How The Deep State Squeezed America's Wealth

Tyler Durden's picture

Authored by Bill Bonner via,

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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Rex Andrus's picture

You haven't said anything.

Income tax is theft. All they are doing is switching red, white, black and blue dildos. The way this is being done is that we are not in the loop. This is status quo. This is all unconstitutional. It's all a distraction from the real issue, which is our freedom, our sovereignty and our checking the felonious, genocidal slaves of 2-3 foreign powers who have occupied our government before they burn the place back to the 6th century. Everything else anyone claims is speculation or propaganda. No shortage of either. Globalist sabotage takes its toll. Educate yourself, nobody else will. Get the facts. The deep state that Clinton, Obama, Clapper, Brennan, Bush are slave to is the issue. They did 9/11. They are about to fight to the death and we're invited. Trouble ahead, trouble behind.

NYC_Rocks's picture

Not a very well written article.  Sad to see this posted here.  It's just a rant about "real money" with little logic or thougthful data.  The buyer of the painting was not disclosed so we don't know where the person got their money.  This article is weak and full of innuendo.  Yes, the Fed and it's money printing benefits the rich first. That's nothing new.  I wish ZeroHedge would do a better job of filtering out these horribly written articles (really more of an emotional rant). Stick to the authors who are thoughtful, logical and provide evidence/data.

Sonder's picture

This is not the first time this has happened and it will not be the last, the cycle of Empire remains relevant as ever.

Batman11's picture

Bank loans create money.

This is Wall Street blowing up the US and global economy by using debt for financial speculation and inflating a real estate bubble.

M3 going exponential, a credit bubble is underway (debt = money)

The money supply = public debt + private debt

Monetary theory has been regressing since 1856, when someone worked out how the system really worked.

Credit creation theory -> fractional reserve theory -> financial intermediation theory

“A lost century in economics: Three theories of banking and the conclusive evidence” Richard A. Werner

Batman11's picture

The money supply = public debt + private debt

That should be a squiggly "=", approximately equals.

When I copied it from a UK document it turns into a "?", "=" was better.

Total US bank balances around the Great Depression are in this video at 9 -11 mins.

You can see what I mean. 

Batman11's picture

What did Glass-Steagall actually do?

It separated the money creation side of banking from the investment side of banking.

They realised the problem that had helped to cause 1929 in the 1930s, no one knew by the 1990s.

Repealed in 1999, nine years until 2008.


TeethVillage88s's picture

I'm stepping out for a while. I just don't get this Post Keynesian, Post Irving Fisher, Post Marriner Eccles, post Nixon Shock Economics. I guess it is MMT, Monetary Theory.

Jim Rickards say some thing about the Debate between "Frequentist" like Bernanke, Yellen AND Bayesian who can use little to no data to model outcomes. He is talking about Mr. Faust a Federal Reserve Advisor and 2008 & 1930s Depressions as being handled by people with little evidence that their solutions would work. QE-QE3 for instance didn't lead to Capital being put to work to growth the economy. Federal Reserve prefers to gather more and more data and to use more and more of the same old stuff.

100 Million working aged people not working, $800 Trade Deficit, GDP, Inflation, Unemployment numbers are frauds, Boskin Commission Reforms a fraud, Trickle Down Tax Plans are a Fraud, Labor Compensation in the USA is down since 1979 or 1981 at least, Wealth is down from like 1979 or earlier, ... while all corporation Trans-Nations activities have profited their executives, their lobby dollars are up, their wealth is up, Globalism Trends are up, WTO is a mechanism for extracting wealth from the USA...

- none of the old Economics has been kept post 1971 ... so what do we have now? Economic Opportunity still exists, entrepreneurship can still be great opportunity in State Capitalism, Inverted Totalitarianism, if you pay experts to navigate the massive mountains of paperwork and agree to leverage up and use public stock offerings
- Extract the Labor & Resources of the world, pass Lobby Dollars back to Congress to grease the skids
- Extract the Wealth of US Markets, US 401Ks, US Retirement Promises, Health Care Industry, Mortgage Industry, Credit Industry & Consumer Markets
- Extract the Usury
- Extract the Taxes to control people & businesses
- Put up Police State to manage the Disenfranchised
- Put up Welfare State to alleviate the pain and worries of the Depressed, of the Losers, to hide the Depression
- Make people pay for their Credentials, Military Service, University Degrees, Job Skills,
- Make people pay when they marry, divorce, get arrested, someone dies, someone is born, someone gets ill, someone starts a business

Hm... Sounds like China or Byzantium

TheNeosNeo's picture

Future debt obligations, that's a laugh.

The US is already bankrup, it's just that nobody has the balls to file the proper paperwork.

Time to reboot the beast.


helloimjohnnycat's picture

It's all bullshit.

The painting is fake, the deal is fake-out scam, and the people are known shysters.

I'm mad at myself for bothering to post the obvious.


Apeon's picture

I think the 'PAINting' looks like Hillary before Make-Up!