It’s Show Time:
Good Morning all of you independent minded souls out there in reality land; your King of Simple News is on the air.
I want to start off this morning with a cheery thought, “It’s always darkest just before it gets pitch black.”
Inflation is a terrible element of our growth capitalism model that is literally built into our system. A semi-sane person might ask why such a destructive element would ever see the light of day, let alone be an inseparable element of our base economy.
The answer is easy; it allows those who devised the system to get something for nothing. The old saw, “It takes money to make money,” is the root cause of inflation. Those who have ample money to loan, never have to do a day’s work in their lives due to the inflationary concoction’s of compounding interest and Wall Street. Money in the mail box if you would.
So why aren’t all of the people who pay the interest and lose their retirements on Wall Street hopping mad? Because they aren’t smart enough to be hopping or jumping or rolling or any other kind of mad.
We are taught that those who collect interest and make the big bucks on Wall Street are smarter than the rest of us. No matter how they obtained their money, they are seen as smarter than the average bear. And the majority of Americans buy off on that line. Like taking corn from a blind chicken; it’s easy.
Getting back to inflation, I’ve unleashed my old hound dog “Blue,” to see if he can track down the real effects of inflation and he led me right to joblessness.
As inflation pushes up prices, it must necessarily push up wages at the same rate or we run into a cash flow problem. We have more cash flowing out than flowing in when buying the same products. Therefore, it is absolutely necessary to make more money each and every year to pace inflation. Remember, inflation is built into our system. It’s not a take it or leave it kind of deal like “Bronco Ben” Bernanke would have you believe. Uh-oh.
The real rub here comes when there are more real people than real jobs and wages stagnate. Inflation is un-tethered and rises regardless of whether you got a raise this year or not. For that matter, it rises whether you have a job at all; similar to ongoing compounding interest.
The domino scenario takes over at this point and as more people lose their jobs and have no money to spend, the folks where the unemployed were previously spending their money lose their jobs and so on. Keep in mind that if everyone had a real job, the losses would be minimal, but then people don’t have real jobs, they have created jobs that were created by printing money.
All that said, the only way out of this mess would seem simple; give everyone in America a raise rather than just the Wall Street bankers and politicians. After all, constant wage increases have always been the norm. Here’s a flash, “the norm,” is no longer a ruling factor; massive unemployment is ruling the game today. It’s called overshoot; lots of workers, not so much in the area of real or created jobs.
As our political brain trust imported millions upon millions of foreign workers to America and exported millions upon millions of our jobs to foreign countries, the smart kids in third grade figured out that such a shuffle could lead to an unemployment problem. Kids these days, huh?
When there are literally millions of Americans who are unemployed, underemployed, and don’t want to be employed, what are you thinkin’ the chances are of getting a raise next year? Uh huh, Slim and none and Slim left town.
I’m shifting gears on you just for a moment, but consider this; healthcare is not too expensive, the American people just don’t make enough money to afford it. Healthcare is available, the funds to pay for it aren’t.
Wages have and will continue to stagnate due to government policies to a point that food will no longer be affordable and our government will blame the farmers and trot out a 2,000 page National Food Care program and you will be fined if you don’t have food insurance.
So really, why not just pay everyone in America more money and everything would be hunky dory? It may sound crazy, but that is exactly what we did in this country for years. Inflation drove wages and everything seemed to be in balance. Of course, it never was in true balance, because growth based capitalism is impossible in a finite world that experiences infinite population growth.
We can’t simply create jobs at will to advance an impossible mathematical theorem. But we darn sure tried and now it’s show time. I’m told that the title of new show will be, “King Obama and the 535 Troop of the House of Pain vs. Natural Physics.” Sorry kids, it’s rated XXX.
Before his death in 1989, M. King Hubbert Stated, “Most employment now is merely pushing paper around,” he said. “The actual work needed to keep a stable society running is a very small fraction of available manpower.” Well darn it anyway Leroy, what are we gonna do now?
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I can answer for Leroy, Mike. There are a lot of things we should do immediately; and should have started on 40+ years ago. But we will not pursue the correct path this time either, as it will not net the massive profits for the few in charge.
We will continue to wring this nation out, fleecing everyone possible until the cash flow stops. Then the greedy and powerful will proceed to other nations, but we will have to hurry, because the competition in this business of greed will become fierce really soon, as other nations begin to catch on to how we truly operate our fine economy. As you indicated above, physics and math will win in the end, but there are numerous means to continue our manipulation for a while yet.
You got to wonder which is worse; the greedy ones doin’ the fleecing or the stupid ones going along with their plan. If numbers matter, the stupid win hands down. I am beginning to think that maybe the year’s supply of food I have on hand should be increased, at least a little, at this point. -bb
In essence, we have climbed up a mountain with the help of fossil fuels. Now that they are becoming too expensive to continue climbing, we have a choice, if we want to call it that. We can let go and fall, or we can slowly lower ourselves down to a more sustainable level.
Since a fall would probably kill most of us, a slow descent is beginning to sound like a pretty good deal. As much as I dislike what Obama and company are doing, to quit spending and balance the budget suddenly would be the same as letting go.
When one has climbed high on a sheer rock face and no longer has the energy to go up, there aren’t many options remaining.
I’ve heard it said here that high unemployment is the new norm and I think that is correct. I believe the talk from our government about the desire to employ Americans is bull, much like the talk of wanting a strong dollar is bull. We should stop thinking of Wall Street and American companies as being tied to American workers. They are no longer just American companies, they are global companies. The employment base and the customer base is global. Wall Street profits can still rise even if the US has high unemployment. Perhaps this crisis will spur Nationalism and bring some jobs back but it won’t be easy.
Interesting comments guys, thanks.
There will never be a central solution. We are well past the point of no return and as Hubbert stated, “We are in a crisis in the evolution of human society. It’s unique to both human and geologic history. It has never happened before and it can’t possibly happen again.”
If we were to attempt to abandon our impossible system of Growth Capitalism, our economy would collapse nearly overnight. If we continue, our economy will still collapse, but more like a slow and continuous train wreck.
Given that choice, humans immediately consider that they may be riding in the last car and outlive the eventual derailment.
“We’re not here for a long time, we’re here for a good time.”
BillyB,
You mentioned “fleecing”. This article tells you exactly who is behind the financial shenanigans that most people suspect, but are not quite certain how they are personally affected.
http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout
It is as rotten as a 2 year old apple.
Hi Hotrod,
What a strong and insightful article! We read the whole thing and previously read “The Great American Bubble Machine” also by Rolling Stone, which added weight to the downhill slide America is on.
It was all probably planned out prior to Obama’s election. I think that if a Republican president was doing this, the press would be up in arms, but notice the silence with Obama.
The joke among the elites is that the Republicans get away with pushing a socialist agenda and Democrats get away with pushing capitalism - the opposition just is not turned in to that approach.
It seems like Goldman Sachs and Citi are the usual suspects in all the taxpayer rip-off schemes currently underway.
Interesting article. Truth be known, all of the regimes since Nixon have relied heavily on the many idiots to promote their very flawed economic storm on America. Our exponential growth economy was never possible long term, but is extremely lucrative for a few at the top. It will continue to be until the function plays. This is due to what the article identifies as people who are too lazy to to do the study and then the math. Therefore they will never attempt anything that could help to avoid where we are headed. We as a nation topped out, on our flawed policies quite some time ago and like the perverbial snowball, there is little to nothing that can stop what we have set in motion from here on out (and yes I do mean we). We have only the crash to fantisize about at this time. Sweet dreams. -bb
I did not mean to infer that these people were the cause of our problems-simply the latest (and possibly the most egregious) con artists lining their pockets while the ship is sinking. With the trade agreements now in place capital can be shifted to the next hot economy to victimize.
It certainly will be interesting to see who will be pegged as the scapegoat for the coming cataclysm.
We will have inflation more likely hyper-inflation.
Countries on fiat currency simply try to outgrow their debt. If the national debt grows 2% a year, inflation has to be greater than 2% to keep it in check. Better if the rate of inflation is much higher.
We never paid off the debt for World War II, we simply outgrew it in the 50s and 60s. Although pretty big in 1945, that debt looked small by 1970.
So, in the next ten years our debt will grow from $11 trillion to $24 trillion. It will probably take a 10%+ inflation rate for 10 years just to keep the national debt in check.
Our govt needs inflation. There is no chance that they can pay off this debt. Our govt is desperately trying to create inflation. They are printing lots of money and will print a lot more of it.
Most of you have read this description of inflation from Futurecasts Online Magazine before.
“Monetary inflation is a kind of tax with which government — by expanding the money supply — transfers wealth from its people to itself. It also results in the transfer of enormous amounts of wealth from the hands of ordinary people to the hands of those speculators shrewd enough to take advantage of the price volatility inflation causes in the markets.”