Sunday, June 16, 2013

What One Hundred Years of Theft Has Done to the Average American Worker

Many Americans find that they can no longer afford their lives. There are many reasons why this is so, but "Localism, A Philospophy of Government" considers as first among them that Americans are being systematically stripped of their wealth by a monetary system which was designed for that very purpose.

That's why we can't afford our lives anymore.  The average American worker is getting poorer because the people who designed the financial system used in this country designed it so that the wealth created by by those workers will be siphoned out of the dollars earned by those workers and stuck into new dollars created out of thin air by those who run the system.    They designed it so that the average American worker would be stupid not to borrow- until the time came when they would be stupid to be in debt, and only those running the system could 1) get advance notice of when that switch would be flipped and 2) get special protection at the expense of the unprotected working class, so that the banksters would not have to suffer the consequences for their bad bets.

When this system, known as the Federal Reserve System, was first set up in 1913, they could siphon off only a little of this wealth.   Over time, as they increasingly separated the dollar from the accountability and restraint of being linked to gold (or silver), the amount of theft they could get away with increased.   Once they severed the last link to real money (money metals) in the 1970s they also accelerated the amount of theft.

With the announcement of "QE to Infinity", the open theft of value from the American worker into the clutches of the ruling elites has gone into hyper-drive.   Most parasites are careful not to suck so much life-blood from their host that the host dies.   The exception to this rule is when it becomes clear to the parasites that the host is going to die, at which point their best play is to accelerate their activities and get as much as they can before the death of the host.   Is this where we are now?  The big banks are sure acting like it.

In order to help quantify the amount of theft which occurs to each and every American worker each and every year, Zerohedge produced this infographic.  But the infographic does not tell the real story.  For example, it shows the average American worker in 1913 making $800 dollars a year vs. $26,364 now.   But without adjusting for loss of purchasing power, we don't know if that worker is better off or worse off.

Consider that in 1913 the official exchange rate for one ounce of gold was $20.62.  But that was the official rate, which included the seniorage value of U.S. coin.   The spot price of gold at that time was $18.92, the same price it had been within a penny or two for many decades.   Today the spot price of gold, even though we are at a recent low point, is $1390 per ounce.    That means by the measuring stick of gold, each dollar in 1913 equals 1390/18.92= 73.47 of today's dollars.

Using that factor, we find that $800 of salary or wages in 1913 equaled 800 x 73.47 = $58,776 in today's dollars.   And that is with the price of gold at a low spot, many believe due to government manipulation.   The price of gold was recently very near $2,000 an ounce before it was relentlessly beaten down in the paper gold markets.    Using that rate, the average worker made what amounted to $84,000 in today's dollars.

The obvious conclusion is that the average American worker today has less than half of the purchasing power of their forebears only a century ago.   And that was at a time when their was no income tax.   Sure, average workers don't pay income tax now, but if they every broke out to making above-average earnings, they would face punitive taxes on their income.

Another thing they did not have in 1913 was large amounts of debt, either personal or governmental.   Various calculations have been made to figure the per person amount of national debt, but most calculations put the number at around $57,000 per person.   So not only are our earnings that much lower in real terms, but even the degree of prosperity we appear to have is an illusion, pumped up by massive amounts of debt which will reduce our prosperity if and when they are paid back.    As stressed as we are right now, we would be more stressed if a trillion dollars of essentially hot checks from the government were not producing a temporary illusion of a somewhat functional economy.

And our forebears did not have to wait until they were 23 years old with $30,000 of college loans to start earning money either.   Less than three percent of the population has a college degree.  They used apprenticeships and did not need a college degree, or the debt which comes with it, to find high paying jobs.  Indeed, the majority did not even complete high school.   The balance between labor and capital has been radically tilted toward capital due to immigration (legal and illegal) policies and practices.   It was not that American manufacturing could not afford to pay high wages, it was that they could not afford to let those who run the financial system skim the wealth and still afford to pay high wages.

Compared to our forebears from a century ago, American workers are underpaid, over debted, over taxed, and forced to jump through many more formal educational hoops.    The solutions are not complicated, they are just hard.   We have to make serious changes to our financial system, not to create something new, but to return to the limited-government model that worked so well for America in the past.  What we have to do that is new is erect new barriers to the centralization of political and financial power which caused the country to lose its favorable initial conditions of freedom and opportunity.

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