Great summary! This is a lesson straight from an Austrian economics text book. It seems to me that the destruction of the US middle class is being offset by the rise in the Chinese middle class.
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Posts Tagged ‘Middle Class’
Why The Middle Class Exists
Posted by M. C. on March 11, 2025
Posted in Uncategorized | Tagged: Austrian Economics, Middle Class | Leave a Comment »
On Wealth Inequality, the Left Has a Point
Posted by M. C. on June 17, 2024
Of course, the demagogic, corporate-owned left will tell us that the solution to the oppression of the poor working man is to oppress the rich man as well. “Tax the rich” is the slogan of the corporate-owned left. It’s like observing that the abusive boyfriend of a woman living on the right side of the street gives his girlfriend a black eye every week from abuse, and the single mom on the left side of the street is free from that abuse, and concluding that the only “fair” solution is to get that abusive boyfriend to blacken the eye of the woman across the street every week as well.
“…when they get the money they can and will loan it directly to the stock gamblers, to be used to exploit the people.”
The author doesn’t state the mechanism of inflation clearly enough. Printing of “fiat” (not backed by a valuable commodity such as gold) money by the federal reserve.
https://libertarianinstitute.org/articles/on-wealth-inequality-the-left-has-a-point/
The federal government has been waging a war against the middle class and working poor since at least 1970. Wealth inequality has steadily increased since the early 1970s, and it’s not a coincidence. It’s a result of a series of policies. The government wants the masses of American working people broke, propertyless, and dependent upon elected officials for the crumbs they give back as handouts from taxes taken.
The most insidious attack on working people has been inflation, which really took off when the federal government decoupled the dollar from gold in 1971.
The inflation tax is the most regressive tax that currently exists in federal policy.
Inflation always taxes wages twice, once when the labor is performed and the worker is awaiting payment, and again when the wages are deposited into the worker’s checking account. But inflation leaves the rich man’s yacht untaxed.
No level of inflation, no matter how high, can ever take one cent of value away from a yacht. A yacht is always going to be a yacht, no matter what the value of money is.
Inflation taxes the poor man’s rent he advances to his landlord, but leaves private jets and vacation homes untaxed.
Want to know where this inflation tax goes? The stolen value of the inflation tax doesn’t just vanish out of thin air.
Some of it goes to the government; economists even have a name for the benefit government draws from the inflation tax. It’s called “seigniorage.”
Rich people generally don’t pay the inflation tax, and many of them benefit from it. Let’s say you’re a billionaire real estate mogul, not unlike Donald Trump, with a net-worth of $1 billion. You buy houses and real estate, and when you get your 20% equity, you pull that equity out and invest it into another real estate holding. So you have properties worth $5 billion, net assets of $1 billion, and (with only 20% equity in your properties) you also have $4 billion in mortgage debt.
4% inflation lowers the value of the mortgage debt you owe, since with CPI inflation you’re just going to raise the rent 4% next year. Inflation created by the Federal Reserve Bank becomes a gift of $160 million annually to your net worth ($4 billion x 0.04).
Every year.
And it enriches them more if inflation exceeds 4%, as it has in recent years.
If the CPI is 10% (as it nearly was in 2022), inflation alone adds 40% ($400 million) to this real estate mogul’s net worth. That doesn’t count the decrease in the nominal debt paid off by the real estate mogul’s tenants.
And this assumes the value of his property holdings is only increasing at the rate of CPI inflation, which it’s vastly exceeding, thanks to Federal Reserve Bank interest rate manipulation and federal housing subsidies and incentives.
Inflation enriches the real estate mogul with a boatload of mortgages that are now easier to pay off. It also benefits the hedge fund speculator and the banker, who are in the very businesses of being in debt.
In other words, the inflation tax makes the value of money flow directly from the wallets of wage-earners to the vaults of rich people who work with debt.
As long as the working man holds money in his possession, whether in the form of credit to his employer for his labor, in his pocket, or in his checking account, inflation taxes him. Only when the money is finally no longer due to him does the inflation tax end.
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Posted in Uncategorized | Tagged: inflation, Inflation Tax, Left, Middle Class, Wealth Inequality | Leave a Comment »
A Jobless Recovery Is Coming to Europe | Mises Wire
Posted by M. C. on April 21, 2021
Any serious analyst would be appalled at the figures of unemployment and growth shown by the IMF after spending close to €20 trillion in chained stimuli. Furthermore, any serious analyst would be seriously warning about the negative consequences of making central banks and government the lender of first resort, not the last resort. What is the biggest risk? That the 2022 estimates prove to be too optimistic, again, and governments and central banks push to an even higher level of interventionism.
https://mises.org/wire/jobless-recovery-coming-europe
The International Monetary Fund has published its April outlook for the global economy. It has been hailed by most commentators due to the strong upgrade in GDP recovery. The report states that “global growth is projected at 6% in 2021, moderating to 4.4% in 2022. The upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility.”
However, there are important warning signs that should be considered because headlines have been predominantly euphoric about this optical upgrade.
Two factors that affect the quality of the recovery should worry us: the upgrade comes mostly from higher government spending and rising debt, and the job recovery is much slower than in previous cycles.
The unemployment rate in the euro area will remain well above 2019 levels even in 2022 (rising from 7.9 percent in 2020 to 8.3 percent in 2022). Only Germany shows a positive employment outlook that leads its unemployment ratio to fall to 3.7 percent. Spain, on the opposite side, will end, according to IMF estimates, with unemployment of 15.8 percent in 2022 from 15.5 percent in 2020. This would make Spain the eurozone economy with the highest unemployment rate even in 2022 and one of the highest in the world.
The United States is estimated to end 2022 with a 4.2 percent unemployment rate, a rapid decrease from the current 6 percent, but still above prepandemic levels. China unemployment is expected to remain low at 3.6 percent and advanced Asia will likely show the best improvement in unemployment, reaching nearly record lows in 2022.
Even with these optimistic estimates of recovery, the IMF is showing that the covid-19 crisis is going to leave millions of workers left behind, and that it will be particularly negative in an area that prides itself on social policies and high public spending, the eurozone.
This crisis has proven that being rich and having a very elevated government spending did not help manage the health and economic crisis better.
The biggest loser of this crisis has been the middle class. According to Bloomberg, an estimated 150 million slipped down the economic ladder in 2020, the first pullback in almost three decades. Massive liquidity injections and large government spending programs have not helped the middle class, and we could argue that it created a negative effect. Why? The middle class has been the most negatively affected by the loss of employment while its savings and real wages have been eroded by inflation as central banks pumped trillions into government debt, creating a perverse spiral of rising prices when disposable real income fell dramatically.
We could argue that it would have been worse without central bank intervention and government spending, but there is absolutely no evidence that shows it should have been as massive and indiscriminate as it was in 2020. We have been told to ignore the size of stimulus or its effectiveness and just accept these massive repurchase and spending programs as essential. No one seems to ask how much is too much and even less when the results are a bloated GDP recovery due to debt and public expenditure with a poor job recovery ratio. As time passes, we have grown used to hearing of “trillion dollar stimulus” and thinking it is not enough.
This poor return on capital employed of government and central bank programs would result in layoffs of management in any company. We are not discussing diminishing returns of monetary and fiscal policy, but outright negative effects if we add asset bubbles and high leverage.
Any serious analyst would be appalled at the figures of unemployment and growth shown by the IMF after spending close to €20 trillion in chained stimuli. Furthermore, any serious analyst would be seriously warning about the negative consequences of making central banks and government the lender of first resort, not the last resort. What is the biggest risk? That the 2022 estimates prove to be too optimistic, again, and governments and central banks push to an even higher level of interventionism.
The destruction of the free market, competition, and innovation may seem appealing to some now, but the likely outcome of poor employment, negative real wage growth, and stagnation should be a real cause of concern. Author:
Daniel Lacalle, PhD, economist and fund manager, is the author of the bestselling books Freedom or Equality (2020),Escape from the Central Bank Trap (2017), The Energy World Is Flat (2015), and Life in the Financial Markets (2014).
He is a professor of global economy at IE Business School in Madrid.
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Posted in Uncategorized | Tagged: GDP, International Monetary Fund, Middle Class, unemployment rate | Leave a Comment »
Tucker Carlson: ‘What You Are Watching Is Class War Disguised as a Race War’
Posted by M. C. on June 3, 2020
Racism exists – mainly as a tool for conquest and subjugation of the unwashed masses.
Derek Chauvin has made himself the proverbial useful idiot.
by Jeff Poor
Tuesday on Fox News Channel’s “Tucker Carlson Tonight,” host Tucker Carlson dismissed the nation was in the midst of a race war and argued the fault lines were instead along class divisions.
Carlson pointed to the downsizing of the middle class, and he maintained there are those stoking the flames of racial difference to hide what was happening to the country economically.
Transcript as follows:
America’s core problems are, in fact economic. Could your kids earn enough to form stable families have their own and live in dignity? Everything flows from that. And that’s what most Americans of all colors worry about most. So, of course, it is the one thing our leaders hate to talk about. That is not accidental. Again, it is by design. What you are watching is class war disguised as a race war. The population at one another’s throats — angry, suspicious, tribal, and maybe they’ll never figure out how much we’re stealing.
The biggest change to American society over the past 50 years has been the death of the middle class. This used to be a middle-class country. It is not anymore. Most of the population has become poorer in real terms, while a shrinking number of people controlling every expanding percentage of the wealth. That means that fewer Americans overall have a meaningful stake in society, and more are dependent. That makes the country much more volatile than it once was.
These riots really shouldn’t surprise you. It is hard to know exactly who is responsible for these sad changes to America, but it is easy to see who is benefiting from them. They are the same people lecturing you about white privilege and systemic racism. This isn’t accidental. CitiBank is happy to put black lives matter logos on their Instagram page precisely so you won’t ask what interest rates they are charging black people.
If you really cared about the poor, you wouldn’t crush them with debt they can’t afford to. Of course, if you really cared about black lives, you wouldn’t probably put abortion clinics in black neighborhoods, but they do. These people are scam artists. They are playing you.
Keep that mind the next time they told you, you may hate your neighbor, which is exactly what they are telling you.
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Posted in Uncategorized | Tagged: Citibank, class war, Derek Chauvin, Middle Class, Race War, Tucker Carlson | Leave a Comment »
OVERTAXED: The Middle Class Is Being Wiped Out, NJ Residents Flee In Droves
Posted by M. C. on July 31, 2019
Mac Slavo
New Jersey residents are fleeing their state in droves thanks to the over taxation and immense financial burden placed on them by their socialist state government. In addition to the already sky-high federal tax that we are all forced to pay, those in New Jersey are struggling to make enough money to live after the state also steals a cut of their income.
The SALT (state and local tax) cap has hit high-tax states like New York, California, and New Jersey particularly hard because these states steal a higher portion of an individual’s income. As a result, affected residents have begun to move to other states – a trend that experts expect to accelerate, according to Fox Business.
“They can’t tax us anymore, the middle class is getting wiped out,” former “Saturday Night Live” cast member and New Jersey resident Joe Piscopo told FOX Business’ Neil Cavuto on Friday, adding that wealthy individuals are leaving the state “in droves.” This is always the case, as governments all seek to find ways to steal more from the producers to fund their corruption. This problem is only going to get worse too and New Jersey Democrats are attempting to pass a state wealth tax.
Democratic Governor Phil Murphy renewed a push to implement the state tax (with a top rate of 10.75 percent) on people with incomes over $1 million. However, amid disagreements with the state legislature, which threatened to shut down the state government, Murphy said he will sign a budget over the weekend. State Democrats sent Murphy a budget proposal last week, which did not include the tax increase on people with more than $1 million. Murphy, however, has been a strong advocate for implementing the tax and it has been one of his top campaign promises.
Therefore, most residents have a difficult time believing that the issue has been completely put to rest. So instead, they’ve taken action and made the decision to leave the state entirely taking their wealth with them rather than having it stolen by tyrannical fascists.
New Jersey Rep. Josh Gottheimer was one of several lawmakers from states including New York, Illinois, and California who took to Capitol Hill on Tuesday to air out their grievances against the new SALT cap. Gottheimer called the cap a “double-taxation grenade” that was “lobbed at New Jersey and other high-tax states” by so-called “moocher states.” The average SALT deduction claimed in Bergen County, New Jersey, was more than $24,700 before the implementation of the cap. -Fox Business
Piscopo says that a handful of states in the U.S. are already socialist. And those are the states people continue to flee in droves and are facing homeless epidemics. “I’m telling you right now, If Gov. Murphy, if Steve Sweeney does a primary, and I don’t mean inside around the rest of the country, but this is huge in Jersey because Jersey, New York, and California are now socialist states,” he told FOX Business‘ Neil Cavuto on Friday.
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Posted in Uncategorized | Tagged: Middle Class, New Jersey, over taxation | Leave a Comment »
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