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Eric Sprott On America's Great Endangered Species: "The 99%"

Tyler Durden's picture




 

Via Eric Sprott and David Baker of Sprott Global,

How does the US achieve a sustained recovery if “the 99%” continues to suffer perpetual decline in real income?

Other than some obligatory arrests for disorderly conduct, the Occupy Wall Street movement celebrated its one year anniversary this past September with little fanfare. While the movement seems to have lost momentum, at least temporarily, it did succeed in showcasing the growing sense of unease felt among a large segment of the US population – a group the Occupy movement shrewdly referred to as “the 99%”. The 99% means different things to different people, but to us, the 99% represents the US consumer. It represents the majority of Americans who are neither wealthy nor impoverished and whose spending power makes up approximately 71% of the US economy. It is the purchasing power of this massive, amorphous group that drives the US economy forward. The problem, however, is that four years into a so-called recovery, this group is still being financially squeezed from every possible angle, making it very difficult for them to maintain their standard of living, let alone increase their levels of consumption.

One of the central themes that arose out of the Occupy movement was the growing sense of unease among the average American citizen with regard to growing imbalances in wealth within the US. The rich are getting richer while the poor get poorer. That feeling is entirely legitimate. According to the US Census Bureau, in 2011 the median income of US households, adjusted for inflation, fell to $50,054. This is 4.9% below its 2009 level, and 8.9% below its all-time peak of $54,932 in 1999. This is not encouraging data. It implies that the average American household is almost 9% poorer today than it was thirteen years ago.

The Census Bureau data is even more troubling if one acknowledges that the Consumer Price Index (CPI) inflation rate it uses to adjust annual income doesn’t properly account for food, energy or healthcare prices – all key inputs to the average US consumer, and all items that have gone up considerably in price over the last decade, particularly since the advent of quantitative easing. Under current CPI, the items pertaining to food, fuel and healthcare only make up 28% of the total basket. The average US family, however, especially among the 99%, is spending far more on these three items as a percentage of their total income. Figure 1 below compares the average price of gasoline and select food items in 1999, when the average household made $54,932 in real terms (inflation adjusted), versus 2012, when the average household made just over $50,000 in the same relative dollars. As can be seen, the increase in food and energy has grossly outpaced the official CPI inflation rate, which conveniently dropped or shifted many of the food and energy components back in the 1990’s. If the Census Bureau used a more appropriate measure of inflation to compare the median household income in 1999 to today, it would result in an even lower annual income number, implying an even worse decline in real wealth over that time period.

FIGURE 1
MAAG_Oct2012-FIG1.gif
Sources:
http://www.dailyfinance.com/2009/12/29/then-vs-now-how-prices-have-changed-since-1999/ http://www.thepeoplehistory.com/pricebasket.html
http://www.dailymail.co.uk/news/article-2159624/American-children-cost-235-000-raise-age-18.html http://answers.google.com/answers/threadview/id/757601.html
http://assets.aarp.org/rgcenter/econ/fs87_income99.pdf
http://www.davemanuel.com/median-household-income.php
http://www.census.gov/prod/2005pubs/c2kbr-36.pdf 

Figure 2 below is courtesy of Shadow Government Statistics, and shows US Average Weekly Earnings adjusted for inflation using two versions of inflation measurement. It is a sobering chart. The blue line shows inflation-adjusted earnings using government CPI, and shows a small but steady increase in real earnings since the mid-1990s. The green line, however, shows what inflation adjusted earnings would be today had the US Bureau of Labour Statistics not made changes to the CPI in the early 90s, and reveals that average weekly earnings have actually been in contraction for over 17 years. Forget blaming our current woes on the hangover from 2008-2009. The average American worker has been losing income in real terms since the late 1990s. This is clearly a long-term trend which has compounded itself over the last ten years. Weakness begets more weakness.

FIGURE 2: REAL AVERAGE WEEKLY EARNINGS PRODUCTION AND NONSUPERVISORY EMPLOYEES
Deflated by CPI-W versus SGS-Alternate (1990-Base)
To September 2012, Seasonally Ajusted (ShadowStatus.com, BLS)
MAAG_Oct2012-FIG2.gif
Source: Shadow Government Statistics, October 16, 2012

Meanwhile, as the Occupy movement also repeatedly highlighted, the increase in wealth inequality within the US has grown steadily over the past thirteen years. Figure 3 below shows the “Gini Ratio” of US household income, which statistically captures income inequality within the country. A Gini Ratio coefficient of 0 corresponds with perfect equality, while a coefficient of 1 describes a situation where one person has all the income, and everyone else has nothing. As can be seen, a clear trend towards inequality has been in place since the late 1960s, and that trend appears to be accelerating today. Just as weakness begets weakness, strength begets strength for those with the most wealth.

FIGURE 3 : INCOME GINI RATIO FOR US HOUSEHOLDS
MAAG_Oct2012-FIG3.gif
Source: US Department of Commerce: Census Bureau

These two central tenets of the Occupy movement – that the rich are getting richer while the poor are getting poorer, are the same tenets that are hindering a real recovery within the US. We simply cannot expect the US economy to grow if the 99% are not generating more wealth and disposable income over time. Any discussion of a US recovery that doesn’t acknowledge the deteriorating reality of this group is not an honest discussion in our opinion. And it’s only getting worse. On top of consistently losing purchasing power to inflation over the past decade, the 99% is faced with a pronounced deterioration in job quality (in terms of average salary), chronic youth underemployment, an inability of retirees to generate income from savings, and a steady increase in outright poverty. Market pundits can get excited about a 1.1% increase in September retail sales, but they can’t expect that increase to be sustainable unless we see some relief for the core consumptive engine that ultimately drives those sales.

In this vein, it was very interesting to watch the reaction to the most recent US Bureau of Labor Statistics (BLS) unemployment release on October 4, 2012, which optimistically reported US unemployment falling to 7.8% – representing the lowest level of unemployment since January 2009. Rather than elicit jubilation, the report prompted cynicism, most notably from the former General Electric CEO, Jack Welch, who famously tweeted, “Unbelievable jobs numbers… these Chicago guys will do anything… can’t debate so change numbers,” immediately after the release. Welch’s tweet elicited a torrent of defensive responses, most notably by the BLS who were outraged that anyone would question their methodology. But it’s not the methodology that should cause concern (it is just a survey, after all, although continually lowering the “participation rate” of the US labour force does deserve some eye-rolling), it’s the fact that the jobs numbers are shrouding the painful reality of the post-2008 US labour market: that the jobs lost tend to be higher-paying, while the jobs gained tend to be lower-paying.

It doesn’t take much to see this trend evolving. A cursory review of the most recent layoff announcements makes it fairly clear what type of workers are being laid off in 2012:

“Bank of America slashing 16,000 jobs before December”
“Pharmaceutical giant Merck to cut nearly 12,000 jobs”
“Computer giant Hewlett Packard to slash 27,000 jobs by October 2014”
“AMD Announces 15% Cut in Workforce”

Meanwhile, the new jobs allegedly responsible for lowering the unemployment rate tend to be coming from companies seeking part-time workers, like Amazon.com, which announced that it will be hiring 50,000 part-time workers for the holiday season. This is also reflected in the latest BLS report, which accounted for 582,000 of the reported 873,000 new jobs gained in September as “part-time for economic reasons”. The reality is that were it not for those part-time jobs gains, US unemployment would look dismal. Public hiring announcements by US companies have totaled a mere 84,937 workers for the first eight months of 2012, which is significantly lower than the 224,243 workers that were announced for the same period in 2011. The BLS labour surveys don’t account for the difference between a Bank of America job cut vs. an Amazon.com hire, but that’s the difference that has the biggest impact on the disposable income netted by the job loss/gain.

The trend of high-salary job losses offset by low-salary job gains is increasingly evident among the youngest participants of the 99% – recent college graduates. Figures analyzed by Northeastern University’s Center for Labour Market studies stated that, in 2011, approximately 53.6% of bachelor’s degree-holders under the age of 25 were either jobless or working in positions that didn’t require a college education, representing the highest percentage in at least 11 years. The data cited in the study implies that at least one out of four recent college graduates was completely out of work last year. This trend is unlikely to change anytime soon. According to government projections, “only three of the 30 occupations with the largest projected number of job openings by 2020 will require a bachelor’s degree or higher to fill the position – teachers, college professors and accountants. Most job openings are in professions such as retail sales, fast food and truck driving, jobs which aren’t easily replaced by computers.” With two thirds of the national college class of 2011 burdened with an average student loan debt of $26,600, the US economy will not be able to count on this demographic to generate increased spending in the years to come. If anything, most of these recent college grads are essentially an economic write-off until the US labour market improves.

This trend of lower pay is also starting to show in post-graduate professions. According to statistics from the National Association for Law Placement (NALP), of law graduates in 2011 whose employment status was known, only 65.4% obtained a job for which bar passage was required. NALP writes, “Moreover, with about 8% of these jobs reported as part-time, the percentage employed in a full-time job requiring bar passage is even lower, 60%.” Figure 4 shows the decrease in average law salaries since 2009, with the most striking decline evident in the median salary at law firms, which has fallen 35% over the past three years as law firms shift to more lower paying jobs.

FIGURE 4: STARTING SALARIES: CLASSES OF 2009, 2010, AND 2011
MAAG_Oct2012-FIG4.gif
Source: Source: National Association for Law Placement, Inc.

Think of the difference in disposable income between a salary of $130,000 in 2009 vs. $85,000 in 2011. That’s the difference that isn’t being expressed in today’s labour statistics, but has a profound impact on consumer spending.

Then there are the retirees, and while they may not yet identify themselves with the Occupy movement, they do undeniably make up a key component of the 99%. This is a group that has not only faced continual inflation erosion, particularly due to massive increases in healthcare costs (see Figure 5), but also now faces the burden of generating retirement income in a perpetual zero percent interest rate environment. If there is any group that has felt the decline in living standards over the past decade it is this one. Consider, for example, that in 2012 a savings of $1 million dollars invested in a generic 10-year Treasury bond currently pays a mere $17,000 in interest before taxes. And that’s $17,000 in 2012 dollars. In comparison, $1 million invested in 10-Year Treasuries in 1999 would have generated $47,200 before tax in 1999 dollars, when a gallon of gas was $1.22 and the cost of almost every household item was lower by half. There is no statistic that measures the impact of this decline on the disposable income for retirees, but it doesn’t take much imagination to realize that it has completely changed the prospects for an entire generation of savers.

FIGURE 5: HEALTH CARE COSTS EXPLODING
MAAG_Oct2012-FIG5.gif
Source: US Department of Labor: Bureau of Labor Statistics

Then there are the millions of Americans who haven’t saved enough: According to the Transamerica Center for Retirement Studies, an estimated 54% of workers in their 60’s do not have enough financial wealth to sustain themselves in their retirement. According to the Employee Benefit Research Institute, 60% of all workers in the US have less than $25,000 of savings and investments. That’s less than $25,000 in an investment environment that only pays 1.7% on 10-year Treasury bonds. If they don’t have enough saved for retirement today, how can we expect them to spend more tomorrow? Couple this with the 46 million Americans who are now enrolled in the federal welfare food stamps program, (more than double the amount from a decade earlier), and it paints an extremely bleak picture. But this is the reality of the 99%. This is the reality affecting the class of consumers that is expected to drive the US out of recession.

When Ben Bernanke announced QE3 in September, he discussed the importance of increasing the US consumer’s willingness to spend: “The issue here is whether or not improving asset prices generally will make people more willing to spend… If people feel that their financial situation is better because their 401(k) looks better for whatever reason, or their house is worth more, they are more willing to go out and provide the demand.” The 99% will not spend more unless the trend in declining real incomes can be reversed. The current antidote of quantitative easing has indeed helped the equity market and lowered the costs of mortgages. But on the flipside, it has driven the prices of food and energy far beyond the rate of inflation, destroyed retirees’ savings through zero percent interest rates, and ultimately done nothing to boost the confidence and investment required to reverse the persistent labour trend towards lower paying jobs.

The sad fact is that the economic reality for the average family is far worse today than it was ten years ago… even fifteen years ago, and the trend of declining wealth is firmly in place. The youth need higher paying jobs and the retirees need yield, and for all the trillions of dollars that the US government and other western governments have spent and printed, none of it has addressed these key areas of weakness in a way that can reverse the long-term trend. As we approach year-end and the finality of the US election, there will likely be numerous indicators implying a US recovery. Unless they directly benefit the 99%, we would advise readers to take them with a large, bipartisan grain of salt. Weakness begets weakness, until something dramatic reverses the trend’s course. The 99% are firmly stuck in a declining trend, and we do not see it reversing any time soon.

 

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Tue, 10/30/2012 - 10:33 | 2931301 Spastica Rex
Spastica Rex's picture

Occupy was a project of the 1%.

Can I someday be called a person instead of a consumer? Is that just unreasonable?

Tue, 10/30/2012 - 10:38 | 2931320 Lost Wages
Lost Wages's picture

You are a milk cow for the elite. Grovel before them.

Tue, 10/30/2012 - 10:42 | 2931329 RockyRacoon
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I prefer to think of us as turnips.  The last drop of blood is about to extracted.  What will the 1% do then, cannibalize each other?   The wanna-be alpha wolves will turn on each other and the massacre will definitely have a boosting effect on popcorn sales.

I apologize for the mixed metaphors.

Tue, 10/30/2012 - 10:48 | 2931360 malikai
malikai's picture

I'm a traditional guy. I don't really see myself as anything more than a slave.

Tue, 10/30/2012 - 11:12 | 2931402 Pladizow
Pladizow's picture

Useless Eaters, Expendible Containers, Human Resources: http://www.youtube.com/watch?v=nSTp2y4QO7I

Tue, 10/30/2012 - 11:38 | 2931527 Bicycle Repairman
Bicycle Repairman's picture

When consumption moves from the US to East Asia, game over.  You won't even be called a consumer.  The USA won't be like Mad Max.  It will be peaceful, Kafka-lite, punctuated by the occasional "security event". We will make nothing.  We will consume less.  We will live on small government stipends.  Most, including the old, will work for "their" stipend.  Work will consist of internal security,  "Eco-jobs",  menial health care jobs and paper shuffling.  Markets will be a thing of the past. Free time will be forbidden.  All focus will be on the coming American renaissance that is always just around the corner.

Tue, 10/30/2012 - 11:52 | 2931582 Pladizow
Pladizow's picture

"If you want a vision of the future, imagine a boot stamping on a human face - forever." - George Orwell

Tue, 10/30/2012 - 12:33 | 2931710 Spastica Rex
Spastica Rex's picture

Lots of boots on the board today.

Tue, 10/30/2012 - 14:58 | 2932252 RockyRacoon
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Kafka-like?  I can dig it.  I especially like the idea of slowly morphing into a cockroach.  Much more stuff becomes palatable that way.

Tue, 10/30/2012 - 10:51 | 2931368 Spastica Rex
Spastica Rex's picture

Turnips+wolves+popcorn=briliant!

If I'm looking forward to anything in the last 1/3 of my life (less, if I'm lucky), it's when(if) the snake really begins to eat its own tail.

Tue, 10/30/2012 - 11:01 | 2931392 Dr. Engali
Dr. Engali's picture

I'd rather see the turnips squashing the snakes.

Tue, 10/30/2012 - 11:06 | 2931410 Spastica Rex
Spastica Rex's picture

Me too, although I call myself a pacifist.

And really, we're all the same snake.

Tue, 10/30/2012 - 10:48 | 2931361 Melin
Melin's picture

We're lab rats.

Tue, 10/30/2012 - 11:20 | 2931458 N. B. Forrest
N. B. Forrest's picture

I haven't quite figured why there is so much animosity towards the  wealthy on this page.  Sometimes I get the feeling that the commenters on this page are more appropriate for the Mother Jones web site.   Yes a lot of the wealthy in the NY/WaDC corridor have stolen their money.  However most rich people have earned it. The failure to differentiate the two is quite intellectually lazy. 

 

Then again, if you are just over come with envy, I guess you don't care if it was stolen or earned.  If someone has money and you don't, then obviously you will hate them. 

Tue, 10/30/2012 - 11:25 | 2931470 Spastica Rex
Spastica Rex's picture

However most rich people have earned it

How do you reckon?

Tue, 10/30/2012 - 11:48 | 2931564 N. B. Forrest
N. B. Forrest's picture

Double post

 

Tue, 10/30/2012 - 12:11 | 2931642 TheSilverJournal
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Working hard and smart to produce the most with the least means your an aweful human being. Save your soul, live in poverty and produce nothing and live off of others! Everyone stop producing! The way to save humanity is to produce so little that we starve!!

Tue, 10/30/2012 - 15:32 | 2932398 TheSilverJournal
TheSilverJournal's picture

/ Sarc, guys. I was being sarcastic. I thought that was thick enough it didn't have to be stated.

Tue, 10/30/2012 - 11:50 | 2931565 N. B. Forrest
N. B. Forrest's picture

I live in a medium sized Midwestern city.  I know many of the wealthiest people around here.  And I also know the source of wealth of a majority of the very wealthy. 

 

Most of them are entrepreneurs, and children of entrepreneurs.  Their wealth comes from real estate development, energy, high tech inventions, one is an HVAC entrepreneur who has worked her butt off her entire life and now has a net worth in the upper eight figures.  Another owns a well know trucking company. 

 

These guys are technically in the 1% net worth of America.  Yet they are vilified as leaches and slave owners on this site.  I, however look at them as heroes and role models for my children to look up to.  So you fools can all scream and call them names, but I will stick to my guns and say that you are a spoiled Marxist brat who is just envious of the wealth created by those who work hard and are successful. 

Tue, 10/30/2012 - 11:57 | 2931594 Spastica Rex
Spastica Rex's picture

Thanks for your response.

I've rarely been called a Marxist or spoiled, but OK. Sometimes I'm referred to as an "intellectual coward" for not being willing to argue either side of a statement like "most rich rich people earned it."

It must feel good to have all the answers.

Tue, 10/30/2012 - 12:08 | 2931630 N. B. Forrest
N. B. Forrest's picture

I'm not claiming to have the answers, that is just a big straw man on your behalf.  I'm  just observing that there is a strong Marxist thread on this page that is quite annoying.  As I have said before, outside of the NYC/WaDC orbit, most rich people are rich because the worked hard and were a little more lucky than everyone else.  Or their parents were. 

 

It is the Marxists and Fascists who vilify people solely based upon their wealth.  It's the Marxists, Fascists and purveyors of class warfare who accuse those who are successful of stealing their wealth.

Tue, 10/30/2012 - 12:18 | 2931660 Spastica Rex
Spastica Rex's picture

Well, you seem to think you have the answer to the question at hand, namely "Did most rich people earn it?" That you think you know the answer to that question demonstrates that you are stupid. That you think your anecdotal "evidence" is indeed evidence - or even that if it is evidence, it's sufficient to support your claim, demonstrates that you are stupid. 

Furthermore, I don't think you really understand what a "straw man" is, or else you haven't looked in the intellectual mirror lately.

Do you know what a red herring is?

Tue, 10/30/2012 - 13:52 | 2932007 PD Quig
PD Quig's picture

Read "The Millionaire Next Door."

80% of the rich did not inherit their wealth. Condensed version:

http://www.washingtonpost.com/wp-srv/style/longterm/books/chap1/milliona...

Tue, 10/30/2012 - 14:45 | 2932206 Spastica Rex
Spastica Rex's picture

Well, that's at least an attempt.

However, there's no supporting evidence in what you present, just more unsubstantiated claims. No, that the authors have "Ph.D." after their names doesn't substantiate their claims anymore than the Ph.D. after Paul Krugman's name substantiates his claims.

Listen - I'm not hating on rich people. My brother-in-law is the head of finance for Microsoft and my in-laws live up the street from Bill Gates, and I don't hate them. My in-laws are some of the finest people I know - they both come from poor backgrounds and live a very frugal lifestyle.

I'm also not making any claims one way or the other on the precentage of "rich" people who "earned" their wealth. I'll leave that to the real Marxists and real Randroids.

Maybe you could backtrack and define "rich" and "earn." I'm sure as Hell not going to try.

Tue, 10/30/2012 - 20:13 | 2933162 AldousHuxley
AldousHuxley's picture

millionares next door are rich but not wealthy nor influential. $3M  cash in the bank is just retirement money these days.

"Rich" as in wealthy I've got FU money is $10M+ in liquid assets with mortgage paid off.  The real capitalists. Not $2M in 401k after slaving away for 40 years ripping other slaves off while majority of profit goes to lenders.

 

also don't buy into meritocracy because one hard working guy gets lucky.

 

freeing one slave a year keeps their hopes up and keeps working as a slave when there is no merit for the slave owner except he had money.

 

that's right folks....It is mostly all LUCK.

 

Speaking of Bill Gates...he attended private school more expensive than Harvard which gave him the head start with computers when no one else had them, with mother able to pull strings with IBM executives to buy his software he bought from someone else.

 

Rich are either lucky, born with it, married into it, or sacrificsed everything worthwhile in life to obtain it making it worthless goal.

 

Also, look at the world. Chinese "communist" elites being billionares, Putin's ex-KGB gangsters in Russia being billionares....America isn't that different either if you trace wealth a little bit.

 

Rockefellers kill for money: http://en.wikipedia.org/wiki/Ludlow_Massacre

well, America herself raped and displaced natives with weapons, exploited imported slaves from Africa for agricultural economy, used Chinese to build railroad infrastructure, now using Mexicans for manual labor, and Chinese factory slaves for production.

 

dumb rich claim their individual hard work was what gave them success.

smart rich know luck had a big part of it and will give back to society.

 

 

 

Tue, 10/30/2012 - 22:25 | 2933481 Spastica Rex
Spastica Rex's picture

I'm with you 100%. The mere wealth or lack there of says little about a person, and materialism is a mind disease.

Tue, 10/30/2012 - 12:24 | 2931682 TheSilverJournal
TheSilverJournal's picture

I accuse the central planners of stealing the world's wealth. I don't think that makes me a Marxist or a Fascist.

It's time to get rid of the theives. Get rid of the central planners. And if Romney wins, get rid of Romney's centrally planning ass. The highest increases in productivity in this country occurred when we had capitalism. Counterfeitting was once upon a time a capital offense too, just saying...

Tue, 10/30/2012 - 11:59 | 2931601 AurorusBorealus
AurorusBorealus's picture

I don't think that there is a general hatred for the wealthy on Zerohedge.  Rather, there is a general hatred for all those who have made their wealth in finance, Real estate, and other endeavors without doing anything productive or innovative (unless you count inventing new fraudulent financial "products" innovation).  Similarly, I think you will find that there is a general hatred of a system the promotes crony capitalism and government favoritism, wherein vested interests retain all the power and it has become nearly impossible to begin a successful company or innovate without massive capital assets and political clout.

Tue, 10/30/2012 - 12:26 | 2931686 Midas
Midas's picture

I hope you are right about that Aurorus.  But that is the problem with complaining about the 1%.  It doesn't make the distinction.  Occupy wall street seemed like a big tantrum to me, they may have made an argument as compelling and lucid as yours, but I never saw it.  I will admit I tuned out after a while.

Tue, 10/30/2012 - 12:31 | 2931705 Spastica Rex
Spastica Rex's picture

OWS was a Ye-Olde-Merry-Street-Faire for the hippies sponsored by Carls Jr. It was also a message to the plebs of America that resistance is futile.

Tue, 10/30/2012 - 15:15 | 2932320 dugorama
dugorama's picture

you mean "regulatory capture"

http://en.wikipedia.org/wiki/Regulatory_capture

under the section heading American Examples:

"...forces pro se complainants to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case."[14] Gramm, wife of former Senator Phil Gramm, was accused of helping Goldman SachsEnron and other large firms gain influence over the commodity markets. After leaving the CFTC, Gramm joined the board of Enron."

Wed, 10/31/2012 - 19:35 | 2936016 Tegrat
Tegrat's picture

My views are exactly the same.

Tue, 10/30/2012 - 17:50 | 2932901 Lost Wages
Lost Wages's picture

I said "the elite," not "the wealthy" so this sub-thread is irrelevant.

Tue, 10/30/2012 - 10:43 | 2931344 TheSilverJournal
TheSilverJournal's picture

To the central planners, you're not even a consumer. You're simply an input in their system built to suck the resources out of the world to be used to their personal benefit.

Tue, 10/30/2012 - 10:46 | 2931354 Matt
Matt's picture

A consumer is just a class of person. Besides, even corporations are "persons" so that is really too vague a term.

Tue, 10/30/2012 - 10:47 | 2931358 Ruffcut
Ruffcut's picture

Kissingers "useless eaters" group.

Tue, 10/30/2012 - 11:07 | 2931414 Vince Clortho
Vince Clortho's picture

What is wrong with good old Debt Slave?

Tue, 10/30/2012 - 11:19 | 2931451 rpboxster
rpboxster's picture

I stopped using the term "consumer" a few years ago.  I also banned "leader" from my vocabulary. I cringe when I hear "our leaders..."  There is no such thing today.

Tue, 10/30/2012 - 11:48 | 2931569 Spacemoose
Spacemoose's picture

there seems to be an unstated assumption in the article, that the 99% can perpetually continue to consume more than they produce.

even though the 1% are admittedly consuming far more than they produce, i doubt that reducing the consumption of the 1%, and transferring that consumption to the 99%, could make a detectable difference in the standard of living of the 99%. the real problem is the actions taken by the 1% in suppressing the productivity of the 99% (for instance, diverting capital to wind turbines to enrich GE or other similar situations where capital is diverted to campaign contributors).

Tue, 10/30/2012 - 12:25 | 2931684 spekulatn
Tue, 10/30/2012 - 13:41 | 2931956 Buckaroo Banzai
Buckaroo Banzai's picture

From the above link: "A funny thing happened on a way to a "movement." It was exposed. The alternative media, including The Daily Bell, pointed out the various contradictions, suspicious funding and general nonsensical nature of this manufactured effort. And that has helped sink it, or at least diminish it."

Tue, 10/30/2012 - 10:37 | 2931315 LawsofPhysics
LawsofPhysics's picture

Please Eric, it has been this way for 6,000+ years.  What else would one expect from a exponentially growing population of humans in a closed system where fraud and the massive mis-allocation and mal-investment of capital and resources has been the status quo for over one hundred years.

Same as it ever was...

Tue, 10/30/2012 - 11:08 | 2931421 1835jackson
1835jackson's picture

Totally agree. It has always been this way. No surprises. There will always be very rich people and very poor people. Get over it.

Tue, 10/30/2012 - 11:45 | 2931554 Spastica Rex
Spastica Rex's picture

King John agreed with this message as well. So did King Louis XVI. Revolutions happen occasionally. Get over it.

Tue, 10/30/2012 - 15:23 | 2932348 MachoMan
MachoMan's picture

So the mob is preferable to the aristrocrat?  I think not...  In the turmoil, a lot of innocent people get hurt...  I'm not sure why you would advocate it so nonchalantly.  In the end, we'll need to invent a form of government that works with complete apathy of the citizenry, but still somehow fairly apportions everything to the apathetic.

Tue, 10/30/2012 - 16:35 | 2932668 Spastica Rex
Spastica Rex's picture

No - not at all; I'm just pointing out the other side of the cavalier's coin.

Tue, 10/30/2012 - 15:17 | 2932330 dugorama
dugorama's picture

Ah, but the ratio does change.  And teh gap as well.  Take a look on-line at Gini coefficients around the world and realize that it need not be this way.  In some countries, university professors can actually afford to send their children to college without a second mortgage!  

Tue, 10/30/2012 - 11:11 | 2931429 Vince Clortho
Vince Clortho's picture

The big exception of the last 100 years is the mass media and its control.

In previous times the serfs and slaves knew their position at the bottom of the shit-pile.

In the last 100 years you have the MSM promoting the fantasy of Middle Class and upward Mobility.

 

Tue, 10/30/2012 - 10:39 | 2931323 mr1963
mr1963's picture

The reason "Occupy" is no longer a movement is it was found to be 1% of a far, far, far left fringe population, and its values and ethics was not in line with the other 99% of the population.

Tue, 10/30/2012 - 10:44 | 2931348 RockyRacoon
RockyRacoon's picture

If you can outline the movement's "values and ethics" I'll see whether I can agree with you... or not.

Tue, 10/30/2012 - 10:50 | 2931351 Awakened Sheeple
Awakened Sheeple's picture

You must have seen that on Fox "news."

Tue, 10/30/2012 - 11:10 | 2931420 PD Quig
PD Quig's picture

Let's stipulate that the 1% are doing well. The so-called 99% that showed up in the streets last year to rape, rob, and pound drums mindlessly, however, was actually more like the "5%." Those of us old enough to remember the campus shutdowns of the 1960's will recall the high-minded--but ridiculously simplistic--rhetoric that revealed nothing so much as naivete and childish idealism. And it all faded away as soon as they were no longer worried about being sent to Vietnam. Oh, and those millions in SE Asia who were slaughtered by the North Vietnamese conquerors and Pol Pot, or who drowned on the South China Sea attempting to escape...well, put them right out of your minds because the Killing Fields don't fit into the lefty narrative of those times.

The street theater and farce that was the 'Occupy Movement' was merely primal scream therapy for the misfits and unemployed. It's not hard to imagine why most of those freaks were without jobs or any better use of their time. The filthy mess they made of the public square--and left behind for others to clean up--is the perfect metaphor for their 'movement.' It is also why it has faded into obscurity: they had no purpose other than to vent their frustrations.

Life ain't fair, dumbfucks. Show some initiative and commit some energy to something that you're passionate about. If that doesn't work, try something else. Or go hitchhike around the third world and see how good you really have it here in these awful, oppressive, inegalitarian United States of America. Figure it out. Change the world by changing yourself first, fer Chrissakes.

 

Tue, 10/30/2012 - 11:15 | 2931436 Vince Clortho
Vince Clortho's picture

Is that you Bill O'Reiley?  If not, great impersonation.

Tue, 10/30/2012 - 11:24 | 2931464 PD Quig
PD Quig's picture

O'Reilly? Go back to sleep. We'll wake you when we're ready for you.

Tue, 10/30/2012 - 12:28 | 2931691 Spastica Rex
Spastica Rex's picture

Or go hitchhike around the third world and see how good you really have it here in these awful, oppressive, inegalitarian United States of America. 

Excellent point. One World Government will take care of that. I think Poland represents about the middle ground of global living standards, so at least we'll all have bigos to enjoy.

Tue, 10/30/2012 - 10:40 | 2931331 Bay of Pigs
Bay of Pigs's picture

Maybe the "there is no inflation" buffoons can explain the first chart?

Yeah, I didnt think so...

Tue, 10/30/2012 - 10:42 | 2931334 slackrabbit
slackrabbit's picture

I don't give a crap about income equality.

What I care about is the Rule of Law; Where if you commit crimes you are prosecuted!

People are angry at the injustice of the justice system, and the complete break down of the executive, police and judicary.

Tue, 10/30/2012 - 10:48 | 2931363 Ruffcut
Ruffcut's picture

It's more about the law of the rulers. Only peasants need obey those laws.

Tue, 10/30/2012 - 10:50 | 2931364 RockyRacoon
RockyRacoon's picture

You are on track.  Most of the brou-ho-hum about income inequality is actually looking at the symptoms, not the disease.   If guilty parties were drawn and quartered according to law, the income disparity would take care of itself and seek the typical historic distribution curve.   The poor, as they say, will always be among us, but the curve is not typical at this point -- and getting worse.   REAL law and its consequences could go a long way to correct the imbalance.

It's not about being poor, middle-class, or rich, so long as we all know that the doors of opportunity are open to all.

Tue, 10/30/2012 - 11:22 | 2931456 Zero Govt
Zero Govt's picture

Slackrabbit  -  the "Rule of Law" that you and many wise men espouse is a monopoly (of power) institution. You only get crap out of any monopoly

and isn't that just what all evidence points too?

In fact the Law is not a piece of paper that frees you, it is by nature rules that strangle us, one bunch of pricks behind Govyt desks telling us how to behave, run a business, what we can and cannot do on our own private porperty. It's never freeing, it's always a yoke around freedoms kneck

the Law is State oppression. the 'rise of law' equals the rise of tyranny. Simple graph, a 3 year old can follow it

What we need is freedom.. no law... like nature which works beautifully without any rules whatsoever. That's where we came from, that's how we're designed to live. Free

Anyone that whines about freedom is like a socialist whining about capitalism. They're running on empty not the least of which they've no evidence in 3,000 years that the law has improved society or added anything of value to society. It is merely a tool for the elite to rob or enslave us. Period.

Tue, 10/30/2012 - 11:29 | 2931494 N. B. Forrest
N. B. Forrest's picture

That all sounds good on paper, but in reality anarchy always leads to tyranny and the strong oppressing the weak.  The ruthless oppressing those who just want to be left alone. 

 

Every political theory works well as long as it is theory.  However you need to be practical and look at what has worked in the past. 

 

 

Tue, 10/30/2012 - 13:47 | 2931990 Buckaroo Banzai
Buckaroo Banzai's picture

"...but in reality anarchy always leads to tyranny"

Only problem with that statement is that it's been a LONG time since a government-less society has been permitted to function. The Irish system of Tuaths was a terrific system of social organization that operated without a central government, but that got squashed by the English, mainly because they were terrified of its implications.

There is a difference between anarchy and lawlessness. It's unfortunate that the two concepts get easily confused, but then again, most people are get easily confused.

Tue, 10/30/2012 - 14:09 | 2932073 EscapingProgress
EscapingProgress's picture

Ok, I'll be practical. A monopoly on force and violence HASN'T worked in the past, so let's rule that one out.

Tue, 10/30/2012 - 17:36 | 2932853 Radical Marijuana
Radical Marijuana's picture

Yeah, what actually happens without some sovereign state sort of rule of law is that we end up getting more disorganized lies and robbery instead.

The basic FACT is that human reality is ALWAYS organized lies, operating organized robbery. Different systems are therefore different systems of lies and robbery. Anarchy never exists. It only appears to exist for a while, until the new systems of organized lies, operating organized robbery, evolve new dynamic equilibria.

Any "ideals" that are based on there NOT being some systems of organized lies, operating organized robbery, always backfire, and end up producing the opposition of what those bullshit impossible ideals propose. One of the main reasons why the rule of law is being destroyed is that too many people believe in the bullshit of the biggest bullies about what the "rule of law" is, or should be.

As I said in another comment nearby to this one, there is an ineluctable Paradox of Enforcement, which is the most important of all political problems, which nobody has ever been able to propose any final solution for, but rather, that paradoxical problem is inherent or innate to all politics, and therefore, always must be muddled through, and often is "corrected" by some eventual destruction of societies that fail to address and correct it in any other ways.

Tue, 10/30/2012 - 19:44 | 2932819 Radical Marijuana
Radical Marijuana's picture

Yes, slackrabbit, the destruction of the rule of law is more important than any finite level of income inequality. Of course, runaway increases of the level of income inequality is one of the main manifestations of the destruction of the rule of law.

The rule of law is inherently problematic. As recognized in Plato's Republic, there is nobody that guards the guardians (except maybe the longer term effects of natural selection upon societies as a whole.)

HENCE, the rule of law always has

THE PARADOX OF ENFORCEMENT.

Only those who are the best at being dishonest, and backing that up with violence, are able to enforce the rule of law. However, that group then becomes the supreme organized gang of criminals, or rather those who give those people their orders become the supreme organized gang of criminals.

That is what has happened to the rule of law in North America, more and more blatantly! The elites that effectively are able to give the orders to the politicians, police, and prosecutors, etc., have practical immunity to break the laws. The elites can routinely engage in egregious frauds, and only have to pay token fines, IF they are ever prosecuted. More extremely, the elites can also get away with staging false flag attacks, which means that those elites have an effective impunity to get away with murder, and then they can take advantage of them getting away with those murders, as justification for why they can then get away with even more murders. The system of social defence is thereby effectively subverted to become its own worst enemy. One could say that the our culture has a serious autoimmunity disorder, in the sense that we have become allergic to ourselves, and so are attacking ourselves, because our social defence systems were almost totally tricked into believing that they were being attacked from the outside, when they actually were being attacked from the inside. That has made our psychotic "national security" become the overwhelmingly worst threat of all!

The REAL political system in North America is now the runaway triumph of globalized elites being able to benefit from fraud driven robbery, backed by covert murders. What ACTUALLY has happened is that North American society IS being controlled by a group of trillionaire mass murderers.

I observe no indications whatsoever that enough of the 99% will ever approach an adequate appreciation of the paradox of enforcement, and therefore, there are no reasonable grounds to doubt that the runaway financial destruction of the majority of the people living in North American will be continued by the global trillionaire mass murderers starting genocidal wars, which then loop back to become democidal martial law imposed upon the vast majority of North Americans.

We have not seen anything yet, compared to how fast this process is going to automatically get way, worse!  We have exponentially accelerating terminal social sicknesses throughout our current civilization. The majority of people are forced to pay for the systems that will enslave and destroy them! Moreover, the relatively smaller groups of people, who were paid to enslave and destroy the larger groups, will eventually discover that they were parts of a monster, that then systematically turns around and destroys them too! History shows that the destruction of the rule of law turns into a monster which eventually devours and destroys those who got that process going in the first place.

However, there are no reasonable grounds to believe that that process could be arrested now. We are decades too late, and trillions of dollars short, to stop the runaway fascist plutocracy juggernaut from making road kill out of most of the people, which includes, as that ride gets rougher and rougher, that it will shake off more and more of those who were riding on top of it, and then turn them into road kill too. Most of the police, and military, as well as most of the administrators, that enabled that monster of the runaway destruction of the rule of law to occur, and constantly get worse, will later become the victims of that that monster, that they fed and enabled, in order to get paid by that monster, to do "their duty." The established systems are runaway madness, and almost all of those operating those systems are psychologically incapable of understanding WHY that is happening!

Meanwhile, there are NO feasible realistic solutions, for this reason, more than any other reason, which is that the rank and file people who are making that happen deliberately refuse to understand or admit the existence and the central importance of the PARADOX OF ENFORCEMENT!

Tue, 10/30/2012 - 10:51 | 2931370 monopoly
monopoly's picture

Sprott is spot on. But why are we discussing truth and facts here. This is an election week. Do not distort the picture with reality until next Wednesday.

I am amazed though that most have Less than $25k in savings for the long haul. Really sad. I am sure Dimon really cares about these people. Amerika. Right!!

Tue, 10/30/2012 - 10:55 | 2931376 Donlast
Donlast's picture

Slackrabbit....This is a sign of a society losing its moorings.  And currency debasement as pursued by the Fed will make it worse. Every man against every man; the centre no longer holds.  Mutual abuse becomes rampant and foul-mouthed.  Then people look for a saviour.  In Germany they found one in Hitler. 

 

 

Tue, 10/30/2012 - 11:05 | 2931379 JustObserving
JustObserving's picture

"How does the US achieve a sustained recovery"

 

What sustained recovery? Any recovery is an illusion caused by massive, eternal QE where the Fed buys 77% of all Treasuries, props up the stock market, and attacks gold and silver to preserve the illusion of low inflation.

Of course, we also manipulate our inflation numbers and the unemployment numbers lower.  Official unemployment is 7.8% while Shadowstats has it at 23%.

With about 50% of American citizens getting aid from the government and 47 million on food stamps and US debt increasing $1.5 trillion every year, any US recovery is an illusion.

http://www.shadowstats.com/alternate_data/unemployment-charts

 

Tue, 10/30/2012 - 11:03 | 2931403 proLiberty
proLiberty's picture

The consumer is NOT 70% of the economy!

see:

 

Malinvestment and Regime Uncertainty, Mises Daily: Monday, October 29, 2012 by John P. Cochran

Mark Skousen, in "Consumer Spending Does Not Drive the Economy," summarizes: The truth is that consumer spending does not account for 70 percent of economic activity and is not the mainstay of the U.S. economy. Investment is! Business spending on capital goods, new technology, entrepreneurship, and productivity are more significant than consumer spending in sustaining the economy and a higher standard of living. In the business cycle, production and investment lead the economy into and out of a recession; retail demand is the most stable component of economic activity. Professor Skousen has attempted to partially bridge the gap with an alternative measure of economic activity, gross domestic expenditures (GDE). He argues, GDE appears to be more than twice the size of GDP, and has historically been three times more volatile than GDP, and serves as a better indicator of business cycle activity. I conclude that consumer spending represents approximately 30 percent of total economic activity (GDE), not 70 percent as often reported. This conclusion is more consistent with the leading economic indicators published by the Conference Board. Why is this important? The more aggregated model of the economy can lead one to misdiagnose the cause of the boom-bust and the slow recovery as aggregate demand shocks requiring continuing doses of monetary or fiscal stimulus.... link: http://mises.org/daily/6245/Malinvestment-and-Regime-Uncertainty

 

(I really dislike the dysfuctional web editor on ZH!)

 

Tue, 10/30/2012 - 11:44 | 2931549 duo
duo's picture

Henry Ford invested in his employees also.  Buy paying them a wage much higher than he needed to, he enabled his workforce to buy the product they were building, leading to more efficiency and economy of scale, and a larger middle class as a by-product.

 

Tue, 10/30/2012 - 13:59 | 2932034 Richard Head
Richard Head's picture

This is a fallacy.  Ford had to pay above prevailing rates because the assembly line was mind-numbingly dull, and no craftsmen were willing to do it at the standard wage.

Tue, 10/30/2012 - 14:22 | 2932120 TimmyB
TimmyB's picture

Ford NEVER paid anyone more than he had to.  He had to pay skilled craftsman higher wages to work on his mind-numbing assembly line.  "Paid more than he had to?"  Shit, do you really think he was running a charity?     

Tue, 10/30/2012 - 11:13 | 2931408 LouisDega
LouisDega's picture

There were lots of the "99%" at Panera this morning after Sandy. The line was 40 deep. Bullish for Panera

http://www.nasdaq.com/symbol/pnra

Tue, 10/30/2012 - 11:06 | 2931409 Zero Govt
Zero Govt's picture

Another pat statement of the already well-known and oft circulated by Mr Sprott without any hopium or half-decent advise on mitigating the decline

very bored

Tue, 10/30/2012 - 11:29 | 2931486 Venerability
Venerability's picture

You know I'm wild about Eric Sprott and John Embry and all the Sprott-niks. (Go, CDE!)

But re our Markets, the important group to focus on is not the "99 percent."

It's the 10 or 15 percent just below the 1 percent of the 1 percent who control the major Dark Pools and Derivatives Books.

We have always been the Heart and Soul of this and every other Market.

We have actually recently outperformed the one percent of the one percent, who have gotten way too arrogant and greedy in recent years.

And whether or not we are Centrist in our political views, we are virtually ALL Centrist in our Market views - that is, we believe in compromise and consensus-building among Market participants, not incessant malicious bullying by those with the very deepest pockets.

We are neither Muppets nor Sheeple nor Krill to be feasted upon by malignant Whales. 

Tue, 10/30/2012 - 11:35 | 2931514 Venerability
Venerability's picture

By the by, although this has nothing to do with Markets per se, I want to post this here, just because ZH is well-read by folks in the Internet security apparatus:

There has been some sort of serious, serious break-in at Linked In overnight during the storm.

Everyone's home pages are getting full scrolling feeds, instead of their own settings being applied, and most of the real-time feeds seem to be coming from questionable sources - meaning they can place illegal links on people's computers.

This, of course, has immense multiplier effects and can easily infect the entire Internet quickly, as has happened frequently at Facebook and Twitter, albeit somewhat less frequently at Linked In.

Meanwhile, Linked In's Help Desk - whatever country it is now in - is now totally unreachable.

If any security people read this, please pass it on - and quickly. TIA.

 

Tue, 10/30/2012 - 11:39 | 2931518 WhiteNight123129
WhiteNight123129's picture

THe rise in price has nothing to do with inflation (wages are not up in the US). IT has to do with global wages and their pressures on basic necessities. The wages in emerging countries have rose massively in the last 10 years.

Now the USD is about to get partially demonetized. With 60-65% of world reserves in USD and 80% of FX transaction in Dollars, we have the following. The Chinese will use the Yuan for 1/3 of their trade by 2015. By 2020 it is freely convertible. The Brazilian central bank will happily accumulate the Yuan Gov Bonds as a reserve.

So think as partial demonetization of the USD. Think about Pound Sterling before and after WWI or think about India and China the last countries on a Silver standard after Germany (1870),US (1873) and France (1873) .... Mexico (1905). The price of all imports rose in China in the 1920s and 1930s when China had all the Silver of the world landing on its shore (eventually China gave up Silver), the exporters boomed, the wages were not following the rise in price of international commodities/ imports. This demonetization of Silver was quite disruptive for China and India in the last decades of XIX and first decades of XX century.

That is what is going on. Partial demonetization of the USD. Better get some Yuan, Gold, US exporters, Agriculture in your portfolio. Short the US centric consuption stocks against it.

 

 

Tue, 10/30/2012 - 11:48 | 2931568 Walt D.
Walt D.'s picture

Occupy Wall Street are in the wrong town - they should be in Washington DC - no sign of anything in recession there - boom town USA. 

Tue, 10/30/2012 - 12:31 | 2931703 JR
JR's picture

When manufacturing leaves the economy then the printing press has to print the economy…until it folds.

Monetary fascism, i.e., globalization, off-shored America’s economy leaving joblessness and inflation in the void.

When Germany lost WWI, the French took over Germany’s industrial base in partial reparation war payments. Without its industry revenues, the German government began printing to cover its debt and avoid default; Weimar inflation ensued.

Now that globalization has off-shored the bulk of America’s industrial base and industry revenues, Bernanke is printing to cover U.S. debt and avoid default. Inflation has ensued.

D. Sherman Okst wrote in 2010 on Financial Sense, “In 1959, manufacturing accounted for 30%+/- of U.S. economic output. In 2008, it was 11%+/-. The United States lost 32% of its manufacturing jobs since 2000. Manufacturing employment in the U.S. computer industry is now lower today than it was in 1975. Asia produces 84% of all printed circuit boards. The United States has lost 42,000+/-  factories since 2001.”

The United States has been losing an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

The Chicago Tribune reported on July 20, 2012 that “the closure of more than 50,000 manufacturing facilities, the loss of nearly 6 million manufacturing jobs and chronic trade deficits are all troubling signs of our nation’s diminished industrial and innovative capability.” 

Off-shoring, with no comparative advantage to our nation, has no basis in Adam Smith’s free market mercantile system that built and accounted for America’s  industrial greatness “rooted in 200 years of government directed, supported or sponsored Industrial Policy…”

Instead, off-shoring is a by-product of Monetary Fascism which is a “system where financial interests control the state for the advancement of the financial class” and, as James Kennedy wrote on ZH, “the plunder of the State and its peoples for the benefit of the individual.”

End the Fed: keep jobs here.

http://articles.chicagotribune.com/2012-07-20/news/chi-keep-jobs-here-20120720_1_domestic-jobs-service-economy-reward-companies

Tue, 10/30/2012 - 13:17 | 2931880 indio007
indio007's picture

This would be 100% spot on if he said it was a planned decay.

The plan is to neuter the masses in every way shape and form.

Tue, 10/30/2012 - 13:41 | 2931951 reTARD
reTARD's picture

A rare rant found on a MSM comments section:

No libertarian gives a crap about Obama or Romney...both so close to the same to us it's pathetic. And those of us that are anarchists (want an abolition of coerced monopolization of market demanded services by the government, not an end to all government, provided it's voluntary government) don't hate the EPA because they scare people actually being hurt...but because they are an inefficient monopoly on the market demanded service of cleaning and keeping clean our environment.

Tell me...who was it that ruled in favor of corporations who were polluting farms because the polluting corporations paid more taxes than the victims (farmers)?

It was the coercively monopolized government. Respect for property rights solves the issue...but the state only respects who pays more in revenues to their tax (extortion) coffers. Hence, corporations (that the state invented BTW) are given deference, under the guise of "good of the public...good of the collective". What they mean is "good of our tax coffers"...to them that is the "public good". But the real public good is stopping the pollution of those big tax paying corporations upon those smaller payment giving individuals and small businesses.

This is why the rich rule the rest of us...because it's NOT a free market where we're all equal under the law. If I pay more in taxes than you, I am worth more to the state than you are...and court decisions WILL go in my favor.

What is the anarchist libertarian solution? Abolish the state. Abolish the monopolization of market demanded services like law, defense, environmental controls, etc. End the state invented corporate personhood created simply to protect the guilty in a corporate structure. End favoritism under the law by ending the monopoly of force in law. You might disagree...but the root problem is the coercive monopolizer...the state...and until you address the root problem then all you're doing is tinkering around the edges of true causation.

The state is that which murders and extorts...but they say it's legal when THEY do it...but illegal when everyone else does it. That causes all kinds of problems...like what we have here. THEY can allow pollution, or be too inept to stop it...but anyone who dares compete with them to better this service to the public, they are a criminal. Seems to me until you realize the state is the root problem...the one monopolizing by force, and the one failing at its proclaimed job...then you'll never solve the logical problems in the methodology. Organizing by force always leads to inequality and absurdity...and that's all the state is: an entity that enforces a monopoly on a service with force, as opposed to allowing competition, i.e. voluntary, competing governments.

Classical liberals had one thing right...the state is evil. They thought it was a "necessary evil"...so pardon us libertarians for taking their ideas to their logical conclusions and saying "if it is a necessary evil, perhaps trying to make it unnecessary might be good if we don't support, in principle, evil."

How much money have you asked the state spend on making itself unnecessary? Why do you think the state is benign or beneficent...even as it is the only group that "legally" extort (tax) and murder (kill innocent people in wars of aggression and occupation as well as democide)? I mean, unless you think everyone should be able to extort and murder (as opposed to fund themselves via payments for service or donations...like the rest of society), or think having a group that can violate all logic and ethics that everyone else must be governed by is GOOD, then rationally and logically you have no excuse for not noticing that the state NEVER spends ANY money on making itself unnecessary, and only expand its powers constantly...and you have no consistent moral theory by which to argue for such a privileged class (the state).

How long will you ignore your failing morally? How long will you cheerlead for extortion and murder? How long before you start biting the hand that feeds you, and get up off your knees? How long before you notice the one solving all your problems is the same one who caused them so they can called "hero"?

How long will libertarians have to logically demonstrate to statists that they are cheerleading for a masochistic public ruled by a sadistic ruling class? Wake up.

Side note: The EPA was formed by a Republican, Richard Nixon, after he signed an executive order.

Tue, 10/30/2012 - 13:58 | 2932030 JosephConrad
JosephConrad's picture

Briefly stated, you're partially correct. The 99% are doomed because they're the COWARDLY MICE being EATEN by the WEALTHY MURDEROUS CATS. Unfortunately, the MICE don't have the COURAGE to merely use NUMBERS to overwhelm th CATS. They merely remonstrated and whine as the Sociopathic Wealthy TAKE LIVES, mercilously. This dichotamy is what will destroy this nation in the end - and the end is all too near...

Tue, 10/30/2012 - 14:35 | 2932151 reTARD
reTARD's picture

Sorry, no. Marx was not quite right in terms of his dichotamy. It is NOT an issue with rich versus poor. It is really about the producers/savers (those who consume less than they produce) versus the takers/debtors (those who live beyond their own means as well as beyond of the means of the others who are producing).

The morality of the rant is precisely right. In pre-school, all the parents and teachers tell their kids without exceptions, DON'T HIT, DON'T TAKE from so-and-so. It's absolute.

Until you figure out the principles, you have no foundation from which to based your ideas and ideals.

Tue, 10/30/2012 - 20:02 | 2932893 Radical Marijuana
Radical Marijuana's picture

I agree with Joseph Conrad's comment, while I regard reTard as being retarded in his understanding of imaginary impossible ideals, as being correct "principles."

The correct principles are our current best approaches understanding energy laws and general systems. Those primarily manifested through the history of militarism, which made and maintained our money system.

Joseph Conrad's comment is a correct statement on the basis of how militarism actually works, and therefore, how our monetary system actually worked.

The only truly "principled" solutions would be different murder systems, to enable different money systems. Those will BE the perfection of the flows of energy through systems ...

When the systems get way, way too far out of balance, then they finally have to go through some dramatic changes of state, to be able to then evolve new dynamic equilibria, which are possible under those new environmental conditions.

Right now, we are in the phase of the runaway triumph of the established systems of huge lies, backed up by lots of violence, becoming too successful, so that they go mad, and destroy themselves. We can no more stop that than we can wish away a hurricane. We are on the edge of social hurricanes and tornadoes like we have never seen before. However, from a sublime point of view, that is still the perfect flow of energy through systems, even when those might torture you to death, in horribly miserable ways. (Not that that sublime view helps much when we are actually suffering through those events.)

Wed, 10/31/2012 - 04:28 | 2933871 reTARD
reTARD's picture

There are a lot of retards here today, indeed. I may be one in certain ways and I make no claims otherwise as noted by my name, but apparently I'm not the only one as I use the plural.

It appears to me that I am confronted by someone who believes in relative morality/ethics. I may not have used the term "principles" in the right content as I should have used universal, absolute morals instead. I suppose that to the moral relativist that there are exceptions for killing and for forcefully taking.

I assume that by the "established systems of huge lies" you mean the cycle of nations for example. This cycle could be (this one taken from Chuck Missler):

Spiritual Faith –> Courage –> Liberty –> Abundance –> Complacency –> Apathy –> Dependency –> Bondage

You might be right that we could be stuck in these endless cycles of big lies and of nations. However, what has been "established" technically can be unestablished.

I can only speak for myself, but for those who do not have the mind to imagine then for them it will indeed be impossible. It's like a giant wheel rolling towards you, only you keep running when instead you could just step aside.

But please do carry on with your understanding of "imaginary impossible ideals" if you so wish and your ideal solution of "different murder systems." Apparently, it seems for you murder is okay when a system warrants it. Probably when it is "for the greater good." You just better not end up on the wrong side of the gun.

You sound like someone who wrote Agenda 21. In case you did not read the initial rant (not mine but one I copied from someone else elsewhere) carefully, an anarchist wants to end the state, the government, the monopoly of force and coersion which is the tool and enabler of those who really run this world.

Tue, 10/30/2012 - 14:10 | 2932076 Fix It Again Timmy
Fix It Again Timmy's picture

Recession proof jobs: Gigolo in the Hamptons....

Tue, 10/30/2012 - 14:44 | 2932204 Cisco Kid
Cisco Kid's picture

Does anyone have an opinion/ experience on Porter Stansberry's picks, opinions on oil/ gas markets and newsletters?

Tue, 10/30/2012 - 14:53 | 2932237 Clueless Bill
Clueless Bill's picture

This article presents the truth very clearly.  The question is, why have the powers that be chosen QE instead of job stimulus programs?  Answer:  they no longer need the U.S. consumer.  The BRIC countries and the third word will provide all the consumption necessary.  The U.S. citizen is only needed to foot the bill for the global U.S. military presence that protects the global corporate empire.  The 1% no longer needs a prosperous or stable home base.

Tue, 10/30/2012 - 15:46 | 2932466 JR
JR's picture

Which means Americans no longer need the powers-that-be.

If your economy doesn’t have anything to do, and you have to print to keep it going, you need new PTB. For example, no nation can thrive on a service industry that services itself. "We can't get rich doing each other's laundry."

How does a service-oriented economy work unless the multi-based corporations that grew fat by using foreign labor and off shoring U.S. jobs bring back those profits and share them with the American people, and I’m not talking about shareholders.

I’m talking tariffs; I’m talking the death of tax havens; I’m talking the rebirth of an American mercantile economy based on the free enterprise of the individual where “every butcher, baker, craftsman and merchant operating in his own self-interest would ultimately benefit his fellow man” and the relative wealth of the Nation State, protected by law and a government that represents the people and not the monetary fascists who have allegiance to no man or country, only to money.

In short, Americans need to throw the devils out.

America can’t be the management nation of the world if there is no way to pay for it. If America is to be a management and innovation nation and not an industrial nation, then the profits from that management need either to be shared with the American people, the economy, or else all of the tax advantages, monopoly advantages, regulatory advantages and stimulus packages need to be removed from those corporations who are based here.

And the power of the State must return to its obligation to the people and producers who make up the state, the working man and American industry, so that free enterprise can succeed and America can thrive again.

Tue, 10/30/2012 - 16:03 | 2932512 Jack Burton
Jack Burton's picture

This flys in the face of the current political movement in America that maintains that America's economic problems stem from a punishingly high tax rate on the weathy and the corporations in America. The "Job Creators" feel, and make known through their political allies, that they are being victimized by the US government's tax policies. They maintain that 47% of Americans have avoided paying taxes alltogether and that these freeloaders are causing the tax rates on "Job Creators" to be punitive. In their scenario they, the job creators, are being taxed for their success and for their hard work, while the freeloaders get to take a huge cut of the wealthy's income via redistrubutive government programs.

Mr. Romney has done a good job articulating their case. Jobs will never recover in America as long as most taxes are pushed off onto the successful and harder working 1%. Over decades government has worked at attacking success by raising taxes on the wealthy to the point whre they may no longer choose to work harder and produce all the wealth creation in the USA. America's economy has tanked due to an unfair coroprate tax rate, an unjust weatlh tax, death tax and unfair progressive income tax which has pushed high income earners into a system that shakes them down for most of their wealth.

The fact that most, if not all, income growth over the last three decades has gone to the 1% and that corporate profits and cash on hand are at all time records, can not hide the fact that the rich are being taxed to death by government. The American 1% are seeing their success punished and stripped away by unfair taxes on them, while the 47% skip paying taxes at all. Under this system the rich are saying to America, "We earn our wealth and we deserve to keep what we make. We demand lower taxes on us because we are the "job creators".

To see why America's economy and job growth are so poor, I present the Bush record against the Obama record. Under Bush, tax cuts were passed that went some of the way to taking pressure off of the 1% and allowing them to keep more of their well deserved income. The resultant jobs growth speaks for itself and the lower deficit numbers showed how tax cuts for the wealthy actually increase overall tax revenues. Under Obama, taxes have gone up every year on high income earners and tax revenues have thus tanked, and a vibrant jobs growth under Mr. Bush has now turned into record job shrinkage under Obama.

What Romney is saying is simple. The rich create the jobs. They create the wealth growth. They are being punished and basically put out of the job creation business by the unfair Obama tax increases aimed only at high income earners. In short, Obama's attack on the 1% is causing economic ruin and destroying the 1%'s ability to create both jobs and wealth. Job losses and income losses under Obama show clearly that his policies of war on the rich have destroyed the wealth and job creating policies of Mr. Bush. You need only compare the job growth under a Bush administration with the massive job losses under the Obama socialist agenda.

It is all in black and white, the jobs and wealth have been destroyed by Obama socialism, Romney will restore the Bush policies and according to Romney, this will restore the same vibrant jobs growth, balanced budgets and growth in American manufacturing strength world wide.

Romney could not be more clear that attacking "job creators" with punitive taxation will only kill off the economy. Obama's massive tax increases on the 1% stand in stark contrast to the pro jobs growth tax policies of Mr. Bush. It is a case of huge success in job creation under Bush and the huge destruction of job growth under Obama. The Republican case is being made to the people that they have economic growth tax policies, while Obama just offers more socialism and job destruction. The Rich in America are being taxed to death, being forced to surrender their wealth to the government, to be handed out to the failures in society. As far as the republicans are concerned it is "case closed". Now the American people must choose.

Tue, 10/30/2012 - 17:43 | 2932883 plata pura
plata pura's picture

these states united' representation must post haste void of constestation increase tariff on finished goods and services of import. further'rmore the citizenry have been so turk'd by flat earth free trade ideology of the toss pot super nationals they would sell posterity's prosperity to ease their station. in conclusion a constitutional convention be in order; with great weight being given to publik financing of elections, term limits including the court supreme and creating 8 more states within the boundaries of california, tejas and new york.

Tue, 10/30/2012 - 18:47 | 2933003 Radical Marijuana
Radical Marijuana's picture

Of course, this article is superficially correct:

The sad fact is that the economic reality for the average family is far worse today than it was ten years ago… and the trend of declining wealth is firmly in place. ... and for all the trillions of dollars that the US government and other western governments have spent and printed, none of it has addressed these key areas of weakness in a way that can reverse the long-term trend.

While that may well be true, however, articles like this fail to address the real driving factors behind these things, which is the global elites are deliberately implementing plans to destroy the American republic, so that it can be assimilated into a global system, which those elites are attempting to consolidate. There is NO way for Americans to fix these problems unless they addressed that agenda ... but that is practically impossible from a political point of view.

The main political symbol of what I am talking about were the events on 9/11/2001. Anyone who takes the time to examine those events from a logical and scientific perspective concludes that those events MUST have been an inside job, and therefore, were a false flag attack. That false flag attack deliberately destroyed the leading symbols of the American economic system, and prepared the way for the runaway low interest rates, which prepared for the financial crises of 2008, and then the on-going multi-trillion fiat dollar bails out of the biggest banks, along with even lower interest rates, so on and so forth, all in a terrible vicious spiral!

That 9/11 false flag attack was possible to pull off successfully due to the overall political conditions that have developed in the USA. Namely, the funding of the political process, creating puppet politicians (backed by the destruction of those who refused to become puppets) and the domination of the mass media, and so on and so forth, which made it possible to get way with 9/11 as a false flag attack, which was never properly investigated. Rather, the huge lies surrounding that were then pumped and pumped for more justifications for more and more mass murders all over the world! Those things that were developed abroad are now coming back home, for instance, drones, and a general impunity to mass murder, which was demonstrated by those who got away with staging 9/11 as a false flag attack.

Therefore, an article like this is superficially correct. However, it is all inside of a context that does not address how the destruction of the 99%, and their economic, and political, circumstances was being deliberately orchestrated. Of course, any such "truth" is mostly irrelevant to the REAL PROBLEM, which is the runaway triumph of frauds, backed by force. ... Some of my other comments, that I posted in replies above, mentioned other aspects of this essential problem that treasonous traitors are controlling the government of the USA, and there is nothing on the horizon that is going to stop that, but rather, way more signs that that is going to get unimaginably worse. Since only slightly different kinds of treasonous traitors have any real chance of winning elections, the American economy, and the majority of the American people, are going to continue to be DELIBERATELY DESTROYED. Due to the same reasons WHY that was possible, namely the history of the funding of politics, and the control of the mass media, etc., there is no reasonable hope for any "recovery" of the American economy. Rather, it is suffering from terminal social sicknesses!

WITHOUT a more wide-spread and deeper understanding of more 9/11 truth, and everything that that symbolizes, then none of it has addressed these key areas of weakness in a way that can reverse the long-term trend. Rather, the ACTUAL "solutions" to the world's runaway economic problems are going to be genocidal world war abroad, and democidal martial law at home. THAT is what the people really controlling America are planning for the future of the American people, NOT economic recovery!

Since the belated chances of more 9/11 truth, doing anything to change the actual political situation are practically ZERO, the chances of any economic recovery are also practically ZERO, while the probability of more debt slavery, becoming debt insanity, and more wars based on deceits, is practically 100%! Americans are ALREADY in a state of irreconcilable social polarization, which has no possible good solutions, since that situation is already way, way, way too tragic to fix. More radical truth can do almost nothing against the astronomically amplified magnitude of the HUGE LIES that are controlling the American economy.

The American economic system is apparently in a death spiral of fraud, backed by force, of runaway robberies, backed by murders. More truth about that can not appear, and would only provoke a worse backlash IF some political miracles made it possible for more radical truth to ever become significant. Therefore, Americans are much more of an Endangered Species than most of them know!

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