What Should The Federal Reserve Do To Stimulate The Economy And Abate Economic Inequality?

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The Federal Reserve will raise its main interest funds rate by one-quarter of a point, signaling confidence that the economy has finally recovered from the 2008 financial crisis. The move, announced on December 16, 2015 in a statement from the Federal Open Market Committee, was widely expected and marks the first time the central bank has raised the funds rate in almost 10 years. The funds rate is the principal lever for controlling interest rates that borrowers pay. The Federal Reserve cut the rate almost to zero at the height of crisis to spur an economic recovery, the result of which as been anemic for the vast majority of Americans, but has bolstered the capital OWNERSHIP portfolios of the already wealthy OWNERSHIP class.

The Federal Reserve raised its key interest rate in order to demonstrate its confidence in the U.S. recovery. Committee officials are expecting the U.S. economy to grow by 2.4 percent in 2016, according to the Federal Reserve’s forecast released after the announcement. The “official” unemployment rate is expected to level off at 4.7 percent over the next three years. The underlying support for the main interest rate increase is strengthening economic indicators, namely the increasing job growth, albeit mostly low-wage jobs.

It is, however, a misrepresentation, based on questionable economic indicators, that the economy is healthy and has escaped from the “Great Recession.” Raising the Federal Reserve’s main interest rate from near zero to, well, just above zero at 0.25 percent is not a solution to ANYTHING. The economy will continue to head toward the ultimate wreck resulting in significantly expanded wealth inequality at the expense of ordinary citizens who are struggling as wage slaves, welfare slaves, charity slaves and consumer debt slaves with no meaningful savings or the ability to save and invest. Anyone who believes that the economy is robust with a 2.4 percent annual growth expectation does not understand what the real potential is. Any growth under 10 percent is anemic.

To date, the Federal Reserve’s near-zero interest rates have boosted stock (OWNERSHIP participation) speculation for those qualifying for low-cost capital credit and boosted stock prices. The wealthy OWNERSHIP class has been able to buy back stock and further concentrate their OWNERSHIP of corporations. That’s IT!

The bond-buying spree over the past six years now poses the challenge for the Federal Reserve to dispose of the assets on its bloated balance sheet – more than four times larger than when the bond buying began. How much has the balance sheet grown? When the Great Recession hit, the Federal Reserve’s balance sheet was approximately $700 billion dollars, and over the course of the recession and recovery, the asset purchases the central bank made through its various quantitative easing programs expanded the balance sheet to over $4.4 trillion. Note: “quantitative easing” is a monetary policy in which a central bank purchases government securities (bonds or other debt) or other securities from the market exchanges in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with money in an effort to promote increased lending and liquidity to meet financial obligations.

There is very little to show for the Federal Reserve lowering the benchmark interest rate (near zero). While borrowing costs have been lowered to create an incentive for business corporations to expand, what expansion resulted has not really benefited the vast majority of American citizens, who are seeing jobs exported to foreign countries whose economies are being boosted by American corporation investment in productive plant and machinery instead of making investments in productive plant and machinery in the United States. That coupled with the continual impact of technological progress is steadily eliminating well-paying jobs in manufacturing and devaluing the worth of labor, leaving what job prospects remain in the low-pay service industries. As a result income inequality is constantly the result as the divide between the wealthy OWNERSHIP class and the wage serfs and property-less widen.

Without a population with earnings to create demand for products and services, there will not be any significant private sector investment in the growth of the economy. Yet, according to an articled entitled “Fed Hikes Interest Rates” by Jon Prior and Ben White on Politico, “growing numbers of Wall Street analysts now believe that the gentle hike of just a quarter of a percentage point will not be necessarily bad news for markets, and could even provide a short-term stimulus if businesses are inspired to invest in new equipment now rather than wait for higher rates in the future.” But “markets” are ALL secondary, as they are comprised of assets (stocks, bonds and securities) already OWNED, which are then bought and sold among an already wealthy OWNERSHIP class. Markets have nothing to do with the REAL economy – the formation of actual capital assets necessary to productivity growth.

The Federal Reserve’s printing of “new” money to execute its bond purchasing has also caused inflation in the cost of products and services, and put further strain on ordinary working Americans struggling to survive day-to-day, week-to-week, month-to-month and year-to-year with less disposable income to pay for products and services at higher prices, and to pay down credit card and consumer loan debt. And while mortgage rates have been reduced due to the Federal Reserve’s purchase of mortgage-backed securities, still the vast majority of Americans cannot qualify for mortgage loans to purchase housing. And while, on the one hand, Americans are unable to save for their retirement, the Federal Reserve’s efforts to reduce borrowing costs is aimed at creating an incentive for businesses and consumers to spend instead of save.

The Federal Reserve cites the “dramatic” improvement in the unemployment rate but this is just ballyhoo, when in reality unemployment is far more vast and earned incomes are stagnant with most Americans barely getting by. The official unemployment rate, now seemingly relatively low at 5 percent, does not reflect the “new normal,” in which millions have simply stopped looking for jobs or are involuntarily underemployed. Furthermore, wages for working people have remained flat or falling. In other words, the economy is still very depressed, despite nearly a decade of easy money with Federal Reserve borrowing rates held near zero.

Of course, as is conventional wisdom, any program that results in job creation is what is “sold” to the American public, when at its core and hidden by those with a hold on the economy, it is known that it is narrow OWNERSHIP creation that is the REAL result of the stimulus programs. It is the same old game of “make the rich richer” and there will be trickle-down benefits. But that is not the reality of what occurs.

What are the alternatives for stimulating growth, abating wealth inequality and increasing incomes of ALL Americans, without taking from those who already OWN America, an essential practical requirement for reforming the system?

How about instead of the Federal Reserve showing that it is committed to keeping rates low, it can help to trigger significant job-creating activity — from renovating factories to building new factories and new tools, by providing capital credit loans at zero “0” percent interest to local banks who would in turn lend this interest-free money for the specific purpose to finance the creation of new wealth-creating, income-producing capital assets to grow the economy. Who should benefit from such interest-free capital credit should be EVERY child, woman and man, who would then be empowered to acquire over time significant portfolios of self-liquidating capital asset investments in the American economy, with the capital credit loans repaid out of the FUTURE earnings of the investments. After all, that is the same practical logic of corporate finance that the wealthy OWNERSHIP class uses to further enrich their capital wealth portfolios. Note: Self-liquidating denotes an asset that earns back its original cost out of income the asset produces over a fixed period.

Broadening capital OWNERSHIP would increase the pay of the least-advantaged workers (and non-workers) who would be contributing their productive capital to the expansion of the economy. And in this way, EVERY citizen can become a productive contributor to the economy.

The Federal Reserve, which has been largely responsible for the powerlessness of most American citizens, should set an example for all the central banks in the world. Chairman Janet Yellen and other officials of the Federal Reserve need to exert leadership and implement Section 13, Paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth. We should not destroy the Federal Reserve or make it a political extension of the Treasury Department, but instead reform it so that the American citizens in each of the 12 Federal Reserve Regions become the OWNERS. The result will be that money power will flow from the bottom up, not from the top down — not for consumer credit, not for credit that doesn’t pay for itself or non-productive uses of credit, but for credit for productive uses to expand the economy’s rate of growth, including investments to transform from reliance on environment-polluting energy sources to clean energy sources, and to build a super-infrastructure all over our nation.

The Federal Reserve needs to stop monetizing unproductive debt, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” at their local bank to acquire a growing full dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Steadily over time this will create a robust economy with millions of new “customers with money” to purchase the products and services that are needed and wanted.

Our leaders need to put on the table for national discussion this SUPER-IRA idea and the necessary reform of our tax policies that would incentivize corporations to pay out fully their earnings in the form of dividend income, and issue and sell new stock to grow their businesses. Under the proposed Capital Homestead Act, an equal allocation of productive credit would be processed for every citizen, based on the aggregate value of the projected need for new capital formation projects, exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets.

The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets with future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.

Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance (a la the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.

Essentially, the pressing need is for everyone in a position of influence to encourage President Obama and our next President to raise the consciousness of the American people by making their NUMBER ONE focus the introduction of a National Right To Capital Ownership Bill that restores the American dream of property OWNERSHIP as a primary source of personal wealth.

These proposals are the solutions to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual OWNERSHIP so that EVERY American’s income significantly grows simultaneously with the growth of the economy, providing the means to support themselves and their families with an affluent lifestyle, and to ensure that their children and grandchildren will benefit even more.

To fully understand the proposed solutions requires a commitment to read and carefully consider the scope of the foundational agendas for reforming the system. The solutions’ core is a conscious and dedicated growth policy that broadens individual personal OWNERSHIP in the economy’s FUTURE wealth-creating, income-producing capital asset creation. “FUTURE” is stressed because the primary solutions are not based on socialistic redistributive policies that tax and punish those in society who are producing, whether through their labor or their “tools” that they OWN, which they contribute as inputs to creating economic value. The solutions are based on the fundamental principle that economic value is created through human and non-human contributions.

The solutions have at their core the truth that labor and physical capital are independently productive. Given the reality that most products, and increasingly services, are exponentially made by physical capital, the solutions require using financial tools that effectively will democratize capital OWNERSHIP, with the full earning dividend income paid out to each capital owner. The basis for this foundational thinking is at the core of binary economics which recognizes that there are two independent factors of production: people (labor workers who contribute manual, intellectual, creative and entrepreneurial work) and physical capital (land; structures; infrastructure; tools; machines; robotics; computer processing; certain intangibles that have the characteristics of property, such as patents and trade or firm names and the like which are OWNED by people individually or in association with others). Fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through OWNERSHIP of the non-human factor of production. Financial capital, such as stocks and bonds, is just an ownership claim on the productive power of real capital. In the law, property is the bundle of rights that determines one’s relationship to things.

The role of physical productive capital is to do evermore of the work, which produces wealth and thus income to those who own productive capital assets. Our current economic policies are proposed in the name of JOB CREATION. But the reality is that full employment is not an objective of businesses.

Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever-increasing role. The reason the rich are getting richer is not due to their labor work but due to their expanding OWNERSHIP of wealth-creating, income-producing capital.

Given the indisputable reality that productive capital is increasingly the source of the world’s economic growth, capital should become the source of added property OWNERSHIP incomes for all. It is logical and reasonable to postulate that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive and continue to promote job creation while ignoring the issue of OWNERSHIP and how to broaden OWNERSHIP so that EVERY child, woman and man is empowered to become a capital OWNER.

Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment – thus the political focus on job creation and redistribution of wealth rather than on full production and broader capital OWNERSHIP accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When the “tools” of capital OWNERS replace labor workers (non-capital OWNERS) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.

The capitalism practiced today is what, for a long time, I have termed “Hoggism,” propelled by greed and the sheer love of power over others. “Hoggism” institutionalizes greed (creating concentrated capital OWNERSHIP, monopolies, and special privileges). “Hoggism” is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital OWNERSHIP. Our scientists, engineers, and executive managers who are not OWNERS themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” OWNER more productive. How much employment can be destroyed, by substituting machines for people, is a measure of their success – always focused on producing at the lowest cost. Only the people who already OWN productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital OWNERSHIP in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital OWNERSHIP to improve their economic well being.

The solutions, through the reform of the system, will END Hoggism. Louis O. Kelso, the father of binary economics, postulated: “When consumer earning power is systematically acquired in the course of the normal operations of the economy by people who need and want more consumer goods and services, the production of goods and services should rise to unprecedented levels; the quality and craftsmanship of goods and services, freed of the corner-cutting imposed by the chronic shortage of consumer purchasing power, should return to their former high levels; competition should be brisk; and the purchasing power of money should remain stable year after year.”

It is imperative that leaders seeking new solutions seize the opportunity presented by the 2016 presidential election to implement effective programs for expanded OWNERSHIP of productive capital, and address the problem of education on this subject.

At one point in 1976, the discussion led to The Joint Economic Committee of Congress endorsing the two-factor policy to broaden capital OWNERSHIP as an economic goal for America. The 1976 Joint Economic Report stated: “To provide a realistic opportunity for more U.S. citizens to become OWNERS of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the OWNERSHIP of wealth in this country, which would assist in evaluating how successfully the base of wealth was being broadened over time.” Unfortunately the Congress has never paid any attention to this policy, and the goal has subsequently been unacknowledged and unheeded by our plutocratic political leaders.

The stark reality is that we are in a depression reflected in rising under reported unemployment and underemployment and instability that we will never escape from until we change our economic policy. According to the Economic Policy Institute, a family of four needs an income of at least $60,000 dollars a year to reach an “adequate but modest living standard.” But, 50 percent of all Americans make less than half that amount. In essence, they are flat broke. This scenario will worsen as globalization further develops and as technology shifts production from humans to non-humans.

Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance – not able to accumulate equity that can help to sustain them in their retirement years. And this is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states or proposals for a $15.00 per hour minimum wage, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor-worker wages is that production will decline or desist without sustainable consumer demand. And where there are signs of consumer demand, it is virtually always because consumers use credit cards and other forms of consumer debt to purchase products and services.

This is all coming about because we have severely mismatched the power to produce with the possession of unsatisfied needs and wants. Those capital “worker” OWNERS who have unsatisfied needs and wants have ready access through conventional finance to get as much or more capital as they want (especially with the near-zero interest funds rates provided by the Federal Reserve). Our tax laws are designed to further benefit the ultra-rich 1 percent by providing enormous write-offs and credits to producers (corporations) who are owned by the few, who already produce more than they can consume.

Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively minuscule, as are their dividend payments compared to the top 10 percent of capital owners. Pew Research found that 53 percent of Americans own no stock at all, and out of the 47 percent who do, the richest 5 percent own two-thirds of that stock. And only 10 percent of Americans have pensions, so stock market gains or losses don’t affect the incomes of most retirees.

Those who have only their labor power and its precarious value held up by coercive rigging and who desperately need capital OWNERSHIP to enable them to be capital “workers” as well as labor workers to have a way to earn more income, cannot satisfy their unsatisfied needs and wants. With only access to labor wages, the 99 percenters will continue, in desperation, to demand more and more pay for the same or less work, as their input is exponentially replaced by productive capital.

But if we change direction and systematically build earning power into consumers, we have the opportunity to reverse the depression perpetrated by systematically limiting the 99 percent to labor wages alone and through technology eliminating their jobs, and through labor-destroying globalization. We need solutions to grow the economy in ways that simultaneously create productive jobs and widespread equity sharing. We need to systematically make capital credit to purchase capital accessible to economically underpowered people (the 99 percenters) in which the income from the capital investment is isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capital owners. This can only be accomplished by enabling every person to have access to capital OWNERSHIP and purchase the capital, and pay for it out of what the capital produces. It’s time good and well-intentioned people woke up and adopted a JUST Third Way beyond the greed model of monopoly capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice, as well as put us on the path to inclusive prosperity, inclusive opportunity and inclusive economic justice.

If you have read this far then hopefully you will explore in more depth the solutions and agenda for REAL change. The end result is that citizens would become empowered as OWNERS to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elite controls the coercive powers of government.

If we do not reform the system and create government that justly serves ALL the people, and restrain man’s greed, which otherwise cannot be self-controlled, the wealthy who seek to own productive power that they cannot or won’t use for consumption will continue to beggar their neighbor – the equivalency of mass murder – the impact of concentrated capital ownership, which will inevitably result in turmoil and upheaval, if not revolution.

Read “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” here.

Read the Agenda of The Just Third Way Movement here, here, here and here.

Read the Capital Homestead Act here, here, here and here.

If you become supportive of this core agenda and solutions, then support the Unite America Party Platform, published by The Huffington Post here as well as Nation Of Change and OpEd News.

The Huffington Post has published my article entitled “What Should The Federal Reserve Do To Stimulate The Economy And Abate Economic Inequality?” at  http://www.huffingtonpost.com/gary-reber/what-should-the-federal-r_b_8881752.html as well as OpEd News at http://www.opednews.com/articles/What-Should-The-Federal-Re-by-Gary-Reber-Corporate-Greed_Corporate-Profits_Federal-Reserve-System_Money-151228-507.html, the Liberal Voice  at http://www.liberalvoice.tv/what-should-the-federal-reserve-do-to-stimulate-the-economy-and-abate-economic-inequality/ and at KJOZ Radio at http://kjozradio.com/what-should-the-federal-reserve-do-to-stimulate-the-economy-and-abate-economic-inequality/, by Unfollow Trump at http://unfollowtrump.com/?p=625.

Bernie Sanders: To Rein In Wall Street, Fix The Fed

On December 23, 2015, Bernie Sanders writes in The New York Times:

WALL STREET is still out of control. Seven years ago, the Federal Reserveand the Treasury Department bailed out the largest financial institutions in this country because they were considered too big to fail. But almost every one is bigger today than it was before the bailout. If any were to fail again, taxpayers could be on the hook for another bailout, perhaps a larger one this time.

To rein in Wall Street, we should begin by reforming the Federal Reserve, which oversees financial institutions and which uses monetary policy to maintain price stability and full employment. Unfortunately, an institution that was created to serve all Americans has been hijacked by the very bankers it regulates.

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CreditSpencer Platt/Getty Images

The recent decision by the Fed to raise interest rates is the latest example of the rigged economic system. Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner. They have been dead wrong each time. Raising interest rates now is a disaster for small business owners who need loans to hire more workers and Americans who need more jobs and higher wages. As a rule, the Fed should not raise interest rates until unemployment is lower than 4 percent. Raising rates must be done only as a last resort — not to fight phantom inflation.

What went wrong at the Fed? The chief executives of some of the largest banks in America are allowed to serve on its boards. During the Wall Street crisis of 2007, Jamie Dimon, the chief executive and chairman of JPMorgan Chase, served on the New York Fed’s board of directors while his bank received more than $390 billion in financial assistance from the Fed. Next year, four of the 12 presidents at the regional Federal Reserve Banks will be former executives from one firm: Goldman Sachs.

These are clear conflicts of interest, the kind that would not be allowed at other agencies. We would not tolerate the head of Exxon Mobil running the Environmental Protection Agency. We don’t allow the Federal Communications Commission to be dominated by Verizon executives. And we should not allow big bank executives to serve on the boards of the main agency in charge of regulating financial institutions.

If I were elected president, the foxes would no longer guard the henhouse. To ensure the safety and soundness of our banking system, we need to fundamentally restructure the Fed’s governance system to eliminate conflicts of interest. Board members should be nominated by the president and chosen by the Senate. Banking industry executives must no longer be allowed to serve on the Fed’s boards and to handpick its members and staff. Board positions should instead include representatives from all walks of life — including labor, consumers, homeowners, urban residents, farmers and small businesses.

The Fed must also make sure that financial institutions are investing in the productive economy by providing affordable loans to small businesses and consumers that create good jobs. How? First, we should prohibit commercial banks from gambling with the bank deposits of the American people. Second, the Fed must stop providing incentives for banks to keep money out of the economy. Since 2008, the Fed has been paying financial institutions interest on excess reserves parked at the central bank — reserves that have grown to an unprecedented $2.4 trillion. That is insane. Instead of paying banks interest on these reserves, the Fed should charge them a fee that would be used to provide direct loans to small businesses.

Third, as a condition of receiving financial assistance from the Fed, large banks must commit to increasing lending to creditworthy small businesses and consumers, reducing credit card interest rates and fees, and providing help to underwater and struggling homeowners.

We also need transparency. Too much of the Fed’s business is conducted in secret, known only to the bankers on its various boards and committees. Full and unredacted transcripts of the Federal Open Market Committee must be released to the public within six months, not five years, which is the custom now. If we had made this reform in 2004, the American people would have learned about the housing bubble well in advance of the financial crisis.

In 2010, I inserted an amendment in Dodd-Frank to audit the emergency lending by the Fed during the financial crisis. We need to go further and require the Government Accountability Office to conduct a full and independent audit of the Fed each and every year.

Financial reforms must not stop with the central bank. We must reinstateGlass-Steagall and break up the too-big-to-fail financial institutions that threaten our economy. But we need to start with fundamental change. The sad reality is that the Federal Reserve doesn’t regulate Wall Street; Wall Street regulates the Fed. It’s time to make banking work for the productive economy and for all Americans, not just a handful of wealthy speculators. And it begins by making the Federal Reserve a more democratic institution, one that is responsive to the needs of ordinary Americans rather than the billionaires on Wall Street.

http://www.nytimes.com/2015/12/23/opinion/bernie-sanders-to-rein-in-wall-street-fix-the-fed.html?ref=opinion&_r=0

http://www.commondreams.org/news/2015/12/23/sanders-when-im-president-wall-street-foxes-wont-guard-fed-henhouse?utm_campaign=shareaholic&utm_medium=facebook&utm_source=socialnetwork

http://www.reuters.com/article/us-usa-election-sanders-idUSKBN0U61HN20151223

http://www.cnbc.com/2015/12/24/heres-what-bernie-sanders-would-do-to-the-fed.html

https://beta.finance.yahoo.com/news/federal-reserve-will-pay-banks–12-billion-in-2016-165253054.html

Bernie Sanders makes valid and constructive criticisms of the Federal Reserve. But if he wants Board positions to instead include representatives from all walks of life — including labor, consumers, homeowners, urban residents, farmers and small businesses, the best way to achieve this would be to make the Federal Reserve OWNED by ALL the citizens residing within the 12 regional districts.

As for my overall comment as to what should the Federal Reserve do to stimulate the economy and abate economic inequality, I suggest the following:

The Federal Reserve will raise its main interest funds rate by one-quarter of a point, signaling confidence that the economy has finally recovered from the 2008 financial crisis.

The move, announced on December 16, 2015 in a statement from the Federal Open Market Committee, was widely expected and marks the first time the central bank has raised the funds rate in almost 10 years. The funds rate is the principal lever for controlling interest rates that borrowers pay. The Federal Reserve cut the rate almost to zero at the height of crisis to spur an economic recovery, the result of which as been anemic for the vast majority of Americans, but has bolstered the capital OWNERSHIP portfolios of the already wealthy OWNERSHIP class.

The Federal Reserve raised its key interest rate in order to demonstrate its confidence in the U.S. recovery. Committee officials are expecting the U.S. economy to grow by 2.4 percent in 2016, according to the Federal Reserve’s forecast released after the announcement. The “official” unemployment rate is expected to level off at 4.7 percent over the next three years. The underlying support for the main interest rate increase is strengthening economic indicators, namely the increasing job growth, albeit mostly low-wage jobs.

It is, however, a misrepresentation, based on questionable economic indicators, that the economy is healthy and has escaped from the “Great Recession.” Raising the Federal Reserve’s main interest rate from near zero to, well, just above zero at 0.25 percent is not a solution to ANYTHING. The economy will continue to head toward the ultimate wreck resulting in significantly expanded wealth inequality at the expense of ordinary citizens who are struggling as wage slaves, welfare slaves, charity slaves and consumer debt slaves with no meaningful savings or the ability to save and invest. Anyone who believes that the economy is robust with a 2.4 percent annual growth expectation does not understand what the real potential is. Any growth under 10 percent is anemic.

To date, the Federal Reserve’s near-zero interest rates have boosted stock (OWNERSHIP participation) speculation for those qualifying for low-cost capital credit and boosted stock prices. The wealthy OWNERSHIP class has been able to buy back stock and further concentrate their OWNERSHIP of corporations. That’s IT!

The bond-buying spree over the past six years now poses the challenge for the Federal Reserve to dispose of the assets on its bloated balance sheet – more than four times larger than when the bond buying began. How much has the balance sheet grown? When the Great Recession hit, the Federal Reserve’s balance sheet was approximately $700 billion dollars, and over the course of the recession and recovery, the asset purchases the central bank made through its various quantitative easing programs expanded the balance sheet to over $4.4 trillion. Note: “quantitative easing” is a monetary policy in which a central bank purchases government securities (bonds or other debt) or other securities from the market exchanges in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with money in an effort to promote increased lending and liquidity to meet financial obligations.
There is very little to show for the Federal Reserve lowering the benchmark interest rate (near zero). While borrowing costs have been lowered to create an incentive for business corporations to expand, what expansion resulted has not really benefited the vast majority of American citizens, who are seeing jobs exported to foreign countries whose economies are being boosted by American corporation investment in productive plant and machinery instead of making investments in productive plant and machinery in the United States. That coupled with the continual impact of technological progress is steadily eliminating well-paying jobs in manufacturing and devaluing the worth of labor, leaving what job prospects remain in the low-pay service industries. As a result income inequality is constantly the result as the divide between the wealthy OWNERSHIP class and the wage serfs and property-less widen.

Without a populous with earnings to create demand for products and services, there will not be any significant private sector investment in the growth of the economy. Yet, according to an articled entitled “Fed Hikes Interest Rates” by Jon Prior and Ben White on Politico, “growing numbers of Wall Street analysts now believe that the gentle hike of just a quarter of a percentage point will not be necessarily bad news for markets, and could even provide a short-term stimulus if businesses are inspired to invest in new equipment now rather than wait for higher rates in the future.” But “markets” are ALL secondary, as they are comprised of assets (stocks, bonds and securities) already OWNED, which are then bought and sold among an already wealthy OWNERSHIP class. Markets have nothing to do with the REAL economy – the formation of actual capital assets necessary to productivity growth.

The Federal Reserve’s printing of “new” money to execute its bond purchasing has also caused inflation in the cost of products and services, and put further strain on ordinary working Americans struggling to survive day-to-day, week-to-week, month-to-month and year-to-year with less disposable income to pay for products and services at higher prices, and to pay down credit card and consumer loan debt. And while mortgage rates have been reduced due to the Federal Reserve’s purchase of mortgage-backed securities, still the vast majority of Americans cannot qualify for mortgage loans to purchase housing. And while, on the one hand, Americans are unable to save for their retirement, the Federal Reserve’s efforts to reduce borrowing costs is aimed at creating an incentive for businesses and consumers to spend instead of save.

The Federal Reserve cites the “dramatic” improvement in the unemployment rate but this is just ballyhoo, when in reality unemployment is far more vast and earned incomes are stagnant with most Americans barely getting by. The official unemployment rate, now seemingly relatively low at 5 percent, does not reflect the “new normal,” in which millions have simply stopped looking for jobs or are involuntarily underemployed. Furthermore, wages for working people have remained flat or falling. In other words, the economy is still very depressed, despite nearly a decade of easy money with Federal Reserve borrowing rates held near zero.

Of course, as is conventional wisdom, any program that results in job creation is what is “sold” to the American public, when at its core and hidden by those with a hold on the economy, it is known that it is narrow OWNERSHIP creation that is the REAL result of the stimulus programs. It is the same old game of “make the rich richer” and there will be trickle-down benefits. But that is not the reality of what occurs.

What are the alternatives for stimulating growth, abating wealth inequality and increasing incomes of ALL Americans, without taking from those who already OWN America, an essential practical requirement for reforming the system?

How about instead of the Federal Reserve showing that it is committed to keeping rates low, it can help to trigger significant job-creating activity – from renovating factories to building new factories and new tools, by providing capital credit loans at zero “0” percent interest to local banks who would in turn lend this interest-free money for the specific purpose to finance the creation of new wealth-creating, income-producing capital assets to grow the economy. Who should benefit from such interest-free capital credit should be EVERY child, woman and man, who would then be empowered to acquire over time significant portfolios of self-liquidating capital asset investments in the American economy, with the capital credit loans repaid out of the FUTURE earnings of the investments. After all, that is the same practical logic of corporate finance that the wealthy OWNERSHIP class uses to further enrich their capital wealth portfolios. Note: Self-liquidating denotes an asset that earns back its original cost out of income the asset produces over a fixed period.

Broadening capital OWNERSHIP would increase the pay of the least-advantaged workers (and non-workers) who would be contributing their productive capital to the expansion of the economy. And in this way, EVERY citizen can become a productive contributor to the economy.

The Federal Reserve, which has been largely responsible for the powerlessness of most American citizens, should set an example for all the central banks in the world. Chairman Janet Yellen and other officials of the Federal Reserve need to exert leadership and implement Section 13, Paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth. We should not destroy the Federal Reserve or make it a political extension of the Treasury Department, but instead reform it so that the American citizens in each of the 12 Federal Reserve Regions become the OWNERS. The result will be that money power will flow from the bottom up, not from the top down – not for consumer credit, not for credit that doesn’t pay for itself or non-productive uses of credit, but for credit for productive uses to expand the economy’s rate of growth, including investments to transform from reliance on environment-polluting energy sources to clean energy sources, and to build a super-infrastructure all over our nation

The Federal Reserve needs to stop monetizing unproductive debt, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” at their local bank to acquire a growing full dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Steadily over time this will create a robust economy with millions of new “customers with money” to purchase the products and services that are needed and wanted.

Our leaders need to put on the table for national discussion this SUPER-IRA idea and the necessary reform of our tax policies that would incentivize corporations to pay out fully their earnings in the form of dividend income, and issue and sell new stock to grow their businesses. Under the proposed Capital Homestead Act, an equal allocation of productive credit would be processed for every citizen, based on the aggregate value of the projected need for new capital formation projects, exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets.

The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets with future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.

Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.

Essentially, the pressing need is for everyone in a position of influence to encourage President Obama and our next President to raise the consciousness of the American people by making their NUMBER ONE focus the introduction of a National Right To Capital Ownership Bill that restores the American dream of property OWNERSHIP as a primary source of personal wealth.

These proposals are the solutions to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual OWNERSHIP so that EVERY American’s income significantly grows simultaneously with the growth of the economy, providing the means to support themselves and their families with an affluent lifestyle, and to ensure that their children and grandchildren will benefit even more.

To fully understand the proposed solutions requires a commitment to read and carefully consider the scope of the foundational agendas for reforming the system. The solutions’ core is a conscious and dedicated growth policy that broadens individual personal OWNERSHIP in the economy’s FUTURE wealth-creating, income-producing capital asset creation. “FUTURE” is stressed because the primary solutions are not based on socialistic redistributive policies that tax and punish those in society who are producing, whether through their labor or their “tools” that they OWN, which they contribute as inputs to creating economic value. The solutions are based on the fundamental principle that economic value is created through human and non-human contributions.

The solutions have at their core the truth that labor and physical capital are independently productive. Given the reality that most products, and increasingly services, are exponentially made by physical capital, the solutions require using financial tool that effectively will democratize capital OWNERSHIP, with the full earning dividend income paid out to each capital owner. The basis for this foundational thinking is at the core of binary economics which recognizes that there are two independent factors of production: people (labor workers who contribute manual, intellectual, creative and entrepreneurial work) and physical capital (land; structures; infrastructure; tools; machines; robotics; computer processing; certain intangibles that have the characteristics of property, such as patents and trade or firm names and the like which are OWNED by people individually or in association with others). Fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through OWNERSHIP of the non-human factor of production. Financial capital, such as stocks and bonds, is just an ownership claim on the productive power of real capital. In the law, property is the bundle of rights that determines one’s relationship to things.

The role of physical productive capital is to do evermore of the work, which produces wealth and thus income to those who own productive capital assets. Our current economic policies are proposed in the name of JOB CREATION. But the reality is that full employment is not an objective of businesses.

Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever-increasing role. The reason the rich are getting richer is not due to their labor work but due to their expanding OWNERSHIP of wealth-creating, income-producing capital.

Given the indisputable reality that productive capital is increasingly the source of the world’s economic growth capital should become the source of added property OWNERSHIP incomes for all. It is logical and reasonable to postulate that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive and continue to promote job creation while ignoring the issue of OWNERSHIP and how to broaden OWNERSHIP so that EVERY child, woman and man is empowered to become a capital OWNER.

Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment – thus the political focus on job creation and redistribution of wealth rather than on full production and broader capital OWNERSHIP accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When the “tools” of capital OWNERS replace labor workers (non-capital OWNERS) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.

The capitalism practiced today is what, for a long time, I have termed “Hoggism,” propelled by greed and the sheer love of power over others. “Hoggism” institutionalizes greed (creating concentrated capital OWNERSHIP, monopolies, and special privileges). “Hoggism” is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital OWNERSHIP. Our scientists, engineers, and executive managers who are not OWNERS themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” OWNER more productive. How much employment can be destroyed, by substituting machines for people, is a measure of their success – always focused on producing at the lowest cost. Only the people who already OWN productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital OWNERSHIP in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital OWNERSHIP to improve their economic well being.

The solutions, through the reform of the system, will END Hoggism. Louis O. Kelso, the father of binary economics, postulated: “When consumer earning power is systematically acquired in the course of the normal operations of the economy by people who need and want more consumer goods and services, the production of goods and services should rise to unprecedented levels; the quality and craftsmanship of goods and services, freed of the corner-cutting imposed by the chronic shortage of consumer purchasing power, should return to their former high levels; competition should be brisk; and the purchasing power of money should remain stable year after year.”

It is imperative that leaders seeking new solutions seize the opportunity presented by the 2016 presidential election to implement effective programs for expanded OWNERSHIP of productive capital, and address the problem of education on this subject.

At one point in 1976, the discussion led to The Joint Economic Committee of Congress endorsing the two-factor policy to broaden capital OWNERSHIP as an economic goal for America. The 1976 Joint Economic Report stated: “To provide a realistic opportunity for more U.S. citizens to become OWNERS of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the OWNERSHIP of wealth in this country, which would assist in evaluating how successfully the base of wealth was being broadened over time.” Unfortunately the Congress has never paid any attention to this policy, and the goal has subsequently been unacknowledged and unheeded by our plutocratic political leaders.

The stark reality is that we are in a depression reflected in rising under reported unemployment and underemployment and instability that we will never escape from until we change our economic policy. According to the Economic Policy Institute, a family of four needs an income of at least $60,000 dollars a year to reach an “adequate but modest living standard.” But, 50 percent of all Americans make less than half that amount. In essence, they are flat broke. This scenario will worsen as globalization further develops and as technology shifts production from humans to non-humans.

Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance – not able to accumulate equity that can help to sustain them in their retirement years. And this is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states or proposals for a $15.00 per hour minimum wage, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor-worker wages is that production will decline or desist without sustainable consumer demand. And where there are signs of consumer demand, it is virtually always because consumers use credit cards and other forms of consumer debt to purchase products and services.

This is all coming about because we have severely mismatched the power to produce with the possession of unsatisfied needs and wants. Those capital “worker” OWNERS who have unsatisfied needs and wants have ready access through conventional finance to get as much or more capital as they want (especially with the near-zero interest funds rates provided by the Federal Reserve). Our tax laws are designed to further benefit the ultra-rich 1 percent by providing enormous write-offs and credits to producers (corporations) who are owned by the few, who already produce more than they can consume.

Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively minuscule, as are their dividend payments compared to the top 10 percent of capital owners. Pew Research found that 53 percent of Americans own no stock at all, and out of the 47 percent who do, the richest 5 percent own two-thirds of that stock. And only 10 percent of Americans have pensions, so stock market gains or losses don’t affect the incomes of most retirees.

Those who have only their labor power and its precarious value held up by coercive rigging and who desperately need capital OWNERSHIP to enable them to be capital “workers” as well as labor workers to have a way to earn more income, cannot satisfy their unsatisfied needs and wants. With only access to labor wages, the 99 percenters will continue, in desperation, to demand more and more pay for the same or less work, as their input is exponentially replaced by productive capital.

But if we change direction and systematically build earning power into consumers, we have the opportunity to reverse the depression perpetrated by systematically limiting the 99 percent to labor wages alone and through technology eliminating their jobs, and through labor-destroying globalization. We need solutions to grow the economy in ways that simultaneously create productive jobs and widespread equity sharing. We need to systematically make capital credit to purchase capital accessible to economically underpowered people (the 99 percenters) in which the income from the capital investment is isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capital owners. This can only be accomplished by enabling every person to have access to capital OWNERSHIP and purchase the capital, and pay for it out of what the capital produces. It’s time good and well-intentioned people woke up and adopted a JUST Third Way beyond the greed model of monopoly capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice, as well as put us on the path to inclusive prosperity, inclusive opportunity and inclusive economic justice.

If you have read this far then hopefully you will explore in more depth the solutions and agenda for REAL change. The end result is that citizens would become empowered as OWNERS to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elite controls the coercive powers of government.

If we do not reform the system and create government that justly serves ALL the people, and restrain man’s greed, which otherwise cannot be self-controlled, the wealthy who seek to own productive power that they cannot or won’t use for consumption will continue to beggar their neighbor – the equivalency of mass murder – the impact of concentrated capital ownership, which will inevitably result in turmoil and upheaval, if not revolution.

Read “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.org/11/economic-justice/

Read the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.

Read the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

If you become supportive of this core agenda and solutions, then support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

Stephen Hawking Says We Should Really Be Scared Of Capitalism, Not Robots

On October 9, 2015, Dylan Sevett writes on U.S. Uncut:

According to world famous physicist Stephen Hawking, the rising use of automated machines may mean the end of human rights – not just jobs. But he’s not talking about robots with artificial intelligence taking over the world, he’s talking about the current capitalist political system and its major players.

On Reddit, Hawkings said that the economic gap between the rich and the poor will continue to grow as more jobs are automated by machines, and the owners of said machines hoard them to create more wealth for themselves.

Someone asked:

“Have you thought about the possibility of technological unemployment, where we develop automated processes that ultimately cause large unemployment by performing jobs faster and/or cheaper than people can perform them?

“In particular, do you foresee a world where people work less because so much work is automated? Do you think people will always either find work or manufacture more work to be done?”

Hawkings replied:

“If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.”

The insatiable thirst for capitalist accumulation bestowed upon humans by years of lies and terrible economic policy has affected technology in such a way that one of its major goals has become to replace human jobs.

If we do not take this warning seriously, we may face unfathomable corporate domination. If we let the same people who buy and sell our political system and resources maintain control of automated technology, then we’ll be heading towards a very harsh reality.

http://usuncut.com/news/edit-complete-hw-stephen-hawking-says-really-scared-capitalism-not-robots/

We should be scared not of becoming a capital owner along with the EVERY OTHER citizen as individual owners, but with Hoggism, as in concentrated capital ownership, We MUST own the “machines” and other capital assets derived from technological invention and innovation in the FUTURE. Otherwise, a few people will OWN us or a STATE will OWN us, and whatever elite controls the coercive powers of government.

This very we MUST empower EVERY child, woman and man to acquire personal OWNERSHIP shares in the corporations growing the economy using insured, interest-free capital credit, repayable with the FUTURE earnings of the capital asset investments, without any requirement for past savings (which the vast majority of Americans simply do not have) or with any reduction in earning from their labor.

Fed Hikes Interest Rates

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Federal Reserve Chair Janet Yellen is expected to promise a very slow and cautious approach even as the central bank increases borrowing costs for the first time in almost a decade. | Getty

On December 16, 2015 Jon Prior and Ben White write on Politico:

The Federal Reserve will raise its main interest rate by one-quarter of a point, signaling confidence that the economy has finally recovered from the 2008 financial crisis.

The move, announced Wednesday in a statement from the Federal Open Market Committee, was widely expected and marks the first time the central bank has raised the rate in almost 10 years. The Fed cut the rate almost to zero at the height of crisis to spur an economic recovery.

Because of the slightly imprecise method of setting the benchmark rate, the Fed said it would raise the target range to between 0.25 percent and 0.5 percent.

Officials also said they plan to move at a gradual pace when deciding when to raise the rate in meetings next year.

“The stance of monetary policy remains accommodative after this increase,” the committee said in its statement, “thereby supporting further improvement in the labor market conditions and a return to 2 percent inflation.”

Officials are expecting the U.S. economy to grow by 2.4 percent next year, up slightly from 2.3 percent projected in September, according to the Fed’s forecast released after the meetings. The unemployment rate is expected to be slightly lower than previously thought, leveling off at 4.7 percent over the next three years. Officials did slightly lower their expectations for the pace of inflation next year — a key figure officials track when deciding when to raise rates — until it reaches the Fed’s 2 percent target in 2018.

The rate hike was well-telegraphed to minimize economic volatility. The soft landing may also have another upshot: minimal political turbulence.

Federal Reserve Chair Janet Yellen, tapped last year by President Barack Obama to lead the Fed and strongly supported by the progressive wing of the Democratic Party, is expected to promise a very slow and cautious approach even as the central bank increases borrowing costs for the first time in almost a decade.

With recent assurances from Yellen that the central bank will exercise extreme care, growing numbers of Wall Street analysts now believe that the gentle hike of just a quarter of a percentage point will not be necessarily bad news for markets, and could even provide a short-term stimulus if businesses are inspired to invest in new equipment now rather than wait for higher rates in the future.

Though the Fed fiercely guards its political independence, the knock-on effect could be good news for Democrats including Hillary Clinton who don’t want to see the bank pump the brakes too hard.

Senior Democrats say the economy has come a long way from the depths of the crisis in 2009 and should be able to weather slightly higher rates. The U.S. economy added 211,000 jobs in November. Home prices have recovered more than 35 percent since the 2012 lows hit after the bust.

“You look at where we are today and it is enormously different,” White House Council of Economic Advisers Chairman Jason Furman told POLITICO on Tuesday. “The unemployment rate has come down to 5 percent; you are seeing some signs of wage growth; you are seeing consumer spending strengthening. A huge range of things about the economy just feel enormously different today.”

Yellen has taken pains in recent weeks to stress that the Fed will be monitoring that data closely and may stop if there are signs that increases are damaging the economy and significantly slowing down hiring.

“Even after the initial increase in the federal funds rate, monetary policy will remain accommodative,” Yellen told Congress this month.

That could keep voters from noticing that the Fed has ended the emergency policy born of the financial crisis and Great Recession that kept borrowing costs at historic lows. Loans taken out to buy homes, cars, and other goods generally follow the Fed’s interest rates up. But the expectation is that with borrowing still so cheap, especially for mortgages, consumer industries will shoulder the effects of higher costs. After the November jobs report, the market largely “priced in” an assumed increase to interest rates for home loans.

Still, whatever the effects of a rate hike on the economy or the campaigns, the impact on the Fed’s own political fortunes could be negative. The primary season is already rife with attacks from Republicans against its aggressive actions to prop up the economy over the last eight years. And those forces are likely to complain that the Fed’s actions are too little, too late.

On the other end of the spectrum, some left-leaning Democrats are fretting that wages are still slow to rise and that too many workers are not participating in the labor market or are being forced to take part-time jobs.

“It’s clear to me that our wages are still too flat, and I think raising interest rates is a mistake,” the Senate Banking Committee’s top Democrat, Sen. Sherrod Brown of Ohio, told POLITICO this week. “I think they do have good intentions, certainly the chair does, but I’m hopeful they think a little more before making that decision.

Not everyone feels the Fed will soft-pedal rates once it begins tightening. Capital Economics forecasters said in a note to clients Monday they expect yields on 10-year Treasurys to increase to 3 percent over the next year from where they are now at 2.2 percent “primarily because we continue to think that investors are underestimating the amount by which the federal funds rate will be raised.”

http://www.politico.com/story/2015/12/federal-reserve-interest-rates-yellen-216810

It is a misrepresentation, based on fudged economic indicators, that the economy is healthy and has escaped from the “Great Recession.” Raising the Federal Reserve’s main interest rate from near zero to, well, just above zero at 0.25 percent is not a solution to ANYTHING. The economy will continue to head toward the ultimate wreck resulting in significantly expanded wealth inequality at the expense of ordinary citizens who are struggling as wage slaves or welfare slaves with no meaningful savings or the ability to save and invest. Anyone who believes that the economy is robust with a 2.4 percent annual growth expectation does not understand what the real potential is. Any growth under 10 percent is anemic.

To date, the Federal Reserve’s near zero interest rates have boosted stock (OWNERSHIP participation) speculation for those qualifying for low-cost capital credit and boosted stock prices. The wealthy OWNERSHIP class has been able to buy-back stock and further concentrate their OWNERSHIP of corporations. That’s IT!

The bond-buying spree over the past six years now poses the challenge for the Federal Reserve to dispose of the assets on its bloated balance sheet – more than four times larger than when the bond buying began. How much has the balance sheet grown? When the Great Recession hit, the Federal Reserve’s balance sheet was approximately $700 billion dollars, and over the course of the recession and recovery, the asset purchases the central bank made through its various quantitative easing programs expanded the balance sheet to over $4.4 trillion. Note: “quantitative easing” is a monetary policy in which a central bank purchases government securities (bonds or other debt) or other securities from the market exchanges in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with money in an effort to promote increased lending and liquidity to meet financial obligations.

There is very little to show for the Federal Reserve lowering the benchmark interest rate (near zero). While borrowing costs have been lowered to create an incentive for business corporations to expand, what expansion resulted has not really benefited the vast majority of American citizens, who are seeing jobs exported to foreign countries whose economies are being boosted by American corporation investment in productive plant and machinery machinery instead of making investments in productive plant and machinery in the United States. That coupled with the continual impact of technological progress is steadily eliminating well-paying jobs in manufacturing and devaluing the worth of labor, leaving what job prospects remain in the low-pay service industries. As a result income inequality is constantly the result as the divide between the wealthy OWNERSHIP class and the wage serfs and propertyless widen.

Without a populous with earnings to create demand for products and services, there will not be any significant private sector investment in the growth of the economy. Yet, “growing numbers of Wall Street analysts now believe that the gentle hike of just a quarter of a percentage point will not be necessarily bad news for markets, and could even provide a short-term stimulus if businesses are inspired to invest in new equipment now rather than wait for higher rates in the future.” But “markets” are ALL secondary, as they are comprised of assets (stocks and securities) already OWNED, which are then bought and sold among an already wealthy OWNERSHIP class. Markets have nothing to do with the REAL economy – the formation of actual capital assets necessary to productivity growth.

The Federal Reserve’s printing of “new” money to execute its bond purchasing has also caused inflation in the cost of products and services, and put further strain on ordinary working Americans struggling to survive day-to-day, week-to-week, month-to-month and year-to-year with less disposable income to pay for products and services at higher prices, and to pay down credit card and consumer loan debt.  And while mortgage rates have been reduced due to the Federal Reserve’s purchase of mortgage-backed securities, still the vast majority of Americans cannot qualify for mortgage loans to purchase housing. And while, on the one hand, Americans are unable to save for their retirement, the Federal Reserve’s efforts to reduce borrowing costs is aimed at creating an incentive for businesses and consumers to spend instead of save.

The Federal Reserve cites the “dramatic” improvement in the unemployment rate but this is just ballyhoo, when in reality unemployment is far more vast and earned incomes are stagnant with most Americans barely getting by. Of course, as is conventional wisdom, any program that results in job creation is what is “sold” to the American public, when at its core and hidden by those with a hold on the economy, it is known that it is narrow OWNERSHIP creation that is the REAL result of the stimulus programs. It is the same old game of “make the rich richer” and there will be trickle-down benefits. But that is not the reality of what occurs.

What are the alternatives for stimulating growth, abating wealth inequality and increasing incomes of ALL Americans, without taking from those who already OWN America, an essential practical requirement for reforming the system?

How about instead of the Federal Reserve showing that it is committed to keeping rates low, it can help to trigger significant job-creating activity – from renovating factories to building new factories and new tools, by providing capital credit loans at zero “0” percent interest to local banks who would in turn lend this interest-free money for the specific purpose to finance the creation of new wealth-creating, income-producing capital assets to grow the economy. Who should benefit from such interest-free capital credit should be EVERY child, woman and man, who would then be empowered to acquire over time significant portfolios of self-liquidating capital asset investments in the American economy with the capital credit loans repaid out of the FUTURE earnings of the investments. After all, that is the same practical logic of corporate finance that the wealthy OWNERSHIP class uses to further enrich their capital wealth portfolios. Note: Self-liquidating denotes an asset that earns back its original cost out of income the asset produces over a fixed period.

Broadening capital OWNERSHIP would increase the pay of the least advantaged workers (and non-workers) who would be contributing their productive capital to the expansion of the the economy. And in this way, EVERY citizen can become a productive contributor to the economy.

The Federal Reserve, which has been largely responsible for the powerlessness of most American citizens, should set an example for all the central banks in the world. Chairman Janet Yellen and other officials of the Federal Reserve need to exert leadership and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth. We should not destroy the Federal Reserve or make it a political extension of the Treasury Department, but instead reform it so that the American citizens in each of the 12 Federal Reserve Regions become the owners. The result will be that money power will flow from the bottom up, not from the top down – not for consumer credit, not for credit that doesn’t pay for itself or non-productive uses of credit, but for credit for productive uses to expand the economy’s rate of growth, including investments to transform from reliance on environment-polluting energy sources sources to clean energy sources, and to build a super-infrastructure all over our nation.

The Federal Reserve needs to stop monetizing unproductive debt, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” at their local bank to acquire a growing full dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Steadily over time this will create a robust economy with millions of new “customers with money” to purchase the products and services that are needed and wanted.

Our leaders need to put on the table for national discussion this SUPER-IRA idea and the necessary reform of our tax policies that would incentivize corporations to pay out fully their earnings in the form of dividend income, and issue and sell new stock to grow their businesses. Under the proposed Capital Homestead Act, an equal allocation of productive credit would be processed for every citizen, based on the aggregate value of the projected need for new capital formation projects, exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets.

The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets with future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.

Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.

Essentially, the pressing need is for everyone in a position of influence to encourage President Obama and our next President to raise the consciousness of the American people by making their NUMBER ONE focus the introduction of a National Right To Capital Ownership Bill that restores the American dream of property OWNERSHIP as a primary source of personal wealth.

These proposals are the solutions to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual OWNERSHIP so that EVERY American’s income significantly grows simultaneously with the growth of the economy, providing the means to support themselves and their families with an affluent lifestyle, and to ensure that their children and grandchildren will benefit even more.

To fully understand the proposed solutions requires a commitment to read and carefully consider the scope of the foundational agendas for reforming the system. The solutions’ core is a conscious and dedicated growth policy that broadens individual personal OWNERSHIP in the economy’s FUTURE wealth-creating, income-producing capital asset creation. “FUTURE” is stressed because the primary solutions are not based on socialistic redistributive policies that tax and punish those in society who are producing, whether through their labor or their “tools” that they OWN, which they contribute as inputs to creating economic value. The solutions are based on the fundamental principle that economic value is created through human and non-human contributions.

The solutions have at their core the truth that labor and physical capital are independently productive. Given the reality that most products, and increasingly services, are exponentially made by physical capital, the solutions require using financial tool that effectively will democratize capital OWNERSHIP, with the full earning dividend income paid out to each capital owner. The basis for this foundational thinking is at the core of binary economics which recognizes that there are two independent factors of production: people (labor workers who contribute manual, intellectual, creative and entrepreneurial work) and physical capital (land; structures; infrastructure; tools; machines; robotics; computer processing; certain intangibles that have the characteristics of property, such as patents and trade or firm namers and the like which are OWNED by people individually or in association with others). Fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through OWNERSHIP of the non-human factor of production. Financial capital, such as stocks and bonds, is just an ownership claim on the productive power of real capital. In the law, property is the bundle of rights that determines one’s relationship to things.

The role of physical productive capital is to do ever more of the work, which produces wealth and thus income to those who own productive capital assets. Our current economic policies are proposed in the name of JOB CREATION. But the reality is that full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. The reason the rich are getting richer is not due to their labor work but due to there expanding OWNERSHIP of wealth-creating, income-producing capital.

Given the indisputable reality that productive capital is increasingly the source of the world’s economic growth capital should become the source of added property OWNERSHIP incomes for all. It is logical and reasonable to postulate that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive and continue to promote job creation while ignoring the issue of OWNERSHIP and how to broaden OWNERSHIP so that EVERY child, woman and man is empowered to become a capital OWNER.

Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment – thus the political focus on job creation and redistribution of wealth rather than on full production and broader capital OWNERSHIP accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When the “tools” of  capital OWNERS replace labor workers (non-capital OWNERS) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.

The capitalism practiced today is what, for a long time, I have termed “Hoggism,” propelled by greed and the sheer love of power over others. “Hoggism” institutionalizes greed (creating concentrated capital OWNERSHIP, monopolies, and special privileges). “Hoggism” is about tOhe ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital OWNERSHIP. Our scientists, engineers, and executive managers who are not OWNERS themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” OWNER more productive. How much employment can be destroyed, by substituting machines for people, is a measure of their success – always focused on producing at the lowest cost. Only the people who already OWN productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital OWNERSHIP in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital OWNERSHIP to improve their economic well-being.

The solutions, through the reform of the system, will END Hoggism. Louis O. Kelso, the father of binary economics, postulated: “When consumer earning power is systematically acquired in the course of the normal operations of the economy by people who need and want more consumer goods and services, the production of goods and services should rise to unprecedented levels; the quality and craftsmanship of goods and services, freed of the corner-cutting imposed by the chronic shortage of consumer purchasing power, should return to their former high levels; competition should be brisk; and the purchasing power of money should remain stable year after year.”

It is imperative that leaders seeking new solutions cease the opportunity presented by the 2016 presidential election to implement effective programs for expanded OWNERSHIP of productive capital, and address the problem of education on this subject.

At one point in 1976, the discussion led to The Joint Economic Committee of Congress endorsing the two-factor policy to broaden capital OWNERSHIP as an economic goal for America. The 1976 Joint Economic Report stated: “To provide a realistic opportunity for more U.S. citizens to become OWNERS of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the OWNERSHIP of wealth in this country, which would assist in evaluating how successfully the base of wealth was being broadened over time.” Unfortunately the Congress has never paid any attention to this policy, and the goal has subsequently been unacknowledged and unheeded by our plutocratic political leaders.

The stark reality is that we are in a depression reflected in rising under reported unemployment and underemployment and instability that we will never escape from until we change our economic policy. According to the Economic Policy Institute, a family of four needs an income of at least $60,000 dollars a year to reach an “adequate but modest living standard.” But, 50 percent of all Americans make less than half that amount. In essence, they are flat broke. This scenario will worsen as globalization further develops and as technology shifts production from humans to non-humans.

Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance – not able to accumulate equity that can help to sustain them in their retirement years. And this is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states or proposals for a $15.00 per hour minimum wage, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor worker wages is that production will decline or desist without sustainable consumer demand. And where there are signs of consumer demand, it is virtually always because consumers use credit cards and other forms of consumer debt to purchase products and services.

This is all coming about because we have severely mismatched the power to produce with the possession of unsatisfied needs and wants. Those capital “worker” OWNERS who have unsatisfied needs and wants have ready access through conventional finance to get as much or more capital as they want (especially with the near-zero interest rates provided by the Federal Reserve). Our tax laws are designed to further benefit the ultra rich 1 percent by providing enormous write offs and credits to producers (corporations) who are owned by the few, who already produce more than they can consume. Those who have only their labor power and its precarious value held up by coercive rigging and who desperately need capital OWNERSHIP to enable them to be capital “workers” as well as labor workers to have a way to earn more income, cannot satisfy their unsatisfied needs and wants. With only access to labor wages, the 99 percenters will continue, in desperation, to demand more and more pay for the same or less work, as their input is exponentially replaced by productive capital.

But if we change direction and systematically build earning power into consumers, we have the opportunity to reverse the depression perpetrated by systematically limiting the 99 percent to labor wages alone and through technology eliminating their jobs, and through labor-destroying globalization. We need solutions to grow the economy in ways that simultaneously create productive jobs and widespread equity sharing. We need to systematically make capital credit to purchase capital accessible to economically underpowered people (the 99 percenters) in which the income from the capital investment is isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capital owners. This can only be accomplished by enabling every person to have access to capital OWNERSHIP and purchase the capital, and pay for it out of what the capital produces. It’s time good and well-intentioned people woke up and adopted a JUST Third Way beyond the greed model of monopoly capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice, as well as put us on the path to inclusive prosperity, inclusive opportunity and inclusive economic justice.

If you have read this far then hopefully you will explore in more depth the solutions and agenda for REAL change. The end result is that citizens would become empowered as OWNERS to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State  and whatever elite controls the coercive powers of government.

If we do not reform the system and create government that justly serves ALL the people, and restrain man’s greed, which otherwise cannot be self-controlled, the wealthy who seek to own productive power that they cannot or won’t use for consumption will continue to beggar their neighbor – the equivalency of mass murder – the impact of concentrated capital ownership, which will inevitably result in turmoil and upheaval, if not revolution.

Read “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.org/11/economic-justice/

Read the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.

Read the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

If you become supportive of this core agenda and solutions, then support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

Sen. Bernie Sanders Proposes Legislation To Permanently Extend PTC

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On December 11, 2015, the North American Windpower staff posted this article:

U.S. presidential candidate Sen. Bernie Sanders, I-Vt., has introduced legislation that he says would permanently extend the production tax credit (PTC) for renewables and drive over $500 billion in clean energy investments between now and 2030.

The American Clean Energy Investment Act of 2015 and The Clean Energy Worker Just Transition Act – both co-sponsored by Sens. Jeff Merkley, D-Ore., and Edward J. Markey, D-Mass. – would significantly reduce carbon pollution and help put the U.S. on a path to more than double the size of its clean energy workforce to 10 million by 2030, says Sanders.

The bills would allocate $41 billion to helping oil, gas and coal workers as they transition out of the fossil fuel industry. According to Sanders, the costs for these proposals are completely offset by repealing all subsidies for fossil fuels and ending the tax breaks that encourage corporate inversions.

Sanders says The American Clean Energy Investment Act of 2015 would stimulate a strong, sustainable economy by spurring massive new investments in renewable energy and energy efficiency.

Specifically, the act would permanently extend the PTC for renewable electricity generation from sources including wind and solar. It would also permanently extend the investment tax credit for advanced clean energy property and expand the 30% credit for offshore wind facilities.

The Clean Energy Worker Just Transition Act would help coal miners and other fossil fuel workers and their families by connecting displaced workers with new job opportunities through vocational education and job skills programs. The bills would also provide support so that transitioning workers and their families could maintain family-level wages, health care and pensions until they are able to start new jobs, the senator explains.

“The American Wind Energy Association [AWEA] deeply appreciates Sen. Sanders’ leadership in seeking long-term policy support to enable the growth of our nation’s wind energy sector,” AWEA says in a release from the senator. “This legislation is the latest example of his attention to wind energy and his leadership in promoting policies that will generate affordable, reliable and clean energy and provide a future for wind energy workers and American factories. We look forward to continuing to work with Sen. Sanders and his colleagues with the shared goal of delivering the benefits of wind energy to even more American families.”

http://nawindpower.com/e107_plugins/content/content.php?content.14935

While I am a strong supporter of developing wind power as well as solar power, as a clean and sustainable energy source, I am appalled at how our nation is advancing such development – feathering the concentrated ownership interests of a few under the private enterprise umbrella at the exclusion of the citizens who will be purchasing the power generated by the wind.

In this respect, Senator Bernie Sanders falls short in advancing the economic interest of the vast majority of citizens who are totally dependent on a job to earn income.

This May 2014, the US Department of Energy for years now has been awarding money for demonstration projects, for example to those planned for the coasts of New Jersey, Oregon and Virginia. Several state governments are forging ahead with their own ambitions for offshore wind farms, and commercial developers say that they could start planting turbines in the ocean as early as next year.

While there is no question there is an urgent need for new approaches and solutions to transforming to a sustainable, renewable and conservatively efficient utility service structures, sadly, the people “in charge” never put any focus on WHO OWNS energy projects subsidized by taxpayers? We need to ensure that utilities structured for profit are fully employee-owned, or better yet that they are structured as a Citizen Land Bank (CLB) or Citizen National Resources Bank (CNRB) specifically owned by the end user beneficiaries of the energy produced or the water consumed. A Citizen Land Bank (CLB) can serve as an alternative to any other structure where no one has a property stake or where there is a State monopoly, such as municipal or regional utility.

A Citizens Land Bank is a for-profit, professionally-managed, citizen-owned-and-governed community land planning and development enterprise, designed to enable every citizen of a community of any size to acquire a direct ownership stake in local land, natural resources and basic infrastructure.

A CLB is a social vehicle for every man, woman and child to gain, as a fundamental right of citizenship, a single lifetime, non-transferable ownership interest in all the Bank’s assets, share equally in property incomes from rentals and user fees from leases or use of the Bank’s assets, accumulate appreciated equity values from enhanced land values, and gain an owner’s voice in the governance of future land development.

A CLB is an innovative legal and financing tool empowered to borrow on behalf of all citizen-shareholders and service the debt with pre-tax dollars to meet the land acquisition, capitalization and operational needs of the Bank. The CLB shelters from taxation the equity accumulations of citizen-shareholders and protects the outside assets of the citizens in the event of loan default or if the enterprise fails.

A Citizen Land Bank is a social tool designed to encourage a just, free and non-monopolistic market economy. It applies the democratic principles of equal opportunity and equal access to the means to participate as an owner as well as a worker. It demonstrates that anything that can be owned by government can and should be owned, individually and jointly, by the citizens.

The Citizen Land Bank is a major feature in a proposed national economic agenda known as “Capital Homesteading for Every Citizen” and embodied in the proposed Capital Homestead Act (http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://cesj.org/learn/capital-homesteading/ and http://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf), which is designed to reform existing monetary, credit and tax barriers to provide every American an equal opportunity to share in the governing powers and profits from new entrepreneurial ventures, new technologies, new structures, and new rentable space built upon the land. Capital Homesteading offers a “Just Third Way” of reversing unsustainable federal deficits and debt, and revitalizing and growing the American free enterprise system in a sustainable and environmentally sound way.

Sanders, Warren Introduce Bill To Hike Social Security Checks

Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) are teaming up on a bill that would hand Social Security recipients a $580 check and pay for it by trimming tax perks for corporate executives.

The progressive duo unveiled new legislation Thursday that would cut checks for millions of Americans that rely on Social Security benefits, weeks after the Obama administrationannounced there would be no cost-of-living increase to payments in 2016.

“At the very least, we must do everything we can to make sure that every senior citizen and disabled veteran in this country receives a fair cost-of-living adjustment to keep up with the skyrocketing cost of prescription drugs and health care.”

Sanders has made expanding Social Security one of the signature issues of his presidential campaign, and has repeatedly called for taxing the wealthy to pay for an expansion of benefits.

Under his bill with Warren, Americans who receive benefits from Social Security, veterans benefits or equivalent state or local programs would receive a one-time payment. The pair noted that the check would equal 3.9 percent of existing benefits, the same percentage that CEO pay rose in 2014.

The senators want to pay for the supplemental payment by killing a tax code provision that allows companies to deduct a portion of executive salary, so long as it is “performance based.”

Under current tax law, companies can only deduct the first $1 million in executive compensation, but performance-based pay, like stock options, is exempted from that restriction. Noting that CEO pay is still on the rise while Social Security benefits are flat, Warren said it’s clear top executives could chip in.

“While Congress sits on its hands and pretends that there’s nothing we can do, taxpayers will keep right on subsidizing billions of dollars’ worth of bonuses for highly paid CEOs,” she said. “Giving seniors a little help with their Social Security and stitching up corporate tax write-offs isn’t just about economics; it’s about our values.”

Democrats have targeted that part of the tax code in the past to raise revenue, and Warren’s office says repealing that language would raise more than enough to cover cutting those supplemental checks.

Repealing the tax break was also floated by former Ways and Means Committee Chairman Dave Camp (R-Mich.), when he drafted his own tax reform proposal in 2014.

Under the Warren-Sanders bill, the rest of the revenue raised by killing that corporate tax break would go toward shoring up the Social Security and Disability trust funds, which got a much-needed cash infusion as part of the most recent budget agreement.

http://thehill.com/policy/finance/259264-warren-sanders-team-up-on-bill-to-hike-social-security-checks

While this proposed legislation should be considered an emergency measure, raising Social Security payments is not a long-term solution.

Social Security and job creation are not enough given the reality that tectonic shifts in the technologies of production continues to destroy jobs and devalue the worth of labor as “machines” replace labor in the production of products and services and as globalization, powered by cheap labor and las regulations, make it virtually impossible for American workers to compete. And privatizing Social Security is not the solution without the necessary reform of the financial system and the conduct of corporations.

Social Security is based on JOBS and payroll taxes. Because the function of technology is to “save” labor or, in order words, shift from labor intensive production of products and services to the non-human productive capital input, jobs are increasingly being replaced by human-intelligent machines, super-automation, robotics, digital computerized operations, etc.

President Obama stated: “What’s at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.” As long as working people are limited by earning income solely through their labor worker wages and rely on their Social Security benefits, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. Working people and the middle class will continue to stagnate, resulting in a stagnated consumer economy. More troubling is that this continued stagnation will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and capital owners will increase, which will result in upheaval. Dependent on a tax on wages and salaries, Social Security will falter as tectonic shifts in the technologies of production destroy and devalue jobs.

The majority of Americans, dependent on labor worker wages, no longer think that jobs and labor wages will return suddenly—if at all—and at a livable earnings level, that the value of their homes will re­bound, or that their limited retirement funds will soon be fully restored. Americans are scared but attribute their worsening finances to job losses, reduced hours, wage givebacks, and overall reduced earnings. They do not understand the role of productive capital driven by technological innovation and science and the requirement for them to become capital owners whose productive assets do their work, as well as labor workers, to earn a viable economic future. And until we, as a society, understand how wealth is produced, how consumers earn the money to buy products and services and the nature of capital ownership, we will not be able to set a course to obtain an affluent quality of life for middle and working class citizens, where everyone “can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.”

Unemployment and underemployment is high, and will continue to be so, and there is an accelerating displacement of labor workers by technology and cheaper foreign labor, resulting in greater economic uncertainty and unstable retirement incomes for the average American citizen—causing the average citizen to become increasingly dependent on government wealth redistribution programs.

The stark reality is that we are in a depression reflected in rising unemployment and underemployment and instability that we will never escape from until we change our economic policy. Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance––not able to accumulate equity that can help to sustain them in their retirement years. And this is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor worker wages is that production will decline or desist without sustainable consumer demand.

The solution is to CREATE new OWNERS of wealth-creating, income-producing FUTURE productive capital assets. Unfortunately, conventionally, most people do not have the right to acquire productive capital with the self-financing earnings of capital; they are left to acquire, as best as they can, with their earnings as labor workers. This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the full earnings of capital. Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively miniscule, as are their dividend payments compared to the top 10 percent of capital owners.

What historically empowered America’s original capitalists was conventional savings-based finance and the pledging or mortgaging of assets, with access to further ownership of new productive capital available only to those who were already well capitalized. As has been the case, credit to purchase capital is made available by financial institutions ONLY to people who already own capital and other forms of equity, such as the equity in their home or small business that can be pledged as loan security—those who meet the universal requirement for collateral. Lenders will only extend credit to people who already have assets. Thus, the rich are made ever richer, while the poor (people without a viable capital estate) remain poor and dependent on their labor to produce income. Thus, the system is restrictive and capital ownership is clinically denied to those who need it.

The solutions can be found in the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/, Monetary Justice reform at http://capitalhomestead.org/page/monetary-justice and  the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/,  http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

Income Inequality Has Squeezed The Middle Class Out Of the Majority


Vacant homes stand in a once vibrant Detroit neighborhood. (Rebecca Cook/Reuters)

On December 9, 2015, Michael A. Fletcher writes in The Washington Post:

After more than four decades of economic realignment and creeping inequality, the U.S. middle class is no longer the nation’s majority.

The number of households that are middle class is now matched by those that are either upper or lower income, according to a report released Wednesday by the Pew Research Center.

The nation has arrived at this tipping point in part because more Americans are moving up the income ladder. In 1971, just 14 percent of Americans were in the upper income tier, which Pew defined as more than double the nation’s median income. Now, 21 percent of American households are in that upper earning category – at least $126,000 a year for a three-person household.

But at the same time, many Americans are falling behind, helping to deplete the middle. In 1971, a quarter of American households fell into the bottom earning tier, which Pew defined as less than two-thirds of the nation’s median income. By 2015, 29 percent of American households fell into that category, which for a three-person household meant they earned $42,000 a year or less.

Overall, the share of Americans living in middle-class households has declined from 61 percent in 1971 to 50 percent. The hollowing out of the middle class has been a source of consternation among many economists, politicians and the public at large. They say as Americans move toward the economic extremes it is harder to find common ground, and a common sense of what it means to be an American.

But others say a shrinking middle class – however that group is defined – is not problematic by itself.

“I don’t think it is anything we should be worried about,” said Scott Winship, a senior fellow at the conservative-leaning Manhattan Institute. “More important than how many people are in certain income ranges, is whether people are moving up.”

The decline of the middle class has been accompanied by growing inequality, as a growing share of the nation’s income has been captured by those at the top. Nearly half of the nation’s aggregate income went to upper-income households in 2014, the report said, up from 29 percent in 2014. Meanwhile, those in the middle earned 43 percent of the nation’s income in 2014, down from 62 percent in 1970.

That trend has only accelerated since the turn of the century. Median income for middle income families declined 4 percent between 2000 and 2014, and their median wealth, decimated by the Great Recession, cratered by 28 percent between 2001 and 2013, the report said.

The slimming of the middle class has come even as Americans of all income levels have grown more prosperous, Pew found. Middle class families have seen their income grow by 34 percent in inflation-adjusted dollars since 1970, while lower-income Americans have experienced income growth of 28 percent. Still, that growth is not nearly as strong as the 47 percent income growth experienced by upper-income households in that time period.

The changing economic fortunes of American households has been most dramatic at the far ends of the income spectrum, Pew found. The share of households earning more than three times the median income – $188,000 a year for a family of three in 2014 dollars – is now 9 percent, up from just 4 percent in 1971. At the bottom, one in five households earned less than half the overall median income –$31,000 a year in 2014 – up from 16 percent in 1971.

The report also found that older Americans, married couples and black Americans have made more economic gains than others in recent decades. Between 1971 and 2015, for example, the share of black Americans in the upper income tier more than doubled to 12 percent. Meanwhile, some 17 percent of adults aged 65 and older are in the upper income tier, Pew said, up from just 7 percent in 1971.

Despite that progress, African Americans and the elderly still remain more likely than other Americans to be lower income, and less likely to be higher-income.

One marker of relative prosperity in recent decades has been educational achievement. While the economic status of Americans with bachelor’s degrees changed little from 1971 to 2015, those who did not graduate from college fell down the income ladder.

That shift was magnified by evolving social trends, which saw marriage in decline overall, but especially for those with fewer educational credentials. Married adults have moved up the income ladder over the past four decades, while those who are unmarried slipped backwards, the report said.

https://www.washingtonpost.com/news/wonk/wp/2015/12/09/income-inequality-has-squeezed-the-middle-class-out-of-the-majority/

Washington Post journalist Michael Fletcher has framed the report issued by the Pew Research Center as a positive, yet has failed to point out that productive capital wealth concentration is concentrating at an accelerating rate, leaving behind the vast majority of American, even those who can be counted by wage income as in the “middle class.”

As is typical of American journalism and academia research, such as that conducted by the Pew Research Center, not once in this article does he raise the issue of WHO OWNS. Therefore Fletcher does not question and does not address the fundamental reason why capital wealth OWNERSHIP is concentrated among a tiny wealthy OWNERSHIP class, who for that reason are on top of the income earners.

BecauseIncome inequality has squeezed the middle class out of the majority and the number of households that earn middle class incomes is now matched by those that are either upper or lower income, it should not be hard to project the negative impact this trend will have on our political democracy and the “American Dream.”
The reality is that the vast majority of Americans are denied equal opportunity to gain significant capital OWNERSHIP participation in the FUTURE economy, which in the past has been overlooked because most people had prospects for a good-paying job. As with other journalists and economists, and academia as a whole, Fletcher does not even EVER use the word or explain CAPITAL OWNERSHIP and its significance to wealth building and income earnings. Instead, the focus is ALWAYS on income earned from jobs, but the reality is that tectonic shifts in the technologies of production, combined with the globalization of production, is destroying jobs and devaluing the worth of labor. This will not reverse, though a society capable of enabling EVERY citizen to be productive will stem this trend as full production will eventually result in far more prosperous and affluent lifestyles for EVERY citizen. But with the application of efficient technological innovations and inventions to produce with less and sustain and enhance the environment, new technologies will continue to enable companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work will continue to eroded by physical productive capital’s ever increasing role.

With that said, Fletcher and the researchers at the Pew Research Center ignore the critical understanding that in reality there are two ways for people to participate in production and earn income.

The stark reality is that we are in a depression reflected in rising “real” (not statistical) unemployment and underemployment and instability that we will never escape from until we change our economic policy. Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance – not able to accumulate equity that can help to sustain them in their retirement years. And this is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states and cities, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor worker wages is that production will decline or desist without sustainable consumer demand. Furthermore, those corporations growing the economy, both nationally and globally, will expand globally with investment in new productive capital projects and seek “customers with money” abroad.

This is all coming about because we have severely mismatched the power to produce with the possession of unsatisfied needs and wants. Those capital owners who have unsatisfied needs and wants have ready access through conventional finance to get as much or more productive capital as they want. Our tax laws are designed to further benefit the 1 percent by providing enormous write-offs and credits to producers (corporations) who are owned by the few with their massive stock ownership, who already produce more than they can consume. Those who have only their labor power and its precarious value held up by coercive rigging and who desperately need capital ownership to enable them to be capital workers as well as labor workers to have a way to earn more income, cannot satisfy their unsatisfied needs and wants. With only access to labor wages, the 99 percenters will continue, in desperation, to demand more and more pay for the same or less work, as their input is exponentially replaced by productive capital.

But if we change direction and systematically build earning power into consumers, we have the opportunity to reverse the depression perpetrated by systematically limiting the 99 percent to labor wages alone and through technology eliminating their jobs. We need solutions to grow the economy in ways that create productive jobs and widespread equity sharing. We need to systematically make insured, interest-free capital credit to purchase capital accessible to economically underpowered people (the 99 percent) in which the income from the capital investment is isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capital owners. This can only be accomplished by enabling every person to have access to capital ownership and purchase the capital, and pay for it out of what the capital produces. It’s time good and well-intentioned people woke up and adopted a Just Third Way paradigm (http://cesj.org/learn/just-third-way/) beyond the greed model of monopoly, “hoggist” capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice. It’s time Capital Homesteading solutions are enacted as the “justice-and-equal-opportunity” alternative to redistributive, wage-welfare approaches that swell the power of government and impede the ability of the average citizen and family to become economically independent.

'This Isn't NAFTA,' U.S. Trade Representative Says About Trans-Pacific Partnership

Michael Froman

On December 10, 2015, Chris Kirkham writes in the Los Angeles Times:

After years of negotiations, the United States and 11 other Pacific Rim countries wrapped up a sweeping trade agreement in October that supporters say will eliminate obstacles such as tariffs and set standards for doing business in 40% of the global economy.

The deal has faced tough opposition in Congress — particularly among Democrats, who believe that past accords such as the North American Free Trade Agreement have sacrificed U.S. jobs to foreign competition.

After months of wrangling and intense lobbying from the Obama administration, Congress this year gave the administration so-called fast track authority to negotiate the final details of the Trans-Pacific Partnership with the other countries — Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile, Peru, New Zealand, Vietnam and Brunei.

The final deal still faces a yes-or-no vote from Congress, which cannot make amendments to the agreement, in the midst of a contentious 2016 election season. On the campaign trail so far, Democratic hopefuls Bernie Sanders and Hillary Clinton have opposed the deal, as well as Republican candidate Donald Trump — although for different reasons.

The Times sat down with U.S. Trade Representative Michael Froman, the Obama administration’s chief negotiator for the trade agreement. Below is an edited version of that interview.

You’ve had to travel around the world to sell this other countriesand it has faced tight votes in Congress. Can you break down the importance of an agreement like this and why in this part of the world?

The Asia-Pacific region is going to be home to an estimated 3.2 billion middle-class consumers by 2030 and it’s a region that’s very much in flux. We think it’s important that the U.S. play a leading role in helping to define the rules of the road for the region and not leave that to others.

We take in imports from all over the world now. But we face these barriers which create an unfair situation for our workers and for our companies. What we’ve tried to do is eliminate barriers to these other markets and level the playing field by raising their standards. That creates new opportunities for us to increase our exports.

How do you think California, as distinct from other parts of the country, will be affected by this deal?

California is such an immense and diversified economy that it stands to benefit across the board: manufacturing, services, agriculture. There’s a 15% tariff on headphones made in the U.S. That’ll go to zero.

Some of these markets like Malaysia and Vietnam have emerging middle classes. The first thing a middle-class person wants is more protein in their diet, better nutrition and safe food. Having a “grown in America” product is a great brand in this region, whether that’s beef, pork, poultry, dairy products, fruits and vegetables, nuts or wine. All of those are produced in abundance in California.

Why the focus on exports and jobs driven by exports?

Export-related firms tend to hire more, pay more and be more durable during times of economic uncertainty because they can diversify their markets. There are a range of economic studies out there that say, on average, export-related jobs pay up to 18% more than non-export-related jobs in the same sector.

What would you say to the criticism that past trade agreements have opened the door for moving production jobs overseas?

I disagree with that. Take Vietnam: It has 90 million people, it’s a fast-growing economy, it has an emerging middle class.

We have two choices: One, we can lower their barriers to our exports, which allows us to continue to produce here, produce more here and sell in Vietnam; or — if we let them continue to have high barriers — companies will have every incentive to move there to get past the barriers to be able to serve that market. Our preference is to lower other countries’ barriers so that people have a reason to produce in the United States.

Throughout the debate over TPP, there has been a constant comparison to the North American Free Trade Agreement. Some argue that NAFTA cost the U.S. hundreds of thousands of jobs, others say it caused job gains. Either way, are there lessons learned from NAFTA in this agreement?

Whatever your position is on NAFTA, this isn’t NAFTA. In the intervening 23 years, we have looked at our experience and we have built on it. When Sen. Obama was running for president, he said we can’t afford to have labor and environmental obligations be treated in side agreements that are not fully enforceable. So with TPP, one of its fundamental elements is that trade and environmental obligations are first of all stronger than ever before, clearer than ever before, fully enforceable and at the center of the trade agreement.

Enforcement has been a huge point of criticism for labor and environmental groups. What would you say to critics who question whether this agreement will have the teeth to enforce standards?

It’s got real teeth. Not only the labor and environmental provisions but the intellectual property provisions, the state-owned enterprise provisions, the digital economy provisions. These are tighter provisions than we’ve had in previous trade agreements. It lays out specific timetables by which the dispute settlement has to take place.

It avoids situations of some of our past trade agreements where one party could slow down or prevent the dispute settlement process from reaching a conclusion. At the end of the day, if a party doesn’t change their policies, it allows us to impose trade sanctions on them.

Could the U.S. do that under NAFTA?

Not on trade and environment.

Even some economists who support this trade agreement have argued that, in 10 to 15 years, there may only be a modest increase in the number of U.S. jobs. Do you expect a huge boost in the U.S. economy and a big increase in the number of jobs?

Trade agreements are not a panacea. They’re part of a larger economic strategy where you need to invest in infrastructure, you need to invest in education and all the elements that help make the American workforce competitive. But if the debate is about whether trade agreements will create more jobs or only create better jobs, I think it’s a great debate to have.

http://www.latimes.com/business/la-fi-qa-tpp-20151210-story.html

This is such a misrepresentation of what the Trans Pacific Partnership is. All along the idea of the Trans Pacific Partnership has been to promote the interests of giant, multinational corporations over the interests of labor, environmental, consumer, human rights, or other stakeholders in democracy, AND FURTHER CONCENTRATE OWNERSHIP OF THE NON-HUMAN PRODUCTIVE CAPITAL MEANS OF PRODUCTION!

The argument that eliminating tariffs for goods entering the United States and for goods entering the other 11 nations with the TPP, is that exports will increase and there will be more jobs for Americans because corporations will want to produce in the United States rather than abroad. But anyone with common sense knows that wage levels in the other countries will not suddenly raise to the level of the United States, even at the minimum wage level, which will still put “Made In America” at a significantly higher cost level.

And for those who will be able under the TPP to export their goods without tariffs added to the price, this really benefits the ownership class of those corporations, who are then expected to add more employees. But with technological automation continuing to advance rapidly at an exponential rate, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Yet you NEVER hear any economist or anyone in academia, or journalist, as in this interview, question WHO WILL OWN the future?

The REAL STORY is a story about the collusion among a globally wealthy ownership class to further concentrate private sector ownership in ALL FUTURE wealth-creating, income-generating productive capital asset creation on a global scale. A sorta FREE TRADE ON STEROIDS!

Middle-Class Families, Pillar Of The American Dream, Are No Longer In The Majority, Study Finds

Middle-class

On December 10, 2015, Don Lee writes in the Los Angeles Times:

The nation’s middle class, long a pillar of the U.S. economy and foundation of the American dream, has shrunk to the point where it no longer constitutes the majority of the adult population, according to a new major study.

The Pew Research Center report released Wednesday put in sharp relief the nation’s increasing income divide, which is certain to be a central issue in the 2016 presidential race. It also highlights how various economic and demographic forces have eroded long-held ideals about maintaining a strong, majority middle class.

Many analysts and policymakers regard the shift as worrisome for economic and social stability. Middle-income households have been the bedrock of consumer spending, and many liberals in particular view the declining middle as part of a troubling trend of skewed income gains among the nation’s richest families.

Median-income voters, particularly non-college-educated men, are also at the core of billionaire Donald Trump’s surprising surge in the Republican presidential campaign. His supporters’ sense that their once-secure middle-class standing is in danger of slipping appears to be fueling much of the anger against the government and immigrant groups.

The tipping point for the middle class occurred over the last couple of years of the recovery from the Great Recession as the economy continued to reward highly educated workers, well-to-do investors and those with technical skills.

Rapid growth of upper-income households, coupled with an increase in less-educated low earners, has driven the decline of the middle-income population to a hair below 50% of the total this year, Pew found. In 1971, the middle class accounted for 61% of the population, and it has been declining steadily since.

The Pew research found that the shares of upper-income and lower-income households grew in recent years as the middle shrank — with the higher-income tier growing more. In that sense, the nonpartisan group said, “the shift represents economic progress.”

Pew defined middle class as households earning two-thirds to twice the overall median income, after adjusting for household size. A family of three, for example, would be considered middle income if its total annual income ranged from about $42,000 to $126,000. Pew analyzed data from the Census Bureau and the Labor Department, as well as the Federal Reserve.

Most Americans have traditionally identified themselves as middle class, even those at the top and bottom, reflecting a kind of cultural heritage tied to the American dream of self-reliance. But the Great Recession and subsequent slow recovery have shaken that image.

A Gallup survey this spring showed that just 51% of U.S. adults considered themselves middle or upper middle class, with 48% saying they are part of the lower or working class. As recently as 2008, 63% of those polled by Gallup said they were middle class.

This change in self-identification — and the reality of the shift documented by Pew — carries political ramifications as the state of the middle class continues to be a major focus of the economic debate in the presidential campaigns, with candidates, in time-honored fashion, invoking the middle class in their speeches and policy statements. President Obama has dubbed his programs “middle-class economics.”

Patrick Egan, a politics professor at New York University, says the Pew findings and the Gallup surveys suggest that the public may be more open to policies of redistribution.

“Americans are always kind of reluctant to embrace open class warfare,” Egan said. But “if more Americans are under the idea of placing themselves at the bottom, you’ll see politicians follow.”

Although the median incomes of upper, lower and middle tiers have all lost ground since 2000, primarily because of the Great Recession in late 2007 to mid-2009, upper-income households saw the smallest decline through 2014, the Pew study found.

Seen over a longer period, from 1971 to 2014, the median income of all upper-income households increased 47% to $174,625. The median income for the middle tier rose 34% to $73,392, and for the lower income group, it was up 28% to $24,074. The median marks the halfway point.

Pew’s findings add to strong evidence that the middle class has been thinned partly by a decline in manufacturing due to competition from imports as well as a broader polarization of jobs that has favored the most educated and technically skilled workers.

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Elizbeth Espinoza and her husband, Carlos Arceo, both 38, fall squarely in the middle class, according to Pew. The Downey couple, who have two children, ages 4 and 6, gross about $110,000 between them, not counting benefits, such as healthcare insurance. By Pew’s definition, a household of four is in the middle tier if total income is $48,347 to $145,041.

But Espinoza, who works as a student programming coordinator at the UCLA Labor Center, sees her family as barely straddling the middle class. The reason: high living costs, including $850 a month for child care and hefty student loan payments.

“I’m on the border of middle class, and I feel this way because I feel like being part of the middle class means being comfortable financially, and I think we struggle with that,” Espinoza said. “When you look at that
expense-to-income ratio,
it’s just a lot more difficult
to have that comfortableness.”

Espinoza said that she and her husband were hopeful about their future incomes rising, but she doubts that they can move up to the upper-income tier. “I feel like upward mobility keeps getting harder and harder,” she said.

The Pew study did not address economic mobility — an issue that many economists believe is more important than the change in income distribution. But research on income mobility across generations has found the U.S. as a whole lags behind other Western countries.

The declining middle also reflects demographic shifts, such as the arrival of more low-skilled immigrants, which can be seen in the overall slippage of Latinos in the income ladder since 1971. By race, black adults made the biggest strides in income status from 1971 to 2015, although they are significantly less likely to be middle income compared with adults overall.

At the same time, the increase of women in the workforce since the early 1970s has tended to boost household incomes, as has higher college education enrollment. And of course, strong gains from stocks and high-tech ventures have fueled incomes for some.

As of this year, 9% of Americans are in what Pew called the highest-income category — up from 4% in 1971 and 5% in 1991. A household with three people had to have an income of more than $188,000 last year to be in this highest bracket.

In contrast, the share of American adults in the very lowest income category — a three-person household making less than $31,000 — rose to 20% of the U.S. adult population this year from 16% in 1971.

“The distribution of adults by income is thinning in the middle and bulking up at the edges,” Pew said.

Whether this trend continues will depend in large part on how household structures evolve. Soaring numbers of single-parent households since the early 1970s, for example, have increased those at the bottom of the income spectrum.

Also, trends in marriage rates, immigration, college education and the labor force participation of lower-skilled men in particular will all have a bearing on the future of the middle class in America, said Harry Holzer, an economist and public policy professor at Georgetown University.

The Pew findings, however, are not comforting, he said. “It does suggest, even when you adjust for demographics, it’s a little troubling,” Holzer said. “We always expect things to be getting better.”

http://www.latimes.com/nation/la-fi-middle-class-erosion-20151209-story.html

Los Angeles Times journalist Don Lee displays once again, as he has done over numerous published articles, that he is a shallow journalist. Not once in this article does he raise the issue of WHO OWNS and therefore does not address the fundamental reason why capital wealth OWNERSHIP is concentrated among a tiny wealthy OWNERSHIP class, who for that reason are on top of the income earners. Meanwhile, the vast majority of Americans are denied equal opportunity to gain significant capital OWNERSHIP participation in the FUTURE economy, which in the past has been overlooked because most people had prospects for good-paying job. As with other journalists and economists, and academia as a whole, Lee does not even EVER use the or explain CAPITAL OWNERSHIP and its significance to wealth building and income earnings. Instead, the focus is ALWAYS on jobs, but the reality is that tectonic shifts in the technologies of jobs, combined with the globalization of production, is destroying jobs and devaluing the worth of labor. This will not reverse, though a society capable of enabling EVERY citizen to be productive will stem this trend as full production will eventually result in far prosperous and affluent lifestyles for EVERY citizen. But with the application of efficient technological innovations and inventions to product with less and sustain and enhance the environment, new technologies will continue to enable companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work will continue to eroded by physical productive capital’s ever increasing role.

With that said, Lee and the researchers at the Pew Research Center ignore the critical understanding that in reality there are two ways for people to participate in production and earn income.

The stark reality is that we are in a depression reflected in rising “real” (not statistical) unemployment and underemployment and instability that we will never escape from until we change our economic policy. Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance – not able to accumulate equity that can help to sustain them in their retirement years. And this is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states and cities, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor worker wages is that production will decline or desist without sustainable consumer demand. Furthermore, those corporations growing the economy, both nationally and globally, will expand globally with investment in new productive capital projects and seek “customers with money” abroad.

This is all coming about because we have severely mismatched the power to produce with the possession of unsatisfied needs and wants. Those capital owners who have unsatisfied needs and wants have ready access through conventional finance to get as much or more productive capital as they want. Our tax laws are designed to further benefit the 1 percent by providing enormous write-offs and credits to producers (corporations) who are owned by the few, who already produce more than they can consume. Those who have only their labor power and its precarious value held up by coercive rigging and who desperately need capital ownership to enable them to be capital workers as well as labor workers to have a way to earn more income, cannot satisfy their unsatisfied needs and wants. With only access to labor wages, the 99 percenters will continue, in desperation, to demand more and more pay for the same or less work, as their input is exponentially replaced by productive capital.

But if we change direction and systematically build earning power into consumers, we have the opportunity to reverse the depression perpetrated by systematically limiting the 99 percent to labor wages alone and through technology eliminating their jobs. We need solutions to grow the economy in ways that create productive jobs and widespread equity sharing. We need to systematically make insured, interest-free capital credit to purchase capital accessible to economically underpowered people (the 99 percent) in which the income from the capital investment is isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capitalists. This can only be accomplished by enabling every person to have access to capital ownership and purchase the capital, and pay for it out of what the capital produces. It’s time good and well-intentioned people woke up and adopted a Just Third Way paradigm (http://cesj.org/learn/just-third-way/) beyond the greed model of monopoly, “hoggist” capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice.

Middle Class No Longer Dominates In The U.S.

America: Land of shrinking opportunity

The once-strong middle class no longer dominates America.

Middle class Americans now comprise less than half, or 49.9%, of the nation’s population, down from 61% in 1971, according to a new Pew Research Center report. For Pew, middle class Americans live in households earning between two-thirds to two times the nation’s median income. In 2014, that ranged from $41,900 to $125,600 for a three-person household.

For decades, the middle class had been the core of the country. A healthy middle class kept America strong, experts and politicians said.

But more recently, these residents have struggled under stagnating wages and soaring costs. Presidential candidates on both sides of the political aisle are campaigning on ways to bolster the nation’s middle class and increase opportunities to climb the economic ladder.

chart middle class shrinking

The steady decline of the middle class is yet another sign of economic polarization, said Rakesh Kochhar, associate director of research at Pew. Not only are more Americans shifting into the upper and lower classes, but they are moving into the higher range of the upper class and the lower range of the lower class.

This is yet another sign of growing income inequality, he said.

“There are fewer opportunities that place people in the middle of the income distribution,” Kochhar said.

One silver lining, however, is that more people are moving up the ladder than down. The ranks of the upper class are growing faster, according to Pew’s research.

Senior citizens were most likely to have shifted into the upper class since 1971. The share of Americans age 65 and over in the upper bracket increased nearly 27% over that time. Married couples with no children and black Americans also saw larger gains.

Those most likely to fall into the lower class were those with only a high school degree and high school dropouts, as well as unmarried men.

chart middle class falls behind rich

Here’s another sign of how growing income inequality is squeezing the middle class.

Since 1970, upper class households saw their median income soar 47% to $174,600 in 2014. Meanwhile, the middle class only got a 34% boost to $73,400. Still, they have been more prosperous than the lower-income Americans, who only received a 28% bump to $24,074.

Some research shows that increased income inequality and a hollowing out of a nation’s middle class stunts economic growth, Kochhar said.

chart middle class share of income

Looking at it another way, the upper class now controls 49% of the nation’s aggregate income, up from 29% in 1970.

The middle class used to earn the largest slice of the nation’s income. It held 62% in 1970, but that share has since fallen to 43%.

The lower class, meanwhile, holds 9% of the country’s income, just under the 10% it earned in 1970.

chart middle class wealth gap widens

The rich are not only trumping the middle class in terms of income. They’ve also seen their wealth soar over the past 40 years.

The median net worth of upper class families doubled between 1983 and 2013, up to $650,100.

But the wealth of the middle class has increased a near negligible 2% over that time to $98,100. At least they fared better than lower-income Americans, who saw their wealth drop 18% to $9,500.

For its wealth calculations, Pew used data from the Federal Reserve Bank’s Survey of Consumer Finances, which defines net worth as all of a family’s assets minus all their debts.

To check if you are middle class, check out Pew’s calculator here.

http://money.cnn.com/2015/12/09/news/economy/middle-class/index.html

Economist Joseph Stiglitz NEVER focuses on  the fundamental reason why capital wealth OWNERSHIP is concentrated among a tiny wealthy OWNERSHIP class and thus is on top of the income earners, while the vast majority of Americans are denied equal opportunity to gain significant capital OWNERSHIP participation in the FUTURE economy. Stiglitz doesn’t even EVER use the or explain CAPITAL OWNERSHIP, and he is Nobel Prize economist!

Stiglitz represents just how bad academia is as he ignores the critical understanding that in reality there are two ways for people to participate in production and earn income.

The stark reality is that we are in a depression reflected in rising “real” (not statistical) unemployment and underemployment and instability that we will never escape from until we change our economic policy. Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance – not able to accumulate equity that can help to sustain them in their retirement years. And this is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states and cities, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor worker wages is that production will decline or desist without sustainable consumer demand. Furthermore, those corporations growing the economy, both nationally and globally, will expand globally with investment in new productive capital projects and seek “customers with money” abroad.

This is all coming about because we have severely mismatched the power to produce with the possession of unsatisfied needs and wants. Those capital owners who have unsatisfied needs and wants have ready access through conventional finance to get as much or more productive capital as they want. Our tax laws are designed to further benefit the 1 percent by providing enormous write-offs and credits to producers (corporations) who are owned by the few, who already produce more than they can consume. Those who have only their labor power and its precarious value held up by coercive rigging and who desperately need capital ownership to enable them to be capital workers as well as labor workers to have a way to earn more income, cannot satisfy their unsatisfied needs and wants. With only access to labor wages, the 99 percenters will continue, in desperation, to demand more and more pay for the same or less work, as their input is exponentially replaced by productive capital.

But if we change direction and systematically build earning power into consumers, we have the opportunity to reverse the depression perpetrated by systematically limiting the 99 percent to labor wages alone and through technology eliminating their jobs. We need solutions to grow the economy in ways that create productive jobs and widespread equity sharing. We need to systematically make insured, interest-free capital credit to purchase capital accessible to economically underpowered people (the 99 percent) in which the income from the capital investment is isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capitalists. This can only be accomplished by enabling every person to have access to capital ownership and purchase the capital, and pay for it out of what the capital produces. It’s time good and well-intentioned people woke up and adopted a Just Third Way paradigm (http://cesj.org/learn/just-third-way/) beyond the greed model of monopoly, “hoggist” capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice.