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Bill Bonner, reckoning today from Youghal, Ireland...
Take away profits; all you have left is cool.
~ A perceptive Dear Reader
‘Tax us… please!’
So sayeth a group of 100+ rich people… including Disney heiress Abigail Disney and venture capitalist Nick Hanauer. Huh? Asking to pay more taxes; that’s pretty cool, isn’t it?
But why not simply let Mr. Market correct them, by taking away their phony, ill-gotten gains?
Bloomberg: “Market sell-off is ultimate test of what it real and what is not.”
The Washington Post: “Crypto collapse erases more than $1 trillion in wealth.”
In the modest decline so far, the world’s stock owners are down about $9 trillion. All they need is another $40 trillion in losses and the correction will be complete.
Today, in addition to mocking the cool, earnest rich, we explore the whole scammy plot. The financial system has become corrupt… here’s how well-meaning do-gooders make it worse.
We left you yesterday contemplating ‘cool.’ We noted that when you have a lot of money, an additional dollar has little value. “Declining marginal utility,” it is called. One piece of apple pie for dessert is a delight. By the third piece, the pie loses much of its appeal.
Today, we take the contemplation a little further, by looking at those who say they feel a little sick.
Front-Running of the Bulls
Profits are the only measurable way of knowing that you are making the world a richer place. You take resources and labor… you work them up into finished products and services… and then sell them for more than you invested to make them. You make a profit. And your customers get something they want. Is there any other reliable gauge of ‘doing good?’
Of course, there are exceptions. There are phony, contrived, and connived profits as well as honest ones. You can make a lot of money, for example, by selling drugs to people who don’t need them… especially if the feds are picking up the tab.
You can make money by front-running the stock market, as Fed governor Richard Clarida did… putting in his buy orders just before the Fed made a major announcement.
And, today, we lay the whip – again – on a very dead horse. Yes, as Richard Clarida… Nancy Pelosi… and Larry Fink all illustrate, you can make a lot of stock market gains when the Fed is rigging the market… and you are in on it.
In the last twelve months almost no infirmity – neither financial, moral or intellectual – prevented a person from getting rich. Speculators sold NFT squiggles for millions. They sold joke cryptos for millions. They sold money-losing, zombie companies for millions. Surely it was the late stage of a very empty-headed market, when the dumber and less experienced you were, the more money you made!
But cometh now rich people, like Larry Fink and Abigail Disney, whose excess dollars turn their stomachs. They would gladly exchange them for a little street cred. And a little cool. Commondreams.org:
100+ Ultra-Rich People Warn Fellow Elites: 'It's Taxes or Pitchforks'
A group of more than 100 millionaires and billionaires on Wednesday presented fellow members of the global economic elite with a stark choice: "It's taxes or pitchforks."
"For all our well-being—rich and poor alike—it's time to confront inequality and choose to tax the rich," the letter reads. "Show the people of the world that you deserve their trust."
What the queasy millionaires seem most concerned about is holding onto their cool rich status… and protecting the elite’s authority:
'How do we work together and restore trust?'" the letter reads.
Gemma McGough, a British entrepreneur and a founding member of Patriotic Millionaires U.K., reiterated that case in a statement Wednesday.
"It's time we right the wrongs of an unequal world," McGough added. "It's time we tax the rich."
Fairness, say the millionaires, is what it’s all about. But fairness, like coolness, is a matter of opinion. Is it fair for one group to pay a higher rate than another? It is fair to transfer trillions of dollars to the richest Americans… and then let them impose their agenda on the rest of us?
And what’s fair about printing up trillions of dollars and passing it to them in the first place? Neither Ms. Disney, nor Ms. McGough, nor Mr. Fink mention it.
Gorging on FedFare
In the course of this century, the Fed has created… and spent… approximately $8 trillion. Its artificially low interest rates spun off trillions more. And the federal government has added $23 trillion to the ‘national’ debt. What happened to all that money? Did it buy bread from the bakers? Old jalopies from the used car lots? Did it raise the wages of the laboring classes?
No, it did none of those things. Instead, almost the entire wad was funneled to Wall Street where it increased the prices of stocks and bonds. In the stock market alone, that represented a gain of $24 trillion. Who owns stocks and bonds? Abigail Disney. Nick Hanauer. And Larry Fink.
Over the course of a whole generation – 40 years – the elite have added about $1 million in stock market wealth for every man, woman, and child in the top 10%. Since 1978, executive salaries have increased 1,000% – 100 times faster than employee pay. During that same period, in real, inflation-adjusted terms, the typical working stiff has gained just 32 cents per hour.
Is that fair?
And now approaches the grand rip-off finale. The feds ran up $30 trillion of debt – much of which went, directly or indirectly, to the richest people in the country. Who will pay that debt? How?
Tune in tomorrow...
Regards,
Bill Bonner
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Bill, I’ve been reading your journal for many years and enjoy your humor. Also like Dan and Tom’s perspective. Keep up the great work! I have a question for Tom, what is the app that you use to travel back roads of USA? I know that you mentioned it a while ago, but I forgot to jot it down.
Your story brings to mind a church I count as a long time customer. For a short time as a member I was appointed head of property tasked with compiling a budget and staying with in the budget. The church was flush with capital having been endowed by great men of industry in 1910.
Along came the early woke generation then called social justice warriors. These were mostly government workers, lawyers, medical folks from the ranks of the white collar crowd. Their leader handily won the highest office after which time the lesser folks across the City line became the concern. No longer was tending the flock in their field of any importance. The sheep kindly listen even to wolf as long as the slaughter is within measured steps.
It was decide the one million dollars growing slowly in the endowment was an obscenity an ungodly amount. The neo-godly folks had never run a business or cared for a facility spanning an acre of property. The call was put out to all the land 10% of profits would be directed towards the good of mankind, later this became 10% of all new bequeathals as well. As the old members passed away their hard won dollars were poured into the pockets of the many scammers and charlatan lined up in their rags while the BMW's idled around the corner.
The markets were up the coffers seemed inexhaustible, the old were passing away and dropping thousands from the grave. Alas this all ended badly too much of a good thing became too much of a bad thing. The shysters no longer waited at the door, they joined the ranks of the sheep and pushed the last rational voices out the door. The financial bloodletting began it got so bad the property budget had to be slashed no longer would profits be used to maintain the buildings I was tasked with keeping the lights on, and the heat and cooling limping along.
The end came like the story of Noah, with a twist the rats left the ark with great speed to the nearest ship of fools that would take them aboard. The RE crash of 2007 instantly cut off the flow of dollars the church was instantly in the red. The unwise stewards were forced to sell paid up commercial RE assets to fund the debts generated during the orgy.
When the smoke cleared the endowment had changed from a measured stream of cashflow that kept church afloat in thick and thin, to a lump of $630,000 in cash with no income. Last Sunday on a 25 degree day the heat went off, a pipe I no longer watched over failed. As one of the last rational people to walk the plank I'm no longer a member only contractor they call.
Deciding to wait until Monday forgoing a Sunday emergency call they made due.
Monday the pipe was repaired and the invoice was paid. It was noted by the treasurer the church would be out of funds in 6 years. It seems the new leaders believe investing in the system of profit is an abomination, their plan is to convert the property into a quasi community and performing arts center.
With no funds they're seeking government grants.
I count the whole affair as an eye opening experience. Interacting with 'other faiths' led me to know religion is probably one of the biggest scams next to large government. The king created religion to claim the title of divine ruler, while supporting the clerics with all manner of tax exemption to judicial powers. God did not create mankind for this purpose.