Why the U.S. “Middle Class” is Poor

The Federal, state, and local government takes in over five trillion dollars in the form of tax revenue each year.  Guess where the majority of that tax revenue comes from?  No, it doesn’t come from huge corporations, or investment banks, or insurance companies, or Wall Street.  Close to 90% of that tax revenue comes from you and me and really small businesses.  Never mind that these government entities can’t break even with all this money as that is a topic for a much longer post, but just imagine for a moment that we the citizens of the United States provide the Federal, state, and local governments with approximately $4+ trillion in tax revenue.  Larger corporations only provide roughly 6% of government revenue through taxes.

Large U.S. based multinational corporations have been enjoying record profits during the last few years while main-street american citizens are struggling.  Large corporate profits are approaching $2 trillion a year.  As a result, the stock market is fairing pretty darn well considering the struggles many Americans are facing economically.  Huge American corporations are enjoying cheap international labor and a lean base of U.S. employees that are terrified of losing their jobs.  Labor productivity is very high for these large American companies.  Why hire U.S. citizens when profits are hitting historical record highs?  Those at the top of these large U.S. corporate entities are rolling in the money as are investment bankers, Wall Street, and the rich that are in the know and invest money to make more money without doing anything to make that money.  Is it any mystery why the income gap in our great country is wider than any other developed country in the entire world?  Is it no wonder that the gap is still increasing?

Now, in addition to the enormous tax burden individuals and small businesses absorb, there is another high-priced burden — prices of everything we buy.  How do corporations make a profit?  Because we, the ordinary citizen, pay more for those products than they cost to produce and distribute.  Because we believe all the advertising bullshit that makes us think a product is worth more than its cost.  The marketing gurus call this “perceived value”.  So, as a result, not only are we supporting all our governments with the majority of their tax revenue, but we are also giving excessive money to huge corporations so that they can enjoy profits.  We, the middle class, are getting fucked on both ends.  And guess who gets all our money?  The government and the 1% that runs corporate America (huge corporations, investments banks, Wall Street, banks, insurance companies).

Now, in addition to the above two burdens, most of us must resort to forms of credit and loans to enjoy life.  As a result, we end up forking out money in the form of interest payments to the altruistic banks.  If we a buy a car, a house, or simply enjoy a vacation or dinner out — along comes the extra expense in the form of monthly interest payments.  Or, if you are young without wealthy parents and want an education to get a job then you also need to take out a loan (a loan you will be paying for the majority of your youthful life).  And since the corporations we work for aren’t going to give us annual pay raises above the rate of inflation (or hire you young folks after taking out that big loan to get an education) we will never be in a position to pay off that debt.  Therefore, monthly interest payments simply become a life-long additional expense in addition to income taxes, sales taxes, and inflationary prices coined “perceived value”..

The final piece of the elimination of the “middle class” comes in the form of higher inflation above an beyond the already considerable price inflation forced on the individual through corporate prices that are far above production and distribution costs.  This additional inflation is caused by the incompetence and cronyism of the Federal Reserve combined with our governments that can’t contain spending to the some $4 trillion bucks we hand over to them.  The crook-like Federal Reserve just keeps printing more and more U.S. dollars which simply waters down what little dollars we have left in our wallets.  Why do they keep printing more and more dollars?  I am not the one to answer that question, but it has something to do with our mounting Federal debt, trade deficits, and currency wars.  But it really doesn’t matter why when you consider that in the end it is the “middle class” that ends up disappearing.  How much more are you spending to fill up your gas tank?  How much more are you spending at the grocery store?  How much more are you spending when you travel and have to check bags?  How much more are you paying to heat or cool your homes?  How much more are you paying for entertainment and dinner out?

I don’t have a fully developed solution outside of a Utopian creation, but I do have a broad fundamental concept.  It is time to tax the shit out of the rich.  It is time to tax the shit out of huge corporations that are taking our money by shipping jobs overseas, charging us too much money to buy their products, and working current employees like dogs without raises greater than inflation.  It is time to cut the shit out of government spending.  I don’t care if the stock market takes a major hit.  All I want is the middle class to have a chance to get back on its feet.  A country without a healthy and strong middle class isn’t going to be around long in its current form.  And I for one am reaching the point where I would be more than willing to ensure that current form no longer exists.  But, a new form must first be envisioned through logic and true leadership.  Tearing down a corrupt and broken form without envisioning a radical but workable new form simply leads to a bandwagon of buffoons beating their chest and demanding a free bushel of bananas in exchange for nothing.  My Utopian visions could solve our problems, but then again, people would have to understand and agree that money is a myth and that the true form of currency is human energy, motivation, cooperation, sacrifice, and acceptance of some inequality not in gender or race, but in ability..

America’s Financial Apocalypse — Mike Stathis

Have you ever stumbled upon an author or thinker that confirms your intuition and broad thoughts, but due to their higher expertise or intelligence refines or improves your understanding of those instincts?  Well, last night I stumbled upon just such a person – Mike Stathis.  Usually I find people of interest in Penguin Classics and the author has been dead for hundreds or thousands of years.  Normally, these authors I connect with are philosophers or poets.  My most recent discovery was Robinson Jeffers (poet), but he has been dead for a few decades.  I always connect with or admire authors that attempt to portray or explore the truth.  I don’t think many can know the truth in full, but very special individuals can attempt to be as objective as possible to at least seek the truth to the best of their ability.

I stumbled upon Mike Stathis as a result of my previous post (Inflation – Fuse to the Debt Bomb).  I wanted to read expert opinion of the risk of future inflation.  Based on my intuition and experience at the grocery store, bars, restaurants, and the gas pump, we are already experiencing higher than usual inflation despite what the government and the media report.  But I wanted to get some expert views on how bad inflation might get in the next few years.  I found an article by John William’s who argues we are going to experience hyperinflation, which would essentially make the dollar worthless.  I liked this article because it sided with my intuition that inflation is going to get worse and expose the financial Ponzi scheme created by Wall Street, the Federal Reserve, huge corporations, investment banks and banks, the government, and the media.  I also found that Ron Paul, the only presidential candidate I somewhat like sides with the argument that we are going to experience hyperinflation.

Hyperinflation is an extreme case of inflation so I also wanted to get some opposing views.  I then stumbled upon Mike Stathis who actually took John William’s argument head on piece by piece.   I was so impressed by his objectivity, knowledge, insight and the fact that he took the time to address the issue in such a methodical and logical manner.   I decided to do further research on who this guy was and suddenly realized I had found a gem.  I never expected to find a great philosophical mind that was also a finance/investor expert that attempts to portray the truth despite the consequences or loss of financial gain or media influence.

Mike puts forward a very interesting argument against hyperinflation and I am not going to recap that argument here, but I will provide the link. Dismantling-John-Williams-Hyperinflation-Predictions.html  I do want to make a few broad comments about his point of view regarding inflation and the economic future of America.  Although he doesn’t predict hyperinflation, he does believe we will experience inflation or massive inflation.  And I tend to align more with his argument than those that predict hyperinflation.  Those that predict hyperinflation claim that because the Federal Reserve keeps printing enormous amounts of money combined with no link to an asset like gold means the dollar will eventually become a worthless piece of toilet paper.

Mike makes a few key arguments that I never thought about.  He says the dollar is heavily linked to oil since oil is traded in U.S. dollars.  He also makes the same argument about commodities.  Therefore, as long as the dollar is the currency involved with these important transactions it will maintain worth.  I have probably over-simplified his argument, but it makes sense.  He also makes the argument that since the dollar is the key currency used in international trade that we actually export inflation and reduce the potential inflationary impacts on the United States when we print more money.  He also makes another important point.  Given oil is a key ingredient to supporting the value of the dollar, the U.S. will not hesitate from using its superior military power to prevent any attempt to begin trading oil in another currency.  Guess what?  Iran trades oil in a different currency than the U.S. dollar.  Where do you think World War III might ignite?  Look at the media focusing on the nuclear threat as opposed to Iran’s attempt to undermine the U.S. dollar as a means to trade oil.  Guess what other middle east country was attempting to create a mechanism to trade oil without the mighty U.S. dollar?  Yep, it was Iraq.

The other excellent point Mike argues is that the powers that be (Wall-Street, large corporations, the Federal Reserve, investment banks and banks, the government, and the media) will do everything in their power to prevent a major collapse or something like hyperinflation.  This argument challenges my previous post in which I stated the upcoming higher inflation will blow up the debt bomb and awaken American citizens to the Ponzi scheme.  But his argument makes much more logical sense.  Rather than allow a total collapse, the powers that be will continue to push-off dooms day well into the future.  As a result, what we will experience as normal U.S. citizens is a “Silent Great Depression”.  We will be put through a long and extended period of pain, but not the type of pain that erupts into a revolution.  In other words, the powers that be will continue to take all our assets and quality of life but ensure we can still limp along nibbling on bread crumbs to keep us relatively content.  This is a much more intelligent strategy.  In reality, the good American citizens should stand up and start a revolution and demand a complete overhaul of our country.  But the forces and powers will employ all their influence to subdue the masses of normal American citizens as to further draw milk from the cow.

Here is a link to Mike’s firm and website that has many interesting articles that you may wish to read.  AVA Investment Analytics

I must warn you that some of the articles are very controversial, but he attempts to express the truth based on his real life experience in the investment community.   He has also published several books.  The book on the above image (America’s Financial Apocalypse) was written before the recent economic collapse.  He has correctly predicted many economic events that we have experienced in the last decade.  I am going to purchase and read his books to learn more about his thoughts and predictions, but based on what I have read thus far, he is a voice to be taken seriously.  But, as with any author or great mind, one must always further probe and question their thoughts and points of view.