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Posts Tagged ‘Dow Jones Industrial Average’

Here’s the real dirty little secret the US corporate press doesn’t want you to know.The biggest trade deficit the United States has is with US corporations exporting manufactured goods and services from China, Pakistan, Vietnam and Mexico to the United States. That’s right. The US trade deficit is with Nike, Microsoft, Apple, NCR, and hundreds of other US corporations. They export hundreds of billions of dollars worth of goods to the United States every year from their facilities, contractors and subcontractors in other nations. Perhaps as many as forty million of those jobs overseas used to be in the US.

US corporations manufacture goods and services overseas in order to redistribute income from the 99 to the 1 percent. Take a look at the chart below. Notice the trade deficit starts to spiral, especially after 1980.

Now take a look at the chart below. Notice that the amount of income going to the 1 percent begins to spiral upward at about the same time as the US trade deficit does.

The United States has had a trade deficit with other nations since 1976. That means US businesses have imported more goods from other nations than has been been exported every year since 1976. In 1975, the US trade surplus was over $12 billion. In 2012, the US trade deficit was over $534 billion, and over $741 billion in manufactured goods. What happened?

It began with electronics in the 1950s, when those American jobs manufacturing radios and televisions and their parts were exported to Taiwan and elsewhere. The things made in Taiwan were imported into the US. By the mid 1970s, steel and automobile companies were exporting US jobs, and importing things. Free trade agreements paved the way for these jobs to be exported. These agreements also paved the way for US corporations to create jobs overseas, rather than in the US. In other words, the US primarily exports jobs to other nations, rather than goods and services.

The reason the US government has done this is to redistribute income from the 99 to the 1 percent. The difference between the old US wages and the new lower overseas wages goes into the pockets of the rich via higher corporate earnings, rising share prices and surging stock prices. Notice in the graph below that the Dow Jones Industrial Average, (an average of the stock prices of the thirty top rated US publicly trade corporations), began to surge in the early 1980s, which coincided with the growing US trade deficit, and the massive growth of income being redistributed from the 99 to the 1 percent. Notice income growth for the 1 percent surged during the mid 1990s, the Dow began growing even faster, and the US trade deficit continued to surge. Those surges coincide with Nafta, which took effect in December 1994. That treaty made it easy for US jobs to be exported to Mexico, and so they were.

Historic Dow Jones Average

Now President Obama, and Wall Street senators such as Mitch McConnell and Ron Wyden, want to redistribute more income (and political influence) from the 99 to the 1 percent via the Trans Pacific Partnership (TPP), the largest income redistribution scam of all time. The US trade deficit will explode with this treaty, whole industries (such as the remains of the textile industry) will be exported, more and more income wil be redistributed from the 99 to the 1 percent, and the Dow Jones Industrials will surge. None of this is good economic policy. The president knows this, McConnell knows this, Ron Wyden knows this.

In 1980, the 1 percent took home 7 percent of all the income produced in the US. Nowadays, thanks to these treaties, that figure ranges between 21 to 31 percent, which means the 99 percent have less money to demand goods and services, which is why the economy is so weak. Wealth has also been massively redistributed from the 99 to the 1 percent. Check out the video below.

The result of free trade income and wealth redistribution treaties has been to wreck the US economy, and to corrupt the US government, as well as many state and local governments in the process. The economic game has been rigged against the 99 percent using the money redistributed to the 1 percent via trade treaties. The Trans Pacific Partnership is intended to be a knockout punch to the 99 percent. It’s time to end the madness. Take to the streets, call the people who are supposed to represent you in congress. Let them know you want this insanity stopped.

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The answer to the title above is simple; constant population growth equals constantly growing corporate profits. That’s not necessarily a good thing for the 99 percent.

The US economy is dominated by a Ponzi Scheme known as Wall Street. As corporate earnings rise, stock prices generally rise. If aggregate corporate profits go down, as they always must in time, then that 15,000+ value we see today with the Dow Jones Industrials can drop to 8,000 or less, as it did during the Great Recession.

Now imagine what would happen if the economy never came out of the Great Recession, like during the Great Depression. In October 1929, the Dow Jones was close to 400, up from less than 100 in 1921. The Depression hit that month, the economy entered into a sustained decline, the Dow dropped and dropped until it was less than 50 in October 1932. That’s a lot of speculative profits that were wiped out. The Dow began climbing with the election of FDR on November 8, 1932. But what if FDR didn’t win and the US continued down the same path? There’s a good chance the Dow would’ve dropped to a value of zero.

One way to avert such a calamity is to have constantly increasing population. As population grows, there are more people to feed, which means constantly growing demand for goods and services, which helps corporate profits rise, which keeps the Dow growing. The government will even feed and house tens of millions of people in order to keep demand up.

If, however, the US population was to decline, especially in the long-run, so too would the demand for goods and services. That means corporate profits would begin a long term drop. The financial markets would plummet in the long run. Paper profits that have grown over decades would vanish like smoke.

The birth rates of US citizens began to slow a few decades ago, and to compensate, your government opened the floodgates of immigration to compensate for that. Of course, there were other factors for doing this, as well. More immigrants meant a downward push on wage growth. The difference between what wages would’ve been in the absence of higher immigration and what they became with greater immigration went into the already fat wallets of the super rich via higher corporate profits, share prices and rising dividends.

This is not to suggest that immigration is always a bad thing, especially if there is a rising tide of prosperity for all. However, immigration during a time when there has been a massive redistribution of income and wealth flowing from the 99 to the 1 percent probably isn’t a good thing for the 99 percent. But it is good for Wall Street and the 1 percent, and for the reasons cited above.

If population growth continues to slow, and last year it grew only 0.7 percent, and middle class income continues to stagnate, then the current record rise in the Dow Jones Industrials suggests it is a bubble caused by redistributing income from the 99 to the 1 percent.

In other words, it is possible the current pathetic economic expansion is ambling down a road that ends at a very steep cliff. This brings us to a question.

Was the Great Recession just a blip on the road to an even greater Depression somewhere down the road a few years from now?

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Yes, are we getting ripped off. From 2009 to 2011, the richest 8 million families (the top 7%) on average saw their wealth rise from $1.7 million to $2.5 million each. Wealth is what you own, income is money coming in. Income is what makes wealth grow, outside of say, the growth in value of an asset.

The Dow Jones just blew past 15,000, a record. How’d that happen? Easy. Income is being massively, and in many cases illegally, redistributed from the 93 percent to the 1 percent. See your-retirement-bottle-champagne-how-wall-street-fraudsters-ripped-you-again and breakdown-of-the-26-trillion-the-federal-reserve-handed-out-to-save-rich-incompetent-investors-but-who-purchase-political-power. The extra money the 1 percent receive in their rip-off scam is invested in the stock and bond markets, and it is precisely this redistribution scheme that is fueling the Dow Jones Industrials.

That’s why the rest of us, that’s 111 million families, suffered on average a decline of $6,000 each. It’s been redistributed to the 1 percent. Free trade treaties also play a role in this scam. Every year, one to three million jobs are exported from the United States to lower wage nations, according to the Federal Reserve. The difference between the old higher wages and the new lower wages are thrust into the pockets of the 1 percent via higher corporate earnings, rising dividends and soaring stock prices.

Do the math and you’ll discover that the top 7% gained a whopping $5.6 trillion in net worth (assets minus liabilities) while the rest of lost $669 billion. Their wealth went up by 28% while ours went down by 4 percent.

It’s as if the entire economic recovery is going into the pockets of the rich because it is. It’s no accident, it’s been carefully planned, whether it’s shipping jobs overseas, or giving bailouts to the 1 percent via the government and the Federal Reserve.

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