The Zombie Economy: America’s Expensive ‘Nobility’

US stocks are still near their all-time highs.

Gold is still clinging to the $1,200-an-ounce mark.

So, let’s return to the examination of why the 21st century has been such a dud so far.

Here’s a simple answer: There are too many zombies.

$75,000 a year from Uncle Sam

First, a reader explains how to become a zombie:

‘Follow these easy, proven 13 steps to financial well-being…

  1. Don’t get married to her
  2. Use your mom’s address to get mail sent to
  3. Guy buys a house
  4. Guy rents out house to his girlfriend who has two of his kids
  5. Section 8 will pay $900 a month for a three-bedroom home
  6. Girlfriend signs up for Obamacare so guy doesn’t have to pay out the butt for family insurance
  7. Girlfriend gets to go to college free for being a single mother
  8. Girlfriend gets $600 a month for food stamps
  9. Girlfriend gets free cellphone
  10. Girlfriend gets free utilities
  11. Guy moves into home but uses mom’s house to get mail sent to
  12. Girlfriend claims one kid and guy claims one kid on taxes… now you both get to claim head of household at $1,800 credit
  13. Girlfriend gets disability for being “bipolar” or having a “bad back” at $1,800 a month and never has to work again

    ‘This plan is perfectly legal and is being executed now by millions of people.

    ‘A married couple with a stay-at-home mom yields $0.00 dollars.

    ‘An unmarried couple with stay-at-home mom nets:

    $21,600 disability +
    $10,800 free housing +
    $6,000 free Obamacare +
    $6,000 free food +
    $4,800 free utilities +
    $6,000 Pell grant money to spend +
    $12,000 a year in college tuition free from Pell grant +
    $8,800 tax benefit for being a single mother

    = $75,000 a year in benefits’

We haven’t verified the details above… But if they’re correct…$75,000 a year is not chicken feed.

Zombies in suits

But the big money is still not in food stamps and disability.

The big money is on Wall Street and in Northern Virginia. That’s where the zombies wear suits.

Archaeologist Arthur Demarest explains that we’re not the first society to be brought low by zombies. They caused the decline of the Mayan civilization too:

‘Society had evolved too many elites, all demanding exotic baubles […] all needed quetzal feathers, jade, obsidian, fine chert, and animal furs. Nobility is expensive, non-productive and parasitic, siphoning away too much of society’s energy to satisfy its frivolous cravings.’

Yes, it’s the elite zombies who are most expensive. The hoi polloi get peanuts (albeit lots of them). The elites get much more.

For example, where did all those trillions in Fed ‘stimulus’ go?

Little of it went to the guys on disability (although it did help cover Washington’s spending deficits).

No, that money helped prop up the prices of financial assets (directly in the bond market and indirectly in the stock market).

Shareholders made money. Executives got bonuses. Wall Street firms made out…well…like bandits.

It’s easy. The financial wizards arrange for a company to sell bonds — earning millions in fees for the service.

Then the company takes the money (borrowed at the lowest interest rates in history) and uses it to buy back its own stock (paid for at one of the most richly valued levels in history).

The price of the remaining shares goes up (because more earnings accrue to each remaining share) — triggering bonuses for all the insiders.

The trick is so sweet that corporate America is set to hit a new milestone this year — nearly $1 trillion in buybacks!

Let them eat cake

Everybody is happy…all the corporate nobility, that is.

The poor working stiffs are worse off than ever. Because all this insider financial gaming reduces the long-term capital formation and serious investing that creates real jobs and real wealth.

But the plain people have no idea how the money system is rigged against them. And at least they have disability.

The elites always figure out ways to crony up with government…and to turn themselves into zombies.

King Louis XVI of France must have been a decent fellow. But he was surrounded by zombies.

Almost the entire First and Second Estates — the clergy and the nobility — lived off of privileges, tariffs, taxes, grants, rents and other entitlements.

After they took their share, there was hardly enough national output left to support the working classes.

And you think America’s hedge fund managers have a nice tax deal with their ‘carried interest’?

France’s elite was practically exempt from taxes.

But with so many zombies, 18th-century France struggled to stay solvent. A couple of bad harvests…and people began to starve.

‘We’re hungry. We want bread,’ chanted the poor women in front of the Tuileries Palace in Paris.

At that moment, if you believe the popular account, the king’s young wife, Marie Antoinette, needed better PR people.

‘They say they are hungry,’ the flack might have told her.

‘You should say something about how you care deeply about their hunger. How you feel their pain. And how you are working day and night with the royal court to alleviate the food shortages in France.’

Instead, the darling but dim Austrian blurted out what must have sounded, for a moment, like a ‘bon mot’.

‘They have no bread? Well, let them eat cake!’

Whether it was true or not, the story got around. And it sounded true enough.

Soon the mob was roused and the revolution couldn’t be stopped.

Regards,

Bill Bonner,
for the Markets and Money Australia


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Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.


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