How The Deep State Squeezed America's Wealth

Tyler Durden's picture

Authored by Bill Bonner via InternationalMan.com,

Salvator Mundi, said to be by Leonardo da Vinci, is the world’s most expensive painting.

Last Wednesday, at auction, each square inch was valued at nearly $1 million – including the bummed-up, restored, and damaged parts.

The painting may not be da Vinci’s work. Or perhaps, since it has been so heavily doctored up, little remains of his work. And whoever’s work it was must have been having a bad day.

And yet, it sold for over $450 million (including auction-house charges) – a lot of money for such a depressing work of art.


Donald Trump as da Vinci’s Salvator Mundi

The question on the table: Why?

But since we don’t know the answer to that question, we’ll answer another one: How come so many people have so much money?

Made in the Middle

The latest GOP “tax reform” proposals raise questions, too.

Though billed as a “middle-class tax cut,” the middle class gets almost nothing from the proposed plan.

Instead, almost all the benefits go to: (1) business owners, and (2) the rich.

And since the feds are unwilling to cut spending, the middle class ends up with about $2.2 trillion of extra debt, which it will have to reckon with eventually.

We bring up the tax cut because we think it helps explain the painting. Not for nothing are Republicans and the modern Salvator Himself, Donald J. Trump, setting up the middle class for a huge bamboozle.

A train ride we took on Monday – the Acela Express from Baltimore to New York – was subsidized by taxpayers from all over the country.

The train runs from one end of today’s modern economy to the other. It goes from Washington, D.C. – the center of politics – to New York – the center of money.

In between is nothing but poverty and dereliction. There are factories that last made a product in the ’50s. There are workers’ houses almost unchanged in half a century. There are abandoned warehouses… wrecked cars… junk steel… and burly men in orange vests working with machines.

The middle is where real work was done and real things were made, shipped, and distributed; it shows few signs of growth or prosperity.

It is as though a sausage had been squeezed in the middle, driving the rich meat to the ends. In between is lean… and greasy.

How come?

Deep State’s Fingerprints

Every crime scene has many fingerprints on it.

Most are of the innocent.

An aging population, for example, is not exactly something you can do anything about. Technological innovations, too, are largely beyond public policy control.

But there’s one set of fingerprints on the tax cut flimflam… the relative poverty along the Northeast Corridor… and the $450 million painting: the Deep State’s.

The insiders use fake money – the post-1971 dollar – to transfer wealth and power from the people who earn it to themselves.

It is as though they loaded up the train in Newark and Trenton… and shipped everything to Washington.

You earn real money by making real things and providing real services. But fake money is different. You don’t earn it by adding to the world’s wealth.

You get it by subtracting from it… that is, by borrowing from future output.

Real money is not controlled by anyone.

It is earned – freely – in win-win exchanges. Back in the 1950s and 1960s, it ended up in places like East Baltimore and Trenton because they used to make things people wanted.

But fake money takes a different route. It is created by the insiders… and controlled by them. It goes where they want it to go.

No Stimulus

Money always bows to politics; often, it is completely beholden to it.

In Russia, the oligarchs took government-owned property and used it to build their fortunes. In China, state-owned enterprises and favored entrepreneurs get government-backed credit to build their apartments, factories, and shopping malls.

And in America, the fake money is directed to favored sectors by 73,000 pages of the Internal Revenue Code… and 81,000 pages of the Federal Register.

So, it is hardly a surprise that the latest tax proposals favor the Deep State at the expense of the middle class.

Readers may argue that the money “stimulates” the economy… and that it “trickles down” to the common people. If so, there is little evidence of it.

As a percentage of the working-age population, fewer people have jobs today than at any time since the 1970s. Back then, the typical man had to work 900 hours to earn enough to buy a new pickup truck. Today, he has to work 1,500 hours.

Central banks have increased the world’s monetary base (and their own balance sheets) by $20 trillion so far this century.

This money didn’t go to the fellow in the orange vest. Instead, it went to Russian tycoons… Chinese billionaires… art collectors… hedge fund managers… and rich people on both ends of the track.

*  *  *

The Trump team reached out to Bill’s network for advice on the economy. Recently, Bill’s team sent them a field memo on a coming crisis… They’re now releasing it to the general public… (It’s not what you expect.) Click here to read more.

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Shibumi2's picture

Hogwash...the federal reserve note from 1913 Is the real scam.

Who the hell would think giving the Jewish oligarchs monopoly control over America's money supply was a good idea...particularly with their historical track record.

Time for a change in ownership at the least

Seasmoke's picture

Woodrow Wilson thought so. Though I think he has changed his mind in Hell.

earleflorida's picture

william howard taft  (1909-13 potus)

made it happen.

and, reagan broke the unions for his trickle down economy?

Dwain Dibley's picture

Guess what; neither the Fed or the banks possess the legal authority to create money, and they don't.  What they do create is asset-backed bank debt, which people get to experience for a brief moment in time as bank-administered lines of credit, which, after its use, people then experience as debt.

You want to hear something really funny; do you know who has ultimate control over the amount of legal tender money in circulation?  It's not the U.S.G., it's not the Fed or the banks, it is the deposit account holder.  That's right, people taking their money out of the banks determines how much legal tender money there is in circulation.

Here's another interesting fact, the U.S.G. owns the Federal Reserve note, until it is issued for circulation whereupon, it becomes the private property of the holder.

The Great Depression was the result of a cascading collapse of bank generated debt/credit being used as if it were money.  Millions of people were made to suffer, some starving to death, not because there were no industries, not because there were no products, not because there were no jobs, not because there was no food, millions were made to suffer because there was no money.  Fast forward 2008, same fucking thing.

Currently, there is a total of $1.53-Trillion in U.S. legal tender dollars in circulation around the globe.  Of that $1.53-Trillion, $280-Billion is in circulation within the U.S.  Of that $280-Billion, $72-Billion is held in bank vaults.

That $72-Billion in bank vaults backs the $1.9-Trillion in credited demand deposit accounts.  It also backs the $9.3-Trillion in credited savings accounts.  It also backs the billions in credit transactions, from Main Street to Wall Street and all points between and beyond, that occur on a daily basis.  It also backs all U.S.G. payments.

And that, is the stark reality of Fractional Reserve Banking within the U.S.

You want to end the Fed, take your money out of the banks and use it instead of the bank debt administered as a line of credit. (Actually pay for things instead of playing 'hot potato' with bank debt.)

http://carl-random-thoughts.blogspot.com/


jamesmmu's picture
TV, Facebook, Twitter, Youtube all Suspended in Pakistan! Cell Service About to be Blocked!

http://investmentwatchblog.com/tv-facebook-twitter-youtube-all-suspended...

Cabreado's picture

Finally...

there is no "deep state"

even remotely so in comparison to the entitlement and ignorance that enables it.

The "deep state" is a collection of opportunists, 

and the masses behave similarly, sans the control component.

A rule of law comes naturally from this dynamic, and a critical mass of neglect makes it All turn over again, eventually.

(You are here)

The most pessimistic thought is that, now that everyone is communicating,

communication has proven to mean nothing at all.

Captain Nemo de Erehwon's picture

True, but that requires we carefully think what we want for currency. Such a discussion is part of the dynamic, not precluded by it.

ElTerco's picture

And to spell it out, the Deep State is the lobbyists, Koch brothers, and George Soros of the world. In other words, those who buy the legislators and not the legislators themselves. That said, make no mistake, the legislators contribute personally to the end result.

ElTerco's picture

Here is an interesting Gem from the original House tax plan:

"Tax capital gains and dividends as ordinary income, allow a 50% deduction for capital gains, dividends, and interest"

The net effect of this provision is to give the very rich a slightly lower tax rate than they currently have on capital gains, but to eliminate the capital gains tax rate for anyone who relies on the standard deduction rather than itemizing, aka screw the middle class.

https://taxfoundation.org/details-and-analysis-2016-house-republican-tax...

factorypreset's picture

Power of the purse strings. Same as it ever was and ever will be. 

Drop-Hammer's picture

(((Deep State)))--fixed it for you.  (((Them))), undermining America since 1913.  MAJFA (Make America Jew-Free Again).

gizmotron's picture

Simple math. The problem is regressive tax rates for ultra-income earners since 1982. Progressive rates for the rest of us. This started in 1982 with Reaganomics, when Cap Gains and Divs were dramatically reduced, leading to regressive tax rates for the very highest earners (0.5% and above, who derive most of their income from CG and DIV, not wages, interests, and rents). And the higher up you go, the more regressive it gets.

In 1980, the top 0.5% paid 38% of all Fed tax. Today, the top 0.5% pays 31%. Doh! Yup, socioeconomic non-linearity really is this simple, along with two newer twists: carried interest and easy offshore havens (50% of Goldman's business is offshoring waealth). Multiply this class non-linarity over 35 years, and you get the biggest middle-class disproportion since 1928. The simple fix: return to 1975 CG and DIV tax rates, and abolish carried interest.

The reason this will never happen? Tax competition among nations, and a corrupted Congress (PAC payola, Wall St speaking fees, K-St Revolving doors, Citizen United corruptions, etc.). We're screwed, and heading towards something like a French Revolution.

dsty's picture

Great cherry picking of info " fewer people have jobs today than at any time since the 1970s"

I call that bull, economy is doin purdy good, everything is up, hard times for pessimists.

Keystone's picture

What planet do you live on?

ElTerco's picture

"And since the feds are unwilling to cut spending, the middle class ends up with about $2.2 trillion of extra debt, which it will have to reckon with eventually."

Actually, it is much worse than this.

The tax cuts actually total about $5.7 trillion. The House tax reform bill will "pay for" about $3.0 trillion of that cut with claw backs that come almost exclusively from the middle class:

(1) repeal $1.6 trillion of personal exemptions
(2) reform $1.3 trillion of itemized deductions
(3) remove $0.15 trillion of other exclusions/benefits

On net, most of the middle class will pay more taxes, either immediately or when the temporary provisions expire, and that is on top of he $2.2 trillion debt gap mentioned above in the article.

That means $5.2 trillion of the $5.7 trillion "tax cut" has to be paid by the plebs, and the remainder goes to the wealthy, who don't really need the money, and aren't going to use it to provide new jobs.

.

Suckers!!!

.

PS details found in a table embedded in the following article:

https://www.vox.com/2017/11/2/16596896/house-republican-tax-reform-cuts-...

FBaggins's picture

 So at least fix the job problem by ending offshoring and limiting various manufactured goods from other nations with high high tariffs. Who cares what other nations think or rich that have invested in China offshoring US jobs and capital.  Give the people some real hope using your own huge market of 300,000 + million people and they will not only start producing a lot of their own goods again but also have the security to reproduce themselves with actual children. If you really want to be successful, then end the Fed and have the government issue greenbacks again. Be self sufficient as a nation and get rid of the international banksters, crooks and thugs running thigns. You can get a consensus on these things by the working and middle class by telling the oligarch-run deep state and the media simply to FO, and then, JUST DO IT.   

G-R-U-N-T's picture

I wouldn't be surprised if one part of this investment is just parking wealth. As Government's put the squeeze (taxes and fees) on more and more asset classes, movable or immovable, art is one option. Keep in mind that the collectors trading world is abundant, alive and well.

bloofer's picture

I think it may be simpler to think of art as a form of currency--large-denomination currency, as well as fiat currency. It has value because a small group of elites say it does. It has little or no intrinsic value and may or may not have any artistic merit. What divides very costly art works from not-so-costly art works is nothing more than "we say so." And very often the basis for saying so is flimsy at best.

I think art is best viewed as a fiat currency that circulates only among the wealthiest of elites.

Cardinal Fang's picture

Actually, what happened was the urban race riots of the 1960's cause white flight.

That is why the Northeast corridor is a wasteland.

There are large parts of those areas that were never rebuilt.

And never will.

It's not wealth transfer.

It's risk management.

Try getting off the fuckin train in one of those areas and take a walk around. If you survive, you will understand what I am talking about.

First thing you will note is the strong stench of human urine...

Then comes the incessant police sirens and jive shit talking assholes...

And so on...

LA_Goldbug's picture

Check out how the Chosenites and their little goy munchkins manipulated it all,

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

XBroker1's picture

Everything seems fine to me, though we are in a climate meltdown. People will soon wake up to this; but it's already too late.

Ace006's picture

I'm betting you need help tying your shoe laces.  "Climate meltdown"! Now that's funny.

VWAndy's picture

 I have good reason to suggest they also have ways in wich they cockblock the little people.

  What info are they looking for? Proffitable info would be my first guess.

bobzibub's picture

No, it is not the "deep state".  Nor the Fed.  It is merely due to two sets of corrupt politicians fiercely competing for political donations.  For each dollar they fritter away on the first class citizens of this country (the incorporated) they know they can expect a small percentage of that wealth in return.  The more wealth concentrates, the more is donated. If they fix a bridge, build a hospital, or undermine the complex system of economic rents corporations use to mine the wealth of the nation (what passes for making stuff or offering legitimate services) the politician's economic returns are negligible or negative.  Alternatively, if they build glorious nuclear powered submarines in space, the returns would be substantial.  Queue the next round of military trophies--obsolete aircraft carriers and barely functional fighter jets--and the sabre rattling to justify them.

The failures of the political system and subsequent economic/military weakness in the United States is not due to a conspiracy; it is simply that the political system is utterly corrupt.  It will continue to be utterly corrupt due to the moronic idea that donations are free speech and other popular bogus economic theories such as the absolute supremacy of markets etc.

LA_Goldbug's picture

Holy Smokes, so it is an early April Fools Day joke :-)

pcrs's picture

You wonder how this evolutionary survived : people supporting a system (with passion and they even fight for it in wars) that screws them and favors a few at the top. In other words : How did it happen that it is more easy to screw people than to convince them they are being screwed?

from an evolutionary point of view, how could it survive?

Hkan's picture

Still northern Europe enjoy acceptable equality but for how long...

Deep state ruthless greed contamination effect fear or extreme parties democratic takeover due to immigration......no one is safe. BBB bubble big bang...about to change world order.

Interesting fearful future.

Grandad Grumps's picture

Nice 666 sign. Which Trump is that?

BTW, I do not see Trump flipping Satanic signs the way Obama, Hillary, Merkel et. al. would regularly do.

And, while a good and realistic article, I believe politics bows to money, not the other way around.

ludwigvmises's picture

The idea that the wealth transfer from the poor to the rich is inextricably connected to fiat money is flawed. There are many countries with fiat money where the middle class enjoys a steady increase in wealth and happiness and where the super-rich are happy to pay very high taxes to support the poor and the middle class, such as the Netherlands, Denmark, Sweden or Finland. These countries realize that high quality education and health systems are what give the poor the ability to float to the top through hard work and dedication. High quality education with high PISA scores is free in Finland for everyone who wants it, anyone who is willing to learn. Over here high quality education is only available to those families who are already rich. Fiat money has nothing to do with it.

overmedicatedundersexed's picture

what's water?? said the fish.  (we used to call your type, brain washed..now it's just" Eyes wide shut").. love the" super rich are happy to pay very high taxes",,comment..

can't cure stupid

NoPension's picture

We NEED to bring back manufacturing jobs. With a minimum of robotics. Even if they run at break even. We MUST have some reasonable outlet for the masses of dumbasses being produced to go and be useful.

Until and unless we decide to stop funding and subsidizing the low IQ underclass...and their uncontrolled breeding and substandard living habits...there needs to be a place they can go and be useful. I'd rather, as a society...we subsidize certain industries...if for nothing else..to give these people an outlet to be useful. Either that. Or eradicate them. Option number one is more humane. Option number two is smarter. The status quo is nationwide suicide.

red1chief's picture

The high IQ over class takes much more. They would be dumbasses in the real world if the government were not protecting their oligarchy.

King of Ruperts Land's picture

Factories with lots of automation can pay higher wages. "robots" are a powers that be excuse for why you are being oppressed.

Primary production and factories is were labor makes real money and real profit (excess value beyond the labor put in.) Services make no real profit, except the amount by which they underpay the labor.

Anteater's picture

If we went to a full Fig Newton economy, with every able-bodied

person guaranteed a job in their local Fig Newton factory, then

loaded the fig newtons (and powdered milk) into B-52s, where any

kid who wanted to 'be all he could be' can go carpet-bmob global

disaster areas, our factories would run 24 hours a day, everyone

would have a car in every garage, only the old would die off, and

America would become that Shining Light on the Hill once again,

instead of dual-Israeli serial bust-out kleptocracy we've become.

Raise a Fig Newton in toast with me! Mazel tuv!

Anteater's picture

Finland is a bad example. My friend teaches there and says the

Finns are dumb as rocks. Their unique education and assessment

system is gamed to make them appear brilliant, in the same way 

the natiinal universities in India are the ones testing and certifying

their engineering graduates competence. Try South Korea if you

are looking for meaningful study and assessment. The Finns only

test those selected to take the exams for university. Tragically, the

myth of Finns' high-grading has become a pillar of American CCSS.

But instead of testing only the select, America tests every kid, like

the turkey-farming business model that DeVos' EduIC will become.

overmedicatedundersexed's picture

crime. all it ever was..gangs of elite criminals buying .gov and using .gov power to rob and plunder..the most obvious peice of evidence:the ongoing concentration of wealth and power. what 10 families own more wealth than 40% of the worlds populations...got to hand it to them..they are winning.

ZeroBeek's picture

"almost all the benefits go to: (1) business owners, and (2) the rich"

Has nothing to do with deep state.

Just Trump and the Republicans taking care for the rich, not for you.

red1chief's picture

Things will get more messy when the deplorables figure that out.

Scornd's picture

The painting is priceless because it represents high knowlege that is lost to the commoners.

It's rare. It's a picture of real wealth of a people.

ART, bitchez.

You don't even get it.

CTG_Sweden's picture

 

 

One problem with the American economy and distribution of wealth is that money in pension accounts, such as 401(k):s, are protected in bankruptcies while assets outside pension accounts are not protected. At the same time it´s easy to go bankrupt in the US because of health care bills. That means that most savings wind up in pensions accounts. The assets in these pension accounts are usually managed by others who can invest in companies that make no or small profits but are still are considered as great investments. That makes the original owners of these companies rich. This is an example of how wealth is transferred from ordinary people to a new kind of billionaires that have emerged over the past 30 or 40 years.

 

InnVestuhrr's picture

Confiscating earnings on the basis of how much you earn

AND

Using the confiscated earnings to buy votes with entitlement/bribery programs which subsidize poverty

are BOTH immoral and unconstitutional, so anything that diminishes/ends either is absolutely GOOD.

Anteater's picture

A flat tax of 17.5% on any income about $25,000 would feed the $4T Beast.

They don't want you to know that. They want your MC/SS Trust Fund, then

start cutting back on Welfare and Education, to pay for  MilIC and MedIC, so

the Rich from around the world will continue to play at WSs Casino. This is

why Muslims will tell you: never let the Chosen get their nose under the tent.

Well they did, and have, and will be our New American Century Royalty now.

H - e - double l, oh double fucked,  Herzog's gift to You!

 

conraddobler's picture

This is the material world, given to Satan to rule as to test us because God our father loves us and wants us to be the best we can be.

It's like hiring Charles Manson to babysit your kids to toughen them up.

Winning!

Anteater's picture

Charles Manson would play them songs on the guitar.

John Hinkley would read your children great poems.

Trump would sell them tap water and airline peanuts.

Kushner would steal their candy. Degrees of criminal.

At this point, Trump is focused like a laser on private

hotel:casino deals from his 'Winter White House', a

Bolshevik call sign if there ever was one. Na Zdorovie!

wdg's picture

At the core of America's (and the entire western world's) financial and monetary system is a system of theft and plunder on an unprecedented scale called central and fractional-reserve banking. With the establishment of the privately owned Federal Reserve in 1913, America traded honest and moral money for crooked and fake dollars that could be created by the trillions out of thin air for the benefit of a powerful banking/corporate elite. The consequences of this high treason was to transfer most US wealth earned by honest workers to a criminal network of thieves and gangsters who now control America, leaving behind a desolate landscape of abandoned factories, rundown towns and cities and endemic poverty. The architects of this massive system of plunder is an International Criminal Banking Syndicate headquartered in London and New York. To quote from Carroll Quigley's book "Tragedy and Hope":

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.""

 
RussianSniper's picture

Please help me get the word out to all money launderers, drug dealers, oil oligarchs, and corrupt jews that I am a gifted painter and all around really creative person; who will gladly sell to any and all interested parties the crap, I mean masterpieces, I have created.

Rex Andrus's picture

Whip out the draft tax proposal and cite the sections that prove your allegations, Allred. The only TDS bitch whine I have heard so far is that sure, it adds 5 TRILLION with a T to our domestic economy over the next 10 years, which is wonderful socialism, but this just doesn't make up for the welfare socialist wealth transfer "tax cuts" from producers like small business owners and engineers to fresh off the boat career lawn mowers and burger flippers being "temporary", expiring over 10 years. The (((alinskyite))) vultures want this largess to Piven Cloward's tumors to be fatal, just like the permanent (((wealth transfer))) to the armies of non-producing ZOG minions (corporate bureaucrats, corporate paper shufflers, corporate lawyers, corporate ideological indoctrinators, corporate msm carpetbaggers, corporate insurance scalawags, corporate military toys, corporate evidence destroying and manufacturing enforcers and corporate ideologically correct H1B chumps). Sympathy for the devil. https://www.youtube.com/watch?v=vBecM3CQVD8

ElTerco's picture

I can make stuff up, too.

I could make up some bullshit that having a 90% tax on all income (including capital gains) for anyone making over $500K a year would bring $5 Trillion in growth over 10 years. In fact, some charts that were posted on ZH a month ago showed that claim is likely to be true.

But you know what? Saying something is true doesn't mean it is. All those projections by economists are complete bullshit.

This Tax reform bill is more likely to drive the country as a whole into the ground while further enriching people who can't even spend the money they have.