US vs. THEM

“I’ll show you politics in America. Here it is, right here. “I think the puppet on the right shares my beliefs.” “I think the puppet on the left is more to my liking.” “Hey, wait a minute, there’s one guy holding out both puppets!”” – Bill Hicks

Image result for “I’ll show you politics in America. Here it is, right here. “I think the puppet on the right shares my beliefs.” “I think the puppet on the left is more to my liking.” “Hey, wait a minute, there’s one guy holding out both puppets!””

Anyone who frequents Twitter, Facebook, political blogs, economic blogs, or fake news mainstream media channels knows our world is driven by the “Us versus Them” narrative. It’s almost as if “they” are forcing us to choose sides and believe the other side is evil. Bill Hicks died in 1994, but his above quote is truer today then it was then. As the American Empire continues its long-term decline, the proles are manipulated through Bernaysian propaganda techniques, honed over the course of decades by the ruling oligarchs, to root for their assigned puppets.

Most people can’t discern they are being manipulated and duped by the Deep State controllers. The most terrifying outcome for these Deep State controllers would be for the masses to realize it is us versus them. But they don’t believe there is a chance in hell of this happening. Their arrogance is palatable.

Continue reading “US vs. THEM”

SHOULD YOU BELIEVE WHAT THEY TELL YOU OR WHAT YOU SEE?

Sometimes I wish I could just passively accept what my government monarchs and their mainstream media mouthpieces feed me on a daily basis. Why do I have to question everything I’m told? Life would be much simpler and I could concentrate on more important things like the size of Kim Kardashian’s ass, why the Honey Boo Boo show was canceled, the Victoria Secret Fashion Show, whether I’ll get a better deal on Chinese slave labor produced crap on Black Thanksgiving, Black Friday, or Cyber Monday, fantasy football league standings, the latest NFL player to knockout their woman and get reinstated, Obama’s latest racial healing plan, which Clinton or Bush will be our next figurehead president, or the latest fake rape story from Rolling Stone. The willfully ignorant masses, dumbed down by government education, lured into obesity by corporate toxic packaged sludge disguised as food products, manipulated, controlled and molded by an unseen governing class of rich men, and kept docile through never ending corporate media propaganda, are nothing but pawns to the arrogant sociopathic pricks pulling the wires in this corporate fascist empire of debt.

I’m sure my blood pressure would be lower and my mood better if I just accepted everything I was told by my wise, sagacious, Ivy League educated, obscenely wealthy rulers as the unequivocal truth. Why should I doubt these noble, well intentioned, champions of the common folk? They’ve never misled us before. They would never attempt to use two highly publicized deaths as a lever to keep black people and white people fighting each other and not realizing all races are now living in a militarized police surveillance state supported by the one Party. They would never use their complete control over the financial, political, judicial, and media organisms to convince the masses that voting for one of their hand selected red or blue options will ever actually change anything. They would never engineer the overthrow of a democratically elected government, cover up the shooting down of an airliner, and attempt to blame their crimes on the leader of a nuclear power in their efforts to retain a teetering global empire. They would never overthrow or wage economic warfare on countries that don’t toe the line regarding the continued dominance of the petrodollar in global commerce.

Sadly, I’m cursed with a mind that questions everything and trusts no one in authority or associated with the status quo. It’s the reason I don’t read newspapers or watch mainstream media television entertainment propaganda, disguised as news. It’s the reason I will never vote in a national election again. The lesser of two evils is still evil. I’m skeptical of every piece of data fed to the sheep by the government apparatchiks working for the state. The faux journalists being paid millions by one of the six corporations controlling the media and dependent upon the government, Wall Street bankers, and mega-corporations for their advertising revenues regurgitate whatever they are told by those pulling the purse strings. The mainstream media are nothing but propaganda peddlers for the Deep State and truth telling is prohibited in their world of deception, debt, and denial. Their job is to sustain, enhance, and further enrich the status quo by engineering consent through what they report and what they do not report. The true ruling powers who operate in the shadows behind the scenes are men of power, wealth, status and education who truly believe they are better equipped to consciously manage and manipulate the public mind to achieve their ends. They are disciples of the Edward Bernays School of deception, manipulation and propaganda.

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

The Nazis were pikers compared to the technologically savvy Madison Avenue maggots and Silicon Valley snakes who mold the opinions, tastes, and beliefs of the iGadget addicted, vapid, unintelligent, unquestioning, zombie-like masses who beseech to be led, told what to do and what to believe. A vast swath of the population don’t read books or even know how to read above a grade school level. They couldn’t write a coherent paragraph if their life depended upon it. But they can twitter, text, Instagram, and facebook at the speed of light. Try walking down any street in an American city without some iGadget distracted oblivious moron bumping into you. The addicting nature of today’s technology is being used by the ruling elite to monitor, control, and make you respond the way they choose.

Facebook, corporate media organizations, quasi-government organizations, and the NSA are creating a corporate totalitarian state where the slaves willingly sacrifice their privacy, liberty and freedom for mindless entertainment and distractions. The 21st Century totalitarian state captures your political beliefs, daily activities, habits, interests, spending behaviors, organizational associations, love life, pictures, psychological makeup, and fears from your own postings on the internet. With the right algorithms they can uncannily predict how you will react to different situations and messaging. They can also uncover threats to the status quo. Under the guise of keeping you safe from terrorists they are actually ferreting out subversives and radicals who refuse to conform to their idea of a good citizen slave. We will all be subject to our own Room 101.

Dan Kaplan in his recent article about Facebook as a tool for totalitarianism lays out the extreme threat to our future:

Today’s totalitarian demands a more subtle way to influence cultural and political sentiment. But if you got your hands on an algorithmically filtered newsfeed? One that could control the stories people see every day and influence their emotions across geographic, political and economic lines? You’d be in business.

But then there was the mood-influence study that scandalized us for a couple of weeks this year. Facebook changed the tone of content showing up in people’s feeds to test the impact it could have on their moods. The results, not too surprisingly, suggested that Facebook has the power to manipulate sentiment at scale.

Given how easy it is to scare people about the scary-seeming-but-actually-low-risk Ebola, and how dumb we all get when we are afraid, it is not crazy to think that under the wrong circumstances — like one or two more mass-scale terrorist attacks on major cities — modern democracy gives way to something akin to 1984.

If Big Brother were to seize the reins of power, sure, he’d use the cable news the way it’s being used today. But Facebook’s data maw, targeting power and sentiment-manipulation capabilities would be far more insidious. Whether this is what we become or not comes down to the future we choose to build.

The saddest part of this episode of mass delusion, mass confusion, and mass media collusion is that even though we are moving towards Orwell’s totalitarian vision of society, thus far, technology, triviality and an unending array of distractions have lured the masses into passive preoccupation with egotistical pleasures. We’ve been persuaded to love our servitude while drowning in a sea of irrelevance, diversions, and trifles. We continue to amuse ourselves to death while forging our own chains of debt and yielding to the direction of an all-powerful welfare warfare surveillance state that promises to protect us from phantom threats while actually abolishing our rights, freedoms, and liberties. No coercion necessary. We have been trained to love our servitude.

“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

Arrogance, Desperation, Lies & Truth

 “Facts do not cease to exist because they are ignored.” – Aldous Huxley

The level of data massaging by the government and their co-conspirators on Wall Street and in the corporate media is a futile attempt at a happy ending that will never come to fruition. The intensity and relentlessness with which the state and its quasi-state minions attempt to paint a false picture of economic recovery is equal parts arrogance and desperation. The arrogance is a function of successfully pulling off the greatest heist in world history from 2003 through 2008 with no adverse consequences, no criminal charges, no penalties for their crimes, and more power and wealth than they had prior to 2003. The only way to stop sociopaths is to throw them in jail or kill them. In our dystopian paradise of greed, they were rewarded with trillions in rescue packages by their cohorts in crime at the Federal Reserve and in Congress. They’ve paid themselves billions in bonuses for gorging at the Federal Reserve trough of QE and ZIRP. The desperation is borne from the fact that after $7.5 trillion of debt added by the Federal government and $3.5 trillion of debt created by the Federal Reserve since 2009, the Greater Depression for average Americans deepens by the day.

The men pulling the strings behind the scenes are drunk with power and their hubris allows them to believe their own infallibility and blinds them to the dire consequences for our country when their debt Ponzi scheme fails. But, as we grow ever closer to the day of reckoning, they will use every means at their disposal to paint a positive picture, regardless of the facts and reality for the average person. The examples of twisting, distorting and outright lying about the economic reality of our times are endless. These are some of the major false storylines peddled by our benevolent corporate fascist leaders:

The BLS reported 321,000 jobs added in November and the unemployment rate at 5.8%. Jobs are plentiful, based upon these statistics.

A skeptical critical thinking individual might ask a few questions or point out a few inconvenient facts the government purveyors of propaganda might not want us to ponder:

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

According to the government reported figures, the economy hasn’t been this strong since 2007. GDP has supposedly grown at greater than 4% over the last two quarters.

Anyone who is sentient knows consumer spending accounts for 68% of GDP. Capital investments that lead to long term prosperity continue to decline as a percentage of GDP from 20% in 2000 to 16% today. We’ve chosen consumption and financialization over savings and investment. This fact leads to some observations:

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

According to the quasi-governmental mouthpieces at the Conference Board, consumer confidence is near a 5 year high, reflecting what should be robust spending.

So we are told by the representatives of corporatism that we are confident about the economy and the future. How does that measure up to the facts on the ground:

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

According to the government, the deficit was ONLY $483 billion in 2014.

This is a real doozy. Obama has been touting how he has cut the deficit through his wise management of the budget. This is where government accounting is used by apparatchiks to mislead the public and obscure the truth. A few pertinent facts are always left out by the politicians touting deficit reduction:

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

According to the government, we’ve experienced a strong housing recovery since 2010.

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

  • The 24% rise in home prices (Case Shiller Index) since the 2012 low has been nothing more than a Wall Street hedge fund/Federal Reserve scheme to elevate prices and make Wall Street bank balance sheets less insolvent. Wall Street banks withholding foreclosures from the market while Wall Street hedge funds (Blackstone) use free money from the Fed to buy up housing and rent it out to former homeowners has enriched the .1% while destroying the dream of home ownership for millions.
  • The percent of first time home buyers remains near record lows, while speculators, flippers, hedge fund managers, and rich Chinese businessmen make up a record number of purchasers. The fact this is a fake housing recovery is proven by mortgage applications to purchase a home sitting at 1995 levels and 30% below 2009 recession lows. Maybe the fact real median household income is also at 1995 levels, real wages keep declining, and labor force participation is at 1978 levels has something to do with real people not being able to purchase a home.

  • Even with the artificial hedge fund demand, existing home sales are lower than 2013 and languishing at 1999 levels. They are still 25% below 2005 levels, despite the lowest mortgage rates in history. New home sales are a disaster, with no appreciable increase in two years. Apartment construction has far outpaced single family housing construction. After a five year housing recovery, new home sales languish at levels seen at the bottom of our last six recessions. New home sales are 65% below the 2005 peak and at levels seen in the early 1960’s when there were 130 million less people living in the country.

According to the corporate media, the auto market is hitting on all cylinders with annual sales of 16.4 million, the highest since 2006.

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

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

According to the corporate mainstream media pundits, the plunge in oil prices from $100 per barrel to $61 per barrel is unequivocally good for the economy. The shale oil boom has worked its magic and happy times are here again.

Sometimes you have to wonder whether the highly educated spokesmodels on the corporate mainstream media are really as vacuous and clueless as they appear or whether they are just paid to look pretty and mouth the corporate line. They seem incapable of comprehending the unintended consequences of various events. The collapse in oil prices is one of those events.

  • There is no doubt that lower oil prices will lower the price of gas for the average American. Estimates say they will save $368 per year, which can be spent elsewhere. The highly paid shill economists who declare this will boost spending seem to be math challenged. Retail sales figures include gas stations. What isn’t spent there will be spent in another category, most likely healthcare or groceries as prices in both areas continue to escalate. It’s a zero sum game. No new spending will occur.
  • The worldwide supply of oil has only increased marginally over the last few years. The U.S. shale boom has been offset by declines elsewhere (Libya, Iran, Mexico). The reason for the collapse is the same reason for the 2009 collapse – worldwide demand is contracting. Europe is in a depression. Japan is in a depression. Russia’s economy is contracting. China is decelerating rapidly. The U.S. demand is flat. The implications of another global recession after five years of central banks printing trillions of fiat currency are alarming to say the least.
  • The cost to extract shale oil and transport it to a refinery capable of processing it is high. Honest analysts will tell you that a price of $70 to $80 is required to breakeven. Most companies don’t build breakeven into their plans. Bakken shale oil sells at a discount of about $14 per barrel due to the difficulty of extraction, transport, and processing. It is now selling for $47 per barrel. The number of permits for new rigs fell by 40% in November when oil was still selling for $75 per barrel. Do you think permits for new wells will fall at a price of $61 per barrel? Capital spending by the energy industry accounted for 33% of all capital spending in the last few years. I’m sure some other industry will pick up the slack. Right?
  • It seems the shale oil boom has resulted in a few jobs being created since the 2010 recession trough. In fact the states where fracking is prevalent have accounted for all the job growth in the nation. I wonder if a shale oil bust will have any employment implications. There are 9.3 million jobs related to the energy industry across the country. The plunge in oil prices created by Saudi Arabia in the 1980s created a depression in Texas which contributed to the S&L crisis. This plunge will reveal who has been swimming naked in the high yield bond market and derivatives market.

These are just a few examples among a multitude of lies. Others include: stocks aren’t overvalued, gold isn’t money, inflation is good for you, and ISIS terrorists are an imminent threat to your way of life. Every feel good story fed to the masses by the oligarchs running this shitshow we call America is no different than the propaganda doled out by other infamous totalitarian regimes throughout history. We believe things because we’ve been conditioned to believe them. The crony capitalist oligarchs are intelligent enough to invent theories to explain how the world should work, but not intelligent enough to interpret their models correctly. When they act on their theories (Keynesianism), their actions appear to be those of a lunatic. Despite all evidence refuting their theories, their arrogance and hubris lead them to destruction. The collective insanity of this world is almost too much for a rational thinking person to grasp. The extremely wealthy men operating in the shadows will use every means at their disposal to retain power, enhance their wealth, and crush dissent.

“Being a card carrying member of the privileged class means never having to say I’m sorry, much less ‘not guilty.’  Power is doing what you want when you want, and consequences are for everyone else. Or perhaps these titans of modern industry and the halls of power are at heart just good natured bumblers, who in a genuine belief destroy lives and crash economies, while pursuing insane ideological assumption put forward by vested interests, all the while stuffing their pockets, and crushing all dissent with the political skills of a Machiavelli and the ruthlessness of Al Capone.” – Jesse

The two party system is nothing but a ruse designed to keep the people believing they have a say in how things are run in this country. Both parties support the military industrial complex. Both parties support the militarization of police forces around the country. Both parties support the mass surveillance of its citizens. Both parties do the bidding of their rich corporate and special interest benefactors. Both parties favor deficit spending for eternity. Both parties believe the government should expand its role in our everyday lives. Both parties do the bidding for and protect the Wall Street interests who really run this country. No more proof is needed than what has occurred over the last five years, as criminal Wall Street bankers were rewarded for their malfeasance with trillions of dollars from taxpayers and their puppets at the Federal Reserve. While we were allowing ourselves to be distracted, amused, entertained, and indebted, the oligarchs were busy conducting a silent coup.

“Let’s be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own fascist ends and unslakable will to power.

This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price. And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill-gotten gains.

But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake-up call, and the tide then turns to genuine reform.” – Simon Johnson

The oligarchs have had a good run. The system cannot be reformed from within. The corruption runs too deep. The system is broken and can’t be fixed. There is no doubt in my mind that a collapse approaches which will make 2008/2009 look like a walk in the park. The anger, blame and retribution will sweep away the existing social order and replace it with something new. It will be up to the people to decide what happens next. We were warned two centuries ago by a wise man. Hopefully, we’ll get a 2nd chance.

“However political parties may now and then answer popular ends, they are likely in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion.” George Washington

 

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

Chris Hedges: The Myth of a Free Press

Guest Post by Jesse

The bias in the US media towards corporate and special interests is apparent in some sources more easily and readily than in others, especially if one has access and bothers to look at a broad base of international news sources.The great change was institutionalized with the overturn of the Fairness Doctrine under Reagan in 1985 and the revoking of media ownership restrictions from 1934 and 1975 under the Clinton administration’s Telecommunications Act of 1996.

What has changed perhaps is the extreme marginalization of independent sources.  For the most part media outlets declare themselves for one group or another.  The bias of the financial media in policy issues has become so obvious and servile to its corporate interests that it is almost embarrassing.  What is even more surprising is the reach of this sort of continuous advocacy journalism into ‘mainstream’ channels such as Fox and MSNBC that actively re-interpret reality to suit a class of viewers.

This balkanization of the issues attracts large classes of listeners into group think, and precludes any meaningful debate of the issues, even to the very framing of the questions and the issues, and ultimately their very perception of reality.

This is a brief excerpt.   Read the entire article for free here.

“The mass media blindly support the ideology of corporate capitalism. They laud and promote the myth of American democracy—even as we are stripped of civil liberties and money replaces the vote. They pay deference to the leaders on Wall Street and in Washington, no matter how perfidious their crimes. They slavishly venerate the military and law enforcement in the name of patriotism.

They select the specialists and experts, almost always drawn from the centers of power, to interpret reality and explain policy. They usually rely on press releases, written by corporations, for their news. And they fill most of their news holes with celebrity gossip, lifestyle stories, sports and trivia. The role of the mass media is to entertain or to parrot official propaganda to the masses.

The corporations, which own the press, hire journalists willing to be courtiers to the elites, and they promote them as celebrities. These journalistic courtiers, who can earn millions of dollars, are invited into the inner circles of power. They are, as John Ralston Saul writes, hedonists of power…

The mass media are plagued by the same mediocrity, corporatism and careerism as the academy, labor unions, the arts, the Democratic Party and religious institutions. They cling to the self-serving mantra of impartiality and objectivity to justify their subservience to power.

The press writes and speaks—unlike academics that chatter among themselves in arcane jargon like medieval theologians—to be heard and understood by the public. And for this reason the press is more powerful and more closely controlled by the state.

It plays an essential role in the dissemination of official propaganda. But to effectively disseminate state propaganda the press must maintain the fiction of independence and integrity. It must hide its true intentions.”

Chris Hedges, The Myth of a Free Press