Dear Reader,
The United States economy is largely a “financialized” economy.
Financialization: “The increase in size and importance of a country’s financial sector relative to its overall economy.”
And as you will see below, the financialized economy is a reverse-Robin Hood economy.
It famishes the lower and middling classes… and fattens the topmost classes.
The financial industry represented 10% of the gross domestic product in 1970.
Then in 1971 old Dick Nixon slammed the gold window shut… and murdered the gold standard.
The gold standard — though a sad caricature in its dying day — nonetheless enforced discipline.
A wastrel nation that consumed more than it produced would eventually run through its gold stocks.
The credit dollar, the unbacked dollar, lifted the penalty.
By the Sweat of Others’ Brows
“By the sweat of your brow you will eat,” Genesis instructs us.
Under the new credit-dollar standard, America could eat by the sweat of foreign brows — without perspiring one bead of its own.
Americans left behind the grimy toil of the factory floor and the workbench.
They lit out for Wall Street. They went chasing after the fast buck — the easy buck.
By 2010 the financial system ballooned to 20% of the gross domestic product… inflated by the helium of artificially depressed interest rates and the false levitations of financialization.
Wall Street went up with it. Main Street did not.
Labor’s share of Gross National Income came in at 51% in 1970.
And by 2022? Labor’s share of Gross National Income sunk to 43%.
Source: Charles Hugh Smith www.oftwominds.com
A $149 Trillion Transfer
Eight percentage points may not appear vast across 52 years. It may appear that labor absorbed a setback — but not a trouncing.
Have another guess, says economics commentator Charles Hugh Smith:
- If wage earners’ share of Gross Domestic Income had remained at 51% instead of declining to 43%, wage earners would have received an additional $149 trillion over those 52 years. That’s roughly $3 trillion a year, which works out to an additional $22,000 annually for America’s 134 million full-time workers or an additional $18,000 annually for the nation’s entire work force (full-time, part-time, self-employed, gig workers) of 163 million.
Labor’s loss was capital’s gain.
Thus Robin Hood turned his colors… walked away from labor… and threw in with capital.
It Wasn’t Inevitable — It Was a Choice
Here Mr. Smith cites Time magazine:
- The [massive] transfer of wealth… has occurred entirely within the American economy, not between it and its trading partners. No, this upward redistribution of income, wealth, and power wasn’t inevitable; it was a choice — a direct result of the trickle-down policies we chose to implement since 1975.
- We chose to cut taxes on billionaires and to deregulate the financial industry. We chose to allow CEOs to manipulate share prices through stock buybacks, and to lavishly reward themselves with the proceeds. We chose to permit giant corporations, through mergers and acquisitions, to accumulate the vast monopoly power necessary to dictate both prices charged and wages paid.
- We chose to erode the minimum wage and the overtime threshold and the bargaining power of labor. For four decades, we chose to elect political leaders who put the material interests of the rich and powerful above those of the American people.
In brief: financialization of the United States economy triumphed.
It’s Not the Free Market System
The trickle-down theory of economic progress argues you must first feed the horses in order to feed the sparrows.
It contains much justice — poor men do not open businesses. They do not provide employment. They put no bread in mouths.
Yet the Federal Reserve’s stable hands have overfed the horses. And the sparrows have scratched along on the leavings.
I am heart and soul for the free enterprise system.
Let a man present his talents and abilities before the free and open market.
Let him wrest what he can from its ruthless yet honest combats.
For this man has earned his take. Let it be the lion’s take.
Yet as I am heart and soul for the free enterprise system… I am heart and soul against the manipulated system.
Let the Bulls and Bears Fight It Out Honestly
The manipulated system is a form of welfare. It is welfare not for the indigent — but for the stockholder.
Thus a chairman of the Federal Reserve system is Robin Hood-in reverse. He is also a corrupt referee…
The stock market should be a free and open joust. Bull and bear, bovine and ursine, let them meet on fair and neutral ground.
There they can settle their quarrels under honest competition.
A scrupulously impartial judge should referee the bout. His lone concern should be the equal application of martial justice.
He must hold the scales even.
And may the winner emerge fair and square, his hand raised in honest victory.
Should it be the people’s champion — the bull — so much the better.
But should the heelish bear walk out victorious, well then…. The heelish bear was the superior pugilist.
Justice, that is, would be served. What we have instead is injustice.
It’s a Rigged Fight
The Federal Reserve is not a neutral referee in this bout. It is rather an active participant, in active conspiracy with the bull.
Before the bout it packs his gloves with iron. And once the bout commences?
If the bull strikes beneath the belt, if he bites in the clinches, if he punches after the bell has rung…
This rogue referee instantly loses his powers of vision. He sees nothing.
And if the bear smites the bull down to the canvas, witless, leaving him to take the count?
Then this corrupto stretches the count until the sprawling bovine can regain the vertical… and his wits:
“O-o-o-o-o-o-n-e… … … … t-w-o-o-o-o-o-o… … … … t-h-h-h-r-e-e-e-e-e-e… … … …” all the long way to 10.
“Fīat Jūstitia Ruat Cælum”
Meantime, should the bear absorb but a glancing blow, the official declares him loser by technical knockout, the victim of a mighty clout.
What we have, then, is not a contest of one against one. We have instead a travesty of two against one.
The badly used bear is denied all chance of victory.
But I am for the fair fight.
I believe there exists a force deep down, within a man’s liver and lights, that demands a square accounting — that demands justice.
The manipulated system is actively arrayed against a square accounting. It is against justice.
“Fīat jūstitia ruat cælum,” I say — “Let justice be done though the heavens fall.”
Regards,
Brian Maher
for Freedom Financial News
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