Category Archives: Economics

The USA Is Now a 3rd World Nation

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By Charles Hugh Smith

Source: Of Two Minds

I know it hurts, but the reality is painfully obvious: the USA is now a 3rd World nation.

Dividing the Earth’s nations into 1st, 2nd and 3rd world has fallen out of favor; apparently it offended sensibilities. It has been replaced by the politically correctdeveloped and developing nations, a terminology which suggests all developing nations are on the pathway to developed-nation status.

What’s been lost in jettisoning the 1st, 2nd and 3rd world categories is the distinction between developing (2nd world) and dysfunctional states (3rd world), states we now label “failed states.”

But 3rd World implied something quite different from “failed state”: failed state refers to a failed government of a nation-state, i.e. a government which no longer fulfills the minimum duties of a functional state: basic security, rule of law, etc.

3rd World referred to a nation-state which was dysfunctional and parasitic for the vast majority of its residents but that worked extremely well for entrenched elites who controlled most of the wealth and political power. Unlike failed states, which by definition are unstable, 3rd World nations are stable, for the reason that they work just fine for the elites who dominate the wealth, power and machinery of governance.

Here are the core characteristics of dysfunctional but stable states that benefit the entrenched few at the expense of the many, i.e. 3rd Worldnations:

1. Ownership of stocks and other assets is highly concentrated in entrenched elites. The average household is disconnected from the stock market and other measures of wealth; only a thin sliver of households own enough financial/speculative wealth to make an actual difference in their lives.

2. The infrastructure of the nation used by the many is poorly maintained and costly to operate as entrenched elites plunder the funding to pad their payrolls, pensions and sweetheart/insider contracts.

3. The financial/political elites have exclusive access to parallel systems of transport, healthcare, education, etc. The elites avoid trains, subways, lenders, coach-class air transport, standard healthcare and the rest of the decaying, dysfunctional systems they own that extract wealth from the debt-serfs.

They fly on private aircraft, have their own healthcare and legal services, use their privileges to get their offspring into elite universities and institutions and have access to elite banking and lending services that are unavailable to their technocrat lackeys and enforcers.

4. The elites fund lavish monuments to their own glory disguised as “civic or national pride.” These monuments take the form of stadiums, palatial art museums, immense government buildings, etc. Meanwhile the rest of the day-to-day infrastructure decays in various states of dysfunction.

5. There are two classes that only interact in strictly controlled ways: the wealthy, who live in gated, guarded communities and who rule all the institutions, public and private, and the debt-serfs, who are divided into well-paid factotums, technocrat lackeys and enforcers who serve the interests of the entrenched elites and rest of the populace who own virtually nothing and have zero power.

The elites make a PR show of being a commoner only to burnish the absurd illusion that debt-serf votes actually matter. (They don’t.)

6. Cartels and quasi-monopolies are parasitically extracting the wealth of the nation for their elite owners and managers. Google: quasi-monopoly. Facebook: quasi-monopoly. Healthcare: cartel. Banking: cartel. National defense: cartel. National Security: cartel. Corporate mainstream media: cartel. Higher education: cartel. Student loans: cartel. I think you get the point: every key institution or function is controlled by cartels or quasi-monopolies that serve the interests of the few via parasitic exploitation of the powerless.

7. The elites use the extreme violence and repressive powers of the government to suppress, marginalize and/or destroy any dissent. There are two systems of “law”: one for the elites ($10 million penalties for ripping off the public for $10 billion, no personal liability for outright fraud) and one for the unprotected-unprivileged: “tenners” (10-year prison sentences) for minor drug infractions, renditions or assassinations (all “legal,” of course) and institutional forces of violence (bust down your door on the rumor you’ve got drugs, confiscate your car because we caught you with cash, so you must be a drug dealer, and so on, in sickening profusion).

8. Dysfunctional institutions with unlimited power to extract money via junk fees, licensing fees, parking tickets, penalties, late fees, etc., all without recourse. Mess with the extractive, parasitic bureaucracy and you’ll regret it: there’s no recourse other than another layer of well-paid self-serving functionaries that would make Kafka weep.

9. The well-paid factotums, bureaucrats, technocrat lackeys and enforcers who fatten their own skims and pensions at the expense of the public and slavishly serve the interests of the entrenched elites embrace the delusion that they’re “wealthy” and “the system is working great.” These deluded servants of the elites will defend the dysfunctional system because it serves their interests to do so.

The more dysfunctional the institution, the greater their power, so they actively increase the dysfunction at every opportunity.

The USA is definitively a 3rd World nation. Read the list above and then try to argue the USA is not a 3rd World nation. Try arguing against the facts displayed in this chart:

I know it hurts, but the reality is painfully obvious: the USA is now a 3rd World nation.

 

A New World Order: Brought to you by the Global-Industrial Deep State

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By John W. Whitehead

Source: Intrepid Report

“There are no nations. There are no peoples . . . There is only IBM and ITT and AT&T, and DuPont, Dow, Union Carbide and Exxon. Those are the nations of the world today. The world is a collage of corporations, inexorably determined by the immutable by-laws of business.”—Network (1976)

There are those who will tell you that any mention of a New World Order government—a power elite conspiring to rule the world—is the stuff of conspiracy theories.

I am not one of those skeptics.

What’s more, I wholeheartedly believe that one should always mistrust those in power, take alarm at the first encroachment on one’s liberties, and establish powerful constitutional checks against government mischief and abuse.

I can also attest to the fact that power corrupts, and absolute power corrupts absolutely.

I have studied enough of this country’s history—and world history—to know that governments (the U.S. government being no exception) are at times indistinguishable Civilfrom the evil they claim to be fighting, whether that evil takes the form of terrorism, torture, drug trafficking, sex trafficking, murder, violence, theft, pornography, scientific experimentations or some other diabolical means of inflicting pain, suffering and servitude on humanity.

And I have lived long enough to see many so-called conspiracy theories turn into cold, hard fact.

Remember, people used to scoff at the notion of a Deep State (a.k.a. Shadow Government), doubt that fascism could ever take hold in America, and sneer at any suggestion that the United States was starting to resemble Nazi Germany in the years leading up to Hitler’s rise to power.

We’re beginning to know better, aren’t we?

The Deep State (“a national-security apparatus that holds sway even over the elected leaders notionally in charge of it”) is real.

We are already experiencing fascism, American-style.

Not with jackboots and salutes, as Robert Kagan of the Brookings Institution notes, “but with a television huckster, a phony billionaire, a textbook egomaniac ‘tapping into’ popular resentments and insecurities, and with an entire national political party—out of ambition or blind party loyalty, or simply out of fear—falling into line behind him.”

And the United States is increasingly following in Nazi Germany’s footsteps, at least in the years leading up to Hitler’s rise to power.

Given all that we know about the U.S. government—that it treats its citizens like faceless statistics and economic units to be bought, sold, bartered, traded, and tracked; that it repeatedly lies, cheats, steals, spies, kills, maims, enslaves, breaks the laws, overreaches its authority, and abuses its power at almost every turn; and that it wages wars for profit, jails its own people for profit, and has no qualms about spreading its reign of terror abroad—it is not a stretch to suggest that the government has been overtaken by global industrialists, a new world order, that do not have our best interests at heart.

Indeed, to anyone who’s been paying attention to the goings-on in the world, it is increasingly obvious that we’re already under a new world order, and it is being brought to you by the Global-Industrial Deep State, a powerful cabal made up of international government agencies and corporations.

It is as yet unclear whether the American Police State answers to the Global-Industrial Deep State, or whether the Global-Industrial Deep State merely empowers the American Police State. However, there is no denying the extent to which they are intricately and symbiotically enmeshed and interlocked.

This marriage of governmental and corporate interests is the very definition of fascism.

Where we go wrong is in underestimating the threat of fascism: it is no longer a national threat but has instead become a global menace.

Consider the extent to which our lives and liberties are impacted by this international convergence of governmental and profit-driven interests in the surveillance state, the military industrial complex, the private prison industry, the intelligence sector, the technology sector, the telecommunications sector, the transportation sector, and the pharmaceutical industry.

All of these sectors are dominated by mega-corporations operating on a global scale and working through government channels to increase their profit margins: Walmart, Alphabet (formerly Google), AT&T, Toyota, Apple, Exxon Mobil, Facebook, Lockheed Martin, Berkshire Hathaway, UnitedHealth Group, Samsung, Amazon, Verizon, Nissan, Boeing, Microsoft, Northrop Grumman, Citigroup . . . these are just a few of the global corporate giants whose profit-driven policies influence everything from legislative policies to economics to environmental issues to medical care.

The U.S. government’s deep-seated and, in many cases, top secret alliances with foreign nations and global corporations are redrawing the boundaries of our world (and our freedoms) and altering the playing field faster than we can keep up.

Global surveillance

Spearheaded by the National Security Agency (NSA), which has shown itself to care little for constitutional limits or privacy, the surveillance state has come to dominate our government and our lives.

Yet the government does not operate alone.

It cannot.

It requires an accomplice.

Thus, the increasingly complex security needs of our massive federal government, especially in the areas of defense, surveillance and data management, have been met within the corporate sector, which has shown itself to be a powerful ally that both depends on and feeds the growth of governmental bureaucracy.

Take AT&T, for instance. Through its vast telecommunications network that crisscrosses the globe, AT&T provides the U.S. government with the complex infrastructure it needs for its mass surveillance programs. According to The Intercept, “The NSA considers AT&T to be one of its most trusted partners and has lauded the company’s ‘extreme willingness to help.’ It is a collaboration that dates back decades. Little known, however, is that its scope is not restricted to AT&T’s customers. According to the NSA’s documents, it values AT&T not only because it ‘has access to information that transits the nation,’ but also because it maintains unique relationships with other phone and internet providers. The NSA exploits these relationships for surveillance purposes, commandeering AT&T’s massive infrastructure and using it as a platform to covertly tap into communications processed by other companies.”

Now magnify what the U.S. government is doing through AT&T on a global scale, and you have the “14 Eyes Program,” also referred to as the “SIGINT Seniors.” This global spy agency is made up of members from around the world (United States, United Kingdom, Australia, Canada, New Zealand, Denmark, France, Netherlands, Norway, Germany, Belgium, Italy, Sweden, Spain, Israel, Singapore, South Korea, Japan, India and all British Overseas Territories).

Surveillance is just the tip of the iceberg when it comes to these global alliances, however.

Global war profiteering

War has become a huge money-making venture, and America, with its vast military empire and its incestuous relationship with a host of international defense contractors, is one of its best buyers and sellers. In fact, as Reuters reports, “[President] Trump has gone further than any of his predecessors to act as a salesman for the U.S. defense industry.”

The American military-industrial complex has erected an empire unsurpassed in history in its breadth and scope, one dedicated to conducting perpetual warfare throughout the earth. For example, while erecting a security surveillance state in the U.S., the military-industrial complex has perpetuated a worldwide military empire with American troops stationed in 177 countries (over 70% of the countries worldwide).

Although the federal government obscures so much about its defense spending that accurate figures are difficult to procure, we do know that since 2001, the U.S. government has spent more than $1.8 trillion in the wars in Afghanistan and Iraq (that’s $8.3 million per hour). That doesn’t include wars and military exercises waged around the globe, which are expected to push the total bill upwards of $12 trillion by 2053.

The illicit merger of the global armaments industry and the Pentagon that President Dwight D. Eisenhower warned us against more than 50 years ago has come to represent perhaps the greatest threat to the nation’s fragile infrastructure today. America’s expanding military empire is bleeding the country dry at a rate of more than $15 billion a month (or $20 million an hour)—and that’s just what the government spends on foreign wars. That does not include the cost of maintaining and staffing the 1,000-plus U.S. military bases spread around the globe.

Incredibly, although the U.S. constitutes only 5% of the world’s population, America boasts almost 50% of the world’s total military expenditure,spending more on the military than the next 19 biggest spending nations combined. In fact, the Pentagon spends more on war than all 50 states combined spend on health, education, welfare, and safety. There’s a good reason why “bloated,” “corrupt” and “inefficient” are among the words most commonly applied to the government, especially the Department of Defense and its contractors. Price gouging has become an accepted form of corruption within the American military empire.

It’s not just the American economy that is being gouged, unfortunately.

Driven by a greedy defense sector, the American homeland has been transformed into a battlefield with militarized police and weapons better suited to a war zone. Trump, no different from his predecessors, has continued to expand America’s military empire abroad and domestically, calling on Congress to approve billions more to hire cops, build more prisons and wage more profit-driven war-on-drugs/war-on-terrorism/war-on-crime programs that pander to the powerful money interests (military, corporate and security) that run the Deep State and hold the government in its clutches.

Global policing

Glance at pictures of international police forces and you will have a hard time distinguishing between American police and those belonging to other nations. There’s a reason they all look alike, garbed in the militarized, weaponized uniform of a standing army.

There’s a reason why they act alike, too, and speak a common language of force.

For example, Israel—one of America’s closest international allies and one of the primary yearly recipients of more than $3 billion in U.S. foreign military aid—has been at the forefront of a little-publicized exchange program aimed at training American police to act as occupying forces in their communities. As The Intercept sums it up, American police are “essentially taking lessons from agencies that enforce military rule rather than civil law.”

Then you have the Strong Cities Network program. Funded by the State Department, the U.S. government has partnered with the United Nations to fight violent extremism “in all of its forms and manifestations” in cities and communities across the world. Working with the UN, the federal government rolled out programs to train local police agencies across America in how to identify, fight and prevent extremism, as well as address intolerance within their communities, using all of the resources at their disposal. The cities included in the global network include New York City, Atlanta, Denver, Minneapolis, Paris, London, Montreal, Beirut and Oslo.

What this program is really all about, however, is community policing on a global scale.

Community policing, which relies on a “broken windows” theory of policing, calls for police to engage with the community in order to prevent local crime by interrupting or preventing minor offenses before they could snowball into bigger, more serious and perhaps violent crime.

It sounds like a good idea on paper, but the problem with the broken windows approach is that it has led to zero tolerance policing and stop-and-frisk practices among other harsh police tactics.

When applied to the Strong Cities Network program, the objective is ostensibly to prevent violent extremism by targeting its source: racism, bigotry, hatred, intolerance, etc. In other words, police—acting ostensibly as extensions of the United Nations—will identify, monitor and deter individuals who exhibit, express or engage in anything that could be construed as extremist.

Of course, the concern with the government’s anti-extremism program is that it will, in many cases, be utilized to render otherwise lawful, nonviolent activities as potentially extremist. Keep in mind that the government agencies involved in ferreting out American “extremists” will carry out their objectives—to identify and deter potential extremists—in concert with fusion centers (of which there are 78 nationwide, with partners in the private sector and globally), data collection agencies, behavioral scientists, corporations, social media, and community organizers and by relying on cutting-edge technology for surveillance, facial recognition, predictive policing, biometrics, and behavioral epigenetics (in which life experiences alter one’s genetic makeup).

This is pre-crime on an ideological scale and it’s been a long time coming.

Are you starting to get the picture now?

We’re the sitting ducks in the government’s crosshairs.

On almost every front, whether it’s the war on drugs, or the sale of weapons, or regulating immigration, or establishing prisons, or advancing technology, if there is a profit to be made and power to be amassed, you can bet that the government and its global partners have already struck a deal that puts the American people on the losing end of the bargain.

Unless we can put the brakes on this dramatic expansion, globalization and merger of governmental and corporate powers, we’re not going to recognize this country 20 years from now.

It’s taken less than a generation for our freedoms to be eroded and the police state structure to be erected, expanded and entrenched.

Rest assured that the U.S. government will not save us from the chains of the global police state.

The current or future occupant of the White House will not save us.

For that matter, anarchy, violence and incivility will not save us.

Unfortunately, the government’s divide and conquer tactics are working like a charm.

Despite the laundry list of grievances that should unite “we the people” in common cause against the government, the nation is more divided than ever by politics, by socio-economics, by race, by religion, and by every other distinction that serves to highlight our differences.

The real and manufactured events of recent years—the invasive surveillance, the extremism reports, the civil unrest, the protests, the shootings, the bombings, the military exercises and active shooter drills, the color-coded alerts and threat assessments, the fusion centers, the transformation of local police into extensions of the military, the distribution of military equipment and weapons to local police forces, the government databases containing the names of dissidents and potential troublemakers—have all conjoined to create an environment in which “we the people” are more divided, more distrustful, and fearful of each other.

What we have failed to realize is that in the eyes of the government, we’re all the same.

In other words, when it’s time for the government to crack down—and that time is coming—it won’t matter whether we voted Republican or Democrat, whether we marched on Washington or stayed home, or whether we spoke out against government misconduct and injustice or remained silent.

When the government and its Global-Industrial Deep State partners in the New World Order crack down, we’ll all suffer.

If there is to be any hope of freeing ourselves, it rests—as it always has—at the local level, with you and your fellow citizens taking part in grassroots activism, which takes a trickle-up approach to governmental reform by implementing change at the local level.

One of the most important contributions an individual citizen can make is to become actively involved in local community affairs, politics and legal battles. As the adage goes, “Think globally, act locally.”

America was meant to be primarily a system of local governments, which is a far cry from the colossal federal bureaucracy we have today. Yet if our freedoms are to be restored, understanding what is transpiring practically in your own backyard—in one’s home, neighborhood, school district, town council—and taking action at that local level must be the starting point.

Responding to unmet local needs and reacting to injustices is what grassroots activism is all about. Attend local city council meetings, speak up at town hall meetings, organize protests and letter-writing campaigns, employ “militant nonviolent resistance” and civil disobedience, which Martin Luther King Jr. used to great effect through the use of sit-ins, boycotts and marches.

And then, as I make clear in my book A Government of Wolves: The Emerging American Police State, if there is any means left to us for thwarting the government in its relentless march towards outright dictatorship, it may rest with the power of communities and local governments to invalidate governmental laws, tactics and policies that are illegitimate, egregious or blatantly unconstitutional.

Nullification works.

Nullify the court cases. Nullify the laws. Nullify everything the government does that flies in the face of the principles on which this nation was founded.

We could transform this nation if only Americans would work together to harness the power of their discontent.

 

Constitutional attorney and author John W. Whitehead is founder and president of The Rutherford Institute. His book A Government of Wolves: The Emerging American Police State is available online at www.amazon.com. Whitehead can be contacted at johnw@rutherford.org. Information about The Rutherford Institute is available at www.rutherford.org.

How to Beat a Manipulator

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These six men own as much wealth as half the world’s population

By Caitlin Johnstone

Source: Consortium News

Humans are hackable. Ask any conman. Our desire to think we have control over our lives often hides this from ourselves, but most of us are highly suggestible and hypnotizable. If you think you’re not, you’re in more danger of being hacked than someone who has humbled themselves enough to see how this works in them.

There’s no need to be ashamed of being conned. Realizing that you’ve been, or are being, conned will naturally bring up feelings of embarrassment, but it’s never your fault that someone’s taken you for a ride. Get clear: conning someone is the crime; being conned is being a victim of that crime. That’s how the law sees it in fraud cases. Manipulators would love you to think that it’s your fault for allowing yourself to be manipulated, but that’s just another manipulation isn’t it?

Manipulators use one of our most astounding, useful, and beautiful human characteristics when they con us—empathy. Our innately trusting nature is the reason why we’ve been able to collaborate on large scales to create and innovate in extraordinary ways unseen anywhere else in the animal kingdom. Because we learn by modeling, and we are shaped by the group we inhabit and our urge to create harmony will make life viscerally uncomfortable until we are back in alignment with our tribe. We are the peacemakers; we seek alignment, which is how we are paced by manipulators into aligning with their sick agendas. How gross is it then that our ability to empathize and relate to each other is one manipulators use to control us?

Because of the reach of mass media, every single one of us is in an abusive relationship with plutocratic manipulators. Many of us are in personal relationships with manipulators too. Conveniently, the strategies for dealing with sociopathic manipulators are the exact same, from plutocrats to your live-in partner.

Get Clear on Your Own Will

You are easy prey if you don’t know what you want and you leave it up to others to decide for you. If you don’t have a sense of who you are and what you stand for, anyone can come in and co-opt that for their own sick agendas. Sit down, get quiet, and make an inventory of who you are and what you need. Don’t be squeamish about adding things that you don’t have yet. That’s the point. Make a list of what you need not just to survive, but to thrive. Apply the live-and-let-live rule to every one of your wants, and if you’re confident that nothing you want will hurt or interfere in anyone else’s will, then the list is good. You can stand by it unequivocally, and you should do so with as much strength and confidence as you can muster. Grow to its size and advocate loudly for it.

Watch Where the Resources Go

How do you really know if you’re being manipulated? Well, what manipulators understand that the rest of us don’t is that there are real life resources like sex, money, work, gold, oil, land, water, food, people, air, etc; and there are good feelings. They will always try to get you to swap real things for good feelings. If you don’t have empathy, you see the whole world in a completely different way. Most people are trying to get what they need without hurting anyone, because hurting someone hurts them too. Manipulators don’t experience that, so they just get what they need by telling their victim that they’ll hurt someone if they don’t hand it over.

Zoom out and take an inventory of who’s got all the stuff. Which way are the scales tipped? Good manipulators try to shift the ground underneath us to funnel the real wealth into their coffers, while placating us with good feelings about how blessed our hard work is and all that, and how selfish it would be to demand healthcare when there’s people in Syria who need to be bombed for their freedom. Leave all that behind and zoom and out and see who’s got all the stuff. Who has all the power, all the wealth, all the real stuff that you can really use in the real world, and who is barely existing but has hope for a better tomorrow?

Same in a marriage. Who has all the wealth, power, kudos, retirement savings, and who just has a story about what a good person they are? Religion has primed us for manipulation, and that was by design. Over millennia, we have been taught to value fealty, piety, hard work, submission, and to leave judgement and reward til after we die. This creates the perfect environment for manipulators who can see very clearly what the valuable real-world things are, and what are creations woven of fairytales. Work out what’s real in the here and now, and see who is in control of what should be your stuff. Is it you? If it’s not, you’re being manipulated out of it.

Watch Their Actions, Not Their Words

Manipulators only have words. They can’t just walk up to you and say “Give me your life savings,” they have to weave a complex story that makes you feel like it’s the right thing to do. A good conman will never ask for anything if they can get away with it. Ideally, they want you to make the offer. That’s the best kind of con, the one where the victim thinks it was their idea in the first place. A great conman will have you begging him to take the thing that he wanted all along, so then he can even get your gratitude for it.

By zooming out and seeing what they’re doing, rather than listening to what they’re saying, you can get a much better idea of what’s actually happening. If, for example, they’re saying they support single-payer healthcare while voting against it, sabotaging any efforts in any direction, taking money from donors who oppose it, and generally running interference on it, then those actions tell the real story. If the offer is not what you asked for but you are so desperate, so far down the line with them, so invested, and so cut off from any alternate solutions that you’ll take anything, then the con is complete.

Think about it from their point of view. Ideally, they want to be the ones you go to for the thing they don’t want you to have. They want to be the ones you place your hope and energy with so you don’t go to someone who will actually help them, but they also need to string you along for as long as possible, doing as little as possible, while taking as much energy as they can from you without arousing suspicion. They sing the song of inertia, of incrementalism, of “Not now, but soon.” That’s how they keep you trapped. If you zoom out and watch what they’re actually doing, rather than what they’re saying, you will know when it’s time to say bye Felicia and seek out an actual solution.

Don’t Try to Out-Manipulate Them

Once you’ve figured out you’re being manipulated, the knee-jerk reaction is to try and manipulate them back. Dude. Don’t even. Do you know how beautiful and precious you are to even think that that’s possible? These people have had no empathy for all their lives, and without all that emotional noise clouding their decisions, they have been playing every single person in their life like a game of chess. They are masters. They are five moves ahead of you already, and you’re just learning what a rook is. They have a whole lifetime of manipulating under their belt, and you are a total noob. You will lose that game. Don’t play it.

Instead, go with your strengths. Demand what you want and stick to that, loudly and unapologetically. Keep asking for what you want in the most direct way possible. Remember, a manipulator aims to take your will from you. Take it back. Many of us have been so manipulated for so long, we don’t even know what we want anymore. Make your inventory, keep it simple, keep it to what you know you need to thrive, and then plant your feet and demand it.

Meanwhile, keep pointing out the weird things they do to try and avoid giving you what they said they would. Shout it from the rooftops when they do something sly. They’ve used your politeness and goodwill to hide their little indiscretions. Don’t let them anymore. If they’re being creepy, say it. Don’t be manipulated into tacit consent by your politeness.

Keep telling the truth to yourself at least, even when it doesn’t tally with your worldview. Remain as intellectually honest with yourself as possible about what the knowable facts are, and what is conjecture or wishful thinking. Verify everything as much as you can so you know you’re standing on solid, factual ground. Manipulators love to keep people as confused as possible. Get as many quantifiable, verified, real-world facts as you can underneath you and build your worldview on them. And when you’re sure of yourself, say it like it’s true, because you know it is. Be unequivocal with the things you know. When you’re sure, don’t let anyone get in any wriggle room. Approach your private research with curiosity, objectivity and a light hand, but once the work is done, plant your feet in its truth and don’t let them be uprooted.

And lastly, don’t play by the rules, play by what is right. Manipulators love rules because they love to strategize about how to bend them, and how to bend you with them. Think of the worst kind of lawyers and you’ll know exactly what I mean. If you’re a deeply good person like you know you are, and you are always trying to point yourself at the highest interest, you know deep down if you’re doing the right thing. Trust your guts and forge ahead. Keep doing the right thing, even if it breaks a rule.

Apply The Manipulator’s Rules In Reverse

There’s something in psychology called “projection”, and anyone who has done a good deal of inner work will tell you that it’s a handy self-enquiry tool to see if what you hate in others, you can find in yourself. In order not to deal with our guilt, we tend to project the things we don’t like on to other people to hide the shame of it from ourselves. Bringing it out into the light can often result in some healthy forgiveness of both ourselves and our perception of others.

That’s great, but what the sages neglect to tell you is that people are also projecting all the time on to you. If you’re suggestible and good-hearted enough to not want to harm anyone, you can take everyone’s projections on to you as truth without even realizing it. Unless you develop a strong, conscious, healthy sense of who you are as a person, you can be gaslit into thinking that you’re any amount of the horrible things people project on to you, and that can easily grind you to a confused and babbling halt. Again, take an inventory of who you are and what you want, and grow in size until you can stand in that truth and defend it. Find your will and take it back.

Manipulators particularly use projection as a tactic to hide what they’re doing to you in plain sight. A manipulator can have you chasing your tail by simply suggesting that you or others are doing what you are seeing them doing with your own eyes. DNC caught rigging the election? Oh no, it was actually Russia who rigged the election by catching the DNC rigging the election. See what I did there? It’s so dumb, but it works.

Here’s the key: simply reverse the pronouns. When faced with a manipulator, everything he says about you, he is saying about himself, and everything he says about himself, is what he thinks of you. If he’s telling you you’re duplicitous and you’re a liar and you’re trying to take him for all he’s got, he’s actually saying he’s duplicitous and he’s a liar and he’s trying to take you for all you’ve got. If you have good grounds to believe you are being manipulated by someone, reverse the pronouns in your mind and let them tell you who they are. It works from personal relationships right up to the grand manipulators employed by the plutocrats.

Bring as much awareness as possible to all the ways you’re being manipulated, and all the ways you’ve been inadvertently manipulating. Make it as conscious in yourself as possible so we can all add to the sum of human knowledge as to how to transcend the manipulations. Once we draw back and fill out to our own individual sovereign boundaries, we will be able to trust ourselves to stand in our truth. We will also be able to see who we can trust so much more easily, and once you know you can trust someone, you can collaborate with them. These newly-conscious and divine collaborations will create the very things we need to solve the real world problems we face as a species and take the will of the planet from the sociopaths and return it to the will of the people.

And that’s really all it will take. A tipping point of un-manipulatable and awake people collaborating to create new systems that will surpass the old is all it will take to wrest power from the manipulators who only have the old Biblical tools of fear, guilt and shame to work with. This is doable, and it only needs you.

 

This commentary was originally published on CaitlinJohnstone.com .

 

Amazon and Apple: Wall Street’s Trillion Dollar Babies

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By Dean Baker

Source: CounterPunch

Last month Amazon joined Apple, becoming the second company in the world to have a $1 trillion market capitalization. Amazon’s accomplishment didn’t cause quite as much celebration as Apple’s – it pays to be number one – nonetheless this was treated as a milestone that all of us should view as good news.

Actually, the celebratory coverage of both events demonstrated the incredibly ill-informed nature of much economic reporting in the United States. A big run-up in share prices is good news for the people who own lots of stock in the company; it is not especially good news for anyone else.

In principle, the value of a stock is supposed to represent the expected future earnings of the company. I said “supposed” because stock prices fluctuate wildly in response to all sorts of things that are not obviously connected to future earnings, but in the textbook definition, it is the discounted value of future earnings that determine stock prices. To be clear, this is not the socialist textbook, this is the capitalist textbook that is taught in business schools.

What does it mean that Amazon and Apple have market valuations of more $1 trillion? Presumably, it means that investors are now more optimistic about the companies’ future profit potential. It’s difficult to see why the rest of us should celebrate this outcome.

Apple obviously makes products that consumers value, and in that sense, it is contributing to the economy and generating wealth. But, suppose instead of one huge company we had 10 little (or littler) Apples that sold iPhones, computers, and the other items that comprise Apple’s product line? Would we be any poorer as a society in that case, even if the market cap of our leading tech company was just $100 billion?

Or, even with Apple as our dominant tech company, suppose the surge over the $1 trillion barrier was due to a victory in an antitrust case, which would allow Apple to charge higher prices going forward. That’s great for Apple’s stockholders, but what exactly would the rest of us be celebrating? Paying more money for our iPhones?

In the same vein, in the past, Apple has been caught conspiring with other Silicon Valley companies, agreeing not to compete for workers. Apple, along with its co-conspirators, ended up paying a substantial settlement as a result.

Suppose Apple found a legal way to fix wages or bought a judge to make it legal. The prospect of a lower wage bill would also be good for Apple’s stock price, but not especially good news for those of us who are more likely to make our living from working than owning Apple stock. Again, there is not much in this story for most of us to celebrate.

The celebration for Amazon is even more peculiar. Amazon is clearly an innovative company that has sped the development of Internet retailing. It also has specialized in tax avoidance, eliciting investment incentives from state and local governments, and abusive labor practices.

Perhaps the crossing of the $1 trillion threshold was associated with investors’ confidence that Amazon’s CEO had developed a new and more effective tax avoidance scheme. Again, great news for Amazon stockholders, but pretty bad news for the folks who will have to make up the revenue shortfall.

What is notably different about Amazon is that, unlike Apple, the company does not have huge profits. While Apple earned $48.4 billion in after-tax profits in 2017, Amazon’s profit was just over $3 billion. That gives the company an incredible price-to-earnings ratio of more than 300-to-1.

There are two stories we can tell here. One is that investors expect Amazon’s profits to increase enormously. This would be a case where it takes advantage of its market power to increase its profit margins hugely. Ordinarily, this would be the basis for antitrust action, but given the corruption of the political system, it is certainly possible the company could get away with it. Again, is a future of higher prices something the rest of us should really be celebrating?

The other possibility is that Amazon’s stock price is driven by fantasy, like the Internet stocks of the late 1990s or Bitcoin today. Presumably, at some point reality will reassert itself, but should the rest of us celebrate ill-informed investors being taken for ride?

It is striking that so many would see economic or social progress as being in some way captured by stock valuations. In 1953 Jonas Salk developed the polio vaccine. This eventually led to the near eradication of a disease that had killed or crippled tens of millions of people.

Salk didn’t try to patent his invention. A private charity funded the research. But, what if there had been a Salk Inc. that had the patent on a vaccine that could save tens of millions of lives? Surely the market cap would be an order of magnitude larger than either Apple’s or Amazon’s. Was it a loss to society that the vaccine was made available for pennies rather than tens of thousands of dollars a shot?

If we want to talk about value to society, the anti-smoking crusaders of the last four decades have saved tens of thousands of lives and improved the health of millions more by reducing smoking in the United States and around the world. The people who led this fight, most of whom were women, won’t be featured on the covers of business magazines, but they did much more to enhance society’s wealth than Jeff Bezos.

Anyhow, congratulations to Apple and Amazon’s stockholders on their stock gains. They have been fortunate. The rest of us, not so much.

Taxpayers Are Footing the Bill for Sky-High CEO Salaries

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Billions in taxpayer funds go to CEOs who pay their workers peanuts. We can change that.

By Sam Pizzigati

Source: Other Words

Politicians often gab about the “private sector” and the “public sector,” as if these two categories of economic activity operated as two completely separate worlds.

In reality, these two sectors have always been deeply intertwined.

How deeply? Every year, the federal government spends about half a trillion dollars buying goods and services from the private sector. State and local government contracts with private-sector enterprises add hundreds of billions more.

And private-sector companies don’t just receive contracts from our governmental entities. They receive all sorts of subsidies — billions upon billions of dollars in “corporate welfare.”

Where do all these dollars come from? They come from us, America’s taxpayers. Without the tax dollars we provide, almost every major corporation in the United States would flounder. Some would simply cease to exist. The defense contractor Lockheed Martin, for instance, takes in almost all its revenue from government contracts.

This private sector reliance on public tax dollars gives us, as citizens, some leverage over the behavior of our largest and most powerful corporations. We could, if we so chose, deny those dollars to corporations that engage in behaviors that undermine the values we hold dear.

On other fronts, we already do this denying. For over a generation now, we’ve leveraged the power of the public purse against companies with employment practices that discriminate on the basis of race and gender. Companies that discriminate can’t get government contracts because we’ve come to a consensus, as a society, that we don’t want our tax dollars subsidizing racial and gender inequality.

Unfortunately, our tax dollars are still subsidizing — in a big way — economic inequality, as a new Institute for Policy Studies report on CEO pay details quite vividly. Billions of our tax dollars are annually going to corporations that pay their top executives more in a week, or even a day, than their typical employees can make over an entire year.

The late Peter Drucker, the founder of modern management science, believed that no corporate enterprise that pays its CEO over 25 times what its workers are earning could operate efficiently and effectively over the long haul. In 2017, every single one of the federal government’s 50 largest private contractors paid its chief executive over 25 times more than its most typical workers.

In fact, most paid their top execs well over 100 times more.

And at one, DXC Technology, the CEO pulled down over $32 million in 2017 pay — over 800 times the compensation of the firm’s typical employees.

Let’s add a little context here. The president of the United States earns $400,000 a year. The CEOs of the 50 private companies with the largest federal contracts last year averaged over $13.5 million. The CEOs of the 50 largest recipients of federal subsidies last year averaged over $12 million.

Our tax dollars, in other words, are helping a lucky few become fabulously rich.

We do live, as our politicians like to point out, in a “free country.” Corporations can pay their top execs whatever they want. But we taxpayers have freedom, too. We can freely deny our tax dollars to enterprises that are making our society ever more unequal.

Some lawmakers are starting to step in that direction. Five states have begun considering legislation that would make it harder for companies with wide CEO-worker pay gaps to get government contracts and tax breaks. And one city — Portland, Oregon — has already enacted legislation that taxes corporations with wide CEO-worker pay gaps at a higher rate than corporations with more modest gaps.

We need more Portlands.

For Economic Truth Turn To Michael Hudson

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By Paul Craig Roberts

Source: PaulCraigRoberts.org

Readers ask me how they can learn economics, what books to read, what university economics departments to trust. I receive so many requests that it is impossible to reply individually. Here is my answer.

There is only one way to learn economics, and that is to read Michael Hudson’s books. It is not an easy task. You will need a glossary of terms. In some of Hudson’s books, if memory serves, he provides a glossary, and his recent book “J Is for Junk Economics” defines the classical economic terms that he uses. You will also need patience, because Hudson sometimes forgets in his explanations that the rest of us don’t know what he knows.

The economics taught today is known as neoliberal. This economics differs fundamentally from classical economics that Hudson represents. For example, classical economics stresses taxing economic rent instead of labor and real investment, while neo-liberal economics does the opposite.

An economic rent is unearned income that accrues to an owner from an increase in value that he did nothing to produce. For example, a new road is built at public expense that opens land to development and raises its value, or a transportation system is constructed in a city that raises the value of nearby properties. These increases in values are economic rents. Classical economists would tax away the increase in values in order to pay for the road or transportation system.

Neoliberal economists redefined all income as earned. This enables the financial system to capitalize economic rents into mortgages that pay interest. The higher property values created by the road or transportation system boost the mortgage value of the properties. The financialization of the economy is the process of drawing income away from the purchases of goods and services into interest and fees to financial entities such as banks. Indebtedness and debt accumulate, drawing more income into their service until there is no purchasing power left to drive the economy.

For example, formerly in the US lenders would provide a home mortgage whose service required up to 25% of the family’s monthly income. That left 75% of the family’s income for other purchases. Today lenders will provide mortgages that eat up half of the monthly income in mortgage service, leaving only 50% of family income for other purchases. In other words, a financialized economy is one that diverts purchasing power away from productive enterprise into debt service.

Hudson shows that international trade and foreign debt also comprise a financialization process, only this time a country’s entire resources are capitalized into a mortgage. The West sells a country a development plan and a loan to pay for it. When the debt cannot be serviced, the country is forced to impose austerity on the population by cutbacks in education, health care, public support systems, and government employment and also to privatize public assets such as mineral rights, land, water systems and ports in order to raise the capital with which to pay off the loan. Effectively, the country passes into foreign ownership. This now happens even to European Community members such as Greece and Portugal.

Another defect of neoliberal economics is the doctrine’s denial that resources are finite and their exhaustion a heavy cost not born by those who exploit the resources. Many local and regional civilizations have collapsed from exhaustion of the surrounding resources. Entire books have been written about this, but it is not part of neoliberal economics. Supplement study of Hudson with study of ecological economists such as Herman Daly.

The neglect of external costs is a crippling failure of neoliberal economics. An external cost is a cost imposed on a party that does not share in the income from the activity that creates the cost. I recently wrote about the external costs of real estate speculators. https://www.paulcraigroberts.org/2018/04/26/capitalism-works-capitalists/ Fracking, mining, oil and gas exploration, pipelines, industries, manufacturing, waste disposal, and so on have heavy external costs associated with the activities.

Neoliberal economists treat external costs as a non-problem, because they theorize that the costs can be compensated, but they seldom are. Oil spills result in companies having to pay cleanup costs and compensation to those who suffered economically from the oil spill, but most external costs go unaddressed. If external costs had to be compensated, in many cases the costs would exceed the value of the projects. How, for example, do you compensate for a polluted river? If you think that is hard, how would the short-sighted destroyers of the Amazon rain forest go about compensating the rest of the world for the destruction of species and for the destructive climate changes that they are setting in motion? Herman Daly has pointed out that as Gross Domestic Product accounting does not take account of external costs and resource exhaustion, we have no idea if the value of output is greater than all of the costs associated with its production. The Soviet economy collapsed, because the value of outputs was less than the value of inputs.

Supply-side economics, with which I am associated, is not an alternative theory to neoliberal economics. Supply-side economics is a successful correction to neoliberal macroeconomic management. Keynesian demand management resulted in stagflation and worsening Phillips Curve trade-offs between employment and inflation. Supply-side economics cured stagflation by reversing the economic policy mix. I have told this story many times. You can find a concise explanation in my short book, “The Failure of Laissez Faire Capitalsim.” This book also offers insights into other failures of neoliberal economics and for that reason would serve as a background introduction to Hudson’s books.

I can make some suggestions, but the order in which you read Michael Hudson is up to you. “J is for Junk Economics” is a way to get information in short passages that will make you familiar with the terms of classical economic analysis. “Killing the Host” and “The Bubble and Beyond” will explain how an economy run to maximize debt is an economy that is self-destructing. “Super Imperialism” and “Trade, Development and Foreign Debt” will show you how dominant countries concentrate world economic power in their hands. “Debt and Economic Renewal in the Ancient Near East” is the story of how ancient economies dying from excessive debt renewed their lease on life via debt forgiveness.

Once you learn Hudson, you will know real economics, not the junk economics marketed by Nobel prize winners in economics, university economic departments, and Wall Street economists. Neoliberal economics is a shield for financialization, resource exhaustion, external costs, and capitalist exploitation.

Neoliberal economics is the world’s reigning economics. Russia is suffering much more from neoliberal economics than from Washington’s economic sanctions. China herself is overrun with US trained neoliberal economists whose policy advice is almost certain to put China on the same path to failure as all other neoliberal economies.

It is probably impossible to change anything for two main reasons. One is that so many greed-driven private economic activities are protected by neoliberal economics. So many exploitative institutions and laws are in place that to overturn them would require a more thorough revolution than Lenin’s. The other is that economists have their entire human capital invested in neoliberal economics. There is scant chance that they are going to start over with study of the classical economists.

Neoliberal economics is an essential part of The Matrix, the false reality in which Americans and Europeans live. Neoliberal economics permits an endless number of economic lies. For example, the US is said to be in a long economic recovery that began in June 2009, but the labor force participation rate has fallen continuously throughout the period of alleged recovery. In previous recoveries the participation rate has risen as people enter the work force to take advantage of the new jobs.

In April the unemployment rate is claimed to have fallen to 3.9 percent, but the participation rate fell also. Neoliberal economists explain away the contradiction by claiming that the falling participation rate is due to the retirement of the baby boom generation, but BLS jobs statistics indicate that those 55 and older account for a large percentage of the new jobs during the alleged recovery. This is the age class of people forced into the part time jobs available by the absence of interest income on their retirement savings. What is really happening is that the unemployment rate does not include discouraged workers, who have given up searching for jobs as there are none to be found. The true measure of the unemployment rate is the decline in the labor force participation rate, not a 3.9 percent rate concocted by not counting those millions of Americans who cannot find jobs. If the unemployment rate really was 3.9 percent, there would be labor shortages and rising wages, but wages are stagnant. These anomalies pass without comment from neoliberal economists.

The long expansion since June 2009 might simply be a statistical artifact due to the under-measurement of inflation, which inflates the GDP figure. Inflation is under-estimated, because goods and services that rise in price are taken out of the index and less costly substitutes are put in their place and because price increases are explained away as quality improvements. In other words, statistical manipulation produces the favorable picture required by The Matrix.

Since the financial collapse caused by the repeal of Glass-Steagall and by financial deregulation, the Federal Reserve has robbed tens of millions of American savers by driving real interest rates down to zero for the sole purpose of saving the “banks too big to fail” that financial deregulation created. A handful of banks has been provided with free money—in addition to the money that the Federal Reserve created in order to take the banks’ bad derivative investments off their hands—to put on deposit with the Fed from which to collect interest payments and with which to speculate and to drive up stock prices.

In other words, for a decade the economic policy of the United States has been run for the benefit of a few highly concentrated financial interests at the expense of the American people. The economic policy of the United States has been used to create economic rents for the mega-rich.

Neoliberal economists point out that during the 1950s the labor force participation rate was much lower than today and, thereby, they imply that the higher rates prior to the current “recovery” are an anomaly. Neoliberal economists have no historical knowledge as the past is of no interest to them. They do not even know the history of economic thought. Whether from ignorance or intentional deception, neoliberal economists ignore that the lower labor force participation rates of the 1950s reflect a time when married women were at home, not in the work force. In those halcyon days, one earner was all it took to sustain a family. I remember the days when the function of a married woman was to provide household services for the family.

But capitalists were not content to exploit only one member of a family. They wanted more, and by using economic policy to suppress pay while fomenting inflation, they drove married women into the work force, imposing huge external costs on the family, child-raising, relations between spouses, and on the children themselves. The divorce rate has exploded to 50 percent and single-parent households are common in America.

In effect, unleashed Capitalism has destroyed America. Privatization is now eating away Europe. Russia is on the same track as a result of its neoliberal brainwashing by American economists. China’s love of success and money could doom this rising Asian giant as well if the government opens China to foreign finance capital and privatizes public assets that end up in foreign hands.

Why do corporate boards so overpay US CEOs?

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By Sam Pizzigati

Source: Nation of Change

Back in 1999, near the dizzying height of the dot-com boom, no executive in Corporate America personified the soaring pay packages of America’s CEOs more than Jack Welch, the chief exec at General Electric. Welch took home $75 million that year.

What explained the enormity of that compensation? Welch didn’t claim any genius on his part. He credited his success, instead, to the genius of the free market.

“Is my salary too high?” mused Welch. “Somebody else will have to decide that, but this is a competitive marketplace.”

Translation: “I deserve every penny. The market says so.”

Top U.S. corporate execs today, on average, are doing even better than top execs in Welch’s heyday. In 1999, notes a just-released new report from the Economic Policy Institute, CEOs at the nation’s 350 biggest corporations pocketed 248 times the pay of average workers in their industries. Top execs last year averaged 312 times more.

What explains this growing generosity to America’s top corporate chiefs? Today’s apologists for over-the-top CEO compensation, like Jack Welch a generation ago, point to the market.

One leading critic of these apologists, the Dutch management scientist Manfred Kets de Vries, neatly summed up this market world view earlier this year: Big CEO pay packages “reflect market demands for a CEO’s unique skills and contribution to the bottom line.” Mega-million executive paychecks “merely represent the market forces of supply and demand.”

Or, as the University of Chicago’s Steven Kaplan puts it, “The market for talent puts pressure on boards to reward their top people at competitive pay levels in order to both attract and retain them.”

In the world that CEO cheerleaders like Kaplan inhabit, impartial, unbiased markets determine executive compensation. Corporate boards simply play by market rules. They pay their execs what the market says their execs deserve. If they don’t, they risk losing their executive talent.

American corporate leaders take scarcity – of CEO talent – as a given. How else, in a market economy, to explain rapidly rising CEO pay? If quality CEOs abounded, executive compensation would not be soaring. But that compensation is soaring, so qualified CEOs obviously must be few and far between – and totally deserving of whatever many millions they receive. Simple market logic.

And simply wrong. American corporations today confront no scarcity of executive talent. The numbers of people qualified to run multi-billion-dollar companies have never, in reality, been more plentiful. These numbers have been growing steadily over recent decades, in part because America’s graduate schools of business have been graduating, year after year, thousands of rigorously trained executives.

America’s first graduate school for executives, the Tuck School of Business at Dartmouth, currently boasts an alumni network over 10,000 strong. MBAs in the equally prestigious Harvard Business School alumni network total over 46,000. Add in the alumni from other widely acclaimed institutions and the available supply of executives trained at America’s top-notch business schools approaches several hundred thousand.

Just how many of these academically trained executives have the skills and experience really needed to run a Fortune 500 company? Let’s assume, conservatively, that only 1 percent of the alumni from the “best” business schools have enough skills and experience to run a big-time corporation.

That arithmetic would give Fortune 500 companies that go looking for a new CEO at least several thousand eminently qualified candidates. No supply shortage here.

Indeed, today’s business world is overflowing with eminently qualified CEO candidates, once you add in the grads from business schools abroad. INSEAD, perhaps the most prominent of these international schools, now has over 56,000 active alumni.

In the past, to be sure, American corporations seldom looked beyond the borders of the United States for executive talent. That tunnel vision made some sense. Executives inside the United States and executives outside worked in different business environments. Foreign executives could hardly be expected to succeed in an unfamiliar American marketplace, even if they did speak flawless English.

But today, in our celebrated “globalized” economy, that distinction between domestic and foreign executives no longer matters nearly as much. In dozens of foreign nations, in hundreds of foreign corporations, executives are competing in the same global marketplace as their American counterparts. They’re using the same technologies, studying the same market data, and strategizing toward the same business goals. Together, taken as a group, executives from elsewhere in the world constitute a huge new pool of talent for American corporations.

Pay consultants in the United States, for their part, do acknowledge the reality of this global marketplace for executive talent. In fact, they cite global competition as one important reason why executive pay in the United States is rising. American companies, the argument goes, now have to compete against foreign companies for executive talent, the argument goes. This competition is forcing up executive pay in the United States.

Really? What ever happened to market logic? If corporations all around the world paid their executives at comparable rates, market competition would certainly force up executive compensation worldwide. But corporations don’t all pay executives at comparable rates.

American executives take home far more compensation than their foreign counterparts, on average over triple the pay of execs in America’s peer nations. By classic market logic, any competition between highly paid American executives and equally qualified but more modestly paid international executives ought to end up lowering, not raising, the higher pay rates in the United States.

Why, after all, would an American corporation pay $50 million for an American CEO when a skilled international CEO could easily be had for one-fifth or even one-fiftieth that price?

We have here, in short, a situation that a deep, abiding faith in the “market” does not explain. In the executive talent marketplace, American corporations face plenty, not scarcity, yet the going rate for American executives keeps rising.

Has someone repealed the laws of supply and demand? How else could executive pay in the United States have ascended to such lofty levels?

Some analysts do have an alternate explanation to offer. Markets, they point out, still operate by supply and demand. But markets don’t set executive pay.

“CEOs who cheerlead for market forces wouldn’t think of having them actually applied to their own pay packages,” as commentator Matthew Miller has noted in the Los Angeles Times. “The reality is that CEO pay is set through a clubby, rigged system in which CEOs, their buddies on board compensation committees and a small cadre of lawyers and ‘compensation consultants’ are in cahoots to keep the millions coming.”

“CEO compensation,” agree Lawrence Michel and Jessica Schieder, the authors of the new Economic Policy Institute executive pay report, “appears to reflect not greater productivity of executives but the power of CEOs to extract concessions.”

If CEOs earned less, the pair add, we would see “no adverse impact on output or employment.” Instead, they go on, lower executive paychecks would mean higher rewards for corporate workers, since the huge paydays that go to CEOs today reflect “income that otherwise would have accrued to others.”

How could those “others,” the rest of us, best go about lowering CEO compensation? Michel and Schieder offer a variety of promising proposals, ranging from higher marginal income tax rates to higher corporate tax rates on companies with excessively wide CEO-to-worker compensation ratios.

And what might a reasonable CEO-to-worker pay ratio be? The new Economic Policy Institute research suggests one plausible goal. Back in 1965, Michel and Schieder calculate, America’s top execs only pulled down 20 times more pay than the nation’s average workers.

America’s Debt Dependence Makes It An Easy Economic Target

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By Brandon Smith

Source: Alt-Market.com

There is a classic denial tactic that many people use when confronted with negative facts about a subject they have a personal attachment to; I would call it “deferral denial” — or a psychological postponing of reality.

For example, point out the fundamentals on the U.S. economy such as the fact that unemployment is not below 4% as official numbers suggest, but actually closer to 20% when you factor in U-6 measurements including the record 96 million people not counted because they have run out of unemployment benefits. Or point out that true consumer inflation in the U.S. is not around 3% as the Federal Reserve and the Bureau of Labor Statistics claims, but closer to 10% according to the way CPI used to be calculated before the government started rigging the numbers.  For a large part of the public including a lot of economic analysts, there is perhaps a momentary acceptance of the danger, but then an immediate deferral — “Well, maybe things will get worse down the road, 10 or 20 years from now, but it’s not that bad today…”

This is cognitive dissonance at its finest. The economy is in steep decline now, but the mind in denial says “it could be worse,” and this is how you get entire populations caught completely off guard by a financial crash. They could have easily seen the signs, but they desperately wanted to believe that all bad things happen in some illusory future, not today.

There is also another denial tactic I see often in the world of politics and economics, which is what I call “paying it backward.” This is what people do when they have a biased attachment to a person or institution and refuse to see the terrible implications of their actions. For example, when we point out that someone like Donald Trump makes destructive decisions, such as the continued support of Israel and Saudi Arabia in Syria and Yemen, or the reinstatement of funding for the White Helmets in Syria who are tied to ISIS, Trump supporters will often say “Well what about Obama?”

This is a game of shifting accountability. Is one person worse than the other? Possibly. I say give it time and make notes. However, the negative decisions of one politician we don’t like do not diminish the negative decisions of another politician we might like. They should BOTH be held accountable.

The same goes for countries and economies. When an analyst points out that U.S. debt is at historic highs and is utterly unsustainable, people in denial will say “but what about China or Europe?” One does not negate the other and, of course, there are differences that make the situation in the U.S. far more tenuous.

Primarily I am talking about America’s endless dependency on the world reserve status of the U.S. dollar and, beyond that, the steady expansion of debt at low interest rates for the past decade.

The Federal Reserve, once the No. 1 buyer of U.S. debt, has essentially declared it is cutting off support and has begun dumping assets from its balance sheet. The only assets the Fed seems to be maintaining are Mortgage Backed Securities (MBS). All others are being cut, including Treasuries. The American economy is inexorably attached to the idea of our Treasury debt as a safe investment, with our national debt spiking above $21 trillion and many trillions more owed to entitlement programs depending on how you calculate the expenditures, there is a vital need for steady foreign investment in U.S. debt.

But what happens when investment in U.S. debt becomes politically unsavory? Consider the current escalation of the trade war; Many pro-dollar talking heads and cheerleaders have argued in the past that no nation has the guts to dump dollar denominated assets and risk the wrath of American “economic might.” But, already we have seen Russia dump half its U.S. Treasury holdings in a single month and the trade war has only just begun.

Is Russia’s action a sign of things to come? Will other nations like China follow the same strategy? We will have to wait and see, but I believe this is the inevitable outcome of the trade war if it drags on for the rest of the year.

America’s dependent nature, feeding off of foreign investment to support its debts, is a disaster waiting to happen. The concept of economic “recovery” is laughable until this issue is addressed.  And, entering into a trade war while ignoring this blaring weakness is foolish, to say the least.

Beyond the issue of government (taxpayer) debt, let’s not forget about American corporations and consumers. U.S. corporate debt as a percentage of gross domestic product is at historic highs not seen since the housing bubble of 2008 or the dot-com bubble of 2001. There is a distinct difference, though, that makes today’s bubble far more insidious. After years of near-zero interest rates, corporations have become addicted to cheap debt. So much so that they have been borrowing nonstop to support their own stock prices through stock buyback manipulation. But now the Fed is raising interest rates and has committed to expanded hikes in the future.

So, what will corporations do as the cheap debt dries up? Thus far, they are spending the majority of their Trump tax cut still trying to artificially prop up stock process. When this money runs out (and I believe it will much faster than the mainstream thinks), the existing debt of these companies will cost much more to finance, and future borrowing at the same pace will become impossible. This is a threat that is developing now, not in some far-off future.

Eventually, corporations will have to make deep spending cuts rather than borrow. This means mass layoffs, store closures and potential cuts to pensions. And, of course, no more stock buybacks, meaning a market crash will ensue.

What about the U.S. consumer? U.S. consumer debt is set to reach new highs by the end of the year; around $4 trillion by official estimates.  While discussion continues about the alleged “labor shortage” in the U.S., one thing is clear — the jobs that do exist do NOT pay wages that keep up with true inflation. When we see spikes in retail sales in the U.S. and this is applauded as economy recovery, very few mainstream analysts point out that higher retail sales are merely tracking higher inflation.

That is to say, consumers are spending more money on less stuff. Again, this is unsustainable, which is why consumer debt is exploding. Dependency on credit cards and loans is being used by the public to offset much higher costs. But as the Fed raises interest rates, this too will end. Higher Fed rates translate to higher credit rates as well as higher mortgage rates (indirectly). With higher interest payments comes a large drop in overall spending.

As you can see, there are at least two forces at work here that will end all talk of U.S. recovery and which undermine any notion of economic strength — the first is the trade war, which I believe is a massive distraction designed to draw attention away from the actions of international banks and central banks. The second is the Federal Reserve, which has addicted the country to cheap fiat and is now flushing the drugs. We cannot delude ourselves into thinking that this trend will remain slow or that it will not develop into a crash in the near term. We also cannot simply deflect to other countries like China or those in Europe as if their problems are somehow worse and therefore ours are not a concern.

The fact that the health of the US economy is inexorably reliant on the continued foreign demand for the dollar and Treasury debt means any reduction of the dollar’s world reserve status or petro-status, or any decline in treasury purchases, will directly affect the carefully crafted image of America as a stable system.  Without a sudden and aggressive resurgence of domestic production and innovation America has no safety net in the event that our debt addiction is used against us.

The argument that the central bank can jump in at any time to monetize that debt and reduce the danger is also delusional.  This assumes first and foremost that the Fed WANTS to reduce the danger.  I believe they want the danger to increase, not decrease.  Debt monetization also has the added bonus of causing even more inflation as foreign investors dump their dollar denominated assets back into the US.  Monetization is a poison, not a cure.

The crisis is here, now. Seeing and accepting it allows us to prepare accordingly. Denying it as inconsequential sets people up as victims of their own bias and ignorance.