Economics


Economics and Government and Social Issues24 Dec 2012 08:15 pm

Most people have heard many times that the Fed has “injected liquidity into the market” and that we frequently make efforts to increase the “velocity” of money. We also have been barraged by a number of “bubbles” including the housing bubble and the tech bubble to mention but two of the more popular bubbles. So, one of the better images which captures “liquidity”, “velocity” and “bubbles” would be a bubble bath. Let’s take these elements of a bubble bath as a means of understanding our modern economy.

Okay, imagine, if you will, a large tub being filled with water and interacting with bath suds which we will call “stimulus” and “financial instruments” designed to produce increased wealth and financial activity. The water rushing from the faucet is the liquidity being added to the economy. The more we turn the knob up the more intense the velocity of the money being entered into the tub/economy.

Taking this image a step further we can say that interaction of “policies” and financial instruments as well as practices such as “flipping” in the housing industries cause the water to foam and form bubbles. Probably the largest producers of foam is the practice of derivatives and fractional banking.

So, the one ingredient missing in our analogy is debt. Debt is like the plug being removed from the bottom of the tub so that while “liquidity” is being entered into the bath the actual water level is not rising. So, the more debt the quicker the tub drains and the more liquidity with great velocity is needed to keep the tub from completely draining.

Therefore, the real economy of the people, represented by three inches of water in the tub has changed little over the last decade, and if anything, has actually shrunk a little towards the two inch mark. Yet, the foam caused by the interaction of derivatives and financial instruments with all the liquidity being injected (poured) into the market at amazing velocity and volume continues to rise and rise.

While the foam get frothier and frothier the underlying water level does not keep up with the debt draining the water out of the tub. When money borrowed, loaned or printed actually stimulates the economy and generates growth the level of the water rises and not just the foam.

In a healthy economy someone creates a $1.50 of growth in GDP for every dollar borrowed. This would be similar to our economy in the 1950’s. In the 80’s we began to fall behind where it took 5 or 6 dollars of borrowed money to generate one dollar of growth, hence the steady rise in the national debt we incurred during the Reagan years. Well, those day now seem golden in comparison where we probably need to borrow/print somewhere north of $20 to generate a dollar of actual growth.

Derivatives and the QE’s are forms of trying to increase the velocity of money to somehow get past the inertia of the existing mountain of debt. Yet, these “stimulus” packages and endless money printing are only creating more debt (bathtub leaks) and more froth (bubbles) like the bond bubble.

When people look at our current absurd economic situation (and system) they wistfully harken back to a time when money was pegged to a commodity of real value such as the gold standard. Yet, while having a gold standard is a tad more rational, it still ignores the fact that any form of money is arbitrary and a fiction. There is no inherent and stable value to anything, even gold. So, the title of this post is a little deceiving since money can never be or become real. Yet, we surely could make it much more tangible and practical.

The viewpoint that gold has tremendous intrinsic value is quite popular. Also I’ve heard it said many times that gold is a very vital, important and practical substance, and not just alluring and mystical. Yet, if gold were truly valuable and functionally important than how could we afford to house the majority of gold in vaults and buildings? If it were a vital and inherently valuable substance than you think its isolation and removal from functioning society would prove difficult or harmful.

Yet, at the moment I would like to talk about some of the trends regarding luxurious foam production and its ramifications of the average american and the shrinking american middle class. In reality there is a national bathtub, and then each individual and corporation has their own private bathtub.

The money being printed and the great velocity of water of printed money is finding its way into a very small number of bathtubs. These corporations and individuals bath tubs are being inundated with luxurious mountains of foam, and while the foam is frothy, it still can be popped down to quite a considerable amount of water.

The banks, corporations and financial elite not only get all of this water poured into their tubs, but they get low interest rates which have the water drain out of their tubs at a much slower pace. If this wasn’t bad enough for the rest of us, they have the Fed buy and transfer much of their debt into public debt causing the national bathtub to drain all the more quickly while it doesn’t receive the same pouring of water into its tub. The Fed and the government expect the recipients of this free water to create jobs and in this way disperse the water to our individual tubs.

So, while the personal tubs of the fraction of one percent get water and a better plug, the national tub gets almost no water and the leaks and drains become enlarged. The low interest rates make it easy for the wealthy to pay back their loans, and the little guys either can’t get a loan, or get them at much higher interest rates.

The transfer of bad debt from banks, corporations and wealthy individuals to the public makes the national bathtub drain all the more quicker while it isn’t receiving more water from neither the Federal Reserve nor the government. In fact, the government is now saying that we no longer have any rights to the money they took out of our paychecks for programs such as social security, and will gradually turn off that faucet.

Our individual bath tubs are no better than the national bathtub as personal debt rises while wages do not keep up with inflation. Not only are the corporations and wealthy not sharing their windfalls and bailouts through job creation or positive economic activity but are hoarding the money and taking jobs abroad.

In my next post I’ll discuss the ways in which the losing of jobs to China and the third world is a false flag regarding the cause of our economic and employment woes.

Jim Guido

Economics and Government and Politics and Social Issues06 Nov 2012 10:15 am

As our election process degrades further and further into voting for the lesser of two evils, I urge all to vote Bubonic Plague. Since this year’s opponent (Small Pox) has a far superior kill rate to the plague and those who survived small pox were usually grossly disfigured or handicapped, I see little choice but to vote Bubonic Plague. So, while I’m no big fan of the plague I decided not to “waste my vote” for some vaguely healthy third party which has no chance of winning and instead cast my vote for the plague. My vote is more accurately a vote against small pox, and I join the huge chorus of people who chant “anything but small pox” as their campaign slogan.

The US presidential elections have become a total farce in which neither candidate’s policies reflect the will of the people, but rather the uber-wealthy. It is absurd that in a representative democracy we are not offered a candidate whose central policies are aligned with the wishes of the vast majority of its citizens. In poll after poll it is common that over 60 to 70 % of democrats and republicans preferences are in direct opposition to the policies of the candidates regarding the economy, education, bail outs, military involvement, the budget, privacy, civil liberties, government and corporate transparency and public health. The differences between the candidates are dwarfed by their similarities.  While both of their positions on key issues clearly on the opposite side of the public will.

Let me try one more image in an attempt to capture the utter absurdity of this presidential election.  Politicians are defined as and referred to as public servants. Let’s imagine that our nation is one huge restaurant and we are hiring (electing) a cook. In this analogy the pubic opinion polls act as a menu of entrees, appetizers, etc. which we want the restaurant to serve.  We, the people, have requested an extensive menu with a point of emphasis of cutting down on fat and offering healthy eating options.

Yet, now the final two cooks vying for the position are offering us menus with not a single item on them which we had suggested or requested. Add to this fact that the menus are doninated by fatty red meats, rich sauces, and generally cholesterol laden foods. First of all, one has to question the interview process of how out of all the cooks available these became the finalists. Then, we need to question the sanity of the restaurant owners (voters) to actually hire one of these  arrogant clowns who refuse to cook what we ask and to respect our health requirements.

Hell these are not servants but executioners. I know that the words executive and executioner have the same etymological roots, but who would think that the “executive branch” and “the highest executive officer” (president) would become our executioner. The president of the US is the only public servant hired (elected) by the entire populace. How can we accept that this servant is ignoring and in so many ways opposing our will, requirements and wishes?

Our elected leaders are becoming our executioners in the indirect fashion in that they are ignoring our healthy policy menu and cooking up their own dishes (policies) that endanger and kill us. Yet, their role as potential executioners has become more literal and direct than the public servant cook image suggests.

With president Obama’s demonstrating total disregard for the constitution by signing into law the ability for the president of the US to imprison american citizens indefintely without trial, and execute anyone (even citizens) due to his personal assessment that they are a danger to the state, we now live in a country that has legalized tyranny. The president now has as much legal power as any ruthless king or tyrant has ever had.

While this may not be a new thing for most nations, who have had kings and tyrants imprison and execute perceived threats to the state, it is new for the US. Most nations have outgrown such savagery and realized that this power is inevitably abused with utlimately many people being killed due to only their words, principles, or a resistance to implement and support power gone awry.

This is not to say that the US’s history in regard to the abuse of power is free from blemish. We’ve had our witch hunts literally and figuratively in which people have been imprisoned and executed unjustly. Yet, in almost every case there still was due process such as a trial even if the trial were a farce.

In our country’s recent history with the Red Scare of the 50’s, the maltreatment of the Japanese/American citizens during wartime, and some of our anti-Muslim actions of today we do demonstate our baser natures. Yet, in these examples, for the most part, people were imprisoned or their careers ruined through the legal process or a form of mob rule.

What is important to realize is that this is the first time in history in which we have bestowed upon an individual the power to violate the constitution, due process, and the rights of the individual which are the very basis of the republic. I can only think of one other example in our nation’s history in which one individual was given by the community the right to execute citizens without a trial or official charges due to that person being perceived as a dangerous threat.

The executioner I’m thinking of is The Grand Wizard of the KKK. Maybe, I’m wrong, but this is the only example I can think of where someone is sanctioned by the community to make a unilateral decision to execute an individual without a need for trial or formal charges being addressed. The Grand Wizard was able to make the determination that a person (usually black) was a danger or threat to our way of life and therefore worthy of being executed.

I am not equating our president’s new powers with the value system of a KKK Grand Wizard, I am only stating that this is the closest form of total power functioning outside the law that even a portion of us have sanctioned or allowed to exist. What would have happened if this power of the president were available during the Red Scare, the 60’s demonstrations, civil and womens rights, women’s suffrage, many workers rights movements, and any number of other social movements which were deemed as a threat to our nation and our way of life by some of our leaders. We know that many of our presidents have had public enemy lists which have included outspoken celebrities, artists, writers, political activists, or ordinary citizens who supported ideas that the president found offensive or dangerous. Individuals such as John Lennon, Marin Luther King, Mohammad Ali, Charlie Chaplin, Gore Vidal, Noam Chomsky and Jane Addams would have made many presidents lists of people who were public enemies, threats to the state, or terrorists.

The list of dangerous people to the state has always included a number of people on the forefront of social change and/or who are questioning power and the status quo. Some of the darkest moments of the history of many nations involved royalty and leaders who have imprisoned and executed people based on such a list.

There are many reports out that Obama is adding to his “kill list” on an almost daily basis. The very thought of any president being able to act on this list without any accountability or checks and balances is frightening indeed.

Neither candidate is opposed to this new law of imperial power, so no matter who you vote for today you will be electing a man of unilateral power who can execute or imprison anyone that they find distasteful. We aren’t so much electing a president of a representative democracy as a grand wizard of a hate and fear dominated community.

Jim Guido

Economics and Government and Politics and Social Issues01 Oct 2012 04:28 pm

My last post regarding the uber-wealthy and Obama was a tad long and probably a little confusing. Shortly after posting it I found a few articles of people smarter and more articulate than myself discussing similar themes and making similar points. I thought it would be nice to post some of their ideas and add a few of my thoughts to them.

The first article I read in either Counterpunch or Zerohedge, but I’m sorry to say I have no record of the author. If you know who wrote this let me know so that I can cite the article and author.

…….The picture presented by the report as of the end of last year, more than three years since the Wall Street crash and three full years after the coming to power of the Obama administration, was one of increasing social distress for the masses of people and expanding wealth for those at the very top. Nevertheless, the Obama administration seized on the fact that the poverty rate remained unchanged from 2010 to hail the report as a vindication of its policies.

Aside from the callous indifference to the plight of the working class reflected in such statements, they do contain an element of truth. The social disaster reflected in the findings of the Census report is not simply the result of impersonal economic forces, but very much the outcome of the policies of the Obama administration, whose entire focus from day one has been to protect and increase the wealth of the US corporate elite at the expense of the majority of the population.

Even as he expanded the bailout of Wall Street begun under Bush, Obama rejected out of hand any government programs to create jobs—such as public works projects—or any serious measures to provide relief to the unemployed, those facing foreclosure or the shutoff of utilities, or the growing ranks of the poor and malnourished.

On the contrary, he oversaw the destruction of nearly 700,000 government jobs and brutal cuts in social services.

I like the above article for its pointing out factually how Obama has not only neglected but worked against the middle class and unemployed, while serving the interests of the wealthiest of Americans.

The following is from an article by ROBERT HUNZIKER entitled Tax Free Capitalism

According to a recent extensive study (July 2012) conducted by James Henry, former chief economist of McKinsey & Company, the wealthy elite have up to $32 Trillion stashed away in offshore tax havens. This is twice the size of the U.S. economy, and remarkably, the James Henry Analysis excluded ownership of tangibles like RE, yachts, fancy cars, and entire islands (metaphorically speaking, those hidden assets comprise the largest economy in the world… a tax-free economy… a pure libertarian nation-state.)

Wow, talk about your free lunch, not to mention breakfast, dinner and every meal for your family for generations to come. Does anyone really believe that in the age of homeland security and total surveillance that our government is totally unaware of where exactly the majority of that money is? This is indicative of more that the government turning a blind eye, this must be done with the blessings of the IRS and the highest levels of our government and economic oversight.

 

When it comes to pointing out Corporate malfeasance and corporate abuse of the tax payer there is no better voice than Ralph Nader who recently wrote:

The Full Romney

by RALPH NADER

There was something missing from the release of a tape showing Mitt Romney pandering to fat cats in Boca Raton, Florida with these very inflammatory words: “There are 47 percent who are with him, (Obama) who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. These are people who pay no income tax.” Romney said his job “is not to worry about those people.”

Hey, Mitt, why start with the 47 percent? Fully 100 percent of the nation’s 500 biggest corporations are dependent on various kinds of corporate welfare – subsidies, giveaways, bailouts, waivers, and other dazzling preferences – while many pay no tax at all on very substantial profits (see their familiar names – General Electric, Pepco, Verizon etc. – at http://www.ctj.org/pdf/notax2012.pdf).

In lock step with my observation that Obama best serves the interests of the uber-wealthy and the imperialistic globalists there is the following:

Crown Obama: It’s Over

by BEN SCHREINER

It ought, though, to be no surprise to see the elite come back home to Obama.  As Glen Ford has rightly argued, Obama is not so much the lesser evil, but the “more effective evil.”  That is, Obama has proven to be the best face for American capitalism—the most reliable curator for the interests of American capital.  The articulate, black, charming, and ostensibly liberal Obama has demonstrated in four years to be the best man to lead the coming frontal assault on Social Security, Medicare, and public education.  Just as Obama has proven over four years of indefinite detention and expanded drone warfare to be a most adept administrator of U.S. imperialism. 

The above article articulates well how Obama is the man who has put a smily face on Big Brother. The following article notes how incredibly misrepresented is our military’s success regarding the drone program which Obama both touts and expanded.

Heading for a Hollow Victory

by DEEPAK TRIPATHI

Another investigation, this time by academics of Stanford and New York universities, puts the blame on President Obama for the the escalation of CIA drone attacks in which groups are selected by remote analysis of “pattern of life.” The “dominant narrative about the use of drones in Pakistan is of a surgically precise and effective tool that makes the US safer by enabling ‘targeted killings’ of terrorists.” But the report concludes that “this narrative is false.” The number of ‘high-level’ militants as a percentage of total casualties is only about 2% of [deaths]. “The US practice of striking one area multiple times, and evidence that it has killed rescuers, makes both community members and humanitarian workers afraid or unwilling to assist injured victims.” Residents in remote tribal areas across the Pakistan-Afghanistan frontier are “afraid to attend weddings and funerals.”

Imagine living in a country where drone attacks are so frequent that you are afraid of attending public functions out of fear of being attacked or killed by unmanned machines.

One of the points I was trying to make in my last post is how easy it is for Obama to play off of his false image and take us down the road of total wealth and power for the economic elite and poverty and serfdom for the rest of us. The following succinct observation by Paul Craig Roberts says it so well.

Apparently, Americans are the first people in history who are so idealistic, or so thoroughly brainwashed, that they prefer to pay for wars and bail out banks than to make their mortgage payments and help their children with student loan debt.  Paul Craig Roberts

Zero Hedge is a site full of important statistics and economic commentary. The following article cited a article which clearly explains how the Federal Reserve’s efforts to keep interest rates at historic lows for the foreseeable future is having a devastating effect on not only retirees but anyone hoping to save a little money. in particular this article shows how these policies are bringing on the demise of social security and forcing it to either be privatized or forced into bankrupcy.

 

By law, all money deposited in the Social Security trust fund must be invested in U.S. government securities.

The average rate of interest earned by the Social Security trust fund has declined from 6.1 percent in January 2003 to 3.9 percent today, and it is going to continue to go even lower as long as the Fed continues to keep interest rates super low.

The following is one example of how the low interest rate policies of the Fed have completely devastated the retirement plans of many elderly Americans….

You can understand the impact of the invisible tax on the elderly by watching the decline of interest income from $50,000 invested in a five-year Treasury obligation. As recently as 2000, this would have yielded about 6.15 percent and an interest income of $3,075 a year. Now the same obligation is yielding 0.7 percent and an interest income of $350 a year. This is the lowest yield on this maturity of Treasury debt since the Federal Reserve started keeping an index of the yields in 1953.

But it’s more than a low interest rate. It’s an income decline of nearly 89 percent in just 12 years.

And after you account for inflation, those that put money into savings accounts today are actually losing money.

Sadly, the truth is that the Social Security trust fund might not even make it into the next decade.  Most Social Security trust fund projections assume that there will be no recessions and that there will be a very healthy rate of growth for the U.S. economy over the next decade.

So what happens if we have another major recession or worse?

Courtesy of Michael Snyder of Economic Collapse

Returning to the theme of how Obama may be just another Bush or Romney in hip or populist clothing we have :

Mitt’s Bad Week

by ROB URIE

It was Spring of 2010, less than a year after the official end of the last recession but still deep in the throes of the Great Recession, that Barack Obama’s ‘deficit commission’ met for the first time. With close to twenty-five million people unemployed or underemployed and the number living in extreme poverty rising quickly, Mr. Obama’s central economic concern was cutting government spending. ‘Entitlements,’ rather than bankers, militarists and tax cheats, were bankrupting the country. And the co-Chairs of the commission he appointed had the solution: cut Social Security, Medicare, Medicaid and corporate taxes and reduce government regulation of business.

With the faux surprise and opportunistic rants that met Mitt Romney’s 47% ‘dependent / victims’ comments, who noticed that none in his audience challenged them? And who among those who have read similar statements (link) from Barack Obama’s ‘deficit’ commission believes that Mr. Obama’s big-money supporters are of different mindsets than Mr. Romney’s? It was these very same people in Mr. Romney’s audience who Barack Obama had dedicated his first term in office to serving. And in fact, Mr. Romney’s comments were only the proverbial tip of the iceberg when it comes to the divergent descriptions of reality that the ruling class adheres to……

The self-satisfied declamations against Mr. Romney’s comments by Democrats and their supporters depend on near complete ignorance of Mr. Obama’s actual policies while in office. Who in Mr. Romney’s audience, including Mr. Romney, benefited from the unconditional bank bailouts that Obama Generals Geithner, Summers and Bernanke orchestrated? Who among them stand to benefit from Mr. Obama’s top-secret Trans-Pacific Partnership free-trade agreement that seals the power of international capital over labor and environmental regulations? And who among them stand to benefit from Mr. Obama’s build-out of the domestic infrastructure of surveillance, policing and the legal framework needed to crush rebellion? As Mitt Romney is in the process of demonstrating, it is clearly Barack Obama who is the more effective tool for promoting ruling class interests.

In previous posts I’ve noted how I’ve been a voter in search of candidate for a few decades now. On many occasions I’ve rued the fact that neither party even comes close to espousing a single policy that harmonizes with my core values and humanitarian ethics. The following article says it all so well.

Neither Candidate

by BILL QUIGLEY

Neither candidate is interested in stopping the use of the death penalty for federal or state crimes.

Neither candidate is interested in eliminating or reducing the 5,113 US nuclear warheads.

Neither candidate is campaigning to close Guantanamo prison.

Neither candidate has called for arresting and prosecuting high ranking people on Wall Street for the subprime mortgage catastrophe.

Neither candidate is interested in holding anyone in the Bush administration accountable for the torture committed by US personnel against prisoners in Guantanamo or in Iraq or Afghanistan.

Neither candidate is interested in stopping the use of drones to assassinate people in Afghanistan, Pakistan, Yemen or Somalia.

Neither candidate is against warrantless surveillance, indefinite detention, or racial profiling in fighting “terrorism.”

Neither candidate is interested in fighting for a living wage.  In fact neither are really committed beyond lip service to raising the minimum wage of $7.25 an hour  – which, if it kept pace with inflation since the 1960s should be about $10 an hour.

Neither candidate was interested in arresting Osama bin Laden and having him tried in court.

Neither candidate will declare they refuse to bomb Iran.

Neither candidate is refusing to take huge campaign contributions from people and organizations.

Neither candidate proposes any significant specific steps to reverse global warming.

Neither candidate is talking about the over 2 million people in jails and prisons in the US.

Neither candidate proposes to create public jobs so everyone who wants to work can.

Neither candidate opposes the nuclear power industry.  In fact both support expansion.

Bill Quigley

 

When living in a nation in which its president can decide unilaterally to have someone imprisoned indefinitely without ever having to announce formal charges or provide evidence of unlawful behavior one is always vulnerable. Thanks to Obama we now live in such a country. In fact he can even have citizens killed without having to officially divulge the specific threats the person posed. If this is not scary or antithetical to the very concepts that our country was founded on, than I don’t know what is.

The following article points out how easy it would be for a caring, peaceful and thoughtful citizen such as myself to become labeled as a terrorist or a threat to our nation. It appears being a suspected terrorist is far easier than being labeled a communist in the 50’s or being labeled a public enemy like John Lennon was for espousing peace and love. In today’s america you don’t have to demonstrate, or even challenge, all you have to do is ask questions and you too can be red flagged as a terrorist.

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

  • You are capable of critical thinking.
  • You distrust mainstream media.
  • You like nature.
  • You think it’s a good idea to spend the Friday after Thanksgiving with your family rather than camping outside Best Buy to get a cheap plasma television made in China.
  • You think it’s a little strange that WTC building 7 came down at free fall speed on 9/11 yet it was never hit by a plane.
  • You think that drones in America might not be for Al Qaeda.
  • You would like to be able to get on a plane without having to engage in a mandatory radiation bath and digital strip search.
  • You have read a book in the past year.
  • You think you have the right to protest.
  • You think the War on Terror is a scam.
  • You think the War on Drugs is a scam.
  • You think the anger directed at America from the Middle East could possibly be related to our foreign policy rather than hating how amazingly free we are.
  • You think the Republicans and Democrats are exactly the same on the important issues affecting our country.
  • You think believing in The Constitution does not constitute a terrorist act.
  • You have heard of the Bill of Rights and can even name what some of them are.
  • You question whether the government loves you.
  • You think the right to bear arms is not for hunting, rather so citizens can fight back should the government become a bunch of tyrannical thugs.
  • You don’t own a television, and if you do, all you watch is RT, especially the Keiser Report and Capital Account.
  • You don’t think the NDAA is the name of Kesha’s latest single.
  • You think rich, powerful and connected people should be subject to the rule of law and go to jail if they commit crimes. Even if they are bankers and work at JP Morgan or Goldman Sachs.
  • You think corporations aren’t people.
  • You think Warren Buffet is a phony and a crony capitalist.
  • You don’t care that Warren Buffet likes cherry coke, hamburgers and ice cream.  He’s still a bad guy.
  • You know that gold was made illegal by FDR in 1933 and confiscated from the American people.  You know that gold bullion remained illegal for Americans to own until 1975.
  • You think politicians that push for war should be sent to fight on the front lines.  If they are unable, their children should go.
  • You want your food to be labeled GMO so that you can make your own decisions on what you are consuming.
  • You grow your own food.
  • You buy raw milk.
  • You think food and energy should be included in inflation calculations.
  • You are aware that the Department of Homeland Security has purchased 1.2 billion rounds of ammo in the past year.
  • You question whether said ammo purchases are in anticipation of a Normandy beach style landing by Al Qaeda.
  • You think allowing a small group of unelected people (The Federal Reserve) to print unlimited amounts of money and distribute it as they please might not be a good idea.

If you answered yes to more than five of the 32 questions above, you might be a conspiracy theorist.

You also may be on the government’s terror watch list.


I pointed out recently how impossible it has become to talk about social issues without people making it about political ideology.
When did trying to do the right thing and being a kind and caring person become an extreme political stance?
Jim Guido

 

 

 

 

 

 

Economics and Government and Social Issues18 Sep 2012 07:13 pm

 

The goal of the uber-wealthy simply put is to own the greatest percentage of wealth possible.

The dollar amount isn’t as important as the percentage of wealth (relative wealth). Your relative wealth is greater if you own 999,999 of 1,000,000 as opposed to 2,000,000 of 2,000,000,000.

Probably the most important economic mechanism for the uber-wealthy is for the poor to become poorer as they become wealthier. If that’s your goal than Obama is your man.

Here are some of the reasons the uber-wealthy should be for Obama.

  1. Government (taxpayer) money has gone to near zero percent loans and bailouts to the wealthiest people while loans to the rest of us have almost vanished and our interest rates for loans are much higher
  2. The unlimited printing of money has gone directly to the economic elite or indirectly as liquidity put into the stock and bond markets
  3. Trickle down economics has reached a new level of futility
  4. Obama has rejected any federal jobs program introduced, and in fact government jobs have decreased during Obama’s tenure

One must remember that Obama’s presidential campaign got a big lift from the financial crisis and great recession peaking in late summer of 2008. Dire economic headlines dominated the news and helped many Americans decide that a change of parties was needed. Obama’s  response to this “public mandate” was to hire cabinet members, advisors and basically surround himself with the very financial elite which were seen as the cause of the crisis and recession. Any Republican taking the same action would have caused social furor. Therefore, Obama not only kept them employed, with golden parachutes, and safe from prosecution, but he quickly put many of their dream policies into action.

The uber-wealthy benefit greatly from a powerful executive branch which protects, promotes and serves their interests while obstructing, ignoring or abandoning the interests of the masses. Obama’s resume includes the following.

  1. Expanded our military presence abroad
  2. Use of banned war substances such as white phosphorous
  3. Entered and remained in wars that were never approved by congress
  4. Initiated a presidential hit list for people domestic and abroad, with no need for charges let alone a trial to ascertain guilt or worthiness of harm
  5. Continued and expanded our illegal use of torture
  6. Enacted economic sanctions which do little more than starve and kill children and the poor
  7. Used the war on terrorism as a way to protect and fund greedy corporations and arms vendors
  8. Expanded, champions and praises the use of drones which kill innocents as well as people not necessarily proven to be a true threat.
  9. Resisted and helped squash any Wall Street reform or prosecution of financial fraud
  10. Surrounded himself with financiers that were decision makers during the financial bubble and resulting financial crisis and great recession
  11. Continues to enact and support policies that led to record profits for corporations and incredible gains on Wall Street while lowering the wages and standard of living for most Americans
  12. Tolerated illegal actions leading up to and during the Gulf Oil Spill than resisting legal measures taken  and supporting misleading information regarding long term damage to region
  13. Gave no support or aid to workers unions or those with foreclosed homes, and has accepted the policies of corporations who demand severe cuts in pay and benefits as terms of continued employment or being rehired after being let go
  14. Curtailed and now plans to end unemployment benefits for over millions of americans
  15. Planned cuts and reform for Social Security and medicaid are “on the table”
  16. Showed no leadership in addressing laws which cause a disproportionate number of minorities to be imprisoned
  17. Tolerating suppression of free speech (demonstrations) and the use of violence to intimidate those who continue in their efforts to speak and inform

Many democrats and liberals will look at the above list and claim that it would be a lot worse if Obama weren’t president. This typical response by democrats and liberals is the very reason that the uber-wealthy should want Obama to win a second term. These same actions, policies and priorities would be fought tooth and nail if they were being sanctioned and championed by a conservative republican. Yet, since Obama is a populist figure who conservatives often blindly refer to as a socialist, then no one is seeing the destruction of his ways. While the standard of living of most Americans has declined significantly since the recession and during the so called economic recovery, the cries of liberals and democrats are no where to be heard.

Liberals and democrats are too busy defending their president to sound the alarm. The watch dogs are asleep and there is not a hint of them picking up the scent. Obama is doing all the heavy lifting for the uber-wealthy without a single strain showing on his face.

Obama should be the uber-wealthy’s man, for he is accomplishing their goals with the tacit approval of those who are falling into poverty or at least becoming a shadow of their former middle class selves. Obama is robbing and pillaging the 99% and making the uber-wealthy even more wealthy with hardly a word of protest.

 

I would like to finish up this post with an expansion of a few ideas outlined above. The expansion of executive powers is not very scary, but in complete violation of the systems of checks and balances built into the constitution.

Giving the president the right to decide who lives and dies, and who is imprisoned or set free without any checks or balances, puts the president on par with early royalty if not divinity.

I want to try once again to explain the current means and methodology of how our government seems to be purposely handing over almost all wealth to a handful of uber-rich.

Let’s take a moment to review the benefits to the wealthy and the harm to the rest of the populace that takes place during a time of forced low interest rates and unlimited money printing.

 

Money printed and loaned or used as a bailout.

 

First, only the uber-wealthy get or are available to get the new money. The historic low almost free interest rates remove almost all risk, and just add to the wealth of the recipient. They can claim this gift money as profit and use this to stimulate interest in their company’s stock which, of course, just adds to their wealth. They can take millions of dollars in loans and use the money to purchase other relatively safe financial instruments which offer higher interest rates and use a small percentage of their profits to pay back the loan.

In this manner of making money off of low interest rate loans they can increase their wealth with no overhead. They can increase their profit margins without a need to expand their business by building new plants (overhead), or even hire new workers (overhead), but most likely lay workers off (cut expenses, overhead).

The very printing of money makes all those (the masses) poorer in a few ways. With the general pool of money expanding through trillions of dollars being printed (or electronically entered into the financial system) those not receiving money (almost everyone) is becoming relatively poorer.  Second. the money printed just gets added to our national debt, which makes each taxpayer poorer and more in debt without our consent.

In the bizzaro world of money printing and low interest rates the uber-rich do not need us as workers or consumers. They can lay us off an rehire us at 3rd world rates.

Ramifications of Low Interest Rates

 

As stated above the uber-wealthy greatly benefit by low interest rates. They can get huge amounts of play money and invest it however they please, and use the money and the profits it generates to play hard ball with workers and unions drastically reducing wages and benefits.

While the uber-wealthy get richer through low interest rates the rest of us often economically suffer due to low interest rates. Low interest rates hit retirees hard as they can not grow their nest eggs safely and live off the interest as they were instructed to do. Retirees and those heading towards retirement are forced to enter more risky investments such as the stock market in order to have any hope of creating enough money to survive or stop working.

The finance world via the Fed keep interest rates low to “stimulate the economy”. Since the Fed has promised to keep interest rates low for the foreseeable future they also are motivated to keep inflation rates low to moderate. In order to accomplish keeping inflation low they exclude many essential costs such as fuel (energy) and food from their computations.

The understating of inflation hurts most people in two ways. First, the masses are paying more for basics and find it hard to make ends meet. Second a high percentage of businesses base worker pay and raises on the rate of inflation. So, workers receiving a 2% inflation based raise are treading backwards when the true rate of inflation for basic needs is between 6 and 9%.

The mechanisms of low interest rates and money printing is both sinister and devastating to the economic health to 99% of the populace. It is hard to see these economic practices resulting in anything else than the gap between the rich and poor widening at a dizzying pace.

The Fed’s printing frenzy is now being expanded with their recent pledge to purchase billions of dollars worth of mortgage backed securities. There is every reason to believe that a sizable portion of these purchased mortgages will be from the federal programs of Fannie Mae and Freddie Mac.

This means that the Fed will be using tax payer money and debt to purchase very risky and poor quality mortgages. It seems quite logical that these entities will go bankrupt once again and the Fed will have successfully transferred fiscal responsibility from banks and financiers to tax payers, where we will be both liable for the debt (national debt) and for the inevitable bailouts of private and federal agencies.

The Fed continues to print up gift and play money for the wealthiest and most irresponsible people and entities. The Fed takes our (taxpayer) money as escalating debt and distributes it basically risk free to the uber-rich, I say risk free because there is almost no interest rates and if they fail the fed will just take more taxpayer money to bail them out. Each time they print more money and purchase more insolvency they pile onto the taxpayer unfathomable amounts of unserviceable debt, which will just create a society of serfs for generations to come.

We, as taxpayers, front all the money to the uber-wealthy who bear no risk or responsibility. If they use the money successfully they benefit while we become more indebted, and if they fail, well we’ll be called on through the Fed to bail them out once more.

Why would the uber-wealthy want to elect another man? A Romney presidency may awaken the sleeping watch dogs and the alarm for the biggest heist ever to have taken place will be sounded?

 

I can’t imagine anyone doing a better job for the uber-wealthy than Obama, because he’s conducting the great heist in plain sight and with the support and backing of many of the people whose lives his economic policies are devastating.

 

This post alludes to many ideas I’ve detailed in previous posts. Those interested in exploring further the major themes of this article are encouraged to read

The Global High Tech Plantation  6/12/12

Communists, Terrorists, Charity and Compassion  5/6/11

One if by Internet and Two if by TV  4/17/12

 

While I have dozens of articles on this subject matter, the above is a good start.

 

For a more detailed explanation of the mechanics and ramifications of the Federal Reserves purchasing of mortgage back securities please read the following article at counterpoint.com

Why QE3 is Bound to Backfire
by MIKE WHITNEY

 

 

Jim Guido

 

Economics and Government and Politics and Social Issues12 Jun 2012 03:09 pm

This post is a continuation of the ideas expressed in my recent posts False Hopes for a False Society and (Uncle) Sam the Sham and the Pharoahs. Let’s continue to explore the ways in which the wealthy elite are slowly erasing all of the wealth and rights of the 99.9% while maximizing their own wealth and power.

In the previous few posts I’ve been pointing out how the need for human labor is being reduced by the progress being made in technology most notably in the areas of automation, robotics, artificial intelligence, nanotechnology and virtual reality. While the reduction of the need for human labor should be ushering in a time of unprecedented freedom and high standard of living for all of the planets inhabitants it instead is being used to foment the largest gap between the haves and have nots that we have ever witnessed.

All workers including highly skilled and educated professionals are experiencing stagnant or falling wages along with increased hours and work load. Unions and the entire collective bargaining process has been demonized, corrupted and headed for extinction. The right to work has replaced workers rights allowing corporations, agencies, businesses and institutions to remove the power and safety of a united work force.

Unions which have been corrupted by organized crime, special interests groups, mercenaries, corporate moles and power hungry leadership. Unions have been painted by the corporate media as being inherently corrupt and actually a deficit to improving the conditions of workers.

Since unions are deemed unnecessary at best and harmful at worst we are heading towards an economic system whereby workers have no representation or recourse to the power and decisions of ownership. If we take the reasons for the demise of worker representation to be the supposed corruption of all unions based on a few known cases, we are setting a very dangerous precedent.

If worker representation is removed due to corruption of those elected to represent them, then the same could be done with all political representation since corruption amongst politicians (public servants) is even more prevalent than corruption amongst union leaders. Since corrupt union leaders led to the demise of unions and collective bargaining then why shouldn’t corrupt politicians lead to the demise of citizen representations through the election of members to the Senate, House of Representatives and state Governors.

The sentiment to just throw the bums out in every successive election appears to be growing. More and more voters are concluding that all politicians become corrupt, or powerless to pass laws which actually improve their lives or improve the status of the nation. If this be the case, than why bother having elections in the first place.

The president is becoming more and more powerful each and every day. His powers and autonomy are increasing with less and less emphasis on checks and balances. Presidents have been using the increasing speed of world events as an excuse to make military decisions without congressional approval for decades. Yet, Obama is the first president to stay in a war without ever getting Congressional approval, and one would be hard pressed to come up with a plausible argument that the US was in immanent danger in the first place.

Our presidents now have the power to have individuals jailed indefinitely without a trial or the right to an eventual trial. Our president can now have individuals killed under suspicion deemed sufficient by the president.

When it comes to our livelihood and career we now are being told that our interests are best served by corporate capitalism. That despite its flaws trickle down economics is our best option, and that workers rights and representation are inefficient and detrimental to our ultimate success in a global economy. Likewise, our democratic system of electing representatives has become a popularity contest rife with corruption and inefficiency. Yet, by expanding the powers and autonomy of our commander in chief we are being led to believe this direction is the best chance we have of successfully policing the globe, protecting our way of life, and defeating all our enemies.

Yet, the reality of the situation is that with out representation in the workplace we are little more than slaves dependent on the benevolence of corporate management which by law has to place maximizing profit over all other considerations such as worker standard of living or quality of life. Even if we are not in danger of losing our right to vote or our representative democracy the passing of recent laws have taken away some of the basic rights contained in the Bill of Rights. The very inalienable rights which were designed by our government to prevent our government from abusing its powers.

With each passing day of this new age of endless printing of money and corporate loans the average taxpayer is becoming legally liable and responsible for a larger and larger portion of debt. A debt which when called upon to pay will bankrupt almost every average citizen. The only survivors in this game of economic Russian roulette will be the very entities that received the bulk of the bail out and loan money which created a great majority of the debt in the first place. 


The age of consumerism looks to have been replaced by the age of taxpayer bailouts where our sole remaining role is to return all our earnings and savings back to the corporate elite through national debt and bailouts. In all likelihood there is no exit plan or a plan for a return to solvency, only the final demise of the middle class through a final transfer/extraction of all wealth through public debt retrieval.

This is not a theory, the process is already in motion. The only theory is in stating the logical conclusion of the process. The extinction of collective bargaining, the gutting and eventual termination of social security, and the endless printing of money for the elite, are just mediums by which the middle classes role in the distribution of wealth is being made completely unnecessary.

Jim Guido

Economics and Government and Politics and Social Issues13 May 2012 08:21 pm

While it is true that jobs are created through technological advancement it is also true that the need for many jobs is eliminated by technological advancement. A hallmark of the age of the machine and mass production is in the reduction of the need for human labor. Even early on in the industrial revolution one machine could do the work of hundreds of men.

This, of course, was great news for the capitalist who wanted to maximize profits by reducing overhead. Every advance in technology resulted in increased productivity and efficiency allowing robust profit margins and almost unlimited business expansion.

Advances in computer speed and mass communications only quickened the acceleration of the technological age, and with it more and more work is able to be accomplished with less and less people. For every job created through technological advancement hundreds, thousands and perhaps millions of jobs were made unnecessary.

As mass production morphs into automation and robotics the number of jobs needed or even non-injurious to profit margins becomes smaller and smaller. The jobs being replaced are no longer necessarily labor intensive or relatively unskilled. In a few years there will be few tasks that can be executed by humans as quickly or as masterfully as machines, computers, robots and the like. Our most talented, intelligent, educated and skilled professionals will be inferior to the machines they currently program or operate.

We are already familiar with the fact that most daily transactions such as stock market trading, accounting, business inventory, production schedules, or any other large volume operation is best executed and monitored by computers and machines. Each day the number of surgeries better performed by humans is decreasing with almost everyone recognizing that almost every aspect of commercial and urban existence will function better and more efficiently with human error being removed from the business equation.

It is deceptive if not an all out lie when we are told by politicians and the media that we are losing jobs to the Chinese or cheap foreign labor. It is just as dishonest or delusional to suggest that the future job market will depend on a higher educated work force.

The reality is we never will have enough jobs for the soon to be 8 billion inhabitants of the planet. We don’t even have a need for half that many jobs, and with the continued exponential growth of technology the number of jobs needed will be hastening towards zero much quicker than towards a fraction of 8 billion.

Rather than misleading people into a false hope of an industrial rebirth producing millions of jobs for the unemployed, we should be earnestly trying to design societies to function in the emerging technological age of robotics and artificial intelligence. The coming age could free people of labor while producing a standard of living for all inhabitants which would make even the industrial middle class of the mid-twentieth century look relatively impoverished. Yet, hanging on to the old exploitative model will surely render most jobless, impoverished and with a declining standard of living both in a relative and comparative terms.

The role of technology has always been to reduce man’s labor while improving his standard of living and quality of life. Let’s do our best to restore that role and not let technological advances be used and owned by the wealthy who pervert its goal and instead make it a vehicle for expanding the relative wealth of the monopolistic few.

The next few posts will most likely expand on this theme.

Jim Guido

Economics and Government and Politics and Social Issues13 Mar 2012 04:55 pm

I must admit that I get more than a little anxious when I write posts such as my two most recent Let’s Hope I’m Wrong and Wealth Extraction and Transfer. While I am comfortable with both my intentions and conceptual integrity I am afraid to print my thoughts out of fear of being viewed and treated as a harmful element by our government.

I personally do not feel that I am living in a free society which welcomes open dialogue. One can speak freely only as long as they accept certain premises to be true such as our nation being ideologically superior to others and that we are the champions of truth, freedom and global justice.

Much of the constructive criticism I have of the industrial/military complex composed of both governmental and corporate forces I do not put in print or even utter. There is little I fear more than our government. We lead the world by a large margin in the percentage of the populace that is imprisoned. This makes little sense as our government is fond of praising our society and its citizens as being the most moral and humane on the planet.

Our government monitors and has a military presence in almost every land on the globe. The actions, words and policies of our government are becoming increasingly intolerant of any deviation from their global and domestic agendas. The judgmental noose of intolerance seems to be tightening quickly as even the most basic question falling way short of accusation is being labeled an act of terrorism, or an aid to terrorists.

Despite these concerns and reservations I remain hopeful that we can make structural changes that will usher in a high standard of living for all on the globe. We can choose to restructure the economic social system to not reward the conman, robber baron and outlaw mentality that became the basis of our “free enterprise” system. We can choose to tap into and use the bounty of the planet in a non-exploitative and competitive manner.

It is absurd to believe that we were able to get to the moon with the technology of the 1960s (the absolute beginning of computers, robotics, and the like), and we cannot create vehicles that get substantial gas mileage or use fuels that are non-polluting. Over thirty years ago I drove a car that got over 40 miles a gallon, and despite all the generations of technological progress that have occurred since, that same make of economy car actually gets poorer gas mileage.

Inventors and technological visionaries such as Buckminster Fuller have designed and documented ways in which we could create a sustainable high quality of life for all the inhabitants on the globe, and that the biggest obstacle to our implementing these changes is the “money making” hoarding mentality based on an outdated philosophy of inherent scarcity and the planet having insufficient resources for projected populace. In 1980 Buckminster Fuller noted that the earth receives more energy in a minute that humankind uses in a year. He also discussed how the ways in which the earth is inherently synergetic (energy expansive) and that in 1980 there already existed the means to use much of this energy in a regenerative manner.

Since relatively few people read my posts, I feel that I can remain off the radar of the power hungry and paranoid masters of society. And while I am losing freedoms and my quality of life is deteriorating, I can still appease my sense of ethical obligation and write the occasional post hinting at the sorrow and sense of loss that I sometimes feel.

Days like today I choose to confess my sins of omission by admitting my fears of our government and economic elite. Their security seems to depend on my accepting and indirectly supporting their lies and atrocities. Yet, even if I can’t stop them, at least I can say that I do not support their doing such things in my name and on my behalf.

In Our Name, On Our Behalf

Every day the air is poisoned on our behalf
Each day lands are bombed, and destroyed in our name
Every second water is contaminated on our behalf
Millions are made homeless in our name
Millions of animals are imprisoned and abused on our behalf
Each year cultures are humiliated and desecrated in our name
Thousands are tortured on our behalf

Millions have been starved on our behalf
Each day innocents are murdered in our name
Each day tons of waste are generated on our behalf
Nations riches will be robbed in our name
Millions are enslaved on our behalf
Each day people are raped and religiously persecuted in our name
Each day lethal lies are told on our behalf

Though the above will most likely continue
No longer in my name and not on my behalf
I say this with the little dignity I am afforded
Not in my name and not on my behalf

Please forgive me for staying quiet out of fear.

Jim Guido

Economics and Government and Politics and Social Issues02 Mar 2012 07:08 pm


Early History

While to many it seems as if tax payer bailouts of corporate incompetence and malfeasance is a rather recent phenomena a look at our nations past may prove otherwise. Similarly most would hazard to guess that our current gulf between the rich and poor in the US is also unprecedented. Yet, a brief look at our economic history seems to point to the fact that our current situation not only follows the norm, but seems to be sticking to the general history of the nation.

Before we take a look at the actions of our democratic capitalistic society it might be helpful to explain why the following history is seldom reported or acknowledged. While most presidential hopefuls just tow the party line, it is refreshing and perhaps enlightening to keep the following quote of a current candidate: “Truth is treason in an empire of lies.” – Ron Paul

In colonial times American freedom and political participation was based on land ownership. During the early years of this country only land owners could vote or be considered to be free and entitled to basic human rights and protection of law. The status of citizen being based on land ownership came from our European heritage since the medieval times.

In fact the term “real estate” stems from Spanish and Portuguese roots in which the word “real” means royal. In ancient Europe only lords and kings owned land. Royals awarded land to those who they felt would be of benefit to their safety and power, as soldiers, producers of food, arms, etc.

These underlings were given a title and a position of authority in exchange for their complete loyalty and service. The increasingly pampered life, honor code, and unwavering fidelity to king/lord/master rendered those of station to be of value and service to the king without being a threat to them (due to their pampered incompetence).

While it is true that England did not let the colonies break away without a struggle, it is also true that they were not willing to commit many troops or generals to America when France and Spain and the other ambitious warrior cultures were an immanent threat to their empire. The US won its political independence way before it won its economic independence.

The competition amongst European nations, royal families and even the church were limiting factors in terms of the power and wealth of any individual nation (entity). Though the America’s had indigenous peoples to conquer and defeat, their values were such that they were seldom in competition. Between war, law and disease the indigenous populations were quickly eradicated or, marginalized or contained by the ambitious American’s.

Soon the young American nation began to realize that it had almost unlimited frontiers. The westward expansion of the US took many decades. The land was abundant and diverse and relatively pristine and unused. While European land had been forested, mined and tilled for centuries, the new world had been left almost completely untapped.

While land travel and trade between districts in Europe were laden with tolls and tariffs, the American frontier was open and unrestrained. The competition and conflict between the European royal states took an economic and political toll on each nation, putting them at a huge disadvantage to the bustling United States. Without centuries of infrastructure and wear on the environment the US was able to capitalize and incorporate every new invention and industry with relative ease.

No nation on the planet was anywhere to being close to the US in terms of its ability to benefit from the industrial revolution. Its combination of natural resources such as coal, gold, iron, timber, fresh water, arable land, fish, furry animals, and open farm and cattle land was beyond the imagination of any European. It is hard to overstate the economic, political and resource advantage the US had over every other nation. It’s unique favored position was unparalleled and unprecedented.

While the high seas were about the only place an ambitious European could go to escape the control of the royals, the adventurous American had but a days travel westward to escape the control of the aristocracy. While in Europe the world of lawless cutthroat ambition was mainly on the high seas, in the US land pirates dominated the terrain as outlaws and robber barons.

Adam Smith’s view of free market capitalism with its self-regulating “laws” of supply and demand were highly dependent on the aforementioned honor code of the world of European aristocracy. Anyone who doubts this only need to read Adam Smith’s works to hear his concerns, warnings and requirements to insure that the system of capitalism functions correctly.

The wild west and the world of the robber barons had little use for honor in business and commerce. They were ruthless as the land was vast. The European aristocracy cited the prevalence and success of conmen as just one example of the new worlds lack of cultivation and breeding. As Oscar Wilde put it: America is the only country that went from barbarism to decadence without civilization in between.

A bountiful land during a time period of technological and industrial growth and invention is sure to flourish and the US rise in global wealth and productivity was very impressive. Families made fortunes in a few years which had taken centuries to acquire on “the continent”. The surge in technological growth afforded riches in both agriculture and industry. The Civil War had much to with the battle between the two titans of economic largesse (agriculture and industry).

Yet, despite all its advantages, natural opulence, and resource richness the US had more than its share of economic upheavals. Despite having no real adversaries to waste funds on defense, and a huge unified landmass with relatively no taxation and commercial interference the US had several severe economic recessions and depressions.

During the years leading up to the 20th century and the first decade of the 20th century the US was known as the land where fortunes could be made and lost. Since fortunes were gobbled up by businessmen and businesses the gap between those of wealth and those of poverty was huge. While free market capitalism had a lot to do with risk takers, the ambitious and the determined being able to amass fortunes, it also was a major impediment to that wealth being shared and the vast majority of people being either exploited or enslaved.

Managed Economies

In 1913 two major events occurred which would change the way America’s economy would function. The first was the origination of the federal reserve as the central bank of the US, and the second was the constitutional amendment instituting a national income tax. Neither is logically consistent with a democratic society or with free market capitalism. Since the US’s brand of capitalism was proving to be inconsistent at best and incompetent at worst, the pooling of money from the populace was seen as a way to help manage the economy, with the goal of strengthening and securing both the futures of government and business. The federal reserve in particular was designed by the US’s financial elite to help reduce competition and protect their interests and practices.

Despite the economic security offered by the taxing of the public a major depression arrived in a few years time. Yet, following that came a decade of financial excess where investing and gambling once again became almost synonymous. This was a time when even America’s working class started to dabble in becoming part of the investment class.

While WWI had positive and negative effects on the US economy, it greatly improved our world status as all European nations were weakened by its magnitude. The US became a creditor to Europe, a major arms supplier, and an investor in Central and South America.

The great depression once again showed that despite our resources, technological advancement, geographic safety, and emerging global creditor status our economy was still vulnerable and fragile. Our relatively short seven month involvement in WWI plus the fact that our land was not destroyed by bombs and warfare though giving us a tremendous advantage over our industrialized nations competition still did not prevent our capitalistic system from imploding.

During the depression banks loans all but stopped and jobs disappeared. The void was filled by the US government who put people to work and lent then money. The role and function of government expanded greatly and that of major business receded.

During WWII the US’s role as creditor and arms supplier became more and more pronounced. The manufacturing needs of WWII were unprecedented and the US was the only industrial land free of bombings to have their factories function at top production. Only one bombing occurred of a major US military base and that was Pearl Harbor in Hawaii which most people forget was still almost two decades from becoming a US state.

The US was the only industrial nation to emerge out of WWII stronger and more powerful than when it entered it. The US emerged from WWII as the world leader and almost every nation was either under direct US control or owed the US substantial amounts of money. The US government efforts at emerging out of the great depression were funded by the US taxpayer through income tax, war bonds, and charity. Many of the poorest of this nation gave their time freely out of patriotic pride, and many gave their life to help America become strong and defend freedom.

The Spoils of Empire

Through natural resource wealth, industrial and manufacturing capacity, land development, the spoils of war (repaid money from other nations), and the sponsor of industrial growth across the globe the US became the wealthiest and most powerful nation on the globe. In the 1950’s the standard of living of the American middle class became the envy of the world.

US businesses were quick to take over government factories and operations. The US citizen quickly adapted to its needed expanded role as consumer to support the growth and success of American businesses. Over the next two decades the US government spent a great deal of its energy into developing a military presence around the globe, once again funded through the US taxpayer. The US government also used taxpayer money as “foreign aid” to help other nations industrialize and become customers of US businesses.

Most American’s still view post WWII foreign aid as a humanitarian gesture to help supply the basic needs of our recovering allies and to rebuild destroyed infrastructure. While this was true the bulk of foreign aid was used for other purposes.

During the 50’s and 60’s their were laws which stated “foreign aid” was to be given first to US corporations and business entities doing business in the targeted nation. This meant that that US corporations who had established themselves in a nation receiving foreign aid could expect (be legally entitled) to receive the bulk of the funds available. Fortune 500 companies are not idiots and therefore, by the end of the 70’s nearly all of them had used these taxpayer subsidies to expand their businesses abroad. Obviously, many foreign businesses desiring/needing funds had to either develop a businesses relationship becoming a functional front for US corporations or be completely bought out by US interests.

Yet, the above only outlines the the ways that the US taxpayer was used for the benefit of US corporations. Not only did we fund and subsidize their foreign operations, but US corporations could tap into another substantial tax payer subsidized pool of money awarded for the purpose of covering advertising costs for US corporations abroad. Since these companies had offices and even headquarters abroad they also were able to use their foreign presence to reduce if not completely avoided paying US income tax.

So to summarize US corporations and banks which failed to loan money, provide jobs and assist the struggling US working class during the great depression were able to take over and buy out government interests after WWII. They were then over the next two decades able to have the US taxpayer fund and subsidize the expansion and success of these same corporations through foreign aid and other entitlement programs. Many of these operations could and did in fact either replace US jobs, or cause unfair competition practices for US workers.

Yet, despite these advantages plus all the other advantages of resources, invention, empire, military might, etc. the US still found itself in another financial crisis in the stagflation of the 70’s. When Reagan introduced the wonders of trickle down economics American’s were unaware that they had already been subsidizing the government for four decades and Corporate America for two decades.

More Pie for Me

Due to my desire to keep this post from becoming way too long, I have not gone into depth regarding the role invention has played in padding our economic advantages. No nation was better positioned to benefit from the automobile as the US, yet many books have been written on the commercial and economic boon caused by advances in communication, transportation, energy, agriculture, electronics, health and medicine, materials, automation, and space exploration, just to name a few.

As an interesting story which casts some light on the role of big business and its relations to workers and capitalism. In 1953 Walter Reuther, then president of the United Auto Workers, made a revolutionary discovery regarding the nature of profit in business. Using the new field of computer programmers he discovered that the computers proved that General Motors would stand to make record profits if they granted union demands for unheard of higher pay, plus unprecedented vacation, health, and life time benefits. When GM’s computer programmers verified the information, GM granted the unions requests, which resulted in GM becoming within three years of the new contract the first US corporation to achieve a billion dollar profit (even after taxes) with steady growth occurring for the next 20 years.

Despite the data supporting the benefits of sharing the wealth and more equal distribution, the theory and functioning of capitalism is on maximizing relative wealth through competition and the lowering of overhead. Market capitalism is based on competition not cooperation, and relative wealth (disparity) is the true mark of success and the result of competition. Somewhere along the line GM realized that they could further maximize profits by not honoring the deferred payment aspects of workers contracts by using up and reneging on retirement plans.

Over the last two to three decades, compared with other industrial nations, the standard of living and quality of life of American’s have been declining. In many ways the American standard of living is declining in comparison to its own standard of living prior to the 1980’s. The nations that have surpassed the American’s in standard of living, health, life expectancy, education and other accepted measures of quality of life, have done so through social policies regarded as being in conflict with capitalism and free enterprise. Those “emerging and third world nations” which take our loans and follow our directives are not experiencing the growth of standard of living and quality of life as those who are attempting to remain sovereign nations from a policy standpoint and who are likewise instituting social welfare style programs.

The US corporate community hides behind their myths regarding “globalization” as a smokescreen of their role in the failings of capitalism and the steady decline in the American standard of living and quality of life. The loss of American jobs to cheap labor has been going on for decades ever since the 50’s. It isn’t so much that we are being replaced as workers and consumers by the global community, but more that we are no longer needed as consumers.

The capabilities and extent to which automation is used is grossly understated. The truth of the matter we don’t have anywhere near the need for 6 billion jobs. In fact, we don’t truly have a need for a small fraction of that number, and each and every day advancements in automation, robotics, electronics, and artificial intelligence are making more and more jobs obsolete and an unnecessary business expense.

The so called economic rebound is not due to the exploding middle class in China and India, the bulk of their populaces are still decades away from replacing us as consumers. The rebound in profits is more the reduction of overhead in firing workers, not building new factories, and the liquidation of assets. The real profit is attained by corporation getting either direct bailout money, or loans at unprecedented low interest rates and their using that money in stocks and other financial instruments.

As trillions of dollars are printed and handed to a precious few, the rest of us either economically stagnate or suffer a reduction in pay rate or working hours. With interest rates near zero, it doesn’t really matter how much money you owe. It will only matter when interest rates rise, and the federal reserve has already promised to hold interest rates down until the end of 2013 if not longer.

Just by being tax payers we are falling more into debt with each dollar printed. As the national debt climbs the majority of us will owe more in terms of the national debt than our net worth, regardless of whether we have any personal debt.

The US through the vehicle of modern free market capitalism has squandered its inherent wealth and resources and is busy squandering that of the entire globe. It has exploited and then squandered the potential wealth and human benefits of the greatest advance in human inventiveness and technology ever witnessed. It is engaged in poisoning and destroying the very bounty on which its temporary wealth was predicated on, and due to its outdated economic concepts is prohibiting and ruining the use of all the emerging technology which could create a standard of living dwarfing that of even our wealthiest citizens.

The Myth in Sum

The competitive free market system has not created wealth, but only exploited and used it up. The wealth of our planet was provided by nature but recognized and utilized by man through his creativity, inventiveness and resourcefulness. As has been noted many times necessity is often the mother of invention. Need and problem solving have always spurred on invention and technological advancement not capitalism. Capitalism was the beneficiary and not the cause of the inventions which led to improvements in our quality of life.

Yet, we now have learned that comfort as well as the struggle for survival can foster invention and creativity. Leisure and comfort can often provide the mental space and freedom for people to envision and create the possible, oftentimes yesterday’s dreams become today’s realities. Likewise todays dreams could become tomorrows realities.

Capitalism is neither the cause not the necessary evil partnered with progress and technological advancement. I hope that you can glean from this article that capitalism has been as much as an obstacle as a vehicle for advancements in our standard of living and quality of life.

The greatest myth we have in our society is that government is inherently inefficient and to blame for all the limitations and problems of free market capitalism. A look at economic history shows that capitalism has been quite inefficient and incompetent on its own, and if anything the US government through tax payer and printed funds has been the savior/enabler of a highly dysfunctional economic system. I would also add, that qualities such as being selfish, exploitative, chronically mendacious, sociopathic, and compulsive are markers for success in capitalism, while compassion, fairness and ethics are limiters and detriments to success.

Another significant myth is that we have recently started down the road of bailing out large and incompetent banks and businesses. The truth of the matter is that the American taxpayer has been underwriting, bailing out, and subsidizing business incompetence for over 70 years, with no end in sight.

The Politics of Wealth Extraction and Transfer

The culture of corporate bailouts and the ritualistic extraction and transfer of wealth from the planet and its people into the hands of the few runs deep in our society. Here is a short summary of one of its major blood lines.

The powerful role of lobbyist and special interest groups in American politics in often mentioned, let’s take a look at one of the ways they function. Political campaigns are expensive and politicians believe that there electability often depends on getting more donations than their opponents. The majority of money raised from campaigns comes from large donors and not the average tax payer.

The money donated to a candidate through special interest groups is an investment which is designed to pay dividends in the future. Since most are familiar with the large political donations of Jewish interests supporting the Israeli government we will take such an enterprise as a fictitious example. We could take many others, but this particular relationship is easy for me to hypothesize from.

Let’s say a special interest group for an allied nation such as Israel donates with the expectation or the hope that their financial support will be rewarded in-kind. A politician who feels their current and future electability is dependent on the continued financial and political support of their donor, will most likely try to please their donor and meet their needs and goals.

I chose this scenario because one of the largest and most blatant uses of tax payer money is in defense and military expenses. Along with the intelligence community military expenditures are often the most vague and unregulated due to reasons of “national security”.

One single contract for military hardware such as fighter planes, missiles, ships, or even heavy armaments can run into several billion dollars. As a practical example the cost of the new missile defense system we gave to Israel far outstrips the donations made on Israel’s behalf for many years. Yet, we know the military largesse gained through our business dealings with Israel is astronomical for both Israel and the Pentagon (and the American companies their contract with).

We’ve all heard stories of the unbelievable price tags placed on Pentagon purchases. While many of these are for high tech machines which are hard to place a fair price tag on, we also know that basic supplies such as lights and toilet paper can carry the most outrageous of price tags. The logical reason our Pentagon would be willing to charge and purchase such prices is because it is purchase with tax payer money.

When it comes to military and defense spending the US taxpayer is the kitty, and the government and all the special interest groups are the fiscal beneficiaries. I think it is safe to say that the defense department is the largest and most untouchable vehicle for the extraction and transfer of individual wealth from the citizens (tax base) to the favored corporate and banking elite.

Between the ever escalating national debt which bails out and subsidizes the wealthy corporate financial sector and the defense department whose trillions of dollars goes to “Non Governmental Organizations” (NGO’s) the transfer of wealth is occurring at an astounding rate. Since much of the money siphoned to corporations (NGO’s) and financial entities is printed (created) just for that purpose our relative wealth is being wiped out with our tacit consent. Every dollar printed that goes to the few reduces the relative net-worth of all the other people.

Such stealth ways of extracting and transferring wealth unnecessary and in fact allows many of the largest beneficiaries to whine and belly ache about how much more they are expected to pay in taxes than the average person. It is interesting to note that those who are not only receiving a free lunch, but also breakfast and dinner and a little spending money to boot, are the one’s doing the most complaints about the entitlement programs such as social security which the government extracted from worker’s paychecks and was used to bail out corporate incompetence and malfeasance.

The stock market rally over the last two to three years has been fueled by the trillions of dollars given to save incompetent businesses who were deemed to big to fail, and printed and loaned out at historically low interest rates to the financial elite. While those low interest rates insure that the incompetent businessmen and their corporations enjoy record profits it also prevents retirees and those on a fixed income from being able to live off interest and dividends. This forces millions of Americans out of safe investments and into riskier one’s such as the stock market.

With so many being forced into the stock market as a way to avoid poverty and hopefully have enough money till their death, the most devastating and tragic extraction and transfer of wealth is soon to occur. In the very near future it is very likely that a severe but inevitable stock market decline will wipe out the remaining paltry wealth of millions of Americans. Many of whom have been the most loyal and devoted of citizens espousing the glories of the very capitalism which will leave them bankrupt as well as their children.

What Can Be Done?

In a word: Everything.

The problem is that the medicine we’ve been taking is the very cause of the disease. Our economy is sick because of free market capitalism. The longer we continue to take the poison the longer and harder our recovery. Our rise in the standard of living was due to our natural resources, ingenuity, sweat, advances in medicine and technology and partaking in the spoils of empire. There have been previous empires during times of progress which have improved the standard of living of many of its citizens, and they were not capitalistic societies. And their way of economic and political life seemed wonderful until the fall of the empire.

We could be like every other empire and have our lifestyle decay with its decline, or we could use rather than exploit the still incredible resources which our science has identified. We are just learning of the ways our sun produces and transfers energy to our planet. Our planet turns this sun energy into other forms of energy such as food (foliage, fish and animal life), wind, water power, etc. Years ago we had no knowledge of the incredible amount of energy contained in a single atom.

If we were to stop needing to only use energy which we can make a profit off of, to place a meter on and to limit and distribute it for capitalistic ventures, and instead freely use the energy for one and all, we would quickly be able to produce more than enough energy for our needs. Some of this centuries greatest minds such as Buckminster Fuller have expressed great confidence that the solutions already exist and only have to be implemented. These people state that the energy and food needs of the planet can be met without damage to the environment while making the current standard of living of our current elite look modest in comparison.

This is not a fantasy or a dream. Yet, it also is not a utopia. It is just a step in the right direction just like every other step civilization has taken improving the quality of life for those on the planet. This time though it could be done in such a manner as to respect the integrity of nature rather than harming and exploiting nature.

There is much of our society and history of which we can be proud and have no need to change. We can choose to restructure our economic social system in a way that doesn’t reward the robber baron, conman, and outlaw mentality which became the successful mentality of our “free enterprise” system without becoming fundamentally different people. We can build a successful and plentiful society that is based on our higher ideals of trust, care and community and not one based on fear, hatred and an outdated model of the fight for survival.

One guidepost is for us to make decisions based on what is beneficial rather than what is profitable. Such a subtle shift of emphasis could have immense benefits. Many of our solutions will be accomplished in such a simple way. To paraphrase something I said earlier, today’s visions become tomorrows realities, let’s have a vision worthy of becoming tomorrow’s reality.

Yet, one thing is for certain and that is the process of wealth extraction and transfer is a fact and it is occurring. Our next road, no matter what it is, will be hard to begin until we demand that this current path is ended and not just detoured to once again benefit the few in the name of the many.

Jim Guido

Economics and Stock Market31 Dec 2011 02:35 pm

Everyone Loses: Stock Market 101

Since the 1970’s the percent of people and stock trade activity which is involved in mutual funds and index funds in particular has mushroomed. While the frequent day traders have become more active, the typical non-professional as well as professional trader still engages in the buy and hold strategy advocated by market experts since there has been a stock market.

The goal of this post is to point out that the buying and holding of index funds in particular is seldom a winning proposition and very likely a sure way of slowly losing almost all your assets. Let me use this year as an example. I will attempt to use enough math examples to prove my point without traumatizing or boring those who are math-o-phobic.

Any fund that adjusts itself on a daily basis is almost inevitably going to lose value over time. This is true of all index funds and to my knowledge a great deal of mutual funds that deal with the bundling of several stocks.

Okay this is how it works (or doesn’t work for the investor). For convenience sake I’ll use nice round figures.

Let’s say that I have $100,000 invested long in the Nasdaq 100 (top 100 technology companies). Long means the standard way of trading in which I’m hoping for the market to go up. On my first day the Nasdaq rises from 2000 to 2060 an advance of 3%. To make the numbers big enough to quickly show what happens let’s say that I owned a fund such as RYVYX an ETF which doubles the movement.

So, in effect the market went up 6% and after one day I made a quite impressive $6000. Let’s say the next day the market gave back all it had gained and the Nasdaq returned to 2000. The drop from 2060 to 2000 comes out to a 2.9% drop. So, while yesterdays gain was 3% a drop of only 2.9% gets us back to even. Yet, while this sounds like you actually would have made a little money or stayed the same the actual math will show that you surprisingly lost some money.

Since you started the day at 106,000 you lost 5.8% of 106,000 which you get by multiplying .942 of 106,000 which comes out to 99,852. So during your two day round trip you actually lost $148.

Rather than give you a host of mathematical examples let’s take a look at what happened this year. The Nasdaq 100 began the year at 2218 and ended the year at 2278. This means that the Nasdaq 100 went relatively nowhere this year and if you owned an ETF or mutual fund on this index you would expect a modest gain of 2.7%.

In the example above I used a fund which doubled the movement of the index. Well if you wanted the maximum amount of potential gain you can own funds which triple the move of the index such as TQQQ for the Nasdaq 100. In owning the TQQQ then you would anticipate a gain of near 8.1% for the year (2.7 x 3). Yet, the actual performance of this ETF is quite different.

TQQQ ended last year at $73.94 and closed yesterday at $67.99. Therefore instead of gaining the expected 8.1% the fund logically would produce by its tracking the Nasdaq 100 it actually lost a hair over 8%. This means that due to how the index fund tracks the fund on a daily basis that the markets ups and downs caused the fund to deviate significantly to the downside.

In essence if you started the year with $100,000 you would currently have about $92,000. So while the market went up and you should have gained over 8%, you actually lost $8,000.

Now, as many of you know you can buy index funds which “short” the market. So, instead of you making money when the market goes up, you make money when the market goes down. The ETF SQQQ is the short version of the TQQQ which means that it should do the exact opposite.

If you owned the SQQQ for the entire year you would expect that since the market went down 2.7% that you would have lost 8.1% for the year. So, your $100,000 would be right near $92,000.

Well, let’s look at the actual numbers for SQQQ. The SQQQ ended last year at $31.18 and ended this year at $19.69. Okay, so $19.69 is only 63% of of $31.18. So instead of losing an expected 8% you would have in fact lost 37% of your money. Your $100,000 would have shrunk down to $63,000.

Okay, to review, despite the fact that the market went up a mere 2.7% for the year you would have lost money through the buying and holding of index funds whether you played the market to go up or down. These popular index funds were a lose/lose proposition.

Many studies suggest that over 80% of investors lose money. These studies fly in the face of market “experts” who claim that statistics show that despite setbacks even dramatic ones, that those long term investors who patiently buy and hold will typically find their money double every 8 to 10 years.

As you can see from the above example, which is more common than uncommon, the long term buy and hold approach may not be a wise one for most investors.

There are probably those out there who may object that the above example does not include the “dollar cost averaging” strategy of “experts” who advocate investing money into stocks at set intervals. The logic behind this is that pouring money into stocks when they are cheap (stock market has gone down) will just give you more shares and have your money earn more as the market recovers.

I became suspicious of this tendency for everyone to lose in the long term holding of index funds a few years ago. And over the past year ago I’ve factored in the use of “dollar cost averaging” on a monthly and quarterly basis without seeing any significant benefit to ending or even easing the steady erosion of wealth of index investing.

I’m not saying that successful index investing is impossible. I’m only pointing out that the practical and mathematical reality of this style of investment is rife with obstacles and complications, and that investor caution is more than warranted.

Jim Guido

Economics and Government and Social Issues06 Nov 2011 12:49 pm

As a veteran of so many social movements since the 60’s I view the recent efforts in Arab nations, the US Tea Partyers, and the #OWS (OccupyWall Street) with a mixture of hope and skepticism. My hope is small in comparison to my skepticism because like previous social movements I think they underestimate, what they are up against. Too many people trust in the purity of entities such as alternative and social media.

After personally observing how the student revolutions were infiltrated, corrupted, and finally co-opted by the corporate/military/industrial complex I am aware of how the integrity of a noble cause can be not only destroyed, but end up serving the long term interests of the establishment (the 1% in today’s lingo).

There were many other movements that have and are suffering the same fate as the anti-war student movement of the 60’s. In fact the majority of the others fared much worse than the students movement. A short list would include the civil rights and women’s movements, the ecological movement, and the anti-war movements of both Gulf Wars.

Please read the following quote numerous times. In fact make a copy of it and put it on your fridge, on a home wall hanging, or any place where you will see and review it often.

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this
unseen mechanism of society constitute an invisible government which is
the true ruling power of our country. …We are governed, our minds are
molded, our tastes formed, our ideas suggested, largely by men we have
never heard of. This is a logical result of the way in which our
democratic society is organized. Vast numbers of human beings must
cooperate in this manner if they are to live together as a smoothly
functioning society. In almost every act of our daily lives, whether in
the sphere of politics or business, in our social conduct or our ethical
thinking, we are dominated by the relatively small number of
persons…who understand the mental processes and social patterns of the
masses. It is they who pull the wires which control the public mind.” – Edward Bernays – Propaganda – 1928

Look at the year that was stated. Almost a century ago our world was already dominated by perceptual managers. Mr. Bernays was not heralding a new strategy, but a science of social psychology which had developed to the point where he could confidently identify propaganda as the most powerful and pervasive ingredient of maintaining a democracy. In fact, Mr. Bernays and his ilk did and do believe that the very survival of democracy is dependent on the successful control of the public mind.

In my previous post What Money Can Do, I mentioned amongst other things the fact that the wealthy can and do employ some of our greatest minds to insure and expand their power, wealth and control. There is no social movement that will not be monitored, infiltrated, corrupted and influenced by the perceptual managers and PR minions of the wealthy.

Every day the techniques and strategies of social influence and perceptual management are being refined, honed and expanded upon in the practical laboratory we call modern society. The sophisticated techniques used by our intelligence and military agencies in torture, propaganda, brain washing, and removing resistance are being adapted and deployed domestically by the wealthy to further their agenda and to insure their continued dominance.

Just as our government gathered and employed some of the best physicists for the Manhattan Project for the atomic bomb, the military industrial complex currently employs geniuses in the realm of social psychology. Terms such as spin doctors greatly downplays the sphere of influence of the perceptual managers who are working around the clock in their devotion to win our hearts and minds and make us dependent on those who are exploiting us and attacking our standard of living and quality of life.

All those who are feeling that the internet and social media are the tools of the next revolution should keep in mind that the internet was originally a pentagon project, and its main goals and objectives in terms of global and domestic surveillance and influence are still in tact. I see no indication that “they” have lost control of their project. In fact each day I see more and more signs of how they are once again successfully co-opting and incorporating all these Arab, European and domestic social movements into assets of their social engineering.

The desire for the powerful and ambitious to control and exploit the masses is not new, and as Bernays points out, it has a privileged role in democratic systems. Even in the earliest social democracies that existed over two thousand years ago the benefits of mechanisms such as bribery, corruption, deceit and torture were generally known by those in power. In the earliest democracies oratory was heralded and many politicians adopted the skill set of the conman.

Yet, over two thousand years the level of sophistication of propagandists, conmen and perceptual managers has mushroomed. One could say the effectiveness and knowledge of the techniques of persuasion and influence have grown geometrically with the birth of the sciences of social psychology and public relations.

Anyone who truly yearns for lasting and meaningful social change must understand and fully appreciate how potent are the forces able to corrupt, co-opt, redirect, or envelop any social movement. Everything said by or about a movement is monitored and analyzed and processed by perceptual managers. Every word uttered is an opportunity for the spin doctors and propagandists to find a point of entry into joining or redirecting the movement. Every moment new ways for a movements words to be reinterpreted or emotionally experienced are pondered. Without even knowing it followers of a social movement may be straying from the original intent into a version which is being promoted by the establishment.

The problem is that the average person does not have the time nor energy to sift through all of the words being said and have sufficient vigilance to keep their support of the movement pure. Movements themselves and their spokesman often do not see how subtle changes in language or in acceptance of minor ways their ideas are being framed by outside influences (media, splinter groups, etc.) are not only undermining but often altering the core issues of the movement. oftentimes altering the very proposals which have the most potential for dramatic social change. That level of thought and vigilance is more realistically able to be accomplished by the perceptual managers and their employers.

Significant, lasting and beneficial social change is still possible. Our desire to create harmonious and humane societies is a valid one. The goal of constructing societies which improve the quality of human life is not unrealistic or even idealistic. Yet, it is not the direction in which we are moving and until we fully recognize and divorce ourselves from the mechanisms of power, fear and hatred which are the basic tools of social engineering we will have a difficult time not falling prey to the agenda and dominance of perceptual managers who convince us that the elite are too big to fail and our very survival depends on their continued imbalanced success.

Jim Guido

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