Karen Hudes is a graduate of Yale Law School and she worked in the legal department of the World Bank for more than 20 years. In fact, when she was fired for blowing the whistle on corruption inside the World Bank, she held the position of Senior Counsel. She was in a unique position to see exactly how the global elite rule the world, and the information that she is now revealing to the public is absolutely stunning. According to Hudes, the elite use a very tight core of financial institutions and mega-corporations to dominate the planet. The goal is control. They want all of us enslaved to debt, they want all of our governments enslaved to debt, and they want all of our politicians addicted to the huge financial contributions that they funnel into their campaigns. Since the elite also own all of the big media companies, the mainstream media never lets us in on the secret that there is something fundamentally wrong with the way that our system works.
Remember, this is not some “conspiracy theorist” that is saying these things. This is a Yale-educated attorney that worked inside the World Bank for more than two decades. The following summary of her credentials comes directly from her website…
Karen Hudes studied law at Yale Law School and economics at the University of Amsterdam. She worked in the US Export Import Bank of the US from 1980-1985 and in the Legal Department of the World Bank from 1986-2007. She established the Non Governmental Organization Committee of the International Law Section of the American Bar Association and the Committee on Multilateralism and the Accountability of International Organizations of the American Branch of the International Law Association.
Today, Hudes is trying very hard to expose the corrupt financial system that the global elite are using to control the wealth of the world. During an interview with the New American, she discussed how we are willingly allowing this group of elitists to totally dominate the resources of the planet…
A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve. The network has seized control of the media to cover up its crimes, too, she explained. In an interview with The New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts. Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption. And she is confident of success.
Citing an explosive 2011 Swiss study published in the PLOS ONE journal on the “network of global corporate control,” Hudes pointed out that a small group of entities — mostly financial institutions and especially central banks — exert a massive amount of influence over the international economy from behind the scenes. “What is really going on is that the world’s resources are being dominated by this group,” she explained, adding that the “corrupt power grabbers” have managed to dominate the media as well. “They’re being allowed to do it.”
Previously, I have written about the Swiss study that Hudes mentioned. It was conducted by a team of researchers at the Swiss Federal Institute of Technology in Zurich, Switzerland. They studied the relationships between 37 million companies and investors worldwide, and what they discovered is that there is a “super-entity” of just 147 very tightly knit mega-corporations that controls 40 percent of the entire global economy…
When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.
But the global elite don’t just control these mega-corporations. According to Hudes, they also dominate the unelected, unaccountable organizations that control the finances of virtually every nation on the face of the planet. The World Bank, the IMF and central banks such as the Federal Reserve literally control the creation and the flow of money worldwide.
At the apex of this system is the Bank for International Settlements. It is the central bank of central banks, and posted below is a video where you can watch Hudes tell Greg Hunter of USAWatchdog.com the following…
“We don’t have to wait for anybody to fire the Fed or Bank for International Settlements . . . some states have already started to recognize silver and gold, the precious metals, as currency”
Most people have never even heard of the Bank for International Settlements, but it is an extremely important organization. In a previous article, I described how this “central bank of the world” is literally immune to the laws of all national governments…
An immensely powerful international organization that most people have never even heard of secretly controls the money supply of the entire globe. It is called the Bank for International Settlements, and it is the central bank of central banks. It is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City. It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws. Even Wikipedia admits that “it is not accountable to any single national government.” The Bank for International Settlements was used to launder money for the Nazis during World War II, but these days the main purpose of the BIS is to guide and direct the centrally-planned global financial system. Today, 58 global central banks belong to the BIS, and it has far more power over how the U.S. economy (or any other economy for that matter) will perform over the course of the next year than any politician does. Every two months, the central bankers of the world gather in Basel for another “Global Economy Meeting”. During those meetings, decisions are made which affect every man, woman and child on the planet, and yet none of us have any say in what goes on. The Bank for International Settlements is an organization that was founded by the global elite and it operates for the benefit of the global elite, and it is intended to be one of the key cornerstones of the emerging one world economic system.
This system did not come into being by accident. In fact, the global elite have been developing this system for a very long time. In a previous article entitled “Who Runs The World? Solid Proof That A Core Group Of Wealthy Elitists Is Pulling The Strings“, I included a quote from Georgetown University history professor Carroll Quigley from a book that he authored all the way back in 1966 in which he discussed the big plans that the elite had for the Bank for International Settlements…
[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.
And that is exactly what we have today.
We have a system of “neo-feudalism” in which all of us and our national governments are enslaved to debt. This system is governed by the central banks and by the Bank for International Settlements, and it systematically transfers the wealth of the world out of our hands and into the hands of the global elite.
But most people have no idea that any of this is happening because the global elite also control what we see, hear and think about. Today, there are just six giant media corporations that control more than 90 percent of the news and entertainment that you watch on your television in the United States.
This is the insidious system that Karen Hudes is seeking to expose. For much more, you can listen to Joyce Riley of the Power Hour interview her for an entire hour right here.
So what do you think about what Hudes is saying? Please feel free to share your thoughts by posting a comment below…
What are human workers going to do when super-intelligent robots and computers are better than us at doing everything? That is one of the questions that a new study by Dr. Carl Frey and Dr. Michael Osborne of Oxford University sought to address, and what they concluded was that 47 percent of all U.S. jobs could be automated within the next 20 years. Considering the fact that the percentage of the U.S. population that is employed is already far lower than it was a decade ago, it is frightening to think that tens of millions more jobs could disappear due to technological advances over the next couple of decades. I have written extensively about how we are already losing millions of jobs to super cheap labor on the other side of the globe. What are middle class families going to do as technology also takes away huge numbers of our jobs at an ever increasing pace? We live during a period of history when knowledge is increasing an an exponential rate. In the past, when human workers were displaced by technology it also created new kinds of jobs that the world had never seen before. But what happens when the day arrives when computers and robots can do almost everything more cheaply and more efficiently than humans can?
For employers, there are a whole host of advantages that come with replacing human workers with technology. Robots and computers never complain, they never get tired, they never need vacation, they never show up late, they never waste time on Facebook, they don’t need any health benefits and there are a vast array of rules, regulations and taxes that you must deal with when you hire a human worker.
If you could get a task done more cheaply and more efficiently by replacing a human worker with technology, why wouldn’t you want to do it?
We are already starting to see this happen on a mass scale, and according to Dr. Frey and Dr. Osborne, close to half of all of our jobs could be automated within the next 20 years. A recent article posted on smartplanet.com described how this process might play out…
The automation of half the nation’s jobs will occur in two phases, the study says: The first wave will affect (and is affecting) jobs in transportation/logistics, production labor, administrative support, services, sales, and construction. The second wave — propelled by artificial intelligence — will affect jobs in management, science, engineering, and the arts.
Just as interesting as the study is the response provided by Gary Reber, founder and executive director of For Economic Justice, who argues that owners of the means of production will actually thrive as such a shift takes place. Those who rely on 9-to-5 standard employment arrangements for subsistence are likely to suffer the most in the automation wave. As Reber put it: ‘Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum.”
This is one of the reasons why the U.S. economy will never produce enough jobs for everyone ever again.
If technology can outperform humans, it is only rational for companies to replace humans with technology.
And this is even starting to happen in fields that require very high levels of education.
Just look at what is happening in the medical field. Today, millions of people turn to websites such as WebMD for their medical needs, but this is only just the beginning. Check out this excerpt from a recent Bloomberg article entitled “Doctor Robot Will See You Shortly“…
Johnson & Johnson proposes to replace anesthesiologists during simple procedures such as colonoscopies — not with nurse practitioners, but with machines. Sedasys, which dispenses propofol and monitors a patient automatically, was recently approved for use in healthy adult patients who have no particular risk of complications. Johnson & Johnson will lease the machines to doctor’s offices for $150 per procedure — cleverly set well below the $600 to $2,000 that anesthesiologists usually charge.
Certainly we will always need doctors.
But many of the tasks that doctors once performed will now be performed by technology.
For example, have you heard about “OnStar for the Body” yet? Some of these new “wearable technologies” are more than a little bit creepy…
Smart, cheaper and point-of-care sensors, such as those being developed for the Nokia Sensing XCHALLENGE, will further enable the ‘Digital Checkup’ from anywhere. The world of ‘Quantified Self’ and ‘Quantified Health’ will lead to a new generation of wearable technologies partnered with Artificial Intelligence that will help decipher and make this information actionable.
And this ‘actionability’ is key. We hear the term Big Data used in various contexts; when applied to health information it will likely be the smart integration of massive data sets from the ‘Internet of things’ with the small data about your activity, mood, and other information. When properly filtered, this data set can give insights on a macro level – population health – and micro – ‘OnStar for the Body‘ with a personalized ‘check engine light’ to help identify individual problems before they further develop into expensive, difficult-to-treat or fatal conditions.
We are also seeing humans being replaced in other fields as well. For instance, DARPA has developed a robot named “Atlas” that it hopes will be used in “disaster-response scenarios”…
DARPA’s Virtual Robotics Challenge entered a new phase in July, when Atlas — a 6-foot-2-inch, 330-pound robot developed by Boston Dynamics — was introduced to seven teams tasked with training it for disaster-response scenarios. The end goal? “Supervised autonomy” so that Atlas and its successors can step into situations too dangerous for humans.
I don’t know about you, but I don’t really want “Terminator” to show up when my family is in the middle of a disaster, but this is where things are headed.
And as technology increases, a lot of good paying middle class jobs are going to be vulnerable. In fact, one study of employment data that examined statistics from 20 countries found that “almost all the jobs disappearing are in industries that pay middle-class wages, ranging from $38,000 to $68,000.”
Those are exactly the sort of “breadwinner jobs” that middle class families rely upon.
And of course working class jobs are being replaced by technology as well. According to MIT Technology Review, a $22,000 humanoid robot named Baxter has been developed that can easily be programmed to do jobs that have never been automated before…
Brooks’s company, Rethink Robotics, says the robot will spark a “renaissance” in American manufacturing by helping small companies compete against low-wage offshore labor. Baxter will do that by accelerating a trend of factory efficiency that’s eliminated more jobs in the U.S. than overseas competition has. Of the approximately 5.8 million manufacturing jobs the U.S. lost between 2000 and 2010, according to McKinsey Global Institute, two-thirds were lost because of higher productivity and only 20 percent moved to places like China, Mexico, or Thailand.
The ultimate goal is for robots like Baxter to take over more complex tasks, such as fitting together parts on an electronics assembly line. “A couple more ticks of Moore’s Law and you’ve got automation that works more cheaply than Chinese labor does,” Andrew McAfee, an MIT researcher, predicted last year at a conference in Tucson, Arizona, where Baxter was discussed.
So what are human workers going to do when robots are making all of our products?
That is a very good question.
Incredibly, robots are now even replacing human factory workers in China. The following comes from a recent TechCrunch article…
Foxconn has been planning to buy 1 million robots to replace human workers and it looks like that change, albeit gradual, is about to start.
The company is allegedly paying $25,000 per robot – about three times a worker’s average salary – and they will replace humans in assembly tasks. The plans have been in place for a while – I spoke to Foxconn reps about this a year ago – and it makes perfect sense. Humans are messy, they want more money, and having a half-a-million of them in one factory is a recipe for unrest. But what happens after the halls are clear of careful young men and women and instead full of whirring robots?
So who benefits from all of this?
Those that own the big corporations that dominate our economy certainly benefit. They aren’t going to need to hire as many of us to work for them, and they are going to make even bigger profits than before.
Meanwhile, the gap between the wealthy and the poor will grow even larger. The only thing that most people have to offer in the economic marketplace is their labor, and the demand for that labor is decreasing with each passing day.
What do you think will happen to society when most of us are no longer “needed”?
Could we be headed for big trouble as a society?
And if you think that your job could “never be automated”, you might want to think again.
We are rapidly getting to the point where even driving will be automated…
Brace yourself. In a few years, your car will be able to drop you off at the door of a shopping center or airport terminal, go park itself and return when summoned with a smartphone app. Audi demonstrated such a system at this year’s Consumer Electronics Show.
At your next dinner party, ask for a show of hands of the people who’d want that.
Anybody want a car that doesn’t crash? At this month’s Frankfurt auto show, mega-auto supplier Continental announced a partnership with IBM to help bring autonomous vehicles to market, with “zero accidents” as a possible result. Volvo has promised to injury-proof its cars by 2020. GM and Carnegie Mellon aim to develop autonomous technology to eliminate car accidents.
So what will happen to the 3.1 million Americans that drive trucks for a living once all driving is automated?
What will happen to the millions of other Americans that drive buses, taxis and limos once all driving is automated?
That is something to think about.
And researchers are even trying to create computers that “seem human” when you have a conversation with them…
On 14 September, researchers will gathered in Derry, Northern Ireland, to demonstrate their latest efforts. If any of them has created a machine that successfully mimics a human, they will leave $100,000 richer.
The money is being put up by Hugh Loebner, a New York based philanthropist. His goal, he says, is total unemployment for all human beings throughout the world. He wants robots to do all the work. And the first step towards that is apparently to develop computers that seem human when you chat to them.
So if your job involves a telephone, you are in danger of being phased out. In fact, this transition is already starting to happen…
IPsoft is a young company started by Chetan Dube, a former mathematics professor at New York University. He reckons that artificial intelligence can take over most of the routine information-technology and business-process tasks currently performed by workers in offshore locations. “The last decade was about replacing labour with cheaper labour,” says Mr Dube. “The coming decade will be about replacing cheaper labour with autonomics.”
IPsoft’s Eliza, a “virtual service-desk employee” that learns on the job and can reply to e-mail, answer phone calls and hold conversations, is being tested by several multinationals. At one American media giant she is answering 62,000 calls a month from the firm’s information-technology staff. She is able to solve two out of three of the problems without human help. At IPsoft’s media-industry customer Eliza has replaced India’s Tata Consulting Services.
We truly are entering an unprecedented time in human history.
Instead of robots violently taking over society like so many movies have portrayed, they are slowly starting to “replace” us instead. A recent Wired article described what this transition might look like as it picks up steam…
First, machines will consolidate their gains in already-automated industries. After robots finish replacing assembly line workers, they will replace the workers in warehouses. Speedy bots able to lift 150 pounds all day long will retrieve boxes, sort them, and load them onto trucks. Fruit and vegetable picking will continue to be robotized until no humans pick outside of specialty farms. Pharmacies will feature a single pill-dispensing robot in the back while the pharmacists focus on patient consulting. Next, the more dexterous chores of cleaning in offices and schools will be taken over by late-night robots, starting with easy-to-do floors and windows and eventually getting to toilets. The highway legs of long-haul trucking routes will be driven by robots embedded in truck cabs.
All the while, robots will continue their migration into white-collar work. We already have artificial intelligence in many of our machines; we just don’t call it that. Witness one piece of software by Narrative Science (profiled in issue 20.05) that can write newspaper stories about sports games directly from the games’ stats or generate a synopsis of a company’s stock performance each day from bits of text around the web. Any job dealing with reams of paperwork will be taken over by bots, including much of medicine. Even those areas of medicine not defined by paperwork, such as surgery, are becoming increasingly robotic. The rote tasks of any information-intensive job can be automated. It doesn’t matter if you are a doctor, lawyer, architect, reporter, or even programmer: The robot takeover will be epic.
Are you ready for the “robot takeover”?
The world of employment is never going to be the same again. Technology has already surpassed human workers in a whole host of arenas, and this transition is only going to become more rapid in the years ahead.
So what does this mean for the rest of us? Please feel free to share your thoughts by posting a comment below…
Barack Obama promised to fundamentally transform America, and when it comes to health care he has definitely kept his promise. Thanks to Obamacare, health care spending is up, health insurance premiums are up, the number of hours Americans are working is down and employer-based health insurance is becoming an endangered species. Of course employer-based health insurance will not disappear completely any time soon, but it has been steadily shrinking for over a decade, and Obamacare will greatly accelerate that decline. If you go back to 1999, 64.1 percent of all Americans were covered by employment-based health insurance. That was pretty good. Today, only 54.9 percent of all Americans are covered by employment-based health insurance, and now thousands upon thousands of U.S. employers are considering reducing the scope of the health plans they offer to employees or eliminating them altogether due to Obamacare. If you are thinking that this sounds like a potential nightmare for millions of Americans families, you would be exactly right.
There have already been widespread reports of companies dropping health insurance, but nobody knows for sure how widespread the carnage will be. According to Businessweek, the surveys that have been done up to this point have come up with widely varying results…
A Deloitte study last year suggested 10 percent of employers would stop offering group health plans. A widely criticized McKinsey report from 2011 put the number as high as one-third. The Congressional Budget Office’s latest projections suggest 8 million fewer people will be covered by employer plans five years from now under the ACA than without it. Many of them will get policies through health insurance exchanges instead.
But what everyone does agree on is that employer-based health coverage will continue to diminish.
And we are already watching this happen right in front of our eyes. Just this week, the Wall Street Journal reported that the largest security guard firm in the United States is dropping health coverage for 55,000 employees…
The nation’s largest provider of security guards plans to discontinue its lowest-cost health plans and steer roughly 55,000 workers to new government-sponsored insurance exchanges for coverage next year, in the latest sign of the fraying ties between employment and health care.
The U.S. arm of Sweden’s Securitas AB is among more than 1,200 employers that offer the kind of bare-bones health plans that must be phased out beginning Jan. 1 under the health-care law. Nearly four million people are enrolled in these so-called mini-med plans, which cap benefits to participants, sometimes at as little as $3,000 a year.
“The mini-meds go away and we’re not replacing them,” said Jim McNulty, a spokesman for Securitas’s U.S. operation. “Their option is to go to the exchanges.”
Other big employers, including Darden Restaurants Inc., Home Depot Inc. and Trader Joe’s Co., say they will stop offering health insurance to part-time workers, and will direct those employees to the state exchanges. Darden, Home Depot and Trader Joe’s previously offered mini-meds to their part timers.
Speaking of Trader Joe’s, I wrote about how they are eliminating health coverage for part-time workers the other day. Instead of providing health insurance for their part-time workers, Trader Joe’s will be writing them a check and pushing them on to the Obamacare exchanges…
Trader Joe’s, the grocer once lauded for providing health care coverage to its part-time workers, is about to push those employees off its plan.
According to a memo obtained by the Huffington Post, the company will stop covering employees who work less than 30 hours per week.
The change is set for the start of 2014. Instead of insurance, workers instead will get a check for $500 in January.
“Depending on income you may earn outside of Trader Joe’s, we believe that with the $500 from Trader Joe’s and the tax credits available under the [Affordable Care Act (ACA)], many of you should be able to obtain health care coverage at very little if any net cost to you,” said Trader Joe CEO Dan Bane in the memo.
And this is a huge reason why the shift from full-time work to part-time work in America has accelerated this year. Obamacare creates an incentive for companies to have more part-time workers and less full-time workers. In fact, almost all of the jobs that have been “created” by the U.S. economy in 2013 have been part-time jobs.
But it is incredibly difficult to try to support a family on a part-time job. Sadly, the quality of our jobs continues to decline rapidly and only 47 percent of all adults have a full-time job in America today. This is only going to continue to get even worse under Obamacare.
As a result of these trends, more Americans are going to be forced to go out and buy health insurance “on the individual market”. When they do, they are likely to be in for a really nasty surprise…
Andy and Amy Mangione of Louisville, Ky. and their two boys are just the kind of people who should be helped by ObamaCare. But they recently got a nasty surprise in the mail.
“When I saw the letter when I came home from work,” Andy said, describing the large red wording on the envelope from his insurance carrier, “(it said) ‘your action required, benefit changes, act now.’ Of course I opened it immediately.”
It had stunning news. Insurance for the Mangiones and their two boys,which they bought on the individual market, was going to almost triple in 2014 — from $333 a month to $965.
The insurance carrier made it clear the increase was in order to be compliant with the new health care law.
Are you ready to have your health insurance premiums potentially double or triple?
In other cases, families are discovering that health insurance companies are simply cancelling their health insurance plans…
Across the country, insurers are sending out ObamaCare-induced health plan death notices to untold tens of thousands of other customers in the individual market. Twitter users are posting their ObamaCare cancellation notices and accompanying rate increases:
Linda Deright posted her letter from Regency of Washington state: “63 percent jump, old policy of 15 yrs. cancelled.” Karen J. Dugan wrote: “Received same notice from Blue Shield CA for our small business. Driving into exchange and no info since online site is down.” Chris Birk wrote: “Got notice from BCBS that my current health plan is not ACA compliant. New plan 2x as costly for worse coverage.” Small-business owner Villi Wilson posted his letter from HMSA Blue Cross Blue Shield canceling his individual plan and added: “I thought Obama said if I like my health care plan I can keep my health care plan.”
In fact, this even happened to one member of Congress. U.S. Representative Cory Gardner had purchased health insurance on his own because he wanted to experience what his constituents were going through, and he recently got a letter informing him that his old plan had been “discontinued”…
“After my current plan is discontinued,” he wrote last week, “the closest comparable plan through our current provider will cost over 100 percent more, going from roughly $650 a month to $1,480 per month.” He now carries his ObamaCare cancellation notice with him as hardcore proof of the Democrats’ ultimate deception.
Is this what Obama was talking about when he promised that we could keep our old health insurance plans if we were happy with them?
In the end, millions upon millions of us are going to get pushed on to the Obamacare health insurance exchanges.
We were promised that there would be lots of competition and that prices would be reasonable.
Unfortunately, in some areas of the country it turns out that the “exchanges” are turning out to be “monopolies” where consumers will only have one company to choose from…
“Although seven insurance companies currently operate in North Carolina, under the new Obamacare exchanges, those options will dwindle down to one in the majority of counties,” Ellmers said Thursday following the disclosure of figures by federal health officials showing that more than 60 percent of North Carolina counties will have only one insurance provider option under Obamacare: Blue Cross Blue Shield.
“The whole point of an online marketplace was to provide options, so North Carolinians could go online, compare prices, and choose plans from different companies. That is how competition is supposed to work!,” Ellmers said.
Beginning October 1 under Obamacare, Blue Cross Blue Shield will be the only health insurance provider serving the entire state of North Carolina in the new Obamacare exchanges, serving all 100 of the state’s counties. Its competitor Coventry Health Care, which is owned by Aetna, will only reach 39 counties.
That leaves 61 counties, or 61 percent of all the state’s counties, in a Blue Cross Blue Shield-only zone.
Not only that, but a lot of these exchanges are not even going to be ready to function properly on October 1st. For example, according to the Washington Post, the D.C. “health marketplace” is a complete and total mess at this point…
Just days away from launch, the District of Columbia’s health marketplace is announcing a pretty significant delay.
While the D.C. Health Link will launch a Web site on October 1, shoppers will not have access to the their premium prices until mid-November. The delay comes after the District marketplace discovered “a high error rate” in calculating the tax credits that low- and middle-income people will use to purchase insurance on the marketplace.
The insurance marketplaces, if working as plan, are supposed to spit out an estimate for a tax credit after a shopper enters in some basic information about where she lives and how much she earns. In the District, that won’t happen next month. Instead, the eligibility determination will be made “off-line by experts” by early November.
So who is going to benefit from this new system?
Well, it turns out that the health insurance companies will greatly benefit. Health insurance companies helped write Obamacare, and their stock prices have absolutely soared since Obamacare was signed into law. If you doubt this, just check out the amazing charts in this article.
Not that they were hurting under the old system either. They have been raking in gigantic mountains of cash for years while trying to provide as little health care as possible. For much more on this, please see my previous article entitled “50 Signs That The U.S. Health Care System Is A Gigantic Money Making Scam“.
For the rest of us, Obamacare is going to be even worse than the old system. A 2013 Health Care Survey that polled 200 top health care professionals discovered the following about what they believe Obamacare will bring…
– 53 percent, “Quality of health insurance policies will suffer.”
— 51 percent, “Quality of care will go down.”
— 49 percent, “The law is overly complicated.”
— 42 percent, “Insurance exchanges will be poorly managed.”
— 37 percent, “The law still allows insurance companies to be the middleman.”
— 32 percent, “Too complex for businesses.”
— 19 percent, “Americans will die earlier.”
So Americans are going to pay more, get worse care, have more paperwork and a more complicated system, and they are likely to die younger too?
Wow, that sounds like a great deal.
Where do we sign up?
If you want to live the high life, you don’t have to become a rap star, a professional athlete or a Wall Street banker. All it really takes is winning an election. Right now, more than half of all the members of Congress are millionaires, and most of them leave “public service” far wealthier than when they entered it. Since most of them have so much money, you would think that they would be willing to do a little “belt-tightening” for the sake of the American people. After all, things are supposedly “extremely tight” in Washington D.C. right now. In fact, just the other day Nancy Pelosi insisted that there were “no more cuts to make” to the federal budget. But even as they claim that things are so tough right now, our politicians continue to live the high life at the expense of U.S. taxpayers. The statistics that I am about to share with you are very disturbing. Please share them with everyone that you know. The American people deserve the truth.
According to the Weekly Standard, an absolutely insane amount of money is being spent on the “hair care needs” of U.S. Senators…
Senate Hair Care Services has cost taxpayers about $5.25 million over 15 years. They foot the bill of more than $40,000 for the shoeshine attendant last fiscal year. Six barbers took in more than $40,000 each, including nearly $80,000 for the head barber.
Keep in mind that there are only 100 U.S. Senators, and many of them don’t have much hair left at this point.
But hair care is just the tip of the iceberg. The following are 21 other ways that our politicians are living the high life at your expense…
#1 According to Roll Call’s annual survey of Congressional wealth, the super wealthy in Congress just continue to get much wealthier even though they are supposedly dedicating their lives to “public service”…
Rep. Michael McCaul (R-Texas) is the richest Member of Congress for the second year in a row, reporting a vast fortune that in 2011 had a minimum net worth surpassing $300 million for the first time.
McCaul is followed by Sen. John Kerry (D-Mass.), who reported a minimum net worth of $198.65 million, and Rep. Darrell Issa (R-Calif.), who reported a minimum net worth of $140.55 million. The two lawmakers swapped places since last year’s list.
The lawmakers who round out the top five, Sens. Mark Warner (D-Va.) and Jay Rockefeller (D-W.Va.), also flipped positions from 2010 to 2011, with Warner’s reported minimum worth rising about $9 million to $85.81 million and Rockefeller’s minimum worth rising slightly to $83.08 million.
#2 Amazingly, the 50th most wealthy member of Congress has a net worth of 6.14 million dollars.
#3 At this point, more than half of those “serving the American people” in Congress are millionaires.
#4 In one recent year, an average of $4,005,900 of U.S. taxpayer money was spent on “personal” and “office” expenses per U.S. Senator.
#5 Once they leave Washington, former members of Congress continue to collect huge checks for the rest of their lives…
In 2011, 280 former lawmakers who retired under a former government pension system received average annual pensions of $70,620, according to a Congressional Research Service report. They averaged around 20 years of service. At the same time, another 215 retirees (elected in 1984 or later with an average of 15 years of service) received average annual checks of roughly $40,000 a year.
#6 Speaker of the House John Boehner would bring home a yearly pension of close to $85,000 if he left Congress when his current term ends in 2014.
#7 At this point, quite a few former lawmakers are collecting federal pensions for life worth at least $100,000 annually. That list includes such notable names as Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.
#8 The U.S. government is spending approximately 3.6 million dollars a year to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton.
#9 Nearly 500,000 federal employees now make at least $100,000 a year.
#10 During one recent year, the average federal employee in the Washington D.C. area received total compensation worth more than $126,000.
#11 During one recent year, compensation for federal employees came to a grand total of approximately 447 billion dollars.
#12 If you can believe it, there are 77,000 federal workers that make more than the governors of their own states do.
#13 When Joe Biden and his staff took a trip to London, the hotel bill cost U.S. taxpayers $459,388.65.
#14 Joe Biden and his staff also stopped in Paris for one night. The hotel bill for that one night came to $585,000.50.
#15 When Biden and his staff visited Moscow for two days in 2011, the total hotel bill came to $665,445.00.
#16 During 2012, the salaries of Barack Obama’s three climate change advisers combined came to a grand total of more than $370,000.
#17 Overall, 139 different White House staffers were making at least $100,000 during 2012, and there were 20 staffers that made the maximum of $172,200.
#18 It is estimated that the trip that the Obamas took to Africa cost U.S. taxpayers about 100 million dollars.
#19 The Obamas only have one dog named “Bo”, but the White House “dog handler” reportedly makes $102,000 per year and sometimes he is even flown to where the Obamas are vacationing so that he can take care of the dog.
#20 There is always at least one projectionist at the White House 24 hours a day just in case there is someone that wants to watch a movie. Apparently turning on a DVD player is too much to ask.
#21 In one recent year, more than 1.4 billion dollars was spent on the Obamas. Meanwhile, British taxpayers only spent about 58 million dollars on the entire royal family.
So who pays for all of this extravagance?
The American people do of course.
Unfortunately, what most of our politicians fail to understand is that most families are struggling tremendously right now.
This week, Yahoo featured the story of a 77-year-old former executive that is now flipping burgers and serving drinks to make ends meet. He says that he now earns in a week what he once earned in a single hour, but he is thankful to have a job in this economic environment…
It seems like another life. At the height of his corporate career, Tom Palome was pulling in a salary in the low six-figures and flying first class on business trips to Europe.
Today, the 77-year-old former vice president of marketing for Oral-B juggles two part-time jobs: one as a $10-an-hour food demonstrator at Sam’s Club, the other flipping burgers and serving drinks at a golf club grill for slightly more than minimum wage.
While Palome worked hard his entire career, paid off his mortgage and put his kids through college, like most Americans he didn’t save enough for retirement. Even many affluent baby boomers who are approaching the end of their careers haven’t come close to saving the 10 to 20 times their annual working income that investment experts say they’ll need to maintain their standard of living in old age.
So many Americans are barely making it from month to month at this point. Most people work very, very hard for their money, and it is very discouraging to see our politicians waste our hard-earned tax dollars so frivolously.
Fortunately, there are signs that the American people are starting to get fed up with all of this. According to a stunning new Gallup survey, more Americans than ever before (60 percent) believe that the federal government has too much power.
So what do you think?
Do you think that the government is too big and too wasteful?
Please feel free to share what you think by posting a comment below…
Now that “bail-ins” have become accepted practice all over the planet, no bank account and no pension fund will ever be 100% safe again. In fact, Cyprus-style wealth confiscation is already starting to happen all around the world. As you will read about below, private pension funds were just raided by the government in Poland, and a “bail-in” is being organized for one of the largest banks in Italy. Unfortunately, this is just the beginning. The precedent that was set in Cyprus is being used as a template for establishing bail-in procedures in New Zealand, Canada and all over Europe. It is only a matter of time before we see this exact same type of thing happen in the United States as well. From now on, anyone that keeps a large amount of money in any single bank account or retirement fund is being incredibly foolish.
Let’s take a look at a few of the examples of how Cyprus-style wealth confiscation is now moving forward all over the globe…
For years, there have been rumors that someday the U.S. government would raid private pension funds.
Well, in Poland it just happened.
According to Reuters, private pension funds were raided in order to reduce the size of the government debt…
Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.
The Polish government is doing the best that it can to make this sound like some sort of complicated legal maneuver, but the truth is that what they have done is stolen private assets without giving any compensation in return…
The Polish pension funds’ organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.
Announcing the long-awaited overhaul of state-guaranteed pensions, Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings.
He said that what remained in citizens’ pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.
For years, Iceland has been applauded for how they handled the last financial crisis. But now it is being proposed that the “blanket guarantee” that currently applies to all bank accounts should be reduced to 100,000 euros. Will this open the door for “haircuts” to be applied to bank account balances above that amount?…
Following the crisis in October 2008, Iceland’s government declared all deposits in domestic financial institutions were ‘blanket’ guaranteed – an Emergency Act that was reafrmed twice since. However, according to RUV, the finance minister is proposing to restrict this guarantee to only deposits less-than-EUR100,000. While some might see the removal of an ‘emergency’ measure as a positive, it is of course sadly reminiscent of the European Union “template” to haircut large depositors. This is coincidental (threatening) timing given the current stagnation of talks between Iceland bank creditors and the government over haircuts and lifting capital controls – which have restricted the outflows of around $8 billion.
European finance ministers have agreed to a plan that would make “bail-ins” the standard procedure for rescuing “too big to fail” banks in the future. The following is how CNN described this plan…
European Union finance ministers approved a plan Thursday for dealing with future bank bailouts, forcing bondholders and shareholders to take the hit for bank rescues ahead of taxpayers.
The new framework requires bondholders, shareholders and large depositors with over 100,000 euros to be first to suffer losses when banks fail. Depositors with less than 100,000 euros will be protected. Taxpayer funds would be used only as a last resort.
What this means is that if you have over 100,000 euros in a bank account in Europe, you could lose every single bit of the unprotected amount if your bank collapses.
As Zero Hedge reported on Tuesday, a “bail-in” is now being organized for the oldest bank in Italy…
Recall that three weeks ago we warned that “Monti Paschi Faces Bail-In As Capital Needs Point To Nationalization” although we left open the question of “who will get the haircut including senior bondholders and depositors…. given the small size of sub-debt in the capital structures.” Today, as many expected on the day following the German elections, the dominos are finally starting to wobble, and as we predicted, Monte Paschi, Italy’s oldest and according to many, most insolvent bank, quietly commenced a bondholder “bail in” after it said that it suspended interest payments on three hybrid notes following demands by European authorities that bondholders contribute to the restructuring of the bailed out Italian lender. Remember what Diesel-BOOM said about Cyprus – that it is a template? He wasn’t joking.
As Bloomberg reports, Monte Paschi “said in a statement that it won’t pay interest on about 481 million euros ($650 million) of outstanding hybrid notes issued through MPS Capital Trust II and Antonveneta Capital Trusts I and II.” Why these notes? Because hybrid bondholders have zero protections and zero recourse. “Under the terms of the undated notes, the Siena, Italy-based lender is allowed to suspend interest without defaulting and doesn’t have to make up the missed coupons when payments resume.” Then again hybrids, to quote the Dutchman, are just the template for the balance of the bank’s balance sheet.
Why is this happening now? Simple: the Merkel reelection is in the bag, and the EURUSD is too high (recall Adidas’ laments from last week). Furthermore, if the ECB proceeds with another LTRO as many believe it will, it will force the EURUSD even higher, surging from even more unwanted liquidity. So what to do? Why stage a small, contained crisis of course. Such as a bail in by a major Italian bank. The good news for now is that depositors are untouched. Unfortunately, with depositor cash on the wrong end of the (un)secured liability continuum it is only a matter of time before those with uninsured deposits share some of the Cypriot pain. After all, in the brave New Normal insolvent world, “it is only fair.”
Fortunately, it does not appear that this particular bail-in will hit private bank accounts (at least for now), but it does show that European officials are very serious about applying bail-in procedures when a major bank fails.
The New Zealand government has been discussing implementing a “bail-in” system to deal with any future major bank failures. The following comes from a New Zealand news source…
The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.
Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.
“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.
“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.”
Incredibly, even Canada is moving toward adopting these “bank bail-ins”. In a previous article, I explained that “bail-ins” were even part of the new Canadian government budget…
Cyprus-style “bail-ins” are actually proposed in the new Canadian government budget. When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013″ which the Harper government has already submitted to the House of Commons. This new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks” in Canada. “Economic Action Plan 2013″ was submitted on March 21st, which means that this “bail-in regime” was likely being planned long before the crisis in Cyprus ever erupted.
So what does all of this mean for us?
It means that the governments of the world are eyeing our money as part of the solution to any future failures of major banks.
As a result, there is no longer any truly “safe” place to put your money.
One of the best ways to protect yourself is to spread your money around. In other words, don’t put all of your eggs in one basket.
If you have your money a bunch of different places, it is going to be much harder for the government to grab it all.
But if you don’t listen to the warnings and you continue to keep all of your wealth in one giant pile somewhere, don’t be surprised when you get wiped out in a single moment someday.
There are hundreds of formerly prosperous communities all over America that are being steadily transformed into rotting, decaying hellholes. The good paying middle class jobs that once supported those communities are long gone, and they have been replaced with low paying service jobs if they have been replaced at all. When you visit those communities, it is almost as if all of the hope has been sucked right out of the air. It can be absolutely heartbreaking to look into the hollow eyes of someone that has totally given in to despair, but unfortunately the number of Americans that are giving up on the economy continues to grow. Today, the labor participation rate is the lowest that it has been in 35 years, and more than 100 million Americans are enrolled in at least one welfare program. It is easy to say that they should just “get a job”, but as I have written about repeatedly, our economy simply is not producing enough jobs for everyone anymore. The percentage of working age Americans with a job has remained at the same level that it was at during the worst days of the last recession, and meanwhile the quality of our jobs has continued to steadily decline. Median household income has fallen for five years in a row, but the cost of living continues to rise rapidly. The middle class is being systematically shredded, and poverty is growing at an alarming rate. The U.S. economy has been in decline for a long time, and the really bad news is that it appears that this decline is about to accelerate.
We are a nation that consumes far more wealth than we produce. We are a nation that buys far more from the rest of the world than they buy from us. We are a nation that has a “buy now, pay later” mentality.
As a nation, we have accumulated the largest mountain of debt in the history of the world. 40 years ago, the total amount of debt in our system (government, business and consumer) was about 2 trillion dollars. Today, it is more than 56 trillion dollars.
The consequences of decades of incredibly foolish decisions are starting to catch up with us, and it is those at the bottom of the food chain that will suffer the most.
I could spend the rest of this article quoting 30 or 40 more statistics that show how bad things are, but today I wanted to do something different. Today, I wanted to share some quotes from some of my readers about what they are seeing where they live. The following are 20 quotes from ordinary Americans about the economic despair that is rapidly growing like a cancer all around us…
“Yes, the American economy is in the pits. I know five languages, have three degrees (including two graduate degrees), and have lived overseas for 16 years and I still can’t find a job in the USA. Everything is broken in America. Maybe I should give up my American citizenship.”
“I’ve been struggling since I finished college in the summer of 2010. My dream is to work in the courts, law enforcement but it’s almost impossible to get a call back for an interview. I interviewed with Garland, Texas PD for a position in the city jail and I made the final 30 of 300 applicants that applied for the 3 positions.”
“I have two Master’s degrees, am 61 years old and earning $10 per hour. What does that say about the current economy?”
#4 Cincinnati Dave:
“I work for one of the banks mentioned in your article. I was in mortgages. I saw all of this coming, so several months ago I asked to get into another area of the bank and fortunately, for me, they granted by request. A lot of people are losing their jobs and there is really no prospects out there for anything else whereby the same kind of money could be made. I will make nothing near what I had been earning but am at the least grateful to be employed. This is all so sad to watch happen.”
“I used to work for WF processing mortgages. The week that the rates went up, I was out of work, not one extra week of work.”
“The U.S. economy is producing mostly part-time, low-wage jobs. These jobs barely pay enough to put food on the table.”
“What I am aware of, is every person I know, who had to switch jobs in the last five years took a pay cut. The smallest cut among my friends was 10%, the average was closer to 18%. No we are heading down a bad road, and we are past the point of no return.”
“After spending most of my life in the middle class, I now consider myself lower class due to age and income. Nothing wrong with that. I am still able to provide myself with what I need and some of my ‘wants’. I am like most retirees today.”
“As many of you already know (but maybe some new members of this blog don’t) – I live in Phoenix, Arizona. Where you live here, determines (to a great extent) your economic well being. Those in the “East Valley” – Chandler, Gilbert, Scottsdale, etc – have the jobs, the opportunities and the transportation. Those in the wealthier areas of the “West Valley” also have these benefits.
The remainder – those who live in the older west side of town, and the south side of town – are mainly forgotten and left to struggle. Many are hard working citizens who just want a chance. Unfortunately, chance costs money, in the view of many people, and as far as the municipal government is concerned, there’s no money for us. It’s cheaper to let them live in a tent in the park, where the cops at least have an excuse to evict them.”
“We are no longer the land of opportunity where anyone can make it.”
“There is no middle class here in the Florida Panhandle. Only folks who have money are the retired and they hate everyone. They own all the antique stores [big business] and most thriving businesses and restuarants. Military is big here, they spend every dime they have on stupid stuff and taxis. Tourist are way down since the spill. Now for the good news. A major food chain here is going out of business [Food World] Another is losing 20k a month to theft. Every other property it seems is up for sale. There are tons of empty real estate [store fronts] There are thrift stores opening everywhere. People are selling goods on the streets, only to be run off by the cops. Crime is getting out of hand. Most don’t go out after dark. Police are beating up the homeless at the beaches. Panhandling now is mainly younger people. Where did all the older ones go?”
“In my area which is SW Florida, it’s been getting tighter for my customers so on a case by case basis I lower my price when they need auto repairs. I still find road signs advertising homes for sale (cash only). Many are advertised as foreclosed.
I’ve started seeing people living out of their cars. It’s not a daily occurrence but I have been noticing it.”
I have been looking after the homeless now for 4 years. Last winter I had an encounter where I was told that I could not hand out blankets and sleeping bags in the dead of winter and that I would be arrested for trespassing if “me and my friends” didn’t move along.
So, I adopted the policy that I would pull up next to them, have them get in the car and we would go for a drive. I would find a place to pull over and give them what they needed then I would drop them off in a different place.
“Around where I live in the SE, things seem ok but I live in a university town. Go to some of the surrounding small towns and it is desolate. Car dealerships closed. Entire streets with abandoned stores. The only activity is a one clerk post office. I know people in our church who are a paycheck away from going over the edge or going over due to a spouse dying and losing one of their social security checks. I see grim. More homeless. A local church is feeding many more including some folks living out of their cars—lots of children. Mostly minimum wage jobs in the area. If it were not for the university and its 34,000 students, this place would look as bad as the smaller communities.”
#15 TN Gal:
“Here in southeast TN we have jobs, mostly part-time or low wage. Our problem these days are so many people dependent on government programs no one wants to work. They do better on programs than working partying and paying for insurance. Housing still very depressed. Seeing more homeless around and local churches straining to provide food. Crime is up and drugs, which were down, are coming back with a vengeance. Middle class here are senior citizens on SS, younger retirees not the older ones. Older ones seem to be struggling. Sad.”
Michael, I live in North Central Illinois. About 60 miles southeast of Chicago. The town we live in has about 8,000 in it. Very “middle class” farm community. Unemployment is high and so is underemployment. We know many people living off 2 part time jobs. That seems to be the norm around here. Or people taking jobs that they would never of considered in the past, just to get by. My son used to work for CAT in Aurora, but was “let go” in order to bring in new workers at a lower pay scale. It took him over a year(which really isn’t bad) to find a part time job with 3M.
“Drive around Los Angeles at 3:00 AM any day and you will see the devastating and pervasive homelessness from 8 to 80 year olds. And the massage parlors and hookers on the streets of used to be ‘high-end’ neighborhoods are exploding. No other way to make a living.”
“A couple of years ago it was reported 9K people a night slept in their cars here in San Diego County. Special car parks are set up in some church parking lots. The cops look the other way. Wonder what the figure is now?”
“My own viewpoint is that a collapse of the current economic system is inevitable and imminent.”
#20 El Pollo de Oro:
“During a conversation on prepping, someone recently said to me, ‘If things get half as bad as these preppers think they will, I don’t want to be alive.’ So, how bad will things will get? Real unemployment is already at Great Depression levels (John Williams’ Shadow Statistics contradicts the BLS’ bogus figures), but when this depression deepens, I think we’ll be looking at 50% or 60% unemployment easily. Much worse than the 1930s. It will be absolute hell for millions of Americans, and when the money stops flowing down to the man on the street, the blood will flow in the streets (Gerald Celente). Lots of it.”
There is a reason why every fiat currency in the history of the world has eventually failed. At some point, those issuing fiat currencies always find themselves giving in to the temptation to wildly print more money. Sometimes, the motivation for doing this is good. When an economy is really struggling, those that have been entrusted with the management of that economy can easily fall for the lie that things would be better if people just had “more money”. Today, the Federal Reserve finds itself faced with a scenario that is very similar to what the Weimar Republic was facing nearly 100 years ago. Like the Weimar Republic, the U.S. economy is also struggling and like the Weimar Republic, the U.S. government is absolutely drowning in debt. Unfortunately, the Federal Reserve has decided to adopt the same solution that the Weimar Republic chose. The Federal Reserve is recklessly printing money out of thin air, and in the short-term some positive things have come out of it. But quantitative easing worked for the Weimar Republic for a little while too. At first, more money caused economic activity to increase and unemployment was low. But all of that money printing destroyed faith in German currency and in the German financial system and ultimately Germany experienced an economic meltdown that the world is still talking about today. This is the path that the Federal Reserve is taking America down, but most Americans have absolutely no idea what is happening.
It is really easy to start printing money, but it is incredibly hard to stop. Like any addict, the Fed is promising that they can quit at any time, but this month they refused to even start tapering their money printing a little bit. The behavior of the Fed is so shameful that even CNBC is comparing it to a drug addict at this point…
The danger with addictions is they tend to become increasingly compulsive. That might be one moral of this week’s events.
A few days ago, expectations were sky-high that the Federal Reserve was about to reduce its current $85 billion monthly bond purchases. But then the Fed blinked, partly because it is worried that markets have already over-reacted to the mere thought of a policy shift.
Faced with a choice of curbing the addiction or providing more hits of the QE drug, in other words, it chose the latter.
So why won’t the Fed cut back on the reckless money printing?
Well, as Peter Schiff recently noted, Fed officials seem to be convinced that any “tapering” could result in the bursting of the massive financial bubbles that they have created…
The Fed understands, as the market seems not to, that the current “recovery” could not survive without continuation of massive monetary stimulus. Mainstream economists have mistaken the symptoms of the Fed’s monetary expansion, most notably rising stock and real estate prices, as signs of real and sustainable growth. But the current asset price bubbles have nothing to do with the real economy. To the contrary, they are setting up for a painful correction that will likely be worse than the one we experienced five years ago.
As I have written about previously, the Federal Reserve is usually very careful not to do anything which will hurt the short-term interests of the financial markets and the big banks.
But at this point the Fed is caught in a trap. If it continues to pump, the financial bubbles that it has created will get even worse. If it stops, those bubbles will burst. But as Doug Kass noted recently, it is inevitable that these financial bubbles will burst at some point one way or another…
“Getting in was easy. Getting out—not so much. The Fed is trapped and can’t end tapering or else the bond and stock markets will blow up. The longer this continues the bigger the inevitable burst.”
In essence, we can have disaster now or disaster later.
But most Americans don’t care much about what is happening on Wall Street. They just want economic conditions to get better for them and for those around them. And to this day, the mainstream media continues to sell quantitative easing to the American people as an “economic stimulus” program by the Federal Reserve.
So has quantitative easing actually been good for the U.S. economy?
For example, while the Fed has been recklessly printing money out of thin air, household incomes have actually been going down for five years in a row…
What about employment?
Don’t more Americans have jobs now?
Actually, that is not the case at all. Posted below is a chart that shows how the percentage of working age Americans with a job has changed since the year 2000. As you can see, the employment to population ratio fell from about 63 percent before the last recession down to underneath 59 percent at the end of 2009 and it has stayed there ever since…
So where is the “employment recovery”?
Can you point it out to me? Because I have been staring at this chart for a long time and I still can’t find it.
So if quantitative easing has not been good for average Americans, who has it been good for?
The wealthy, of course.
Just check out what billionaire hedge fund manager Stanley Druckenmiller told CNBC about quantitative easing the other day…
“This is fantastic for every rich person,” he said Thursday, a day after the Fed’s stunning decision to delay tightening its monetary policy. “This is the biggest redistribution of wealth from the middle class and the poor to the rich ever.”
“Who owns assets—the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday.”
Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed’s policy is that the rich will spend their wealth and create jobs—essentially betting on “trickle-down economics.”
“I mean, maybe this trickle-down monetary policy that gives money to billionaires and hopefully we go spend it is going to work,” he said. “But it hasn’t worked for five years.”
Sadly, Druckenmiller is exactly correct.
Since the end of the last recession, the Dow has been on an unprecedented tear…
Of course these stock prices have nothing to do with economic reality at this point, but for the moment those that are making giant piles of cash on Wall Street don’t really care.
Sadly, what very few people seem to understand is that what the Fed is doing is going to absolutely destroy confidence in our currency and in our financial system in the long-term. Yeah, many investors have been raking in huge gobs of cash right now, but in the long run this is going to be bad for everybody.
We have now entered a money printing spiral from which there is no easy exit. According to Graham Summers, the Fed has “crossed the Rubicon” and we are now “in the End Game”…
If tapering even $10-15 billion per month from $85 billion month QE programs would damage the economy, then we’re all up you know what creek without a paddle.
Put it this way… here we are, five years after 2008, and the Fed is stating point blank that the economy would absolutely collapse if it spent any less than $85 billion per month. This admission has proven just how long ago we crossed the Rubicon. We’re already in the End Game. Period.
Most Americans don’t really understand what quantitative easing is, and most don’t really try to understand it because “quantitative easing” sounds very complicated.
But it really isn’t that complicated.
The Federal Reserve is creating gigantic mountains of money out of thin air every month, and the Fed is using all of that newly created money to buy government debt and mortgage-backed securities. Over the past several years, the value of the financial securities that the Fed has accumulated is greater than the total amount of publicly held debt that the U.S. government accumulated from the presidency of George Washington though the end of the presidency of Bill Clinton…
The same day that the Federal Reserve’s Federal Open Market Committee announced last week that the Fed would continue to buy $40 billion in mortgage-backed securities (MBS) and $45 billion in U.S. Treasury securities per month, the Fed also released its latest weekly accounting sheet indicating that it had already accumulated more Treasuries and MBS than the total value of the publicly held U.S. government debt amassed by all U.S. presidents from George Washington though Bill Clinton.
To say that this is a desperate move by the Fed would be a massive understatement. We have never seen anything like this before in U.S. history.
And look at what all of this wild money printing has done to our money supply…
In many ways, the chart above is reminiscent of what the Weimar Republic did during the early years of their hyperinflationary spiral…
Just like the Weimar Republic, our money supply is beginning to grow at an exponential pace.
So far, complete and total disaster has not struck, so most people think that everything must be okay.
But it is not.
In a previous article, I included an outstanding illustration from Simon Black that I think would be extremely helpful here as well…
Let’s say you’re at a party in a small apartment that’s about 500 square feet in size. Then suddenly, at 11pm, a pipe bursts, starting a trickle into the living room.
Aside from the petty annoyance, would you feel like you were in danger? Probably not. This is a linear problem– the rate at which the water is leaking is more or less constant, so the guests can keep partying through the night without worry.
But let’s assume that it’s an exponential leak.
At first, there’s just one drop of water. But each minute, the rate doubles. So by 11:01pm, there’s 2 drops. By 11:02, 4 drops. And so forth.
By 11:27pm, there’s only six inches of standing water. Yet by 11:31pm, just four minutes later, the entire room is under nearly 8 feet of water. And the party’s over.
For nearly half an hour, it all seemed safe and manageable. People had all the time in the world to leave, right up until the bitter end. 11:27, 11:28, 11:29. Then it all went from benign to deadly in a matter of minutes.
Are you starting to get the picture?
What the Federal Reserve is doing is systematically destroying the U.S. dollar, and the rest of the world is starting to take notice.
Why should they continue to lend us trillions of dollars at super low interest rates when we are exploding the size of our money supply?
It is simply not rational for other nations to continue to lend us money at less than 3 percent a year when the real rate of inflation is somewhere around 8 to 10 percent and reckless money printing by the Fed threatens to greatly accelerate the devaluation of our currency.
When QE first started, the added demand for U.S. government debt by the Federal Reserve helped drive long-term interest rates down to record low levels.
But in the long-term, the only rational response by all other buyers of U.S. government debt will be to demand a much higher rate of return because of the rapid devaluation of U.S. currency.
So QE drives down long-term interest rates in the short-term, but in the long-term the only rational direction for long-term interest rates to go is much, much higher and in recent months we have already started to see this.
The only way that the Fed can stop this is by increasing the amount of quantitative easing.
Right now, the Fed is buying roughly half a trillion dollars worth of U.S. Treasuries a year, but the U.S. government issues close to a trillion dollars of new debt and must roll over about 3 trillion dollars of existing debt each year.
If the Federal Reserve eventually decides to buy all of the debt, then interest rates won’t be a major problem. But if the Fed goes that far our financial system would be regarded as a total joke by the remainder of the globe and we would reach hyperinflation much more rapidly.
If the Federal Reserve stops buying debt completely, the financial bubbles that they have created will burst and we will rapidly be facing a financial crisis even worse than what we experienced back in 2008.
But almost whatever the Fed does at this point, the rest of the world will probably continue to start to move away from the U.S. dollar as the de facto reserve currency of the planet. This move is just beginning, but it is going to have major implications for us in the years ahead. This is a topic that I will be addressing extensively in future articles.
Most of the debate about quantitative easing has focused on the impact that it will have on the U.S. economy in the short-term.
That is a huge mistake.
Of much greatest importance is what quantitative easing means for the long-term.
The rest of the world is losing confidence in the U.S. dollar and in U.S. debt because of the reckless money printing that the Fed has been doing.
But we desperately need the rest of the world to use “the petrodollar” and to lend us the money that we need to pay our bills.
As the rest of the planet starts to reject the U.S. dollar and starts to demand a much higher rate of return to lend us money, the U.S. economy is going to experience a tremendous amount of pain.
It is hard to put into words how foolish the Federal Reserve has been. The Fed is systematically destroying what was once the strongest financial system in the world, and in the end we are all going to pay the price.
The too big to fail banks are now much, much larger than they were the last time they caused so much trouble. The six largest banks in the United States have gotten 37 percent larger over the past five years. Meanwhile, 1,400 smaller banks have disappeared from the banking industry during that time. What this means is that the health of JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley is more critical to the U.S. economy than ever before. If they were “too big to fail” back in 2008, then now they must be “too colossal to collapse”. Without these banks, we do not have an economy. The six largest banks control 67 percent of all U.S. banking assets, and Bank of America accounted for about a third of all business loans by itself last year. Our entire economy is based on credit, and these giant banks are at the very core of our system of credit. If these banks were to collapse, a brutal economic depression would be guaranteed. Unfortunately, as you will see later in this article, these banks did not learn anything from 2008 and are being exceedingly reckless. They are counting on the rest of us bailing them out if something goes wrong, but that might not happen next time around.
Ever since the financial crisis of 2008, our politicians have been running around proclaiming that they will not rest until they have fixed “the too big to fail problem”, but instead of fixing it those banks have rapidly gotten even larger. Just check out the following figures which come from the Los Angeles Times…
Just before the financial crisis hit, Wells Fargo & Co. had $609 billion in assets. Now it has $1.4 trillion. Bank of America Corp. had $1.7 trillion in assets. That’s up to $2.1 trillion.
And the assets of JPMorgan Chase & Co., the nation’s biggest bank, have ballooned to $2.4 trillion from $1.8 trillion.
We are witnessing a consolidation of the banking industry that is absolutely stunning. Hundreds of smaller banks have been swallowed up by these behemoths, and millions of Americans are finding that they have to deal with these banking giants whether they like it or not.
Even though all they do is move money around, these banks have become the core of our economic system, and they are growing at an astounding pace. The following numbers come from a recent CNN article…
-The assets of the six largest banks in the United States have grown by 37 percent over the past five years.
-The U.S. banking system has 14.4 trillion dollars in total assets. The six largest banks now account for 67 percent of those assets and the other 6,934 banks account for only 33 percent of those assets.
-Approximately 1,400 smaller banks have disappeared over the past five years.
-JPMorgan Chase is roughly the size of the entire British economy.
-The four largest banks have more than a million employees combined.
-The five largest banks account for 42 percent of all loans in the United States.
As I discussed above, without these giant banks there is no economy. We should have never, ever allowed this to happen, but now that it has happened it is imperative that the American people understand this. The power of these banks is absolutely overwhelming…
One third of all business loans this year were made by Bank of America. Wells Fargo funds nearly a quarter of all mortgage loans. And held in the vaults of JPMorgan Chase is $1.3 trillion, which is 12% of our collective cash, including the payrolls of many thousands of companies, or enough to buy 47,636,496,885 of these NFL branded toaster ovens. Thanks for your business!
A lot of people tend to focus on many of the other threats to our economy, but the number one potential threat that our economy is facing is the potential failure of the too big to fail banks. As we saw in 2008, when they start to fail things can get really bad really fast.
And as I have written about so many times, the number one threat to the too big to fail banks is the possibility of a derivatives crisis.
Former Goldman Sachs banker and best selling author Nomi Prins recently told Greg Hunter of USAWatchdog.com that the global economy “could implode and have serious ramifications on the financial systems starting with derivatives and working on outward.” You can watch the full video of that interview right here.
And Nomi Prins is exactly right. Just like we witnessed in 2008, a derivatives panic can spiral out of control very quickly. Our big banks should have learned a lesson from 2008 and should have greatly scaled back their reckless betting.
Unfortunately, that has not happened. In fact, according to the OCC’s latest quarterly report on bank trading and derivatives activities, the big banks have become even more reckless since the last time I reported on this. The following figures reflect the new information contained in the latest OCC report…
Total Assets: $1,948,150,000,000 (just over 1.9 trillion dollars)
Total Exposure To Derivatives: $70,287,894,000,000 (more than 70 trillion dollars)
Total Assets: $1,306,258,000,000 (a bit more than 1.3 trillion dollars)
Total Exposure To Derivatives: $58,471,038,000,000 (more than 58 trillion dollars)
Bank Of America
Total Assets: $1,458,091,000,000 (a bit more than 1.4 trillion dollars)
Total Exposure To Derivatives: $44,543,003,000,000 (more than 44 trillion dollars)
Total Assets: $113,743,000,000 (a bit more than 113 billion dollars – yes, you read that correctly)
Total Exposure To Derivatives: $42,251,600,000,000 (more than 42 trillion dollars)
That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 371 times greater than their total assets.
How in the world can anyone say that Goldman Sachs is not being incredibly reckless?
And remember, the overwhelming majority of these derivatives contracts are interest rate derivatives.
Wild swings in interest rates could set off this time bomb and send our entire financial system plunging into chaos.
After climbing rapidly for a couple of months, the yield on 10 year U.S. Treasury bonds has stabilized for the moment.
But if that changes and interest rates start going up dramatically again, that is going to be a huge problem for these too big to fail banks.
And I know that a lot of you don’t have much sympathy for the big banks, but remember, if they go down we go down too.
These banks have been unbelievably reckless, but when they fail, we will all pay the price.