Half. A Trillion. Dollars.

A few days ago, ZeroHedge highlighted something amazing: That, for the first, time, we’re paying $500 billion – half a trillion dollars – in interest on the federal debt.

In 2015, Federal revenues amounted to approximately $3.2 trillion dollars. That means that just over 15% of the government’s income goes to servicing debt – that one dollar out of every $6.40 taken in goes to debt payments.

From this point on, that’s as good as it’s going to get. That number will increase as interest rates go higher and as we continue to deficit spend.

And that number guarantees that our deficit spending will increase. Those interest payments are crowding out the money available for our increasing government obligations, with healthcare costs rising and social programs increasing (those retiring Boomers are going to need more and more).

When does it break? When it hits 25% of revenues? 50%? When it pushes the annual deficit past $2 trillion?

I don’t know what the metric will be – but we’re already unsustainable, and at some point we’re going to get called on it.

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The audacity of corporate cronies

It’s almost a cliché to call small business the backbone of the US economy, but it happens to be true. According to Inc. Magazine, in 2010 there were 27.9 million small businesses in the US, compared to just 18,500 companies of 500 employees or more. Small businesses employ almost half the nation’s private sector workforce, and since 1995 have created two out of every three net new jobs in this country. They’re also more innovative than their larger counterparts, with small tech firms producing 16 times more patents than large firms, and accounting for 43 percent of high tech employment.

Yet when it comes to a “voice” for business, we typically default to the leaders of the largest businesses in the world – people who, as a rule, do not have our interests at heart, and who don’t hesitate to use their megaphones to advance their interests at the expense of ours.

Take, for example, Jeff Immelt of GE, a company that represents everything that’s wrong with big businesses.

Under Jack Welch, Immelt’s predecessor, GE was a pioneer in outsourcing US jobs, with Welch saying that ““Ideally you’d have every plant you own on a barge to move with currencies and changes in the economy,” and that their parts suppliers needed to “migrate or be out of business.” Under Immelt, the company holds record levels of cash offshore – $119 billion in 2016 – and paid an effective federal income tax rate of -1.6 percent on $58 billion in profits over the past ten years. And they are the ultimate in crony capitalists. In 2011, Forbes writer Dan Ikenson highlighted the following excerpts from the DC Examiner:

Tim Carney gave his impressions of this budding relationship between GE and the Obama administration in the DC Examiner last July:

First, there’s the policy overlap: Obama wants cap-and-trade, GE wants cap-and-trade. Obama subsidizes embryonic stem-cell research, GE launches an embryonic stem-cell business. Obama calls for rail subsidies, GE hires Linda Daschle [wife of former South Dakota Senator and Obama confidante Tom Dachle] as a rail lobbyist. Obama gives a speeeh, GE employee Chris Matthews feels a thrill up his leg. I could go on.

And Carney does go on in a December 2009 Examiner piece:

Look at any major Obama policy initiative — healthcare reform, climate-change regulation, embryonic stem-cell research, infrastructure stimulus, electrical transmission smart-grids — and you’ll find GE has set up shop, angling for a way to pocket government handouts, gain business through mandates, or profit from government regulation.

And yet, when we look for someone to speak on behalf of business, Jeff Immelt somehow grabs hold of the mic and purports to speak on their behalf. It’s true in government circles – Immelt sat on Obama’s Council on Jobs and Competitiveness and now sits on Trump’s new manufacturing council – and it’s true in the public forum.

Two days ago, for example, he gave remarks to students at Georgetown. And, under the guise of advancing the American Way, advocated yet again for globalism, talking GE’s book.

He asks the question: “How did an ideal so connected to American influence and success become so demonized?” He offers some platitudes – we could have done it better – but later, his own hubris shows why when he says, “I don’t listen to people who have no global context, never been in a factory or don’t want to compete.” In other words, if you’re not already an offshoring globalist, screw your opinion.

His solution to our challenges? More globalism and more government intervention. Other companies should hire more talent overseas and produce in those markets. The US government needs to invest in infrastructure. Business should have more access to capital, especially government-backed capital. And of course we should lower business taxes in the US.

There’s nothing wrong with Jeff Immelt talking his book; that’s his job as CEO of his company. But there’s something tremendously wrong with any of us giving credibility to a self-serving globalist crony capitalist when he pretends to speak to our interests.

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The nature of people

The premise behind this blog, and behind other projects to come, is that governments and corporations have become too powerful: They’ve moved from servants to rulers. The freedoms that were fought so hard for are being stripped from us; if we want to live as sovereign citizens it’s up to us to fight back.

But clearly, as bad as the situation is, nothing has happened to wake people up and cause a sustained response. (The movements of late, including the Tea Party and Occupy Wall Street, were well-intentioned but misguided, and ultimately compromised.) So what is it going to take?

I think you need to start by understanding the nature of people – what’s important to them and what motivates them. Only then can you find the lever that will motivate them to learn what’s happening and act.

Here’s my analysis:

As a rule, people are good and fair.

There is always going to be some small percentage of the population without principles or morals – your psychopaths and sociopaths – but the vast majority of people are decent, and that’s true across all divider lines (economic, race, religion, etc.).

People generally don’t want freedom; they want comfort and security.

Freud said that “Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility,” and I think there’s some truth to that. People are much more interested in avoiding pain than in pursuing independence.

People want the easy way.

We’re biologically hard-wired to save energy: Calories used to be scarce, so if there’s a way to do things that require less effort, that’s what people will do. Bill Maher once asked, “If it solved global warming, would you give up the TV remote and go back to carting your fat ass over to the television set every time you wanted to change the channel?” The answer for most is probably no.

People are focused on the short-term.

The Maher quote above also illustrates the way humans act when faced with a short-term versus long-term issue. We tend to care about now, and not the future. As a result we see a chronic failure to save (when we’d rather spend now) and a wave of lifestyle diseases like obesity, diabetes, lung cancer, and liver disease, all of which usually come about after years of bad short-term decisions.

People want to succeed, but they define success differently.

We are goal-driven biological organisms – we want to survive and thrive. Long ago that drive was focused on actual survival, but with our calorie-rich and safety-net-filled culture, survival is assumed, and we’re now able to focus on new goals. But we set those goals in the context of what we see as our reality.

A drug dealer is pursuing success as he sees it: He sees wealth and is attracted to it, sees that he cannot succeed through the traditional channels, and sees the money you can earn with drugs – so, despite the dangers and the morals of the situation, he is rationally pursuing success as he defines it through the channels available to him. The lesson: People need to find a vision of success and a realistic path to realize it.

They will act with the right motivation.

We’ll put up with a lot, but when something or someone important to us is threatened – our kids, our spouses, our property –we’ll act strongly and decisively.

Not sure where to go with this, but it’s interesting food for thought.

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How QE really works

h/t http://qe4people.eu:

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DNC acknowledges their rigged primary

In theory, our political parties would work on a majority-rules basis: Since the party wants to win elections, they would select their candidates based on who gets the most votes from party members. But in reality, our two parties regularly subvert the will of the people in order to hand-pick the candidates that party officials want.

Take the Democratic National Committee as an example. Many liberals feel that the DNC rigged the primary and stole the party nomination from Bernie Sanders so that Hillary Clinton, the big-money corporate candidate, would be run in the general election.

For many Sanders supporters, that’s more than a feeling: They’ve banded together to sue the DNC for rigging their primary, arguing that they donated to Sanders under false pretenses and were therefore materially harmed by the DNC’s actions.

The party’s response? You’re damn right we rigged the primary process, and it’s your own fault if you believed otherwise. According to a report on the DNC’s response to the lawsuit:

The attorneys representing the DNC have previously argued that Sanders supporters knew the primaries were rigged, therefore annulling any potential accountability the DNC may have. In the latest hearing, they doubled down on this argument: “The Court would have to find that people who fervently supported Bernie Sanders and who purportedly didn’t know that this favoritism was going on would have not given to Mr. Sanders, to Senator Sanders, if they had known that there was this purported favoritism.”

Sanders supporters counter by noting that the DNC promised that the nominating process would be fair and impartial, and in fact that those exact words are found in the DNC’s charter. The DNC response:

Later in the hearing, attorneys representing the DNC claim that the Democratic National Committee would be well within their rights to “go into back rooms like they used to and smoke cigars and pick the candidate that way.” By pushing the argument throughout the proceedings of this class action lawsuit, the Democratic National Committee is telling voters in a court of law that they see no enforceable obligation in having to run a fair and impartial primary election.

The DNC attorneys even go so far as to argue that the words “impartial” and “evenhanded”—used in the DNC Charter—can’t be interpreted by a court of law.

If you think the Republicans are any better, they’re not: Ask Ron Paul supporters what happened in 2012.

So for anyone who doesn’t want a corporate-owned, pro-war party, better get your walking shoes on: The DNC and the RNC have made it clear that they don’t want you.

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Why should we go to war with North Korea?

Chris Martenson of Peak Prosperity is a brilliant man who can take complex issues and break them down – correctly – in a way that people can understand. I respect, and rely on, what he says.

But even Martenson is baffled by what’s happening between the US and North Korea, doing a great job of describing the situation but failing – like the rest of us – to figure out any logic behind recent events.

In his latest post, “The Relentless Push Towards War,” he reminds us of all the other ways in which we’ve been frightened, from stories on Ebola, Iran, Libya, terrorists and Russia, then asks – why North Korea? And why now?

North Korea hasn’t done anything differently than they’ve been doing for decades: Making noise and lobbing missiles into the ocean. While their military is large, they haven’t made any new moves that would warrant changing our posture, and provoking them from this state of détente would result in millions of lives lost in both North and South Korea (as well as any other country dumb enough to jump in to the fray). And according to Trading Economics, their 2015 GDP was only $16.1 billion (just over 1% of South Korea’s $1,378 billion GDP that year), so they’re hardly a force to be reckoned with economically. So why now?

According to Martenson, his best guess is that (a) we need someone to be scared of, since Americans didn’t take the bait on the Russian bogeyman; (b) we wanted to sell and install a THAAD missile system that most South Koreans don’t want; and (c) it helps as we renegotiate trade deals with South Korea. None of which is justifiable – it’s an insanely dangerous game to play – but that’s how the US rolls.

The biggest puzzle: With a threat of imminent war, how can the South Korean stock market actually be up 3%? Markets are supposed to hate uncertainty, and a hot war with North Korea would inevitably devastate much of the South. Martenson chalks it up to central banks gone wild, which is they only explanation that even comes close to making sense.

Let’s hope cooler heads prevail, and that the US finds something else to be scared of soon. There is nothing to be gained here, and tremendous amount to lose.

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Me vs. George Carlin

It took me 40,000 words to get my point across in How You Got Screwed (my new book, due out in January). George Carlin gets the same point across in three minutes. Pretty humbling.

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