Posts tagged income
By Jim Cox
Tax Consumers, Taxpayers, and the Cox Box
Years ago I joked that every economist’s highest goal was to have a graph or concept named for him or her. Among the existing ones are the Keynesian Cross Graph, the Edgeworth Box, the Phillip’s Curve, the Laffer Curve, Rothbard’s Law, Buridan’s Ass, Mises’s Butler, Hume’s Specie-Flow Mechanism, Rostow’s Stages of Growth, the Ricardo Effect, Menger’s Law, the Beveridge Curve, and Hayek’s Triangles.
I came up with a way of visually depicting libertarian class analysis in the 1980s but never shared it beyond a friend or two. But now I immodestly present what I have called the Cox Box.
Libertarian class analysis is based on two classes in regard to government: the taxpayers and the tax consumers. It is important to note that libertarian class analysis predates the better known Marxist class analysis of workers and the owners of the means of production (capitalists). Marx published his class analysis in 1848, whereas the libertarian class analysis of J. B. Say and Charles Dunoyer was developed in 1810 and by James Mill in the 1820s and 1830s.
Here is how John Calhoun stated libertarian class analysis in his Disquisition on Government in 1848:
The necessary result … is to divide the community into two great classes: one consisting of those who, in reality, pay the taxes and, of course, bear exclusively the burden of supporting the government; and the other, of those who are recipients of their proceeds through disbursements, who are, in fact, supported by the government; or in fewer words, to divide into tax-payers and tax-consumers. … The effect … is to enrich; and strengthen the one, and impoverish and weaken the other.
So, how to depict the correct libertarian class analysis? Here, I depict it as a box with income levels along the one axis and a division of taxpayers and tax consumers along the other axis wherein half of all income levels are net taxpayers and half are net tax consumers. Figure 1 represents a hypothetical economy in which net tax consumption does not vary by income level:
Figure 1: A neutral Cox Box.
We know, however, that tax consumption can very significantly at various income levels. What are some of the specific examples of the ways one is a tax consumer in the modern US? Among the higher incomes these transfers include farm subsidies, mortgage guarantees, bank bailouts, overseas marketing subsidies, and the recent Quantitative Easing to pump up the stock market (to name only a few of the many). At the lower income levels, these transfers include the SNAP program, rent subsidies, unemployment benefits, and Medicaid (again, to name only a few of the many).
Conservatives believe the appropriate depiction is reflected in Figure 2, which features an economy in which higher income earners pay the bulk of all taxes (not just income taxes) while receiving little in return, and the welfare-enabled lower income earners pay very little of all taxes (not just income taxes) while receiving much in unearned payments:
Figure 2: The conservative view.
Conservatives, however, tend to overlook the money that so many higher-income earners receive from their crony capitalist connections within government. So, firms such as General Motors do earn their revenues from willing customers but also have enjoyed taxpayer-financed bailouts and protection from their potential competitors through various regulations.
Left liberals believe that the appropriate depiction is best explained in Figure 3, as they largely believe that higher income earners don’t pay their “fair share” of all taxes (not just income taxes) while receiving vast benefits in return. Meanwhile, the welfare recipients pay substantial taxes (not just income taxes), while receiving a pittance in return compared to their better-connected higher-income earners. Higher-income earners such as General Motors stockholders and executives are subsidized with resources not bestowed on lower-income earners:
Figure 3: The left-liberal view.
Libertarians in contrast favor Figure 4 with higher-income earners using their political connections to arrange money flows to themselves. At the same time, ideological pressures result in a political buying off of the desperate lower income groups who have been shut out of opportunities to better their circumstances via licensing costs, minimum wages, regulations and more.
Figure 4: The libertarian view of tax consumers.
Libertarians in particular see a troubling drift over time to the left of the diagram as net taxpayers are increasingly outnumbered by net tax consumers. As Mises pointed out in Bureaucracy, this will eventually lead to the destruction of the economic system.
Cox Box analysis will reveal a different mix of taxpayers and consumers at different income and wealth levels in different societies, times, and places. In the modern United States, however, we find an economy in which those at the income extremes appear to most easily take advantage of taxpayer-funded benefits while those at the middle income levels are increasingly called upon to finance the expenditures. Moreover, libertarians see the country as being transformed from a society of free individuals voluntarily interacting with one another into a heavily-politicized society wherein the government is involved — by various means — in virtually every facet of life.
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No Janet Yellen, The Economy Is NOT “Getting Better”
On Tuesday, new Federal Reserve Chairman Janet Yellen went before Congress and confidently declared that “the economic recovery gained greater traction in the second half of last year” and that “substantial progress has been made in restoring the economy to health”. This resulted in glowing headlines throughout the mainstream media such as this one from USA Today: “Yellen: Economy is improving at moderate pace“. Sadly, tens of millions of Americans are going to believe what the mainstream media is telling them. But it isn’t the truth. As you will see below, there are all sorts of signs that the economy is taking a turn for the worse. And when the next great economic crisis does strike, most Americans will be completely and totally unprepared because they trusted our “leaders” when they told us that everything would be just fine.
It is amazing how deceived people can be. Just consider the case of 56-year-old Brian Perry. He is a former law clerk that has applied for nearly 1,500 jobs since 2008 without any success. But he says that he is “optimistic” that he will get another job soon because he believes that the economy is recovering…
By his own count, Brian Perry has applied for nearly 1,500 jobs since being let go as a law clerk in 2008. The 56-year old Perry lives in Rhode Island, where the 9.1 percent unemployment rate is 2.5 percentage points above the national average.
Perry remains optimistic that a job is forthcoming. He thinks a more robust economy would create better opportunities for the long-term unemployed like him.
Let us certainly hope that Perry does find a new job soon. But if he does, it won’t be because we are experiencing an “economic recovery”. Just consider the following facts…
-In January, we were told that the U.S. economy “created” 113,000 new jobs. But that figure was arrived at only after adding a massive seasonal adjustment. In reality, the U.S. economy actually lost 2.87 million jobs in January. During the past decade, the only time the U.S. economy has lost more jobs in January was during 2009. At that time, the U.S. economy was suffering through the peak of the worst economic downturn since the Great Depression.
-Prominent retailers are closing hundreds of stores all over the United States. Things have gotten so bad that some are calling this a “retail apocalypse“…
- JC Penney, which lost $586 million in three months in 2013, is planning to close 33 stores in 19 states and lay off 2,000 people. JC Penney’s stock has lost 84 percent of its value since February 2012.
- Sears has decided to shut down its flagship store in Downtown Chicago, and it has closed 300 stores in the United States since 2010. Stock analyst Brian Sozzi noted that Sear’s inventory levels have fallen by 23.7 percent since 2006. He also noted that Sears had $4.4 billion in cash and equivalents in 2005 but $609 million in cash and equivalents in 2012. Sozzi, who calls himself a guerrilla analyst, has a blog full of disturbing pictures of empty Sears stores.
- Macy’s, one of the few retail success stories, is planning to close five stores and eliminate 2,500 jobs.
- Radio Shack is preparing to close 500 stores, according to The Wall Street Journal.
- Best Buy recently closed 50 stores and eliminated 950 jobs at stores in Canada.
- Target announced plans to eliminate 475 jobs and not fill 700 empty positions to reduce costs.
- Aeropostale is planning to close 175 stores.
- Blockbuster has closed down all of its stores.
-McDonald’s is reporting that sales at established U.S. locations were down 3.3 percent in January.
-In January, real disposable income in the U.S. experienced the largest year over year decline that we have seen since 1974.
-Only 35 percent of all Americans say that they are better off financially than they were a year ago.
-What is happening to the U.S. stock market right now very closely resembles what happened to the U.S. stock market just before the horrific stock market crash of 1929. Just check out the chart in this article.
Meanwhile, things continue to unravel all around the rest of the globe as well.
In previous articles, I have detailed how the reckless money printing by the Federal Reserve has inflated massive financial bubbles in emerging markets all over the planet. Now that the Fed is “tapering”, those bubbles are starting to burst and we are witnessing a tremendous amount of economic chaos. Here are three more examples…
Ghanaian Economist Dr. Theo Richardson says Ghana’s economy will crash by June this year if the Bank of Ghana continues with its kneejerk measures to rescue the cedi.
“The government is facing liquidity problems and if we don’t get the appropriate remedies to address the issues at hand the situation may worsen and by June the economy may crash,” Dr. Richardson said.
With only $24.5 billion left in FX reserves after valiantly defending major capital outflows since the Fed’s Taper announcement, the Kazakhstan central bank has devalued the currency (Tenge) by 19% – its largest adjustment since 2009. At 185 KZT to the USD, this is the weakest the currency has ever been as the central bank cites weakness in the Russian Ruble and “speculation” against its currency as drivers of the outflows (which will be “exhausted” by this devaluation according to the bank). The new level will improve the country’s competitiveness (they are potassium heavy) but one wonders whether, unless Yellen folds whether it will help the outflows at all.
In the wake of a global stock market sell-off driven by worries over slower growth in emerging markets, the head of India’s central bank, Raghuram Rajan, criticized the U.S. Federal Reserve as it pressed on with plans to dial back its monthly bond purchases: “International monetary co-operation has broken down,” said Rajan, who added that “the U.S. should worry about the effects of its polices on the rest of the world.”
We have reached a “turning point” for the global financial system. Things are beginning to fall apart both in the United States and all around the world.
But at least the dogs at the White House are eating well. Just consider the following photo that was recently tweeted by Michelle Obama…
This article first appeared here at the Economic Collapse Blog. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
Image credit: http://theeconomiccollapseblog.com
221 Percent Increase In One Year? Why Are So Many People Renouncing American Citizenship?
The number of Americans that renounced their citizenship was 221 percent higher in 2013 than it was in 2012. That is a staggering figure, and it is symptomatic of a larger trend. In recent years, a lot of really good people with very deep roots in this country have made the difficult decision to say goodbye to the United States permanently. A few actually go to the trouble to renounce their citizenship, and that is mostly done for tax purposes. But most willingly choose to leave America for other reasons. Some were very serious when they said they would leave the U.S. if Barack Obama got a second term, some (such as Jesse Ventura) are dismayed at how our freedoms and liberties are eroding and are alarmed at the rise of the Big Brother police state, some are absolutely disgusted by the social and moral decay that is eating away at the foundations of our society, and there are yet others that consider “the grass to be greener” on the other side of the planet. Personally, I have a number of friends that have made the very hard decision to relocate their families thousands of miles away because they see what is coming to America and they believe that there isn’t any hope of turning things around at this point. I also have a lot of friends that are determined to stay in the United States no matter what. When it comes to the future of America, almost everyone has a very strong opinion, and these are discussions that we need to start having.
Once upon a time, the United States was seen as “the land of opportunity” all over the globe and it seemed like everyone wanted to come here.
But now that is all changing. As we have abandoned the principles that this country was founded upon, our economy has gone steadily downhill.
As I wrote about the other day, the middle class in America is slowly dying. As millions of good paying jobs have been shipped out of the country, the competition for the remaining jobs has become quite intense. At this point, there is even tremendous competition for minimum wage jobs.
Compared to exactly six years ago, 1,154,000 fewer Americans have jobs. Meanwhile, our population has gotten significantly larger since then. There simply are not enough jobs for everyone, and we continue to fall even farther behind. In January, the economy only added 113,000 jobs and in December the economy only added 75,000 jobs. Both of those figures are well below what we need just to keep up with population growth.
Looking ahead, things look even more troubling.
The competition for jobs has also resulted in an extended period of declining incomes in the United States.
Those that read my articles regularly probably have those facts memorized by now.
In addition, a study that just came out has shown that the number of “low-wage breadwinners” in the United States is at an all-time high…
A staggering number of American households are relying on low-wage jobs as their leading or sole source of income.
Meet the low-wage breadwinner. There were about 21 million of them in the United States in 2011, according to a forthcoming study by University of Massachusetts Boston economists Randy Albelda and Michael Carr.
Unlike other studies which often focus just on low-wage workers, the researchers looked at those who also live in low-income households. This way, they were able to strip out the teenager making $8 an hour flipping burgers but still living comfortably with his parents. Or the mom who works a part-time job in retail to supplement her husband’s otherwise ample salary.
For tens of millions of average American families, there simply is not enough money left at the end of each month.
That is why many of them turn to debt to try to make up the difference. Consumer credit is increasing at an alarming pace once again, and when the next great economic shock arrives many of those families are going to be in for a tremendous amount of financial pain.
In this type of economic environment, it should not be a surprise that anger, frustration and desperation are rising to very dangerous levels.
It was desperation and a fear of losing everything that he had ever worked for that drove one 80-year-old man to become a methamphetamine courier.
It was intense anger and frustration that drove a 58-year-old military veteran to package up cat feces and send it to employers that had turned him down…
Rather than simply grumble to himself or complain to others, a St. Louis man aggrieved by a company’s failure to hire him took another approach.
Jevons Brown packaged up cat feces and sent it through the mail.
Brown, 58, was sentenced Friday to two years of probation after pleading guilty in August to a misdemeanor charge of mailing injurious articles.
The plea says Brown, a veteran, became frustrated with his lack of employment opportunities and lashed out at employees of companies that failed to hire him.
This is just the tip of the iceberg.
In the years ahead, we are going to see much, much worse.
And if you do lose everything, don’t expect anyone to care very much. There is already a frightening lack of compassion for those that are down on their luck in the United States today. For example, in Pensacola, Florida it is actually illegal for homeless people to use blankets or cardboard boxes to shield themselves from the cold…
So there I was with my wife and three kids, all of us huddled under blankets with the fireplace roaring, watching the temperature continue to drop from a comfortable 65 degrees down to 45. But outside it was 17 degrees and raining and sleeting, and if you were homeless, you had to consider that if you used a blanket to shield yourself from the elements, that you might be hauled off to jail for a violation of a local ordinance prohibiting using blankets, cardboard, or newspaper to cover yourself.
Once you lose everything, society just wants you to go away.
And this lack of compassion is going to get a whole lot worse during the very hard times that are coming.
So it is easy to understand why many Americans would want to get out of this country while they still can.
However, the truth is that the grass is not necessarily greener on the other side.
For instance, you may be dreaming of moving to a tropical paradise where you can enjoy the sand and the sun every single day.
In the past, many Americans considered Puerto Rico a good place to relocate to. After all, it is a United States territory and if you only speak English you can still get around pretty well.
But you wouldn’t want to move down to Puerto Rico these days. Right now it is in the middle of a full-blown economic collapse…
Puerto Rico’s slow-motion economic crisis skidded to a new low last week when both Standard & Poor’s and Moody’s downgraded its debt to junk status, brushing aside a series of austerity measures taken by the new governor, including increasing taxes and rebalancing pensions. But that is only the latest in a sharp decline leading to widespread fears about Puerto Rico’s future. In the past eight years, Puerto Rico’s ticker tape of woes has stretched unabated: $70 billion in debt, a 15.4 percent unemployment rate, a soaring cost of living, pervasive crime, crumbling schools and a worrisome exodus of professionals and middle-class Puerto Ricans who have moved to places like Florida and Texas.
In fact, Puerto Rico is a preview of the kind of societal chaos that we could be seeing inside the United States in just a few years…
Schools sit shuttered either because of disrepair or because of a dwindling number of students. In this typically convivial capital, communities have erected gates and bars to help thwart carjackers and home invaders. Illegal drugs, including high-level narcotrafficking, are one of the few growth industries.
Well, what about South America?
In recent years, South America has been an extremely popular destination for those wishing to leave the United States.
Unfortunately, many areas of South America are experiencing full-blown economic collapse right now as well. As I wrote about recently, deteriorating economic conditions have resulted in widespread crime, looting, violence, blackouts, shortages of basic supplies, and runs on the banks in Argentina and Venezuela. The following is an excerpt from a recent interview with Fernando Aguirre who actually lives down in Argentina…
Chris Martenson: Okay. Bring us up to date. What is happening in Argentina right now with respect to its currency, the peso?
Fernando Aguirre: Well, actually pretty recently, January 22, the peso lost 15% of its value. It has devalued quite a bit. It ended up losing 20% of its value that week, and it has been pretty crazy since then. Inflation has been rampant in some sectors, going up to 100% in food, grocery stores 20%, 30% in some cases. So it has been pretty complicated. Lots of stores don’t want to be selling stuff until they get updated prices. Suppliers holding on, waiting to see how things go, which is something that we are familiar with because that happened back in 2001 when everything went down as we know it did.
Chris Martenson: So 100%, 20% inflation; are those yearly numbers?
Fernando Aguirre: Those are our numbers in a matter of days. In just one day, for example, cement in Balcarce, one of the towns in Southern Argentina, went up 100% overnight, doubling in price. Grocery stores in Córdoba, even in Buenos Aires, people are talking about increase of prices of 20, 30% just these days. I actually have family in Argentina that are telling me that they go to a hardware store and they aren’t even able to buy stuff from there because stores want to hold on and see how prices unfold in the following days.
Well, what about Europe?
Isn’t Europe a lot more stable?
Unfortunately, that is not necessarily true. In recent years we have seen rioting, civil unrest and Depression-like conditions in Ukraine, Greece, Spain, Italy and Portugal.
And now you can add Bosnia to that list…
More than 150 people were wounded in Bosnia on Friday in the worst civil unrest in the country since the 1992-95 war as anger over the dire state of the economy and political inertia boiled over.
Angry protesters set fire to part of the presidential palace in Sarajevo in protests over unemployment and corruption, as well as government buildings in the capital Sarajevo, Tuzla and Zenica.
Just because you move out of the United States does not necessarily mean that you will avoid what is coming.
We are heading for a global economic collapse, and the pain is going to be felt to the farthest corners of the planet.
But of course there are many that will end up leaving the United States and will ultimately thrive.
So what do you think?
Is now a time for people to consider leaving the United States permanently?
This article first appeared here at the Economic Collapse Blog. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
Image credit: http://theeconomiccollapseblog.com
The Economist Who Exposed ObamaCare
Boy, the Congressional Budget Office report which showed that Obamacare will further reduce the number of people in the workforce sure threw the White House for a loop. It spent most of Friday trying to explain the report away.
The train wreck just continues to pile up.
(From The Wall Street Journal)
As the CBO admits, that’s a “substantially larger” and “considerably higher” subtraction to the labor force than the mere 800,000 the budget office estimated in 2010. The overall level of labor will fall by 1.5% to 2% over the decade, the CBO figures…
…The CBO’s intellectual conversion is all the more notable for accepting Mr. Mulligan’s premise, which is that what economists call “implicit marginal tax rates” in ObamaCare make work less financially valuable for lower-income Americans. Because the insurance subsidies are tied to income and phase out as cash wages rise, some people will have the incentive to remain poorer in order to continue capturing higher benefits. Another way of putting it is that taking away benefits has the same effect as a direct tax, so lower-income workers are discouraged from climbing the income ladder by working harder, logging extra hours, taking a promotion or investing in their future earnings through job training or education.
By Greg Hunter
Dr. Paul Craig Roberts-U.S. Markets Rigged by its Own Authorities
Economist Dr. Paul Craig Roberts says, “We have a situation where all the markets are rigged. All the markets are manipulated.” As an example, Dr. Roberts points to the stock market. Dr. Roberts contends, “We have a stock market at all-time highs, and where is the economy? There’s not one. There’s no recovery.” Dr. Roberts goes on to say, “53% of Americans earn less than $30,000 per year. Well, the poverty rate for a family of four is something like $24,000. . . . If there is no income to drive the economy and there is no credit expansion to drive the economy, then how does it go anywhere? You can’t possibly have a recovery.”
Manipulations Rule The Markets
The Federal Reserve’s announcement on December 18 that beginning in January its monthly purchases of mortgage-backed financial instruments and US Treasury bonds would each be cut by $5 billion is puzzling, as is the financial press’s account of the market’s response.
The Federal Reserve conveys a contradictory message. The Fed says that improvements in employment and the economy justify cutting back on bond purchases. Yet the Fed emphasizes that it is maintaining its commitment to record low interest rates “well past the time that the unemployment rate declines below 6.5 percent, especially if projected inflation continues to run below the [Open Market] Committee’s 2 percent longer-run goal. When the Committee decides to begin to remove policy accommodation it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.”
The last sentence in the quote states that the Fed does not regard its announced reduction in bond purchases as less accommodation or as a move toward tightening. In other words, the Fed is saying that tapering does not mean less accommodation.
To put it another way, the Fed is saying that the economy is doing well enough not to require the same amount of monthly bond purchases, but is not doing well enough to stand any change in the near zero nominal federal funds rate. The implication is that the Fed either does not think that a reduction in purchases will result in a rise in long-term interest rates or that such a rise will not derail the economy as long as the Fed keeps short-term rates at or near zero. If the $10 billion decrease in monthly bond demand results in higher long-term interest rates, what good does it do to keep the federal funds rate at zero? If the $10 billion monthly bond purchases were not needed as part of the accommodation policy, why was the Fed purchasing them?
Possibly the Fed thinks that Congress has taken steps to reduce the federal deficit, which would result in a reduced supply of bonds to match the Fed’s reduced demand for bonds, but the Fed’s statement makes no reference to federal deficit reduction, which is probably a smoke and mirrors change instead of a real one.
Moreover, the Fed’s outlook for the economy is mixed. The Fed says that “recovery in the housing sector slowed somewhat in recent months,” so why reduce purchases of mortgage-backed financial instruments? And surely the Fed is aware that the U3 unemployment rate has declined because discouraged workers who cannot find a job are not counted among the unemployed. As all measures show, real median family income and real per capita income are lower today than in 2007, and real consumer credit is not growing except for student loans. Without rising aggregate demand to drive the economy, why does the Fed see a recovery instead of faulty statistical measures that do not accurately portray economic reality?
The financial media’s reporting on the stock market’s response to the Fed’s announcement has its own puzzles. I have not seen the entirety of the news reports, but what I have seen says that the equity market rose because investors interpreted the reduction in bond purchases as signaling the Fed’s vote of confidence in the economy.
Previously when the Fed announced that it might cut back its bond purchases, the markets dropped sharply, and the Fed quickly back-tracked. Everyone knows that the high prices in the bond and equity markets are the result of the liquidity pouring out of the Fed and that a curtailment of this liquidity will adversely affect prices. So why this time did prices go up instead of down?
Pam Martens points out that there is evidence of manipulation. http://wallstreetonparade.com
As market data indicates, the initial response to the Fed’s announcement was a sharp move down as market participants sold stocks on the Fed’s announcement (see the chart of the Dow Jones Industrial Average in Pam Martens’ article). But within a few minutes the market changed course and rose on panic short-covering just as sharply as it had fallen.
The question is: who provided the upward push that panicked the shorts and sent the market up 292 points? Was it the plunge protection team and the NY Fed’s trading floor? Was it the large banks acting in concert with the Fed? It is hard to avoid the conclusion that this was an orchestrated event that forestalled a market decline.
Short selling in the paper gold futures market has been used to protect the US dollar’s value from being knocked down by the Fed’s Quantitative Easing. Following the Fed’s December 18 announcement, another big takedown of gold was launched.
William Kaye had predicted the takedown in advance. He noticed that the ETF gold trust GLD experienced a sudden loss in gold holdings as shares were redeemed for gold. Only the large Fed-dependent bullion banks can redeem shares for gold. Possession of physical gold allows the short-selling that drives down the gold price to be covered.
Bloomberg reports that gold is exiting the West. It has been shipped out to Asia. You explain, dear reader, how the price of gold can fall so much in the West while the supply of gold dries up. http://www.bloomberg.com/video/what-s-happening-to-all-the-gold-d33u1c23SDqA0p0e~9_INw.html
In a few days prior to the Fed’s tapering announcement, GLD was drained of 25 tonnes of gold by primary bullion banks, JP MorganChase, HSBC, Deutsche Bank, Goldman Sachs, and Citicorp. As Dave Kranzler pointed out to me, these banks happen to be the biggest players in the OTC derivatives market for precious metals. HSBC is the custodian of the GLD gold and JPM is the custodian of SLV silver. HSBC and JPM are two of the three primary custodial and market-making banks for Comex gold and silver.
The conclusion is obvious. QE helps the big banks, and manipulation of the gold price downward protects the US dollar from its dilution by QE.
The Fed’s reduced bond purchasing announced for the New Year still leaves the Fed purchasing $900 billion worth of bonds annually, so obviously the Fed does not think that everything is OK. Moreover, the Fed has other ways to make up for the $120 billion annual reduction, assuming the reduction actually occurs. The prospect for tapering is dependent on the US economy not sinking deeper into depression. Massaged “success indicators” such as the unemployment rate, which is understated by not counting discouraged workers, and the GDP growth rate, which is overstated with an understated measure of inflation, do not a recovery make. No other economic indicator shows recovery.
Until a whistleblower speaks, we cannot know for certain, but my conclusion is that the Fed understands that it must protect the dollar from being driven down by QE and that the orchestrated takedowns of gold are part of protecting the dollar’s value, and perhaps also the cutback in QE is a part of the protection by signaling an end of money creation. The Fed also understands that it cannot forever drive down the gold price and that it cannot forever pour liquidity into stock and bond markets. To retreat from this policy without crashing the edifice requires successful orchestrations. Therefore, we are likely to experience more of them in the days to come.
Allegedly, the US has free capital markets, and globalism is bringing free capital markets to the world. In actual fact, US capital markets are so manipulated–and now by the authorities themselves–that manipulation cannot stop without a crash.
What American “democratic capitalism” has brought to the world is manipulated financial markets and the absence of democracy. How long this game can play depends on the outside world.
Reprinted with permission from www.paulcraigroberts.org
About Dr. Paul Craig Roberts
Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.
37 Reasons Why “The Economic Recovery Of 2013″ Is A Giant Lie
“If you repeat a lie often enough, people will believe it.” Sadly, that appears to be the approach that the Obama administration and the mainstream media are taking with the U.S. economy. They seem to believe that if they just keep telling the American people over and over that things are getting better, eventually the American people will believe that it is actually true. On Friday, it was announced that the unemployment rate had fallen to “7 percent”, and the mainstream media responded with a mix of euphoria and jubilation. For example, one USA Today article declared that “with today’s jobs report, one really can say that our long national post-financial crisis nightmare is over.” But is that actually the truth? As you will see below, if you assume that the labor force participation rate in the U.S. is at the long-term average, the unemployment rate in the United States would actually be 11.5 percent instead of 7 percent. There has been absolutely no employment recovery. The percentage of Americans that are actually working has stayed between 58 and 59 percent for 51 months in a row. But most Americans don’t understand these things and they just take whatever the mainstream media tells them as the truth.
And of course the reality of the matter is that we should have seen some sort of an economic recovery by now. Those running our system have literally been mortgaging the future in a desperate attempt to try to pump up our economic numbers. The federal government has been on the greatest debt binge in U.S. history and the Federal Reserve has been printing money like crazed lunatics. All of that “stimulus” should have had some positive short-term effects on the economy.
Sadly, all of those “emergency measures” do not appear to have done much at all. The percentage of Americans that have a job has stayed remarkably flat since the end of 2009, median household income has fallen for five years in a row, and the rate of homeownership in the United States has fallen for eight years in a row. Anyone that claims that the U.S. economy is experiencing a “recovery” is simply not telling the truth. The following are 37 reasons why “the economic recovery of 2013″ is a giant lie…
#1 The only reason that the official unemployment rate has been declining over the past couple of years is that the federal government has been pretending that millions upon millions of unemployed Americans no longer want a job and have “left the labor force”. As Zero Hedge recently demonstrated, if the labor force participation rate returned to the long-term average of 65.8 percent, the official unemployment rate in the United States would actually be 11.5 percent instead of 7 percent.
#2 The percentage of Americans that are actually working is much lower than it used to be. In November 2000, 64.3 percent of all working age Americans had a job. When Barack Obama first entered the White House, 60.6 percent of all working age Americans had a job. Today, only 58.6 percent of all working age Americans have a job. In fact, as you can see from the chart posted below, there has been absolutely no “employment recovery” since the depths of the last recession…
#3 The employment-population ratio has now been under 59 percent for 51 months in a row.
#4 There are 1,148,000 fewer Americans working today than there was in November 2006. Meanwhile, our population has grown by more than 16 million people during that time frame.
#5 The “inactivity rate” for men in their prime working years (25 to 54) has just hit a brand new all-time record high. Does this look like an “economic recovery” to you?…
#6 The number of working age Americans without a job has increased by a total of 27 million since the year 2000.
#9 Only about 47 percent of all adults in America have a full-time job at this point.
#10 The ratio of wages to corporate profits in the United States just hit a brand new all-time low.
#11 It is hard to believe, but in America today one out of every ten jobs is now filled by a temp agency.
#12 Approximately one out of every four part-time workers in America is living below the poverty line.
#13 In this economic environment, there is intense competition even for the lowest paying jobs. Wal-Mart recently opened up two new stores in Washington D.C., and more than 23,000 people applied for just 600 positions. That means that only about 2.6 percent of the applicants were ultimately hired. In comparison, Harvard offers admission to 6.1 percent of their applicants.
#14 According to the Social Security Administration, 40 percent of all U.S. workers make less than $20,000 a year.
#15 When Barack Obama took office, the average duration of unemployment in this country was 19.8 weeks. Today, it is 37.2 weeks.
#16 According to the New York Times, long-term unemployment in America is up by 213 percent since 2007.
#17 Thanks to Obama administration policies which are systematically killing off small businesses in the United States, the percentage of self-employed Americans is at an all-time low today.
Bush Sr.: 11.3
Bush Jr.: 10.8
#19 According to the U.S. Census Bureau, median household income in the United States has fallen for five years in a row.
#20 The rate of homeownership in the United States has fallen for eight years in a row.
#21 Back in 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 54.9 percent of all Americans are covered by employment-based health insurance, and thanks to Obamacare millions more Americans are now losing their health insurance plans.
#23 Total consumer credit has risen by a whopping 22 percent over the past three years.
#24 In 2008, the total amount of student loan debt in this country was sitting at about 440 billion dollars. Today, it has shot up to approximately a trillion dollars.
#25 Under Barack Obama, the velocity of money (a very important indicator of economic health) has plunged to a post-World War II low.
#26 Back in the year 2000, our trade deficit with China was 83 billion dollars. In 2008, our trade deficit with China was 268 billion dollars. Last year, it was 315 billion dollars. That was the largest trade deficit that one nation has had with another nation in world history.
#27 The gap between the rich and the poor in the United States is at an all-time record high.
#28 Right now, 1.2 million students that attend public schools in the United States are homeless. That is a brand new all-time record high, and that number has risen by 72 percent since the start of the last recession.
#29 When Barack Obama first entered the White House, there were about 32 million Americans on food stamps. Today, there are more than 47 million Americans on food stamps.
#30 Right now, approximately one out of every five households in the United States is on food stamps.
#31 According to the Survey of Income and Program Participation conducted by the U.S. Census, well over 100 million Americans are enrolled in at least one welfare program run by the federal government.
#32 In 2000, the U.S. government spent 199 billion dollars on Medicaid. In 2008, the U.S. government spent 338 billion dollars on Medicaid. In 2012, the U.S. government spent 417 billion dollars on Medicaid, and now Obamacare is going to add tens of millions more Americans to the Medicaid rolls.
#33 In 2000, the U.S. government spent 219 billion dollars on Medicare. In 2008, the U.S. government spent 462 billion dollars on Medicare. In 2012, the U.S. government spent 560 billion dollars on Medicare, and that number is expected to absolutely skyrocket in the years ahead as the Baby Boomers retire.
#34 According to the most recent numbers from the U.S. Census Bureau, an all-time record high 49.2 percent of all Americans are receiving benefits from at least one government program.
#35 The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.
#37 The U.S. national debt is on pace to more than double during the eight years of the Obama administration. In other words, under Barack Obama the U.S. government will accumulate more debt than it did under all of the other presidents in U.S. history combined.
Fortunately, it appears that most Americans are not buying into the propaganda. According to a new CNN survey, the percentage of Americans that believe that the economy is getting worse far exceeds the percentage of Americans that believe that the economy is improving…
Americans views on the state of the nation are turning increasingly sour, according to a new national poll.
And a CNN/ORC International survey released Friday also indicates that less than a quarter of the public says that economic conditions are improving, while nearly four in ten say the nation’s economy is getting worse.
Forty-one percent of those questioned in the poll say things are going well in the country today, down nine percentage points from April, and the lowest that number has been in CNN polling since February 2012. Fifty-nine percent say things are going badly, up nine points from April.
So what do you think?
Do you believe that the U.S. economy is getting better or getting worse?
This article first appeared here at the Economic Collapse Blog. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
Image credit: http://theeconomiccollapseblog.com
Why Obamacare Will Motivate Millions Of Americans To Make Less Money And Get Divorced
Did you know that Obamacare contains huge incentives that will actually motivate people to try to reduce their incomes? It’s true. Under Obamacare, making less money can pay off big time. As you will see below, reducing your income by just $1,000 could get you an Obamacare subsidy worth over $14,000. Who wouldn’t want to make that trade? And guess what? Obamacare also makes divorce highly profitable for millions of American couples. In fact, there are some U.S. couples that are already considering divorce due to the provisions contained in the new health care law. Of course those couples still plan to live together – they just want to get divorced so that they can save thousands of dollars on their health care expenses. Yes, I know that sounds absolutely crazy. But this is actually happening. The truth is that Obamacare is turning out to be a much larger disaster than anyone anticipated, and it seems like new “surprises” just keep popping up with each passing day.
The figures that you are about to see were calculated using the Kaiser Family Foundation subsidy calculator. These numbers apply to a husband and a wife that are both 62 years old.
A non-smoking, married couple living in San Francisco, California earning $63,000 a year will have to pay $20,318 a year for a silver plan under Obamacare and $12,647 a year for a bronze plan.
At $63,000, that couple would be making too much money to be eligible for a subsidy, so that couple will have to pay the total cost of whatever plan they choose by themselves.
But if that couple only made $62,000 a year, things would dramatically change.
The plans would still cost the same, but the couple would now be eligible for an Obamacare subsidy of $14,428.
So a silver plan would end up costing them only $5,890, and they would ultimately pay nothing for a bronze plan.
In other words, by reducing their income by $1,000, that couple would save $14,428 if they got a silver plan or they would save $12,647 if they got a bronze plan.
Isn’t that bizarre?
And as I mentioned above, Obamacare also contains a huge incentive to get divorced. In fact, according to a recent Breitbart article some couples are already considering doing this…
Nona Willis-Aronoqitz, 29, and Aaron Cassara, 32, are full-time freelancers and earn more than $62,000 a year, which means they do not qualify for the subsidies under Obamacare. The couple realized, however, they would be able to afford the plans if they divorce.
Not only that, two single people living together can actually make far more than $62,000 a year and still be eligible for large Obamacare subsidies. This was explained in a recent article posted on the website of The Atlantic…
Any married couple that earns more than 400 percent of the federal poverty level—that is $62,040—for a family of two earns too much for subsidies under Obamacare. “If you’re over 400 percent of poverty, you’re never eligible for premium” support, explains Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation.
But if that same couple lived together unmarried, they could earn up to $45,960 each—$91,920 total—and still be eligible for subsidies through the exchanges in New York state, where insurance is comparatively expensive and the state exchange was set up in such a way as to not provide lower rates for younger people.
So Obamacare is going to motivate millions of Americans to make less money and get divorced.
What a wonderful law.
Meanwhile, millions of Americans are having their existing health care policies taken away from them even though Obama repeatedly promised us that this would never happen…
According to one analysis, 52 million Americans could lose their current health plans by the time this is all over…
Yet advisers did say in 2010 that there were large caveats and that anyone whose insurance plan changed would lose the promised protection of being able to keep existing plans. And a report in 2010 said that as many as 69 percent of certain employer-based insurance plans would lose that protection, meaning as many as 41 million people could lose their plans even if they wanted to keep them and would be forced into other plans. Another 11 million who bought their own insurance also could lose their plans. Combined, as many as 52 million Americans could lose or have lost old insurance plans.
Another analysis conducted by Forbes projects that 93 million Americans will ultimately lose their health insurance policies.
In any event, hopefully everyone can agree that this is a complete and total nightmare.
And as Americans are losing their current health insurance policies, they are being told that their new policies will be much more expensive.
For example, it is being estimated that health insurance premiums for healthy 30-year-old men will rise by an average of 260 percent.
But some families are being hit much harder than that.
Obamacare is named the “Affordable Care Act,” after all, and the President promised the rates would be “as low as a phone bill.” But I just received a confirmed letter from a friend in Texas showing a 539% rate increase on an existing policy that’s been in good standing for years.
As the letter reveals (see below), the cost for this couple’s policy under Humana is increasing from $212.10 per month to $1,356.60 per month. This is for a couple in good health whose combined income is less than $70K — a middle-class family, in other words.
Could you afford that kind of an increase?
All of these problems are even causing large numbers of Obama supporters to turn on Obamacare…
Obama supporters on the West Coast are experiencing similar surprises. In San Francisco, husband and wife Lee Hammack and JoEllen Brothers, who describe themselves as “cradle Democrats,” were alarmed when they received their insurance cancelation notice informing them that their previous $550 monthly premium would now be almost $1,300, their deductible would be higher, they would pay higher hospital costs, and their out-of-pocket maximum would increase.
And of course the technical problems that are plaguing the Obamacare health insurance exchanges continue.
For instance, Oregon’s health care exchange has not enrolled a single person yet.
In North Carolina, we find a similar situation…
In fact, only one person was able to successfully use Healthcare.gov to enroll in the new exchange.
But even that single person has not paid, which means the enrollment is not complete.
In Washington D.C., things are much better. Five people in D.C. have been able to successfully enroll in Obamacare at this point.
Down in Florida, one man spent an entire month unsuccessfully trying to navigate Healthcare.gov…
Since Oct. 2, Miami resident Nick Athanassiadis has spent several hours a day—nearly every day—on the Internet repeatedly trying to create an account on the federal Obamacare marketplace to see if insurance plans being sold there might be less expensive than his current coverage.
But despite having a long background in digital and software companies, Athanassiadis was repeatedly thwarted by a head-spinning series of glitches, system outages, blank screens, error messages, broken or nonexistent Web links and other hurdles on the HealthCare.gov site that kept his goal out of reach for weeks.
And even when he finally—finally—reached that goal, he didn’t like what he saw.
This has got to be the most disastrous launch of a major national law in U.S. history.
So what do you think about Obamacare so far?
Image credit: http://thetruthwins.com
Ron Paul: Obamacare ‘A Conspiracy Of Stupidity’
Dr. Paul isn’t the only medical doctor who is completely fed up with medical central planning. I’ve talked with a few and each one is deeply concerned about how it will impact care.
Image credit: http://www.againstcronycapitalism.org
30 Statistics About Americans Under The Age Of 30 That Will Blow Your Mind
Why are young people in America so frustrated these days? You are about to find out. Most young adults started out having faith in the system. They worked hard, they got good grades, they stayed out of trouble and many of them went on to college. But when their educations where over, they discovered that the good jobs that they had been promised were not waiting for them at the end of the rainbow. Even in the midst of this so-called “economic recovery”, the full-time employment rate for Americans under the age of 30 continues to fall. And incomes for that age group continue to fall as well. At the same time, young adults are dealing with record levels of student loan debt. As a result, more young Americans than ever are putting off getting married and having families, and more of them than ever are moving back in with their parents.
It can be absolutely soul crushing when you discover that the “bright future” that the system had been promising you for so many years turns out to be a lie. A lot of young people ultimately give up on the system and many of them end up just kind of drifting aimlessly through life. The following is an example from a recent Wall Street Journal article…
James Roy, 26, has spent the past six years paying off $14,000 in student loans for two years of college by skating from job to job. Now working as a supervisor for a coffee shop in the Chicago suburb of St. Charles, Ill., Mr. Roy describes his outlook as “kind of grim.”
“It seems to me that if you went to college and took on student debt, there used to be greater assurance that you could pay it off with a good job,” said the Colorado native, who majored in English before dropping out. “But now, for people living in this economy and in our age group, it’s a rough deal.”
Young adults as a group have been experiencing a tremendous amount of economic pain in recent years. The following are 30 statistics about Americans under the age of 30 that will blow your mind…
#1 The labor force participation rate for men in the 18 to 24 year old age bracket is at an all-time low.
#2 The ratio of what men in the 18 to 29 year old age bracket are earning compared to the general population is at an all-time low.
#3 Only about a third of all adults in their early 20s are working a full-time job.
#4 For the entire 18 to 29 year old age bracket, the full-time employment rate continues to fall. In June 2012, 47 percent of that entire age group had a full-time job. One year later, in June 2013, only 43.6 percent of that entire age group had a full-time job.
#5 Back in the year 2000, 80 percent of men in their late 20s had a full-time job. Today, only 65 percent do.
#6 In 2007, the unemployment rate for the 20 to 29 year old age bracket was about 6.5 percent. Today, the unemployment rate for that same age group is about 13 percent.
#7 American families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
#8 During 2012, young adults under the age of 30 accounted for 23 percent of the workforce, but they accounted for a whopping 36 percent of the unemployed.
#9 During 2011, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.
#10 At this point about half of all recent college graduates are working jobs that do not even require a college degree.
#11 The number of Americans in the 16 to 29 year old age bracket with a job declined by 18 percent between 2000 and 2010.
#12 According to one survey, 82 percent of all Americans believe that it is harder for young adults to find jobs today than it was for their parents to find jobs.
#13 Incomes for U.S. households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you adjust for inflation since the year 2000.
#14 In 1984, the median net worth of households led by someone 65 or older was 10 times larger than the median net worth of households led by someone 35 or younger. Today, the median net worth of households led by someone 65 or older is 47 times larger than the median net worth of households led by someone 35 or younger.
#15 In 2011, SAT scores for young men were the worst that they had been in 40 years.
#16 Incredibly, approximately two-thirds of all college students graduate with student loans.
#17 According to the Federal Reserve, the total amount of student loan debt has risen by 275 percent since 2003.
#19 The total amount of student loan debt in the United States now exceeds the total amount of credit card debt in the United States.
#20 According to the U.S. Department of Education, 11 percent of all student loans are at least 90 days delinquent.
#21 The student loan default rate in the United States has nearly doubled since 2005.
#22 One survey found that 70% of all college graduates wish that they had spent more time preparing for the “real world” while they were still in college.
#23 In the United States today, there are more than 100,000 janitors that have college degrees.
#24 In the United States today, 317,000 waiters and waitresses have college degrees.
#25 Today, an all-time low 44.2 percent of all Americans between the ages of 25 and 34 are married.
#26 According to the Pew Research Center, 57 percent of all Americans in the 18 to 24 year old age bracket lived with their parents during 2012.
#27 One poll discovered that 29 percent of all Americans in the 25 to 34 year old age bracket are still living with their parents.
#28 Young men are nearly twice as likely to live with their parents as young women the same age are.
#29 Overall, approximately 25 million American adults are living with their parents according to Time Magazine.
#30 Young Americans are becoming increasingly frustrated that previous generations have saddled them with a nearly 17 trillion dollar national debt that they are expected to make payments on for the rest of their lives.
And this trend is not just limited to the United States. As I have written about frequently, unemployment rates for young adults throughout Europe have been soaring to unprecedented heights. For example, the unemployment rate for those under the age of 25 in Italy has now reached 40.1 percent.
Simon Black of the Sovereign Man blog discussed this global trend in a recent article on his website…
Youth unemployment rates in these countries are upwards of 40% to nearly 70%. The most recent figures published by the Italian government show yet another record high in youth unemployment.
An entire generation is now coming of age without being able to leave the nest or have any prospect of earning a decent wage in their home country.
This underscores an important point that I’ve been writing about for a long time: young people in particular get the sharp end of the stick.
They’re the last to be hired, the first to be fired, the first to be sent off to fight and die in foreign lands, and the first to have their benefits cut.
And if they’re ever lucky enough to find meaningful employment, they can count on working their entire lives to pay down the debts of previous generations through higher and higher taxes.
But when it comes time to collect… finally… those benefits won’t be there for them.
Meanwhile, the overall economy continues to get even weaker.
In the United States, Gallup’s daily economic confidence index is now the lowest that it has been in more than a year.
For young people that are in high school or college right now, the future does not look bright. In fact, this is probably as good as the U.S. economy is going to get. It is probably only going to be downhill from here.
The system is failing, and young people are going to become even angrier and even more frustrated.
So what will that mean for our future?
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