Tag Archives: RT

Why Wage Earners Live on Debt

You keep hearing about free college, free healthcare, and “affordable” housing. Some of which, you might already be getting. But you are still living on credit card debt. Of course there is an infinite number of reasons why anyone might be living on debt or from paycheck-to-paycheck. There is, however, one reason that is shared with a great number of people: stagnant workers’ wages.

Although our grandparents may have lived relatively comfortably on a job that paid them $3 an hour, today we struggle at $15 an hour. That’s because our wages have not kept up with the cost of living. Our wages have been stagnant in relation to what we can purchase with them. Why is that? Depends on whom you ask.

Here is the usual list of reason for stagnant wages:

* Global competition – U.S. wage earners must compete with lower-wage workers outside the U.S.

* Automation – Employers search for the least costly options that will provide the same results for their companies. If cost of human labor raises above the cost of robots, employers will opt for robots.

* Decline in union membership – During our grandparents’ time union membership was around 30% of workers. Today union membership is around 10.5%.

Here is one reason that pundits do not like to talk about:
Wage stagnation and productivity

What’s the most important date on the chart above? 1971 – the year Nixon closed the “gold window.” It was in this year that the US dollar officially become completely fiat. We could no longer exchange our paper money for gold.  Income Inequality and the End of the Gold Standard, SchiffGold, March 2015.

President Richard Nixon drove the final nail on the coffin of the U.S. gold standard in 1971, thereby unleashing the creation of money backed by nothing.  Here is the cascading of events:

* What we call money these days is also popularly called fiat money, funny money, money out of thin air, and debauched currency.

* This kind of money is created at will by the U.S. Treasury when it prints dollar bills. It is also created by banks when they loan out funds to the general population. The balance in your account at your bank represents an IOU the bank issues to you, since your money is not sitting in some vault marked with your name, but has been lent out to other consumers holding mortgages and other loans.

* The amount of funny money in circulation is controlled by the U.S. central bank, the Federal Reserve. The Fed does this mainly by mandating what level of capital banks need to have on reserve (high level of reserves means less money available to lend out, thus less money created), and by manipulating interest rates (high interest rates produce fewer loans.

* Since around 2008, the Federal Reserve has kept interest rates at near zero. Consumers and businesses have taken advantage of the cheap money, and borrowed.

* Consumers incurred considerable credit card, mortgage, and student loan debt.

* Businesses took advantage of the cheap money to build monopolies. They bought out competitors with cheap borrowed funds. Businesses also learned that they no longer depended on their workers to produce money – if they wanted money for capital investment or other big thing, they just borrowed cheap money.

* As workers became redundant, their wages did not raise in relation to their productivity.

* In the absence of wages that keep up with rising prices, workers rely on debt.

Stacy Herbert reporting on Keiser Report

In this episode of the Keiser Report, Max and Stacy discuss how US workers stopped being compensated for their increased productivity only once the US went off the gold standard and there was no longer any honest way to gauge value.  Something happened in 1971  March 2, 2019.


So, where is money in the economy that used to go workers now going? It is going to investors, those whose income does not depend on wages. Low interest rates encourage those with some money not needed for basic living to buy stocks and other investment assets, thus increasing the prices of such assets. As the prices of assets raise so do the net worth of investors.

It is a commonly held belief that the Fed’s low interest rates have been responsible for inflating stock market values. Because people with more wealth tend to own more stock, to the extent that the Fed has been the cause of higher stock prices, it has worsened wealth inequality. Similarly, low interest rates have meant low borrowing costs for large corporations with direct access to capital markets (through corporate bonds). This cheap money helps to boost corporate profits which, again, flow mostly to the wealthy.  How the Fed;s Low Interest Rates are Increasing Inequality, Forbes, May 2015.

America in Decline

It is All Trump’s Fault

Neal Gabler on Moyers and Company marked the first anniversary of the Donald Trump presidency by writing that America has descended into Banana Republic status thanks to Mr. Trump.

“Whatever her failings, America was once majestic. Now she is hopelessly diminished — a wealthier version of the corrupt nations in the developing world that we used to ridicule. And we owe it all to Donald Trump for making America small again.”

Someone who can transform a nation from “majestic” to third world in 12 months must be capable of walking on water.  Not that such transformation feats are impossible.  George Bush turned Iraq, a country different from ours but stable, into an incubator for terrorism.  Hillary Clinton and her State Department, after contributing to the unforgivable death by impaling of Muammar Gaddafi, plunged Libya into complete chaos (gloating afterwards “We came, we saw, he died”).

The Real Decline

However, the mindless assertion that Donald Trump is responsible for America’s decline is not the point of this article.  The point is that America is in decline, and there is very little time to save it.  Our Founding Fathers came up with an amazing idea when they created this nation.  This was to be a country where the People ruled, where government was for the People and by the People.  But such an experiment, they knew, required a responsible populace – folks who understood what to vote for and what not to vote for in order to preserve their liberty and prosperity.

Alas, the Founding Fathers’ experiment seems to have been a tall order.  Today, just about everyone depends in some form or another on government, thereby making government the master not the servant of the people.  Today, we have voted ourselves into $20 trillion worth of national debt.  Today, we see dismal statistics on America’s life expectancy, child mortality, income inequality, and literacy.

Technology:  A Competitive Advantage Lost

For example, let’s talk about technology.  When modern globalization – where each nation depends on a competitive advantage to thrive – became the norm in the 1970’s, the U.S. was expected to be the leader in technology.  It was expected to be comfortable with shedding its manufacturing base and focusing on development of computing power and associated economic sectors, such as banking and finance.

SFUSD BLM shirts 3But then unions fossilized mediocre educators into tenure; children were indoctrinated, not taught the three Rs and other skills to allow them self sufficiency and productivity; higher education became more interested in recruiting useful idiots into the progressive cause than teaching future professionals; and so many of our children went to school hungry because their parents were incapable of providing for them.  The destruction of the American family, the murderous war on drugs, big pharma, the military-prison-welfare complex are subjects for another day.


sunway supercomputer 2Results have been totally predictable.  America lost its competitive advantage.  In November 2017, China unveiled its Sunway TaihuLight supercomputer.  The TaihuLight ranked number one in the TOP500 list as the fastest supercomputer in the world.  The previous holder of the rank was the Tianhe-2, also Chinese.  And by the way, the TaihuLight is also energy-efficient, ranking 16th in the Green500 list.

Precious Little Time to Act

Meanwhile, America does little manufacturing, lacks an adequate skilled workforce, and is mostly focused on the fake news of the month – whether it is toppling down statues or keeping tabs on who exposed himself to whom 20 years ago.

Moyers & Company and Mr. Gabler make their living promoting the status quo progressive state, and that’s entirely their prerogative.  It is up to those who suppose Moyers and his company are not connecting the dots to present alternative scenarios.

Speaking of alternative scenarios to Mr. Gabler’s reason why America is in decline, here is a link to episode #1155 of the Max Keiser Report on RT.  Max and his guest Dan Collins paint a fascinating picture of how China is building trade partnerships, helping second-tier countries build infrastructure and schools, internationalizing its currency (so they one day may no longer need U.S. dollars), and buying up gold (maybe to establish a gold standard!?).  All this while the U.S. has for the last 15 years been squandering its human and economic treasure in endless war, and now has little to offer its neighbors but armaments and military bases.

Max Kaiser is fond of hyperbole.  He commented that President Trump is “euthanizing America” in the least painful way – winding down the country’s unrealistic view of itself as policeman to the world, making mutually-beneficial deals with other countries, enticing corporations to come home and provide jobs, and (a contentious part) giving the American worker a better chance of having a job without the presence of foreign workers, whether undocumented or holders of work visas.

We the People need to choose whether to continue on our current trajectory or turn things around.  We need to decide who gives a better reason for America’s decline — Neal Gabler or Dan Collins.

The Keiser Report

Max Keiser 2Just Vote No and friends view main stream media’s interpretation of the “news” with a decidedly jaundiced eye. Not only that, the more popular media spews gossip and calls it news.  So, our salvation rests in “alternative” venues, such as Zero Hedge or California Political Review.

A program that has been around since 2009 is The Keiser Report, hosted by Max Keiser and Stacy Herbert, and broadcast mostly out of the RT network. We say “mostly” because what is not acceptable even to RT, is posted in Max Keiser’s YouTube channel. Max is a long-time financial analyst and money manager, as well as a passionate advocate for investment in Bitcoin. Stacy is a television presenter and producer, besides also being a fantastic news analyst.

Here are some highlights from three episodes.

#1136 Artificial Intelligence

Max and Stacy report from the Standing Rock Sioux reservation in North Dakota. At first blush this might seem a strange setting for a discussion on artificial intelligence. It is not. The white man’s devastation of the Native American way of life serves as cautionary tale for the coming annihilation of the average worker’s world by increasingly sophisticated technology.

#1140 Markets & Media Meltdown

Stacy discusses the sorry state of the American media, where a feud between a legislator in a cowboy hat and the President of the nation is reported blow by blow for days. Max challenges his audience to detect a difference between debt monetization, historically the precursor of run-away inflation and financial collapse, and quantitative easing.

#1142 “Help to Buy” – Who did it really help?

Max and Stacy reveal who really profits from the tax-payer financed U.K. program purportedly implemented to help people purchase homes: developers. A universal principle is that prices are raised to the extent taxpayers are willing to finance subsidies. In the case of the Help to Buy program, builders raise house prices by almost exactly the amount made available in the form of subsidies.