barrett Brown and Private Manning to a fraudulent two-party sham political system entirely controlled by your socio-economic class.

While I agree that President Obama talks in simplistic, imbecilic “class warfare” terms, what does he do in reality? He is the most oligarch-coddling President this nation has ever seen. Talk is cheap Zell. I only listed a few of the root problems causing dissent in the country. They are very real, they are not going away and as long as oligarchs like you pretend they don’t exist and this is all the result of “envy” nothing will get better. In fact, it will get much, much worse. I see very little envy. I see a populace waking up to a gigantic fucking fraud, full of below average cronies thieving and people getting pissed about it. I see a 0.01% class of oligarchs to which the free market and the rule of law do not apply. So I’m not sure what exactly the 99% is supposed to be emulating. Your unaccountable criminality?

Of course I couldn’t end this section without calling you out on the most absurd thing you said: “The 1 percent work harder.”

Where to begin…First of all, I’d like some hard data to back up this statement. You complain about class warfare and then hypocritically say something like that? How is that not class warfare. You, a billionaire, come on television and tell 320 million people that the reason they feel disillusioned and agitated is because they are lazy. If that’s not class warfare I don’t know what is.

But let’s take this a step further. Let’s assume that the average person in the 1% works harder than the average person in the 99%. This reality still means that there are likely millions, if not tens of millions of above average workers within the 99% that work considerably harder than the average 1% person. Even if you don’t accept my numbers, you can’t deny there would still be hundreds of thousands that fall into that bucket. So what do you have to say to them? Furthermore, where does your expertise on the work ethic of the 99% come from? I highly doubt you spend much time hanging around them.

Why Your Statements Are Destructive
There is genuine dissent in America and it would behoove you to actually try to understand it, rather than assuming it is represented by inane political rhetoric from Barrack Obama. In case you hadn’t noticed, Obama isn’t popular. Neither are Democrats and Republicans. In fact, a recent Gallup Poll showed that 42% of Americans identify as Independent, versus 31% as Democrats and 25% as Republicans. This is the highest “Independent” identification on record. People know something is very wrong, they know the system is broken.

Generally speaking, the dissent from both the “progressive” side and the “libertarian” side overlaps on many issues. Issues that you seem to be oblivious to. These are:

1) Opposition to Wall Street bailouts, the concept of TBTF and the growth of crony capitalism generally.
2) The fact that the “rule of law” is not applied to oligarchs, politicians and government officials.
3) The destruction of civil liberties through the nation and the militarization of police.
4) Endless and pointless wars abroad, as well as the destructive war on drugs at home.

As you yourself admit: “the 1 percent are much bigger factors in all forms of our society.” This is true, and since the 0.01% wields even greater power, you must accept responsibility for these issues. Instead, you just come on television and call everyone envious.

The fact that there is such tremendous overlap on such major issues from activists on the so-called “left” and the “right” is extraordinarily important. These are real grievances that are not going away. Angst on these issues must be dealt with, and no amount of superficial, ignorant statements will change that reality. The only thing that the arrogant oligarch attitude will do is cause more people to despise you. Is that what you want?

I don’t think you’re a bad guy with evil intent. I think you are a money obsessed financier who hasn’t taken the time to actually understand what is really going on within your own country because you have your head so far up your own ass. It’s hard for anyone to actually look at themselves in the mirror and be honest about themselves and the myths they create. However, history shows us that when decadent plutocrats are unable to do so, we end up with disastrous situations. Situations which are often times violent and result in despotism. A situation I desperately hope to avoid, and I truly hope you and others like you recognize your error before it is too late.

In Liberty,
Michael Krieger

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May The Farce Be With You – Janet Yellen Compares Bernanke to Obi-Wan Kenobi

Just in case you had any lingering doubt about how hopelessly screwed the world’s monetary and financial system really is, all you have to do is learn that in a series of ceremonies (because that is so appropriate with a record number Americans on food stamps) celebrating Ben Bernanke in recent days incoming Fed head Janet Yellen likened Bernanke to Obi-Wan Kenobi, the wise, experienced Jedi Knight mentor to his protégé Luke Skywalker in “Star Wars” movies.

There’s nothing that makes you feel more warm and fuzzy inside than the recognition that the soon to be most powerful person in the world thinks that printing trillions of dollars and giving it to criminals at zero interest qualifies as attributes of a intergalactic Jedi Master.

On the flip-side, this right here is what 95% of Americans think of Bernanke and his criminal cartel.

Not from The Onion, but from the Wall Street Journal we learn that:

Officials held a series of ceremonies honoring Mr. Bernanke in the past few days. At a dinner Tuesday evening among senior officials, Ms. Yellen likened Mr. Bernanke to Obi-Wan Kenobi, the wise, experienced Jedi Knight mentor to his protégé Luke Skywalker in “Star Wars” movies. She jokingly imagined Mr. Bernanke advising her to trust in the Fed’s statement of objectives, a document that lays out its goals for inflation and jobs, according to someone familiar with the event.

Mr. Bernanke received a standing ovation from Fed officials at the FOMC meeting in its boardroom earlier Tuesday. And he was toasted Thursday by hundreds of Fed staff packed into an atrium at the Fed’s Eccles Building, where they were served peanuts, popcorn and crackerjacks in honor of Mr. Bernanke’s love of baseball.

Kill. Me.

Full article here.

In Liberty,
Michael Krieger

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Working Age Americans are the Majority of People on Food Stamps for the First Time

When people ask me to describe the state of the U.S. economy, what I always say is that it can best characterized as an ongoing state-sanctioned theft. This theft consists of the 0.01% oligarch class intentionally leveraging a corrupt monetary and political system in order to funnel all of the wealth of the non-oligarch rich and middle-class upward to them. The underclasses are kept quiet and in-line via food stamps and other forms of so-called “welfare.”

In reality, I have frequently maintained that food stamps are actually corporate welfare and that the stock market represents food stamps for the 1%. The entire economy is a gigantic bait and switch in which a handful of people rape and pillage everyone else.

With unemployment and GDP statistics hopelessly manipulated, we must look at other data points in order to gain an understanding of how things really stand. Data related to food stamp rolls is one way to gain real insight into the true state of the U.S. economy.

In an excellent article from the Associate Press, we learn several things.

  • For the first time ever, working-age people now make up the majority in U.S. households that rely on food stamps.
  • Food stamp participation since 1980 has grown the fastest among workers with some college training.
  • By education, about 28 percent of food stamp households are headed by a person with at least some college training, up from 8 percent in 1980.

More from the AP:

WASHINGTON (AP) — In a first, working-age people now make up the majority in U.S. households that rely on food stamps — a switch from a few years ago, when children and the elderly were the main recipients. 

Some of the change is due to demographics, such as the trend toward having fewer children. But a slow economic recovery with high unemployment, stagnant wages and an increasing gulf between low-wage and high-skill jobs also plays a big role. It suggests that government spending on the $80 billion-a-year food stamp program — twice what it cost five years ago — may not subside significantly anytime soon.

“High employment, stagnant wages.” Huh? Don’t these people realize we’ve been in a recovery for almost five years now!

Food stamp participation since 1980 has grown the fastest among workers with some college training, a sign that the safety net has stretched further to cover America’s former middle class, according to an analysis of government data for The Associated Press by economists at the University of Kentucky. Formally called Supplemental Nutrition Assistance, or SNAP, the program now covers 1 in 7 Americans.

Notice the statement, “America’s former middle class.” At least they are honest. The middle class is gone.

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Introducing “The Money Oscars” – Jon Stewart on Davos and Financial “Journalists”

Once again, Jon Stewart knocks it out of the park with his unique style of hilarious and cutting social commentary. This time he takes on the orgy of crony capitalists, vacuous celebrities and corrupt politicians that is the World Economic Forum in Davos, or as he calls it, “The Money Oscars.” This is the best Stewart clip I have seen since he recently took it to Chris Christie.

Enjoy.

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Why China’s Attack on Bitcoin is a Sign of Weakness

For myself and many others back in the 2008/09 period, it seemed obvious what China should to do from an entirely nationalistic perspective on the grand geopolitical chessboard. With the reputation of the U.S. laying in tatters following a gigantic financial collapse and an utterly embarrassing, unlimited taxpayer bailout of the criminals that caused the crisis, the entire world (including Americans) was looking for something else. Something new, something more lawful. Something more just and more stable. The U.S. dollar and the Federal Reserve System had been exposed and entirely discredited in many people’s minds. One of history’s most bold and monumental geopolitical moves was ripe for the taking. China could attempt to back its currency with gold, something I discussed with Max Keiser in a May 2010 interview. Immediately, capital flows would flood into the country, Chinese consumer purchasing power would explode and a rebalancing of their economy would experience a traumatic, but monumental and necessary shift. They could have announced such a plan and then implemented it slowly and with safety nets for manufacturers. It wouldn’t have been easy, but the window of opportunity was open. Instead, they did nothing, and now I think it’s too late.

I think there are two obvious reasons why the Chinese authorities failed to take bold action on the world stage. First, many of the wealthiest billionaires and elites in China have benefited greatly from so-called “free trade” partnerships with the West. The ponzi relationship in which we print pieces of paper and give it to them for manufactured goods has resulted in fabulous fortunes for the Chinese power players. Not to mention their existing personal, social relationships with Western elites. So why rock the boat?

The second reason has to do with the likely political and social turmoil that would have resulted from such a move. The enormous economic rebalancing from such a power play would financially ruin many people during the transition period. Some of them might be locally powerful figures who could then rile up newly unemployed peasants and the conditions for revolution would be ripe. That’s not to say this would be the outcome, but pulling off such a grand move would open up the political situation to such a risk. A risk no one in power was willing to take. So they didn’t.

There is a third possible reason, and that is the U.S. quietly threatened China militarily if they attempted such a move. This is certainly possible as well.

All of these questions were on my mind back on May 2012 when I wrote an article titled: China Better Have a Plan. Here’s a passage from that piece:

The fact that the Central Planners in China are basically standing around like deer in headlights as their economy plunges into the abyss is nothing short of astounding.  Sure they have lowered the bank Reserve Requirement but so what?  That is an epic joke of a move in light of the gargantuan problems that economy is facing, and is blatantly pathetic in its irrelevance.  I’m not going into detail for the thousandth time why China’s economy is nothing more than a Keynesian Centrally Planned house of cards on steroids with mal-investments that make the U.S. housing market look benign.  I have done that too many times over too many years to exert energy on that topic once again.  That said, what I do want to do is look back at the post 2008 period and try to figure out why they never really took polices to rebalance the economy away from fixed asset investment toward consumption.  In fact, not only did they not rebalance but they doubled down on the prior strategy!  Well now the chickens have come home to roost and we are about to find out if China has any real “long term” plan to get themselves out of this mess.

Ultimately, what I think the authorities in China decided to do was let the U.S. hang itself. The Chinese elites didn’t want to be held responsible for the collapse of the U.S. dollar or the world monetary system. So instead, they decided to wait it out, buy gold and prepare to take over on the world stage once the monetary system imploded in on itself. This seemed like a reasonable plan, but they didn’t anticipate one very, very important thing. They didn’t anticipate Bitcoin.

Bitcoin is the monetary equivalent of some genius programmer coming to the global chessboard, picking it up over his or her head and then throwing it on the floor, scattering the pieces all over the place. This is why I and so many others were shocked that the control-freaks in China were seemingly supportive of it. I believe this was the result of some very forward thinking and brilliant Chinese entrepreneurs seeing the technological achievement for what it is and convincing others of its incredible potential. However, that didn’t last long. Why?

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Jeffrey Lacker: “Fed Has No Interest in Stopping Bitcoin”

While I don’t believe a word the professional criminals at the Federal Reserve say about anything, this is nonetheless an interesting clip from CNBC earlier today. The guest was Jeffrey Lacker, the President of the Federal Reserve Bank of Richmond.

Of course, I do note that after Lacker says his statement about the lack of imminent Fed intervention, he does mumble “at this point” under his breath.

The first thirty seconds is all that’s worth watching.

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My Recent Webinar with TF Metals Report

It’s been a little while since I joined the always witty and entertaining Turd Ferguson of TF Metals Report for an interview. Last week, we sat down and conducted a webinar where the site’s premium subscribers we able to ask me on the spot questions on pretty much any topic they could think of. It was a really fun format for me and I think regular readers will really get a kick out of it.

Picture of the Day: Bitcoin Reaches Record Market Capitalization of $2.64 Billion

Oh the times they are a changin’. The total value of all the bitcoins in the world, something that didn’t even exist five years ago, is now worth $2.64 billion. While impressive, Ben Bernanke and his merry minions of monetary mayhem still create the equivalent of over 30 new Bitcoin markets every single month by printing $85 billion new Federal Reserve Notes (slave coupons) into existence. So where does value actually reside?

Screen Shot 2013-11-04 at 3.06.44 PM

In Liberty,
Mike

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Picture of the Day: This is How I Would Decorate the U.S. Tombstone

Now I am become Death, the destroyer of worlds.

- The Bhagavad Gita

This is all we would need to put on the tombstone for the USA. No words, no tears, no flowers. Just a picture of George W. Bush putting the Medal of Freedom around the neck of the most destructive American in our nation’s storied history. Alan Greenspan: The Maestro of Idiocy.

USAtombstone