Dollar Destruction: My Wealth Inequality Manifesto

by: Philip Davis

Is the Fed actively trying to destroy the dollar?

Well yes, of course they are. Americans had done something that was unforgivable to Republicans by the end of the Clinton administration - they had attained a decent standard of living.  Median net worth had climbed from $57,800 under Reagan/Bush in 1992 to $78,400 in 2001, a 35% rise in the wealth in the middle of the middle class.  People with zero or negative net worth were also at all-time lows with just 17.6% of the population in debt.

Although the wealth of the nation increased dramatically in the 90s, the percentage of wealth held by the top 1% of the the country FELL from 37.2% in 1992 to 33.4% in 2001 but the Bush tax cuts quickly reversed that and sent the top 1%’s wealth back to 34.3% by 2004.  Where did most of that money come from?  Well the top 4% DROPPED from 25.8% of the nation’s wealth to 24.6% of the nation’s wealth and that figure is brought UP by the top 1%.

So the people who think they are rich but aren’t actually rich enough to be invited to Crawford on the weekend, the ones who give until it hurts at the Republican fundraisers, were the ones who got well and truly screwed by the Bush economy.  The top 4% had gone from 22.8% of the nation’s wealth in 1992 to 25.8% in 2001 and then, just 3 years later, while the top 1/4 of their group became SUPER RICH, the rest lost over 5% of their assets.  Read the report, it’s fun!

Another thing that’s striking about this report is the count of millionaire households, which lept from 3.4M in 1992 to 7.3M in 2001 (and we’re using 2001 because it’s AFTER the dotcom bubble broke).  Three years later, in 2004, new wealth creation had clearly ground to a halt as only 600,000 new households achieved millionaire status with just 6,000 crossing the $10M line to join the top 4% (vs 297,000 under Clinton) and just 53,000 making it to the top 10% at the $5M mark in Bush’s first 3 years versus the 790,000 that had made it to the top 10% under Clinton.

Even sadder, just 574,000 out of 112M US households managed to break into the $1M net worth category vs. the 348,000 PER YEAR that attained the American dream during the Clinton administration.  Why do I care so much?  Well, the last time this much wealth was concentrated in the hands of the top 1% of the country was 1929 - you cannot line the pockets of 3M people at the expense of 300M other people without the system breaking down, we are now at that breaking point!

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Over the past 7 years, the wealth of the top 1% of this country has grown from 33.4% to 39.7% primarily due to a massive transfer of money by taking on $5Tn of government debt in order to finance a 50% decrease in taxes paid by that group.  THESE ARE THE TAX CUTS THAT YOUR "LEADERS" ARE ASKING YOU TO DEFEND! 

That's right, those evil, greedy, self-centered, hypocritical bastards are asking you to make sure that our government continues to borrow money, debase the currency, destroy our nation’s infrastructure and throw millions of citizens into poverty - in order for 3M people to continue receiving over 1/2 of the "tax cuts."

It’s not just the theft of your tax dollars by the top 1% that hurts you in this economy.  As I wrote in "The Dooh Nibor Economy" the unbridled spending of a very small percentage of people who effectively have infinite wealth drives up the price of good and services for everyone else, creating additional taxes that are paid by the other 99% in the form of higher commodity prices, housing prices etc. throughout the economy. 

The bottom of the Forbes 400 richest Americans has $1.3Bn (Roger Wang) while the richest (Bill Gates) has $59Bn. As a group, those 400 people control over $2Tn in assets, earn $300Bn a year and pay $75Bn a year less taxes on that money now than they did in 2001 - just those 400 people out of the 3M in the top 1%.  That’s $600Bn that our government had to borrow in order for them to get 15% richer last year, rather than the 11.25% richer they would have gotten under the old tax code.

Of course corporations are legal people too, and they have had their taxes slashed as well, yet our national debt is being financed by rich and poor alike as our "lock box" has been raided, social programs have been slashed, debts have piled on and the few dollars we have left have lost 40% of their value since the Supreme Court decided George Bush was our duly elected leader.

The policies pursued by the Fed are murdering the working class people of this country.  Low rates are not being passed on to the homeowners or borrowers who need them as, suddenly, nobody who is not in the top 4% qualifies for a low-interest loan anymore, so the lending institutions (the definition of which has now been broadened to include the financial institutions who gamble in the commodity markets) who are given access to OUR money by the Fed at ultra-low rates, but use that money to speculate in the commodity markets.

Look at Goldman Sachs (NYSE:GS).  They have been given access to and have used the Fed discount window yet they have analysts telling you to buy oil and other commodities and stay away from the US auto industry, Boeing (NYSE:BA), all the other banks, retail… etc.  So, effectively, the Fed is giving them OUR money and they are sending it out of the country to OPEC by the tanker-full, causing American citizens to double their spending on fuel and other commodities and drawing money away from US industries like the US auto industry, Boeing, Banks and Retailers — Isn’t that just the greatest scam ever???

So this is my quarterly message to voters - GET MAD!  It is not going to be enough to sit back in your chairs and complain to your TV that things need to change, because we are reaching a tipping point where we are losing control of this country and it is being stolen from right under our noses by people who wrap themselves in a flag and question your patriotism if you question their actions - this is NOT the America we were brought up to believe in!

For those of you who haven’t seen it, I urge you to view this video clip from "Network" in which Howard Beale urged voters of the Ford administration to get mad - the similarities to today’s situation are downright scary 30 years later…