Tuesday, September 29, 2020

Helicopter Money and the End of Taxes

Rather than right the ship, the "easy fix" is to distribute "free money"--not just to billionaires and corporations but to everyone.

The system of collecting taxes and distributing the dough is a zero-sum game: each dollar of tax revenue paid by someone and given to someone else is one dollar that the taxpayer will no longer have to save or spend. Meanwhile, the recipient received a dollar that would not have been available without taxes.

State and local governments are still bound by this zero-sum game except for infrastructure spending funded by the sale of municipal bonds. These bonds are debt and must be paid back with interest. But as a general rule, the general funds of cities, counties and states are zero-sum: they can only spend what they collect in tax receipts.

As a result, the feeding frenzy at the public trough has winners and losers: taxpayers who receive fewer benefits than they pay in taxes are the losers, and residents / enterprises who get subsidies, tax breaks, entitlements, benefits in excess of what they paid in taxes are the winners.

Zero-sum: every corporate or individual welfare queen / king that mooches off the public trough as a result of skims and scams (gaming the system, lying, lobbying, legalized looting, etc.) deprives a legitimate recipient / program of scarce tax dollars, or deprives the taxpayers of a tax cut.

The federal government has no restraint. The federal feeding trough can be refilled by deficit spending, i.e. selling Treasury bonds and blowing the proceeds on essentially limitless skims and scams.

Taxpayers naturally resent the skims and scams their hard-earned tax payments fund. Politicos are dimly aware of this resentment (dismissed as evil populism by the status quo's apparatchiks) and so they naturally seek to defuse this threat to their own skims and scams by giving free money to everyone and not just to their super-wealthy donors (in the form of bailouts, subsidies, tax breaks, no-bid contracts, etc.)

We've already had a taste of free money for everyone in the $1,200 giveaway earlier this year. There was also talk of dispensing with the individuals' share of Social Security/Medicare taxes (7.65% of earned income) for a limited time, but this created confusion because it was unclear if this was a temporary measure that would be due later or an actual freebie.

Clearly, this was a trial balloon for eliminating the Social Security/Medicare tax for low and moderate income households. Why collect $1,200 in SSA taxes and then hand the household $1,200? Why not just eliminate the tax?

Most households pay very little federal income tax as it is. The bottom 50% pay 1% of all federal income taxes, and the top 10% pay the majority of all income taxes.

Declaring the first $50,000 or $60,000 of income per taxpayer as tax-free would not reduce tax revenues by much because the bottom 90% pay such a small percentage of income taxes.

If 90% of households don't pay federal income taxes, then they have no beef with who's feeding at the federal trough, as it's no longer zero-sum. There will be "free money" for everyone: corporate welfare galore, no income taxes for the bottom 90%, permanent unemployment payments for the chronically unemployed, Universal Basic Income (UBI) for everyone, even the top 10% (so they get something for free)-- helicopter money without limit.

As all the extremes of wealth/income inequality unravel, calls to "tax the rich" gain favor. The problem is that the super-rich have the political power to evade taxes, so the only people who will pay more will be the tax donkeys who aren't rich enough to hire teams of tax attorneys and buy tax breaks from desperate-for-campaign-cash politicos.

The idea of countering inequality by giving everyone free money seems painless as long as the Federal Reserve can create trillions out of thin air. And the basic idea of MMT (Modern Monetary Theory) is the Treasury can create trillions without even selling Treasury bonds that accrue interest.

As I explained in The Silent Exodus Nobody Sees: Leaving Work Forever (9/23/20), all this free money (with a token giveaway to the remaining tax donkeys) will have unintended consequences:

1. The working poor who do the economy's hard, low-pay work will find ways to leave their life of poorly paid toil behind forever.

2. The tax donkeys will have tremendous incentives to cut their work and income down to the tax-free level. Why kill yourself to pay 50% of what you earn as taxes?

What kind of economy will we have when all the hard work becomes optional and a consequential percentage of the tax donkeys effectively "lay down their burdens"? All the "free money" will go to consumption, not production, and so the purchasing power of the "free money" will erode very rapidly.

This Is Why Inflation Will Rip Everyone's Face Off (9/17/20)

The intrinsic unfairness of the status quo is undermining the willingness to keep contributing to it. Rather than right the ship, the "easy fix" is to distribute "free money"--not just to billionaires and corporations but to everyone.

Simply put, work no longer pays. What pays is turning companies into debt-zombies to buy back shares and milking America's monopolies. (Contributor A.P. outlined how the system really works: Our Wile E. Coyote Economy: Nothing But Financial Engineering (6/11/20)

All those who believe this is a permanent, stable system will get a nice hard chair at the banquet of consequences. The dominoes are falling but distractions abound.



My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts end September 30 (Kindle $7, print $17)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.



Recent Podcasts:

AxisOfEasy Salon #23: Lords of the Algos (1 hr)


My COVID-19 Pandemic Posts


My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).



If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Chris ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.   Thank you, John P. ($3/month), for your superbly generous pledge to this site -- I am greatly honored by your support and readership.

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Sunday, September 27, 2020

Goodbye To All That: Are Our Rituals of "Prosperity" Increasingly Meaningless?

The heretical truth is that many of the "consumption rituals" that signified "prosperity" for decades are either meaningless, unaffordable or require way more effort than the meager payoff is worth.

Of all the economic heresies imaginable, perhaps the most heretical is to recognize what we label "prosperity" as increasingly meaningless rituals more akin with Soviet-era staged parades than actual well-being.

This is the most dangerous heresy because it breaks the link between consumption--the core activity of our economy--and human happiness. If conspicuous / surplus consumption is ritualistic rather than fulfilling (i.e. it adds to our well-being), then it becomes meaningless or even corrosive.

The focus them shifts to the negative consequences of consumption, i.e. how the rituals of consumption are eroding / disrupting our well-being.

Rituals are satisfying because the performance of the ritual is itself the source of our satisfaction. Belief or enjoyment isn't necessary; completion of the ritual is its own reward.

But once we pull away from the rituals, the emptiness of the performance becomes clear and we start asking, what am I getting out of this for the expense and effort?

These questions arise because many conventional consumption rituals have become prohibitively expensive and troublesome and others demand major amounts of time with very little payoff.

Consider the ritual of passively consuming sports. The ratings of televised games were falling before the pandemic, and by some measures appear to be in free-fall. It's not hard to discern potential reasons: Millennials never formed the habit/ritual of spending hours watching a game, or attending games; despite the protests from die-hard fans, most of the games are interchangeable, as are the players, as pro and college sports have become homogenized in many ways.

As with many other consumption rituals, those performing the rituals rarely stopped to ask themselves if the ritual was actually improving their well-being, or if it had slowly morphed into a colossal waste of time and money.

Many activities of discretionary consumption are in large part rituals: going on vacations, taking cruises, shopping, dining out, and so on. While many will miss the performance of these rituals, others will realize they don't really miss them. Some will feel immense relief that they no longer have to put up a facade of enjoying the tiresome, meaningless rituals.

The enormous expense of once-affordable rituals such as dining out means many will give up these consumption rituals because they can no longer afford it. Two sandwiches and two drinks, sales tax and a tip is now routinely $50 or more. (Note to wealthy readers: in the real world, it's pretty difficult to earn $50 net of taxes and the cost of doing business.)

Other consumption rituals were embedded in modes of work that are dissolving because they're no longer financially viable. The rituals of business travel and attending conferences paid by employers are dying because the luxury of these consumption rituals is no longer affordable to employers whose revenues and profits are in terminal decline.

Every manager pounding the table for a return of all employees to the central office has yet to discover what happens when the corporation reports a staggering loss and refuses to provide forward guidance. If the manager is fortunate enough to retain their job, their task will be to eliminate all offices and digitize and/or automate every function to cut costs.

The many rituals of a central office--the endless meetings, the petty arguments, the smoking breaks, going out for lunch--goodbye to all that. A couple of quarters of steep losses in revenues will push every company and agency to strip away all the rituals of consumption that are no longer affordable.

Did all that enormous expense of time and money really make us happy, or were we just going through the motions? Even those who were so anxious to resume the performance of these consumption rituals may find that the performance leaves them with a nagging sense of ennui and hollowness, as if something is missing, despite the perfect repetition of the ritual.

Some will blame the pandemic, but this is not the real source of their dissatisfaction. The heretical truth is that many of the consumption rituals that signified "prosperity" for decades are either meaningless, unaffordable or require way more effort than the meager payoff is worth.

So the game is playing on the TV but nobody's watching. The news is playing on another TV, but nobody's watching that, either. A disembodied stock market pundit declares a new Bull market but nobody's listening. The social media feed is scrolling by in a mad fury on a smartphone but nobody's clicking on any of it. It's all pointless, hollow, tiresome, for the completion of the ritual is no longer enough.

The meaningless of the engagement rituals and the consumption rituals is now so obvious that the desperation of the purveyors to get everyone back on board adds an exclamation point to the emptiness of their offerings.

Here's why addressing this is heresy: what props up the economy once all the consumption rituals fall out of favor or are no longer affordable? The answer is of course nothing.



My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts end September 30 (Kindle $7, print $17)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.



Recent Podcasts:

AxisOfEasy Salon #23: Lords of the Algos (1 hr)


My COVID-19 Pandemic Posts


My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).



If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.


NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Anthony L. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.   Thank you, Charles H. ($25), for your superbly generous contribution to this site -- I am greatly honored by your support and readership.

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Friday, September 25, 2020

The Road to Nowhere: Whatever Can't Be Politicized Ceases to Exist

Just as time is a one-way arrow, "the politicization of everything" is a one-way road to dissolution and collapse.

The essence of any Totalitarian society is the politicization of everything, as everything must be either supporting the status quo or it's a threat to the status quo.

There is no middle ground in a Totalitarian society and so everything--literally everything-- must be politicized to assess its true nature of being "for" or "against" the status quo.

In such a society, what cannot be politicized ceases to exist. It isn't counted or recognized, and so it fades into a netherworld of shadows, a dangerous realm where the mere act of attempting to recognize a non-politicized experience is itself a threat to the status quo.

You will of course be thinking of the former Soviet Union (USSR) and other Totalitarian societies. Here's an extreme example of how the politicization of everything works: a conventional worker in a conventional factory happens to mention to a co-worker that he dreamed Stalin had fallen ill, and this worried him. The co-worker reported this disturbing dream to the proper authorities, who instantly recognized the true nature of the dream and sentenced the worker to 10 years in the Gulag for having an anti-Soviet dream.

(A 10-year sentence in the Gulag was so common that it was nicknamed "a tenner.")

In America circa 2020, "a tenner" for the wrong thought, opinion or dream takes other forms. Indeed, even the claim that a dream might not have a political angle is itself cause for being sentenced to "a tenner," because the core of the Totalitarian society is the politicization of everything.

Every object, entity, image, document, historical "fact," person, thought, emotion, reaction, narrative, opinion, everything tangible or intangible, has a barely concealed political subtext in a Totalitarian society.

There is nothing innocuous, innocent or whimsical in a Totalitarian society, at least in the public sphere. In an era permeated by the cruel marriage of surveillance capitalism and the bitterly divided state, even the once-private sphere is subject to public exposure and shaming / sentencing.

As in an Orwellian nightmare, your "smart" phone, vehicle, TV or Alexa-powered doorbell can eavesdrop and record your private conversations and behaviors, and somebody somewhere has access to this data and can share it with others.

The ostensible justification is "your safety" or "to catch wrongdoing," but this is transparently false. The real reason is to discern your political crimes. You need not commit any crimes per se to be persecuted; all that's needed is some tiny bit of evidence that reflects your true beliefs which by definition must be supportive of the status quo via endless virtual-signaling; if not, then they are necessarily a threat to the status quo.

To remain confidential, everyday life must be treated as wartime. Your hand-written journal is safe, as long as you don't share it digitally. But since we've morphed into an engagement-based social order, your selfhood now depends on engaging others digitally via "likes," shares, etc. and sharing your most "engaging" images and experiences.

A non-shared, non-digital private life is now a form of non-existence that most people find painful and isolating. Hence the obsessive addiction to social media and "sharing" one's (carefully edited) life online.

Alas, even the most careful editing cannot conceal your true beliefs which will be revealed by the smallest detail: your location, the brand of items you're wearing, etc.

In a bitterly divided society, your beliefs will be political crimes to one camp or another. Any attempt to "find common ground" will be dismissed as a self-serving ploy, or more dangerously, as a hidden agenda of the forces attempting to destroy the Party.

Those furiously virtue-signaling to maintain their political righteousness within their chosen camp find the sands shifting beneath their feet. The most extreme virtue-signaling is rewarded until it becomes a new threat, and then those who strayed unknowingly beyond the invisible lines will find themselves cast out for political crimes whose definition is constantly changing.

Science has long be politicized, of course, but now it is being hyper-politicized as the stakes keep rising. Claims of neutrality are necessarily viewed as nothing more than clever facades to mask the real motives of self-interest and collusion.

Just as time is a one-way arrow, the politicization of everything is a one-way road to dissolution and collapse. Wishing it wasn't so doesn't make it so.



My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts end September 30 (Kindle $7, print $17)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.



Recent Podcasts:

AxisOfEasy Salon #23: Lords of the Algos (1 hr)

My COVID-19 Pandemic Posts


My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).



If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.


NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Bob S. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your steadfast support and readership.   Thank you, Roger H. ($25), for your superbly generous contribution to this site -- I am greatly honored by your steadfast support and readership.

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Wednesday, September 23, 2020

The Silent Exodus Nobody Sees: Leaving Work Forever

The "take this job and shove it" exodus is silently gathering momentum.

The exodus out of cities is getting a lot of attention, but the exodus that will unravel our economic and social orders is getting zero attention: the exodus from work. Like the exodus from troubled urban cores, the exodus from work has long-term, complex causes that the pandemic has accelerated.

These are the core drivers of the exodus from work.

1. labor's share of the economy has been in multi-decade decline. It's easy to blame globalization and/or automation--and it's true that the decline in labor's share accelerated from 2000 on. But this trend began around 1970, long before China joined the World Trade Organization and the advent of "software eating the world." (see chart below)

2. While it's convenient for those reaping the big gains (see chart below) to blame globalization and/or automation, the real driver was financialization--the neoliberal move to deregulate finance so it could turn everything into an exploitable "market" that could be made to serve one master: shareholder value, the innocuous-sounding code-phrase for anything goes and winner takes most--if you're rich.

Shareholder value was the super-wealthy's self-serving justification for unlimited greed as corporations went from being enterprises serving communities, the national interest, employees, customers and shareholders to financialization machines whose sole purpose was enriching insiders via loading the company with debt to pay huge bonuses to top managers, stock buybacks funded by debt, the abandonment of trustworthy accounting principles and so on.

Financialization and the deification of shareholder value sluiced all the gains into the hands of the few at the top at the expense of the many. As the chart below indicates, the top 0.1% enjoyed income gains of around 350% since 1979 while the bottom 90% barely topped 20%--a number that would be sharply negative if real-world inflation were included.

Simply put, the bottom 90%--wage-earners--lost ground over the past four decades of financialization while the wealthy winners of financialization became super-wealthy. The rewards of labor/work have diminished to an extraordinary degree for the bottom 90%, and even the 91% - 99% bracket has found their labor has mostly served to enrich those above them.

These trends will drive both the top wage-earners and the bottom wage earners out of the workforce. The managerial class that keeps the whole machine glued together can either retire or use their human and financial capital to find other less stressful ways to make a living and downsize their expenses to match their reduced income.

Some will be voluntary, many will be involuntary, but the results will be the same: a mass exodus of hard-to-replace skilled workers. This is what I'm calling the take this job and shove it exodus.

Once the Federal Reserve starts sending "free money" directly to households, many at the bottom of the pay scale will realize they too can take this job and shove it.

In Unprecedented Monetary Overhaul, The Fed Is Preparing To Deposit "Digital Dollars" Directly To "Each American" (Zero Hedge)

'I cry before work': US essential workers burned out amid pandemic Essential workers reported stress caused by increased workloads, understaffing, fears over Covid and struggles in enforcing social distancing. (The Guardian)

What few well-paid apologists seem to realize is that to equal the purchasing power of the minimum wage I earned in 1970 ($1.65/hour), the minimum wage would have to be close to $20/hour now. The absurdly under-reported rate of official inflation (the Consumer Price Index) claims that a minimum wage of $12/hour now equals the purchasing power of $1.65/hour in 1970, but since I've kept records of all expenses I can report that this is totally false.

As the chart below shows, wages' share of the economy has been in a relentless 50-year slide. The entire machinery of inflation calculation has been driven by the desperate need to mask the true collapse of the purchasing power of wages.

Once the workforce awakens to this, the silent exodus out of the workforce will gather into a flood tide. Permanent unemployment payments, Universal Basic Income (UBI), free Fed money--regardless of the program or name, these will enable a mass exodus of those at the bottom of the workforce pay scale while burnout will also decimate the ranks of essential managerial / skilled workers.

It's payback time, people. Hey, Financial Aristocracy, clean your own floors and slaughter your own meat. Hey, corrupt politicos and apparatchiks, wipe your own tables and watch your own brats. The take this job and shove it exodus is silently gathering momentum.

The Protected Class of pundits, technocrats, flunkies, toadies and enforcers believes the take this job and shove it exodus is "impossible", just as everyone believed the Titanic was unsinkable. Just as the Titanic sinking went from "impossible" to inevitable, so will the take this job and shove it exodus move from "impossible" to inevitable.





My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts end September 30 (Kindle $7, print $17)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.



Recent Podcasts:

AxisOfEasy Salon #22: When the going gets weird, the weird turn to YouTube (1 hr)


My COVID-19 Pandemic Posts


My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.


NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Ian M. ($10/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.   Thank you, wstiles ($5/month), for your much-appreciated generous pledge to this site -- I am greatly honored by your support and readership.

Read more...

Monday, September 21, 2020

Inflation and "Socialism-Lite" Are Just What the Billionaires Want

After a bout of inflation and "socialism-light", we could end up with even more extreme inequality when the whole rotten structure collapses.

Imagine owning a Buffett-Bezos fortune of bilious billions, or even 10% of these mega-fortunes, i.e. between $5 billion and $20 billion. Heck, imagine owning 1% of these mega-fortunes, i.e. $500 million to $2 billion.

You're extremely rich so you can buy the best advice. Your capital is mobile, and so are you. You can live anywhere and shift your capital anywhere.

Your advisors have noted an increase in media chatter on inequality, for example: The Bill for America's $50 Trillion Gluttony of Inequality Is Overdue, and they're busy preparing plans to weather the storm and preserve your fortune come what may.

It's all too obvious that a claw-back of the trillions plundered by America's 0.1% is now inevitable as the pendulum has swung to extremes of looting and parasitic predation that have destabilized the social and economic orders. So Job One is managing this claw-back politically and financially to leave the fortunes of the super-wealthy either unscathed or even more magnificent after the dust settles.

The super-wealthy have two key weapons at their disposal: inflation and "socialism-light." Once the world's governments borrow and spend enough money supporting all the insiders, bread and circuses for the masses (Universal Basic Income) and giveaways to industry and construction (under the happy rubric The New Green Deal), inflation will be roaring higher in no time.

What happens in runaway inflation? Tangible assets soar: land, timber, railroads, gold, mining companies and stocks of truly profitable enterprises (not zombies propped up with debt and bogus "profits" ginned up by accounting tricks).

What do the super-wealthy own? Land, timber, railroads, gold, mining companies and stocks-- all the tangible assets that will maintain or increase their value in runaway inflation.

(Recall that "inflation" is not one dynamic; many are protected and others actually gain while the masses are impoverished: "Inflation" and America's Accelerating Class War 9/18/20.)

"Socialism-light" is equally beneficial to the super-wealthy. "Socialism-light" is my term for the Aristocracy's management of the extreme inequalities of wealth, income, power and privilege. The basic idea of "socialism-light" is to spread a thick layer of gooey PR over the same old system of legalized looting, parasitic exploitation and neofeudal predation and then have the government borrow endless trillions to fund bread and circuses for the masses (Universal Basic Income).

The irony will not be lost on the super-wealthy. As the state borrows endless trillions to send every household $1,000 a month, this borrow-and-spend orgy will push inflation higher, stripping away the purchasing power of the household's income.

In no time at all the $1,000 in "free money" will only buy $500 of goods and services. The cries for "more stimulus" will reach a crescendo and the bread and circuses will double to $2,000 a month.

But this money-printing-to-the-moon will only increase real-world inflation (as I explained in This Is Why Inflation Will Rip Everyone's Face Off 9/17/20), so the end result will be the $2,000 only buys $200 of goods and services.

Meanwhile, the super-wealthy are minting fortunes as everyone desperately seeks a hedge against inflation, which is wiping out cash, low-interest bonds, etc.

Banks--a core source of wealth and power for the super-wealthy--also anticipate this, which is why they immediately sell all the loans they originate to pension funds, sovereign wealth funds and other bagholders whose losses will be stupendous once inflation shreds the value of low-interest rate debt.

Banks won't be able to survive unless they 1) grab the most valuable collateral underlying their loan portfolios and 2) move their lending into short-term debt so they can jack up interest rates to match inflation.

Meanwhile the gooey, easily digestible PR will include a "wealth tax" that ends up being a pinprick on the total wealth of the super-wealthy who have sequestered their wealth in philanthro-capitalist foundations that are nothing but power grabs by other means, and various other forms of legalized looting.

The "wealth tax" will end up stripmining professionals and entrepreneurs, not the super-wealthy. Those earning $1 million with a net worth of $20 million will be gutted, while those worth $5 billion will pay a pittance. This is the inevitable result of the best government money can buy.

Eventually the entire house of cards collapses and if there is no replacement of the current political power structure that actually changes the way currency is created and distributed, the pathways to ownership of capital and labor's share of the economy, then the system will simply return to the existing inequality with a new currency.

As I often say: if you don't change the way money is created and distributed, you've changed nothing. If you don't change the means of acquiring capital and political power, you've changed nothing. If you don't change labor's share of the economy, you've changed nothing.

Money-printing, inflation and "socialism-light" are just what the super-wealthy ordered: so by all means spark runaway inflation with "free" (heh) bread and circuses, provide trillions in "stimulus"to corrupt insiders, industry giveaways (New Green Deal, carbon credits, etc.), and slap a feel-good "wealth tax" that mysteriously misses the super-wealthy but guts the tattered remains of the productive class.

After a bout of inflation and "socialism-light", we could end up with even more extreme inequality when the whole rotten structure collapses. Be careful what you wish for and cui bono--to whose benefit? To answer that, look beneath the gooey layer of PR.

It doesn't have to be this way. My new book outlines a much different way of organizing capital, labor and the creation of money: check out the free bits: Excerpts of the book (PDF) The Story Behind the Book and the Introduction.







My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts end September 30 (Kindle $7, print $17)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.



Recent Podcasts:

AxisOfEasy Salon #22: When the going gets weird, the weird turn to YouTube (1 hr)
<

My COVID-19 Pandemic Posts


My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).



If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Thaddeus K. ($20), for your splendidly generous contribution to this site -- I am greatly honored by your support and readership.  

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Sunday, September 20, 2020

The Bill for America's $50 Trillion Gluttony of Inequality Is Overdue

The battle to claw back a significant percentage of the $50 trillion is just beginning.

Do you hear the pathetic bleating of America's billionaires and their army of toadies? If not, you soon will, for a remarkable report has been released that documents the $50 trillion in earnings that's been transferred to the Financial Aristocracy from the bottom 90% of American households in the past 45 years.

The report was prepared by the RAND Corporation, and has a suitably neutral title: Trends in Income From 1975 to 2018. (The full report can be downloaded for free.)

Just as remarkable is the no-holds-barred coverage of the study by Time magazine, an iconic publication of the mainstream media: The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90% -- And That's Made the U.S. Less Secure.

Longtime readers know I've reported on the astounding increase in America's economic inequality for the past 15 years, and addressed the eventual banquet of consequences this imbalanced, destabilizing state of affairs will serve up.

But with few exceptions, the corporate media has ignored this fundamental reality of American life, and blown off the consequences as easily ignored speculation by marginalized bloggers and commentators. ("Would somebody please shadow-ban these sites going on and on about soaring inequality? Thank you, Facebook, Google and Twitter--we'll return the favor directly.")

The extreme rarity of paragraphs like these in the corporate media cannot be over-emphasized. The corporate media has carried water for the billionaires and America's Financial Aristocracy for decades. (No surprise, given that the vast majority of America's media / social media is owned by the billionaires and Financial Aristocracy. Why bite the hand that feeds you, especially when the risk of losing your career is so high?)

Excerpted from the time.com article linked above:

There are some who blame the current plight of working Americans on structural changes in the underlying economy--on automation, and especially on globalization. According to this popular narrative, the lower wages of the past 40 years were the unfortunate but necessary price of keeping American businesses competitive in an increasingly cutthroat global market. But in fact, the $50 trillion transfer of wealth the RAND report documents has occurred entirely within the American economy, not between it and its trading partners. No, this upward redistribution of income, wealth, and power wasn't inevitable; it was a choice--a direct result of the trickle-down policies we chose to implement since 1975.

We chose to cut taxes on billionaires and to deregulate the financial industry. We chose to allow CEOs to manipulate share prices through stock buybacks, and to lavishly reward themselves with the proceeds. We chose to permit giant corporations, through mergers and acquisitions, to accumulate the vast monopoly power necessary to dictate both prices charged and wages paid. We chose to erode the minimum wage and the overtime threshold and the bargaining power of labor. For four decades, we chose to elect political leaders who put the material interests of the rich and powerful above those of the American people.


That this level of incendiary outrage is now seeping into the mainstream media tells us that the bill for America's $50 Trillion gluttony of inequality is long overdue and the pendulum of reckoning will swing to political, social and economic extremes equal to the extremes of wealth and income inequality engineered by America's Financial Aristocracy and their toadies / lackeys in government, the Federal Reserve, Wall Street, Silicon Valley and the media.

The rallying cry to claw back a significant percentage of the $50 trillion is just beginning. The billionaires have the money and power, of course, and the best government that money can buy plus the loyalty of a vast army of well-paid toadies, lackeys, factotums and apparatchiks.

But once the citizens no longer accept their servitude, the pendulum will gather momentum. America's Financial Aristocracy has reached extremes not just of wealth-income-power inequality, but extremes of hubris. Their faith in luxury bug-out estates / private islands is evidence that even if the way of the Tao is reversal, they'll have their private bodyguards and stashes of fuel and other essentials.

The clawback might not be as easy to rebuff as they anticipate, nor will the pendulum swing that's just starting necessarily arrive at the opposite extreme in the orderly, predictable fashion they're accustomed to controlling.

Here's a few of the many charts you've seen over the years here that illustrate rising inequality:







My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts end September 30 (Kindle $7, print $17)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.



Recent Podcasts:

AxisOfEasy Salon #22: When the going gets weird, the weird turn to YouTube (1 hr)


My COVID-19 Pandemic Posts


My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).



If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.



Thank you, Sebastian S. ($35), for your splendidly generous contribution to this site -- I am greatly honored by your support and readership.
 

Thank you, Robert P. ($1), for your much-appreciated generous contribution to this site -- I am greatly honored by your support and readership.

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Friday, September 18, 2020

"Inflation" and America's Accelerating Class War

Those who don't see the fragmentation, the scarcities and the battlelines being drawn will be surprised by the acceleration of the unraveling.

I recently came across the idea that inflation is a two-factor optimization problem: inflation is necessary for the macro-economy (or so we're told) and so the trick for policy makers (and their statisticians who measure the economy) is to maximize inflation in the economy but only to the point that it doesn't snuff out businesses and starve workers to death.

From this perspective, households have to grin and bear the negative consequences of inflation for the good of the whole economy.

This narrative, so typical of economics, ignores the core reality of "inflation" in America: it's a battleground for the class war that's accelerating. Allow me to explain.

"Inflation" affects different classes very differently. I put "inflation" in italics because it's not one phenomenon, it's numerous phenomena crammed into one deceptively simple word.

When "inflation" boosts the value of homes, stocks, bonds, diamonds, quatloos etc. to the moon, those who own these assets are cheering. When "inflation" reduces the purchasing power of wages, those whose only income is earned from their labor suffer a decline in their lifestyles as their wages buy fewer goods and services.

They are suffering while the wealthy owners of soaring assets are cheering.

The Federal Reserve and federal authorities are not neutral observers in this war. The Fed only cares about two things: enriching the banking sector and further enriching the already-rich.

The banking sector makes money by lending newly created currency to borrowers. No borrowers or new loans--banks go broke. So the Fed must generate the right kind of "inflation": it must lower the cost of borrowing money (deflating the cost of borrowing) by reducing the rate of interest borrowers pay, and it must "inflate" the market value of the collateral banks and Wall Street need to support more debt: commercial buildings, homes, stocks, bonds, etc.

This "inflation" of asset valuations makes those who already own these assets richer, while impoverishing those who must buy them with wages that are losing purchasing power. The Fed doesn't care if small businesses go broke or households slide into poverty; the Fed's only concerns are maintaining "inflation" in asset valuations and "deflation" in the cost of borrowing, so that debt-serfs, zombie corporations, local and federal government--everyone--can borrow more money, further enriching banks and Wall Street.

This is the sole goal of the Fed. Everything else is distracting PR.

There are downsides to this, of course, but they fall on "the little people" so economists, the Fed and federal officials don't bother to even track the downsides. Thus we have the nonsensical games government statisticians play to keep official measurements of "inflation" low. This serves to obscure the reality that real-world "inflation" in the cost of education, childcare, health insurance, rent, and so on--all the big-ticket household costs--is soaring, stripping away the purchasing power of wages.

Here's an example of how wages and purchasing power can be understood. Back in the day, I could rent my own studio apartment for half a week's pay. I was young and not well-paid, but I could still rent a crummy apartment for half a week's pay: 2.5 day's wages.

Try finding an apartment for half a week's pay in a major city. Young workers are paying two week's pay just to rent a room. This is a massive loss in the purchasing power of labor.

Meanwhile, those with the right kind of assets are experiencing fantasic increases in their unearned income. These increases in income (and wealth) far exceed the modest impacts of real-world inflation on these owners of the right kind of assets.

Let's start with the the wrong kind of asset: a savings account. Where savers earned 5.25% on their savings as a regulatory requirement in the 1960s, now they earn less than nothing: even the bogus "official inflation" is 2%, while savers get 0.1% or less on savings. So savers lose money every day.

Those who bought bonds and stocks and real estate--the right kind of assets--have scored enormous gains in wealth and income. There's just one little tiny problem with the right kind of assets: the vast majority are owned by the top 5% of households, with the top 1% owning 40% and the top 0.1% owning 20%--more than the bottom 80% own.

There aren't just wealth-income classes --those who own these assets and those who don't-- there are demographic and age classes, too. Young wage earners are mostly priced out of buying these assets with wages, unless they borrow staggering sums of money and devote most of their income to servicing their debts (student loans, auto loans, mortgage, etc.).

Retirees have been forced into gambling their retirement funds in the Fed-rigged casinos, which just so happen to crash every decade or so, wiping out the naive punters who believed "the Fed has our backs."

"Inflation" isn't an abstract debate --it's class war. And it's not just between two classes, those who depend on wages/earned income and those reaping the trillions in unearned income and wealth; there are warring classes fractured by age, demographics, political loyalties and issues of who's hoarding what: every one of these fractured classes is competing for scarce resources, scarce income and scarce security.

Those who don't see the fragmentation, the scarcities and the battlelines being drawn will be surprised by the acceleration of the unraveling. As noted here previously, The banquet of consequences is being laid out, and there won't be much choice in the seating.



My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts end September 30 (Kindle $7, print $17)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.



Recent Podcasts:

AxisOfEasy Salon #22: When the going gets weird, the weird turn to YouTube (1 hr)


My COVID-19 Pandemic Posts


My recent books:

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook coming soon) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).



If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.



Thank you, Anne ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.
 

Thank you, Judah S. ($10), for your most generous contribution to this site -- I am greatly honored by your support and readership.

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Thursday, September 17, 2020

This Is Why Inflation Will Rip Everyone's Face Off

 This is why inflation will rip everyone's faces off: production will continue to stagnate no matter how many trillions the Federal Reserve prints and throws around.


This is how market capitalism is supposed to work: consumers decide (for whatever reason) to buy more toilet paper. This increase in demand strips the shelves of TP and pushes the price up as demand exceeds supply.


In response, capital flows to enterprises that ramp up production of TP to meet this new demand / scarcity of supply. Price returns to equilibrium.


Yea for our wunnerful market capitalism ... but oops, this isn't what actually happens in our economy. What actually happens is less of a happy story. As correspondent A.P. explained in Our Wile E. Coyote Economy: Nothing But Financial Engineering (June 12, 2020), the real money in the American economy isn't made by increasing production of goods and services or making better quality products; it's made with debt that funds financial trickery like stock buy-backs.


The "business" is just the facade used to justify the corporate bonds, loans, stock buy-backs, etc. Corporate America has perfected this game, and so have Wall Street and SillyCon Valley, which produces one money-losing unicorn after another that IPOs for tens of billions of dollars, all based on the pixie dust of future profits and valuations.


Production is for losers. Financial engineering is for winners. Simply put, capital has no interest in gambling on building factories and training employees. Not only is that risky, it's a low margin endeavor, which makes it of zero interest to capital.


How many billionaires have been minted in America in the past 20 years for building anything? Billionaires become billionaires by either hijacking the human mind's receptors for attention and addiction or by selling corporate bonds and leveraging the debt to skim billions of dollars.


Not only is capital not available to boost production, neither is the expertise or labor. A great many of the people with the hands-on experience needed to build stuff and manage complex production processes have retired or will soon retire, and there isn't a second team ready to take the field.


If production is absolutely necessary, then Corporate America will have it done on the cheap overseas. Sure, the quality is terrible but the American consumer will buy without question; that's why corporations went to all the trouble of establishing a heavily moated monopoly or cartel: the consumers have either no choice or a false choice between members of a cartel offering the same lousy quality and high prices.


But Corporate America's go-to solution to everything--globalization--is running out of rope, and the cliff beckons.


Corporate America's tired trick of offering a couple bucks more per hour for the opportunity to double your workload no longer works because the issue isn't the couple bucks per hour; it's that the workforce no longer has the requisite skills because our educational system and Corporate America have failed.


The Federal Reserve can conjure up trillions of dollars out of thin air to further enrich the nation's parasitic scum, but they can't print experienced, motivated workers or people with entrepreneurial skills.


Corporate America gave up training its workforce a long time ago, and SillyCon Valley has perfected the art of poaching employees from competitors rather than invest in training.


As for the underpaid workforce who's supposed to do the real work-- as I've noted here many times, the pandemic has given many workers an opportunity to reassess their options, and some consequential percentage (including many small business owners) have concluded that the wisest course of action is to follow Johnny Paycheck's suggestion to Take This Job and Shove It.


The top 5%--speculators, technocrats, managers and the chattering classes-- haven't grasped that America is now a variation on the old Soviet joke: The Soviet joke was we pretend to work and you pretend to pay us. In America, the joke is: we work like crazy to make you rich and you pretend to pay us.


This is why inflation will rip everyone's faces off: production will continue to stagnate no matter how many trillions the Federal Reserve prints and throws around. With capital addicted to financial engineering and the purchasing power of labor's wages in permanent decline, we're about to reap the consequences of hollowing out our real economy to benefit the most parasitic and socially useless sociopaths at the top.



My new book is available! A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet 20% and 15% discounts end September 30 (Kindle $7, print $17)

Read excerpts of the book for free (PDF).

The Story Behind the Book and the Introduction.


Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World


Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).


The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)


Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, George G. ($10/month), for your outrageously generous pledge to this site -- I am greatly honored by your support and readership.

 

Thank you, Michael H. ($10/month), for your outrageously generous pledge to this site -- I am greatly honored by your support and readership.


Read more...

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