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Thursday, July 10, 2014

Why the U.S. Economy is Going Down the Toilet



The fact that the rich are getting richer and the poor are getting poorer is pretty much indisputable. In the U.S., wages have been flat for almost 40 years (when adjusted for inflation). Meanwhile every year more and more of the good paying jobs are being off-shored which continues to erode the Middle Class.
The reason for all of this is multifaceted.
*  First the signing of trade treaties like Nafta, Gatt, etc made it a no brainer for companies to manufacture in very low wage countries and ship it to the U.S. with no tariffs or penalties.
* U.S. tax law makes money that U.S. companies make in foreign countries untaxable as long as it doesn't come back to the U.S. encouraging investment in foreign countries instead of U.S.
*  Government corruption has never been worse. There is a revolving door between industry and government leading to government regulations that are designed to either stifle competition or enrich the one making the regulations. Example Michael Chertoff was head of Homeland Security and passed regulations requiring the use of the full body scanners and then signed a multibillion dollar contract for them.  He leaves office and forms the Chertoff Group that receives millions of dollars a year----representing the body scanner manufacturers.
*  Too close relationship between the Federal Reserve and Wall Street/Hedge Funds. Hedge Funds can literally pick up the phone and "borrow" billions from the Federal Reserve at practically no interest to buy a company. They then have that company pay back THEIR loan and after a few years sell the company or chop up its pieces and make record profits NEVER paying out a dime themselves !!
*  The End of the Glass–Steagall Act in the 1990s was a disaster. Basically it said that Commercial Banks (that only make money by loaning money to businesses and individuals) could NOT merge with Investment Banks (who make money by playing the market with derivatives, shorts, etc). This means that if that law was still in effect, all of the big commercial banks (JP Morgan, Citibank, Wells Fargo, etc) could never have gotten into derivatives and the Panic of 2008 and the Bank Bailout would never have happened.
*  The population is being kept "content" by massive welfare spending (food stamps, welfare, housing, negative taxation {earned income tax credit}), etc. This however is not sustainable in the long term.
*  Federal Reserve is keeping economy afloat by pumping BILLIONS a month into the economy via "Quantative Easing". This money is flowing into the hands of the Big Banks and Hedge Funds hence why they are getting richer and richer and the stock market keeps going up while the economy is in the toilet). Very little trickles down to Main Street.
*  The dollar is lowly collapsing. Right now, the Federal Reserve is buying almost all of our government debt because other countries and investors refuse to buy them. One economist says this is like a snake eating it's own tail and its not sustainable.
*  The government is preparing for unrest hence the militarization of police, buying billions of rounds of ammo, etc for non-military government agencies, etc.

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