fake gold 3_0Neofeudal financialization and unproductive State/corporate vested interests have bled the middle class dry.
Yet we accept the officially sanctioned narratives as authentic and meaningful. Why? Perhaps the truth is simply too painful to accept, so we will reject it until we have no other alternative.
Let’s cut to the chase and generalize “what’s fake”: everything that is officially sanctioned
: narratives, policies, statistics, you name it–all fake– massaged, packaged, gamed or manipulated to serve the interests of the ruling Elites.

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By Charles Hugh Smith, Of Two Minds:

Anything that might introduce a shadow of skepticism or doubt about the sustainability, fairness and transparency of the status quo (i.e. anything authentic and genuine) is recast or repackaged into a fake that can be substituted for the authentic when everyone’s gaze is distracted by the latest fad/media sensation/scandal.

ObamaCare: fake, a simulacrum of insurance and healthcare.

The National Security State: fake, a cover for global Empire.

The Patriot Act: Orwellian cover for state-corporate fascism.

Student loans: parasitic, exploitive loan-sharking enforced by the Central State for often worthless “higher education.”

And so on.

Yesterday I explored the peculiar dynamic that motivates us to accept forgeries, fakes and illusions as authentic: What’s Real? What’s Fake?. If the fake enables our fantasy (of free money, of owning an authentic canvas by a famous artist, that rising wealth inequality is just a side-effect of freewheeling capitalism, etc. etc. etc.), then we want to believe it so badly that we overlook all the evidence of chicanery, forgery, illusion and fakery.


Consider our willingness to accept the conventional narrative about why the Great American Middle Class has been in decline since 1973: rising energy costs, globalization, and the declining purchasing power of the U.S. dollar.

While these trends have certainly undermined middle-class wealth and income, there are five other more politically combustible dynamics at work:

1. The divergence of State/corporate vested interests and the interests of the middle class

2. The emergence of financialization as the key driver of profits and political power

3. The neofeudal “colonization” of the “home market” by ascendant financial Elites

4. The increasing burden of indirect “taxes” as productive enterprises and people involuntarily subsidize unproductive, parasitic, corrupt, but politically dominant vested interests

5. The emergence of crony capitalism as the lowest-risk, highest-profit business model in the U.S. economy

The non-fake narratives are considerably different from the status quo ones. Please consider two: The Neofeudal Colonization of Home Markets and the Happy Marriage of the Parasitic Central State and Crony Capitalist Cartels.

The Neofeudal Colonization of Home Markets

The use of credit to garner outsized profits and political power is well-established in Neoliberal Capitalism.  In what we might call the Neoliberal Colonial Model (NCM) of financialization, credit-poor developing world economies are suddenly offered unlimited credit at very low or even negative interest rates. It is “an offer that’s too good to refuse” and the resultant explosion of private credit feeds what appears to be a “virtuous cycle” of rampant consumption and rapidly rising assets such as equities, land and housing.

Essential to the appeal of this colonialist model is the broad-based access to credit: everyone and his sister can suddenly afford to speculate in housing, stocks, commodities, etc., and to live a consumption-based lifestyle that was once the exclusive preserve of the upper class and State Elites (in developing nations, this is often the same group of people).

In the 19th century colonialist model, the immensely profitable consumables being marketed by global cartels were sugar (rum), tea, coffee, and tobacco—all highly addictive, and all complementary:   tea goes with sugar, and so on.  (For more, please refer to Sidney Mintz’s landmark study, Sweetness and Power: The Place of Sugar in Modern History).

In the Neoliberal Colonial Model, the addictive substance is credit and the speculative consumerist fever it fosters.

In the financialization model, the opportunities to exploit “home markets” were even better than those found abroad, for the simple reason that the U.S. government itself stood ready to guarantee there would be no messy expropriations of capital or repudiation of debt by local authorities who decided to throw off the yokes of credit colonization.

In the U.S. “home market,” the government guaranteed lenders would not lose money, even when they loaned to marginal borrowers who could never qualify for a mortgage under any prudent risk management system.  This was the ultimate purpose of Freddie Mac, Fannie Mae, and now the FHA, which is currently guaranteeing the next wave of mortgages that are entering default.

In my analysis, the Status Quo of “private profits, public losses” and the incentivization of gargantuan household debt amounts to a modern financialized version of feudalism, in which the middle class now toils as debt-serfs.  Their debt cannot be repudiated (see student loans), their stagnating disposable income is largely devoted to debt service, and their assets have evaporated as the phantom wealth created by serial credit bubbles vanishes as soon as the asset/credit bubble du jour bursts.

Trivium 5 oz 2The Status Quo: A Happy Marriage of the Parasitic Central State and Crony Capitalist Cartels

In broad brush, financialization enabled the explosive rise of politically dominant cartels (crony capitalism) that reap profits from graft, legalized fraud, embezzlement, collusion, price-fixing, misrepresentation of risk, shadow systems of governance and the use of phantom assets as collateral.  This systemic allocation of resources and the national income to serve their interests also serves the interests of the protected fiefdoms of the State that enable and protect the parasitic sectors of the economy.

The productive, efficient private sectors of the economy are in effect subsidizing the most inefficient, unproductive parts of the economy.  Productivity has been siphoned off to financialized corporate profits, politically powerful cartels, and bloated State fiefdoms.  The current attempts to “restart growth” via the same old financialization tricks of more debt, more leverage and more speculative excess backstopped by a captured Central State are failing.

Neofeudal financialization and unproductive State/corporate vested interests have bled the middle class dry.

Yet we accept the officially sanctioned narratives as authentic and meaningful. Why? Perhaps the truth is simply too painful to accept, so we will reject it until we have no other alternative.

  1. Welcome to the FIAT debt Stockholm Syndrome.  We embrace our kidnappers. 
    I’ll embrace Ms. Steyr and her weapons of sweet destruction 
    Fake or not, that form of ‘das capital’ would keep anyone warm at night
    I’ll bring the gold; she’ll bring the guns

  2. So nice to see it spelled out so clearly. There is such an absence of these truths in media that sometimes I even wonder if I’m the lunatic that many think I am when I allude to these topics and truths. There are far more conspiracies than there are theories of same. The problem is that the elites have trained us through media propaganda to view critical thinkers as lunatics, tin foil hat wearers, conspiracy theorists, nutjobs. They have the masses so well trained to accept the 180 degree view of the real world.

  3. silver slicker 
    everything the government says is lies, including the 4.1% 3Q GDP print.
    Ditto for bankers. 
    4.1% GDP is just an example of the Big Lie.  Just like Geobbels said—if you’re going to lie, lie big. He also said that the state must use every resource within its power to maintain the lie, repress dissent because truth is the mortal enemy of lie and truth is the greatest enemy of the state. Three cheers for Edward Snowden

    • RGR  The man of the year was your girl above or a guy in a skirt.
      I was going to say  “Mark my word’  but that is an obnoxious way of making a point.
      I bet an ounce of silver to a mouldy rolling dognut that over half, and maybe even the majority,  of the adjusted GDP is government created. Remember that sequester? The gummint spent nearly $1 trillion dollars that they hide by snorkeling money out of federal honeypots.
      Heck,  the local, state and federal governments account for 43% of the US GDP now, up from 34% 10 years ago. 
      I can’t see how Government is considered a contributing part of this  country’s GDP  any more than a 20 pound tapeworm contributes to the health of its human host or a vulture to its victim life expectancy.

    • You can mark your words ANYTIME, Uncle AG! 
      Did you see where on the chat (FOMC) where I called you Uncle AG? 
      I told everyone I was just trying to work my way into the will  😉 
      No one responded  🙁

  4. I have said many times, everything is a mirage. That is what is so hard about seeing the world for what it is for the first time. You need to be honest with yourself that the majority of what you knew is a lie, or a distortion.
    It is perverse, but the example of the matrix is very apt as an allegory.

    • A better movie representation, which might be before your time, Mr. CDL… 
      THEY LIVE starring (of WWF fame) Rowdy Roddy Piper
      A line from the movie:
      “I’m here to chew bubblegum, and kick a$$… and I’m all out of bubblegum!”

    • @undeRGRound,
      OMG, one of my all-time favorite classics.  I remember when I first saw it with my wife, I leaned over to her and said we might be the only one with our glasses on in this theater.  I was a silver bug and a conspiracy “nut” back then.
      LOL, I just watched it again the other day.

    • Yeah, it was odd, but the way the aliens had the populace programmed, and the way the glasses 
      showed reality, and who was the enemy… Too bad we don’t have glasses like that, I’d give them
      out by the hundreds! I wonder what KLUMMAC actually looks like… 

    • As far as KLUMMAC is concerned, I’m a non-profit! 
      But I will follow your sage advice, oh Wise One  😉
      I got too much going for me to be a burden on anyone else!
      I’m just awaiting the crash so I can unveil something huge… 
      You know about it AG

  5. KLUMMAC is on his way to his $25,000 a week manse in Hawaii with his $5000 a day boy friend.
    Leggo of my ears Reggie, I know what I’m doing
      Michele has the boo boo face. 

    copy on that thing you speak about.   We look forward to hearing about it.  
    Also, 1001 ways to be your own non-profit.  
    That’ll be a good title to a book.

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