Monthly Archives: November 2019

[KR1462] Keiser Report: Cash and debt pile

In this episode of the Keiser Report, Max and Stacy discuss Warren Buffett’s $128 billion cash pile. In the second half, Max talks to Professor Steve Keen about the rapidly climbing pile of U.S. debt now over $23 trillion and whether or not it matters.

Stock Market Cheerleading: Why Do We Celebrate the Super-Rich Getting Richer?

The one constant across the media-political spectrum is an unblinking focus on the stock market as a barometer of the national economy: every major media outlet from the New York Times to Fox News prominently displays stock market action, and TV news anchors’ expressions reflect the media’s emotional promotion of the market as the end all to be all: if stocks rose, the anchors are smiling and chirpy, and if the market fell then their expressions are downcast and dour.

This cheerleading of the stock market is based on an implicit assumption that the rising stock market raises all boats: a rising market is assumed to reflect an expansion of sales and profits that trickle down to the masses in higher wages, more jobs and rising 401K retirement accounts.

The reality is starkly different: the vast majority of the gains generated by a rising stock market flow to the top 10% households who own 93% of all financial assets, and the gains within the top 10% are highly concentrated in the top .01% of financiers, super-wealthy families and corporate managers who have reaped the vast majority of the past decade of stock market gains.

The 1% grabbed 82% of all wealth created in 2017 (and 2018 and 2019…)

America’s Richest 1% Now Own As Much Wealth As The Middle And Lower Classes Combined

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“What’s Moral Is What’s Legal… And What’s Legal Is For Sale”: Negative Network Effects Run Amok

Here’s the U.S.economy in a nutshell: Corporate America is an anti-social Black Plague, gorging on cartel-monopoly profits reaped from negative network effects running amok, enriching the few at the expense of the many and concentrating political power in the hands of the most rapacious, anti-democratic corporate sociopaths.

Let’s start with network effects: the conventional definition is “When a network effect is present, the value of a product or service increases according to the number of others using it.”

So for example, when telephone service was only available to a few users, its value was limited. As more people obtained telephone service, the value of the network increased to both its owners and to users, who could reach more people and conduct commerce more easily as a result of having telephone service.

In the conventional analysis, negative network effects occur from “congestion,” i.e. the network is adding new users so quickly that “more users make a product less valuable.”

But this superficial analysis misses the fatally anti-social consequences of corporate negative network effects, a dynamic described by analyst Simons Chase in this essay. Here is an excerpt:

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Now That We’ve Incentivized Sociopaths–Guess What Happens Next

“Sociopath” is a word we now encounter regularly in the mainstream media, but what does it mean? Here is a list of 16 traits, many of which are visible in lionized corporate and political leaders and entrepreneurs.

One key trait is a lack of moral responsibility or conscience; the sociopath feels no remorse if he/she takes advantage of people or exploits them.

Sociopaths are masters of superficial charm, intelligence and confidence, and adept at massaging or misrepresenting reality up to and including outright lying to persuade others or get their way.

Like all psychological syndromes (manic depression, autism, bipolar disorder, etc.), there is a wide spectrum of sociopathological traits, some of which may offer some adaptive benefits (and hence their continued presence in the human genome). In other words, an individual can have a few of the traits in greater or lesser proportions.

Thus the modern BBC Sherlock Holmes (played by Benedict Cumberbatch) describes himself as a “high-functioning sociopath” (though many contest this diagnosis of the original Holmes in Arthur Conan Doyle’s stories).

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The End Of Money

The unfolding wealth transfer is about to get markedly worse.
Read why it’s so important now to position yourself to be on the winning side

The Political Parties and the Media Have Abandoned the Working “Middle Class”

Defining the “middle class” has devolved to a pundit parlor game, so let’s get real for a moment (if we dare): the “middle class” is no longer defined by the traditional metrics of income or job type (blue collar, white collar), but by an entirely different set of metrics:

1. Household indebtedness, i.e. how much of the income is devoted to debt service, and

2. How much of the household spending is funded by debt.

3. The ability of the household to set aside substantial savings / capital investment.

4. The security of the households’ employment.

5. The dependence of the household wealth on speculative asset bubbles inflated by central bank policies.

6. The percentage of the household income that is unearned, i.e. derived not from labor but from productive assets.

7. The exposure of the households’ employment to automation, AI or offshoring.

8. How much of the household income is government transfers: benefits, subsidies, etc.

After writing about the middle class and America’s class structure in depth for over a decade, it seems to me the actual, real-world class structure is something along these lines:

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The Middle Class Is Now The Muddle Class

The first use of the phrase The Muddle Class appears to be The rise of the muddle classes (Becky Pugh, telegraph.co.uk) in January 2007. The “muddle” described the complex nature of defining “the middle class,” which includes education, class origins, accents, and many other financial, social and cultural signifiers.

Comedian Jason Manford claimed to have coined the term in June 2013“I’ve invented a new term; ‘Muddle Class’. When you find yourself being working class AND middle class at the same time.”

I’m using the term to describe the economic class that has the social signifiers of middle class status but little to no ownership of meaningful capital or control of their own financial security. In other words, this class “muddles through” the erosion of their purchasing power and economic security, claiming the social status of “middle class” while their financial status is impoverished when compared to the security of previous generations of “middle class.”

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