The Corruption Of The Welfare State

by | May 22, 2017 | Economy, Keith | 0 comments

A report from the Federal Reserve was issued late last Friday – Report on the Economic Well-Being of U.S. Households. To quickly summarize the report it is alleged from the data collected that 28% of the respondents claim that their income for the last twelve months was less than $28,000, 44% claim they would not be able to cover an unexpected $400 expense, 23% claim they cannot pay all of their monthly bills and 25% claim they regularly skip medical treatments because they cannot afford it.

This is a problem, this is a major problem. These numbers constantly get worse and worse. Let us look at why it won’t get better.

The American Left, as much as they crow about inequity and wealth distribution and the evil 1%, are almost wholly responsible for this situation not being repaired. Let me explain to you why that is. The welfare state as we know it exist almost entirely due to credit. If the credit were to vanish the welfare state would also vanish within hours – for the continued existence of the welfare state depends on that credit being available day after day after day.

Most American Leftist tend to think the method by which wealth is transferred within the welfare state is that the government takes ten dollars out of their paycheck and gives two dollars to this person in need and two dollars to that person in need and so on and so forth.

That is not how it works. There are nowhere near enough tax dollars to pay for the welfare state that has been created. The welfare state runs of off never ending credit – credit that is consequently financialized via rehypothecation and collateralization and Credit Default Swaps and any number of instruments. What this adds up to is a perpetual bleeding out of the wealth from the poor and middle class to the top 7%.

During the eight years of Obama the poor lost 45% of their net wealth, the middle class lost 30% of their net wealth but on average billionaires doubled their net wealth.

The American Left let this genie out of the bottle and they have no means by which to get it back in the bottle without also destroying the welfare state they so cherish. There is a reason that you only ever hear Leftists address fiscal policy (taxes and spending) and ignore monetary policy (where the actual wealth transfer to the 7% takes place). There is a reason that nearly all of the super wealthy are in favor of the welfare state and constantly argue to expand the welfare state – the credit required to fund the welfare state is free money to the wealthy. I am well aware that Bernie Sanders and Elizabeth Warren are never going to bring this up just as I am aware that MSNBC is never going to explain to their viewers how the welfare state is nothing more than a wealth transfer to the 1% via monetary policy – but that is what it is.

The more you know…