Tag Archives: Economics

What We Don’t Elect Matters Most: Central Banking and the Permanent Government

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By Charles Hugh Smith

Source: Of Two Minds

We’re Number One in wealth, income and power inequality, yea for the Fed and the Empire!

If we avert our eyes from the electoral battle on the blood-soaked sand of the Coliseum and look behind the screen, we find the powers that matter are not elected: our owned by a few big banks Federal Reserve, run by a handful of technocrats, and the immense National Security State, a.k.a. the Permanent Government. These entities operate the Empire which hosts the electoral games for the entertainment and distraction of the public.

The governance machinery controlled by elected representatives is tightly constrained in what it can and cannot do. It can’t do anything to stop the debasement of the nation’s currency, which is totally controlled by the Politburo of the Fed, nor can it do much to limit the Imperial Project, other than feel-good PR bits here and there.

The president wields vast powers but even the president is powerless to stop the debasement of the nation’s currency and the enrichment of bankers, financiers, corporations, etc., who fund the campaigns of the gladiators, oops I mean politicians.

If we set aside the term Deep State and simply call it the unelected machinery of governance (Permanent Government), we get a clear picture of its scope and power. Presidents, senators and representatives come and go, but the machinery of Empire grinds on, decade after decade.

A great many people and places in America don’t matter to the Fed or the Permanent Government, and so they’ve been abandoned to their fates. The darlings of the Fed and Empire are clustered in Silicon Valley and other urban hubs where the technological and financial machinery of global hegemony are fabricated and maintained.

Those far from these centers of banking, finance and Big Tech have little to no stake as owners of meaningful capital. All they have to sell is their labor, and that’s been losing purchasing power for decades as financialization and globalization have stripmined rural America and enriched the bankers, financiers and speculators who serve the Fed and unelected Permanent Government.

The Fed and the Permanent Government have been very, very good to the few at the expense of the many. Look at the chart below at America’s complete dominance when measured by the soaring wealth of its top 1% power elite: We’re Number One in wealth, income and power inequality, yea for the Fed and the Empire! And we don’t have to elect them–they elect themselves.

 

American Requiem

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However inequitable its bias, capitalist democracy at least offered the possibility of incremental and piecemeal reform. Now it is a corpse.

By Chris Hedges

Source: ScheerPost.com

Well, it’s over. Not the election. The capitalist democracy. However biased it was towards the interests of the rich and however hostile it was to the poor and minorities, the capitalist democracy at least offered the possibility of incremental and piecemeal reform. Now it is a corpse. The iconography and rhetoric remain the same. But it is an elaborate and empty reality show funded by the ruling oligarchs — $1.51 billion for the Biden campaign and $1.57 billion for the Trump campaign — to make us think there are choices. There are not. The empty jousting between a bloviating Trump and a verbally impaired Joe Biden is designed to mask the truth. The oligarchs always win. The people always lose. It does not matter who sits in the White House. America is a failed state.

“The American Dream has run out of gas,” wrote the novelist J.G. Ballard. “The car has stopped. It no longer supplies the world with its images, its dreams, its fantasies. No more. It’s over. It supplies the world with its nightmares now.”

There were many actors that killed America’s open society. The corporate oligarchs who bought the electoral process, the courts and the media, and whose lobbyists write the legislation to impoverish us and allow them to accumulate obscene amounts of wealth and unchecked power. The militarists and war industry that drained the national treasury to mount futile and endless wars that have squandered some $7 trillion and turned us into an international pariah. The CEOs, raking in bonuses and compensation packages in the tens of millions of dollars, that shipped jobs overseas and left our cities in ruins and our workers in misery and despair without a sustainable income or hope for the future. The fossil fuel industry that made war on science and chose profits over the looming extinction of the human species. The press that turned news into mindless entertainment and partisan cheerleading. The intellectuals who retreated into the universities to preach the moral absolutism of identity politics and multiculturalism while turning their backs on the economic warfare being waged on the working class and the unrelenting assault on civil liberties. And, of course, the feckless and hypocritical liberal class that does nothing but talk, talk, talk.

If there is one group that deserves our deepest contempt it is the liberal elites, those who posture as the moral arbiters of society while abandoning every value they purportedly hold the moment they become inconvenient. The liberal class, once again, served as pathetic cheerleaders and censors for a candidate and a political party that in Europe would be considered on the far-right. Even while liberals were being ridiculed and dismissed by Biden and by the Democratic Party hierarchy, which bizarrely invested its political energy in appealing to Republican neocons, liberals were busy marginalizing journalists, including Glenn Greenwald and Matt Taibbi, who called out Biden and the Democrats. The liberals, whether at The Intercept or The New York Times, ignored or discredited information that could hurt the Democratic Party, including the revelations on Hunter Biden’s laptop. It was a stunning display of craven careerism and self-loathing.

The Democrats and their liberal apologists are, the election has illustrated, oblivious to the profound personal and economic despair sweeping through this country. They stand for nothing. They fight for nothing. Restoring the rule of law, universal health care, banning fracking, a Green New Deal, the protection of civil liberties, the building of unions, the preservation and expansion of social welfare programs, a moratorium on evictions and foreclosures, the forgiveness of student debt, stiff environmental controls, a government jobs program and guaranteed income, financial regulation, opposition to endless war and military adventurism were once again forgotten. Championing these issues would have resulted in a Democratic Party landslide. But since the Democratic Party is a wholly owned subsidiary of corporate donors, promoting any policy that might foster the common good, diminish corporate profits and restore democracy, including imposing campaign finance laws, was impossible. Biden’s campaign was utterly bereft of ideas and policy issues, as if he and the Democrats could sweep the elections by promising to save the soul of America. At least the neofascists have the courage of their demented convictions.

The liberal class functions in a traditional democracy as a safety valve. It makes piecemeal and incremental reform possible. It ameliorates the worst excesses of capitalism. It proposes gradual steps towards greater equality. It endows the state and the mechanisms of power with supposed virtues. It also serves as an attack dog that discredits radical social movements. The liberal class is a vital component within the power elite. In short, it offers hope and the possibility, or at least the illusion, of change.

The surrender of the liberal elite to despotism creates a power vacuum that speculators, war profiteers, gangsters and killers, often led by charismatic demagogues, fill. It opens the door to fascist movements that rise to prominence by ridiculing and taunting the absurdities of the liberal class and the values they purport to defend. The promises of the fascists are fantastic and unrealistic, but their critiques of the liberal class are grounded in truth. Once the liberal class ceases to function, it opens a Pandora’s box of evils that are impossible to contain.

The disease of Trumpism, with or without Trump, is, as the election illustrated, deeply embedded in the body politic. It is an expression among huge segments of the population, taunted by liberal elites as “deplorables,” of a legitimate alienation and rage that the Republicans and the Democrats orchestrated and now refuse to address. This Trumpism is also, as the election showed, not limited to white men, whose support for Trump actually declined.

Fyodor Dostoevsky saw the behavior of Russia’s useless liberal class, which he satirized and excoriated at the end of the 19th century, as presaging a period of blood and terror. The failure of liberals to defend the ideals they espoused inevitably led, he wrote, to an age of moral nihilism. In Notes From Underground, he portrayed the sterile, defeated dreamers of the liberal class, those who hold up high ideals but do nothing to defend them. The main character in Notes From Underground carries the bankrupt ideas of liberalism to their logical extreme. He eschews passion and moral purpose. He is rational. He accommodates a corrupt and dying power structure in the name of liberal ideals. The hypocrisy of the Underground Man dooms Russia as it now dooms the United States. It is the fatal disconnect between belief and action.

“I never even managed to become anything: neither wicked nor good, neither a scoundrel nor an honest man, neither a hero nor an insect,” the Underground Man wrote. “And now I am living out my life in my corner, taunting myself with the spiteful and utterly futile consolation that it is even impossible for an intelligent man seriously to become anything, and only fools become something. Yes, sir, an intelligent man of the nineteenth century must be and is morally obliged to be primarily a characterless being; and a man of character, an active figure – primarily a limited being.”

The refusal of the liberal class to acknowledge that power has been wrested from the hands of citizens by corporations, that the Constitution and its guarantees of personal liberty have been revoked by judicial fiat, that elections are nothing more than empty spectacles staged by the ruling elites, that we are on the losing end of the class war, has left it speaking and acting in ways that no longer correspond to reality.

The “idea of the intellectual vocation,” as Irving Howe pointed out in his 1954 essay This Age of Conformity, “the idea of a life dedicated to values that cannot possibly be realized by a commercial civilization — has gradually lost its allure. And, it is this, rather than the abandonment of a particular program, which constitutes our rout.” The belief that capitalism is the unassailable engine of human progress, Howe wrote, “is trumpeted through every medium of communication: official propaganda, institutional advertising and scholarly writings of people who, until a few years ago, were its major opponents.”

“The truly powerless people are those intellectuals — the new realists — who attach themselves to the seats of power, where they surrender their freedom of expression without gaining any significance as political figures,” Howe wrote. “For it is crucial to the history of the American intellectuals in the past few decades — as well as to the relationship between ‘wealth’ and ‘intellect’ — that whenever they become absorbed into the accredited institutions of society they not only lose their traditional rebelliousness but to one extent or another they cease to function as intellectuals.” 

Populations can endure the repression of tyrants, as long as these rulers continue to effectively manage and wield power. But human history has amply demonstrated that once those in positions of power become redundant and impotent, yet retain the trappings and privileges of power, they are brutally discarded. This was true in Weimar Germany. It was true in the former Yugoslavia, a conflict I covered for The New York Times. 

The historian Fritz Stern in The Politics of Cultural Despair, his book on the rise of fascism in Germany, wrote of the consequences of the collapse of liberalism. Stern argued that the spiritually and politically alienated, those cast aside by the society, are prime recruits for a politics centered around violence, cultural hatreds and personal resentments. Much of this rage, justifiably, is directed at a liberal elite that, while speaking the “I-feel-your-pain” language of traditional liberalism, sells us out.

“They attacked liberalism,” Stern writes of the fascists emerging at the time in Germany, “because it seemed to them the principal premise of modern society; everything they dreaded seemed to spring from it; the bourgeois life, Manchesterism, materialism, parliament and the parties, the lack of political leadership. Even more, they sense in liberalism the source of all their inner sufferings. Theirs was a resentment of loneliness; their one desire was for a new faith, a new community of believers, a world with fixed standards and no doubts, a new national religion that would bind all Germans together. All this, liberalism denied. Hence, they hated liberalism, blamed it for making outcasts of them, for uprooting them from their imaginary past, and from their faith.”

We are in for it. The for-profit health care system, designed to make money — not take care of the sick — is unequipped to handle a national health crisis. The health care corporations have spent the last few decades merging and closing hospitals, and cutting access to health care in communities across the nation to increase revenue — this, as nearly half of all front-line workers remain ineligible for sick pay and some 43 million Americans have lost their employee-sponsored health insurance. The pandemic, without universal health care, which Biden and the Democrats have no intention of establishing, will continue to rage out of control. Three hundred thousand Americans dead by December. Four hundred thousand by January. And by the time the pandemic burns out or a vaccine becomes safely available, hundreds of thousands, maybe a few million, will have died.

The economic fallout from the pandemic, the chronic underemployment and unemployment — close to 20 percent when those who have stopped looking for work, those furloughed with no prospect of being rehired and those who work part-time but are still below the poverty line are included in the official statistics — will mean a depression unlike anything we have seen since the 1930s. Hunger in US households has already tripled since last year. The proportion of US children who are not getting enough to eat is 14 times higher than last year. Food banks are overrun. The moratorium on foreclosures and evictions has been lifted while over 30 million destitute Americans face the prospect of being thrown into the street.

There is no check left on corporate power. The inevitable social unrest will see the state, no matter who is in the White House, use its three principle instruments of social control — wholesale surveillance, the prisons and militarized police — buttressed by a legal system that routinely revokes habeas corpus and due process, to ruthlessly crush dissent. People of color, immigrants and Muslims will be blamed and targeted by our native fascists for the nation’s decline. The few who continue in defiance of the Democratic Party to call out the crimes of the corporate state and the empire will be silenced. The sterility of the liberal class, serving the interests of a Democratic Party that disdains and ignores them, fuels the widespread feelings of betrayal that saw nearly half the voters support one of the most vulgar, racist, inept and corrupt presidents in American history. An American tyranny, dressed up with the ideological veneer of a Christianized fascism, will, it appears, define the empire’s epochal descent into irrelevance.

Lords of Misrule: UK Elites and the Rise of Global Feudalism

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By Chris Floyd

Source: Empire Burlesque

I darkly suspect that the UK is entering a long winter of discontent and widespread upheaval, which will likely end with the replacement of the hapless opportunist Boris Johnson by someone even worse: the hardcore, inhumane, hard-right true believer Michael Gove, with the equally inhumane, sinister crank Dom Cummings still running the show. (Cummings, remember, has long been Gove’s man, not Johnson’s.) Together they will use the chaos and suffering to keep pushing their brutal agenda of “disruption” and “reform” to destroy the ability of government to act for the greater common good. Instead they will continue turning over its functions to cronies in the private sector, who will drain the Treasury in corrupt deals while providing degraded services – or none at all – as we have seen in almost every case of “privatisation” over the past decades and especially during the pandemic.

Gove and Cummings are part of a broader rightwing movement across the world, which has for decades been funded with unimaginable amounts of money (almost always “dark money,” hidden and laundered through cut-outs). These extremist ideologues believe that government has only one legitimate function: enhancing the power and privilege of an elite that rules by the “right” of its inherent superiority: either its “superior genes” (as Trump – and Cummings’ lordly father-in-law – openly say) or a putative in-born “superior intellect” (as Dom postulates, ludicrously including himself among that number). Money is the main signifier of inherent worth in this barbaric belief system; and being unaccountable to the laws and regulations that restrict the grubby rabble is one of the chief privileges of the elect.

In essence, it’s a form of high-tech feudalism, where baronal power centers (oligiarchs, corporations) hold sway over weak and nominal national governments. If you read what the right-wing think tanks (often American in origin) with which Gove and Cummings have long been associated are ACTUALLY saying in the dense, dull prose of their innumerable “policy papers,” you’ll see that this characterization of their ideology and their aims is no exaggeration. It’s an ancient evil – brutal, rapacious rule by unaccountable elites – dressed up in modern form and cloaked in the cynical perversion of rhetoric about “rights” and “freedom” and “sovereignty” and “modernization” and “AI,” etc. They are heartless liars in pursuit of loot and power, and they literally, demonstrably, do not care who lives or dies, as long as they get what they want.

Until we recognize this, until we stop treating these radical, death-dealing, society-wrecking extremists as normal politicians working within the system, we cannot effectively confront them and stop their depredations. They will continue to use the system itself to hollow out government and society until there is nothing left but their little clique, sealed in sumptuous fortresses behind masses of armed guards, lording it over the ruins.

Win-Win vs Lose-Lose: The Time Has Come for the World to Choose

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By Matthew Ehret

Source: Strategic Culture Foundation

It is a tragedy of our age that society has been locked in a zero-sum operating system for so long that many people living in the west cannot even imagine a world order designed in any other way… even if that zero sum system can ultimately do nothing but kill everyone holding onto it.

Is this statement too cynical?

It is a provable fact that if one chooses to organize their society around the concept that all players of a “great game” must exist in a finite world of tension as all zero-sum systems presume, then we find ourselves in a relatively deterministic trajectory to hell.

You see, this world of tension which game masters require in today’s world are generated by increasing rates of scarcity (food, fuel, resources, space, etc). As this scarcity increases due to population increases tied to heavy doses of arson, it naturally follows that war, famine, and other conflict will rise across all categories of divisions (ethnic, religious, linguistic, gender, racial etc). Showcasing this ugly misanthropic philosophy during a December 21, 1981 People Magazine Interview, Prince Philip described the necessity of reducing the world population stating:

“We’re in for a major disaster if it isn’t curbed-not just for the natural world, but for the human world. The more people there are, the more resources they’ll consume, the more pollution they’ll create, the more fighting they will do. We have no option. If it isn’t controlled voluntarily, it will be controlled involuntarily by an increase in disease, starvation, and war.”

When such a system is imposed upon a world possessing atomic weapons, as occurred in the wake of FDR’s death and the sabotage of the great president’s anti-colonial vision, the predictably increased rates of conflict, starvation and ignorance can only spill over into a global war if nuclear superpowers chose to disobey the limits and “norms” of this game at any time.

Perhaps some utopian theoreticians sitting in their ivory towers at Oxford, Cambridge or the many Randian think tanks peppering foreign policy landscape believed that this game could be won if only all nation states relinquished their sovereignty to a global government… but that hasn’t really happened, has it?

Instead of the relinquishing of sovereignty, the past decade has seen a vast rise of nationalism across all corners of the earth which have been given new life by the rise of China’s Belt and Road Initiative and broader multipolar alliance. While these impulses have taken on many shapes and forms, they are united in the common belief that nation states must not become a thing of the past but rather must become determining forces of the world’s economic and political destinies.

The Case of the Bi-Polar USA

Unfortunately, within the USA itself where nationalism has seen an explosive rise in popularity under President Trump, the old uni-polar geopolitical paradigm has continued to hold tight under such neocon carryovers as Mike Pompeo, Defense Secretary Esper, CIA director Gina Haspel and the large caste of Deep State characters still operating among the highest positions of influence on both sides of the aisle.

While I genuinely believe that Trump would much rather work with both Russia, China and other nations of the multipolar alliance in lieu of blowing up the world, these aforementioned neocons think otherwise evidenced by Pompeo’s October 6 speech in Japan. In this speech, Pompeo attempted to rally other Pacific nations to an anti-Chinese security complex known as the Quad (USA, Australia, Japan and India). With his typically self-righteous tone, Pompeo stated that “this is not a rivalry between the United States and China. This is for the soul of the world”. Earlier Pompeo stated “If the free world doesn’t change Communist China, Communist China will change us.”

Pompeo’s efforts to break China’s neighbours away from the Belt and Road Initiative have accelerated relentlessly in recent months, with territorial tensions between China and Japan, Vietnam, South Korea, Malaysia, Taiwan, Indonesia, Philippines, Indonesia and Brunei being used by the USA to enflame conflict whenever possible. It is no secret that the USA has many financial and military tentacles stretching deep into all of those Pacific nations listed.

Where resistance to this anti-China tension is found, CIA-funded “democracy movements” have been used as in the current case of Thailand, or outright threats and sanctions as in the case of Cambodia where over 24 Chinese companies have been sanctioned for the crime of building infrastructure in a nation which the USA wishes to control.

Pompeo’s delusional efforts to consolidate a Pacific Military bloc among the QUAD states floundered fairly quickly as no joint military agreement was generated creating no foundation upon which a larger alliance could be built.

China’s Foreign Minister Wang Yi accurately called out this regressive agenda on October 13 saying:

“In essence [the Indo-Pacific Strategy] aims to build a so-called Indo-Pacific NATO underpinned by the quadrilateral mechanism involving the United States, Japan, India and Australia. What it pursues is to trumpet the Cold War mentality and to stir up confrontation among different groups and blocs and to stoke geopolitical competition. What it maintains is the dominance and hegemonic system of the United States. In this sense, this strategy is itself an underlying security risk. If it is forced forward it will wind back the clock of history.”

China Responds with Class

China’s response to this pompous threat to peace was classy to say the least with Wang Yi teaming up with Yang Jiechi (Director of China’s Central Foreign Affairs Commission) who jointly embarked on simultaneous foreign tours that demonstrated the superior world view of “right-makes-might” diplomacy. Where Wang Yi focused his efforts on Southeast Asia with visits to the Philippines, Indonesia, Cambodia, Malaysia, Laos, Thailand and Singapore, Yang Jiechi embarked on a four-legged tour of Sri Lanka, the UAE, Algeria and Serbia.

While COVID assistance was a unifying theme throughout all meetings, concrete economic development driven by the Belt and Road Initiative was relentlessly advanced by both diplomats. In all bilateral agreements reached over this past week, opportunities for cooperation and development were created with a focus on diminishing the points of tension which geopolticians require in order for their perverse “game” to function.

In Malaysia, the $10 billion, 640 Km East Coast Rail link was advanced that will be completed with China’s financial and technical help by 2026 providing a key gateway in the BRI, as well as two major industrial parks that will service high tech products to China and beyond over the coming decades.

After meeting with Wang Yi on October 9, Indonesia’s Special Presidential Envoy announced that “Indonesia is willing to sign cooperation documents on the Belt and Road Initiative and Global Maritime Fulcrum at an early date, enlarge its cooperation with China on trade and investment, actively put in place currency swap arrangements and settlements in local currency, step up the joint efforts in human resources and disaster mitigation, and learn from China’s fight against poverty.”

In Cambodia, a major Free Trade Agreement was begun which will end tariffs on hundreds of products and create new markets for both nations. On the BRI, the New International Land-Sea Trade corridor and Lancang-Mekong Cooperation plans were advanced.

In the Philippines, Wang Yi and Foreign Minister Locsin discussed Duterte’s synergistic Build Build Build program which reflects the sort of long term infrastructure orientation characteristic of the BRI which are both complete breaks with the decades-long practices of usurious IMF loans which have created development bottlenecks across the entire developing sector.

In Thailand Wang Yi met with the Thai Prime Minister where the two accelerated the building of the 252 km Bangkok-Korat high speed rail line which will then connect to Laos and thence to China’s Kunmin Province providing a vital artery for the New Silk Road.

In the past few years, the USA has been able to do little to counter China’s lucrative offers while at best offering cash under the rubric of the Lower Mekong Initiative established under the Hillary-Obama administration in preparation for the Asia Pivot encirclement of China that was unleashed in 2012. This was done as part of a desperate effort to keep China’s neighbors loyal to the USA and was meant to re-enforce Obama’s Trans-Pacific Partnership which Trump thankfully destroyed during his first minutes in office.

Yang Jiechi’s Four-Legged Tour

In Sri Lanka, a $90 million grant was offered by China which will be devoted to medical resources, water supplies and education and which the Chinese embassy website stated “will contribute to the well being of Sri Lankans in a post-COVID era”. Another $989 million loan was delivered for the completion of a massive expressway stretching from Central Sri Lanka’s tea growing district to the Port of Hambanota. While this port is repeatedly used by detractors of the BRI like Pompeo as proof of the “Chinese debt trap”, recent studies have proven otherwise.

In the UAE, the Chinese delegation released a press release after meeting with Prince Zayed al-Nahyan stating: “Under the strategic guidance of President Xi and the Abu Dhabi crown prince, China will enrich the connotation of its comprehensive strategic partnership with UAE, cement the political trust and support, promote alignment of development strategies, and advance high-quality joint construction of the Belt and Road.”

In Algeria, Yang offered China’s full support for the New Economic Revival Plan which parallels the Philippines’ Build Build Build strategy by focusing on long term industrial growth rather than IMF-demands for privatization and austerity that have kept North Africa and other nations backward for years.

Finally in Serbia which is a vital component of the BRI, the Chinese delegation gave its full support to the Belgrade-Budapest railway, and other long term investments centered on transport, energy and soft infrastructure, including the expansion of the Chinese-owned Smederevo Steel Plant which employs over 12 000 Serbians and which was saved from bankruptcy by China in 2016. By the end of the trip, Prime Minister Brnabic announced: “Serbia strongly supports China both bilaterally and multilaterally, including President Xi Jinping’s Access and Roads Initiative and the 17+1 Cooperation Mechanism, in the context of which most of Serbia’s infrastructure and strategy projects will be realized”

The Spirit of Win-Win Must Not Be Sabotaged

Overall, the spirit of the growing New Silk Road is fast moving from a simple east-south trade route towards a global program stretching across all of Africa, to the Middle East, to the High Arctic and Latin America. While this program is driven by a longer view of the past and future than most westerners realize, it is quickly becoming evident that it is the only game in town with a future worth living in.

While China has committed to the enlightened idea that human society is more than a “sum of parts”, the Cold Warriors of the west have chosen to hold onto obsolete notions of human nature that suppose we live in a world of “each vs. all”. These obsolete notions are premised on the bestial idea that our species is destined to do little more than fight for diminishing returns of scraps in a closed -system struggle for survival where only a small technocratic elite of game masters calling themselves “alphas” control the levers of production and consumption from above.

Thus far, President Trump has distinguished himself from other dark age war hawks in his administration by promoting a foreign policy outlook centered on economic development. This has been seen in his recent victories in achieving economic normalization between Serbia and Kosovo, and endorsing the Alaska-Canada railway last month. With the elections just around the corner and the war hawks flying in full force, it is clear that these piecemeal projects, though sane and welcomed are still not nearly enough to break the USA away from its course of war with China and towards a new age of win-win cooperation required for the ultimate survival of our species.

Why We’re Doomed: Our Delusional Faith in Incremental Change

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By Charles Hugh Smith

Source: Of Two Minds

Better not to risk any radical evolution that might fail, and so failure is thus assured.

When times are good, modest reforms are all that’s needed to maintain the ship’s course. By “good times,” I mean eras of rising prosperity which generate bigger budgets, profits, tax revenues, paychecks, etc., eras characterized by high levels of stability and predictability.

Since stability has been the norm for 75 years, institutions and conventional thinking have both been optimized for incremental change. This is an analog of natural selection in Nature: when the organism’s environment is stable, there’s little pressure to favor random mutations, as these can be risky.

Why risk big changes when everything’s working fine as is?

Absent any big changes in their environment, organisms’ genetic programming remains stable. Unlike natural selection’s process of generating random mutations and testing their efficacy and advantages over the existing programming, human organizations quickly habituate to stable eras by institutionalizing incremental changes as the only available process for reform / change.

Radical reforms are not just frowned on as 1) unneccesary and 2) needlessly risky, there is no institutionalized process to propose, test and adopt radical changes because there is no need for such a process.

Nature has such a process: punctuated equilibirium. When faced with a rapidly changing environment, organisms face intense evolutionary pressure to adapt or die. Mutations which confer a significant advantage in the new environment become part of the species’ genetic programming as those with the adaptation bear offspring who carry the advantageous adaptation. Those without the advantageous adaptation die and those with the adaptation thrive and multiply.

Once the environment stabilizes in “the new normal,” the evolutionary pressure lets up and the species returns to the stability of relatively few changes in its genetic programming.

Organisms which have lost the ability to adapt to rapid change die off once they encounter instability. Species that constantly face instability and rapid change will selectively favor genetic traits which optimize rapid evolution.

Nature tends to retain a basement closet full of fast-evolution tricks just in case the organism faces novel challenges.

Alas, human organizations and conventional thinking have no such closet of fast-evolution tricks. Rather, human organizations and conventional thinking marshal formidable forces to suppress anything which threatens the status quo, because why risk upsetting the feeding trough unless it’s absolutely necessary?

Therein lies the fatal problem: radical adaptation is never absolutely necessary in human organizations and conventional thinking until it’s too late–and even then, the leadership and conventional thinking will fatalistically accept oblivion rather than opt for a risky strategy of testing every mutation and fast-tracking whatever has promise, even though the odds of failure are high since 1) the challenge is novel and therefore unpredictable and 2) most mutations will fail to provide the radical advantages needed to meet the challenge.

In other words, what’s absolutely necessary to human organizations and conventional thinking is the suppression of potentially dangerous novel ideas because the worst-case scenario is that the novel ideas upset the feeding trough all the insiders have come to depend on.

Unfortunately for human organizations and conventional thinking, novel challenges demand precisely what they’re incapable of: risky rapid evolution. The risks will never seem worth it because some insiders might lose their spot at the feeding trough.

Since this loss is viewed as catastrophic by those at risk, they will fight with everything they have to stymie any radical reforms. Ironically, their resistance to rapid evolution only guarantees the demise of the entire organization / status quo, including the spot at the trough they were so eager to defend at all costs.

As the crisis deepens, the default setting in organizations and conventional thinking is that incremental changes and reforms will be enough, because they’ve been enough for four generations. I call this entirely natural default setting the delusional faith in incremental change because this faith isn’t guided by history or the logic of causality; it’s simply convenient and easy.

Nobody gets fired or demoted for agreeing to do more of what’s failed spectacularly.

I’ve prepared a chart of the delusional faith in incremental change showing how each new crisis is met by incremental institutionalized defaults that are completely inadequate to the novel challenges that have arisen. The blindness to the need for radical adaption has been institutionalized as well: this is what worked in the past, so it will work now. Why risk everything when we have procedures that have worked well?

Each stage of the crisis draws whatever conventional response causes the least pain. First, the “rainy day fund” is drained to keep everyone at the feeding trough. Studies of options are funded, and so on.

The recommendations are either too timid and clearly inadequate or they’re too bold and risky. So incremental policy and budget tweaks are adopted as acceptable institutional defaults.

But rifts open in the leadership as the farsighted few demand rapid, radical adaptations and the conventional risk-averse crowd digs in their heels. The farsighted few are pushed out or quit / retire, eliminating the only people who had the ability and experience to actually pull off a radical change of course.

A reshuffling of leadership evokes hope that the modest reforms will work magic. Alas, incremental tweaks only work in eras of stability. They fail miserably in unstable eras of rapidly-evolving challenges.

As everything runs to failure, the only acceptable path is to do more of what’s failed spectacularly, a default to low-risk incrementalism that only accelerates the final inevitable collapse.

The delusional faith in incremental change guarantees systemic failure. Better not to risk any radical evolution that might fail, and so failure is thus assured.

This is why our status quo is doomed:

‘$2.5 TRILLION THEFT’ – STUDY SHOWS RICHEST 1% OF AMERICANS HAVE TAKEN $50 TRILLION FROM BOTTOM 90% IN RECENT DECADES

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The median U.S. worker salary would be around twice as high today if wages kept pace with economic output since World War II, new research revealed.

By Brett Wilkins

Source: Common Dreams

New research published Monday found that the top 1% of U.S. income earners have taken $50 trillion from the bottom 90% over the past several decades, and that the median worker salary would be around twice as high today as it was in 1945 if pay had kept pace with economic output over that period.

The study’s authors, Carter C. Price and Kathryn Edwards of the RAND Corporation, examined income distribution and economic growth in the United States from 1945 to the present. The researchers found stark differences between income distribution from 1945 to 1974 and 1975 to 2018.

According to the study—which was funded by the Seattle-based Fair Work Center—the median salary of a full-time U.S. worker is currently about $50,000. Adjusted for inflation using the consumer price index, workers at or below the current median income now earn less than half of what they would have if incomes had kept pace with economic growth. This means that if salaries had kept pace with economic output, the median worker pay would be between $92,000 and $102,000 today, depending on how inflation is calculated.

Had the more equitable distribution of the roughly 30-year postwar period continued apace, the total annual income of the bottom 90% of American workers would have been $2.5 trillion higher in 2018, or an amount equal to about 12% of GDP.  In other words, the upward redistribution of income has enriched the 1% by some $47 trillion—which would now be more than $50 trillion—at the expense of American workers.

David Rolf, a Seattle labor organizer, president of the Fair Work Center, and founder of Service Employees International Union (SEIU) Local 775, is more blunt. He calls this “the $2.5 trillion theft.”

“From the standpoint of people who have worked hard and played by the rules and yet are participating far less in economic growth than Americans did a generation ago, whether you call it ‘reverse distribution’ or ‘theft,’ it demands to be called something,” Rolf, who helped lead the fight for a $15 hourly minimum wage in Seattle and beyond, told Fast Company.

Remarkably, the study found that workers at all income levels would be better off today if income kept pace with output. Full-time, prime-age workers in the 25th percentile, for example, would be earning $61,000 instead of $33,000. Workers in the 75th percentile, who in 2018 earned $81,000, would be making $126,000. Even 90th-percentile workers, who earn $133,000, would be making $168,000 under the more equitable distribution.

On the other hand, had the economic pie been divided more equitably, the income of the top 1% would fall from around $1.2 million to a still-affluent $549,000.

“We were shocked by the numbers,” said Nick Hanauer, a venture capitalist and self-described “zillionaire” who, along with Rolf, came up with the idea for the study. “It explains almost everything,” Hanauer told Fast Company. “It explains why people are so pissed off. It explains why they are so economically precarious.”

Sen. Bernie Sanders (I-Vt.), who made correcting economic inequality a pillar of both of his presidential bids, lamented the “h-u-g-e redistribution of income in America” in a Monday tweet.

The researchers’ findings, which come amid a deadly coronavirus/Covid-19 pandemic, shine light on the injustice of an economy—by far the wealthiest in the history of civilization—in which essential workers struggle mightily, and often in vain, to survive while the richest people grow ever richer at their expense.

According to Americans for Tax Fairness, the total wealth of U.S. billionaires increased by $792 billion, or 27%, during the first five months of the Covid-19 pandemic. During this period, Amazon CEO Jeff Bezos, the world’s wealthiest person, has become the world’s first multi-centibillionaire, with a net worth now surpassing $200 billion. Meanwhile, his employees struggle to make ends meet, and Amazon workers who speak out against poor pay and hazardous working conditions during the pandemic have been fired and derided by company executives.

Compared to other most-developed nations, the U.S. has done a relatively poor job of taking care of its people during the pandemic. In addition to the U.S. being the only developed nation without universal healthcare, its workers have received less in direct payments and government support than people in many comparable countries.

The gap between the richest and poorest U.S. households is now wider than it has ever been in the past 50 years, according to the most recently available data from the U.S. Census Bureau. The pandemic has only exacerbated the situation, as around half of lower-income American households have reported a job or wage loss due to Covid-19.

Internationally, the U.S. ranks 39th out of over 150 nations in income inequality, according to Gini coefficient data compiled by the CIA, placing it roughly on par with nations like Peru and Cameroon. Among Organization for Economic Cooperation and Development (OECD) nations, the U.S. has the seventh-highest level of income inequality.

The U.S. has the highest poverty rate among the world’s most-developed nations, and the fourth-highest poverty rate among OECD nations after South Africa, Costa Rica, and Romania. According to UNICEF, the U.S. also has the second-highest rate of childhood poverty in the developed world behind Romania, with more than one in five U.S. children—and over one in four Latinx children, and nearly one in three Black and Native American children—living in poverty.

This year, more than 54 million Americans, or roughly one in every six people—including 18 million children—may experience food insecurity, according to the nonprofit group Feeding America.

The Economy Continues To Unravel Despite All Stimulus Measures

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By Brandon Smith

Source: Alt-Market.com

Since the pandemic lockdowns were first implemented in the US I have been more concerned with the government and central bank response than the virus itself. As I have noted in past articles, the pandemic restrictions and subsequent economic and social crisis events they help to create will cause far more deaths than Covid-19 ever will. Not only that, but the actions of the Federal Reserve continue to con the American public into believing that there is some kind of “plan” to stop the crash that THEY engineered.

The only agenda of the Fed is to increase the pain in the long term; they have no intention of actually preventing any disaster.

This is evidenced in comments by voting members of the Fed, including Neel Kashkari who recently argued for the enforcement of hard lockdowns for at least six weeks in the US, all because the US savings rate was going up. Meaning, because Americans are saving more in order to protect themselves from economic fallout, Kashkari thinks we should be punished with an economic shutdown that would force us to spend whatever we have been able to save.

Do you see how that works?

Fed members and government officials demand hard lockdowns, depleting public savings and destroying small businesses. Then, the public has to beg the Fed and the government for more and more stimulus measures so that they can survive. The people and the system become dependent on a single point of support – fiat money creation and welfare. Yet, the evidence suggests that this strategy is failing to do much of anything except stall the inevitable for a very short time.

If the goal was really to reduce the pain of the pandemic as much as possible, then the strategy should be to keep the economy as open as possible and let the virus run its course.  By initiating lockdowns, all we are doing is extending the economic damage over the span of years instead of months.  We can deal with the comparatively minimal deaths associated with the virus; we cannot handle the disaster that is about to befall the financial system.

The small business sector appears to be the most fragile element of the economy right now. The PPP loans that were supposed to shore up small businesses failed miserably, with data showing only 13% to 19% of applicants getting a loan of any kind. Over 64% of small businesses that received a loan are also worried about being approved for loan forgiveness. In other words, of the few small business owners that got a PPP loan more than half do not have the ability to pay the loan back if they end up not qualifying for exemption.

This problem does not seem to be affecting the corporate sector, however. International companies are enjoying incredible cash infusions from the Fed through overnight loans as well as Fed stimulus propping up stock markets (at least for now). Tech companies in particular are enjoying a rush of investment as the assumption in the daytrading world is that the central bank will not allow these companies to fail.

Maybe they are right, but stock markets today DO NOT reflect the health of our system in any way. Stock tickers are a placebo, a Pavlovian trigger for the public, a tool to make people believe that the situation is improving merely because share values are going up. This is not the case.

Small businesses in the US account for around 50% of all employment and job creation. They are a vital part of the economy. Yet, government and central bank measures seem to have left them out in the cold to die.

To be sure, the $600 weekly unemployment enhancement created through the CARES Act passed in March did boost consumer spending, primarily on durable goods such as computers, TVs, cellphones, etc. Spending on services declined though, which is where the majority of small businesses make their money. And, considering the fact that most durable goods are manufactured overseas, this means that the majority of stimulus dollars that went to consumers did not go into the US economy, but foreign exporters like China.

Now, the unemployment enhancement has ended and its return is in question. It will be interesting to see if the boost to purchases of goods will continue without that extra $600 weekly stimulus. Consumer spending rose in July by 1.9%, but this was already a weak print compared to the increases during the previous two months.

Unemployment numbers have declined due to soft reopenings in numerous states, and at the very least some part time jobs appear to be returning, but nowhere near the level needed to erase the millions of jobs lost since February after the initial lockdowns began. If you count U-6 measurements and unemployed people who have been removed from the rolls for being jobless for too long, the REAL unemployment rate is closer to 30% of working age Americans. This is essentially Great Depression levels of joblessness.

US GDP has continued to decline by 32% according to the Bureau of Economic Analysis (despite statistical rigging by the Fed and government agencies), and while it’s possible that stimulus slowed the effects of GDP loss, there is no indication what the trillions of dollars created by the Fed have actually bought other than a few months of time and a massive bubble in the stock market.

The economy cannot survive extreme lockdown conditions for any length of time, let alone almost two more months. And, if you want to know what it means when elites in government and central banking call for a “hard lockdowns”, just look at Level 4 restrictions in places like Australia and New Zealand, where only one person can leave home at any given time, can only travel 3 miles from home and only for food and supplies, and anyone caught not wearing a mask is subject to arrest or a $10,000 fine.

This mother in Melbourne, Australia was arrested because of a Facebook post calling for protests over the lockdown restrictions.  She later had to take the post down and offered an apology, saying she did not know it was illegal to post such statements on social media:

Yeah, this kind of Orwellian response will do wonders for any economic recovery, and this is what Kashkari is calling for in the US.  It’s almost as if the Fed and certain politicians WANT a financial collapse in America…

The REAL solution is to stop the lockdown restrictions altogether. If the goal is truly to protect as many American lives as possible for the “greater good”, then the pandemic response must stop. Luckily, it seems that more and more people are beginning to see through the facade and are rejecting the restrictions. Even in Europe and Australia there have been some signs of protest and rebellion. The problem is that, at least in terms of the economy, it may be too late.

We have to consider the fact that once a large portion of the business sector (like small businesses) takes a massive hit like the one they have suffered over the past several months, many such businesses and jobs will simply not come back. There are many reasons for this, but primarily it’s a matter of debt. The average small business owner carries almost $200,000 in debt for 3-5 years before he reaches profitability or breaks even. This is assuming that there are no major economic catastrophes in that time.

With the pandemic, the riots, the restrictions, etc., businesses will have to take on much more debt with little guarantee of recovery in the next few years let alone the next few months.  Chapter 11 business bankruptcies in the US rose over 26% in the first half of 2020 alone.

Even if lockdown restrictions were completely eradicated tomorrow, a large number of businesses would go bankrupt anyway.  The “Retail Apocalypse” has been growing over the past decade, LONG before the coronavirus was on issue.  Thousands of businesses shut down last year and tens of thousands more are slated to close this year.   The virus and lockdowns simply accelerated the existing decline.

This is why large banks are cutting off loans to business owners and consumers right now; they know exactly where all this is headed.

Banks act as middlemen for the PPP loans financed by the Fed, yet those loans are not getting to most businesses. Banks have also cut credit card lending in the past few months, and general lending has crashed. All of this despite low interest rates for banks receiving stimulus injections from the Fed. Where is all of the money going? They are keeping it for themselves, buying up hard assets as well as propping up the stock market. As noted above, the elites have NO INTENTION of saving the economy, only themselves.

If the stimulus is not getting to the main-street economy then the only purpose it serves is to give the public a false sense of comfort.  The people who gain the most from the ongoing pandemic chaos are establishment elites that want severe restrictions on personal liberty.  Not to mention, the virus and lockdowns offer a convenient scapegoat for the financial crisis that was already brewing due to central bank mismanagement of stimulus, inflation and interest rates. The bottom line is, the banks do not want the crisis to end.  Why would they?  The longer the panic continues, the more they benefit.

Inflation Is Stealth Austerity

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By Charles Hugh Smith

Source: Of Two Minds

Rather than decry austerity, which demands an open political discussion of trade-offs, we should decry inflation’s stealthy reduction of purchasing power.

Austerity–bad. Inflation–good. Oh wait–they’re the same thing: both are a reduction in purchasing power. The only difference is a reduction via austerity is upfront while inflation is a stealth reduction, obfuscated by “official” distortions and Federal Reserve mumbo-jumbo.

Consider $1,200 in wages, unemployment, stimulus, Social Security payment, etc. If this payment gets cut by 10%–$120–as a result of austerity, pay cut, reduction in hours worked, etc., recipients scream bloody murder.

But if inflation reduces the purchasing power of the $1,200 by 10%, nobody does anything but grumble that “prices keep rising while my income stays the same.” This is the classic boiled frog syndrome: inflation is like the heat being turned up so gradually that the poor frog doesn’t realize he’s about to expire.

Inflation is stealthy because the loss of purchasing power is difficult to monitor. Your $1,200 only buys what $1,080 bought in the recent past; 10% inflation reduced your income exactly the same as if austerity had subtracted the $120 upfront.

Governments and central banks love inflation because the theft goes unnoticed. The public tolerates inflation because it’s easy to passively accept this erosion in their standard of living and difficult to generate the political heat that an outright cut would spark.

Though it’s being openly engineered by the Federal Reserve, inflation appears to be a force nobody controls–unlike austerity which is so clearly a political decision. If Inflation robbed 10% of everyone’s income overnight, people might be roused from their passivity to protest.

But since the theft occurs slowly–what’s 1% a month?–and unevenly across a spectrum of goods and services, this theft doesn’t rouse the same political storm as upfront austerity.

Inflation is a form of sacrifice that few recognize as sacrifice. It seems like everyone’s income is eroded equally, but this isn’t true: the wealthy closest to the Fed’s money spigots are earning multiples of inflation from asset inflation, stock buybacks, etc. Inflation is a pinprick to the wealthy and a stilletto in the kidneys of the bottom 95%.

To the political Aristocracy, inflation is wonderful because they don’t need to ask anyone to sacrifice 10% of their income as they do with austerity; they just steal the 10% a dribble at a time and throw up their hands as if inflation is some mystery force completely beyond their control.

Ironically, austerity–an honest, upfront political decision and sacrifice–is decried, while the dishonest, stealth cut of inflation is passively accepted, even as the Federal Reserve has made a cloaked political decision to reduce the purchasing power of everyone’s income except for the New Nobility (the top 0.1%) that the Fed slavishly serves.

Rather than decry austerity, which demands an open political discussion of trade-offs, we should decry inflation’s stealthy reduction of purchasing power, a Fed policy that benefits the few at the expense of the many.

Here is the Chapwood Index of inflation, which carefully measures “apples to apples” costs of essential goods and services in each city:

As inflation erodes purchasing power, workers’ share of the economy has declined dramatically– a double-whammy of declining purchasing power and standard of living.