Feeding Like Leeches

AIKEN, South Carolina – The poor Republicans! A Washington Post story wonders if the party could “break in two.” Party stalwarts are threatening to desert to Hillary. And a Texas newspaper worries that the GOP could be “on the verge of extinction.”


extinct GOPAaaaaaand… it’s gone!

Image via reverbpress.com


Not much to report from Wall Street lately. The Dow is still teetering on the 17,000 level… like a school bus on the edge of a bridge. Several readers wrote in to complain about our fact-ish item: that $176,000 was the cost of “salaries” for the typical third-grade classroom.

The figure came from Conspiracies of the Ruling Class, a new book by Lawrence Lindsey, the director the National Economic Council during the G.W. Bush administration. The title was so provocative, we picked it up.

The idea of a “conspiracy” at the top of U.S. politics… and a “ruling class” in what is supposed to be a republic… suggested that the author, a Republican insider, had lost his party membership… or his mind. We opened it eagerly… hoping it was the former, not the latter.

Perhaps Lindsey – anticipating the neocons who are abandoning the GOP banner for the Deep State favorite, Hillary Clinton – had stolen a march on them… and gone over to the Democrats. Lindsey’s point, insofar as the education numbers are concerned, was that the typical third-grade teacher doesn’t get a salary of $176,000. Nowhere close.

Instead, the money goes into salaries for administrators, “educators,” and all the assorted zombies now feeding like leeches on the public school system.


LindseyLawrence Lindsey, former director of the National Economic Council, comes rolling by.

Photo credit: Rotundlvr / via flickr

Rigged and Rotten

You could look at the entire system in the same way. You’d find zombies hiding in every corner and crevice – from the National Labor Relations Board… to the Federal Bureau of Prisons… to Pentagon procurement… to the Food and Drug Administration… to the Securities and Exchange Commission.

The whole shebang is rigged and rotten – including the financial system. The typical voter doesn’t understand why or how. Who does? But he feels it. Something is wrong; he knows it. And more and more, he wants to say so.

So far, the most effective voices for this discontent are Donald Trump and Bernie Sanders – neither of whom has much truck with the GOP’s traditional principles.  Consider a report yesterday in Investor’s Business Daily.

Small Businesses Are Hitting the Brakes on Wages and Benefits,” reads the headline. The article that follows gives the results of a poll of small business owners. Generally, they are not feeling their oats. Instead, they are putting a “chill” on hiring and capital expansion projects.


1-NFIB optimism indexThe NFIB small business optimism index is once again rolling over after having barely recovered from the demise of the housing bubble. Few charts illustrate better how the centrally planned fiat money-based cronyism of modern regulatory “democracy” is becoming an unbearable burden on what little is left of free market capitalism. Its assorted rackets are siphoning more and more real wealth away from genuine wealth creators into the pockets of cronies and zombies – click to enlarge.


This attitude is now being blamed for the surprisingly weak wage data that came out earlier this week. More people are working – according to the official reports – but doing less overtime and earning less money.   The survey also revealed the following detail:


“Another factor for weaker wages: In addition to weaker sales, a net 4% reported lower selling prices, the worst in more than five years.”


Lower prices leave businesses with lower margins. And less desire to hire. This is part of the dreary picture that faces young people today… and it’s why they, too, may be turning against the GOP and its “establishment” candidates.


Generation Stagnation

From Red Alert Politics, an online publication for conservatives, comes the following report:


“A 30-year-old millennial earns roughly the same as what a 30-year-old earned 30 years ago, according to a new study from the Center for American Progress. The wage stagnation is demoralizing when the differences are vast. Millennials today “are 50% more likely to have finished college and that they work in an economy that is 70% more productive,” but a weak recovery and a shift in the labor market has kept starting salaries low, the report notes. The median compensation for 30-year-old workers in 1984 was $18.99 per hour. By 2004, it had moved up to $20.63 hourly, but declined to $19.32 hourly by 2014.”


2-household-income-by-age-bracket-median-realStagnation nation: median real household incomes by age bracket. People in 15-35 year age group have made zero progress in almost half a century – click to enlarge.


The Atlantic added further detail:


“In retail, wholesale, leisure, and hospitality – which together employ more than one quarter of this age group [between 25 and 34] – real wages have fallen more than 10% since 2007. To be clear, this doesn’t mean that most of this cohort are seeing their pay slashed, year after year. Instead it suggests that wage growth is failing to keep up with inflation, and that, as twenty-somethings pass into their thirties, they are earning less than their older peers did before the recession.”


Count on a progressive think tank like the Center for American Progress to provide claptrap “solutions” – including increasing “private sector unionism.” Bernie’s got answers, too – raising taxes on the rich and providing free education and free health care.

But the poor GOP – and its leading man, Trump – has no answers at all, not even crackpot ones. Mr. Trump is a deal maker. A negotiator par excellence. But who are you going to negotiate with to get the economy moving in the right direction?

We saw him on TV last night. The more we see him, the more we like him… and the surer we are that Americans are doomed. “The world is ripping us off,” he said; who “the world” is and how it rips us off is unclear.


nitemareSuccessful nightmare dispensers

Cartoon by Chip Bok


Part of the Problem

Old-school Republicans would have had answers. But you’d have to go back a long time to find them.

“Try some real money for a change,” they would have said. “And, oh yes, balance the budget, too.”

But today’s Republicans are usually part of the problem, not the solution. They have been bought by the Deep State. Now, they offer much the same nonsense as the Democrats: tax, spend, borrow, regulate, bomb, imprison. In that regard, the last Bush administration was probably the worst in modern U.S. history.

The GOP is in disarray. It doesn’t believe its own core ideas. Neither does its standard bearer, Trump, or the voters.   When we picked up Lindsey’s book, we hoped he might put some light on the subject. Or at least a kick in the derriere to the Republican leadership.

“They lost the plot,” he might have said. “They set up the Deep State to take over. No wonder their candidates aren’t winning!” Instead, he loses the plot himself. It’s all the fault of the liberals, Obama, the Clintons… and even Franklin Roosevelt, he suggests. In such a target-rich environment, it is a shame to waste the ammunition on the dead.


Robert TaftHere is an “old school” Republican – a species that has all but died out: Senator Robert A. Taft of Ohio, here depicted in 1952 during his bid for the nomination. He was the ideological opposite of today’s neo-”conservatives”. In favor of a sane foreign and domestic policy, often denounced as an “isolationist” because he didn’t want the country to wage costly and unnecessary wars of aggression.

Photo credit: Bettmann / Corbis


Charts by NFIB, Doug Short / AdvisorPerspectives


Chart and image captions by PT


The above article originally appeared as Republicans for Hillary at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.



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6 Responses to “A Rigged and Rotten System”

  • Galactus:

    My belief is that without a check on currency(like silver/gold, but more important a free market currency), there can be no lasting solution to any of the nations ills.

    How can anyone even know how many ‘productive jobs’, as referenced here by Bonner, or at times by Schiff and others, have been lost due to comparative advantage versus distorted capital markets due to money creation?

    How do you address the “currency manipulation” other countries engage in(see Trump) without addressing our own?

    I’m getting to the stage I can’t trust #’s to mean anything from anyone in economic terms but we don’t even really now the true monetary base in the US, let alone other countries.

    It’s all smoke and mirrors…all of it.

    • Kafka:

      “comparative advantage”

      This 19th century concept was developed long before governments relied entirely on fiat currencies and had national treasuries subsidizing, directly and indirectly, favored industries.

      And long before we had the international Deep State.

      • Galactus:

        I’m not doubting the veracity of comparative advantage, I’m doubting whether anyone can successfully know how much in the way of productive jobs have been lost due to it versus money creation and hence capital distortion, let alone solve the associated problems.

        Free market money is the only way there can be a level playing field and a solution to the problem of having enough productive jobs.

  • wmbean:

    Assuming Trump would be the next president of the country we must approach his time in office with a few words of caution. First is that while the president wields a great deal of power and influence, it has limitations. He can fill patronage and issue executive orders limited in scope but he can only ask that legislation to his liking, budgets to his liking, and appointments to his liking be passed. What he may receive in turn could be totally not to his liking and if a congress is hostile can be forced upon him.

    On the one hand he can direct the justice department to pursue healthcare monopolies and break them up, He can use the variety of legislation that prohibits collusion, cartels, and monopolies to control price and supply of goods and services, which he has already said he will do if elected. Unfortunately he cannot stop the march towards total government control of the country and economy. Every year the size or number of positions in government employment at all stages tends to increase. A “democratic socialism” would only increase this trend until the private taxpayer base becomes far too small to support such a large public employee base. Collection of taxes from public employees to pay for their salaries is the ultimate irony in ponzi schemes. Of course the issuance of fiat currency would cover that until the public loses its faith in such a scheme.

    Given the fiat currency scheme of the world in general there is no wealth creation, only inflated wealth accumulation, or inflated values. One can no longer do value investing when value is constantly being inflated to the point of hyperinflated values. If one wants to restore normalcy to the world economy then kill off the idea of corporations and trusts. Go back to sole proprietorships and partnerships. If one must bring together resources for extremely large projects the issue a corporation for that specific purpose with a definite time limit. And go back to a bimetal currency standard. Make government retire their debts and place limits on their ability to engage in deficit spending. Restrict government employment to no more than ten percent of the total work force in a country. Place term limits on political offices and careers as well as term limits on public employment. Will this ever happen? Only in a drugged induced haze of a fantasy. Still, a cat may look at a king.

    • Kafka:

      “Collection of taxes from public employees to pay for their salaries is the ultimate irony in ponzi schemes.”

      And that is the key. Only the private sector creates wealth-value added- to tax. All public employees’ taxes are in fact paid by someone else.

  • Kafka:

    ” how the centrally planned fiat money-based cronyism of modern regulatory “democracy” is becoming an unbearable burden on what little is left of free market capitalism. Its assorted rackets are siphoning more and more real wealth away from genuine wealth creators into the pockets of cronies and zombies – ”

    Well said Bill. That is what is wrong with this country.

    But, “its leading man, Trump – has no answers at all, not even crackpot ones. Mr. Trump is a deal maker. A negotiator par excellence. But who are you going to negotiate with to get the economy moving in the right direction?”

    You seem to be willfully deaf and blind. Trump said clearly last night, we will start building things here in America. Your blind spot is showing when you write about (American) “genuine wealth creators” then conveniently ignore the endless opportunities in America if the playing field wasn’t tilted against this country.

    And you are good with a calculator so exactly what is the cost of a barrel of oil out of Saudi Arabia when you factor in the American military protection and the endless Middle East wars.

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