Monday, January 22, 2007

Death of America, the economy

Last update on 02/07/2007There is one simple rule of economics; the only way to get rich is to take someone else’s money. Surprised? Just look at all the hedge funds, the advisers, the analysts on the Wall Street, all in the business of taking money away from someone else. What is it that these people do that generates wealth? Nothing, all they do is to figure out a way to take away someone else’ money, “legally”. The only way, actually, to generate wealth is to add value to something, to create or improve something by adding labor to it. It could be something like taking an ore out of a mine, where it was worthless, or machining a part or even navigating a ship across the ocean with some merchandise on it for sale. But what it is not, is to be betting as to what commodity should sell at what price in the future, for instance, or where the stock market will be at a given point. As such, labor of the physical kind is the only thing that adds real value to an item, be it the growing of a crop, the harvesting of the same or making of widgets.How then can one ever become wealthy? Well if you happen to have enough capital, you start a business, a venture, where you try to pay the least amount of money to the people who actually generate wealth through their labor, and that is called working. Since labor is a perishable commodity, the working person must use it in exchange for something of a “monetary value” as quickly as he or she can. If the labor is abundant, the value of labor decreases, just like any other commodity, thus the person is forced to sell it as quickly as he or she can, for whatever value one can receive for it. In a global economy, where all the workers of the world are forced to compete against each other the value of work (wages) will decrease rapidly, thus the employer will force the worker to work for the fewest beans thereby keeping most of the value added to the product. This is called Capitalism. And by the way, capital is not generated by a FED printing unlimited amounts of money, capital is generated by a people earning more than they are spending and putting the extra money aside, which is called “savings” I had to explain this because some of the readers may be Americans who are not familiar with such ancient terms.In today’s consumer based economy we are encouraged to spend, spend, spend, and so we do. Many a worker or a family is living on a tight budget. Of course one needs a car to get around, going to work, we need a house or an apartment, and we need health insurance, water, electricity, cable, cell phone, home phone etc. With the wages generally being lower than what it takes to supply what one needs, we require a second income, in most cases, just to make the ends meet so we need to have a “relationship” to be able just to survive, really. Thus one must fall in “love” out of necessity, which does not say much for the quality of one’s selection, or for the commitment to and the duration of such a relationship.Poverty is the state where a person or a family can not fulfill their needs, it may be real or imagined (imagined, when needs are created and assumed, but are not necessary for survival). In the land of plenty and consumption society, where you are reminded twenty four – seven what the others have that you do not have, the imagined poverty destroys many a home, a family and a relationship.This the situation, a catch-22 if you will, in 1980 while we were still talking about the ERA (equal rights amendment) in this country, I proposed that including females in the labor force causes inflation, and at the same time reduces the wages of workers. Now I admit, I do not have a “Nobel” in economics, and this is basic economics, if there are two people working in a house hold, they have (supposedly) more disposable income so they buy more goods and the price of goods goes up, with me so far? Now then when there are more people available to work, the price of labor goes down (wages are reduced), so over a long period of time a household is no better off with two people working than it was with only one wage earner. Now I am not suggesting, not by a long shot, that a woman’s place blah, blah, blah. But that may be only the more efficient worker in the house should work, while the other can take care of the house and family. I hope when they are grown, my daughters can buy their own husbands, happy?What I am suggesting is that more people should be taken out from the labor pool so the wages can rise.
There is a big joke being played upon the poor world wide, that we the Anglos, the white, the rich, the first worlders are interested in reducing poverty. No we are not, not really, remember for every high rise going up in a given country, for every factory being built to provide jobs, for every road every bridge, there are and there must be hundreds, thousands may be that must starve, and that is the grim reality of the world that we live in. The joke is that we will spend fifteen billion dollars, in sub-Saharan Africa, over ten years, to reduce poverty, and the punch line is that the United States alone borrows two billion dollars a day to keep her economy going. If we did not use this money to buy unnecessary garbage made by the slave labor in countries like China and Vietnam, that money could be used to develop the infra structure in those countries, or their labor could be paid a living wage, or they could loan or grant the money to a poorer nation. Do you see what I am saying?
What is truly needed, right now, is that the world population be reduced, but the world leaders are afraid to speak the truth to their people to save their own hides. there are the political reasons, cultural reasons and the religious reasons. How can you tell your people that if they won’t stop reproducing they will all die. That each individual country, each individual race, each individual people will out run their resources. The world will be so over crowded and so over polluted that the planet will be unable to support any form of life. As I mentioned previously in " The New World Order, 2003", we can not provide the power, the housing, the transportation , etc, for everyone living on earth now without running out of resources in a short order, then why we continue the charade, why are people not being told that in the long run we will (most of us will any how) be living like the worst off of the sub Saharan Africa.
Increasing the population just so that you increase the number of consumers is dumb. Time and again it can be shown that as the population of a country increases, so does the disparity in the wealth of the rich and the poor. As the poor need to compete for work, the cost of labor goes down and the profit of the rich goes up. No wonder the US is working to legalize millions of illegal aliens to keep the wages of the workers down, at the same time increasing the number of the consumers. Strangely enough, the Muslim prophet Mohammed said that if one is too poor to support a family than one should not marry, guess how that one is working out, even in the so called Islamic countries like Bangladesh.
Is it not strange that the Democratic President Bill Clinton signed off on the NAFTA, that was promoted by Ronald Reagan, and now President Bush and Ted Kennedy want to legalize the illegal immigrants. Is it a conspiracy to screw the poor or are our leaders so damn stupid that they can’t smell dodo even as they have it stuck on their noses. Are we so close to the end of the world now that we don’t need to care? Or as the public WE are so ignorant that we don’t know when we are being screwed. When the illegals marched in the streets there should have been larger counter protests by the Americans, but we are too busy being entertained to death.
Let me back up here for a bit, one would say why am I complaining while the economy is booming, the stock market is up, inflation under control, yada, yada, yada.
Well there are two points to consider first, if housing is considered as and investment for the later years, or at least to put your kids through college, then why are so many people spending the equity in their homes for current expenses, to buy a new TV or something, or just to keep up with the Joneses? Two, if your credit card company increases your credit line, do you become richer? Actually most Americans today are working for “The Man“, to pay the taxes, or to pay the interest on their college loans, on credit card loans, to the mortgage companies. The great big lie is that seventy percent of the Americans own their own homes, when in truth they are renting their homes from the mortgage company. Both the Democrats and the Republicans lie about the economy, because they want the stupid consumer to keep spending the money they will never have, till one morning the are told they now they are officially slaves.
“T’s the ultimate freedom, when you chose to be a slave,” (M.N.R.).
The second point about all this prosperity is that it is based on the deficit spending by the government. The lie that is told is that when government cuts taxes the revenues go up. But no one ever mentions that the revenues go up because of the deficit itself, as the government spending cycles through the economy, obviously the employment and the corporate profits go up, when the employment goes up the social security taxes go up, and guess what is off set by the surplus in the social security tax collection, the deficit. And again as the corporate profits go up the tax collections go up , so the so called reduction in the deficit, or increase in the revenue is just so much smoke and mirrors, and why doesn’t some one explain it to the people? Because it is easier to keep the idiots happy and it gets the politicians re-elected by the stupid electorate.
The lie has been told again and again, so many times that even Bush himself may not know the difference, many Republicans surely do not, and the moneyed advisors don’t want you to know the facts, but here it is the truth about the Bush tax cut. While they are fighting in congress whether to make the Bush tax cut permanent or not, the truth is that the tax cut really does favor the rich and the ultra rich. The average Joe, making a hundred thousand or less was given a fifteen hundred dollar a child tax credit, not a real tax cut, and as the tax cut for the rich is about to be made permanent, the child tax credit will disappear and the taxes for the middle and lower income people will go up, this is called compassionate conservatism.
We see the stock market going up, the Dow making new highs, but is it for real? If you had bought the thirty stocks in the Dow twenty years ago in nineteen eighty six, and had never changed anything, you would be sitting at a net loss today, because the GM, Ford, Delta, ATT, Sears, all have lost money, big time. The only reason the Dow seems to be up is because they keep changing the stocks that make up the Dow thirty are changed as the companies go broke and are replaced by newer names. So if you buy the shares today.
And what does the “value” of company like Google or Yahoo or e-bay, U-tube has to do with reality? These company don’t make anything, and don’t add value to anything, they don’t even own anything that anyone would need, or provide a needed service, ok, e-bay does that. But for the others are nothing more than a HOPE that someone will click thru and ad to buy something.
But to buy something, you need money you do not need for something else that is a necessity, nothing like that is sold on Yahoo, or Google, no milk, no bread, so you must be someone that has extra money. One way to have extra money is to not to have kids, and not to get married, do you see my point?
One of the cruelest ways to make you a slave is to get you in debt. And here is how the scheme works. Starting at home where parents are more apt to go to work to buy whatever is new on the market for their kids, to fulfill their demands, our children get in the habit of not waiting to buy something or waiting for something, saving for something to own. We teach our children that when you want something you jut pull out a credit card. As I have mentioned before, most of us today are living beyond our means. An average person has to go into debt just to meet these so called needs. Not everyone needs a new car, for instance before the old one is paid off. But most people do exactly that and never get out the cycle of having a car payment. In the last thirty years, the car financing has gone from average three year loans to now seven year loans, and we keep making the payments without realizing that so long as the consumers are willing to make these payments, the car prices will keep rising. And that is just the tip of it. Does every one really need a cable bill? A cell phone? Do you know that these payments are for life? We have not learnt to say no, ever! Not in sex and in buying more cheap stuff.
How many do you know that buy more than they can afford? Christmas coming, get a new Visa card, vacation, we can put the on the card also, or take out a home equity line of credit. And yet everyone knows that our wages are not keeping up with the cost of living and we go around scratching our collective behinds wondering what is going wrong and end up getting divorced, (which actually ends up costing more money and lowers our standard of living.
But lets say for example that you never had these problems growing up and the only thing you needed was a small loan for college. Now they have you again, you start out from college already deep in debt, and unless you are extremely lucky you will always be in debt for the rest of your life. And don’t you dare stop spending the money you don’t have, our economy depends on it. It depends on you to be stupid and stay in debt for the rest of your life, so you never get to accumulate wealth, ( capital).
The money that we spend today will yet have to be made by our grand children and great grand children. In the mean time we have a federal reserve system that keeps creating money from nothing, just like the Germans did during the world war two, but we are too stupid to know what happened to the German economy as a result, let me give you a hint, after the war, in Germany, one could get laid for a pack of cigarettes. What is up with our bible thumping president, what was the biblical parable of the seven fat cows followed by the seven skinny cows.
We are being sold in slavery and we don’t care. If not why is it that people making a hundred thousand a year or more cannot seem to afford all that they want, is it not a definition of slavery that your needs are never met? A vast majority of the people making hundreds of thousands of dollars as in debt up to their eyebrows, and even if you make a million or two a year you have not yet “ARRIVED”, it takes much more. Say how you would feel when if had just figured out that you had made your first million dollars last year and then to wake up to find out that Beckham just got a five year two hundred and fifty million dollar contract? I guess you will go out and work harder to make more, so you can keep up , but the only way to make more is to figure out a way as to how to beat some one out of what THEY have. Be it your workers or your clients. But since we are living in a COMPETITIVE environment so only one you can really put the screws to is your workers.
The other problem with today’s consumer culture is that there is so much stuff to buy, you need a new plasma TV, and a black berry, your kids need the new X-box, and I-pod, the latest fashions and cars and the Ivy League education, whatever, and soon as you have built that forty-five hundred square foot McMansion on the golf course, your brother in law builds one of fifteen hundred square foot in that new exclusive sub division.
So here you are, you need more money, nay (screw the holy books), you have the obligation to screw the poor to keep up. Kindness, mercy, justice and fairness are just cliches that we must pay lip service to. As I mentioned in “The New World Order” in 2003, this attitude is destroying families, the traditions the cultures and the environment, and not just theirs ,but that of our own also.
Under president Reagan we had something called social security reform, the Medicare tax was imposed on all the salaried income, or income from a privately owned business, and the basic social security tax was increased slightly and the taxable amount was also increased. Remember I have said many times that I voted for Mr. Reagan the first time and then I became against him because he was a damned liar, or too stupid to know the impact of the polices he was he was being paid to promote. Mr. Reagan sold out the working class, riled people against the poor, broke his promise to balance the budget, screwed the workers by promising that NAFTA will increase the wages of the workers in foreign countries and improve their standard of living , that the foreign countries will also be bound by clean environment standards, etc. As we now know it was all , every bit of it a bunch of lies. What he did do was that he started to spend the social security reserves, ( the excess amount paid into social security for the future benefits), also this amount spent was not included in the current account deficit, so we the workers were screwed twice. It is still beyond the understanding of the average American that thinks that Reagan was the greatest president or a great president, the screwing that the American citizens received by the Reagan administration was the only thing royal about him.
Today as the boomers are approaching the retirement age not many still realize that there is no money there for their benefits to be paid. What they don’t tell you is that we NEED the illegal Mexican here to contribute to the social security fund to keep it somewhat solvent, or at least on a more secure footing, with more people paying into the social security fund.
That is a two edged sword. One that at a later time we will have to pay these people the benefits also, two that since the current “ doing great economy” and the high employment is dependent on deficit spending and borrowing from the foreign nations and peoples, we keep digging the hole deeper and deeper.
How long can we keep printing, or creating this imaginary money? Who do we owe this money to? Besides the future generations. At the start of 2006, I sent an e-mail to Senator Richard Shelby, R-Ala, I had asked him that, where this money that we spend in deficit ends up at, as of today, 23 January 2007, I still have received no satisfactory reply so I will tell you what I think. First of all most of the money the government borrows comes from the social security surplus, it is your money and it is my money the government can decide not to pay us back any or cause inflation to rise and reduce our benefits, secondly the money comes from the FOREIGNERS who buy the US treasury debt and US currency, so each and every day we keep selling the US to others, literally.
Thirdly the money comes from the Federal Reserve Bank, a privately owned company, your future and mine is sold to private bankers, while you sit there watching Desperate Housewives, it is your future, it is your country that desperately needs tending to.
Are we being sold in to slavery? I for one have thought so for the last twenty-five years it is time for the rest of the country to wake up before there is no rest of the country left.
So then where does this money go to? Of course any one knows that the money always will go to the top. It is said time and again, that if all the money was divided in a group, soon it will end up in a few hands. That being true, and the fact the much of the money that the federal government spends, by printing new, or borrowing will also end up in the hands of the rich and the super rich, unless it goes to the foreign countries and the people that we borrowed it from in the first place.
We know, for example, when the government spent billions of dollars after Katrina, people spent that money to buy tools and generators made in China, lumber from Canada and labor from Mexico and Central America, so we can assume that some of that money that the government is borrowing is going directly over seas. Then there is money spent in this country, it as we said before rises to the top and thus ends up with the super rich, am I right so far? By the way the government is “spending” over three hundred billion a year in interest payments. The gap between the poor and the rich increases.
A couple of years ago we had some examples of this gap, where the people spent two and three million dollars on a birthday party. But the most egregious example of this problem was when some one paid sixteen million dollars for a nude of a living actress. And what was that crap about the “Beanie Babies” for Eight thousand dollars? and the singing raisins? Some people do have money to burn, and why not? it is really worthless.
Are we then a third world country, where some have everything and more and the rest have nothing. May be not yet, but we are getting there, fast!
The theory says that the few rich do not cause inflation in an economy, because they are not competing for the same stuff as the rest of the people. But are they, or not. In general they don’t live in the same places, don’t buy the same type and quality of food stuffs, don’t even go to the same doctors and lawyers. But if we take a closer look then they take away the best health care making it out of reach of the rest, because they can afford to pay a premium over whatever the rest will pay. Same with housing, if they get the best and the choicest lots, and homes and whatever, which by definition is a limited quality and quantity they make the prices of real estate unaffordable for the rest. How can you buy a lot for ten thousand dollars in a community where some one else is willing to pay ten times as much, thus the rich can acquire the most desirable location and property causing the rest to pay more than we can afford or to move elsewhere.
One of the biggest problems I have with the rich is that they can afford to out price the average person out of the education market, though there are always some scholarships and grants and loans available for the poor and the average kid, the rich have always a leg up because they go to the best prep schools and can afford private tutoring for a leg up on the entrance exams etc.
I also realize that some people are poor or average because of their own lack of motivation, initiative, and work ethic, some don’t know any better and can not do better than what they are stuck with and will not. But it is not fair to say also that the playing field is level for all.
So where is that trickle down theory, Ronald Reagan was either very stupid, or was bought off buy the real money. And we fell for him, boy were we ever so stupid also.
A lot of people still give the grand example of the lady with food stamps who came to the store in her Cadillac, and I know we have all seen her, but have you ever noticed the poor, the ones buying day old bread, and shopping at the bent can store or lining up at the food banks, no we do not see them, because we don’t go to THOSE places, we have no idea how, in a society where people making a hundred thousand a year have budget problems, people are expected to live on a three hundred a month from social security. While the people who steal the retirement funds from their company employees are given twenty million dollar bonuses.
In this land of plenty, we have shows about the lifestyles of the “Rich and Famous” but no shows about the life styles of the “Starving and the Malnourished“.

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