Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US Wealth Distribution, Where Zombies Go to Feast

Politics / US Economy Dec 21, 2010 - 05:10 AM GMT

By: Bill_Bonner

Politics

Best Financial Markets Analysis ArticleA warning… Bad stuff coming!

We’ve come to the warm latitudes for our Christmas holiday. Your editor didn’t really want to do so. He travels so much for business, he longed to stay home for Christmas. He imagined himself sitting in front of the fire…happily drinking eggnog and eating fruitcake. Or, cutting down trees and mending fences.


It was not to be. He was outvoted. Here we are in Florida…on our way to Nicaragua…where we will spend Christmas not too far from the scene of an incipient border war…

We haven’t been down there for 2 years. We’re going to find out what is going on.

First, we have to warn readers. Bad times are coming. Our Indian colleagues alerted us. The Hindu era of Kalyug is beginning.

What’s Kalyug?

It’s the “age of bad stuff…about 432,000 years of it!”

Whoa. Well, that kind of puts our worries about de-leveraging debt crises into perspective, doesn’t it? By our calculation, de-leveraging will end and we’ll still have about 431,992 years of Kalyug to get through.

Those Hindus really do think long-term, don’t they?

We Episcopalians are more short-term oriented. We’ll worry about things 6 months out. Maybe 24 months. But that’s about it.

Not much action on Friday. The Dow was down 7. Gold was up $8.

What do we see 24 months into the future? Well, you’ll probably think we’re kidding about this, but we’re actually very serious:

The zombies are taking over.

We’re not joking about this zombie thing. Look at what is happening. Here’s a report from Bloomberg:

Dec. 15 (Bloomberg) – The gap between the haves and have-nots in the US is being drawn along geographic lines, Census Bureau data showed yesterday.

The number of counties where median household income decreased is almost 10 times the number that saw an increase, according to a Bloomberg analysis of Census figures comparing an average of the years 2005-2009 with 2000. The government figures also showed a concentration of wealth and education in coastal states.

The Washington metropolitan area emerged as the wealthiest and most educated region of the past five years. The only three communities with median household incomes higher than $100,000 are in suburban counties in Virginia. Maryland, which also borders the nation’s capital, saw income levels in Howard County increase at the eighth-fastest pace in the US since 2000.

The Washington suburbs are home to government contractors such as Bethesda, Maryland-based Lockheed Martin Corp., the world’s largest defense company, and General Dynamics Corp., the Falls Church, Virginia-based maker of Abrams tanks and Gulfstream business jets.

The Washington Post, the zombie paper, gave the news a positive tune:

“Area Counties Richest in Nation,” was the headline…or something like that.

So you see, this “geographical” distribution is really a zombie distribution. If you work for the feds – directly or indirectly – you get more money. Most likely, you’re no longer creating wealth; you’re consuming wealth that others created. That’s what being a zombie is all about.

And as a society becomes more corrupt and degenerate, there are more and more zombies and fewer wealth-creating citizens.

The zombification process runs deep. It changes the nature of what most people regard as “wealth.” Instead of wanting to own a profit-making business, or lend to a wealth-increasing enterprise, more of what passes for wealth is actually a claim against the government. It is a promise by sitting politicians to rip off the future on behalf of the present.

Let’s look at how it works…

In an economy like India’s, a man who wants to prosper will start a business of his own…or invest in someone else’s business. If he wants a decent retirement, he will have to save real money. He’ll need real capital…which supports him by producing real interest or real earnings. He has a claim against future increases to the world’s wealth. But that is wealth that he helped create…by saving and investing.

But in the US, more and more people depend on the government for their retirement financing. The government pledges to take money from future earnings too. But it is a zombie claim; it does not depend on adding to the world’s wealth. It merely takes away the wealth of others.

If an American wants a good-paying job, he looks to the government itself, knowing that its salaries are higher than those in the private sector, and more reliable. And even if the American invests in a private business, the enterprise is more and more likely to depend on the government for contracts, subsidies, tax breaks, regulatory approval or bailouts.

Gradually, “wealth” itself becomes zombified. Insurance policies are backed by government bonds – local or federal. Pensions are heavily dependent on claims against the government. And don’t forget that 42 million people in the US depend on government handouts just so they can eat. Food stamps – the breakfast, lunch and dinner of zombies – have never had so many takers.

This process is completely predictable. The more you subsidize zombies, the more zombies you get. And as the zombie population grows, it becomes more difficult to support. Finally, the paper zombie claims – US Treasuries/welfare/government employment/the US dollar – fall in value. There are too many of them for the private sector to sustain. PIMCO chief and bond expert Bill Gross says the Fed’s purchases of US Treasury bonds “will likely signify the end of the great 30-year bull market in bonds.” That’s just the way it works. As the parasites grow, the host weakens. The more you borrow, the lower your credit rating. The more women you date, the harder it is to remember their names.

Bill Bonner
The Daily Reckoning

Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and Empire of Debt: The Rise Of An Epic Financial Crisis and the co-author with Lila Rajiva of Mobs, Messiahs and Markets (Wiley, 2007).

    © 2010 Copyright The Daily Reckoning, Bill Bonner - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in