|America's growing hunger pangs...
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Still in those lazy, not-so-hazy days of summer. August 15th, anniversary of that fateful decision by the Nixon Administration, to take gold completely out of the international monetary system, came and went without much fanfare. Nobody cares.
Thanks to this easy money, total credit increased 50 times in the last 50 years, far more than the economy that supports it. Today, few people have any real money. But almost everyone has credit. With it, at today's ultra-low interest rates, they can buy stuff they don't need with money they don't have.
That, of course, is why Janet Yellen tells the world not to expect 'normalization' of interest rates any time soon. She knows there will be Hell to pay when people have to pay higher funding costs. All of a sudden the 'stuff you don't really need' will be stacking up in warehouses and on retail shelves, unsold. Then, the people who make the 'stuff you don't really need' will find their hours cut back. And the whole economy will shrink.
The feds know, too, that easy credit makes it possible for them to borrow cheaply...and use the money to buy votes. That is another way to understand how modern government works. It has abandoned the old "invade, conquer, steal" model in favor of the "print, dupe, transfer" model. Yes, dear reader, you want a quick description of human progress in the art of government? Here is it: chicanery and fraud have replaced larceny and brute force.
The feds tax as much as they can get away with - about 50% in the worlds' most advanced democracies. Tax revenues are boosted by cheap credit, which pumps up sales and profits. Then, too, they use cheap credit...which they create...to finance the rest of their transfer schemes. Thus is wealth transferred from the people who earn it and own it...to zombies. Taxes allow them to transfer today's output. Credit gives them a way to transfer tomorrow's output; they take from future generations of taxpayers to buy off present generations of voters and chiselers.
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Trouble is, the model only works as long as the productive part of the society is expanding fast enough to pay for it. Alas, Japan is already shrinking. The European economy is dead in the water. And the US has grown at only 0.9% per year over the last 5 years, while its public debt has grown 4 to 5 times as fast.
When the zombies multiply faster than the people who produce real goods and services, it is just a matter of time before the whole system collapses.
And what's this? From Richmond comes a report, telling us that the number of people needing food assistance is on the rise:
The number of people who each year turn to food pantries and meal service programs in a large swath of Virginia served by the FeedMore food bank has topped 212,000, according to a report released last week by FeedMore and Feeding America.
Meanwhile, Mike "Mish" Shedlock reports that zombies in America are already thicker than flies on a feedlot. Welfare recipients outnumber full-time jobholders by 6.5 million people:
The study, Hunger in America 2014, tracks hunger relief efforts across the country and shows a growing number of people relying on food banks or agencies for help.
In FeedMore's service area, which stretches from Richmond north to the Northern Neck and south to the North Carolina line, about half of its participating agencies reported an increase in the number of clients and a third reported not having sufficient food to meet demand.
The report finds that, in the past year, 70 percent of households needing help had to choose between paying for food or utilities, 60 percent had to choose between food and transportation, and 57 percent had to choose between food and housing.
126 Million Live In Households With Mean-Tested Transfer Payments--40% Of US Population
More credit leads to more zombies, which leads to less real output/person. Inevitable conclusion: disaster.
As a result of Obamacare Medicaid expansion coupled with means-tested Obamacare assistance, I estimate welfare rolls expanded from 35.4% of the population in 2012 to about 40% in 2014.
The latest welfare statistics are from year-end 2012. Those figures show 35.4 Percent: 109,631,000 on Welfare.
109,631,000 living in households taking federal welfare benefits as of the end of 2012, according to the Census Bureau, equaled 35.4 percent of all 309,467,000 people living in the United States at that time.
When those receiving benefits from non-means-tested federal programs - such as Social Security, Medicare, unemployment and veterans benefits - were added to those taking welfare benefits, it turned out that 153,323,000 people were getting federal benefits of some type at the end of 2012.
Subtract the 3,297,000 who were receiving veterans' benefits from the total, and that leaves 150,026,000 people receiving non-veterans' benefits.
The 153,323,000 total benefit-takers at the end of 2012, said the Census Bureau, equaled 49.5 percent of the population. The 150,026,000 taking benefits other than veterans' benefits equaled about 48.5 percent of the population.
In 2012, according to the Census Bureau, there were 103,087,000 full-time year-round workers in the United States (including 16,606,000 full-time year-round government workers). Thus, the welfare-takers outnumbered full-time year-round workers by 6,544,000.
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Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.
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