$75,000 a Year from Uncle Sam

Let’s return to the examination of why the 21st century has been such a dud so far. Here’s a simple answer: There are too many zombies.

 

zombie-2Zombies in suits are especially expensive

Screenshot from a ‘Sprint’ commercial

 

First, a reader explains how to become a zombie: Follow these easy, proven 13 steps to financial well-being …

 

1. Don’t get married to her
2. Use your mom’s address to get mail sent to
3. Guy buys a house
4. Guy rents out house to his girlfriend who has two of his kids
5. Section 8 will pay $900 a month for a three-bedroom home
6. Girlfriend signs up for Obamacare so guy doesn’t have to pay out the butt for family insurance
7. Girlfriend gets to go to college free for being a single mother
8. Girlfriend gets $600 a month for food stamps
9. Girlfriend gets free cellphone
10. Girlfriend gets free utilities
11. Guy moves into home but uses mom’s house to get mail sent to
12. Girlfriend claims one kid and guy claims one kid on taxes… now you both get to claim head of household at $1,800 credit
13. Girlfriend gets disability for being “bipolar” or having a “bad back” at $1,800 a month and never has to work again

 

This plan is perfectly legal and is being executed now by millions of people.

A married couple with a stay-at-home mom yields $0.00 dollars.

 

An unmarried couple with stay-at-home mom nets:

$21,600 disability +
$10,800 free housing +
$6,000 free Obamacare +
$6,000 free food +
$4,800 free utilities +
$6,000 Pell grant money to spend +
$12,000 a year in college tuition free from Pell grant +
$8,800 tax benefit for being a single mother

= $75,000 a year in benefits

 

We haven’t verified the details above … But if they’re correct … $75,000 a year is not chicken feed.

 

1922-chicken-feed-smallerThe power of chicken feed

 

Zombies in Suits

But the big money is still not in food stamps and disability. The big money is on Wall Street and in Northern Virginia. That’s where the zombies wear suits.

Archaeologist Arthur Demarest explains that we’re not the first society to be brought low by zombies. They caused the decline of the Mayan civilization too:

 

“Society had evolved too many elites, all demanding exotic baubles […] all needed quetzal feathers, jade, obsidian, fine chert, and animal furs. Nobility is expensive, non-productive and parasitic, siphoning away too much of society’s energy to satisfy its frivolous cravings.”

 

Yes, it’s the elite zombies who are most expensive. The hoi polloi get peanuts (albeit lots of them). The elites get much more. For example, where did all those trillions in Fed “stimulus” go?

Little of it went to the guys on disability (although it did help cover Washington’s spending deficits). No, that money helped prop up the prices of financial assets (directly in the bond market and indirectly in the stock market). Shareholders made money. Executives got bonuses. Wall Street firms made out… well… like bandits.

It’s easy. The financial wizards arrange for a company to sell bonds – earning millions in fees for the service. Then the company takes the money (borrowed at the lowest interest rates in history) and uses it to buy back its own stock (paid for at one of the most richly valued levels in history).

The price of the remaining shares goes up (because more earnings accrue to each remaining share) – triggering bonuses for all the insiders. The trick is so sweet that corporate America is set to hit a new milestone this year – nearly $1 trillion in buybacks!

 

zombie-4Mooooaaaaar…..mooooaaaaar!

Image via visceral-art.com

 

Let Them Eat Cake

Everybody is happy… all the corporate nobility, that is. The poor working stiffs are worse off than ever. Because all this insider financial gaming reduces the long-term capital formation and serious investing that creates real jobs and real wealth.

But the plain people have no idea how the money system is rigged against them. And at least they have disability. The elites always figure out ways to crony up with government… and to turn themselves into zombies.

King Louis XVI of France must have been a decent fellow. But he was surrounded by zombies. Almost the entire First and Second Estates – the clergy and the nobility – lived off of privileges, tariffs, taxes, grants, rents and other entitlements. After they took their share, there was hardly enough national output left to support the working classes.

And you think America’s hedge fund managers have a nice tax deal with their “carried interest?” France’s elite was practically exempt from taxes. But with so many zombies, 18th-century France struggled to stay solvent. A couple of bad harvests… and people began to starve.

 

ancien regime-2The people under the “ancien regime” – revolutionary postcard

 

“We’re hungry. We want bread,” chanted the poor women in front of the Tuileries Palace in Paris. At that moment, if you believe the popular account, the king’s young wife, Marie Antoinette, needed better PR people.

“They say they are hungry,” the flack might have told her.

“You should say something about how you care deeply about their hunger. How you feel their pain. And how you are working day and night with the royal court to alleviate the food shortages in France.”

Instead, the darling but dim Austrian blurted out what must have sounded, for a moment, like a “bon mot.”

“They have no bread? Well, let them eat cake!”

Whether it was true or not, the story got around. And it sounded true enough. Soon the mob was roused and the revolution couldn’t be stopped.

 

2014-01-06-Let-Them-Eat-CakeWhat really happened.

The above article originally appeared 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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