WHAT THE FED HAS WROUGHT

The chart below might be the most powerful indictment of the Federal Reserve and our corporate fascist empire of debt ever created. Some people don’t get charts. Charts tell a story. This chart tells the story of elitist bankers supporting the agenda of a corporate fascist state, resulting in the gutting of the middle class. Anyone who views this chart in a positive manner is either a Federal Reserve banker or their paycheck is dependent upon the continuation of the pillaging of the working class. Corporate profits are at all-time highs. Profit margins have always reverted to the mean throughout modern history. If they remain at all-time highs then something is terribly wrong.

“Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.” Jeremy Grantham, Barron’s

Here is the story I see in that chart. Corporate profits as a percentage of GNP have averaged 6.5% over the last 67 years. As you can see, it is a volatile figure. Corporate profits rise during expansions and fall during recessions. That has been a given over time. The reason corporate profits have always reverted to the mean was due to the basic tenets of free market capitalism. When a company is generating outsized profits, that industry will then attract new competitors, resulting in price competition and lower profits. From 1950 through 1971, corporate profits as a percentage of GNP fluctuated in a narrow range between 5% and 7%. This was a reflection of a market driven by competition, a non-interventionist Federal Reserve, and a government not captured by corporate interests.

It is no coincidence since Nixon closed the gold window in 1971 and unleashed greedy bankers, feckless politicians, and self serving corporate executives to utilize easy money and prodigious amounts of debt to financialize our economic system and deform capitalism, corporate profits have boomed and busted. The Fed created booms and busts are clearly evident on the chart. Nixon toady Arthur Burns created an inflationary boom in corporate profits to 8% of GNP in the late 70’s followed by the collapse to 3% caused by Volcker having to raise rates to extreme levels to crush the Burns created runaway inflation.

You can see exactly when the Maestro assumed command at the Fed and proceeded to introduce the Greenspan Put, encouraging speculation, borrowing and mal-investment. His easy money boom led to the dot com bubble that doubled corporate profits from their 1987 low. Of course the profits vaporized in an instant and plunged to 4% of GNP in 2001. Greenspan and then Bernanke  proceeded to drive interest rates to record lows creating a prodigious housing bubble resulting in the greatest level of mal-investment and financial fraud in world history. Corporate profits as a percentage of GNP skyrocketed from 4% to 10% in the space of six years. The banking cabal had captured the system.

The Fed orchestra kept the music playing and Wall Street kept dancing the rumba with their corporate CEO dates. The Keynesian acolytes were ecstatic. The Austrians warned of the impending bust. No one listened. The collapse of the worldwide financial system was portrayed by the corporate mainstream media, bankers like Dimon, corporate CEOs like Immelt, billionaires like Buffet, captured government bureaucrats like Paulson, and politicians like McCain and Obama, as a systematic risk that required a taxpayer rescue of criminals.

The $800 billion gift to bankers and mega-corporations by the Washington DC Party of captured politicians was chicken feed compared to the $3.5 trillion of newly printed fiat handed to Wall Street and corporate America by Bernanke and Yellen. Five years of 0% interest rates have impoverished senior citizens and savers, but they have done wonders for Wall Street and mega-corporation profits, along with executive bonuses. Corporate profits soared from 4.5% of GNP to an all-time high of 10.5% in the space of three years and have remained at this elevated level.

Who Needs Wage Earners Anyway?

Is it a coincidence that corporate profits as a percentage of GNP are at record highs while employee compensation as a percentage of GNP is at record lows? Is it a coincidence that employee compensation as a percentage of GNP peaked at 51% in 1971? That year certainly seems to be a turning point in U.S. economic history. Gold’s purpose as a check on statists, Keynesians, politicians, bankers, and the military industrial complex couldn’t be any clearer. The decline has multiple causes, but the storyline about technology being the major cause is patently false. My observations are as follows:

  • From the end of World War II until the mid-1970s employee compensation as a percentage of GNP was consistently between 49% and 51%. The middle class saw their standard of living rise as wages outpaced inflation, savings rates were high and led to capital investment, debt was used for long term purchases like a home or automobile, and bankers accepted deposits and made safe loans. Technological progress over the thirty years was constant, but did not result in declining wages.
  • From the moment Nixon closed the gold window, employee compensation as percentage of GNP relentlessly declined for the next quarter of a century from 51% to 44%. Over this time frame our economy deformed from a goods producing system driven by savings and capital investment into a service/financial economy built upon consumer debt, conspicuous consumption and market gambling. Our iconic mega-corporations fired Americans and hired Chinese slave laborers, lobbied for tax breaks, invested in their own stock, kept wage increases below the level of true inflation, and paid extravagant compensation packages to their Harvard MBA executives.
  • The brief upturn created by Greenspan’s irrational exuberance 90’s boom was short lived. The relentless decline resumed after the dot com collapse, even as Greenspan and Bernanke blew their epic bubble. Their financial engineering machinations on behalf of Wall Street did nothing for the average worker on Main Street. Employee compensation as a percentage of GNP declined from 47% to 44% BEFORE the financial collapse.
  • Unequivocal proof that Bernanke’s sole purpose of QE and ZIRP was to benefit his Wall Street owners can be seen in the continued decline from 44% to 42% since 2008. There has been no recovery for the average American. Wall Street is rolling in dough. Corporate America is rolling in dough. Politicians are rolling in dough. The average American worker is rolling in dog shit.

The mouthpieces for the Deep State insist corporate profits have reached a permanently high plateau. It’s another new paradigm. Just like 1929, 1999, and 2007. Jeremy Grantham is right. The system is broken. The inmates are running the asylum. But financial engineering will not work permanently.  Baijnath Ramraika and Prashant Trivedi in their outstanding article Why Jeremy Grantham is Right about Corporate Profit Margins prove that corporate gross margins have not grown, technological advancement has not been a major factor, innovation and capital investment are non-existent, and corporate CEOs have utilized one time schemes to boost profits.

There are a few major reasons for record corporate profits. The Fed’s gift to banks and mega-corporations of zero interest rates have allowed S&P 500 corporations to refinance their existing debt and take on new debt at below market interest rates. The average interest rate paid by S&P 500 companies is now at all-time lows. Any normalization of interest rates would crush corporate profits.

Even though you hear constant propaganda from the corporate MSM, corporate CEOs, and captured politicians about the dreadful level of corporate taxes, the truth is that mega-corporations are paying record low levels of actual taxes. When profits are at record highs and tax payments at record lows you know they have captured the system. “Creative” tax avoidance and the FASB allowing banks to mark their assets to fantasy have played an enormous role in record profits.

The short term oriented casino mentality of corporate CEOs can be plainly seen in the fact depreciation expense as a percentage of revenue is at 25 year lows, resulting in short term profits but long-term decline. Instead of investing in capital to increase efficiency or expand their business, greedy myopic CEOs have chosen to buy back their own stock at all-time high prices. They did the same thing in 2005 – 2007. Driving up quarterly earnings per share to boost their own stock option compensation is how it rolls in corporate America today. Investing in their workers through higher wages isn’t even a consideration. They don’t teach that in Ivy League MBA programs. SG&A expenses as a percentage of revenue have been driven to all time lows, as outsourcing, downsizing, and working people to death have done wonders for corporate profits.

Ramraika and Trivedi reach damning conclusions of corporate America, based on their detailed unbiased research:

As the world moved increasingly towards the idea of shareholder-value maximization, time horizons for management and the shareholders have shortened. As Montier shows, the average lifespan of a company in the S&P 500 in the 1970s was about 27 years and is down to about 15 years now. In tandem, the average tenure of CEOs is down from about 10 years in the 1970s to about 6 years now. Combine this with the incentive systems prevalent today (think stock options), and it is only logical that a CEO who is going to be around for as few as six years and is going to get a large chunk of her rewards in stock options will want to see higher stock prices.

Cutting SGA expenses and postponing capital investments — actions that carry positive short-term earnings impact at the expense of a business’ competitiveness in the long-term — look promising to managers whose payoffs depend on stock prices in the short-term. Not surprisingly, the renters (there are hardly any owners any more) clamor for just such actions. The problem with this thinking is that the long-term eventually shows up. And when it does, profit margins will have no choice but to remember their long forgotten tendency to revert to mean.

Are interest rates going to be driven lower for corporations? Are taxes going to be driven lower? How many more people can corporations fire? Have economic downturns been eliminated by the Federal Reserve? Will record profits not result in increased competition and price wars? Can wages be driven even lower?

The financial, economic and political system has been captured by corporate fascist psychopaths. The Federal Reserve has aided and abetted this takeover. Their monetary manipulations have resulted in this deformity. Psychopaths always go too far. The American middle class has been murdered. Decades of declining real wages have left them virtually penniless, in debt up to their eyeballs, angry, frustrated, and unable to jump start our moribund economy by buying more Chinese produced crap. Yellen, her Wall Street puppeteers, and the corporate titans should enjoy those record profits and record stock market highs. It won’t last. Short-term profits will be wiped out, as long-term consequences always arrive when you least expect it. The artificial boom will lead to a real depression. Luckily for the oligarchs, most middle class Americans are already experiencing a depression and won’t notice the difference.

“True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.” – Ludwig von Mises

43 thoughts on “WHAT THE FED HAS WROUGHT”

  1. Admin – I love it when you go all accountant!

    Re capital investment,the US is sending/ has sent production overseas. So manufacturing investment will not rebound. Re other industries, the capital investment would be in buildings and such – and that area is vastly over-saturated. So no relief is coming there.

    Re corporate profits, they are showing quite an upturn. Reduced interest costs would be an obvious benefit. So is moving production to low cost countries. Depreciation would be helping marginally. Short-term profits, despicable as they are, are the name of the game.

    But I suspect the death of competition is the biggest reason profits are up. Big companies are now so big that they are immune from small competitors. Small businesses almost cannot survive anymore, much less grow to the point they are able to create cost competition on big companies.

    Re tax rate, those numbers are generally distorted by co-mingling of international with US source profits so as to be meaningless.

    Re the middle-class being murdered – I respectfully disagree. They were not murdered – they went naturally extinct. They sprang into existence in a unique set of circumstances – the US was uniquely positioned after WW2 to allow the creation of the middle class animal. Unfortunately, that animal could only exist in a protected vacuum. The vessel has ruptured, the vacuum no longer exists, and external competition has brought them extinct. Government policy has accelerated the extinction, but it was inevitable. The simple fact is, the US middle class lifestyle – where 50% of people with low skills, modest intelligence, etc. could live affluent lives – was unsustainable. They simply cannot value-add enough to actually earn that lifestyle in open competition with the rest of the world. Especially when those factors are combined with the now well-ingrained sense of entitlement that prevails across the US.

    US citizens are going to have to compete with the rest of the world’s citizens, and for most Americans, they will be incapable of winning the competition. With billions of Chinese and Indians, the odds are stacked against them. Those folks will work longer, harder, and for less than the average middle-class American. That is the reality.

    Thanks so much for another fine article.

     
  2. The Fed is a criminal syndicate. It runs the largest counterfeiting operation in world history. And it’s going to destroy the American experiment.

    The results are going to be horrendous, and the sheeple won’t see it coming until it’s too late. Don’t be one of the sheep.

     
  3. If the Japs had just printed MOAR!!!!

    Abenomics Officially Leads Japan Into A Triple-Dip Recession – Weather Blamed; Nikkei Drops 600 Points, Back Below 17,000

    Submitted by Tyler Durden on 11/16/2014 22:30 -0500

    UPDATE: The crazy-talk is out already…

    AMARI: ABENOMICS HASN’T FAILED
    SUGA: INVENTORIES, WEATHER, CONSUMER MINDSET CAUSED GDP FALL

    The Nikkei 225 has now dropped 600 points from the post-GDP highs and is back below 17,000

    As the BoJ pump fades…

    and S&P futures are weak…

    * * *

    Japanese GDP fell for the 2nd quarter in a row making it official – as we warned a month ago – that Japan has entered a triple-dip recession. Againstr hope-strewn expectations that the rebound from a sales-tax-driven slump would create a magical 2.2% (annualized) expansion, Japanese GDP slumped 1.6% in Q3 – missing by the most since March 2011. So no tax increase… and thus fiscal responsibility goes out the window. Abe dissolves government and bails on another failure? The initial kneejerk reaction sent USDJPY surging back over 117.00 (and NKY followed) but that has quickly reversed and NKY futures are 600 off their highs (and S&P futures are back near last Monday’s lows).

    Abenomics – FTMFW!!!

    Missing by the most in 42 months!!

    The sell-side “nailed it”

    The full breakdown…

    Which left this reaction…

    and S&P futures tumbled

    We can’t wait for the spin… buy Japanese satocks because they are in recession which means so much more pent-up demand when Abenomics really works? Oh and by the way… Kuroda just fired his biggest bazooka ever so don’t expect any monetary policy reaction to this.

     
  4. Creature From Jekyll Island was one of the first books I read after 9/11. My cousin gave me a copy and I remember sitting up all night long reading it and being deeply impressed by how successful the takeover of America had been. Like a magic trick.

    One question I still can’t cypher out- do corporate profits include stock value? If so, then are there really any profits at all since stock prices are based on the massive buy ins from the QE?

    TIA

     
    1. HF

      The corporate profits do not include stock value. They are the S&P 500 profits from their income statements. Of course, the change in accounting rules in March 2009 allowed banks to no longer mark their assets to market. This has created hundreds of billions in fake profits over the last five years.

       
  5. Good article. Humanity has now mastered keeping people/economies/corporations and countries on hyper extended life support. Japan will tank eventually but that corpse could gasp for last breaths of air for some time to come as will we…..until the TPTB decide it is time for the global crash. THEY still see wealth to be be stolen in europe and the USSA.

     
  6. For years I would read items or watch videos like this and just chuckle at the very idea. But today, I do not seem to chuckle as much and start taking these ideas with a little more seriousness.

     
  7. I consider printer sales. The old ones must be tired. The stuff i read about the Australians buying the Putin is the problem story. Sad how gullible everyone is.

     
  8. LLpoh

    I agree with most of what you said. Massive corporations make it virtually imposiible for small competitors to compete. If a small competitor starts to succeed, the massive corporation just buys them.

    I don’t think the middle class extinction was natural. After 1971 there was nothing to keep politicians and bankers from leveraging the country. Before Nixon closed the gold window, if the country didn’t run their finances properly, gold left the vaults and went to countries who were fiscally prudent.

    Real middle class wages are lower today than they were in 1971. The bankers convinced the middle class to replace wages and savings with credit card, auto, student loan and mortgage debt. The mega-corporations then used the term globalization to gut our manufacturing base by shipping the blue collar jobs to China.

    Germany didn’t allow that to happen. They still produce stuff and pay wages that allow a family to live comfortably. Not extravagantly, but comfortably.

    And here we are. No one can figure out why the consumer isn’t spending money they don’t have to revive our economy. The jobs are gone. They aren’t coming back. Adding $3 billion per day to the national debt isn’t going to revive shit. QE has only revived banker bonuses and stock buybacks by mega-corps at all-time high prices. ZIRP has fucked senior citizens and rewarded high yield bond issuers.

    I don’t know when it will all implode, but it will. There is no place to hide when you have simultaneous stock, bond and real estate bubbles.

     
  9. The Cruel Injustice Of The Fed’s Bubbles In Housing

    Submitted by Charles Hugh-Smith of OfTwoMinds blog,

    As the generational war heats up, we should all remember the source of all the bubbles and all the policies that could only result in generational poverty: the Federal Reserve.

    Federal Reserve chair Janet Yellen recently treated the nation to an astonishing lecture on the solution to rising wealth inequality–according to Yellen, low-income households should save capital and buy assets such as stocks and housing.

    It’s difficult to know which is more insulting: her oily sanctimony or her callous disregard for facts. What Yellen and the rest of the Fed Mafia have done is inflate bubbles in credit and assets that have made housing unaffordable to all but the wealthiest households.

    Fed policy has been especially destructive to young households: not only is it difficult to save capital when you’re income is declining in real terms, housing has soared out of reach as the direct consequence of Fed policies.

    Two charts reflect this reality. The first is of median household income, the second is the Case-Shiller Index of housing prices for the San Francisco Bay Area.

    I have marked the wage chart with the actual price of a modest 900 square foot suburban house in the S.F. Bay Area whose price history mirrors the Case-Shiller Index, with one difference: this house (and many others) are actually worth more now than they were at the top of the national bubble in 2006-7.

    But that is a mere quibble. The main point is that housing exploded from 3 times median income to 12 times median income as a direct result of Fed policies. Lowering interest rates doesn’t make assets any more affordable–it pushes them higher.

    The only winners in the housing bubble are those who bought in 1998 or earlier. The extraordinary gains reaped since the late 1990s have not been available to younger households. The popping of the housing bubble did lower prices from nosebleed heights, but in most locales price did not return to 1996 levels.

    As a multiple of real (inflation-adjusted) income, in many areas housing is more expensive than it was at the top of the 2006 bubble.

    While Yellen and the rest of the Fed Mafia have been enormously successful in blowing bubbles that crash with devastating consequences, they failed to move the needle on household income. Median income has actually declined since 2000.

    wage-stagnation11-14a.png

    Inflating asset bubbles shovels unearned gains into the pockets of those who own assets prior to the bubble, but it inflates those assets out of reach of those who don’t own assets–for example, people who were too young to buy assets at pre-bubble prices.

    SF-Case-Shiller11-14a.png

    Inflating housing out of reach of young households as a matter of Fed policy isn’t simply unjust–it’s cruel. Fed policies designed to goose asset valuations as a theater-of-the-absurd measure of “prosperity” overlooked that it is only the older generations who bought all these assets at pre-bubble prices who have gained.

    In the good old days, a 20% down payment was standard. How long will it take a young family to save $130,000 for a $650,000 house? How much of their income will be squandered in interest and property taxes for the privilege of owning a bubblicious-priced house?

    If we scrape away the toxic sludge of sanctimony and misrepresentation from Yellen’s absurd lecture, we divine her true message: if you want a house, make sure you’re born to rich parents who bought at pre-bubble prices.

    As the generational war heats up, we should all remember the source of all the bubbles and all the policies that could only result in generational poverty: the Federal Reserve.

     
  10. There is no longer an open market. Since 2009 there has only been a command economy, with the government picking winners and losers. For 10% of the population, times have never been better. If you work for the government, the military, the states or as a contractor for any of these you are doing better than ever before. If you work in one of the wholly-owned subsidiary sectors such as academia, research, defense, pharma, energy, or banking you are doing better than ever before. For these people, the checks keep on rolling in. Price increases are not noticed; neither are pesky issues like health insurance mandates or additional taxes and fees. These people are increasingly living in their own little world, cut off from the reality of average life. They are unable to envision the struggles the rest of the populace are facing.

    For everyone else, a job only pays enough to cover the monthly expenses. If you are really lucky you have enough left over for a case of beer at the end of the week. For many, hours are going to be cut and they will now have to juggle two jobs and all the additional hassles that come with trying to juggle two schedules. For most under 30, they would be worth more dead than alive, if any of them could afford life insurance. They are being subsidized by their parents, living off the previous generation’s wealth stored from a time when there actually was such a thing as savings. This is not a sustainable solution, as parents will eventually run out of cash, get sick, or die. The government will be on hand to consume anything left over before it is passed down to the next generation.

    All the while the country continues to be crammed with more and more foreign workers. Millions are entering the workforce, either through amnesty or through H1B programs. In addition to gobbling up whatever jobs are remaining, they will drive up demand for goods and services, raising prices on everything especially large expenses like rent. The government will continue to grow in the name of providing “services” to these masses, and the parasitic class will have a whole new host to gouge upon.

     
  11. 1971 was also the year that Lew Powell wrote his memo just a few short months before he was nominated to serve on the Supreme Court. Unfortunately, Justice Powell was a Virginian. It appears that he was more “Hamiltonian” in his views. In his memo Powell urged the Chamber of Commerce and big business to become more politically active. Justice Powell believed that Corporations were indeed people as per wiki:

    “This memo foreshadowed a number of Powell’s court opinions, especially First National Bank of Boston v. Bellotti, which shifted the direction of First Amendment law by declaring that corporate financial influence of elections through independent expenditures should be protected with the same vigor as individual political speech. Much of the future Court opinion in Citizens United v. Federal Election Commission relied on the same arguments raised in Bellotti.”

    I believe that during the same time frame manufacturing was under assault by the emerging vultures known as conglomerates (read jerk off financiers buying solid US manufacturing companies with borrowed cash and then selling them). The same moron’s that are royally screwing us with their scams today were behind the conglomerates (Goldman Sachs and the other Wall St. scum along with Halliburton and MGM Studios.) A quick read of Textron’s About page confirms so much…http://www.textron.com/about/company/history.php. Nixon made the mistake of coming to the aid of our manufacturing. We know how that one ended for him. Good read here from the Eugene Paper in 1969…http://news.google.com/newspapers?nid=1310&dat=19690914&id=GOFVAAAAIBAJ&sjid=3eADAAAAIBAJ&pg=6796,2733158.

    I have reached the conclusion that humanity has been at war for a long time. The battle is about usury. Our tolerance of the usurer means that we are complicit in shackling ourselves. It doesn’t help that we have been and continue to be propagandized into accepting it. Banking is killing us and the planet. Read Margrit Kennedy’s work on how she came to realize usury was the most destructive force on the earth. As Josiah Stamp said:

    “Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.”

     
  12. Hi Admin – i appreciate your comments. I want to respond re Germany.

    First, German wages suck. Their wages are far less in manufacturing than in the US. Their tax system is not good either.

    Until the fall of the USSR, the degeneration of German manufacturing was an exact mirror to that in the US. But the fall of the USSR gave them an opportunity – Germany began loaning the ex-Soviet satellites money buy the gazillions, to be used exclusively to buy German made goods.

    As a result two things happened – the collapse trend of German manufacturing stopped, supported by extreme amounts of borrowed money. And second, German banks assumed massive questionable debts. German banks are in deep doodoo now, as Hungary, Bulgaria, et al owe them a frigging fortune.

    Anyone can create a market via debt if they want to. Germany did it a bit different than did the US – they generated massive debt held by ex-satellites so as to prop up their manufacturing.

    But that bet is starting to unravel. Germany is headed to deep shit soon. Which is one reason you see them playing hardball with Greece, etc. – their entire house of cards comes down if the countries that owe them stop paying. Germany is going to get screwed. They are now in recession.

    And yes, real wages in the US dropped. It was and is inevitable. Low skilled Americans cost around $80k a year to employ in manufacturing, bennies included. I could get all the Chinese I want for what, $10k and they will be smarter, harder working, etc. competition is going to eradicate the US middle class. Government and fed policy have expedited the end, but it was inevitable one way or the other.

    Germany is not the poster child for how to save manufacturing. Not at all. They took advantage of a situation that allowed them to kick the manufacturing job losses down the road a ways, but that will not last. Even they are exporting production to low cost countries now. Such is the world of cheap labor.

     
  13. Why do you always have to be such a party pooper admin?Look on teh bright side,at least we had one heluva’ party whilst the easy money flowed, but nows the time to mosey on toward the exits before the music stops for good.

    watch?v=Or020fmykNU

     
  14. Of course, the change in accounting rules in March 2009 allowed banks to no longer mark their assets to market. This has created hundreds of billions in fake profits over the last five years. -Admin

    Something people should commit to memory.

     
  15. What’s good biz for the Fed, big banks, ans very wealthy investors is rarely good for most citizens. The Fed’s policies are destructive for most since the end result is always that a majority is forced into impoverishment or close to it to enrich a minority.

    I agree with Admin’s position but am forced to admit Lipoh is also correct on many points especially competition. However, I’ve worked for small businesses all my life but even beside this I can’t tolerate the idea of very wealthy people deciding whether I have enough opportunity to prosper or not – or decide my fate entirely.

    This all goes far beyond Fed policies. It’s really about whether people will continue to allow a minority to dictate the degree to which they are expendable economic slaves.

     
  16. Ben Bernake – (Baby Boomer) Jew
    Janet Yellen – (Baby Boomer) Jew

    Usury… a pound of flesh… damned Shylocks…

    I’ve worked and paid my damned SS and Medicare and income taxes continuously since i got my first paying job at age 14, in 1991. In 1995 I was 18 years old and off to college, worked all through college as well. Got out in 2000, still with a pile of debt (since college hyper-inflated so far beyond what Boomers ever had to pay), and kept working. Got that college debt paid off by 2006, but paying my debt down early and often left me flat broke eating ramen noodles and driving a 20 year old car, with no money to put into savings or assets (like stocks, retirement savings, or house). My wages are stagnant and declining, in exchange for better and more work and more responsibilities. Inflation is continually pushed upward. I birthed children, in wedlock, in 2006 and 2008 (current estimated cost of raising those children to age 18 is $250,000/per child and going up fast) and meanwhile I pay even more in taxes to pay for the bastard children of the welfare state. I’m only 37, but already 23-years deep into paying SS and medicare, and with the Boomers riding my generation now, this will only go up and up until the whole thing busts and I get nothing but the burning ashes and rubble of the crumbling empire when I am old.

    Tell me I’m not getting fucked over. Tell me why I shouldn’t loathe those who have been steering this ship for the past 30 years. HINT – it hasn’t been Gen X or Millennials steering this ship, and sitting in power for the past 3 decades. In fact, Gen X isn’t even getting a turn at bat, we have the OLDEST sitting Congress in American history, Congress was younger when the Boomers were younger, now as the Boomers get older so does Congress. Clinton for 2 terms, Bush-deux for 2 terms, Obama for 2 terms, probably on to Hilary (maybe Jeb?) for another 2. There are going to be at least 32 continuous years of Boomer presidents, how long is an average generation again? Boomers starting going into government in the early 1980s, and are going to extend their choke-hold on running the show until they are 100 years old if possible. What is the average age of CEOs in the 1990s, 2000s, and 20teens? Wonder what generation they are? Wonder who the people are who bought houses before 1995 and saw such tremendous gains? I was 18 years old in 1995, and neither I nor my friends were buying houses.

    Power will not transfer normally down to the next generations, who’s personal interests are far different from the Boomers, until it is pried from the Boomers’ cold, dead hands… The worst of them (Bankers, Politicans, CEOs and aging Rockers) will probably cryogenically freeze their evil minds and try to make a post-death come back to continue slaughtering the hopes, dreams, and survival ability of Americans well into the next millennium if possible.

    The Boomers took a giant, nasty SHIT in the water upstream from us, and now the whole creek is poisoned for the rest of us down stream.

    There may be nothing more repugnant on our Planet than Baby Boomer Jew Bankers. Tell me I’m wrong.

     
  17. Oh, we are so DONE!
    It will be such an historic period to be an awake/aware observer to all that is to come.

    And the sheep will not rise up.
    But, boy will they ever be surprised when the SHTF!

     
  18. @SAH: “There may be nothing more repugnant on our Planet than Baby Boomer Jew Bankers. Tell me I’m wrong. ”

    What about the Congress that passed the 16th amendment that gave us the income tax? (possibly fraudulently passed as documented in the book by William Bensen “The Law That Never Was”).

    And how about the creation of the Federal Reserve in 1913.

    The folks who did that were not baby boomers.

    https://en.wikipedia.org/wiki/The_Law_that_Never_Was

     
  19. BTW, bankers might claim religion, but to bunch them together confuses the issue and makes it all the harder to reform. Go after the profession and not the persons beliefs.

     
  20. SAH – nice post. I do not agree with it entirely, but nice nonetheless.

    You said “Got that college debt paid off by 2006, but paying my debt down early and often left me flat broke eating ramen noodles and driving a 20 year old car, with no money to put into savings or assets (like stocks, retirement savings, or house).”

    Congrats on doing the right thing re the debt.

    Boo frigging hoo re the car, tho. I drove an old beater for years – even when I was a senior manager at multinationals. Why? Because it was the smart thing to do.

    You did the smart thing. Revel in it.

    You are only 37. Piffle. You are young. By memory you wasted some time doing, hold on while I gag a bit, work as a “woman’s advocate”. Ummm, prolly not an incredibly wise career choice.
    But I now believe you have righted the ship and are back on course. Way to go! Really and sincerely.

    You are suffering from a human condition – you see tons of folks driving nice cars, living in nice houses, etc., while you, who have and are doing the right thing, are struggling. You, as per human nature, want good stuff now!!! Goddammit, now!!!!

    But here is a secret – those other folks are stone cold broke. They are largely in debt over their heads. They have no chance at EVER getting out from under and moving into an actual good life.

    My accountant, who has almost 50 years in the industry, talks generically about clients. He says the ones that look like they are affluent almost never have any money. They are almost always dead broke. And he says that they often end up destitute ate the end of the day. He says no amount of talking to them or reasoning with them ever has an impact. “Hey Charley, you are going broke. you really cannot afford that new BMw”. Charley then responds with “But I run my own business, I am entitled”, or “I cannot show up to work in an old car, what would my bosses think!”, etc etc. People always have an excuse or justification as to why they do stupid things.

    Forget all that shit. Concentrate on the goal. What is the goal? I figure everyone should want to achieve self-sufficiency. Few actually make it.

    You can make it. You have already done the hard yards. Forget about the pain, and focus on the goal.

    If you do the right things, in ten years or so I expect you will have the world where you want it.

     
  21. images?q=tbn:ANd9GcTRY4XvUX8VGtIm8Lw3Zech14l3athhYu0rNVAJhO56Tntyd-OqQw

    Over 90% of families have median net worth under $300k. That is not good, given it includes housing worth.

    People spend not on investment or capital, but on consumer goods and service. They go into debt for such goods and services and hen wonder why they have nothing.

     
  22. @Llpoh — I was never a ‘women’s advocate’, nor have I ever claimed to be one. For a period of time here, I was often doppelgängered as a supposed feminist, tattooed and pierced freak (none of which I am).

    “Career choices” have been in chronological order: food service (9 years – ages 14-23); retail management (4 years – ages 23-27); paralegal (9 years – ages 27-36); junior executive for multinational corporation (1 year – ages 36-37).

    I’m 37 and I may have no debt, but I also have essentially no assets. I make enough to pay for myself and my children as I go along, but not really enough to save up a lot or “get ahead”. Every time I switch jobs it is for more money, but that seems to just barely make up for the rising cost of living. I’ve been treading water for the past 10 years.

    Currently I drive a 9 year old car with 170k miles on it. I’m not a slouch, and I am ambitious and produce good work, have better-than-average jobs compared to others my age, and have worked continuously since I was 14. I am very conservative with my money/spending habits, yet I feel like I make no forward progress. I don’t see myself buying a home anytime soon. The main thing I have accomplished is no debt and 2 children that I pay for myself (no government assistance), and I never moved back in with my parents after moving out at age 18. I really have nothing tangible. What more am I supposed to be doing? If I can’t hit “comfortable middle class” with the amount of effort, delayed gratification, and fiscal conservatism I have personally exercised… If the system is so broken and rigged for failure that I’m struggling this hard… Then who the hell in my age cohort really has a chance?

    You tell me I am still young. Yeah, relatively so. But what is going to change for the better over the next 13 years? I’ll be 50 then, will my earnings keep pace with inflation? How much harder can I work, and for how much less? I just feel that for older generations, people who behaved like I have but who went to college and were in the workforce in the 1960s-1980s (say, someone born in 1946). Had way cheaper college, cheaper houses, and higher wages and better benefits – period. How much better off would they be at age 37 in 1983 – than I am at that age in 2014 – making similar decisions to mine? It’s fucked, llpoh. Absolutely fucked.

     
  23. SAH – Sorry re the woman’s advocate thing. It must have been a doppler did that. That sucks.

    You are miles ahead of most. Miles. You have much to be proud of. And you are young. Your best years for positioning yourself are in front of you.

    I will give it some thought. Do not lose hope. I will post more tomorrow. Do not despair. You are doing the right things.

     
  24. SAH, take heart , at least the demonic state isn’t injecting you with radioactive isotopes , yet…in the name of scientishism , of course…and think too, you have the most awesome dependable force ever created on earth, a family..consider that your ultimate blessing and never take it for granted.

    Flashback: US Govt Injected Citizens with Uranium Under Secret Program
    Files reveal feds posing as doctors experimented on public
    – See more at: http://naturalsociety.com/us-govt-injected-citizens-uranium-secret-program/#sthash.ziSbBHcm.dpuft

     
  25. SAH, sometime back you posted about your intent to get the hell out of the US. Did that happen or is it still in the works? I was just curious where you chose to go.

    I graduated HS in ’85 so I have ten years on you but the view from here is not all that rosy either. I’ve lived a frugal life like you but with no kids and I went into debt to buy a very modest house. I’ll likely never get to the point in life I intended which was simply “secure”.

    What you and I long for and expected to be was all built on funny money and systems that were/are entirely unsustainable. Only a few generations in the entire history of Earth achieved retirement for the masses. Things are just returning to equilibrium and we missed it by that >||< much. You and I still have a chance but we'll likely work till we die. Embrace the suck because it's likely downhill from here.

     
  26. @SAH – you should be more appreciative of what you DO have. Debt free and a job, that’s damn good, as LLOPH said. Think of all those who can’t get a job, especially a good one like yours.

     
  27. SAH – life is not fair. No one is or should be guaranteed anything. You are on the right track. In ten years your kids will be grown. You should get some promotions with real wage increases. Stay the course.

    I talked about it taking THIRTY years of frugality, hard-work and discipline to set one’s self up for one’s later years. You are only halfway there. I did not say it was easy – I said it was worth it.

    Like so many others, you are starting to waver. Do not do it. It is easy to justify bad decisions – “it won’t work” “those days are gone” etc etc etc. Those arguments/excuses are hogwash.

    In bad times, times of adversity come great opportunities. I kid you not. Folks like you who do the hard things are currently as rare as hens teeth. Stay the course and keep your eyes open for opportunity.

    If you abandon the path you will be screwed. You are doing fine. Keep it up. But the road is long. I never said it was easy, just worth it.

     
  28. llpoh said:
    ” You should get some promotions with real wage increases. ”

    I agree with everything you said except for that statement above. This new world economy/NWO is rapidly leveling the paying field. In places like China and India wages are rising from the $0.50 a week level and wages in the west are dropping to fall in line with the rest of the world. You pointed out so many times that Americans are going to compete with the rest of the world, not just their neighbors so I know you know this.

    For SAH, since you are debt free, be DAMNED careful about where and what form you keep your savings in. If, but more likely when, they devalue the dollar in 20%-30% increments you do not want to be holding cash. I think the threat of gold/silver confiscation is still a small possibility so be careful there too! I think it is possible people will lose their savings entirely during the next run of bank failures so location of your savings is important as well.

    Everyone is right……….you are light years ahead of most in that you are debt free and have some savings. Stay alert going forward!

     
  29. IS – she is currently a low level manager in a big corp. she is smart, and female. Her odds are still pretty good at moving up through the ranks. But I get your drift.

     
  30. llpoh, she may still move up and make more money but compounded annual inflation on necessities in excess of 10% means you barely keep pace and more likely fall behind. I’ve got an excellent job and I still get raises and bonuses but but my savings rate is still shrinking despite making cutbacks to minimize the shrinkage.

    Things are so tight out there that I really don’t see how so many people are still making it. Free shit I guess.

     
  31. IS – yep, that is the nature of the beast. But I believe that folks like SAH will have an increasing advantage as the shit hits the fan more and more. The weak and stupid will get blown away, and the strong will come out on top.

    Right now, there has yet to be a true segregation of the incompetent from the competent. Incompetent folks are everywhere, and many are holding positions they do not deserve. As the shit hits the fan, employers will weed out the incompetent in favor of the competent. You can take that to the bank. As an example, when I have to let a few folks go, I do not let go the best and brightest. Hell no.

    And so, albeit slowly, the competent will begin to compound their advantages.

    The cream will rise once again, and the stupid, unskilled, uneducated, slothly, will suffer mightily.

    It will happen. When is the question.

     
  32. Agreed again llpoh but my concern at 47 is the “when”. I will see it but not in time to benefit from it. SAH might make it though.

    I’ve told you about my current job before. I’m finally getting comfortable with it now. It’s still one hell of a challenge but I can now spend time “thinking and observing” the process instead of working in a state of panic all night long. I’m finally starting to notice the subtleties taking place and correlate them to my inputs or differences in set up of the process. It’s becoming ever so lightly, “intuitive”. When my boss retires I’ll be in an excellent position to write my own ticket. If I don’t get too greedy and I’m able to pick up where he leaves off, I’d be looking at a situation where savings from salary alone would make me a multimillionaire in a decade or less.

    I hope we are still in touch when that time comes because my chances would probably benefit from talking with someone like you.

     
  33. IS – always my pleasure to help if I can. You will get what you pay for!

    I will comment more on the new thread to make it easier.

     

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