This page has been archived and commenting is disabled.

Guest Post: Bernanke's Neofeudal Rentier Economy

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The Fed has directly created a neofeudal rentier economy and society.

 
Federal Reserve Chairman Bernanke is a Reverse Robin Hood, robbing from the lower 95% and giving to the financier class. The Real Reverse Robin Hood: Ben Bernanke and his Merry Band of Thieves (August 31, 2012).
 
It's worth understanding the mechanisms of this wealth transfer: in essence, the Fed extends low-cost credit (i.e. "free money") to the financier class which then uses this free money to buy rentier assets, that is, assets that generate economic rents for the owners, who add no value and create no wealth.
 
This is of course the neofeudal model: the financial aristocracy in the manor house own the rentier assets and the debt-serfs toil away to pay the rents and taxes. The financier class (i.e. those that benefit from the financialization of the economy) are as unproductive as feudal lords; they skim the profits generated by the debt-serfs while adding no productive value to the economy.
 
 
 
(I separate the bottom 95% from the top 4.5% and the .5% financier class for several reasons: 1) most of the stocks and bonds are owned by the top 5%; 2) the top 4.5% is shedding debt while the bottom 95% are adding debt; 3) the income of the top 4.5% is rising while household income of the bottom 95% is declining, and 4)the top 4.5% have access to lower-cost credit than the bottom 95%, but they do not have access to billions of dollars in nearly-free credit from the Fed or the shadow banking system like the financier class.)
 
 
Let's take rental housing as an example of this Fed-driven rentier economy. The financiers borrow $1 billion in nearly-free money and use these funds to buy thousands of houses for cash. Since they can offer cash, they beat out households with approved mortgage applications.
This is the story one hears anecdotally: potential home buyers have a mortgage application approved, all they need is to have their offer for a house accepted. But the house is sold to an investor with cash.
 
So while the Federal housing agencies are offering low-interest, low-down payment mortgages to marginally qualified (or flat-out unqualified) buyers, the Fed is enabling the financier class to outbid conventional homebuyers.
 
Here's the key dynamic: cash earns no return, thanks to the Fed's zero-interest rate policy (ZIRP). This means the interest rate paid by the financier class is also near-zero. So the trick is to take all those billions of nearly-free dollars and use them to buy assets returning 3+% annually.
 
These include rental housing, stocks that pay hefty dividends (for example utility companies), municipal bonds, long-term Treasuries, dividends based on patents and royalties, and everyone's favorite low-risk investment, state-sanctioned monopolies and cartels. (no wonder Big Pharma stocks have skyrocketed.)
 
Zero interest rates rob from the bottom 95% who do not have equal access to low-cost credit and transfer that wealth to the rentier-financier class. The bottom 95% provide the capital (pension funds, 401K accounts, checking and savings accounts, etc.) for zero return, but their access to near-zero cost credit is restricted.
 
The financier class then borrows money from the Fed (or the "shadow banking" non-bank credit system that is ultimately backstopped by the Fed) at near-zero rates, which it then uses to buy rentier assets that yield 3+%. The financier class then skims the rents from the debt-serfs, who have been effectively robbed of trillions of dollars in lost interest by the Federal Reserve.
 
The Fed has directly created a neofeudal rentier economy and society. Giving the financier class unlimited access to free credit with which to buy rentier assets serves two purposes: 1) it drives the valuations of rentier assets ever higher, creating the useful (in terms of propaganda and perception management) illusion of economic vitality, and 2) it greatly enriches the financier class at the expense of the bottom 95%.
 
Goebbels would approve of the Fed's masterful propaganda campaign: rob the bottom 95% to benefit the financier class, all the while piously proclaiming that its policies were aimed at increasing employment for the bottom 95%.
 
In terms of propagandistic chutzpah, it doesn't get any better than this. Congratulations, Bernanke, Yellen, et al.
 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 05/07/2013 - 10:40 | 3537480 Racer
Racer's picture

The ChairSatan and the rest of the central Bwanksters are evil alongside all the other dictators throughout history, but on a grander scale than ever before

Tue, 05/07/2013 - 10:41 | 3537489 vmromk
vmromk's picture

Mere execution of the criminals would be too kind.

Tue, 05/07/2013 - 10:46 | 3537505 malikai
malikai's picture

Comrade Bernanksavic has performed his duties exceedingly.

In the old days, he'd get to retire to the Balkans with a couple mistresses. I wonder what he'll get these days.

Tue, 05/07/2013 - 10:54 | 3537527 Manthong
Manthong's picture

so somebody tell me the difference between this mechanism and Islam..

except for the specific,  subjective identification of “God”.  

http://www.barghouti.com/islam/meaning.html

Tue, 05/07/2013 - 11:05 | 3537555 The Juggernaut
The Juggernaut's picture

"The Fed has directly created a neofeudal rentier economy and society. Giving the financier class unlimited access to free credit with which to buy rentier assets serves two purposes: 1) it drives the valuations of rentier assets ever higher, creating the useful (in terms of propaganda and perception management) illusion of economic vitality, and 2) it greatly enriches the financier class at the expense of the bottom 95%."

And what are you regular peasant people going to do about it?

Tue, 05/07/2013 - 11:32 | 3537648 Ignatius
Ignatius's picture

"And what are you regular peasant people going to do about it?"

"I killed the bank." -- Andrew Jackson

Tue, 05/07/2013 - 11:55 | 3537716 Enslavethechild...
EnslavethechildrenforBen's picture

Things are going to get bloody.

But it won't be the rich that bleed.

Tue, 05/07/2013 - 13:34 | 3537979 The Juggernaut
The Juggernaut's picture

@IgnatiusAndrew Jackson would be ashamed.

Tue, 05/07/2013 - 12:28 | 3537828 Herd Redirectio...
Herd Redirection Committee's picture

CHS, I love when we are on the same wavelength.   Was just talking about the 1% and their cronies/backbone/engine the other day.  They are reducing debt, but that is because they are making enough money to reduce debt.  They are on a % basis not as leveraged as the avg person, but on a $ basis they are the most leveraged part of society.

Tue, 05/07/2013 - 12:28 | 3537819 edifice
edifice's picture

Nothing.  It will continue, indefinitely.

Sorry, until NFL feed and hot wings/beer are cut off, the man-on-the-street could care less.

Tue, 05/07/2013 - 13:50 | 3538026 sgt_doom
sgt_doom's picture

In Amerika, nothing, in China or Protest Central, they beat up the police, burn down the police station, attack government buildings, execute the CEOs and senior management of those companies which laid them off and/or foisted poisonous food among the populace.

Amerika must learn from the Chinese workers!

Tue, 05/07/2013 - 11:07 | 3537570 Translational Lift
Translational Lift's picture

except for the specific,  subjective identification of “God”

The squid has that covered............

Tue, 05/07/2013 - 11:03 | 3537554 optimator
optimator's picture

They'll get to "settle" in a little country where it's nice and warm called "The Capitol of the World. 

Tue, 05/07/2013 - 11:50 | 3537696 Translational Lift
Translational Lift's picture

Comrade Bernanksavic has performed his duties exceedingly.

In the old days, he'd get to retire to the Balkans with a couple mistresses. I wonder what he'll get these days.

A couple young boys..........

Tue, 05/07/2013 - 11:01 | 3537551 optimator
optimator's picture

How about years on a chain gang doing some honest work for a change?

Tue, 05/07/2013 - 11:05 | 3537562 Translational Lift
Translational Lift's picture

All these fuckers should be deep fried.............

Tue, 05/07/2013 - 10:51 | 3537519 JohnGaltsChild
JohnGaltsChild's picture

More of a Pied Piper than a reverse Robin-Hood. He is stealing our children's lives.

Tue, 05/07/2013 - 10:43 | 3537483 LawsofPhysics
LawsofPhysics's picture

Thanks Captain Obvious, the laws and governments are now in place (corporation are people etc.-TBTF etc., although corporation cannot go bankrupt like individual people) such that this will only get worse.  Nothing changes until the guillotines roll or the world goes to war in earnest. The creation of this pyramid of a rentier society is intentional as all the interest and real assets are flowing to the Fed.  The only other way it would end would be to end the fucking Fed, and I don't see the political resolve to do that as most are puppets of the Fed anyway. Hedge accordingly.

Tue, 05/07/2013 - 11:26 | 3537615 Melin
Melin's picture

It is the idea that "corporations aren't people" that allows individuals with decision-making responsibilities within "TBTF" and other favored corporations to invent, lobby, write and break all the laws they wish, steal billions and wander the planet enjoying themselves.

If you and I and other like-minded individuals get together and develop a product or service the world wants to buy, do we lose responsibility for the actions taken by our corporation? Not in a just society.  But neither would we lose our freedom of speech because we created a corporation.

The idea that "corporations aren't people" is brilliant heads-I-win, tails-you-lose propaganda.

Tue, 05/07/2013 - 11:27 | 3537628 LawsofPhysics
LawsofPhysics's picture

"The idea that "corporations aren't people" is brilliant heads-I-win, tails-you-lose propaganda."- Indeed, but the propaganda has been the exact opposite.  I think you miss the point of propaganda, it's to confuse/cover-up the truth.  The propaganda has been that corporations are people, when the exact opposite is the truth, just like monied elite have access to special deals/trades, so do groups of people called "corporations".

Tue, 05/07/2013 - 12:36 | 3537848 Melin
Melin's picture

Individuals have rights; including the right to organize in any way they please and to speak and act through those organizations.

The source of the problem is not in the organizations individuals create and manage it is that "the peoples' representatives" have obliterated what should be a line of demarcation between those organizations and what passes for "government." 

The source of the evil is governments' confiscatory gun.  Take away the governments' power to confiscate and corporations won't have any power except to trade with you on terms you find beneficial.

Tue, 05/07/2013 - 12:42 | 3537858 Herd Redirectio...
Herd Redirection Committee's picture

I think you confuse power with 'ability and willingness to use (deadly) force'. 

People who make the decisions for a corporation should not be subject to 'limited liability', period.

Corporations were not intended to live forever, when originally invented.  Each was to have a limited life.  Say, one roundtrip with merchant goods from London to Port Royal to New York back to London.   Right about now our forefathers look like geniuses.

Tue, 05/07/2013 - 13:08 | 3537931 Melin
Melin's picture

I'm not sure I understand your meaning.  We all have the "ability and willingness to use (deadly) force" if we value our lives.  When an intruder threatens to kill us, for example.

Voluntary trade is distorted by government intrusion in the market.  Unless an individual (or a group of individuals in any form that group takes) is violating the rights of others, government should have no say in the workings of the market.  It is because we allow the government into the market that corporations and individuals benefit unduly from that intrusion.

Separate the economy from the state.

 

Tue, 05/07/2013 - 13:52 | 3538047 LawsofPhysics
LawsofPhysics's picture

"Separate the economy from the state." - already happening. it's called barter, black market, bitcoin, etc.

Tue, 05/07/2013 - 16:57 | 3538737 Radical Marijuana
Radical Marijuana's picture

Thousands of years of assembling and channelling the powers to rob and kill now mean that nobody else has a hope in hell of competing with the established systems, especially since they have developed an abundance of weapons of mass destruction which have made themselves utterly insane, as well as any effective protest against that pathetically irrational.

WHO is going to take away the powers of  governments to murder to back up the power to rob?

WHY propose something which is practically impossible, and too paradoxical to make any sense?

Merlin, you seem to be proposing a bunch of time travelling, magical nonsense, as in your name?

There can be NO effective responses to runaway social insanities, amplified by trillions of times:

http://www.corbettreport.com/?powerpress_pinw=7333-podcast

Defense Against The Psychopath

Wed, 05/08/2013 - 13:40 | 3541781 MeelionDollerBogus
MeelionDollerBogus's picture

I suppose this is news to someone but the power to take away that government power is how some countries are started... such as the USA back in what... 1776 was it? I'm next door so not entirely sure of the historical dates.

Tue, 05/07/2013 - 10:44 | 3537493 Temporalist
Temporalist's picture

Didn't see this mentioned yet.

China’s Gold Purchases From Hong Kong Expand to Record in March

"Gold imports by China from Hong Kong more than doubled to an all-time high in March as buyers in the biggest consumer after India boosted purchases, underscoring increased bullion demand in the world’s second-largest economy.

Mainland buyers purchased 223,519 kilograms (223.52 metric tons), including scrap, compared with 97,106 kilograms in February, according to data from the Hong Kong government today. Net imports by the mainland, after deducting flows from China into Hong Kong, were 130,038 kilograms compared with 60,947 kilograms a month earlier, according to Bloomberg calculations.

The shipments preceded gold’s plunge into a bear market last month, with prices tumbling 14 percent in the two days through April 15 in the worst drop in three decades. The slump led to a surge in demand for jewelry, coins and bars from India and the U.S to China. Separate data today showed China’s gold consumption rose 26 percent in the first quarter as prices fell.

“This is quite out of expectation as all these imports were done before the market slump in April,” said Qu Mingyu, a trader at Bank of China, one of the country’s three largest bullion banks. “Judging from the explosive growth of trading volume on the Shanghai Gold Exchange in the second half of April, and anecdotes that many jewelry shops are sold out throughout the country, imports might be even more substantial in April.”"

http://www.bloomberg.com/news/2013-05-07/china-s-gold-purchases-from-hon...

Tue, 05/07/2013 - 11:24 | 3537622 ParkAveFlasher
ParkAveFlasher's picture

Gold is flowing to the East like solder to heat.  The dollar is only flux that serves the lubricate the journey.  We have our gold standard whether it's desired or intended or neither.

Tue, 05/07/2013 - 10:45 | 3537499 Cognitive Dissonance
Cognitive Dissonance's picture

Watch out for the nasty reversion to the mean when it finally comes.

<And it will. It always does.>

(There will be blood. There always is.)

Tue, 05/07/2013 - 11:06 | 3537565 Urban Redneck
Urban Redneck's picture

Unfortunately, the reversion is usually fleeting, and vast majority of blood spilled belongs to poor or the innocent.

Tue, 05/07/2013 - 11:37 | 3537669 Ignatius
Ignatius's picture

"There will be blood." -- CogD

And one hell of a fine movie...  http://www.imdb.com/title/tt0469494/

Tue, 05/07/2013 - 10:44 | 3537500 Hayabusa
Hayabusa's picture

Look all one has to do is purchase a home, then rent out a couple of rooms (i.e., become a rentier) use the additional $$ to pay off the house as quickly as possible and the associated interest on the mortgage).  If you can't beat the financial aristocracy, join em and play their game.

Tue, 05/07/2013 - 10:49 | 3537515 TeamDepends
TeamDepends's picture

But then you have room-mates in your own home which, for us anyway, defeats the purpose.

Tue, 05/07/2013 - 10:53 | 3537525 Debugas
Debugas's picture

and here come real estate taxes for you

Tue, 05/07/2013 - 12:00 | 3537727 LawsofPhysics
LawsofPhysics's picture

A no-go as banks are holding real estate at inflated value.  Mark-to-fantasy is a doubled-edged sword.  Don't worry about this happening so long as mark to fantasy accounting exists.

Tue, 05/07/2013 - 10:45 | 3537503 lynnybee
lynnybee's picture

& i remember a time when my dad was proud to work for a living to support his family of 4 & was so proud to be a truck driver (local route, sometimes earning xtra money to drive to Chicago & i'd get to ride in the passenger seat of the semi cab!) .    he worked hard, saved his silver coins in an old coffee can, had a savings acc't that paid interest & my mom's weekly grocery bill was $5 & she made everything at home by scratch 'cause no one back then wasted money going out to eat.   after ten years the mortgage was paid off & the rest was just gravy, saving for retirement .    Dad was a truck driver & his best friend since age 6 grew up to be the president of a local bank.   thru out adult years they remained best friends, the banker giving the eulogy at my dad's funeral.    LIFE WAS LOCAL & LIFE WAS HARD WORK THAT PAID THE BILLS & LIFE WAS HONEST MONEY.

Tue, 05/07/2013 - 11:24 | 3537619 Miss anthrope
Miss anthrope's picture

MIssed you Lynnybee!!!

Tue, 05/07/2013 - 11:43 | 3537689 francis_sawyer
francis_sawyer's picture

Love that story lynnybee...

~ f_s

Tue, 05/07/2013 - 12:08 | 3537756 lynnybee
lynnybee's picture

Love that story lynnybee...   bless your hearts, you are all so wonderful on this website; the education here is priceless & so are the friends.

Tue, 05/07/2013 - 13:56 | 3538070 prains
prains's picture

LB

there's enough people in the world who want exactly what you described, we just need some time to sort through all the BS and we'll make it again, we have to

Tue, 05/07/2013 - 10:46 | 3537507 Kina
Kina's picture

Rob from the poor, give to the rich...that's the Fed...working for the bankster elite.

 

Going by history one day that 95% is going to drag the 5% out onto the streets.  History also tells us that the elite will never believe it is possible that their position will change or that they will ever be in danger....until it all changes of course, so quickly.

It only takes a spark to light a wild fire.

One would think that continuing to corrupt every market, corrupt every regulator, every official office, every law court, and deliver benefit only for the rich ... well even that will have its limits...no matter how many drones they put in the sky to protect their castles.

 

Tue, 05/07/2013 - 10:50 | 3537517 Dr. Engali
Dr. Engali's picture

It won't happen until the EBT cards stop functioning. As long as the sheep can have a six pack of piss water beer, some high fructose corn syrup nachos, and a teevee they will be placated.

Tue, 05/07/2013 - 10:58 | 3537539 yogibear
yogibear's picture

When the Fed crashes the dollar EBT people will be hungry again. It's when change happens.

Those people need to direct their anger at the Federal Reserve and their members for allowing government spending and debt to get out of control.

 

Tue, 05/07/2013 - 11:21 | 3537611 fortune114
fortune114's picture

Yeah, when the EBT cards stop working they'll go after the Fed.  Not "whitey". </sarc>

Tue, 05/07/2013 - 10:59 | 3537544 MassOpiate
MassOpiate's picture

Opiates of the masses . . .

Tue, 05/07/2013 - 10:48 | 3537509 francis_sawyer
francis_sawyer's picture

"the debt-serfs toil away to pay the rents and taxes. The financier class (i.e. those that benefit from the financialization of the economy) are as unproductive as feudal lords; they skim the profits generated by the debt-serfs while adding no productive value to the economy..."

~~~

'Chutzpah' [yeah ~ that's an adequate term for it, in parlance]...

[from WIKI]

Chutzpah (pron.: /?h?tsp?/ or /?x?tsp?/[1][2]) is the quality of audacity, for good or for bad. The Yiddish word derives from the Hebrew word ?utspâ (????????), meaning "insolence" or "audacity". The modern English usage of the word has taken on a broader meaning, having been popularized through vernacular use in film, literature, and television. The word is sometimes interpreted -- particularly in business parlance -- as meaning the amount of courage, mettle or ardor that an individual has. However in more traditional usage, chutzpah is invariably negative.

Tue, 05/07/2013 - 10:47 | 3537510 Dr. Engali
Dr. Engali's picture

Every time I read Charles I feel like I'm reading a worn out text book. Tell me something I don't already know. I guess it's good for the noobs.

Tue, 05/07/2013 - 10:55 | 3537528 Al Huxley
Al Huxley's picture

Watching the ruling class rape and pillage the docile public is an incredibly depressing exercise.  I'm thinking of giving it up.  Every time I think that maybe the criminals in charge crossed a line, finally pushed things too far, the public responds with a resounding 'wha?' and proves the elite right in their total disdain for the people they're destroying.  The whole fucking country's going to end up looking like Detroit or Toledo or any of the other hollowed out midwestern industrial centers, and nobody's going to say a fuckng thing.

Tue, 05/07/2013 - 11:00 | 3537547 fonzannoon
fonzannoon's picture

I agree Al but what is the other option? How do you close your eyes to it?

Tue, 05/07/2013 - 11:06 | 3537564 Al Huxley
Al Huxley's picture

I don't know - take the blue pill?  Just watch the MSM and take it at face value?  'Wow, it SEEMS like the prices at this restaurant are quite a bit higher than last year, but the government says there's no inflation, so it must be my imagination'.  There just doesn't seem to be any upside in trying to fight it, or even stay aware of it, its just exhausting, and depressing, and futile.

Tue, 05/07/2013 - 11:14 | 3537592 Dr. Engali
Dr. Engali's picture

Hey it sounds to me like you need to unplug man..you know get some R&R..

 

https://www.youtube.com/watch?v=Smwrw4sNCxE

Tue, 05/07/2013 - 11:19 | 3537605 fonzannoon
fonzannoon's picture

I see lots of people disappearing on here and others throwing in the towel.

Maybe that is a contrarian indicator, or maybe this dystopian nightmare is here to stay.

Hang in there Al. Get closer to your family and your good friends. Isolate the good stuff and focus on it. Whatever is going to happen is going happen...or not.

Tue, 05/07/2013 - 11:50 | 3537704 lynnybee
lynnybee's picture

I see lots of people disappearing on here and others throwing in the towel.   NOT ME !  I'm not going anywhere, there is much work to do for future generations.... & if we don't do it, no one will.   that's what the Fed & Gov't hate, they hate the oldsters who know that this is not normal, worthless paper money, no interest on savings & no jobs.   i have a revolution to live thru yet.    every day either i study or stock & stack.   

 

Tue, 05/07/2013 - 12:44 | 3537865 klockwerks
klockwerks's picture

Lenny, same here as old might turn out to be a good thing as wisdom always give an edge. Everyday we do the same thing in that order, study, stock and stack and that I attribute to good old common sense. Good luck and don't forget the lead

Tue, 05/07/2013 - 12:52 | 3537887 Herd Redirectio...
Herd Redirection Committee's picture

I know I personally took a couple months off, just because it was a quiet couple months, and just seemed to be waiting and waiting for a shoe to drop.  Nice to focus on some other things for a change, but that doesn't mean I lost track of the big picture.

Tue, 05/07/2013 - 11:48 | 3537699 Ignatius
Ignatius's picture

"You change the world by living in it." -- a life long friend

His refinement of Ghandi's "Be the change..." as it recognizes that one will affect the world regardless of intent via our personal life choices.

Hang in there, Al.

Tue, 05/07/2013 - 17:05 | 3538752 Radical Marijuana
Radical Marijuana's picture

Oops, my first accidental double post, which is appropriate since we are stuck in a spiral, that appears to repeat itself ... However, it actually is not just the same old cycle, but is a SPIRAL down the drain, which is picking up speed:

http://www.washingtonsblog.com/2013/05/why-america-fell-so-far-so-fast.html

Why America Fell So Far … So Fast
Tue, 05/07/2013 - 17:02 | 3538753 Radical Marijuana
Radical Marijuana's picture

Indeed, watch and wait, as things automatically get worse, faster.

I cannot think of anything else to do, within the context of reality.

Wed, 05/08/2013 - 13:32 | 3541742 MeelionDollerBogus
MeelionDollerBogus's picture

Awww, don't take it so hard, the steak is juicy.

It must be juicy because the Matrix tells me it is.

Tue, 05/07/2013 - 11:05 | 3537552 Dr. Engali
Dr. Engali's picture

It's really quite maddening isn't it? There was a brief moment in time when  the sheep started to wake up and take notice. I am amazed at how easy it was for TPTB to distract them and lull them back to sleep. I look around in anger at  the rot and corruption  in the country, and the sheep just adjust with their new reality and go back to grazing. 

Tue, 05/07/2013 - 11:08 | 3537571 Al Huxley
Al Huxley's picture

Yeah, I just can't believe it, watching it happen, in slow motion, and everybody just seems to get ok with it and adjust to the new lower standard.  No outrage, no anger, not even any real AWARENESS.  I suspect that's been the general plan all along...

Tue, 05/07/2013 - 12:50 | 3537879 klockwerks
klockwerks's picture

I have hope as I see the recent influx of buyers in PM"s, guns and ammo. Not sure what % have taken notice but following other web sites, seems like it might be more than what you might think. Very few talk about it

Tue, 05/07/2013 - 11:15 | 3537593 fonzannoon
fonzannoon's picture

I have long since stopped hoping that people would wake up to the big picture scenario. What amazes me is the market mentality. These same mice see this market, once agan, as a giant piece of cheese, and right now they are chasing it as fast as ever. The retail sheep are stampeding into stocks, once again, 7,000 points later.

 

Tue, 05/07/2013 - 12:58 | 3537905 RebelDevil
RebelDevil's picture

The only way thing will change is if WE become the authority and create change.
The stark truth is that the sheep are the living dead.
http://www.youtube.com/watch?v=pdb20gcc_Ns

Tue, 05/07/2013 - 13:59 | 3538079 prains
prains's picture

That's why the place is soon to be called the Various States of Detroitification

Tue, 05/07/2013 - 11:02 | 3537537 francis_sawyer
francis_sawyer's picture

Doc... I understand where you're coming from... But from another perspective, this shit needs to be repeated over & over [in the simplest way possible], or else nobody is going to bother to ever take the time to to understand it until the brick actually smashes against their skull...

~~~

Sometimes I just want to sit back & say... "Fuck all these fucking sheep ~ if they're too stupid to understand, then they deserve what's coming to them"... Other times I think... "If I was gifted with a shred of enlightment & then proceed to do NOTHING with it, then WTF good AM I in the first place"?...

By venturing out that way... Then there are the inevitable Las Vegas Dave's of the world who believe that I am the villian for all the problems [which is akin to saying that there are no problems at all]... But that goes with the territory...

All of the 'fence sitters' out there who are reluctant to express one view or another for fear of NOT BEING LIKED are in the same category...

~~~

"I guess it all comes down to a simple question: GET BUSY LIVING ~ OR GET BUSY DYING"

~Andy Dufrene

Tue, 05/07/2013 - 11:06 | 3537566 Dr. Engali
Dr. Engali's picture

I agree Francis, but I wonder if we are the only people listening.

Tue, 05/07/2013 - 11:42 | 3537676 francis_sawyer
francis_sawyer's picture

Doc... Don't worry about it... You've got your finger on the pulse & all you can do is try and keep the patient alive... Anyone that's never seen "BATTLEFIELD" surgery is sure to avert their eyes & cough up some bile in the process... Beyond what happens there is out of anyONE's hands...

Tue, 05/07/2013 - 12:59 | 3537909 Herd Redirectio...
Herd Redirection Committee's picture

If you can only get one idea through to people, don't make it about gold or silver or the financial system (the Fed).  Those are sadly intermediate to advanced topics, that one has to generate an interest in on one's own.

Just try to get through the following:  "The government IS NOT looking out for you"

If they are one of these Red/Blue types, you might have to tell them also:  "Both parties are working for the same Wall St paymasters"

They should at least start to get it.  Of course, the cognitive dissonance on that will be strong, with something like 80% of people, because the gov't in their head is like their grandma, and IS looking out for them.  It literally helps them sleep at night.

Tue, 05/07/2013 - 17:34 | 3538854 noless
noless's picture

Upped you for " All of the 'fencesitters' out there who are reluctant to express one view or another for fear of NOT BEING LIKED are in the same category..." I wish people would be less timid, understand that it's not about being right or wrong sometimes, just either contributing or learning, discussion in general is helpful in cementing ones understanding by contrasting views in ways you might not have been capable of using only your own experiences as the base. Truth though is most definitely about what is correct in the sense of "facts" matching the reality they are supposed to describe, redundant i know, but whatever.

Tue, 05/07/2013 - 10:48 | 3537512 lynnybee
lynnybee's picture

i've never posted it yet like so many others, but, i'm posting it now :   F. U. BERNANKE & ALL YOUR ILK.  I do believe Nigel Farage is correct in saying that the only way this ends is violent revolution.  

Tue, 05/07/2013 - 10:57 | 3537535 optimator
optimator's picture

And you better believe "They" have plans for that event. 

Tue, 05/07/2013 - 11:00 | 3537549 Bearwagon
Bearwagon's picture

Rest assured that all their plans will be null and void the moment the first shot is fired.

Tue, 05/07/2013 - 10:58 | 3537541 Al Huxley
Al Huxley's picture

The only violence will be the newly poor and newly drug-addicted stealing from their not-yet quite as poor neighbors.  I honestly believe this - look at what happened to Detroit, that's the template for the rest of the country, probably the entire western world.  But don't expect the population to rise up in anger - the dumbing-down process of the past 30 (or hundred, take your pick on the timeframe) years has been way too effective.

Tue, 05/07/2013 - 13:03 | 3537919 Herd Redirectio...
Herd Redirection Committee's picture

Not just dumbing down, also drugging.  Not just anti-depressants and opiates, though, there is also the Bisphenol A in all canned foods.  Which, you know, mimics estrogen in the human body.  So all the boys and men in North America are ingesting high levels of essentially estrogen. Fantastic.

Tue, 05/07/2013 - 13:04 | 3537924 Herd Redirectio...
Herd Redirection Committee's picture

"Scientists have simply not wanted to speak about how estrogen supplementation in infants, in the general population, increases homose.xual rates."

Tue, 05/07/2013 - 14:03 | 3538105 prains
prains's picture

Al

I'm with you, this has been a 40 year controlled explosion and the violence will be as such. A controlled explosion. Bush fire 101, when the legitimate fire starts, .gov will start another upwind to contain it. Always a step ahead, until they aren't, then it's game on.

Tue, 05/07/2013 - 10:52 | 3537521 css1971
css1971's picture

This has been going on as long as there have been central banks. It isn't a recent phenomenon. It's just bigger, badder and in yo' face mofo.

Tue, 05/07/2013 - 10:53 | 3537523 mattdubz86
mattdubz86's picture

Zerohedge followers need to continue to spread the truth that so many don't care to believe because they are so engulfed in paying the bills and serving the banksters demands for money.

Tue, 05/07/2013 - 10:53 | 3537526 pragmatic hobo
pragmatic hobo's picture

... the trickle down economy at it's best ...

Tue, 05/07/2013 - 10:56 | 3537533 Mike Cowan
Mike Cowan's picture

And they keep telling us that all they want to do is help the poor.

Tue, 05/07/2013 - 10:58 | 3537542 ShrNfr
ShrNfr's picture

The Pareto distribution of anything is news?

Tue, 05/07/2013 - 11:00 | 3537543 Mercury
Mercury's picture

The Fed has directly created a neofeudal rentier economy and society. 

 

Now shut up and vote for more government!

Tue, 05/07/2013 - 11:04 | 3537558 Sudden Debt
Sudden Debt's picture

FIRST GIVE ME MY FREE PHONE BITCH!!!

Tue, 05/07/2013 - 11:17 | 3537584 Mercury
Mercury's picture

Oh yeah, here are some food stamps. I think they work at the liquor store too but you didn't hear it from me! ha-ha!

Now vote for more "security" from the government. You look like you need it.

Tue, 05/07/2013 - 12:54 | 3537892 Anusocracy
Anusocracy's picture

It's frustrating to see the number of people that fully understand that government lies constantly and uses fear to achieve its goals, but still fall for the old government promoted boogeyman 'without government, society will fall into chaos and ruin'.

They're not equipped to make that mental leap.

Tue, 05/07/2013 - 11:00 | 3537546 Oldwood
Oldwood's picture

I've been robbed!, I'm being robbed! I will be robbed!

Tue, 05/07/2013 - 11:02 | 3537553 Sudden Debt
Sudden Debt's picture

ALL YOUR FOODSTAMPS NOW BELONG TO ME!!!! WHOEHAHAHAHAHAHAHAHAHA!!

Tue, 05/07/2013 - 12:42 | 3537860 DoChenRollingBearing
DoChenRollingBearing's picture

Ha ha!  Might as well go full retard:

All your food stamps are belong to us!

Tue, 05/07/2013 - 11:03 | 3537556 optionsman
optionsman's picture

Long time coming. It was unavoidable. Rentier economy is a cancerous stage in credit driven capitalism. The author misses the point a little. Access to cheap financing is important but far more important is real assets ownership. Rentier economies always end poorly but can last generations

Wed, 05/08/2013 - 13:26 | 3541721 MeelionDollerBogus
MeelionDollerBogus's picture

Credit collapse, fraud & counter-party risks are severe problems with credit-driven economies. However, there are benefits or no one would ever use one. For one thing if you're correct in judging a risk and reward and gain more from work/production using borrowed money you can benefit from the spread while producing real tangible goods or providing really good services to the economy. Not everyone WILL do so just because they attempt it.

Second, just because counter-party risk is a risk doesn't mean in all cases it is WORSE than damage risk & transport time for goods & matching needed goods for barter. In other words, trading credit saves on the risk of damage during transport / storage of excessive goods (inventory) where credit can proxy for inventory and nothing is shipped. This saves on fuel & storage space and the trade-off is a risk vs risk situation that isn't identical every single time. As per the normal limits (np-complete ?) of the calculation-problem in economics one must choose (and ought to have a choice, not be forced one way or another)

Tue, 05/07/2013 - 11:04 | 3537557 Great Depressio...
Great Depression Trader's picture

Zerohedge is a good source for information, but keep in mind the info is in a negative light. Despite all the economic indicators doing well ZH continues with painting the negative picture.

Auto sales hit 15 million annualized but no word or pretty charts from ZH authors. Housing starts reverse but no charts from the authors. The market at RECORD highs yet negativity continues.

To the newer readers, enjoy the mini boom. It may not last very long things are different now but don't get consumed by the negativity on this page. Listening to Tyler would have lost you tons of money.

And before anyone calls me a troll click on my username been a ZH reader since 2009

Tue, 05/07/2013 - 11:17 | 3537597 LawsofPhysics
LawsofPhysics's picture

"Despite all the economic indicators doing"-  What are the real employment numbers, real rates of return, SNAP usage, energy costs, and heathcare cost part of your indicators?  Please clarify exactly what fucking indicators you are talking about, aside from the cheap credit expansion and channel-stuffing indicators you mention.  Yes, is see lots of "financial products" flying of the fucking shelves thanks to free money as well, tell us, what's the real fucking value of these financial products of mass destruction again (2008 was an indicator)?  What are wages again?  Does purchasing power not matter?  Troll, otherwise elighten us.

Tue, 05/07/2013 - 11:48 | 3537698 Great Depressio...
Great Depression Trader's picture

My lengthy post did not go through!
Ill respond to u later

Tue, 05/07/2013 - 14:22 | 3538198 Herd Redirectio...
Herd Redirection Committee's picture

At no point did ZH say "in the short term you can profit trading against the Fed".  Never.

Come on.  If you are a momo trader then you should take ZH's information in a certain light, and similarly, if you have a much longer time frame in mind, you should take ZH's information in a different light.

If ZH comes out and says a bank is lying about its balance sheet that doesn't mean ZH is telling you to short the stock, here and now. 

 

Tue, 05/07/2013 - 11:34 | 3537650 Variance Doc
Variance Doc's picture

You clearly DO NOT comprehend what you read.

But, as long as you are here, drooling and lying in your own shit, click through some adds n' stuff.

Tue, 05/07/2013 - 11:35 | 3537659 Temporalist
Temporalist's picture

Trolls can often hibertate for long periods of time...troll.

Tue, 05/07/2013 - 11:54 | 3537713 Great Depressio...
Great Depression Trader's picture

Not my intention to troll ZH readers. Just pointing out that the sky has not fallen and the Shit hasn't hit the fan.

Cars are selling, homes are being built, exports are at record levels, GDP is at new highs, rail traffic is strong, initial claims are at 330k level, the list goes on and on.

Look at Italy, Spain, Greece, France, UK, Japan, etc. all these countries struggling we are doing ok relatively speaking.

Would the ZH DOOMERS ever expected housing to roar back like it has? Of course not because they are too busy waiting for the next shoe to drop. Instead of going out looking for opportunity all the "momos" are flipping condos making fiat. Gold? Down 25 percent since its recent high while stocks rally. Silver decimated by over 50 percent of its recent peak how's that for an investment.

Tue, 05/07/2013 - 12:00 | 3537729 Bearwagon
Bearwagon's picture

That's all just one humongous trap! Is that so hard to get? Nobody is doing ok, not even relatively! Resist normalcy bias!

Tue, 05/07/2013 - 12:12 | 3537771 Great Depressio...
Great Depression Trader's picture

Not true at all. Man, my dads mortgage payment Just dropped to 2900 per month from 7500 due to it changing from fixed to current rate. Things like this are happening nation wide.

My gf just got a job offer for 60k. She's 28 no student loans and is saving money. My friends are all doing well.

Family business is doing well sales are at record levels mind you this is a 35 year business we've seen quite a bit.

Lastly, commercial vacancies are filling up. Population is still growing while construction effectively stopped. We are already seeing the frenzy in housing pretty soon office space will dry up as well.

Tue, 05/07/2013 - 13:07 | 3537929 Vince Clortho
Vince Clortho's picture

LOL

"frenzy in housing"

What a fucking tool you are.

Tue, 05/07/2013 - 15:53 | 3538544 Great Depressio...
Great Depression Trader's picture

Just go ahead and try to buy a place in california right now there's dozens of offers per home.

Wed, 05/08/2013 - 13:22 | 3541705 MeelionDollerBogus
MeelionDollerBogus's picture

How many of those offers are for 60% or less of the asking price, and how many peak asking / bid prices are already well below what was paid PREVIOUSLY for the same house?

People don't want to sell for a loss and if they are forced to do so are in deep financial trouble - in other words, for them the sky is falling or has fallen.

Tue, 05/07/2013 - 13:16 | 3537945 Winston Churchill
Winston Churchill's picture

Where in China do you live again ?

Tue, 05/07/2013 - 13:54 | 3538060 LawsofPhysics
LawsofPhysics's picture

"my dads mortgage payment Just dropped to 2900 per month from 7500 due to it changing from fixed to current rate." - LMFAO!!!  How many more years of his life and yours will payments have to be made?  All you did was sign up to give the banks more of your labor by paying for a much longer period moron.  Fucking halarious.

Tue, 05/07/2013 - 17:45 | 3538898 noless
noless's picture

Your dad just refinanced to a floating rate mortgage?

Do all your friends also work for your dad?

I must be a fucking retard to not be able to find a job. Jesus, I'm doing something extremely wrong.

Tue, 05/07/2013 - 14:00 | 3538084 Clowns on Acid
Clowns on Acid's picture

Are you wearing Google glasses ?

GD - just ask yourself "if all a Fed had to do is print $1T/yr to achieve 2.5% GDP, with all the anti-buisness regaulations, higher taxes, ObamaCare as ankle weights in the race for growth....why not just continue doing so indefinitely?"

Have you thought of the morality of just printing fiat and making it available to banks before making it available to citizens?

Have you consdiered why fiat printing of money has led to disastrous socio-economic results all throughout history?

Have you ever watched a Wylie coyote cartoon ?

Wed, 05/08/2013 - 13:19 | 3541696 MeelionDollerBogus
MeelionDollerBogus's picture

Looks fallen to me.

Pretty much unless you are in the upper upper middle class or higher, things are falling apart. Unemployment is up (labor participation rate is down, wages are down / stagnant, work hours are down... in the USA.

Now if you live somewhere else or you live richer than most then sure, nothing is wrong. Good for you.

Those stats are NOT accurate, are manipulated, have been discussed in great detail (channel stuffing, initial claims, labor participation vs unemployment U3, U6, etc) so if you've missed out on all this you need to read up.

If you've read it and are deliberately ignoring it then you're a troll.

Tue, 05/07/2013 - 12:36 | 3537845 sgorem
sgorem's picture

 "Despite all the economic indicators doing well"

"Auto sales hit 15 million annualized" = these fucking figures include channel stuffing AND check out the default rate and repo's from sales to sheeple who couldn't afford to put gas in their new suv for a month.


"Housing starts reverse" another bullshit comment. building houses with taxpayer monies paying no % on the loans from Banster & Co. who borrowd taxpayer monies from the Fed at no %, to buy back at liquidation prices when the fucking home doesnt sell, OR WITH FREE CASH BORROWED AT 0%.


"The market at RECORD highs" = DO I REALLY HAVE TO WIPE MY ASS WITH THIS FUCKING COMMENT? .............................you should have your mouth washed out with soap for such ludicrous comments in front of ZH'ers. BTW, trollism can rear it's ugly head at anytime, schedule a visit to your local preferred physician and have him check you out.

Tue, 05/07/2013 - 11:04 | 3537560 Rayfp65
Rayfp65's picture

I remember when Bill Clinton ran and won on his famous line "trickle down economics doesn't work" against Bush. 

The FED knows, if they pull this welfare for the rich, this will all fall apart, yes it does help out some middle class families, but any benefit from equity appreciation goes into one pocket and out the other. The Fed and most govt elites are clueless when it comes to this phenomena, because these people have never really lived in the REAL world!!!!

As for the rich spending, it's great if you own a GUCCI, PRADA, FERRARI, shop.

Tue, 05/07/2013 - 11:11 | 3537580 t0mmyBerg
t0mmyBerg's picture

At least someone is telling it like it is.  I was wondering when someone would call these SOBs out using an appeal to leftist hot buttons.  The appeal to the rightist hot buttons like free markets and distortion of market pricing mechanisms is clearly not gaining traction.  If the meme can be widespread that the Fed is robbing the masses to benefit the wealthy, QE will in fact be curtailed.

Tue, 05/07/2013 - 11:12 | 3537585 thismarketisrigged
thismarketisrigged's picture

fuck u bernanke u fucking douchebag.

 

look what this douche did today. the market was going red around 10 am, and now its at the highs for the day an hour later. goog was down 10 dollars, not its down only 4 and prob will be green soon.

 

u have robbed the middle class of financial wealth u fucker, so go fuck urself

Tue, 05/07/2013 - 11:26 | 3537627 pherron2
pherron2's picture

Met the new neighbor the other day.She was the winning bidder on the house across the street (fifth foreclosure on my block in the last year). She's a cutie, all full of positive energy, and joy, and what a steal she got on the house! She introduced herself as the owner of a local realestate company. Plans to rent the place to her secretary, who baby sits for her when she's not at work. She's really a sweet lady.

Just a link in the chain. How can you dismantle a system that has so many people like her who have vested interest in the status quo?

Tue, 05/07/2013 - 12:22 | 3537810 LawsofPhysics
LawsofPhysics's picture

"How can you dismantle a system that has so many people like her who have vested interest in the status quo?" - easy, break the supply lines for essential commodities to that system.  History is very clear on how this turns out.

Tue, 05/07/2013 - 13:41 | 3537993 pherron2
pherron2's picture

The easy button, great, three...two...one...

Tue, 05/07/2013 - 13:56 | 3538064 LawsofPhysics
LawsofPhysics's picture

Already happening, that whihc cannot be sustained, won't be, regardless of what you or I think.

Tue, 05/07/2013 - 14:50 | 3538322 pherron2
pherron2's picture

I keep hearing that, & it makes perfect sense, but they seem to keep pulling rabbits out of the hat. Not sure I'm ready for the reset. I have no faith that a reckoning is coming on the elite, but I'm sure at some point real hell will descend on the rest of us.

Wed, 05/08/2013 - 13:14 | 3541680 MeelionDollerBogus
MeelionDollerBogus's picture

why WOULD you break this? The secretary obviously needs a place to live, the employer obviously needs a babysitter, everyone needs to work to make money and live, and they all seem happy so far. Why dismantle a thing without proving it's harmful? Doesn't look harmful to me. It could be if the prices swung too far one way or another (low wage, high rent, unsafe living conditions, etc.) but I think with the babysitting we can rule out the unsafe living conditions unless the owner(parent) is an idiot. Not something you can fix either should that turn out to be the case.

Tue, 05/07/2013 - 11:27 | 3537629 Shizzmoney
Shizzmoney's picture

Things won't get fixed until the populace gets out of PRIVATE debt (or at least enough to not be underwater like they are now).

Govt debt doesnt matter b/c that shit is not getting paid back anayways. Nor does it have to be; the US will always be a sovereign state that will be able to print it's own currency because when push comes to shove, we can just blow up the world (either by innovation or by bombs).   

But if people are out of PRIVATE Debt, they can free themselves of the imaginary chains that bind them.  They can speak more freely, they can assemble more freely, and they don't have to beg to their corporate or government "masters".

They can understand they can default on the public debts because a) 80% of that debt is fraudulent (like the bailouts/wars) and b) the money used to create that debt was made out of thin air - therefore - doesn't exist.

Right now, we are under Federal Reserve (jew banker) rule.  There is no United State Dollar......it is the Federal Reserve Note (aka the PetroDollar). 

Tue, 05/07/2013 - 11:28 | 3537635 Tombstone
Tombstone's picture

Just buy.  This time is different...have the markets gone down since 2009?  Nope.  Even the penniless can afford penny stocks.

Tue, 05/07/2013 - 11:30 | 3537639 kensuneit
kensuneit's picture

Perhaps I'm just a simple fool, but didn't we have some recent candidates for president that bring up exactly these points?  Gary Johnson maybe.  Or is the entire system so far out of whack that even our system of democracy is largely replaced by these criminals.  Just a thinkin' out loud here.

Tue, 05/07/2013 - 11:41 | 3537679 IamtheREALmario
IamtheREALmario's picture

It is not just the financier class. It is all of those who have been given, through their connection, more money and power than they contribute in value. You can add to that class pretty much every public company CEO who has been told that they are" special", a part of the special elite class of people who deserve everything and that the people in general only deserve wha they are given.

It is one of Satan's big lies and the means by which he corrupts the ignorant, insecure, power hungry ... who crave to be validated in their existence.

Most people are not that insecure.

Tue, 05/07/2013 - 12:01 | 3537735 Alcoholic Nativ...
Alcoholic Native American's picture

Socialist propaganda.

Tue, 05/07/2013 - 12:09 | 3537763 the grateful un...
the grateful unemployed's picture

parts of this are less true than other parts. the fed is building an economy which can serve a smaller majority of the participants. if 20% of the people opt out, through barter, off the grid living, or criminal activity such as pot growing, the main economy continues to service the other 80%. (in the 60's if GM sneezed the whole country caught cold, this is what they can call progress, obsolescing the business cycle, get it) there's plenty of free money for the 99%, mortgage underwater? mail in your keys, rebuild your credit and get back in the market. there's 0% apr (AND 60 MONTH AUTO LOAN REFI's) for consumers, who don't need to own GMs junk, they just rent or lease. forget this meme about the 1% being the only ones who rent because rent is cheaper. The 99% lost more in asset value, but the 1% has a greater asset cushion. and the 1% has lost asset value too. the game works against everyone, less so if you are smart, rich and nimble, but it was always thus.

the point is if they lose 10% of their economic participants every year, how many years do they have left? (assuming USG will continue to give people pension money, free healthcare, section 8 rent subsidies, etc etc, so that they can pley their role as consumers - once that assumption is broken its game over - but the GOP isn't going to kill the goose - (austerity) -they are happy just to blackmail the Dems and the American people into accepting their plan for the redistribution of wealth...

its going to be a long slow slide...

 

Tue, 05/07/2013 - 12:18 | 3537793 George Washington
George Washington's picture

Brilliant analysis.  Thank you.

Tue, 05/07/2013 - 12:22 | 3537808 Downtoolong
Downtoolong's picture

Dear Mr. Bernanke,

I’m inquiring about how to become a bank holding company under your organization so that I can reap the benefits of borrowing money from you for free and lending it back to the government (with your guarantee of payment) for a profit. It seems to me this kind of opportunity should be available to everyone since it goes on under the guise of government practice for the benefit of the people.

I know you think there are only certain unique and special people in the world who are capable of doing this kind of work. Please trust me when I say it’s really not as challenging as you might think. That’s coming from a physician with additional degrees in math and engineering who has yet to meet a bond trader who can successfully remove an appendix. By the way, my daughter who’s a whiz in her ninth grade algebra class has also figured it out and would like to get in on the deal too if there isn’t a minimum age limit.

You don’t have to worry about anything going awry between me and a bunch of pesky depositors or borrowers.  I promise you none of this will have any adverse impact on the private sector or the economy. In fact, it won’t have any impact on the private sector at all since I don’t actually plan to hold or operate any real banks. I’m only interested in lending and flipping bonds between me, the government, and the Fed. As far as I can tell, by example of Goldman Sachs, this is acceptable to you.

Please send me the necessary application forms to apply for this racket, er line of work, so that I can begin setting up the necessary accounts, etc. I would like to move quickly since my mortgage is coming due. Thanks to Obama Care, I can’t earn shit in the medical profession anymore.

Sincerely yours,

Dr. Phil

Tue, 05/07/2013 - 12:24 | 3537814 edifice
edifice's picture

Oops.

Tue, 05/07/2013 - 12:29 | 3537832 Rathmullan
Rathmullan's picture

And in driving up the price of the rentier assets, the fed hopes someday to unload the mbs it is buying up as a transmisson mechanism for providing free money at prices that are nominally equal to (if not above, though that is of lesser importance) the price at which they are indiscriminantly purchasing the mbs.  

Tue, 05/07/2013 - 12:30 | 3537836 NeoLuddite
NeoLuddite's picture

Judas goats - The lot of them. Politicians, banksters, economists, CFAs and MBAs.

Leading the less fortunate to slaughter and then gorging themselves on the prime cuts.

Tue, 05/07/2013 - 13:30 | 3537967 SmittyinLA
SmittyinLA's picture

I was just noticing this last week that CA has managed to put up hundreds of thousands of low income apartments (that CA pays luxury prices to build) and the state picks up the tab for the heavily subsidized renters as well as the "slumlord bond investors" and the beneficiaries are primarily illegal aliens, former illegal aliens and foreign & offshore bond investors.  

Tue, 05/07/2013 - 13:33 | 3537976 the grateful un...
the grateful unemployed's picture

sources?

Tue, 05/07/2013 - 14:18 | 3538172 Occams Aftershave
Occams Aftershave's picture

Thank you for the explicit, reasoned, great answer to my question, Mr. Charles Hugh Smith.

Tue, 05/07/2013 - 18:05 | 3538949 johny2
johny2's picture

the slow decay of the empire. bernanke has been printing for 6 years or so, and the dollar is still reserve currency. as long as the chinese population have enough food, the things may continue in this fashion.

Wed, 05/08/2013 - 12:58 | 3541618 MeelionDollerBogus
MeelionDollerBogus's picture

Honestly while I’d like to agree with the article it misses 2 things entirely which are joined at the hip. #1 is that Bernanke’s policies do more than assist rentiers, they directly support people we suspect of criminal wrong-doing in various markets & geographic areas and we also (many people around the world) suspect balance sheets to be insolvent in reality but propped up by printed money (governments too), which is a form of fraud (which may not be illegal in all cases but does distort the market. Sorry for the run-on sentence. #2 actual renting with actual rent-payers for actual tangible assets is NOT “creating nothing”. Why do these poor serfs not work out of their own shacks and shanty-towns rent-free but in poor conditions like in India, when looking at North America? I’ll tell you why: because there’s only so many places you can put a tent city and it’s a hard, hard way to live. For the rest you do NOT have to pay for upkeep directly nor do you have to DIRECTLY physically upkeep the property, like building your own deck or repairing stairs. It’s far more efficient for tenants to pay rent (we all have to pay taxes so I’m subtracting that for now from arguments), so that the accumulated payments can pay (we hope) for upkeep of the property. This permits large projects to be done all at once for everyone in a building to reduce capital expenditure for the same work, yet also means that lives benefit from the improvements. The one down side is if fraud happens: payments are made, people get nothing for it, the “rentiers” just run off / abandon the property & tenants. If you repair your OWN property this doesn’t happen. Counter-party risk is everywhere of course. Now consider: don’t we want efficiency in an economy where people work, earn, save, get tangible things (improved homes to live in, apartments, even if rented, are still a tangible benefit). Or if you doubt the tangible benefit you try not maintaining plumbing or a roof, not paying rent to the owner who hires the workers that keep all this running, and see how your life changes.

Wed, 05/08/2013 - 13:09 | 3541658 MeelionDollerBogus
MeelionDollerBogus's picture

As for 'rentiers' and 'renters' for non-tangibles (not a house, not an apartment, not property, not a storage locker where your tangibles are kept safe) ... are you forced to rent? Can you opt out? Is there a law demanding you pay this rent?

Of course in various jurisdictions there's such a thing as mandatory insurance for cars, healthcare, etc. I'm not sure... would one call this rent? That I know of in these cases it is NOT optional unless you want to a) not live in Canada, Sweden, etc (healthcare) or b) not want to ever drive a car (a difficult economic choice, worse in a rural area which pretty much ruins your personal life to get anything done).

Do NOT follow this link or you will be banned from the site!