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The Fed As A Reverse Robin Hood

Tyler Durden's picture





 

In today's edition of Bloomberg Brief, the firm's economist Richard Yamarone looks at one of the more unpleasant consequences of Federal monetary policy: the increasing schism in wealth distribution between the wealthiest percentile and everyone else. While the Fed's third mandate is by now all too clear: push the Russell 2000 to the highest possible level, one can now suggest that the 4th mandate is one that would make Robin Hood spin in his grave: "To the extent that Federal Reserve policy is driving equity prices higher, it is also likely widening the gap between the haves and the have-nots....The disparity between the net worth of those on the top rung of the income ladder and those on lower rungs has been growing. According to the latest data from the Federal Reserve’s Survey of Consumer Finances, the total wealth of the top 10 percent income bracket is larger in 2009 than it was in 1995. Those further down have on average barely made any gains. It is likely that data for 2010 and 2011 will reveal an even higher percentage going to the top earners, given recent increases in stocks." Alas, this is nothing new, and merely confirms speculation that the Fed is arguably the most efficient wealth redistibution, or rather focusing, mechanism available to the status quo. This is best summarized in the chart below comparing net worth by income distribution for various percentiles among the population, based on the Fed's own data. In short: the richest 20% have gotten richer in the past 14 years, entirely at the expense of everyone else.

Another indication of the increasing polarity of US society is the disparity among consumer confidence cohorts by income as shown below, and summarized as follows: "The increase in equity prices has raised consumer spirits, particularly among higher-income consumers. The Conference Board’s Consumer Confidence index for all income levels bottomed in February/March of 2009. The recovery since then has been notable across the board, but nowhere as much as for those making $50,000 or more."

Lastly, nowhere is the schism more evident, at least in market terms, than in the performance of retail stocks:

Saks chairman Steve Sadove recently remarked, “I’ve been saying for several years now the single biggest determinant of our business overall, is how’s the stock market doing.” Privately-owned Neiman- Marcus reported “In New York City, business at Bergdorf Goodman continues to be extremely strong.”

In contrast, retail giant Wal-Mart talks of its “busiest hours” coming at midnight when food stamps are activated and consumers proceed through the check-outs lines with baby formula, diapers, and other groceries. Wal-Mart has posted a decline in same-store sales for eight consecutive quarters.

The conclusion: the end of QE, for now, may help bring US society a little closer, however temporarily.

The withdrawal of Fed accomodation may eventually stop supporting a wider income gap. In the event that further support is needed for the economy, though, this result of monetary policy acting without fiscal support — food stamps, extended uninsurance benefits and so on — should be considered.

Well, further support will be needed, but since the bottom 80% of US society is largely irrelevant in all matters that matter, one can surely hope that this major strata of the population will get some more focus in the future. Although we certainly do not have big expectations.

 

 


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Wed, 07/06/2011 - 08:58 | Link to Comment wandstrasse
wandstrasse's picture

reverse Robin Hood is Dooh Nibor, sounds a bit like LIBOR.

Wed, 07/06/2011 - 09:11 | Link to Comment e_u_r_o
e_u_r_o's picture

Dooh, steal from neighbour!

Wed, 07/06/2011 - 09:20 | Link to Comment bigdumbnugly
bigdumbnugly's picture

robin hood.  banksters in tights?

Wed, 07/06/2011 - 09:39 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Sounds like a job for Super Banzai7.

Who has the Banzai7 signal light?

Wed, 07/06/2011 - 09:30 | Link to Comment snowball777
snowball777's picture

NIBOR: the Neighborhood Bank Origination Rate...also known as the fee at the check-cashing joint.

 

Wed, 07/06/2011 - 08:59 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Steals from the poor and gives to the rich!

Wed, 07/06/2011 - 16:16 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Stupid bitch!

"blimey, this redistribution of wealth is trickier than I thought!"

http://www.youtube.com/watch?v=kp-R1o753pM

Wed, 07/06/2011 - 08:59 | Link to Comment Mercury
Mercury's picture

 "To the extent that Federal Reserve policy is driving equity prices higher, it is also likely widening the gap between the haves and the have-nots....The disparity between the net worth of those on the top rung of the income ladder and those on lower rungs has been growing.

So, replace SNAP cards with IWM shares?

Wed, 07/06/2011 - 08:59 | Link to Comment oogs66
oogs66's picture

best title ever!

Wed, 07/06/2011 - 09:02 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

The Fed As A Reverse Robbing Hood

Fixed it for ya Tyler. No charge.

Wed, 07/06/2011 - 09:46 | Link to Comment Paper CRUSHer
Paper CRUSHer's picture
Hey,hold on a minute there dammit. I'll fix ya both: by Paper CRUSHer on Fri, 07/16/2010 - 09:12
#473107

 

"ROBBING HOOD ROBBING HOOD RIDING THROUGH THE STATES"

"ROBBING HOOD ROBBING HOOD WITH HIS BAND OF MATES"

"FEARED BY THE POOR,LOVED BY THE RICH"

"ROBBING HOOD ROBBING HOOD"

Surcharge.....You'll  both receive a bill later.

Wed, 07/06/2011 - 09:01 | Link to Comment snowball777
snowball777's picture

Have faith, supply-siders! Just keep those mouths open and skyward...the trickling will commence any minute now.

Wed, 07/06/2011 - 09:04 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Like this?

Are those Fed teats government approved?

Wed, 07/06/2011 - 09:06 | Link to Comment wandstrasse
wandstrasse's picture

what is this??? looks like the foundation of a PIIGS country... just with a wolf instead of a pig.

Wed, 07/06/2011 - 11:04 | Link to Comment Ghordius
Ghordius's picture

The she-wolf is actually Etruscan and at least two centuries older than Rome.

The cute little rascals were added in the Renaissance and depict two politicians at work.

Wed, 07/06/2011 - 09:06 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Very gross. Yet... pretty accurate.

Wed, 07/06/2011 - 09:08 | Link to Comment the not so migh...
the not so mighty maximiza's picture

eeeeewwwwww

Wed, 07/06/2011 - 09:11 | Link to Comment Mercury
Mercury's picture

The fall, not the birth of Rome is more appropriate here...

Wed, 07/06/2011 - 09:18 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

This was the fall of civilization. At least for anyone who stood in front of the Romans. Sounds a bit like the USA nowadays.

How many wars is the USA involved in today? Isn't the USA trying to use force to expand its economic insanity. Aren't there all those undeveloped countries just begging for the USA to straighten their asses out? 

For the first 500 years the Romans were not the smartest kids on the block. Just the most brutal and organized. They stole most of their technology and then adapted it to their needs.

Not a perfect analogy, but it works.

Wed, 07/06/2011 - 09:34 | Link to Comment Mercury
Mercury's picture

Hey, they invented concrete and they weren't bad at infrastructure in general. You could have done a lot worse than have been born citizen of Rome during the republic era.

Wed, 07/06/2011 - 09:37 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

That's exactly the type of technology (civil engineering and infrastructure) they stole and then adapted and improved upon. And they invented hydraulic concrete that sets under water, not concrete.

And that's also exactly what you could say about being a US citizen today. Well, if I'm going to be a whore I might as well be a well paid and pampered one.

Wed, 07/06/2011 - 09:41 | Link to Comment Mercury
Mercury's picture

Well they didn't invent conquest either, they just improved upon it. 

Organization and the effective exploitation of technology is pretty much what civilization is.

Wed, 07/06/2011 - 10:07 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I already agreed the Romans were very good at what they did. And so is the USA.

That doesn't make them smart or creative or even industrious. Brutality has a way of making you look smart simply because you get what you want when you want it. The old Might Makes Right writ large.

Wed, 07/06/2011 - 10:39 | Link to Comment Mercury
Mercury's picture

I'm not sure the Romans were more brutal than other contemporary cultures in their corner of the globe (or most others).  At the time human life in general was nasty, brutish and short for the most part (and may yet be again!).

Many of their achievements alongside and despite  their brutality became the building blocks for subsequent civilizations that ultimately made such brutality much more rare.

Wed, 07/06/2011 - 10:56 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Efficiently Brutal. You either joined or you were killed or enslaved. Period. No quarter given. And no, not everyone was like that. This is one of the myths we propagate in order to rationalize and justify the insanity. That old "Human Nature" thingy. Of course our history books will paint a picture that justifies all that has passed and explain all that comes our way.

The winners write the history book and today's winners revise the history books. Thus they will not paint an ugly or true picture if it doesn't serve a greater purpose. History is propaganda written by propagandists. And yes, it is in their best interest to show the Romans are brutal, intelligent and creative etc if that image supports other myths and perspectives being promoted today.

We are already seeing the so called history books written about both modern Iraq wars that don't paint a true picture, but do flatter the "victors" including calling them brave, industrious, kind hearted, fair and just etc. 

Wed, 07/06/2011 - 11:06 | Link to Comment Ghordius
Ghordius's picture

CD, I thought you were a gentle soul! You are shocking me!

What are you missing, the triumphs and the executions of the enemy's leader? ;-)

Wed, 07/06/2011 - 13:26 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

That's the danger of contributing articles and also spending a great deal of time in the comment section. People get to see the real me and not just the one they imagine after reading my articles.

Busted.

Wed, 07/06/2011 - 09:59 | Link to Comment DaveyJones
DaveyJones's picture

has anyone listened to the interview with Julian Assange in London this week? A rare public appearance. Interesting discussion on censorship and technology 

Wed, 07/06/2011 - 10:08 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Link?

Wed, 07/06/2011 - 09:50 | Link to Comment SmoothCoolSmoke
SmoothCoolSmoke's picture

Rome lasted 1200 years, and called the shots for their part of the world for 2/3 of that time.

The USA is struggling to make it to 250 years........... so don't dis the Romans so easily.

Wed, 07/06/2011 - 09:12 | Link to Comment snowball777
snowball777's picture

Shift Rom and Remus there a little aft and you've got the basic idea.

Wed, 07/06/2011 - 09:28 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Milk, milk, lemonade, around the corner fudge is made.

Wed, 07/06/2011 - 09:52 | Link to Comment DaveyJones
DaveyJones's picture

it hits us before the fan

Wed, 07/06/2011 - 09:14 | Link to Comment Superslam
Superslam's picture

Nice tits.

Wed, 07/06/2011 - 09:53 | Link to Comment oldmanagain
oldmanagain's picture

Plus ten.

Austrians unite, save the rich.  So  true.  Supply side is the greatest hoax.

Those that knee jerk against redistribution are walking in their economic sleep.  When the bell tolls, it tolls for thee.

Wed, 07/06/2011 - 09:05 | Link to Comment Greeny
Greeny's picture

US Retail Sales up 0.9% in June VS May.

Wed, 07/06/2011 - 09:06 | Link to Comment Alcoholic Nativ...
Alcoholic Native American's picture

100%......... predictable.

Wed, 07/06/2011 - 11:49 | Link to Comment Urban Redneck
Urban Redneck's picture

Yes.  Ironically, the poor got exactly what they wanted - the tax disparity matches the incomedisparity (with a odd anomaly for a small fraction of the top 1%).  By seeking to eliminate taxation of the lower and middle classes they are rendered irrelevant in the perverted congressional minds seeking primarily to refill the slop through.  And since the anomallous .0001 have a larger share of a larger pie available to maintain their "all animals are equal, but some are more equal than others" status, the practice will continue until the system collapses.  

Wed, 07/06/2011 - 09:06 | Link to Comment LetThemEatRand
LetThemEatRand's picture

But wait, all of my Tea Party heros keep saying that Obama is a socialist and that he hates rich people. 

Wed, 07/06/2011 - 09:09 | Link to Comment Alcoholic Nativ...
Alcoholic Native American's picture

Teabaggers are truely the wize village elders in this great country of ours.

Wed, 07/06/2011 - 09:54 | Link to Comment Lednbrass
Lednbrass's picture

And on the flip side of that, every time I make this argument to a leftist going on about income inequality they flip out and defend the Fed.

Real smart people those- howl about the corps and banks yet defend the tap root that feeds them to the death.  Right now the very statist left are some of the biggest Fed defenders in the US.

Odd how in my lifetime they went from "Question Authority" in 1970 to "How dare anyone question my Authoritah!" shameless apologists for the state in 2011.

At least the Tea Party folks are having some impact- the left is nothing but a rabid watchdog for the establishment now.

Wed, 07/06/2011 - 13:21 | Link to Comment karzai_luver
karzai_luver's picture

There can be little doubt that "the left" or what's left of it is nothing more

than a shrill whore that has given up even the hope of any moral

action.

 

Anyone that votes for them in the U.S. will get the horns and deserve it.

The last lefty prez was Nixon, at least as the left was defined in the U.S.

in the last 50-60 years,Clinton(s) finished off what remained of any left with

a moral stance here.

 

Pure scum that lot. Lies and debauchery with a fiendish grin and an aw shucks.

Perfect swill for the usless eaters in this country.

 

That a fascist liar such as Obama was spawned should be all the proof one needs.

That the idiot left actually projected all their lies and foolishness onto him

and thought he was their lefty lion on a white horse was horrifying to observe.

 

Well hope and change next time fools.

 

 

Wed, 07/06/2011 - 09:07 | Link to Comment MsCreant
MsCreant's picture

They keep robbing and my gold and silver keep going up. Hmmm...I have mixed feelings about this.

Wed, 07/06/2011 - 09:19 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Survivors guilt syndrome. With some therapy sessions, which you will be able to pay for with your Gold and Silver, you'll be fine.

Take two Gold Eagles and call me in the morning.

Wed, 07/06/2011 - 09:19 | Link to Comment MsCreant
MsCreant's picture

;-)

Wed, 07/06/2011 - 09:21 | Link to Comment wandstrasse
wandstrasse's picture

this brings me to a different question: I have a few silver eagles. 'ONE DOLLAR' is printed on them. Does this mean I can go to a US (central) bank and redeem each of my coins for ONE FULL DOLLAR? If yes, wow, I am going to book a flight to the US of A and ....

Wed, 07/06/2011 - 09:31 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Technically the Gold and Silver Eagles are legal tender and can be redeemed for their face value in the almighty dollar.

BTW the USA is still looking for a few more good suckers. Positions are still available, but call now because they're going fast. :)

Wed, 07/06/2011 - 10:26 | Link to Comment wandstrasse
wandstrasse's picture

what is a 'sucker' supposed to do? Well, I am good at farting, I have a valid driver license and I went to the same school as Pope Benedict XVI (all is true!). PLEASE, can I be a sucker, yes or yes?

Wed, 07/06/2011 - 11:03 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

The USA wants you to beg for your turn to be fleeced.

Please may I have another? Wham!

Please may I have another? WHAM!

Wed, 07/06/2011 - 09:08 | Link to Comment zenblkboi
zenblkboi's picture

A "reverse robin hood"  is just normal buisness practices.  To say that Robin Hood is reversed here, implies that Robin hood is the norm.   One could dream.....

Wed, 07/06/2011 - 09:21 | Link to Comment MsCreant
MsCreant's picture

Reverse Robbing Hood is a sexual position. Gosh, didn't your parents talk to you about this stuff?

Oh wait, all of us here had to learn about this stuff on the street. Never mind.

Wed, 07/06/2011 - 09:30 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Is that the one where the whore takes your,err,uhm... wallet... and then puts it into her eeeaaauhm, purse?

Pretty filthy. Too much for my old fashioned style.

Wed, 07/06/2011 - 09:08 | Link to Comment Version 7
Version 7's picture

"If I could by consciences for what they're actually worth and sell them for what they think they're worth - what a deal!"

Wed, 07/06/2011 - 09:10 | Link to Comment Jack Burton
Jack Burton's picture

ZIRP screws average people who can not afford to gamble with their savings, and thus hold bank CDs, savings bonds or savings acccounts. Average folk are being screwed down to a near zero return in order to capitalize banks and the ZIRP also places big money in play to funnel into an equities pump. The result is of course big gains at the top and no gains at all in the bottom 50+%.

Wed, 07/06/2011 - 09:11 | Link to Comment Sudden Debt
Sudden Debt's picture

It helps if you put your head in the sand.

 

Wed, 07/06/2011 - 09:18 | Link to Comment snowball777
snowball777's picture

And then sinter it shut.

Wed, 07/06/2011 - 09:12 | Link to Comment Greeny
Greeny's picture

50k and over is not rich. It's just about 75-80% of the US

population household income, so all you have to look on that

chart is the top line, other line should be just flat,

cause under $20k it's a welfare. In that matter article is poor.

Wed, 07/06/2011 - 09:22 | Link to Comment wisefool
wisefool's picture

The problem with reported income is that in the USA, like Greece, it has absolutley no bearing on the quality of life of that individual. 

There are plenty of people who report $50k incomes, scoop up every tax break and hand out availible to them, write off every single expense in thier lives, from bandwidth, to meals, to the interest on the house which is levered up to provide cash flow for thier "business" to the vehicles they drive to the coffee shop to do "research"

There are only two classes of people. Those at the top and the bottom who tweak out the system, and the dimishing class of people who actually do work, but are taxed at full rate to subsidize the other class.

Greece has a very similar tax code to the USA.......

Wed, 07/06/2011 - 09:16 | Link to Comment IMA5U
IMA5U's picture

shh... just don't tell the Obama heads.  in their minds, they will always be better off than they were 4 years ago because of The Hope and The Change

Wed, 07/06/2011 - 10:00 | Link to Comment oldmanagain
oldmanagain's picture

Obama!! You think Obama is the culprit??  This is so sad.  Hopeless ignorance.

Wed, 07/06/2011 - 10:51 | Link to Comment cdskiller
cdskiller's picture

Obama is to blame, old man, because he legitimized the theft. He turned his back on economic justice and embraced trickle down economics. He destroyed the democratic party base. He gave the populist rhetorical argument away to tea partiers, and they are totally nuts. I mean, there are a couple of posters on this thread who think that Tea Party candidates, like Bachmann or Palin, or whoever, actually give a sh## about reducing the gap between rich and poor. It's delusional in the extreme.

The only way we are going to stop the escalation of the gap in economic class in this country is through revolution, because what needs to be done is radically socialist, in the eyes of many. We need to raise the top marginal tax rate to 80%. We need to bring banking to its knees. Take away the protections of the shadow banking system. Bring all activity into the light and tax it out of profitability so that the people with money will put their hoarded cash into manufacturing instead of into just making more money.

Wed, 07/06/2011 - 10:51 | Link to Comment Lednbrass
Lednbrass's picture

I didnt see the poster saying that Obama was the culprit, seemed more that the ignorati who follow him are so hopiumed out that they cant and wont recognize that it is the same old thing and will breathlessly sing his praises regardless of the fact that there is no change.

He was picked, paid, and blessed by the powers that be for one reason- putting him in the White House during a time of economic upheaval instantly transformed the most volatile segment of American society into frothing defenders of the establishment come hell or high water.  He neutralized urban blacks who will back him regardless of what he does or doesnt do.

Unfortunately you seem to be a reflexive knee jerk idiot and read your own stupidity into other commentary.  Hopeless ignorance indeed.

You never really came back after that wicked Owsley in '67 did you?

Wed, 07/06/2011 - 09:19 | Link to Comment ArkansasAngie
ArkansasAngie's picture

The system is broken. We are spending money to keep the broken system afloat and in the process we screw everything/body else. The purpose of moral hazard recognition aka insolvency is to sweep away the bad. Obviously for this to work we will have to unelect Washington.

The current policy is shifting money to parasites and away from entrprenuerial efforts.

Wed, 07/06/2011 - 09:23 | Link to Comment Waterfallsparkles
Waterfallsparkles's picture

Nothing like taking from the Poor and giving to the Rich.

Of course now they want to take from the Old and give to the Rich by taking away Social Security and Medicare.

Wed, 07/06/2011 - 11:49 | Link to Comment Lednbrass
Lednbrass's picture

I see this claim alot- exactly how is money being taken from the poor?  What mechanism is being used and how much?

Or does not giving something to the poor count as taking it away to you?

Wed, 07/06/2011 - 09:38 | Link to Comment blindman
blindman's picture


.
http://www.mybudget360.com/federal-reserve-continues-shadow-bailouts-ban...
http://www.mybudget360.com/
.

"The Federal Reserve is primarily concerned with one thing and that is to protect the interests of the banking industry. The Fed has no desire or need to protect the underlying economy. If they can get away with allowing banks to jump from one bubble to another they will do so. The success of the overall economy is only consequential if it aligns with the deeper interests of the banking cabal. This weekend former Fed Chair Alan Greenspan mentioned that simply bailing out Greece was a temporary measure. When pressed he went back into “Greenspeak” and rambled on in his typical obtuse language. The reason why global banks fear Greece is not because of the country itself, but because the country has billions of dollars in debt that global banks hold. These banks do not want to pay for their bad bets and would rather shift the cost to the overall population in general. The Fed balance sheet here in the U.S. is now up to $2.84 trillion, another record that gets no airtime in the press. The Federal Reserve continues with clandestine bailouts only to protect the interests of the banking elite.
.
Squeezing the working and middle class

The line out of Wall Street banks has now shifted from:

-(2007) We need money from the Fed to keep money going to American families and small businesses.

And the new line now follows:

-(2011) We need to cut spending and wages to keep competitive in the global marketplace.

What happened to lending to American families and small businesses, the actual reason for the bailouts? These financial liars of course will say anything to steal more taxpayer money. Now it is a narrative of more stealing. These bankers of course don’t follow that line of cutting their own wages but then again, what do expect from the new oligarchy sponsored by the Fed?

The stats show something very different:
.....
"The Fed and its banking cabal would like you to believe that now, everyone needs to live on wages slightly above minimum wage while the pinstriped suit bankers continually squeeze out more and more profits through bailouts, rip offs, financial alchemy, or simply by robbing taxpayers. This is the new business model. The Federal Reserve has failed its mission in many facets because when push comes to shove it is willing to sacrifice the economy for the sake of the elite banking sector. Banks should become like a utility and strictly regulated with force. Commercial and investment banking should be completely split. Hedge funds should receive no special privileges especially when many make money by creating investments that sink the economy and also receive bailouts thanks to political connections. You wonder why unemployment is still too high and wages continue to fall? Look no further than the beast that is the Federal Reserve.""

Wed, 07/06/2011 - 10:23 | Link to Comment whiskeyjim
whiskeyjim's picture

Let us assume everything you say is generally correct.

Then the legal and auditing professional class has also abbrogated their fiduciary duties, their salaries and 'value' not much more than a tax on value generation. For without all the creative book keeping and 'get out of jail free' legisltation, the current financial mess could not have occurred.

Consider that on Main St. an entrepreneur can not sidestep her own business default, even when it is the book keeper who absconds with the money. Her assets are still at risk. I suggest all senior management, defined however you prefer, are proxies for voting ownership and therefore by definition their assets must be on the line.

And it is long past time since auditing firms were actually forced to audit, rather than acting as ponzi schemes to enrich the partners. We have a relatively free market for Main St., which works semi-well, and a totally other set of rules for large companies, and it is totally broken; no one in the end is culpable. No one pays except the taxpayer, and the professional class is exempted from incompetence.

Wed, 07/06/2011 - 11:14 | Link to Comment Ghordius
Ghordius's picture

Amen.

Which would mean that the single person entrepreneur has to be brought back at a level field with the big corporations?

Are you suggesting the deletion of about a million pages of laws? Because by adding additional ones...

Wed, 07/06/2011 - 11:47 | Link to Comment blindman
blindman's picture


recipe for failure. establish a system of law and
then propagate an enormous body of it designed by
special interests who have no idea what they are doing
and what the effects of what they do might be. hey,
the system might fail? nahhh ...just write another law
that does not allow it to happen.!!!
and obviously certain parties will have to be exempt from
all law so that the system doesn't fail from its own weight.
someone unencumbered has to look after national security!
better yet just operate outside of the jurisdiction of the law
ie.. globalization here becomes indispensable.

Wed, 07/06/2011 - 20:16 | Link to Comment StychoKiller
StychoKiller's picture

"There's no way to rule innocent men.  The only power any government has is to crack down on criminals.  Well, when there aren't enough criminals, one makes them.  One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.  Who wants a nation of law-abiding citizens?  What's there in that for anyone?  But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted--and you create a nation of law-breakers--and then you cash in on guilt.  Now that's the system, Mr. Rearden, that's the game, and once you understand it, you'll be much easier to deal with. -- Dr. Floyd Ferris

 

He who has ears, let him hear!

Wed, 07/06/2011 - 11:36 | Link to Comment blindman
blindman's picture


when man subsumes his natural brilliance and creative impulse
to the beezle of systemic rot via a fraudulent fiat debt note
and the math of ponzi termination / growth limitation / contraction
kicks in the only survival strategy left is one of psychological
and intellectual revolution, or so i've heard. just because there
is an elite that has learned to arbitrage death and destruction to
great advantage for a few does not make the system viable or of
the intellect or heart of man or the future man / of man. and now
we all try to navigate this world where death is life and black is white
and accounting is done in colors and shades of shadows.
the change in paradigm is a change in quality not quantity. we are
seeing the qualitative shift which is rendering all systems potentially
obsolete. the basis of the old is going away.
like , as , money only works as currency when there is a conceptual
illusion associated and the old illusion is failing. ....
this the first principle of bubblenomics.
money system contracting back into a barter system ... gold and pm standard..
the derivatives pushed the envelope and broke the whole damned bubble leaving
behind the dust storm of deflation / inflation , purple rain and mud flakes.
the earth itself mortgaged and lifted into the air by strong headwinds and
once again thrown into the sea. but all is well as the average consumer can
close the door and window and watch the ground beneath them lost on their
flat screen t.v..
.
the fed is not an honest broker or authority. period. they are just tools
of the international cartel of arbitrage financiers who feel they need to
keep up certain appearances for a while longer. even though the appearances
are not appearing much anymore, so they buy a commander in chief as insurance.
.
economics, the dismal science. what a shit show! science cannot be dismal.
the act of observation provides the inquirer with information. that is science.
the way that information is perverted, that is economics and where the dismal
comes in. so, it should be economics, the dismal perversion of science. this
they don't teach because there is no beezle for playing the game of leveraging
fraudulently induced debt notes into the culture to destroy people for fun and
profit. ( and calling it god's work ).
you have noticed that all human activity takes place in relation to
MONEY. and that has become the great unknown in the collective mind.
the revolution has begun. war has been declared it is just most people
have not received the memo as such. and all is fair in love and war so we
best watch out for those who have silently engaged without a formal declaration.
this would be the fed and wall st. etc...
yes, some have always known and i guess some will never know and some
just don't want to know. or maybe there was war, then financial war and now
we are collectively ready to think and give tolerance, accord and compromise
a go? the people would benefit and go for it but the "leaders" / hired tools
of the elites. no way. this is their shit show and they are doing very
well, .....

Wed, 07/06/2011 - 09:51 | Link to Comment Jovil
Jovil's picture

You are right Tyler. Just look at the way the system has been set up. One picture is worth a thousand words.

http://lonerangersilver.wordpress.com/2011/05/09/pyramid-of-capital-syst...

Wed, 07/06/2011 - 10:32 | Link to Comment whiskeyjim
whiskeyjim's picture

Of course the problem with the picture, which is the same inherent problem with Marx, is that free markets are NOT as depicted. In free markets, the pyramid is inverted.

It is bureaucracy and central planning the picture disdains, not capitalism. It is fascism or crony capitalism that is depicted.

The proof is simple; one could draw the same picture and substitute 'Socialism' for 'Capitalism' at the top. The picture is the best argument for small goverment.

Wed, 07/06/2011 - 12:02 | Link to Comment mr_sandman
mr_sandman's picture

Exactly.

Everyone who can look at this system honestly knows that without the Fed and a system which has brought us to a ponzi scheme of interest-free risk, Wall Street would be bankrupt.  Therefore, considering they're not bankrupt (by a long shot), then they are stealing the wealth to maintain themselves in the black.  How?  This is the many-trillion dollar question obvious to ZHers.

 

The federal reserve system allows them to steal in a smooth, gradualistic hierarchy.  Government benefits most, then well-connected financial institutions, then down the hierarchy to benefits on debt of large corporate institutions.  Economic institution below those have a high probability of being net economic losers. Economic fascism all the way.

I wouldn't even call it "crony" capitalism, as that assumes some perversion of a fundamentally capitalistic system.

When "capital" is counterfeited by the printing press and handed out to winners at the expense of the losers, that is theft.  When this hierarchical system is legitimized and considered ordinary, it is fascism.

 

Update: What we have now is something akin to free-market fascism.  America still has a great deal of consumer autonomy, but the production structure of capital is not "capitalistic," but corporatized.

Wed, 07/06/2011 - 13:48 | Link to Comment karzai_luver
karzai_luver's picture

consumer autonomy

 

 

That is just great , stay within the fence and graze,consumer!

 

 

 

Wed, 07/06/2011 - 10:13 | Link to Comment whiskeyjim
whiskeyjim's picture

Driving up the return on capital is not the only way the Fed manipulates wealth generation in favor of capital; it is just a more overt example.

When governments or federally appointed institutions like the Fed intervene to prop up financial return or dissipate loss, that preference does not just preferentially increase wealth or extend time for those preferred assets to recover. It forces all other assets to bear the burden that the 'saved' assets would have otherwise taken. In a 'free' market, the allocation of those returns would be the outcome of the complexity of the system. When the Fed does it, it is an intentional transfer.

That a concerted inflation policy structured on top of leveraged debt is an effective wealth transfer from all other income generating assets to financial capital (and by definition, the banks) is such an obvious and clear notion that I fear I am missing some nuance in monetary theory.

I believe it is such an issue I have wondered for years why we allow policies and institutions to do it. Is the moral consequence, even by libertarians, to support strong and substantial governmental wealth redistribution plans to counter the structural prejudice inherent in the government created banking system?

TARP in this milieu is the worst legislation ever written, worse even then the blunt and politically driven stimulus. The system had finally eaten its own head, and the government stepped in and saved it, effectively guaranteeing stagflation until all other income generating assets, including salaries, consumer goods, etc. could absorb the dispersion of bank financial losses.

This seems so blatantly apparent that I fear I am missing something, or half the economists in the world would be screaming bloody murder. As it is, it is only the red-necked pleebs that are crying.

 

 

Wed, 07/06/2011 - 10:23 | Link to Comment oldmanagain
oldmanagain's picture

Moral hazard is that I survive and you do not.  There is nothing moral in the concept, it is as bankrupt a concept as "tax cuts pay for themselves". 

Let's go bomb a city so we can build new buildings is  hard on those wiped out.  When that ratio gets to a few percentage points, the few can outlaw all shelters so there is no protection.

Problem arises when there is not enough resources to repopulate/build.  Time to gas the old and sick.  Send the youth to war.

Wed, 07/06/2011 - 10:32 | Link to Comment Stuck on Zero
Stuck on Zero's picture

It's not just the Federal Reserve that robs from the poor to pay the rich.  Governments at all levels do the same.  Consider traffic fines.  You run a red light and receive a $495 ticket.  For the rich man it's a trifle.  For the poor man it's a disaster.  In Finland, all fines are scaled to the income of the individual so the "sting" is felt equally.  A rich fellow by the name of Vanjoki received a speeding ticket for doing 46.5 mph in a 30-mph zone. His fine? $103,000!

 

Wed, 07/06/2011 - 11:59 | Link to Comment gwar5
gwar5's picture

Socialism is a banking Oligarchs dream.

Massive deficit spending on programs "for the poor" merely allows the banks to finance and hold the government debt that is created, with interest, collected for them by the IRS. But the really big show is the additional 10 X  amount of money they can create out of said debt through fractional reserve banking.

Meanwhile the poor and middle class get their savings confiscated through relentless inflation compounded YOY and government programs that don't work.

The Marxist/socialists still think Goldman Sachs and JPM give money to Obama and Schumer just because they are humanitarians.

 

 

 

Wed, 07/06/2011 - 13:33 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

Hey Gwar,

The middle class never had any real wealth anyways.

The Fed is a muse of sorts, our personal Jesus adorned in goat skin leggings, a horned savior and creator of second chances, a wonder of oligarch goodness (no rich creamy nougat necessary), creating a tough love opportunity for those with sight to covert any remaining transitory credit into AU real wealth. Even those with one glass eye can still take advantage of our dying societies masters largess!

All that's changed in the so called middle class is they've had their borrowed adult toys and marital aids taken away, ego solidifying credit cards put on restriction, unrealistic and utterly unbelievable gov retirement/health care promises broken (our Grandma's knew this was coming in the 80's for Baals sake), and HELOC cut off from their artificial pseudo-wealth bubble maker. There is one partial exception to this, and that is the savings that the MC had. I only consider these savings as that which was derived from their own labor, and went into vehicles that were not risk/gamble speculations (yeah yeah, I know it can be said, inflation forced the investments to get riskier and riskier to bring back a decent ROI... the MC didn't and weren't thinking that, they were only expressing greed). Moreover, hardly any of what is defined as savings was actually such, and what was, was only a dwarf size saving%. The rest went to Pizza Hut.

Most the MC I know knew this illusion was just that, an illusion from the beginning. They would murmur of the impossibility of it all while shoving hotdogs in their mouths. The only things left is for them to do now is wake up, spit out the PBR, and buy some PM's now on the remaining credit of the the illusion system before its back to a visible 2 class system.

Wed, 07/06/2011 - 13:38 | Link to Comment karzai_luver
karzai_luver's picture

No, they give money to obama to protect their interests.

The avg joe doesn't have anything to give of substance.

THe power of the purse is at the top and those giving from that position

are giving to the one who they think protects them.

 

It doesn't matter marx or not at that level.

 

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