Mother, do you think they’ll drop the bomb? Mother, do you think they’ll like this song? Mother, do you think they’ll try to break my balls? Ooh ah, Mother, should I build the wall?
Mother, should I run for president? Mother, should I trust the government? Mother, will they put me in the firing line? Ooh ah, Is it just a waste of time?
The lyrics to Mother had both a literal and figurative meaning for Roger Waters. He was literally describing his overprotective single mother (his father was killed in World War II) building walls to protect him from the outside world. The figurative meaning is Big Mother sending its boys off to war and using fear to control and manipulate the masses. At the time he wrote this song in 1979, the Soviet Union was thought to be at its peak of power and the Berlin Wall represented a boundary between good and evil. Nuclear war was still a looming fear. Waters has always had a dim view of totalitarian states and institutions (English schools). Having seen his Wall Tour performance this past summer at Citizens Bank Park with a diverse crowd of 40,000, ranging in age from senior citizens to teenagers, it seems this song has gained new meaning. He sang a duet with himself from 1980 projected on the Wall and when he sang the lyric, “Mother, should I trust the government?” the entire stadium responded in unison – NO!!! This revealed a truth that is not permitted to be discussed by the corporate mainstream media acting as a mouthpiece for the ruling class. A growing legion of citizens in this country does not trust the government. This is very perceptive on their part.
In part one of this two part series – Hey You – I examined how an invisible government of wealthy, power hungry men have utilized the propaganda techniques of Edward Bernays and lured the American people into a narcissistic, techno-gadget, debt based servitude. Over the last one hundred years they have created a totalitarian state built upon egotism, material goods, and fulfilling our desires through Wall Street peddled debt and mass consumerism. It has been an incredibly effective form of control that has convinced the masses to love their servitude. The ruling oligarchs correctly chose the painless, amusement saturated, soft totalitarianism of Huxley’s Brave New World over the fearful, pain inflicting, surveillance state, house of horrors detailed in Orwell’s 1984.
“A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude.” – Aldous Huxley – Brave New World
The nefarious establishment of the Federal Reserve in 1913, launch of welfare programs in the 1930s, expansion of the entitlement state in the 1960s, creation of the credit card in 1970, mass media marketing propaganda, and the formation of an empire of debt laid the foundation for a society based on triviality, egotism, irrelevance and mass delusion. The conscious manipulation of the habits and opinions of the masses by an invisible government of powerful men using media propaganda and easy to access consumer credit has reached its mathematical limit. The oligarchs built a society dependent upon exponential growth. This unsustainable prototype began to show signs of strain in the 1990s. The powerful interests have been growing ever more desperate and blatantly obvious in their looting and pillaging of the debt bloated carcass of a country. They used their control of the political system to repeal Glass-Steagall, allowing the Wall Street banking cabal to become Too Big to Control. The oligarch puppets at the Wall Street controlled Federal Reserve did the bidding of their masters by reducing interest rates and expanding the money supply to create two epic bubbles.
The Dot.com bubble was created by Wall Street utilizing hype and misinformation to fleece millions into believing we had entered a new paradigm. The only people who got rich were the Wall Street hucksters, shysters and shills.
When the Dot.com bubble burst, Alan Greenspan came to the rescue, at the urging of Nobel prize winner Paul Krugman, by creating the largest banker made bubble in the history of the world. The combination of excessively low mortgage rates, complete lack of regulatory oversight by the Federal Reserve, control fraud committed by the Wall Street banks, and buying frenzy stirred up by the corporate MSM and NAR, led to the biggest financial collapse since 1929.
The white collared psychopathic criminals on Wall Street reaped billions in profits, paid themselves millions in bonuses, and cost taxpayers trillions when it all blew up in 2008. The ruling elite have added $6 trillion to our national debt and their central banker has added another $2 trillion to our ultimate tab, while providing free money to their Wall Street bank owners. They realize their efforts to restart the exponential growth engine have failed. They gutted our productive manufacturing based economic system by shipping the blue collar jobs overseas to Chinese slave labor facilities, replaced workers with machines, stimulated consumption with unlimited distribution of high interest debt, and allowed conglomerates to drive small business owners out of business with their cheap foreign sourced goods, all in the name of capitalism. The plan worked so well that real wages haven’t risen in 40 years, inflation has destroyed the purchasing power of the middle class, 47.7 million people are dependent on food stamps to survive, and the masses can’t even afford the cheap slave labor produced trinkets anymore. There is too little cash, too few jobs, too much debt, too many takers, too few makers, too many bankers, too much delusion, and too few resources to sustain the unsustainable. We have entered the end stages of a ravenous locust swarm. The fields have been stripped barren.
When the men in smoke filled rooms realized their soft totalitarianism was losing its grip on the oblivious, submissive, egoistical, distracted masses, they began phase two of their effort to retain their wealth, power and control. They began to institute Orwellian measures to strike fear into the populace. Their illusion of control is dissipating and they are resorting to force in order to maintain hegemony. It began with the immediate passage of the Orwellian Patriot Act one month after 9/11. Did the corporate media question how a 363 page all-encompassing expansion of police state power was written in a few weeks after 9/11 and passed by October 26? They did not. The bill was pre-written and ready for instant implementation when the time was right. The Orwellian version of America was launched.
“If the ideology had been a lie, then they are not heroes and gods on earth, but monsters and criminals, and their life has been self-serving and meaningless, without significance and honor. And that is the credibility trap. It is the impulse for the leaders to keep doubling down in the hope of a win, until exhaustion and collapse.” – Jesse
Obedience to Authority
“Ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process. Moreover, even when the destructive effects of their work become patently clear and they are asked to carry out actions incompatible with fundamental standards of morality, relatively few people have the resources needed to resist authority.” - Stanley Milgram – Obediance to Authority
Just as Edward Bernays knew the unruly masses could be manipulated by propaganda and molded to believe whatever the small group of intellectually superior men wanted them to believe, conditioning using fear and authoritarian methods have also been perfected by the ruling class. Doctor Stanley Milgram unwittingly provided the oligarchs with confirmation the average citizen could be ordered to do anything by invoking expertise and authority over their subjects. Milgram started his experiments in 1961, shortly after the trial of the World War II criminal Adolph Eichmann had begun. Eichmann’s defense that he was simply following orders when he exterminated millions of Jews roused Milgram’s interest. How could millions of Germans participate and condone such genocide? Milgram’s testing suggested that it could have been that the millions of accomplices were merely following orders, despite violating their deepest moral beliefs.
Writer Kendra Cherry describes the experiment:
The participants in the Milgram experiment were 40 men recruited using newspaper ads. Milgram developed an intimidating shock generator, with shock levels starting at 30 volts and increasing in 15-volt increments all the way up to 450 volts. The many switches were labeled with terms including “slight shock,” “moderate shock” and “danger: severe shock.” The final two switches were labeled simply with an ominous “XXX.”
Each participant took the role of a “teacher” who would then deliver a shock to the “student” every time an incorrect answer was produced. While the participant believed that he was delivering real shocks to the student, the student was actually a confederate in the experiment who was simply pretending to be shocked.
As the experiment progressed, the participant would hear the learner plead to be released or even complain about a heart condition. Once the 300-volt level had been reached, the learner banged on the wall and demanded to be released. Beyond this point, the learner became completely silent and refused to answer any more questions. The experimenter then instructed the participant to treat this silence as an incorrect response and deliver a further shock.
Most participants asked the experimenter whether they should continue. The experimenter issued a series of commands to prod the participant along:
“Please continue.”
“The experiment requires that you continue.”
“It is absolutely essential that you continue.”
“You have no other choice, you must go on.”
The level of shock that the participant was willing to deliver was used as the measure of obedience. How far do you think that most participants were willing to go? When Milgram posed this question to a group of Yale University students, it was predicted that no more than 3 out of 100 participants would deliver the maximum shock. In reality, 65% of the participants in Milgram’s study delivered the maximum shocks.
Of the 40 participants in the study, 26 delivered the maximum shocks while 14 stopped before reaching the highest levels. It is important to note that many of the subjects became extremely agitated, distraught and angry at the experimenter. Yet they continued to follow orders all the way to the end. Why did so many of the participants in this experiment perform a seemingly sadistic act on the instruction of an authority figure? According to Milgram, there are a number of situational factors that can explain such high levels of obedience:
The physical presence of an authority figure dramatically increased compliance.
The fact that the study was sponsored by Yale (a trusted and authoritative academic institution) led many participants to believe that the experiment must be safe.
The selection of teacher and learner status seemed random.
Participants assumed that the experimenter was a competent expert.
The shocks were said to be painful, not dangerous.
The American people have been participants in their very own Milgram experiment being conducted by their government since 9/11. Since the passage of the Patriot Act, the government continues to demand that its citizens increase the voltage in the name of security. Since 2001, the Orwellian measures have included:
Warrantless domestic surveillance.
The ability to search telephone calls, emails, financial matters especially involving foreign individuals, and medical records for people who are “suspected” of endangering the country.
Color coded risk levels designed to keep citizens fearful of non-existent terrorists.
Pre-emptive invasion of foreign countries.
Committing U.S. forces to war without a declaration of war by Congress as mandated in the U.S. Constitution.
Assassination of people on presidential kill lists.
Extermination of “suspected” enemies by predator drones.
Camera systems monitoring the movements of Americans in cites and streets across the United States.
Torture of detainees in camps outside of the United States.
The authority to indefinitely detain America citizens without trial.
Executive orders giving the President the ability to unilaterally disregard the U.S. Constitution and take control of private industries.
Use of drones to monitor the activities of American citizens.
Allowing the very bankers that destroyed the worldwide economic system to blackmail the American taxpayers into handing them $700 billion.
Not prosecuting one Wall Street criminal after the largest Ponzi control fraud in the history of the world.
Cameras and listening devices on public transit and other public locations.
Military exercises conducted in U.S. cities in order to condition the masses.
Attempts to control and censor the internet through the introduction of the SOPA bill.
The use of tragic mass murders by mentally defective young men on psychotropic drugs to disregard the 2nd Amendment and disarm American citizens.
TSA thugs molesting little old ladies and young children to desensitize citizens to gestapo like tactics and treat them like criminals.
Government partnering with Facebook, Apple and other corporate entities to monitor, censor, and report the activities of citizens to the authorities.
The use of public schools to teach children what to think rather than how to think. Thought control is vital to an agenda of keeping the masses fearful and pliable.
Government agencies (FBI, ATF) creating terrorist plots, luring young dupes into the plots, providing fake explosives, and then announcing with great fanfare they have foiled a terrorist plot.
“See something, Say something” government media campaign designed to make citizens paranoid and fearful.
Just as Milgram pondered how the German people could follow the orders of those in authority to slaughter millions, one must ponder how the American people have allowed those in power to strip us of our Constitutional freedoms and liberties in the name of safety and security. They have conditioned the masses to passively accept their fate by utilizing fear, authoritarian measures, thought control, and propaganda. Human beings never change. They have been driven by emotions throughout history – fear, greed, love and hate. There will always be psychopathic men who seek wealth, power, glory and control. It happened during the decline of the Roman Empire and it is happening today during the decline of the American Empire.
“A shocking crime was committed on the unscrupulous initiative of few individuals, with the blessing of more, and amid the passive acquiescence of all.” – Tacitus
Big Brother is Watching You
“Now I will tell you the answer to my question. It is this. The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power, pure power. What pure power means you will understand presently. We are different from the oligarchies of the past in that we know what we are doing. All the others, even those who resembled ourselves, were cowards and hypocrites. The German Nazis and the Russian Communists came very close to us in their methods, but they never had the courage to recognize their own motives. They pretended, perhaps they even believed, that they had seized power unwillingly and for a limited time, and that just around the corner there lay a paradise where human beings would be free and equal. We are not like that. We know what no one ever seizes power with the intention of relinquishing it. Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power. Now you begin to understand me.” – George Orwell – 1984
What the average person can’t seem to process through their government public school educated non-critical thinking brains is that there are actually a small group of bankers, politicians, corporate executives, media magnets, and shadowy billionaires who call the shots in this country. They constitute Bernays’ invisible government, run the show, mold the minds, form the opinions, suggest the ideas, and create the reality for the masses because they believe they are intellectually superior. The left/right and Democrat/Republican discord is a planned diversion for the masses. The country has devolved into a corporate fascist warfare/welfare state. We are clearly moving in the direction of Orwell’s state in which government monitors and controls every aspect of human life to the extent that even having a disloyal thought will be against the law. The longer this is allowed to progress the more likely any effort to resist like Winston Smith will be met with brutal measures.
The parallels to Orwell dystopian nightmare state grow by the day. Those in control use technology to bombard Americans with psychological inducements designed to overwhelm the mind’s capability for autonomous thought. In Orwell’s 1984 the giant telescreen in every citizen’s room blasts a constant stream of propaganda designed to make the failures and shortcomings of the Party appear to be triumphant successes. In Obama’s 2013 the 72 inch Chinese made HDTVs in every McMansion blasts a constant stream of propaganda designed to make the zombie-like occupants buy trinkets and gadgets with a thin piece of plastic and makes the failures in Iraq, Afghanistan, Egypt and Libya appear to be triumphant successes. Our corporate/fascist party uses their control over the media message to indoctrinate and control the public mind through propaganda and repetitive messaging. In Orwell’s world, the Party undermines family structure by inducting children into an organization called the Junior Spies, which brainwashes and encourages them to spy on their parents and report any instance of disloyalty to the Party. In our world children are indoctrinated in government run public schools that fill their brains with government manufactured history, social engineering claptrap and what they should think, rather than how to think. The Orwellian Department of Homeland Security (Thought Police) instructs them to report anyone they think is suspicious with their “See something, Say something” campaign. Children are “encouraged” to re-educate their parents about green energy and global warming. Corporations fund schools to advertise their products within the hallways of learning. The outputs of this corporate/fascist partnership are non-critical thinking, functionally illiterate, willfully ignorant Proles who obey the Party and consume products as instructed.
In Orwell’s 1984 the Party keeps the population in a general state of exhaustion by making them work long grueling hours at government run agencies. This was designed to keep them from thinking or having the energy to resist. About one in six workers work for the government in the United States, with a substantial portion of private jobs dependent upon government largesse. The true distinction in our society can be seen in the income levels over decades of our own Inner Party, Outer Party and Proles.
The government educated masses were purposely not taught about the impact of Federal Reserve created inflation on their lives. Even using the government manipulated CPI, the real household incomes of the masses have barely risen in the last forty five years. Using a true measure of inflation, the real household incomes of the average family have fallen. In addition, prior to the 1980s those household incomes were predominantly provided with one parent working and the other raising the children. Today the vast majority of households require both parents to work in order to just tread water. Child rearing was delegated to the state and parents have been kept in a constant state of exhaustion, like hamsters in a cage on a spinning wheel. Household income was replaced by credit card debt, mortgage debt, auto debt, and student loan debt peddled by our very own Inner Party (Wall Street bankers). The Inner Party members have seen their incomes soar over the last four decades. This was not an accident.
As those at the top accumulate an ever increasing percentage of the national wealth, while consolidating their power through ever more sophisticated use of technology for surveillance, warfare, and financial theft; urban decay and blight spreads across the land. Totalitarian regimes are ferociously effective at augmenting their own power and wretchedly incompetent at providing for their citizens. Just as the London in Orwell’s dystopian world was a decrepit, rundown city in which buildings were crumbling, amenities such as elevators never worked, and basics such as electricity and plumbing were exceedingly undependable, the urban killing fields that are home to tens of millions in the United States are dangerous, disintegrating, hallowed out carcasses of once thriving metropolises. Hunger, poverty, crumbling infrastructure, and violence are the earmarks of society for the Proles. True unemployment exceeds 20%, with youth and minority unemployment exceeding 40%. There are 47.7 million Americans subsisting on food stamps (program administered by JP Morgan), accounting for 20% of all the households in the country.
The incompetency and mismanagement by our totalitarian governing body is evident for all to see, as bridges collapse, water mains burst, gas lines explode, mass transit shuts down and structures deteriorate due to decades of neglect. The priorities of those in power are clearly visible as they spend trillions on weapons used to attack sovereign countries, distribute billions in “aid” to foreign dictators, provide trillions to the criminal banking cabal on Wall Street, and devote billions to technology designed to monitor and control their citizens. Our entire rotting, fetid, bloated, corrupt society has about reached its limits. It is only a matter of time until it implodes like the former Soviet Union.
“Diminishing returns of ever-increasing complexity addressed with ever-more layers of complexity, larded with systematic lying based on mystifying, opaque jargon, sanctioned statistical misreporting, felonious cronyism, and scuttling of the rule of law. In short, the markets have been taken over in effect by a criminal racketeering syndicate. In doing this, so much resilience has been removed from these market structures that they are riddled with rot, like a mansion infested with carpenter ants.” – Jim Kunstler
We Have Always Been at War with Eastasia
Hush now baby, baby, don’t you cry. Mamma’s gonna make all of your nightmares come true, Mamma’s gonna put all of her fears into you, Mamma’s gonna keep you right here, under her wing.
She won’t let you fly, but she might let you sing, Mamma’s gonna keep baby cozy and warm. Oooh babe, Oooh babe, Oooh babe, Of course Mamma’s gonna help build the wall.
The concepts of Doublethink and Newspeak are alive and well in our increasingly Orwellian society. The massive long-term campaign of large-scale psychological manipulation, described in detail by Edward Bernays in 1928, has succeeded in breaking down the capacity for independent thought by the masses. Those in control of the media have molded the minds of millions to believe anything the government tells them, even while possessing information that runs counter to what they are being told. On the eve of the invasion of Iraq, the government and their media propaganda mouthpieces had convinced 69% of the American public that Saddam Hussein was involved in the 9/11 attacks, even though there wasn’t a shred of evidence to support that claim. The storyline of Iraqi soldiers murdering Kuwaiti babies in their incubators during the first Gulf War was another example of propaganda designed to manipulate public opinion. By controlling the media message, those in power control the present and can manipulate the past. The government controls the curriculum in public schools and writes our history to conform to whatever storyline that supports their agenda. With 20% of the adult population in this country functionally illiterate, the formulation of ideas or critical thought is virtually impossible for these people. This is exactly what is desired by the ruling class.
The outrageous example of Doublethink in Orwell’s 1984 occurs during the Hate Week rally. The Party shifts its diplomatic allegiance, so the nation it has been at war with suddenly becomes its ally (Eurasia), and its former ally becomes its new enemy (Eastasia). When the Party speaker suddenly changes the nation he refers to as an enemy in the middle of his speech, the crowd accepts his words immediately, and is ashamed to find that it has made the wrong signs for the event. The American people have been programmed to accept the same logic from our leaders. Saddam Hussein was our ally when he was fighting our enemy Iran, who had been our ally ever since we had overthrown their democratically elected leader in the 1950s. Then he became our enemy for using weapons of mass destruction, provided to him by the U.S., on his own people and threatening our control over Middle Eastern oil. Osama bin Laden was our ally when he was fighting our mortal enemy, the Soviet Union. Then he became our mortal enemy because we refused to leave Saudi Arabia after the first Gulf War. Ghadafi was our sworn enemy after blowing up an airliner filled with Americans, until he helped us after 9/11 and became an ally. Then he became an enemy again for fighting to maintain his dictatorship. Mubarak was an ally for decades as we provided him billions in military hardware so he could brutally maintain control. Then he became an enemy when we decided he was no longer of use. Do you get the picture?
Do you see any parallels between Orwell’s Ministry of Plenty (oversees economic shortages); the Ministry of Peace (wages war); the Ministry of Truth (conducts propaganda and historical revisionism); and the Ministry of Love (the center of the Party’s operations of torture and punishment) and our Department of Agriculture, Department of Defense, Department of Education, and Department of Homeland Security?
“In our age there is no such thing as ‘keeping out of politics.’ All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred and schizophrenia. The very concept of objective truth is fading out of the world. Lies will pass into history.” – George Orwell
Should I Trust the Government?
So the oligarchs have utilized all the plays in Huxley’s playbook and are half way through Orwell’s playbook, but they are rapidly losing their credibility as a small minority of critical thinking people is using the internet to spread the truth and form phyles with like-minded citizens with similar values based on liberty and freedom. The political system is broken beyond repair as $2 billion was spent during this last “election” to maintain the status quo. The looting and pillaging of the middle class continues, while the poor are kept controlled, sedated and enslaved by entitlements, debt, drugs and prisons. The financial system is succumbing to the mountains of debt that have been accumulated trying to keep the game going. In the last ten years worldwide total credit market debt, on balance sheets, sovereign obligations, corporate debt, household debt – has grown from $80 trillion to just over $200 trillion. U.S. unfunded liabilities committed to by the politician parasites that pass for our representatives surpass $200 trillion. There are $1.2 quadrillion of interconnected derivatives outstanding in the world today, 20 times the size of the worldwide economy. The accumulation of worldwide debt, aging developed country populations, depletion of resources, perpetual war, financial fraud and rampant corruption are going to lead to a collapse of epic proportions. It may not happen in 2013, but it will happen within the next five years. Jesse explains why the status quo will never relinquish their power, illegally acquired wealth and control without a fight:
“A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including them. The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.
And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system. The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious hypocrisy.”
The people of this country must regain a sense of responsibility for their lives and the lives of future generations. Enough people need to perceive they are being manipulated, controlled and used by the thought leaders and awaken from their narcissistic materialistic debt financed lives. Our culture has failed. The animosity and anger in the country is beginning to bubble over. The masses are beginning to realize they have been screwed. They haven’t figured out who to blame because they are still trapped in the Republican/Democrat false dogma. There is one Party putting on a show, as displayed this week with the fiscal cliff farce, as the government controlled media proclaimed victory because the status quo was maintained, nothing was cut, and $4 trillion was added to the National Debt. More people need to question and challenge the authorities. We must cast aside our willful ignorance of facts and accept the consequences of decades of bad decisions and delusions of grandeur. More government is not the answer. We must break free of the conditioning and mind control used to make us love our servitude and trust those in power.
Kyle Bass recently revealed a fact about our government leaders:
“They’re not going to tell you that a collapse is coming. You’re going to have to see it for yourself. The government’s never going to tell you that it’s going to happen.These guys are never going to tell you the truth, because they can’t tell you the truth. Their job is to promote confidence, not to tell you the truth.”
We need more people to respond to Roger Waters’ question, “Mother, should I trust the government?” with this answer before we can begin to tear down the wall that seemed too high.
“During times of universal deceit, telling the truth becomes a revolutionary act.” – George Orwell
What is the commonality between every bubble created in the last 100 years? You guessed it – The Federal Reserve. Artificially setting interest rates too low always creates bubbles. Greenspan created the Dot.com and the housing bubbles by setting interest rates too low for too long. When interest rates are artificially supressed, there is no distinguishing between risky investments and sound investments. Low interest rates force investors into riskier assets.
You would think rational educated people would learn from the two bubbles that have burst in the last 13 years. But instead, a highly educated Ivy League professor has decided to double down, set interest rates at zero for the last four years and provide free money to the same Wall Street “investors” that destroyed the worldwide economic system in 2008. He is now creating multiple bubbles simultaneously. He has created a bond bubble. He is creating a new stock bubble. He is attempting to reinflate the housing bubble. He has used accounting gimmicks to keep the commercial real estate bubble from fully deflating. And now he has created a bubble in farmland.
When we have unequivocal evidence that keeping interest rates too low for too long causes bubbles and causes tremendous harm to the citizens, why would a highly educated Ivy League professor follow such a path? There can be no other conclusion than that he works for the financial oligarchs and does what they tell him to do. The only people benefitting from this policy are insolvent Wall Street banks and rich speculators who can count on receiving the Bennie Bucks up front. The rest of us just get screwed.
Farmers have been taking on mounting debt, creating an unsustainable increase in land prices and risking a crash that would ripple through our economy.
Eeyore should have been a farmer. It’s almost impossible to find a farmer happy about his situation. The weather’s too hot, cold, wet, or dry, and prices are too low or too high, depending on whether we’re buying or selling. We can’t, at least in front of our peers, admit to prosperity or even the chance of prosperity. Although we’d never admit it at the local coffee shop, the last few years have been good, at least for Midwestern grain farmers. Prices have been strong — strong enough to make up for much of the production lost to last year’s drought. That’s terrible news for livestock producers, who’ve been faced with drought-damaged pastures and high feed costs, but for farmers producing corn and soybeans, it has been a profitable few years.
Farmers have cash, and nowhere to invest it but farmland. Farmers largely ignore equities, as they tend to balance the inherent risk in farming by investing in what they perceive as less risky places. We aren’t dumb, however, and have figured out that it’s a losing game to invest in bonds or CDs at rates less than inflation while we’re in tax brackets we never even knew existed.
So, farmland prices are booming. Land prices in the heart of the Corn Belt have increased at a double-digit rate in six of the last seven years. According to Federal Reserve studies, farmland prices were up 15 percent last year in the most productive part of the Corn Belt, and 26 percent in the western Corn Belt and high plains. Closer to home, a neighbor planning his estate had an appraisal done in 2010 and again in late 2012. In that two-year period, the value of his farm had doubled. According to Iowa State economist Mike Duffy, Iowa land selling for $2,275 per acre a decade ago is now at $8,700 per acre. A farm recently sold in Iowa for $21,900 per acre.
A debt-to-asset ratio of 30 percent can enter dangerous territory with a land price drop of 50 percent, which sounds like a lot, until you remember that is a price level last seen only 24 months ago in much of the Midwest.
Although much of the increase in land prices has been driven by well-financed farmers and outside investors (many paying a large portion of the purchase price in cash), there are disturbing trends occurring on farm balance sheets. The Kansas Farm Management Association reports that debt-to-equity ratios are highest in large farms, which have over a million dollars in sales. Although the debt-to-asset ratio is low even in the largest farms in Kansas, it’s higher than it was in 1979, shortly before the farmland crash of the eighties. As former home owners in Las Vegas and Southern California can attest, equity can melt away in a hurry. A debt-to-asset ratio of 30 percent can enter dangerous territory with a land price drop of 50 percent, which sounds like a lot, until you remember that is a price level last seen only 24 months ago in much of the Midwest.
The number of farmers in the Kansas survey with a 40 percent debt-to-asset ratio is higher now than it was in 1979, and those farms with a debt-to-asset ratio of over 70 percent are three times as numerous today.
We farmers should be more sophisticated than the average subprime borrower and more risk averse than startup investors in the 1990s. After all, we manage multi-million dollar businesses, and since the average age of farmers is near 60, most of us are survivors of the agricultural asset crash of the early 1980s. In 1981, the average price of farmland in Iowa was $2,147 per acre; by 1986, the average farm brought $787 an acre. That period was the formative experience of my farming career, and one I would not wish to repeat. According to a recent article in the USA Today, a third of Iowa’s farmers left the industry during that crash.
In a population thus inoculated, we ought not to catch the fever again. It is a mark of the few investment choices left to farmers that we’ve so eagerly contributed to this unsustainable increase in land prices. We know better, we know it’s likely to end badly, but we don’t feel that we have an alternative.
A personal admission here. We bought our neighbor’s farm a couple of years ago. Yes, I know better, but we’ve had our eye on that farm for a generation.
Interest rates are low because the Federal Reserve believes that low interest rates are the best way to help heal an ailing economy, or at least the best tool available to the Federal Reserve. Our economy is so fragile and our major banks so tenuously financed that the Fed thinks it has no choice but to risk a repeat of the early 1980s bubble in farmland, the 1990s tech boom, and the recent housing market bust.
Our economy is so fragile and our major banks so tenuously financed that the Fed thinks it has no choice but to risk a repeat of the early 1980s bubble in farmland, the 1990s tech boom, and the recent housing market bust.
A cynic might also notice that low interest rates are extremely important to large borrowers, and the largest of all borrowers is the federal government. Need an example of the impact that an increase in the interest rate will have on the federal budget? The sequester — which has caused the White House to cut tours, is increasing lines at airports, and means that Yellowstone National Park will open later than normal this spring — requires budget cuts of around $85 billion. Even a 1 percent increase in the interest rate would eventually increase federal borrowing costs by $160 billion annually; more normal borrowing costs are around 5 percent.
We can argue over what economic policy works best, but the one thing we can be sure of is this: the federal government and the Federal Reserve are not working with a scalpel, but rather performing surgery on the economy with a chain saw. No one should expect our present monetary policy to be unwound in such a manner that farmland prices can be gently slowed to a more sustainable path — one that reflects the slow but steady increase in demand for food and fiber.
The federal government spent billions of dollars in the 1980s supporting farm income and writing off bad debts from various government farm lending programs. Those resources clearly aren’t available today, and agriculture is facing a grim future.
The Kansas City Federal Reserve recently had a symposium examining whether we are experiencing a farmland bubble. Bubbles are impossible to truly define until they burst, but when the Fed is sponsoring seminars on the topic, it occurs to this Eeyore that straws may well be floating in the wind. The ripples from a crash in farmland prices would not have the long-lasting effects on the economy that the subprime debacle did, but the chance of a crash in farmland prices should still concern policymakers. Farmers may well be collateral damage in the quantitative easing battle and are rightly worried that the next victim of our monetary policy will be wearing overalls when the music stops.
Blake Hurst is a Missouri farmer and a frequent contributor to THE AMERICAN.
It is not easy to destroy the greatest empire in the history of mankind. The 20th Century was the American Century, but as with all empires, the combination of hubris, monetary debasement, imperial overreach and delusional overconfidence have set in motion the inevitable downfall of the American Empire. The policies, decisions, beliefs, and institutions implemented over decades have led the country to the threshold of financial disaster. Based on my observations, a catastrophic combination of demographics, fiat currency debasement, titanic levels of debt, smothering taxation, power in the hands of the few and Wall Street greed have led us to peak Empire. It will be downhill from here as we experience collapse, revolution and ultimately, retribution for the guilty and presumed guilty. I have already addressed the Baby Boomer generation’s contribution to our current plight, to the delight and accolades of Boomers across the land in For a Few Dollars More – Part One. The Boomers were a victim of their size and the timing of their arrival on the scene of empire collapse. Their delusions of debt based wealth and me first attitude could not have been satiated without the creation of the Federal Reserve and the institution of the personal income tax in 1913.
“When a man’s got money in his pocket he begins to appreciate peace.” – Joe – Fistful of Dollars
“Every town has a boss.” – Joe – Fistful of Dollars
In the Old West of the 1800’s, before the creation of the Federal Reserve, money in your pocket meant gold or silver. If Joe were to repeat that line today, he would change it slightly:
“When a man thinks he’s got money in his pocket he begins to appreciate the good things in life like McMansions, BMWs, government provided retirement, government provided healthcare, and delusions of ever increasing wealth.”
Man made inflation is a glorious invention for the men who invented it. For the people who deal with it every day, not so much. Joe knew that every town had a boss. If you didn’t know who the boss was in the United States of America before 2008, you know now. Ben Bernanke and the Federal Reserve Bank of the United States is the boss of this town.
Crony Capitalism Pays for the Cronies
Without Federal Reserve intervention in the financial markets since September 2008, the biggest banks in the world would have entered bankruptcy liquidation. The U.S. economy would have experienced a 10% to 20% fall in GDP. The unemployment rate would have soared above 15%. The stock market would have fallen 70%. Wealthy bondholders and stockholders would have seen their wealth cut in half. Incumbent politicians would have all been thrown out of office. The richest Americans, constituting the ruling class, would have borne the brunt of the pain.
In a true capitalist system, organizations and people who assumed too much risk and made poor decisions would have failed. But the United States does not have a capitalist system. We have a corporate fascist economic system where a small cartel of bankers, military weapons suppliers, and mega-corporations set the agenda for the country through their complete capture of politicians and the mainstream corporate media. At the height of the crisis in 2008, President George Bush revealed whose side he chose:
“I’ve abandoned free-market principles to save the free-market system, to make sure the economy doesn’t collapse. I feel a sense of obligation to my successor to make sure there is not a, you know, a huge economic crisis. Look, we’re in a crisis now. I mean, this is — we’re in a huge recession, but I don’t want to make it even worse.”
George Bush was born with a silver spoon in his mouth. He was not trying to save the free-market system, because we didn’t have a free market system. He was saving his fellow billionaires under the cover of saving the average American. Bush knew as much about saving our economic system as he knew about when to declare mission accomplished in Iraq. He turned the task of saving the free market system over to his multi-billionaire Goldman Sachs Secretary of Treasury Hank Paulson and the real boss of Washington DC, Ben Bernanke. These noble American patriots proceeded to save the top 1% richest Americans on the backs of the American middle class. They did it under the guise of keeping the country out of a Depression. Those who committed the crimes and destroyed the worldwide financial system not only didn’t get punished, they were enriched by the actions of Paulson and Bernanke. This entire sordid chapter in the history of the American empire from 2008 until the imminent collapse, sometime before 2015, will leave future historians dumbfounded at the utter insanity and foolishness of the decisions that were made during the death throes of the empire. Not only did George Bush not save the free-market system, but he drove a stake thru its heart.
To boil the entire 2008 financial collapse down to one word, it would be: DEBT.
Three decades of ever increasing levels of consumer, corporate, and government debt eventually led to an unprecedented implosion. It was as predictable in 2008, to those who understand the fiat monetary system, as it was to Ludwig von Mises decades ago:
“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Federal Reserve – Destroyer of Worlds
The 2008 crash and the 1929 crash were manmade disasters. Alan Greenspan and Ben Bernanke created the atmosphere and conditions that led to the risk taking by bankers, home buyers and consumers. Monetary expansion, excessively low interest rates, the Greenspan/Bernanke Put, disinterest in regulation, and pandering to politicians allowed the party to get out of control. Taking away the punch bowl never crossed their mind. The Federal Reserve is controlled by the major Wall Street banks. These banks were partnerships until the 1980s, with partners personally liable for the actions of their banks. Excessive risk taking meant possible personal bankruptcy. Once they became corporations, excessive risk meant excessive compensation for the executives, with the downside being borne by the shareholders.
But that wasn’t enough. The executives were large shareholders, so they convinced the Federal Reserve to bail their corporations out whenever they made bad bets. It was a sweet deal if you were a banker. Knowing their lackeys at the Fed had their back, the goliath Wall Street banks used their power and wealth to convince the SEC to waive the 12 to 1 leverage rules so they could leverage their balance sheets 40 to 1. This meant that a 5% loss in their capital and they would be insolvent. The Harvard MBA CEO titans of the financial world created the housing bubble through their creation of fraud inducing mortgage products, a bewildering array of derivative products that even their MBA geniuses didn’t understand, and betting against the derivatives they were selling to their clients. When this toxic brew of fraud and debt exploded in their faces, the value of the assets on their books plunged by 30% to 40% in 2008 and 2009. The 10 biggest financial institutions in the country were effectively bankrupt. An orderly bankruptcy liquidation that wiped out the bondholders, stockholders and top executives was the solution to excessive risk taking and failure.
This was an unacceptable solution to the billionaire class that owns half the financial wealth in the country. The President was a multi-millionaire. The Treasury Secretary was a billionaire. There were 250 millionaires in Congress. The top executives of the banks that own and control the Federal Reserve are multi-millionaires. The owners and talking head pundits of the mainstream media are all in the billionaire/millionaire class. The cover story used to bilk $700 billion from middle class taxpayers into the coffers of Wall Street mega-banks was that if we didn’t hand over the loot, the financial system would collapse and a Great Depression would ensue. Every program, policy, and rule change that has been rolled out since September 2008 by the Federal Reserve, Treasury, and Congress has benefitted billionaires, bankers, and politically connected corporations. The Federal Reserve has printed over $2 trillion out of thin air to save the billionaires that have been pillaging the middle class for decades.
The Federal Reserve bought $1.25 trillion of toxic mortgages from Wall Street, allowed these banks to borrow at 0%, threatened the FASB into suspending mark to market accounting so banks could fake the value of their loans, instructed banks to rollover commercial real estate loans as if they weren’t really worth 40% less than the value on their books, and rolled out $600 billion of QE2 in order to create a stock market rally, benefitting their billionaire constituents. The $800 billion stimulus program was shoveled to the corporate friends (contributors) of Congressmen across the land. Cash for Clunkers benefitted government owned car companies. The home buyer tax credit and changing loss carry back rules benefitted mega home builders. Every one of these deeds enriched bankers and billionaires while further impoverishing the working middle class. Real middle class wages continue to fall, unemployment remains near record levels, real inflation in food and energy is running above 10%, senior citizens haven’t gotten a Social Security increase in two years, savers are getting .25% on their savings, home prices continue to fall, and future generations will be stuck with the bill for the billionaire bailout.
The standard of living for the average American continues to fall. Real household income is lower than it was in 1999. The only reason it increased in the 1980s and 1990s was the huge influx of women into the workforce. Two earners were needed to try and maintain a constant standard of living. Real average weekly earnings are lower today than they were in 1970, even using the government bastardized CPI calculation that has been so massaged since 1982 that it has only resulted in a happy ending for government bureaucrats at the BLS. Calculating the CPI exactly as it was calculated in 1980 reveals the truth of what the Federal Reserve has wrought on working class America, a drastic decrease in their standard of living. The insidiousness of Federal Reserve created inflation has sucked the life out of the middle class and enriched the cocktail party class.
The stealth transfer of wealth from the working middle class to the richest in our society was done through convincing the middle class that buying things with debt made you richer. This delusion was sold by the billionaire owned corporate mainstream media and peddled by billionaire bankers to the masses through credit cards, “creative” mortgage products, easy access to home “equity”, auto leases, and easy financing products. Only in a society where a fiat currency could be printed by a central bank with no requirement that it be pegged to an anchor such as gold, could such a staggering amount of debt be accumulated.
Delusions of Debt
The bill that has been rung up is in the form of a national debt that has increased by $4.6 trillion since September 2008, a 48% increase in two and a half years. Over this same time frame real GDP has increased by $200 billion, a 1.6% increase in two and a half years. Over this same period, the Federal Reserve has tripled their balance sheet by adding $2 trillion of debt. Think about this for one second. The leaders of the great American empire have burdened future generations with $6.6 trillion of new debt and increased the Gross Domestic Product by $200 billion. Is this a good return on investment? Did the 30 million unemployed and underemployed Americans benefit? Did the 45 million people on food stamps benefit? Did the 11 million households who are underwater in their mortgage benefit? Did the 3 million people who lost their homes in foreclosure since 2008 benefit? Are Americans paying twice as much for groceries and gasoline benefitting? Did the Tunisians, Egyptians, and other poor people around the world benefit?
The answer to all these questions is NO. The only beneficiaries have been bankers, billionaires, mega-corporations and the politicians who were bought off by these greedy traitors to the Republic. Anyone with an ounce of sense knows the country got into this mess due to the issuance of mountains of debt that was un-payable based upon any reasonable assessment of future cash flows to service the debt. Consumers could never have increased their wages enough to pay off the credit card, mortgage, home equity, student loan, and auto debt they accumulated since 1980. The government could never collect the amount of taxes needed to pay for the $100 trillion of entitlement promises they have made over the last four decades. By 2008 we had reached peak debt delusion.
The only questions that remained were how would the debt be defaulted on and who would bear the brunt of the default. The Federal Reserve Chairman and the U.S. Treasury Secretary rolled out a master plan that revolved around convincing the masses they were being saved, while actually enriching their masters on Wall Street. Their PR machine and captured mouthpieces throughout the mainstream media and in Congress spun the fear mongering message of Depression if the mega-banks were not handed trillions of taxpayer funds.
The proof of what did not happen is borne out in the chart below, showing the total credit market debt in the U.S.at $52.6 trillion, $200 billion higher than it was in 2008. If those who had collected billions in fraudulent profits while using unprecedented levels of debt were rightfully required to take responsibility for the catastrophe they caused, the debt levels would have dropped dramatically. The losses would have been borne by those responsible. The economy would have taken a body blow, all Americans would have been hurt, and many billionaires would have become millionaires or even paupers. The debt would have been written off and lessons would have been learned. The remaining banks (there are 8,000 others besides the 10 who control 50% of the deposits) would have followed traditional risk mitigation methods and the economy would have recovered.
But, as you can see, debt was not written off. No bankers were harmed during the making of this fake recovery. No criminal bankers were prosecuted. No government drones took responsibility for their failure. While the masses were distracted by stimulus packages, mortgage moratoriums, Obamacare and reality TV, the debt was shifted from the criminally negligent banks to you. The proof is right on the Federal Reserve website for all to see:
Financial institutions reduced their debt from $17.1 trillion in 2008 to $14.2 trillion today.
The Federal & state governments increased their debt from $8.7 trillion in 2008 to $11.9 trillion today.
The GSEs (Fannie, Freddie, Sallie) increased their debt from $3.2 trillion in 2008 to $6.4 trillion today.
Corporations increased their debt from $7.0 trillion in 2008 to $7.4 trillion today.
Household debt declined from $13.8 trillion in 2008 to $13.4 trillion as the Federal Reserve backstopped the write-off of $600 billion of bad debt by the banks.
Over $6 trillion of toxic debt was shifted from the insolvent financial industries to the middle class taxpayers under the guise of “Saving the System”. Bad debt does not become good by shifting it to taxpayers. The story line about Americans embracing austerity is false. Household debt rose from $8 trillion in 2000 to $13.8 trillion in 2008, a 72% increase, and has declined by 3% due to write-offs, not austerity.
Champion of the Middle Class
By extending the debt, shifting it to the taxpayer and pretending it is payable, the Federal Reserve and your government have chosen, to use its weapon of choice since inception in 1913 – INFLATION, to default on the debt. It is not a new tactic, it is their only tactic.
The Federal Reserve has slowly and methodically destroyed the American middle class through relentlessly printing more money and purposefully creating inflation, since its reprehensible creation in 1913. For the last three decades only one voice in the wilderness of Washington DC has fought this banking cabal.
“Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people.
From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble last year, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial “boom” followed by a recession or depression when the Fed-created bubble bursts. In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans’ standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.” – Ron Paul – Sept 10, 2002
His colleagues in Congress did not stand up to the Federal Reserve in 2002. Instead, they cheered them on as Greenspan’s ultra loose monetary policy led to the greatest housing bubble in history and a financial collapse unparalleled in human history. As the collapse was hurdling down the track in 2006, Representative Paul once again rose in protest against an organization that is rapidly destroying the American dream.
“The coming dollar crisis is not likely to be “fixed” by politicians who are unwilling to make hard choices, admit mistakes, and spend less money. Demographic trends will place even greater demands on Congress to maintain benefits for millions of older Americans who are dependent on the federal government.
Faced with uncomfortable financial realities, Congress will seek to avoid the day of reckoning by the most expedient means available – and the Federal Reserve undoubtedly will accommodate Washington by printing more dollars to pay the bills. The Fed is the enabler for the spending addicts in Congress, who would rather spend new fiat money than face the political consequences of raising taxes or borrowing more abroad.
The irony is that many of the Fed’s biggest cheerleaders are the same supposed capitalists who denounced centralized economic planning when practiced by the former Soviet Union. Large banks and Wall Street firms love the Fed’s easy money policy, because they profit at the front end from the resulting loan boom and artificially high equity prices. It’s the little guy who loses when the inflated dollars finally trickle down to him and erode his buying power. Someday Americans will understand that Federal Reserve bankers have no magic ability – and certainly no legal or moral right – to decide how much money should exist and what the cost of borrowing money should be.” – Ron Paul – July 11, 2006
The dollar crisis is upon us. Congress and President Obama are avoiding the day of reckoning. The Federal Reserve is enabling profligate spending by politicians, while at the same time enriching their masters on Wall Street. Everything being done in Washington DC seems to be the exact opposite of what should be done. I think the fable of the scorpion and the frog describes our situation best. The scorpion asks a frog to carry him across a river. The frog is afraid of being stung, but the scorpion argues that if it stung, the frog would sink and the scorpion would drown. The frog agrees and the scorpion stings the frog during the crossing, dooming them both. When asked why, the scorpion points out that this is its nature. The Federal Reserve is printing money, creating inflation, enriching billionaire bankers, and dooming the country to certain collapse because that is its nature.
My intentions have been foiled again. I realize that my attempt to put our current economic predicament into perspective will now need to be a five part series. . For a Few Dollars Moreaddressed the Baby Boomer impact on America’s decline. A Fistful of Dollarsexamined how the Federal Reserve’s actions over the last few decades have impoverished the middle class and has placed the country at the brink of collapse, The Good, the Bad, and the Uglywill address the nefarious creation of a central bank and the implementation of a personal income tax in the dreadful year 1913. Outlaw Josey Waleswill scrutinize the looting of America by a small group of powerful, connected, super rich men lurking in the shadows, but pulling the strings on our puppet politicians. Lastly, Unforgiven will detail the impending collapse of our economic system and the retribution that will be handed out to the guilty.
SAN LUIS OBISPO, Calif. (MarketWatch) — Dow skyrockets near 20,000 by 2014? In two years? Then crashes near 10,000 by 2016 presidential elections? Possible? You bet. Déjà vu 2007-2008.
So what’s your biggest risk as an investor? Listening and acting on the relentless manipulative B.S. from Wall Street’s media bulls in the next few years.
Reuters
This scenario could play out: The Dow industrial could hit 20,000 by 2014 and then crash to 10,000 within two years.
Last week USA Today suggested the stock market will soon set a new record high, “How high? How about an all-time high in six months, 16% higher in 12 months, almost 40% higher two years from now.” Yes, 40% said one bullish technician with a mega-bullhorn sounding the rally call for all bulls: “Now is the time to finally break out” of today’s secular bear market.
New secular bull market driving stocks up 40% in just two years, by 2014? Yes, halfway through the next presidential term the DJIA would have to rocket past the 2007 peak of 14,164 to a record close just under 20,000, ignoring GOP leaders warnings that gridlock of all tax, jobs and economic programs will continue if Obama is reelected.
Now compare that with my recent report that says the Dow would drop 20% by 2016, down near 10,000. But it’s not really an impossible scenario: The U.S. stock market could rise near 20,000 in the first two years of the next presidential term. Then by 2014, a global crisis could sink the Dow to 10,000 by the 2016 presidential elections, like 2008.
Wall Street never learned lessons of 2008, so we’re doomed to repeat
Repeating? Yes. Here’s why today’s stock market parallels the 2007-2008 run-up to Wall Street’s disastrous subprime credit meltdown. Remember, the Dow hit 14,164 in October 2007. Then lost more than 50% of market value, crashing to around 6,600 in March 2009. Get it? Lots can happen in two years. And unfortunately technicians can’t fit this kind of macro-volatility into their myopic equations.
How do I know? Earlier when I was publishing my own financial newsletter I developed a healthy skepticism of predictions made by technicians. One day with a commodities trader, after watching his two-minute ticker moves, I asked him about predicting the market two weeks down the road: No can do. Besides, they don’t want to. Like today’s high-frequency traders, they think short-term, in minutes, micro-seconds, not weeks.
Besides, too many variables. It’s tough enough just focusing on short-term technical numbers. In the process, they have to minimize other key analytical tools — fundamental analysis, MPT and macroeconomic trends — and speculate on Fed policies, fiscal cliffs, internecine partisan political wars, jobs, terrorist attacks, China’s exports, and so many other technically less-quantifiable big-picture factors for long-term predictions.
Warning: 93% of Wall Street’s message intentionally misleading B.S.
So if you remember nothing else today, here’s your big take-away: You can never trust Wall Street bulls, they’re lying to you 93% of the time. Studies tell us analysts signal “buys” vastly more than “sells.” And behavioral-science research tells us that bankers, traders and other market insiders are misleading us, manipulating us 93% of the time in their securities reports, PR, ads, speeches, sales material, in their predictions on television, cable shows and when quoted in newspapers and magazines.
Get it? It’s 13-times more likely that Wall Street’s telling you a lie than the truth. Yes, they’re manipulating you 93% of the time. They know your brain’s easy to manipulate. That’s just what they do. They can’t help themselves in today’s highly competitive world. And they’ll never change. So they always win, you always lose.
17 stupid statements bulls make to deny a bear recession
You have to “tune your B.S. detector to high,” as the great financial adviser Jane Bryant Quinn says in her classic “Making the Most Out of Your Money.” Quinn’s warning was reinforced with the publication of “Bull! 144 Stupid Statements from the Market’s Fallen Prophets,” which hit the book stores near the end of the 30-month recession a decade ago, after $8 trillion of the retirement money for 95 million Americans was wiped out.
We picked 17 of the stupidest statements made by Wall Street’s leading minds to illustrate their tendency 93% of the time to mislead and manipulate investors using hype, happy talk and pure biased B.S.
Warning to investors: It will happen again, in 2013. Why? This time is never different: It repeats every market cycle, never stops:
March 1999: Harry S. Dent, author of “The Roaring 2000s.” “There has been a paradigm shift.” The New Economy arrived, this time really is different.
October 1999: James Glassman, author, “Dow 36,000.” “What is dangerous is for Americans not to be in the market. We’re going to reach a point where stocks are correctly priced … it’s not a bubble … The stock market is undervalued.”
August 1999: Charles Kadlec, author, “Dow 100,000.” “The DJIA will reach 100,000 in 2020 after “two decades of above-average economic growth with price stability.”
December 1999: Joseph Battipaglia, market analyst. “Some fear a burst Internet bubble, but our analysis shows that Internet companies … carry expected long-term growth rates twice other rapidly growing segments within tech.”
December 1999: Larry Wachtel, Prudential. “Most of these stocks are reasonably priced. There’s no reason for them to correct violently in the year 2000.” Nasdaq lost over 50%.
December 1999: Ralph Acampora, Prudential Securities. “I’m not saying this is a straight line up. … I’m saying any kind of declines, buy them!”
February 2000: Larry Kudlow, CNBC host. “This correction will run its course until the middle of the year. Then things will pick up again, because not even Greenspan can stop the Internet economy.” He’s still hosting his own cable show.
April 2000: Myron Kandel, CNN. “The bottom line is in, before the end of the year, the Nasdaq and Dow will be at new record highs.”
September 2000: Jim Cramer, host of “Mad Money.” Sun Microsystems “has the best near-term outlook of any company I know.” It fell from $60 to below $3 in two years.
November 2000: Louis Rukeyser on CNN. “Over the next year or two the market will be higher, and I know over the next five to 10 years it will be higher.”
December 2000: Jeffrey Applegate, Lehman strategist. “The bulk of the correction is behind us, so now is the time to be offensive, not defensive.” Another sucker’s rally.
December 2000: Alan Greenspan. “The three- to five-year earnings projections of more than a thousand analysts … have generally held firm. Such expectations, should they persist, bode well for continued capital deepening and sustained growth.”
January 2001: Suze Orman, financial guru. “The QQQ, they’re a buy. They may go down, but if you dollar-cost average, where you put money every single month into them, I think, in the long run, it’s the way to play the Nasdaq.” The QQQ fell 60% further.
March 2001: Maria Bartiromo, CNBC anchor. “The individual out there is actually not throwing money at things that they do not understand, and is actually using the news and using the information out there to make smart decisions.”
April 2001: Abby Joseph Cohen, Goldman Sachs. “The time to be nervous was a year ago. The S&P was overvalued, it’s now undervalued.” Markets fell 18 more months.
August 2001: Lou Dobbs, CNN. “Let me make it very clear. I’m a bull, on the market, on the economy. And let me repeat, I am a bull.”
June 2002: Larry Kudlow, CNBC host. “The shock therapy of a decisive war will elevate the stock market by a couple thousand points.” He also predicted the Dow would hit 35,000 by 2010.
The Dow didn’t bottom until October 2002 at 7,286, down from 11,722. The Iraq War started in April 2003. Soon after, Enron, Spitzer and Sarbanes-Oxley were distracting us from all the insanity of the 2000 crash, the bear market and the 2000-2002 recession.
Warning: In the next four years — no matter who’s president — Wall Street will keep repeating the B.S., piling it on thicker, deeper, until they finally trigger a new meltdown bigger than 2008, worse than 1929, driving America into another Great Depression, like the 1930s.
“Facts are to the mind what food is to the body.”– Edmund Burke
No wonder one third of Americans are obese. The crap we are shoveling into our bodies is on par with the misinformation, propaganda and lies that are being programmed into our minds by government bureaucrats, corrupt politicians, corporate media gurus, and central banker puppets. Chief Clinton propaganda mouthpiece, James Carville, famously remarked during the 1992 presidential campaign that, “It’s the economy, stupid”. Clinton was able to successfully convince the American voters that George Bush’s handling of the economy caused the 1991 recession. In retrospect, it was revealed the economy had been recovering for months prior to the election. No one could ever accuse the American people of being perceptive, realistic or critical thinking when it comes to economics, math, history or distinguishing between truth or lies. Our government controlled public school system has successfully dumbed down the populace to a level where they enjoy their slavery and prefer conscious ignorance to critical thought.
The next six months leading up to the November elections will surely provide a shining example of the degraded society we’ve become. Both parties and their propaganda machines, SuperPacs, and corporate media sponsors will treat the igadget distracted masses to hundreds of hours of lies, spin, and vitriol, designed to divert the public from the fact that both parties act on behalf of the same masters and have no intention of changing course of the U.S. Titanic to avert the iceberg dead ahead. We will be treated to storylines about race, gun control, the war on women, energy independence, global warming, the war on terror, the imminent threat of Iran and North Korea, Obamacare, Romneycare, and of course the economy, stupid.
There are 240 million voting age Americans. About 130 million will likely vote in the 2012 election based upon recent voter participation results. This means that 110 million Americans don’t give a crap about who runs this country or they’ve come to their senses and realize our votes don’t matter. Between 1840 and 1900 voter participation ranged between 70% and 82% as Americans took their civic duty seriously and believed their vote counted. Since 1913, when the politicians relinquished control of our currency to a private bank controlled by a small group of powerful men, voter participation for President has ranged between 49% and 62%. It hasn’t surpassed 57% since 1968. Now that corporations are people and our candidates are selected by a few rich men, the transformation from a republic to a corporate fascist state is almost complete. During the coming interminable political campaign you will hear about jobs until your ears bleed. I can guarantee that 98% of the rhetoric will be false. Neither party wants the American people to understand the truth about what happened to our economy and jobs over the last 100 years. It has been a bipartisan screw job and ignoring the facts doesn’t change them.
The first fact that can’t be ignored is how many Americans are actually unemployed today. Here is some truth you won’t get from a politician or media talking head:
There are 243 million working age Americans.
There are 142 million employed Americans.
Only 101 million of the employed Americans are working more than 35 hours per week. This means that only 41.6% of all working age Americans have a full-time job.
According to the government drones at the BLS, 88 million Americans have “chosen” to not be in the labor force – the highest level in U.S. history.
The percentage of Americans in the workforce at 63.8% is the lowest since 1980 and down from a peak of 67.1% in 2000. The difference between these two percentages is 8 million Americans.
The BLS reports there are only 12.7 million unemployed Americans in the country, down from 15.3 million in 2009.
The BLS reports the unemployment rate has dropped from 10% in late 2009 to 8.3% today. Over this time frame the working age population grew by 5.7 million, while the number of employed Americans grew by 3.6 million. Only a government drone could interpret this data and report a dramatic decline in the unemployment rate.
Any critical thinking human being would examine the data being reported as fact by our government and regurgitated without question by the corporate mainstream media and conclude it is false, misleading and manipulated. The economy was booming in 2000 and 67.1% of the working age population were in the labor force. Today the economy is in much worse shape. More people NEED to work in order to just make ends meet, but according to the government, 8 million Americans have chosen to not work. Only an Ivy League economist or CNBC bimbo pundit would believe such a blatant distortion of reality. A comparison to prior decades provides all the evidence you need:
In 1980 the working age population was 168 million and the labor force totaled 107 million.
By 1990 the working age population grew by 21 million and the labor force grew by 19 million.
By 2000 the working age population grew by another 23 million and the labor force advanced by 17 million.
Since 2000 the working age population has grown by 30 million, but shockingly the labor force has supposedly grown by only 12 million.
This data is so twisted that there is absolutely no doubt the Federal Government is purposely manipulating the numbers to make the economic situation appear better than the reality. During the Great Depression propaganda and spin had not been perfected. There weren’t multiple definitions of unemployment designed to confuse and mislead the public. The peak level of unemployment in the 1930s was 25%. The current reported level is 8.3%. On a comparable basis to the 1930s, including short-term discouraged workers, those forced to work part-time, and the long-term discouraged workers which were defined out of existence in 1994 by the BLS, the real unemployment rate is 22% today. It feels like a depression for millions of Americans because it is a depression.
The rhetoric from the Obama administration about a jobs recovery is laughable. Full time employment peaked in July 2007 at 122.4 million. Today there are 113.9 million people classified as full-time, with only 101.3 million working more than 35 hours. There are 8.5 million fewer people with full time jobs today than there were in 2007. That fact is even more disheartening considering the working age population has grown by 10.5 million over the same time span. Taking an even longer term view provides the perspective needed to assess our true economic state. Total nonfarm employment hasn’t grown in twelve years, while the working age population has grown by 30 million people.
Obama will tout the fact that we’ve added 3.6 million jobs since the bottom of this recession. What he won’t tout is that hiring of temporary workers surged by 37% and accounted for 25% of all the jobs added since 2009. I’m sure these temporary workers, with no health or retirement benefits, are confident about their future. The facts about jobs and employment are consistent with the 47 million Americans on food stamps (up from 35 million when the recession supposedly ended). It’s a sure sign of recovery when spending on food stamps doubles in the last two years. No depression here, just move along.
Record numbers of Americans being added to the SSDI rolls for depression and other illusory disabilities is surely a positive development pointing to a strong economic recovery. In just the first four months of this year, 539,000 joined the disability rolls and more than 725,000 put in applications. “We see a lot of people applying for disability once their unemployment insurance expires,” said Matthew Rutledge, a research economist at Boston College’s Center for Retirement Research. The number of applications last year was up 24% compared with 2008, Social Security Administration data show. Why participate in the labor market when you can collect a government check for life because you are obese or depressed. These are the people no longer in the labor force. Once they go on SSDI, they rarely go back to work again.
The government reported figure of 12.7 million unemployed Americans is an utter falsehood. There are in excess of 30 million Americans that are either unemployed or working part-time that want full-time jobs. Government propaganda doesn’t change the facts.
“Facts don’t cease to exist because they are ignored.” – Aldous Huxley
Would You Like a Side Order of Facts with That Propaganda?
When you watch the Wall Street scam artists paraded on CNBC declaring the number of people not in the labor force is going up due to Baby Boomers retiring, you should understand they are propagating a falsehood. They are either intellectually dishonest or too lazy to do the most basic of research. They are paid millions to impart false storylines to anyone dumb enough to watch CNBC expecting facts or a smattering of truth. If you want some truth, turn to John Mauldin and John Hussman. CNBC doesn’t invite these outstanding honest analysts on their station when they can roll out a shill like Abbey Joseph Cohen or James Paulson. They wouldn’t want some factual analysis when they can have Becky Quick do one of her frequent handjob interviews with that doddering old status quo fool Warren Buffet.
A critical thinker might wonder how could real disposable income be dropping over the last three months and only have risen by 0.3% in the last year if we’ve had the strong job growth touted by Obama. Could it be the jobs being created are extraordinarily low-paying? There are signs of desperation everywhere you look. The two charts below, from one of John Mauldin’s recent articles, reveal the truth about the Baby Boomers retiring storyline. The first chart shows the employment level for those over the age of 55 since 2007. There were 25.3 million people over the age of 55 working in 2007 and there are 30.1 million working today. People over 55 have seen their total employment level rise by 4.8 million jobs since the beginning of the recession, and over 3 million jobs since the 3rd quarter of 2009. Total employment is down by 4 million since 2007, while employment among those over 55 is up 19%. John Hussman described the reality about employment in his recent weekly article:
“If you dig into the payroll data, the picture that emerges is breathtaking. Since the recession “ended” in June 2009, total non-farm payrolls in the U.S. have grown by 2.32 million jobs. However, if we look at workers 55 years of age and over, we find that employment in that group has increased by 3.04 million jobs. In contrast, employment among workers under age 55 has actually contracted by nearly one million jobs, regardless of which survey you use. Even over the past year, the vast majority of job creation has been in the 55-and-over group, while employment has been sluggish for all other workers, and has already turned down.”
I wonder how Larry Kudlow will spin this.
Now for the really eye opening facts. While the labor participation rate has been plunging, the Boomer participation rate has been skyrocketing. The participation rate for the over 65 age group is now at an all-time high. Do you think this has anything to do with home values dropping 36% since 2005, gasoline prices doubling since early 2009, food prices surging by 25%, the 1.4% annual return of stocks since 1999, or the .15% senior citizens can earn on their money today versus the 5% they could earn in 2007?
Intellectually dishonest ultra-liberal Ivy League defender of the Federal Reserve – Paul Krugman had this to say about Ben Bernanke’s zero interest rate policy on senior citizens:
“Finally, how is expansionary monetary policy supposed to hurt the 99 percent? Think of all the people living on fixed incomes, we’re told. But who are these people? I know the picture: retirees living on the interest on their bank account and their fixed pension check — and there are no doubt some people fitting that description. But there aren’t many of them.”
It must be comforting living in an ivory tower or penthouse suite and looking down upon the ignorant masses while caressing your Nobel Prize. The millions of senior citizens with $100,000 of savings could earn $5,000 of interest income in 2007 to supplement their $18,000 of Social Security income. Today, they can earn $150 while the Wall Street banks receive the benefits of ZIRP by borrowing for free from the Federal Reserve and earning billions risk free. Paulie doesn’t think the $4,850 reduction in income and the 15% increase in inflation since 2007 had a negative impact on senior citizens. They must be pouring into the work force because they are just bored, after working for the last 45 years. John Hussman has a slightly different viewpoint, based upon facts rather than a false disproven ideology:
“Beginning first with Alan Greenspan, and then with Ben Bernanke, the Fed has increasingly pursued policies of suppressing interest rates, even driving real interest rates to negative levels after inflation. Combine this with the bursting of two Fed-enabled (if not Fed-induced) bubbles – one in stocks and one in housing, and the over-55 cohort has suffered an assault on its financial security: a difficult trifecta that includes the loss of interest income, the loss of portfolio value, and the loss of home equity. All of these have combined to provoke a delay in retirement plans and a need for these individuals to re-enter the labor force.
In short, what we’ve observed in the employment figures is not recovery, but desperation. Having starved savers of interest income, and having repeatedly subjected investors to Fed-induced financial bubbles that create volatility without durable returns, the Fed has successfully provoked job growth of the obligatory, low-wage variety. Over the past year, the majority of this growth has been in the 55-and-over cohort, while growth has turned down among other workers. Meanwhile, broad labor force participation continues to fall as discouraged workers leave the labor force entirely, which is the primary reason the unemployment rate has declined. All of this reflects not health, but despair, and helps to explain why real disposable income has grown by only 0.3% over the past year.”
Do you believe Krugman or Hussman? The key takeaway from the data is the desperation exhibited by average Americans, while the political governing elite and Wall Street pigs continue to gorge themselves at the trough of free money provided by the Federal Reserve, while paying themselves obscene bonuses for a job well done buying the corrupt Washington politicians.
Over the next six months we will hear unceasing rhetoric from Obama and Romney about how they are going to create jobs. Neither of these government apparatchiks have a clue about jobs or desire to change the course that was set one hundred years ago with the creation of the Federal Reserve. Obama never worked at a real job in his entire life, while Romney has spent his life firing people and spinning off heavily indebted companies to unsuspecting investors. The current deteriorating jobs picture has been decades in the making and a truly bipartisan effort. The rhetoric about America being an engine of growth and the world leader in innovation and entrepreneurship is laughable when examined with a critical eye. We are an aging empire living in the past as the facts portray an entirely different reality. Our fastest growing industries include:
Solar panel manufacturing (subsidized by your tax dollars)
For-profit universities (diploma mills subsidized by your tax dollars)
Pilates and yoga studios
Self-tanning product manufacturing
Social network game development
Hot sauce production
The “surge” in jobs in the last three months is being driven by these industries:
Food services and drinking places
Administrative and support services
Ambulatory health care services
Credit intermediation
Hospitals
Is this the picture of a world leading jobs machine or a delusional, paper pushing, self-involved, obese, sickly, overly indebted crumbling empire? The job openings in industries that actually produce something are barely identifiable on the chart below. Maybe the University of Phoenix can successfully retrain construction and manufacturing workers to be waiters, waitresses, and Wal-Mart greeters if the Federal government can funnel more of our tax dollars into student loans.
If you thought low wage work was only for Chinese, Indians, and Vietnamese, you haven’t been paying attention. The United States is a world leader. We are by far the world leader among developed countries in percentage of low wage workers at 24.8%. I find it hysterical that the dysfunctional insolvent countries of Greece, Spain, Portugal, and Italy have a much smaller percentage of low wage workers than the great American empire. We have 142 million employed Americans and 35 million are slaving away in low paying thankless jobs. This explains why the half the workers in the country make less than $25,000 per year.
The top three employment occupations in the country are:
Office and administrative support work
Sales & Related
Food preparation and serving related
There are high paying good jobs in America, but there aren’t many and on-line college graduates from the University of Phoenix aren’t going to get them. The highest paying jobs today require a high level of specialization and education, especially in the healthcare and technology industries. This disqualifies the vast majority of government run public school graduates. High paying manufacturing jobs which were the backbone of the country during the 1950s and 1960s are gone forever. The reasons for this transformation are multifaceted and will be addressed in Part Two of this article. It didn’t happen by accident and there are culprits to blame. The conversion of our country from making high quality things other countries needed to a debt driven service economy of paper pushers, hash slingers, and retail “specialists” has slowly but surely destroyed the middle class. The masses are distracted by the latest technological marvel that allows them to waste another two hours per day posting how they feel about the latest episode of America’s Got Something or America’s Top Whatever. We have become a country that glories in our materialism and shallow culture while acting like a thug around the world with our unparalleled military machine.
This result is not an accident. It was set in motion by the actions of a handful of rapacious, wealthy powerful men that have been calling the shots in this country for the last hundred years. It wasn’t a planned conspiracy but the logical result of man-made inflation, a fiat currency not backed by gold, the craving of rich men to become richer, a willfully ignorant populace, and a slow devolution of our society into a corporate fascist state. We praise and honor psychopathic criminals while scorning and ridiculing the middle class workers that built this country. The American dream has become a nightmare for the millions of unemployed and underemployed. The acceleration of debt accumulation and money printing guarantees this rotting carcass of a country will go belly up in the foreseeable future.
“Thus did a handful of rapacious citizens come to control all that was worth controlling in America. Thus was the savage and stupid and entirely inappropriate and unnecessary and humorless American class system created. Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage. And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes against which no laws had been passed. Thus the American dream turned belly up, turned green, bobbed to the scummy surface of cupidity unlimited, filled with gas, went bang in the noonday sun.”- Kurt Vonnegut
In Part Two of this article I will examine how we got to this point and what is likely to happen next.
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Random Quote
By and large, language is a tool for concealing the truth. — George Carlin
