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The inequitable distribution of America's wealth is a story all too familiar. An increasingly large portion of the country's wealth is concentrated into the hands of an elite few. For instance, the six Wal-Mart heirs control more wealth than the poorest 30% of Americans. But who exactly are these elites, who individually control more wealth than millions of people combined? Here is the story of Lucy.

Lucy is not the kind of person you would expect to have more accumulated wealth than the poorest 25% of Americans combined. In fact, she's not a person at all. Lucy is a 2 year-old pit bull with no job or formal education.


It is unclear how she came into her wealth, but in spite of owning a larger portion of the country's wealth than almost 25% of the population, she has never been required to file for taxes, and has never paid a dime into the system that rewarded her with the combined wealth of 1 in 4 Americans.

Lucy, who could not be reached for comment, has no credit record of any kind and no debt whatsoever, according checks performed with Equifax and TransUnion, and no known bank accounts within the United States. Her only known asset, in fact, is a pink polka-dot collar given to her as a gift. It is valued at a resale price of $3. Amazingly, without any irony, with only $3 to her name, she actually does have a higher net worth than the 75 million poorest Americans.

How is it then, that the poorest 75 million Americans could have a combined net worth of less than $3? Debt. Most of those 75 million Americans have much more than a pink polka-dot collar to their name, but alongside they have accumulated trillions in household debt ontop of it. Until your assets exceed the value of your debt, you're below the water line, at a negative net worth.

How did this happen? In many ways, but the chief reason that I see isn't bad law, since bad laws have always existed. It isn't greed. That's always existed, too. It isn't even outsourcing, which had a role to play. The real reason is rarely talked about because it's boring: the trade deficit. You can't put a face on it. You can't demonize it with tales of lurid excess and Gatsbyesque parties. So no one talks about it. But it is ultimately the root of the problem.

Think about it.

We've been importing more stuff than we've been making since about 1975, when the wheels really started falling off the country. All together, we've exported about $7 trillion dollars of our wealth overseas by doing this, so it should come as no surprise that Americans have around $900 billion in credit card debt, a trillion dollars in student loans and $8 trillion in mortgage debt, all accumulating faster than the economy is growing.

We are, as a country, perfectly able to provide better economic opportunity to millions of people by producing domestically the goods we currently import with debt. A trade imbalance, by its definition, is the replacement of productive work and wages with debt. The systematic exportation of our wealth is no way to run a country, and is the very reason that 1 in 4 Americans have to purchase everything they own with debt.

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If these brownies were sold in stores they would come with a warning label. That is, if any commercial bakery had the guts to make them. Just take a look at the ingredients, and you'll know that this recipe isn't kidding:

Peanut Butter Brownies

-2 sticks of butter

-2 cups sugar

-6 oz. 100% cacao baking chocolate

-3/4 cup of peanut butter

-1/2 cup powdered sugar

-1 cup of flour

-4 eggs

-1 teaspoon baking powder

-1 teaspoon vanilla

-1/2 salt

Melt your butter and chocolate on very low heat so you don't scorch the chocolate. Take it off the heat and let it cool. I put the mixing bowl directly on the stove, because once you transfer from a saucepan to a bowl, you'll lose chocolate and butter. Ain't nobody got time for that.


While the chocolate is cooling, make the peanut butter filling. Yeah. These brownies have filling. Mix the peanut butter and powdered sugar in a bowl, and knead it together with your hands until you get a smooth, firm ball.


Then, dust a piece of waxed paper or silicone baking sheet with powdered sugar and roll it out!


Match the size of your 9x13 baking pan. Precision is not important.


Preheat the oven to 375, and let an assistant keep any peanut butter from going to waste.


Now that your mix is pretty cool, throw in the sugar and stir it up.


Mix it all up, add in the salt, vanilla and baking powder and stir thoroughly. Then add in your eggs. I recommend adding your other ingredients before the eggs to give the mixture time to cool. If you throw the eggs in when the mix is hot, and you'll have scrambled eggs.


Stir all that until it's smooth, and add in your flour. Once the flour hits, stir as little as possible. If you stir too much, you'll get tougher brownies.


Once the batter is relatively smooth, pour half of it into the pan in an even layer.


Now, carefully transfer the peanut butter layer from the waxed paper or baking sheet onto the brownies. This is not brain surgery, just try to get the bottom layer mostly covered.


Pour the rest of the batter over the peanut butter, sandwiching it between two layers of brownie, and put it in the oven at 375 for about 20-25 minutes.


You know what to do with this.

When the edges of the brownie start to pull away from the pan, you're probably done and you can let the brownies cool. In the highly likely event that you choose to eat a hot brownie, they will fall apart and the peanut butter layer will be gooey.





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There is a popular claim amongst gold and silver enthusiasts that large banks like JP Morgan and Goldman Sachs are capable of manipulating the price of gold and silver and suppressing its "real value". I find this to be a dubious claim.

There are two ways that the megabanks could control prices, the first being to change supply the second being to change demand. Of course, they have no real control over public demand, so they would have to focus on supply.


While there is no way for JP Morgan to instantly create actual gold or silver, what they have managed to create is a great deal of paper gold and silver in the form of exchange traded funds (think of a stock that tracks the price of gold that you can sell online). This absolutely does affect the price of gold and silver, but not by means of force or subterfuge. I don't have the means available to prove that paper gold and silver are truly fraudulent (and neither does anyone else claiming to), but I think it is extremely reasonable to think that they don't have all the gold they say they do and they are running the same kind of fractional reserve scheme that they run with depositors money and everything else. If everyone holding paper gold decided to redeem their shares, I'm sure the wheels would come off, but I can't prove that.

So, by creating a product that enough people believe is equivalent to gold or silver, and appreciates like gold or silver, the megabanks and their friends have satisfied a great deal of demand for gold and silver with a paper substitute that meets those investor's needs. Is this manipulation, or is addressing a market? Is it fraudulent in the sense that the deposits are not fully backed with real gold? Almost certainly, but this is also true of every bank deposit.


Ultimately, everything is "worth" whatever another person is willing to pay. To say otherwise is to speculate as to what a future buyer or a buyer that hasn't been found yet might pay. So, in the absence of what may be a large, fraudulent scheme in paper gold and silver, would physical gold and silver prices be higher? Maybe. I can't say with authority what billions of people would suddenly think about a product in a different world.

If physical gold and silver were really grossly undervalued, it should be simple to find a buyer that will pay more than market rate. However, as sellers of actual gold and silver online will prove, market rate isn't a fake number.

Another tool that big banks have at hand is the naked short. If JP Morgan takes a huge short position, they essentially "sell" a whole bunch of gold or silver they don't have in return for promising to buy later. This has a short term effect of apparently increasing supply and dropping the price, but when the short has to be covered and the gold or silver  bought, this has the reverse effect. Aggressively shorting a market is a dynamic thing looking to benefit from larger moves in price, and doesn't have a net effect on supply. Every ounce virtually sold must eventually be bought back.


For better or worse, the megabanks have satisified a large number of people with their paper products that may or may not have bought physical gold or silver. Paper gold and silver may not survive a long-term downturn in prices, but during the precious metals bull market of the past ten years the market has done very well. While paper gold offends my sensibilities for the same reasons that paper food might, it doesn't have this effect on everyone. Institutional investors like paper, and with their billions of dollars, they like the low maintenance fees (vaulting is expensive), and that they don't have to physically cart around tons of precious metals.

In fact, the enhanced liquidity of paper gold and silver has no doubt brought new investors and additional money into the market. While I would venture that the banks made enough paper to cover the new demand, paper gold and silver did expand the market. The physical-only crowd can still buy physical metal, and a new horde of speculators can now buy paper.


I don't trust the paper, but enough people prefer it to the physical metal that they buy the paper instead. Is this a manipulation? Only if the paper doesn't meet customer expectations. So long as the price tracks with the physical product, the institutional investors will be happy. If the market was satisfied via fraud, and the paper markets fall apart, then a fraudulent manipulation did occur. Time will tell.

What do you think? Leave a comment below.

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Posted by on in Uncategorized

Legalizing pot is a tough one for politicians. After having waged a fruitless "War on Drugs" for 40 years, politicians require face-saving cover as terms of their surrender. The victory that political busybodies hope to extract from their defeat is, of course, a big pile of new tax money for them to use to amass more power. This pile of money, even if it materializes for a while, will ultimately disappear. I, of course, find this hilarious and lovely that politicians will be foiled in their attempt to squeeze more money out of taxpayers.

So how big will that pile of money actually be? You have to make a few assumptions, but you can figure it out pretty quick.


Pot costs something like $5000 a pound or more in places where it is completely illegal. However, according to the auspiciously-named "theweedblog.com", prices in Oregon for top-shelf material have fallen into the $2000 per pound area. Recreational pot remains somewhat illegal in Oregon, but clearly the 50% drop in price isn't just coincidental with greater supply and lower penalties. If it were perfectly legal and mass-produced, the price would be much, much lower than that.


Ultimately, if pot can be row-cropped like corn or soybeans, the dollar-yield per acre will approach the market rate. That is to say, if more money can be made growing pot than celery or carrots, then some farmers will switch to pot. Then, supply will increase, prices will fall and revenue per acre of pot will eventually become comparable to other crops.

So what is the market rate? A vegetable farmer should expect his crops to be worth roughly $30,000 per acre at the grocery store, and this is remarkably true for almost every crop. From pecans to potatoes, $30k is roughly correct. Given that pot yields about 625 pounds of product per acre, $50 dollars a pound is all a farmer could reasonably expect at the point of sale. If prices were consistently higher, farmers would grow more and more until prices fell.


Furthermore, the amount of pot demanded isn't all that great. Far from potatoes or corn, even a hardcore pot smoker would have a tough time making his way through a single pound of marijuana in a year. Assuming there are 4 million hardcore smokers each consuming half a pound of weed a year, demand could be satisfied with 3200 acres of marijuana, just five square miles.


With relatively conservative estimation, the entire market is worth $100 million. Using high rates for farmland, and a wild estimate of pot consumption nationally, the whole market doesn't even touch $1 billion. How, exactly, politicians plan to extract $20 billion in taxes from a $100 million market hasn't yet been explained. Sure, Colorado approved a 25% tax on recreational pot, but would anyone go along with a 20,000% percent tax. Even if such a law were passed, this would create a monstrous profit incentive for people to grow their own.


In the end, legalizing pot will shrink the dollar size of the market, even if it balloons by a factor of fifty in terms of pounds per year. The revenues that have likely already been promised by over-eager politicians may never materialize as the wages of drug lords, smugglers and small time dealers will no longer be factored in to the price of weed. Thankfully, the people that will actually profit will be ordinary (pot smoking) Americans.

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Imagine you are running a spy agency, and you are trying to watch a specific person. The crucial element of spying is to be sure that your subject does not know you are spying on them. Once your cover is blown, any information that the subject might divulge is probably useless, or even intentionally misleading. Your cover is essential to getting useful information.


Now, imagine that you are the NSA, and your mission is to spy on everyone on the planet. Then, you are asked to stand before Congress (and the entire world) and testify to the nature of your program.

They ask you, "Are you spying on Americans?"

The stock answer, without even thinking, must be "No." If you say "Yes," any valuable information being exchanged in the United States is promptly cut off. You directly damage your program if you provide any truthful information as to who, when, where or how you are spying on people. Even admitting the program exists is a shot in the foot.

They ask "How many employees do you have?" and "What kind of computers do you use?"

Is telling the truth any help to you? If your targets know your capabilities, they can thwart your efforts. Any information, from how long you store information to how your screening system works, can all be used against you if it becomes public. Your ideal scenario is to be spying on everyone without anyone knowing anything about your program.

Ultimately, it is essential to the success of your mission to lie about absolutely everything and reveal nothing. Any shred of truth can damage your mission, regardless of how trivial, and so it is imperative that you lie.

So how do you know when the NSA is lying to you? When their lips are moving.

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