American Firesale: Making America Cheap Again
70 Years of Labor Suppression & Wealth Redistribution
70 Years of Labor Suppression & Wealth Redistribution
In recent years I’ve been a bit of a hermit… going down the rabbit holes of the internet. Between classes, while finishing my degree, on my breaks while managing a local gym, and of course in the wee hours of the night in my moments of insomnia.
Fears of the toppling of the ‘American Empire’ seem to be at all-time-highs nowadays. Those of which are grounded in facts, data and are not based in conspiracy theories — I am not at all surprised by these fears. The things that I’ve stumbled across, and the dots that I’ve been connecting are disappointing, daunting and most of all; infuriating. These dots are numerous and far-reaching. Whilst covering a large scope of how the greatest nation in the World operates. Permeating every single corridor of the U.S.A. and directly affecting everything you and I do, by way of the exponential waves that that of businessmen and policymakers manifest through their decisions and actions.
Disclaimers
I’m not an economist, market analyst, sociology or what-have-you degree graduate or established expert
My degree is in health, and specifically Exercise & Movement Science
I’m by all means a hobbyist, and I’ve only been paying attention for a short while
I started connecting dots on my own via podcasts and interviews, but the biggest moments of enlightenment came about while exploring the pages of Tailspin: The People and Forces Behind America’s Fifty-Year Fall — and Those Fighting to Reverse It, by Steven Brill
This paper is closer to a meta-analysis mixed with my opinions
If you’re comfortable with knowing those facts and still curious about my input and why — please continue. I will attempt to include all cited sources on the information that I’m drawing my conclusions off of (there’s a lot).
Prologue
I’m considering this writing an extension, or an elaboration, of my first article; “Extortion, Valuation Manipulation, and Rigging the System: How America Plays The Monopoly Game.”
In review, America has established it’s economic dominance — as well the dollar dominance (Faudot, 2016)— through a long, multi-decade process (that I personally deem of illegal nature) of stealing the wealth of her citizens via gold with the help of Executive Order 6102 in 1933, then manipulating the value of gold with the Gold Reserve Act of 1934 and then further by removing the monetary pegging to gold by abandoning the Gold Standard Act in 1973, and then promoting a failing economic system that is Keynsian economics (a debt-based economic model). Those initial steps being followed by America’s entry to WWII and the trade liberalization following WWII allowed the US’s economic dominance to gain footing (Baldwin, 1985). Now fast-forward to today; the average American is left sitting in a grave, buried under a mountain of debt and pensions failing to uphold their promises to investors that were pushed on them by the leaders they looked to.
TL;DR 🔖American citizens have found themselves observing a system that is seemingly failing at every turn:
American education has fallen in rankings to below the 50th percentile in the rankings of the OECD countries.
American education has created an entirely separate system of insulation for the top single-digit percentile of the population through establishments such as Harvard and Yale (Brill, 2018).
American workers (specifically manufacturing) have been getting displaced for decades (Brill, 2018), due to outsourcing and innovation.
American financial systems have been scheming new ways to steal wealth from the vast-majority of its citizenry to place it in the hands of the few (Brill, 2018)(Wolff, 2017).
American politics is no longer a fight for what’s right or even necessary when it comes to legislation, but a mere matter of which corporation or industry lobbied the hardest (Brill, 2017).
My Opinion: Americans, and the world over, need an honest money. An honest money can help get to the source of a vast majority of these issues.
My 2 Cents To Kick Things Off
The reason I deem the economic model as ‘failing’ is for more-or-less one very easy example that was mentioned in my preceding article. Two weeks. Two weeks of an economy on pause and we are facing a real possibility of a literal economic meltdown. Now we are at about the eighth week and many seem to have forgotten (or perhaps they are simply bored with the state of things) that the real victims are the small business owners and those living paycheck to paycheck.
Fueled by over-extended debt, discouragement to build savings (both on the individual as well small-business levels), and over-valued assets by the shady actions of large business entities. All while The Federal Reserve and the Department of the Treasury spend arm & leg in efforts to avoid a naturally occurring recession. And now, the country has to take a breather because of a viral infection and our fragile system is choking on a hiccup. A recession that would’ve occurred naturally and have been healthy for the economic ecosystem is now shaping up to become a meltdown.
Before I get into the topics, I want to bring your focus to a few dates from the 70s here. While there will be other dates mentioned, these listed are of some significant importance;
1970s, the First Amendment was utilized by businesses to blitzkrieg Washington with lobbying; (Brill, 2018). Effectively allowing for corporate manipulation in legislative matters of Congress
1970, rise in popularity of shareholder democracy. “The social responsibility of business is to increase its profits.” — Milton Friedman (Nobel laureate economist).
1971, creation of the NASDAQ. Allowed small companies to go public without established lines of revenue or profits — promoting corporate gambling as an “investment” technique.
1973, abandoning of the Gold Standard.
1978, rapid allocation of capital to — and the rise of — pension funds.
1979, the last year that middle-class family incomes grew faster than those of the upper-class in the US.
(Thanks to Ben Prentice, and whomever else may have helped him, we have a plethora of images from https://wtfhappenedin1971.com/ to coincide with some of these events.)
The American Worker
Right now America is witnessing quite an interesting set of events play out. While supply chains are grinding and being pressed to their limits as the majority of the country stay at home. This is, of course, due to an outbreak of the COVID-19 virus that spreads rapidly wreaks havoc on the Upper Respiratory System, effectively causing a dramatic accumulation of debris in the lungs resulting in heavily labored breathing and in extreme cases can be fatal. The official reaction to this event has been to shutdown the entire country in an attempt to slow the spread enough so that our health professionals get valuable time to figure out a strategy and a method to get out ahead of the outbreak.
With shutting down and businesses no longer receiving revenues, they have lost the necessary functions to allow them to operate as a “business.” In losing these functions they have also lost the capability to compensate their employees for services rendered. This cascading effect leads to loss of income for scores of our citizenry, which then causes rents to go unpaid, utility bills unpaid, and credit-card bills unpaid as the afflicted party directs their funds to the most important necessities; food and safety.
Analysis | The awful reason wages appeared to soar in the middle of a pandemic
This morning, the Labor Department reported that wage growth skyrocketed in April. Average hourly earnings in the…www.washingtonpost.com
As our country witnesses the largest exodus of Americans from the employment market we have ever seen in history, our stock market climbs in valuation. Let that sink in. As we see the largest amount of citizens — IN THE COUNTRY’S HISTORY — lose their jobs and sources of income…. As of May 13th, 2020 the United States of America has officially hit 36.5M Americans that have filed for unemployment.
Great Depression 2020? The unofficial U.S. jobless rate is at least 20%-or worse
The U.S. unemployment rate exploded to 14.7% in April after more than 20 million jobs were lost to the coronavirus, but…www.marketwatch.com
Workforce Displacement 👷
This brings us to some points of concern that I have come across for our workforce. A conversation that has been a topic of discussion for many years now is the wages of the American worker. We had seen a plethora of headlines for the past few years as organizations wrestled with increasing the minimum wage or simply innovating those workers away. Wages is an issue entirely of itself that I believe does not get its time in the sun.
Since the 70s, there has been some worrisome bifurcations in the earnings of the American population. Now… this all ends up bleeding into every topic I will mention here so I apologize for any confusion. The way I end up organizing this paper will be in an attempt to allow the easiest path to follow.
1979, the last year that middle-class family incomes grew faster than those of the upper-class in the US.
✈️Boomer-Effect 💥
SO, a brief history lesson. We’re first going all the way back to World War II. What WWII did for the American workforce was that it provided a brief reprieve for corporations from having to deal with strikes by unions via a “no strike pledge.” As our time across the pond ended, our boys came home. And they were ready to work. However leading into their return home the National Labor Relations Act gave unprecedented power to unions, culminating in numerous strikes that involved many millions of workers. A reaction was due, enter Taft-Hartley.
1947 was the year this bill passed, and at the time over 35% of the workforce was unionized. With the help of the Taft-Hartley attempting to re-balance the power struggle between unions and corporations, corporations started to push back. The problem was that corporations had the resources and thus the ability, to inflict far greater magnitudes of damage than a union strike. One in particular is the case of J.P. Stevens. The 2nd largest textile maker in the 60s with 45,000 production workers. What Stevens did was fire scores of their employees for simply having expressed support for unions, while knowing this activity was illegal. Stevens was capable of doing this because of the impotence of the laws prohibiting this activity. The company drew out a legal battle for nearly four years arguing their case. In this time, Stevens profited by $277M (that’s million, annotated by the “M”). By acting illegally they avoided having to pay the $0.25 wage increase per 34,000 workers as well as the benefits paid out for the duration of the case (Brill, 2018).
🚧War on the Workers ⚠️
The reason I wanted to mention that seemingly boring piece of history is… it was the first big case showing that corporations are incentivized to act the villain, at least in the short-term. Through short-term thinking companies get monetarily rewarded in the immediate for not only breaking the law but sacrificing their employees, which are the lifeline of their organization to begin with.
After corporations made this realization, the war against the worker would become catalyzed with stock buybacks (which we’re recently being reminded of the short-comings of this with Boeing), takeover battles via tender offers, and outsourcing jobs to cheap-labor countries. These strategies contributed to some American corporations and their committees fluffing their immediate returns and sacrificing long-term thinking as well as their own employees. Meanwhile, 30% of the manufacturing workforce evaporated between 1980 and 2015 (Brill, 2018).
Outsourcing of jobs began to significantly impact American Labor, but it wasn’t a one-off problem. It was a combination of multiple movements all happening in-synchronous. Union-resistance by corporations coupled with “raiders (individuals/groups that use tender offers to acquire majority share of a company to gain control),” buying their way into shareholder-stake and making cuts to increase immediate profitability and shareholder return posed risks for many of the employed. Also included was labor cuts and/or outsourcing the jobs to a cheaper workforce abroad with the liberalization of American Trade and the subsequent advances in technology. In 1973 there were over 1M textile industry workers, fast-forward 40 years later and there was barely 10% remaining (Brill, 2018).
📶Where Innovation Slides into View 💻
Now, the outsourcing of jobs topic also tends to fall in line with the innovation discussion. I believe that technology is the path to a brighter future. One of greater returns had, for less effort expended. However, there needs to be accommodations made along the way to that future.
One of the greatest fallacies, in my opinion, in arguments against innovative technology is that the innovations “kill jobs.” However, this is not true. In fact new technological advances create jobs, resulting in a demand-pull effect. What happens is simply a displacement of the current workforce. As a current task becomes unnecessary it is amended, or replaced, and typically it’s replaced with a new necessary task. Such as the field hand being replaced by the horse-drawn til, the field hand now needs to worry more about the health of his horse and the maintenance of the til. Or the stablemaster that was rendered unnecessary because of the automobile, now he needs to either specialize in a skill such as livestock health or adapt and learn mechanical skills for the new technology that has displaced his industry. Where the real issue arises is the level of technical skill needed by the newly birthed job. That is where we need to make accommodations.
George Meany, former president of the AFL-CIO saw this issue 70 years ago, and he foresaw the issue that we are now being burdened with (Brill, 2018).
“Times have changed, the world has changed, and this country’s trade policy must be changed to meet these new conditions…” George Meany, speaking in a hearing of the House Ways and Means Committee.
While we have to assist our workers with these transitions into new tech, we also have a detachment of the wages vs cost of living & production. The combination of all three of those are directly correlated to quite possibly the most important decision made in monetary policy, that occurred in the 70s. Taking America off the gold standard. Cost of living, wages and the gold standard are topics that I mention in my previous article, here.
Combining the cessation of the gold standard with the anti-worker strategies, stock buybacks to prop immediate shareholder profits, and outsourcing American jobs leaves the greatest portion of the population in the ditch.
🏪Encompassing the Anti-American-Worker Effort 👷
As America has advanced headlong toward automation and globalization, her workforce — pummeled and manipulated for the benefit of corporations — has continued to get kicked while they lie prostrate on the floor. While promoting global trade but pushing the American Worker into a corner to be ignored, big business subsequently won twice. Not only could they strong-arm their workers, but they were also being compensated for innovating said workers away while also not being incentivized to train said workforce to be capable of partaking in the coming paradigm shift. Praised for cutting costs by illegally firing workers for unionizing. Praised for outsourcing work. Praised for leaving the American Worker out in the dust.
While profits are necessary, we have to demand that portions of the production happen within our own borders, to act as a hedge from the ramifications that globalization brings. Effectively providing a level of insulation, which is a strategy I believe every country should adapt as much as possible. But most importantly, we have got to start acting in benevolence when it comes to our employees and our neighbors.
The Blunders of Financialization
1970, rise in popularity of shareholder democracy. “The social responsibility of business is to increase its profits.” — Milton Friedman (Nobel laureate economist). Corporations shifted from a long-term profitability focus to higher short-term returns to pump stock valuations in the immediate, at a cost to long-term benefits and planning.
We return to the 1970s as a focal-point for the beginning of a cascade of issues. Martin Lipton is a man who made a name for himself as a lawyer whom often took the side of defense in dealings with tender offers; which gained popularity in the 70s as a strategy to make high-yield returns in a very rapid timeline (as mentioned before). The ways they made rapid returns I mentioned previously; cut costs, remove employees, outsource employment & production, and essentially do whatever it takes to give the immediate quarterly and annual returns reports a positive uptick. None of this would have been possible without the rise in popularity of shareholder democracy.
“The social responsibility of business is to increase its profits.” — Milton Friedman (Nobel laureate economist).
The way this “shareholder democracy” paved the way for tender offers was that this particular political move within a corporation allowed for each shareholder to not only have a voice but, through a tender offer, essentially commit their voice to another’s. With enough shareholder voices under one banner, an essential coup can be arranged from within, and then control can be bought up via a tender offer.
I bring up Lipton for a quote that he left in 2016 that rings very true; “What we’ve seen is the financialization of the economy…. we created a whole separate economic activity of trading pieces of paper — which accomplishes nothing.”
That quote encompasses a tidal wave of reckless decisions and financial “innovations”, and describes the exact reason why we’re getting deeper and deeper into a grim outlook for the future of our nation.
💸Financialization & Corporate Gambling 🏦
Now, some of you may be asking “what in the hell is ‘financialization,” or “why should I care about what Wall Street & the banks are innovating?” While the former is a fair question, the latter I would argue is born out of ignorance. Surely you remember the 2008 Global Financial Crisis…? Well that was made possible by a little financial innovation called the Mortgage Backed Security (MBS), manifested into existence by Lewis Ranieri. If you’ve seen The Big Short then you know quite well who Lewis is.
If you haven’t watched The Big Short, I suggest you set a reminder in your phone at this moment to watch it once you’re done frolicking with me through my thoughts.
Essentially an MBS was the monetization of the debt of thousands of mortgages, by grouping large amounts of mortgages into one singular product. Allowing individuals/entities to bet on the payments of mortgages by “investing” in these securities, while Wall Street cashed in exorbitant fees for the sales of the MBS’s.
“Two toxic ingredients that would be key factors in America’s tailspin had come together: A preoccupation with financial engineering aimed at enabling ever more aggressive betting on paper instruments had combined with still more engineering that allowed for those facilitating the bets to avoid accountability for the risks they were creating — risks whose consequences would ultimately be suffered far beyond the financial community.” — (Brill; 3, 70).
The creation of MBS’s — compounded by their success — opened the floodgates for financial engineering. The redistribution of wealth, rather than the creation of wealth, which is easily noticeable in Figure 4. Ergo, you now know what financialization is. The act of inventing new methods to rearrange who has money without actually creating a new product. Now, Ranieri wasn’t the sole architect of what would later be a catastrophe that would culminate with the events of 2008.
🎲Gambling on Gambling 🎲
Adding a little gas to the fire was the Credit Default Swap (CDS), pioneered by Blythe Masters in 1994. A CDS is a security — containing value based on the value of something else, these derivatives were essentially a bet on the value of whatever they represented (in this case a house mortgage) and easily comparable to insurance. Essentially a bet on whether the insurance is needed. A CDS on something like say… an MBS, would essentially mean you were betting for or against the MBS defaulting or not. This allowed for an entirely new, far-reaching market to be established. Secondary to the housing market itself, this market of betting on mortgages ran viral. And creating an environment tantamount to a casino, with much greater winners and far greater losers than anything on Wall Street.
Okay yeah that sounds like a dumpster fire. No way it could get worse right? Well no, not quite. CDS’s were not considered insurance by the regulatory body, which meant that none of the entities taking part in the sales of the swaps was required to keep reserves on-hand. Okay cool, so anybody placing these bets were not required to hold the cash accountable in case the bet went against them, how could that go wrong? Anybody having flashbacks to Molly’s Game?
If you haven’t watched Molly’s Game I suggest you place another reminder. Also possibly consider upgrading your taste in films.
So, Wall Street is gambling uncontrollably and players in the space are not expected to be prepared to pay out in the case of a loss. Well it gets worse. A lot worse. In 1994, a federal statute allowed banks to merge and operate branches in every state, effectively allowing them to grow like a weed. Injecting their roots into every corner of the country. By 2005 the ten largest of these weeds held a 61% market share. NOW the scene is starting to get set for you isn’t it? See where this is leading to a position of a dumpster fire becoming the Australian Outback fires?
Well, buckle up because the road gets worse. The year is 1999, and President Clinton repealed the Glass-Steagall Act (Brill; 3, 72). The Glass-Steagall Act had prevented government-backed banks from engaging in risky investment-banking-like activities such as derivatives trading. Now it was possible, and next to unregulated.
Now there is absolutely nothing preventing banks from getting involved in Wall Street’s gambling machine. Don’t worry though, there’s one more can of gas to throw on our dumpster fire. Our story brings us to what is called a Synthetic Credit Debt Obligation. Synthetic Credit Debt Obligation (sCDO) were later concocted. While a credit default swap was basically insurance on a product, the sCDO was essentially a bet on an event occurring that was out of complete control by anybody. Nothing more exciting than placing a bet on the outcome of another individual’s bet, that’s a bet on the insurance of a product, that’s just a grouping of a bunch of those products together.
And there you go, that’s the basics of how the 2008 crisis ended up being the result of a bunch of greedy bankers trying to get a quick buck. And politicians falling in-line to enable their addiction.
🌐Enter, Stage Left: China 🌏
Remember earlier how we mentioned that raiders were working their way through America’s corporate sector and using tender offers to gain control of a company and essentially gut everything to pump quarterly returns then leave with huge sums of cash? Well part of that process was the outsourcing of American jobs. And where did a lot of those jobs and manufacturing lines go? We shift our focus to China.
In May of 2000, China was admitted to the World Trade Organization, promoted by President Bill Clinton. Claiming that China’s admission to the WTO was a “…hundred-to-nothing deal for America when it comes to the economic consequences.” Well, as Steven Brill points out in Tailspin (which if you haven’t caught on yet, is where the majority of these dots were connected), the result couldn’t be farther from Clinton’s claim.
In 1961, the US enjoyed a trade surplus of $5.1B in exports over imports (Brill, 2018). Before China was involved in any large sense. However, from 2000–2009, the trade deficit with China alone tripled to $227B and the U.S. lost 5.6M manufacturing jobs, including 627,000 in tech-related industries (Brill, 2018). Obviously China was the winner many times over in this arrangement.
As the Chinese acquired large sums of cash from the winnings of their admission into the WTO, they deemed U.S. Treasury Bonds as the safe haven for the treasure trove (Brill, 2018). China wanted to keep their money in T-bills because of the USD’s Global Reserve status, and T-bills are a more pure representation of the Constitutional Dollar (defined by Mises here). By allowing Americans to borrow money from the Chinese at very low interest rates, they were loaning at low-risk rates to very high risk American practices. This was a major factor contributing to the easy money that flowed to finance and into the riskiest mortgages and then into the MBS’s and derivatives like the CDS’s. A chain-reaction of bad money practice after bad money practice that ultimately toppled global economies.
By doing this, interest rates shot to historical lows and as more money pushed into the system it made loans less costly for Americans to take out. Those loans went to the housing market, and what was the housing market to Wall Street? The big fat cash-cow made so by the MBS’s, CDS’s, and sCDS’s. Causing an exponential issue to go nuclear.
“Yes, trade has cut costs and spread jobs and wealth around the world and taken millions of people out of poverty…. But we live in the United States, and we have done nothing to take care of the people here who paid the price for all that.” — Joseph Stiglitz, Nobel laureate and chairman of President Clinton’s Council of Economic Advisers; (Brill, 2018)
Remember who paid the price for that financial nuke going off? It wasn’t the big executives or policymakers that paved the road for this atrocious party of degenerates and stupidity. It was the average American homeowner.
📖A Withering Education System 📚
Without a purely fair and transparent education system, a fairness to the American Dream will remain out of reach for the vast majority. An education system that drafts from legacy more than merit perverts the strengths of a meritocracy coupled with capitalism.
Brill shows exemplary character in Chapter 2 of Tailspin, where he admits that his acceptance (as well as his later successes) into Ivy League also caused him to later be part of the problem that is the meritocratic elite. What he also shows is that there was indeed a problem with the system, exposed by the rise of one R. Inslee Clark. Clark (nicknamed “Inky”).
What he did was travel the country, interviewing remarkable students with relatively irremarkable lineage resumes. Students that didn’t have a life of luxury, and possessed the willpower and ambition to rise above their peers and inherited social stature, with the grades to boot.
Rather than the standard for Ivy League at the time which was, in Brill’s words, “… Yale had accepted most alumni sons who applied and had otherwise loaded the college with boys from the most prestigious prep schools, despite the fact that they achieved academic honors, such as Phi Beta Kappa, in proportions far lower than the minority who came from public schools (Brill, 2018),” Inky had set out to change the game. With “Inky’s Boys and Girls” the recruitment stratagem shifted, albeit slightly. Flaunting impressive scores from Inky’s recruits, Yale boasted impressive numbers in test scores as well as diversity among their student population versus their competitors (Sternberg, 2007).
Suppressing the recruitment of youth from diverse backgrounds to colleges worthy of their work-ethic, while pulling from legacy lineage, is a system that I believe forms an echo-chamber within the academia world. I feel this way because legacy’s tend to be taught, and even mentored, by their successful predecessors. The problem that arises here is that there’s a possibility of indoctrination to a specific train-of-thought, which can allow for the suppression of new ideas, new cultural epiphanies, and acceptance of new technologies. And I feel that was what Inky saw, and was therefore so motivated to lash out into the world to change.
📊King-of-the-Hill 🗻
The sons & fathers, husbands & brothers that came back from WWII to America returned with a fervor that lead to the American economy to exploding with robustness for decades. And what these men of war did following the economic boon was exactly what a tactician and warrior would do, and they did it well.
“Massively intensified and massively competitive elite training meets massively inflated economic and social rewards to elite work. You, in virtue of sitting here today, belong to the elite — to the new, super-ordinate working class.” — Daniel Markovitz, (Brill, 2018)
These men and women did the work to position themselves as victorious over their fellow Americans. What is the next step when you reach the top in King-of-the-Hill? You fortify and defend your position and you make yourself so well positioned from the high-ground that, as long as you don’t slip up, you maintain your dominance and position of power. What do you think our American veterans-turned-businessmen did?
While across the Atlantic these fortifications would have been anti-tank barriers, sandbags and trenches… in the elite world its a bit different.The meritocratic elite sent their children to work as bankers, lawyers and executives that all became smarter and better armed to further fortify their moated positions in the top of society.
“…although it was once the engine of American social mobility, meritocracy today blocks equality of opportunity. The student bodies at the elite colleges once again skew massively towards wealth.” —Markovitz (Brill, 2018)
The rise of the above aristocracy gave them the tools to further distance themselves from the rest of American Society, increasing the wage-inequality-gap and further compounding their solidification of their societal positions.
“American meritocracy has thus become precisely what it was invented to combat, a mechanism for the dynastic transmission of wealth and privilege across generations.” — Markovitz (Brill, 2018)
🌐America is Failing 🌎
America has become a victim of its own philosophy. Our meritocracy is allowing for the individuals whom are exceptionally skilled to rise above the tide and take the prestige and wealth that they are capable of, there’s nothing wrong with that. In fact I applaud it, it’s why so many individuals across the globe flock to our shores. However, this system also allows those individuals to be capable of sending their offspring to the top-tiers of schooling and teaching, regardless of the child’s innate abilities and based solely off the parent’s social wealth and financial wealth. Which over time has resulted in the creating of a separate society, as well as an echo-chamber, for the elite. As the cycle works through the members of the elite and their children become entrenched and generate their own “wealths,” (also likely not a word, BUT I still feel it fits so back to the show) the inequality gap grows wider and wider.
Where do you think a lot of those young minds went? You guessed it; politics, law and finance. As we stated before, financialization is an overall negative. These careers seem, to me, to be the sources of all of the wealth redistribution rather than creation. When the families at the top have the majority of the wealth, where is the redistribution going to pull from — those at the bottom.
Elon Musk actually gave credence to this belief that too many strong minds have shifted to the financialization system. While speaking with Joe Rogan on Joe’s podcast; “The Powerful Joe Rogan Experience”, Musk touched on this subject briefly. We have allowed too many of our greatest minds to dedicate their brilliance to systems that don’t produce anything of real value. An adoption of creeds such as that of Inky Clark, Anthony Marx at Amherst College and Musk, will help change our country and our future for the better. A country who’s majority of the citizenry (and businesses) are most concerned about the long-play and pushing the boundaries of science and questioning philosophies of business, finance and education.
The “Bi-Partisan” Political System
1970s, the First Amendment was utilized by businesses to blitzkrieg Washington with lobbying; (Brill, 2018). Effectively allowing for corporate manipulation in legislative matters of Congress
All of the effort that has gone into the elite’s fortifications and insurance that their positions cannot be deposed has led to a rigging of our financial system. While the majority of Americans do not hold assets, the majority of assets held are in the hands of the elite (Wolff, 2017). What’s worse is the allowance of corporations and industries as a whole to financially manipulate political processes via lobbying. This was thanks to the efforts of Alexander Meiklejohn and his philosophy that free speech extends to businesses, and should allow for the use of corporate funds to lobby political topics via the Nixon v. Shrink Missouri Government PAC, and has directly incentivized our political structure to be bought out. No longer is America the land of the free, home of the brave. We are living in an America that is the land of greed, and home of the depraved.
President Obama proposed a deal that was very similar in vision to one that had failed under Nixon — the Patient Protection & Affordable Care Act, because it was refuted by Democrats for involving too much government into healthcare under Nixon’s presidency, and got met with pure vitriol by the Republican party for the exact same reason during Obama’s. Steven Brill interviewed Frank Luntz (Brill, 2018), a Republican strategist whom helped build a platform to oppose Bill Clinton. What Luntz spoke on was a private dinner where he sat down with big-ticket members of the Republican party. This is what Frank had to say;
“The goal was to talk about what we could do about Obama, and health care was probably number on the list,” Luntz went further to speak on the topic of a few senators that expressed wishes to negotiate with Democratic senators on behalf of the American people, “The sense was that we’d let them play along, but then come up with the arguments and polling that would get them to drop out.”
Making it seem as though their true intent was to prevent the opposing ‘party’ from gaining anything they desired. Luntz went even further to explain that the encompassing goal was, “we couldn’t let Obama have a victory.”
What’s worse is that the individuals we have voted into political offices are holding the hands of the men in power who were in command of the entities that brought so many awful consequences down up on us through the financial tool of bailouts. This melding of government and economy deteriorates and undermines the soul of a capitalist market, while the power & wealth gets concentrated into the hands of the few.
A country of Freedoms requires political elasticity, as well as open-mindedness. Which are both qualities that America has fallen short of. While we may be a beacon of hope and freedom for many members of the global community, we can do better. We must do better. And in turn — be better.
Closing Thoughts: Fix the Money, Fix the World
1978, rapid allocation of capital to — and the rise of — pension funds.
Banks have pressured citizens to use their credit cards, take out loans on everything from houses to TV’s, use debt first, save less, and swipe our future away one purchase at a time. Even those whom have elected to plan for their future via pension funds are in a shit situation. Mark Yusko has been banging the table about a lot of these types demographical issues, a huge one is the pension crisis. Pension funds rose in popularity after companies were allowed to match the contributions their employees made, effectively allowing for an employee to double the growth rate of their position. Anyone can see why this would cause the average American to become excited — planning for the future and retirement just became quite a bit easier. However, pensions aren’t impervious to greed or poor decision making. Or worse, an overinflated economy.
Pension funds have taken up a strategy of putting their money to work in an effort to increase their returns, but they’ve failed. Numbers of pensions across the country are underwater on the returns they’ve promised to their investors. In a 2018 article published by the University of Pennsylvania, the amount of shortfall for American pensions had reached a $4.4T (that’s in trillions, yes), a monstrous amount of money that our own citizens are being promised.
Our education system is failing us by allowing the elite to create a monopoly on top-tier education all while America’s over-generalized “education system” doesn’t teach anything. We aren’t teaching our youth true problem-solving, what money is and how it works, how to lose and benefit, and frankly we aren’t even teaching our children what it means to lose. We are effectively raising our youth to be grown-children, without the capability to handle the fact that life is difficult, and the fact that “winning” is actually hard. Winning requires work, and we’re all statistically more likely to lose than we are to succeed.
“Humanity has shown that when it comes to money, we are not responsible enough to keep greed and irrationality out of the conversation.”
In my opinion there is one solution that could allow for a benevolent change or revolution. Money is at the source of so many of these problems, Keynesian economics has forced each and every individual to do whatever they can to gain as many dollars as possible as each value gets printed into oblivion. A money where every individual profits by just having a savings again. A money where transactions are transparent but the senders and receivers are encrypted. With that kind of money, we may be capable of preventing the illegal kinds of actions taking place in Washington D.C. With the transparency we could track our own country’s spending more closely. And we can avoid headlines like the one below.
U.S. Army fudged its accounts by trillions of dollars, auditor finds
NEW YORK (Reuters) - The United States Army's finances are so jumbled it had to make trillions of dollars of improper…www.reuters.com
If we separated the power of money away from government (which is what The Federal Reserve was supposed to be) and removed the temptation to print money at the behest of whomever lie in a particular point of power, we could start to fix our world. A money of the people. An honest money, that doesn’t have a policy that is capable of having human flaws impressed upon its functioning. A money who’s policy will stand-fast, no matter the world’s political events. A money that is border-less, self-secured, and global. Fixing the money can allow us to fix part of the problem. However America’s problem isn’t just solved by fixing the money, it also requires a shift in thinking and mindset.
My answer to fixing the money can be found here.
Buy Bitcoin.
Thank You For Reading
If you’ve stuck it out to the end, I hope you enjoyed the reading but more importantly I hope you learned something! And maybe even opened your eyes even a fraction of the amount that mine have these past few years.
Scroll past the addresses and you’ll find my references for the sources I’ve used over the years to acquire my knowledge and understanding. While not all were directly cited, it all played a part in some way or another.
References
All directly cited materials in this paper were cited from Tailspin: (chapter “x”, page “x”)
Literary:
Baldwin, Robert E., and Anne O. Krueger. “The Structure and Evolution of Recent U.S. Trade Policy.” 1985, doi:10.7208/chicago/9780226036533.001.0001.
Brill, Steven. Tailspin: the People and Forces behind America’s Fifty-Year Fall — and Those Fighting to Reverse It. Vintage Books, 2019.
Faudot, Adrien, and Jean-François Ponsot. “The Dollar Dominance : Recent Episode of Trade Invoicing and Debt Issuance.” Journal of Economic Integration, vol. 31, no. 1, 2016, pp. 41–64., doi:10.11130/jei.2016.31.1.41.
Frankl, Viktor Emil., and Hse Lasch. Man’s Search for Meaning: an Introduction to Logotheraphy. Hodder and Stoughton, 1962.
Hazlitt, Henry. Economics in One Lesson. MacFadden-Bartell, 1969.
Wheelwright, Tom. Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes. RDS Press, 2018.
Sternberg, Robert J. “A Systems Model of Leadership.” American Psychologist, vol. 62, no. 1, 2007, pp. 34–42., doi: 10.1037/0003–066X.62.1.34.
Podcasts:
The Pomp Podcast: each individual is one episode, hosted by Anthony Pompliano; Co-Founder & Partner at Morgan Creek Digital
Guests: Alex Gladstein, Alexis Ohanian, Aleks Svetski #1 & #2, Arjun Sethi, Chamath Palihapitiya, David Sonstebo, Igor Jablokov, Jason Williams #1 & #2, Jeff Booth, Mark Cuban, Mark Yusko #1 & #2, Perianne Boring, Peter Zeihan, Preston Pysh, Raoul Pal, Robert Breedlove, Ruben Harris, Tim Kennedy
Tales from the Crypt: hosted by Marty Bent; Editor-in-Chief of Marty’s Bent, co-hosted by Matt Odell
Guests: Dave Collum, George Gammon, Jeff Booth, Matt Ahlborg, Michael Krieger, Roy Sebag, Travis Kling
The Wolf of All Streets: hosted by Scott Melker; former DJ & Producer, Analyst, and Consultant
Guests: Catherine Coley, Ed Felton, Eric Feigl-Ding, Dr. Michael Corrado, Dr. Richard Melker, Mark Yusko, Ryan Selkis
We Study Billionaires: Co-founded — and hosted by Preston Pysh; Engineer and Investor
Guests: Jeff Booth, Martin Katusa
Websites:
“1947 Taft-Hartley Substantive Provisions.” 1947 Taft-Hartley Substantive Provisions | National Labor Relations Board, www.nlrb.gov/about-nlrb/who-we-are/our-history/1947-taft-hartley-substantive-provisions.
Amadeo, Kimberly. “4 Reasons Why US Education Is Falling Behind.” The Balance, The Balance, 25 June 2019, www.thebalance.com/the-u-s-is-losing-its-competitive-advantage-3306225.
Amadeo, Kimberly. “Are You Officially in the Labor Force?” The Balance, www.thebalance.com/labor-force-definition-how-it-affects-the-economy-4045035.
Amadeo, Kimberly. “How a Boring Insurance Contract Almost Destroyed the Global Economy.” The Balance, The Balance, 8 Aug. 2019, www.thebalance.com/credit-default-swaps-pros-cons-crises-examples-3305920.
Amadeo, Kimberly. “How Capitalism Works Compared to Socialism and Communism.” The Balance, www.thebalance.com/capitalism-characteristics-examples-pros-cons-3305588.
Amadeo, Kimberly. “How Mortgage-Backed Securities Worked Until They Didn’t.” The Balance, The Balance, 13 Jan. 2020, www.thebalance.com/mortgage-backed-securities-types-how-they-work-3305947.
Amadeo, Kimberly. “When the Dollar Was Backed by Gold.” The Balance, www.thebalance.com/what-is-the-history-of-the-gold-standard-3306136.
Bloomberg.com, Bloomberg, www.bloomberg.com/news/articles/2020-03-20/a-covid-19-supply-chain-shock-born-in-china-is-going-global.
Business Radio. “Public Pension Crisis: Who Will Cover the $4 Trillion Shortfall?” Knowledge@Wharton, knowledge.wharton.upenn.edu/article/the-time-bomb-inside-public-pension-plans/
Cammenga, Janelle. “How Well-Funded Are Pension Plans in Your State?” Tax Foundation, 14 Apr. 2020, taxfoundation.org/state-public-pension-plan-funding-coronavirus/.
“The COVID-19 Pandemic and Small Business Employment.” Frank Hawkins Kenan Institute of Private Enterprise, kenaninstitute.unc.edu/kenan-insight/the-covid-19-pandemic-and-small-business-employment/.
Emmiemartin. “Harvard’s Freshman Class Is More than One-Third Legacy-Here’s Why That’s a Problem.” CNBC, CNBC, 11 Apr. 2019, www.cnbc.com/2019/04/07/harvards-freshman-class-is-more-than-one-third-legacy.html.
“Executive Order 6102-Requiring Gold Coin, Gold Bullion and Gold Certificates to Be Delivered to the Government.” Executive Order 6102-Requiring Gold Coin, Gold Bullion and Gold Certificates to Be Delivered to the Government | The American Presidency Project, 5 Apr. 1933, www.presidency.ucsb.edu/documents/executive-order-6102-requiring-gold-coin-gold-bullion-and-gold-certificates-be-delivered.
Gwern. “Bitcoin Is Worse Is Better.” · Gwern.net, 27 May 2011, www.gwern.net/Bitcoin-is-Worse-is-Better.
Kennon, Joshua. “How Tender Offers Affect Investors.” The Balance, The Balance, 21 Nov. 2019, www.thebalance.com/what-is-a-tender-offer-4129430.
Kennon, Joshua. “What Happens When a Company Wants to Buy Back Stock?” The Balance, The Balance, 30 Sept. 2019, www.thebalance.com/the-benefits-of-stock-buy-back-programs-356332.
Landler, Mark. “Chinese Savings Helped Inflate American Bubble.” The New York Times, The New York Times, 26 Dec. 2008, www.nytimes.com/2008/12/26/world/asia/26addiction.html.
Mauldin, John. “The Coming Pension Crisis Is So Big That It’s A Problem For Everyone.” Forbes, Forbes Magazine, 20 May 2019, www.forbes.com/sites/johnmauldin/2019/05/20/the-coming-pension-crisis-is-so-big-that-its-a-problem-for-everyone/#42c2f44637fc.
Mishel, Lawrence. “Wage Stagnation in Nine Charts.” Economic Policy Institute, www.epi.org/publication/charting-wage-stagnation/.
“National Labor Relations Board, Petitioner, v. J. P. Stevens & Co., Inc., and Junior Anderson, Mason Lee,Tommy Gardner, James Alston, Larry Burroughs, Harold Guerry,William Hinton, Ray Mabry, Chester Martin, Ed Mitchum,Ernest Meadows, Dave Moody, Vernon Payne, Troy Quick, Jimmymartin, Robert Rawlings, Mack Renegar, Max Shaver, Howardsellers, Allen Shew, Eugene Taylor, John Thomas, Raymondthompson, Respondents, 563 F.2d 8 (2d Cir. 1977).” Justia Law, law.justia.com/cases/federal/appellate-courts/F2/563/8/31625/.
“No-Strike Pledge, World War II.” St. James Encyclopedia of Labor History Worldwide: Major Events in Labor History and Their Impact, Encyclopedia.com, 12 May 2020, www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/no-strike-pledge-world-war-ii.
“Nixoncare vs. Obamacare: U-M Team Compares the Rhetoric & Reality of Two Health Plans.” Institute for Healthcare Policy & Innovation, ihpi.umich.edu/news/nixoncare-vs-obamacare-u-m-team-compares-rhetoric-reality-two-health-plans.
Paltrow, Scot J. “U.S. Army Fudged Its Accounts by Trillions of Dollars, Auditor Finds.” Reuters, Thomson Reuters, 19 Aug. 2016, www.reuters.com/article/us-usa-audit-army/u-s-army-fudged-its-accounts-by-trillions-of-dollars-auditor-finds-idUSKCN10U1IG.
Rabouin, Dion. “Central Banks Load up for a Long War against Coronavirus.” Axios, 1 May 2020, www.axios.com/central-banks-coronavirus-policy-42c043bc-1575-4108-ac7e-f3117856ed17.html?utm_source=twitter&utm_medium=social&utm_campaign=organic&utm_content=1100.
Richardson, Gary, et al. “Gold Reserve Act of 1934.” Federal Reserve History, www.federalreservehistory.org/essays/gold_reserve_act.
Ryan, Julia. “American Schools vs. the World: Expensive, Unequal, Bad at Math.” The Atlantic, Atlantic Media Company, 3 Dec. 2013, www.theatlantic.com/education/archive/2013/12/american-schools-vs-the-world-expensive-unequal-bad-at-math/281983/.
Shamsian, Jacob, and Kelly McLaughlin. “Here’s the Full List of People Charged in the College Admissions Cheating Scandal, and Who Has Pleaded Guilty so Far.” Insider, Insider, 21 Apr. 2020, www.insider.com/college-admissions-cheating-scandal-full-list-people-charged-2019-3.
“Shelling Out: The Origins of Money.” Shelling Out: The Origins of Money | Satoshi Nakamoto Institute, nakamotoinstitute.org/shelling-out/.
Szabo, Nick. “Unenumerated.” Unenumerated, 1 Jan. 1970, unenumerated.blogspot.com/.
US Census Bureau. “Wealth, Asset Ownership, & Debt of Households Detailed Tables: 2016.” The United States Census Bureau, 19 Sept. 2019, www.census.gov/data/tables/2016/demo/wealth/wealth-asset-ownership.html.
Wolff, and Edward N. “Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth Recovered?” NBER, 30 Nov. 2017, www.nber.org/papers/w24085.
“WTF Happened In 1971?” WTF Happened In 1971?, wtfhappenedin1971.com/.