The Fed Makes Sure Banks & Wall Street Can’t Fail (But the Country Can)
If Americans only understood the corruption surrounding money, and the enormous greed in the financial sector of the American economy, they would understand how money is being stolen from them and other Americans not just by sleight of hand, but also by out-in-the-open greed.
The first thing to understand is that, for the most part, the current economy only benefits the financial classes now. When financial numbers are quoted, like the average income of Americans, that number is skewed by the fact any increase in average income is 90% comprised of gains by the upper 1% or 10% of the population.
Americans’ paychecks are bigger in dollars than 40 years ago, but their purchasing power has hardly risen at all. The wages of the lowest tenth of American workers have gained just ~3% since 2000 while the highest tenth rose 15.7%.
Trillions of dollars redistributed to the wealthy
Economists at the Rand Corporation estimate the bottom 90% of wage earners comprise less and less of the nation’s Gross Domestic Product (GDP), while the top 5% have doubled their wealth. Nearly $50 trillion (~$2.5 trillion per year) has been redistributed from the bottom 90% of income earners to the top 1% since the mid-1970s.
Not like Henry Ford
This was not like Henry Ford who in 1914 chose to increase the pay of his own workers so they could buy one of his cars!!
As an aside, you might be interested in what Henry Ford required of his workers to get that pay raise. Ford workers were given pay raises conditional upon them abstaining from alcohol, not taking in boarders, keeping their homes clean and making contributions to their savings accounts. Imagine.
Enter the whistleblower
David Stockman, former director of the Office of Management & Budget during the Reagan Administration, is one of the few insiders who tells you how the economy is rigged for those at the top. Stockman condemns an insidious practice, stock buy-backs.
Stockman says Fortune 500 companies no longer run commercial enterprises; their CEOs are in the stock-rigging game, strip-mining their own companies via endless stock buybacks to give the appearance of growth.
While executives at large companies were lured into bringing back profits from overseas by a cut in corporate taxes from 35% to 21%, they took those extra earnings and bought-back stocks from their own shareholders, driving up the price of their own equities instead of bringing home overseas profits to start new ventures and hire more Americans.
In other words, CEOs at billion-dollar companies double-crossed the American public. Stock buy-backs are now common.
In Japan, corporations there get other multi-billion-yen companies to buy each other’s stocks, a practice called Keiretsu, creating false demand and higher stock values. But here in America, stock buy-backs reign.
The egregious example of Wells Fargo
For example, Wells Fargo bank executives went so far as to churn bogus new savings accounts (accounts opened without a customer’s consent) to buoy their stock and then used false profits to buy back stocks. Someone should have seen jail time for that. Instead, a $3 billion fine was levied. And Wells Fargo is still in the stock buy-back business.
WF then increased dividends to its stock holders — people of wealth and company executives. WF just bought back $18-billion of its stock with plans to double dividends to its shareholders.
Wells Fargo is no longer in the business of lending money so Americans can buy a new homes or automobiles, it is passing money from its left hand to its right hand and keeping the gains inside its own crowd. And Wells Fargo is not alone in that practice.
In this manner, Wall Street stock markets then look rosy, but the average American only has lottery tickets to buy in a desperate and futile attempt to get ahead financially.
Cut expenses (jobs) to churn profits and blame it on Covid
Under the guise of reducing expenses related to the COVID-19 lockdown, Wells Fargo just laid off 6,400 American workers at the end of 2020 and shifted some of them to India. Any bank can cut overhead by laying off workers to produce stronger profits like WF is doing, but that is the mark of a dying company. And there are more layoffs planned. We’re talking 50,000 to 60,000 jobs, gone!
Using the COVID lockdowns as an excuse, America’s biggest companies are flourishing during the pandemic while putting thousands of people out of work. They then turned their profits over to shareholders in dividends, says a report in The Washington Post.
Real value and wealth don’t exist because of financialization
Gone are the days of creating wealth by value-added entrepreneurship, by taking steel, glass and rubber and turning it into something more valuable, like an automobile. Today every major corporation is making more money via financialization than their core business.
America has ended up with rich companies
and a poor country
In this manner, wealth flows to the top. America has ended up with rich companies and a poor country. Hardly anybody benefits from these new billion-dollar valued high-tech companies except corporate management and shareholders. These companies invest in financial assets that selfishly benefit themselves rather than productive assets that benefit society. This has all been made possible by something called financialization.
If your kids go to college and have the idea that is how to increase their personal worth, unless they enter the ranks of the financial classes, they are not likely to see their diplomas pay off.
Article from LewRockwell