Liberty Blitzkrieg: Financial Feudalism

As usual Michael Krieger of Liberty Blitzkrieg has some insightful things to say about the sad state of financial, economic and political affairs in the United States – Financial Feudalism.

Watching politics unfold in the post-financial crisis era has been extraordinarily frustrating. While it’s been refreshing to observe the emergence of grassroots populism over the last few years, there’s a problematic lack of depth and clarity embedded in these burgeoning mass movements. Tens if not hundreds of millions of Americans now acknowledge that something’s deeply broken within the current paradigm, but we remain focused on identifying symptoms as opposed to understanding and rectifying the systemic nature of the problem.

Of course, there are numerous complexities when it comes to the administration of an imperial oligarchy, and our system didn’t emerge overnight. Perhaps the most fundamental mutation of the post WW2 era came in 1971 when the international convertibility of U.S. dollars into gold was severed. This is when the country began its long transformation from a largely industrial empire to a financial one. I’ve often highlighted how the purely fiat USD reserve currency is the most powerful weapon ever invented, and how the U.S. control of the global financial system is the true backbone of empire, but it’s equally important to understand how the predatory financial system is also used to subjugate Americans in their own country.

In order to understand how this works we need to dig into the most fundamentally important four letter word in any modern economy: Debt.

When most people consider the debilitating societal effects of excessive debt they tend to see it from one basic level. How the bottom half of the population essentially has no choice but to borrow in order to participate in the economy as constructed. This is because the cost of so many things has been inflated way beyond the capacity of most people to purchase them outright. Specifically, wage growth has failed to keep up with the soaring costs of fundamental things such as shelter, healthcare and higher education.

For instance, home prices have been rising faster than wages in 80% of U.S. markets, which means the higher cost tends to offset historically low mortgage rates. Low interest rates don’t really help such people, it just lets them maybe, barely purchase an intentionally inflated asset to live in by taking on a huge chunk of debt. An asset that could quickly become completely unaffordable should the economy turn down as it did a decade ago.

As such, you have multitudes taking on debt defensively just to keep going and avoid falling further down the socioeconomic scale. Debt doesn’t empower such people, rather, it turns them into modern day indentured servants endlessly stuck on a hamster wheel with little to no hope of getting off. This is not an accident, it’s a tried and tested tool which, when combined with incessant mass media propaganda, is an effective way of creating a submissive, confused and desperate underclass.

Many people understand this by now, but what’s far less understood, yet potentially more significant, is how the wealthy use debt.

When you own your primary home outright and you’ve got enough savings that healthcare premiums and paying for your kids college in cash doesn’t make a dent, debt becomes something else entirely. Debt’s no longer an albatross around your neck, instead it becomes a tool to increase wealth. Debt becomes leverage.

Much of the explosion in wealth inequality over the past several decades can be traced back to this systemic interclass weaponization of debt. If you’re very wealthy and connected, access to extremely cheap debt is virtually unlimited, and this access is used to make leveraged bets on all sorts of stuff, but primarily real estate and financial assets such as stocks and bonds. Hasn’t this always been the case you ask? Aren’t those with capital always extremely advantaged over those without it? Isn’t that the history of capitalism and America since the beginning? My answer would be yes and no.

The main difference between prior periods of history and, let’s say the 21st century, has been the vast increase in power of the financial services sector thanks to the Federal Reserve’s willingness to encourage and enable the insatiable reckless behavior of the speculator class. It’s no secret the Fed has been intentionally boosting assets across the FIRE sector such as real estate, stocks and bonds since the crisis. Those with the capital to ride the coattails of this irresponsible and undemocratic central planning rushed out to take on debt to buy these assets, thus multiplying the return on investment.

While the white-collar cubicle worker with enough extra income to diligently add to their retirement account over the past decade has done fine, bankers or hedge fund managers who took on massive leverage to amplify such bets made generational fortunes while creating nothing of value. It’s the way debt works for the financial services sector versus how it works for the average person in a world dominated by big finance and the central bankers who provide them unlimited welfare.

The same thing occurs within the corporate suite, as executives across industries have used access to extremely cheap debt to buyback stock and reward themselves handsomely despite creating nothing of societal value while doing so. It’s pure financial engineering. Nobody should become generationally wealthy this way, but it’s exactly what’s been happening. So you see, debt’s not just a means to subjugate a desperate bottom half of the population, it’s concurrently an effective tool to expand wealth and power at the top. ..

Click here to read the entire article at Liberty Blitzkrieg

SHTFPlan: Gov’t Shutdown Proves Americans Unprepared

From Mac Slavo at SHTFplan.com, Brutal Reality: Government Shutdown Is Proving Americans Are NOT Prepared For A Recession.

The brutal reality is that most Americans are not prepared for the next economic downturn or recession. The government shutdown is highlighting just how much Americans rely on others as opposed to themselves, and how little they have saved for an emergency.

According to the newest op-ed article by Market Watch, the government shutdown is perfectly proving that Americans are not prepared for a financial disaster of any kind, let alone an economic recession. Many have long assumed that the government (which as we all know is almost $22 trillion in debt) will be using their money (stolen funds aka, taxation) to bail out those who get themselves into trouble. But the shutdown is proving just how little the government actually does and just how financially illiterate many Americans have allowed themselves to become.

Almost 60% of Americans have less than $1000 in savings for a rainy day fund or an immediate emergency. It’s been ten years since the Great Recession left many Americans jobless with no money, and it appears most have learned nothing. The government shutdown serves as a painful warning and preview for what will happen once unemployment rises from 50-year lows.  Americans are far too dependent on others, including the government, for their survival.

Within just a few weeks into the government shutdown, people are struggling to cope. We hear stories about people turning to food banks to feed their families. We hear stories about people who are in dire straits because they can’t get loans. We hear stories about people who can’t pay their mortgages. That’s not even one month into the shutdown. –Market Watch

Most Americans live paycheck to paycheck, including those who work for the government…

Read the entire article at SHTF Plan.