Email from a collegue on the IMF's call for US to increase minimum wages.

I received an email from a colleague today which asked:

"Did you see the IMF telling theUS that we should be raising the min wage???  That it would lift 50 million out of poverty? Your thoughts on the repercussions of their statement?"

I know that similar questions are on the minds of many.  In other words, they are watching the oligarchs for clues as to what happens next, generally with the belief that there is something they can do to make things better.  Of course, everyone would be better off if we just ignored the con men at the IMF and other places because only by having our attention do they have any ability to implant their corrupt ideas into our minds.  Of course, this is easier said than done because they control the media and they are experts at mixing a ton of lies and bullshit with a tablespoon of honey in order to make it believable, acceptable and even desirable to hundreds of millions of  unenlightened minds. As the old Mary Poppins song goes, "just a spoonful of sugar helps the medicine go down" (and furthermore) "in the most delightful way".  Yes folks, they have been laughing at us right in front of our faces since childhood.  Now follow the yellow brick road!!

OK, back to the subject at hand.  The IMF are Keynesians just like all central bankers.   

Oh crud, I have to inject this: liberals pronounce it "K-knee-zhun" while we conservatives pronounce it "Cane-sian".  The man's name was "Keynes" and was pronounced "canes" not "K-nees".  If you are a liberal, try to at least get that right.

In any case, they want to keep the "controlled inflation" scam alive (there is no such thing controlled inflation as you can read about here) because it is the engine of their corrupt prosperity.  It goes like this:

• Bankers create money from thin air and lend it out for interest.
• The flood of money drives up asset prices much faster than salaries.
• Bankers get rich on fees for loan origination and on interest paid for the use of something they never earned in the first place (credit).
• It becomes so lucrative that everyone eventually gets into the act.  The entire society becomes credit driven and thus the entire economy becomes a debt Ponzi.  Suddenly your credit score becomes the most important thing about you. 
•  Big players like GE, IBM, Toyota and others sell their products to people AND provide the financing too.  This vendor finance scam always blows up. 
•  We call things like this “shadow banking”.  China is the biggest shadow bank bubble in the history of man.  The US has big pockets of shadow banking in its industry too but all of China is a shadow bank bubble.

·         At some point the credit creation drives asset prices of things too high such that nobody wants (or is able)to buy them even at nearly zero interest.  That’s where we are right now: home sales on the skids even though interest rates are at all-time lows.

• By this time the banks and shadow banks have tons of debt on their books given out at too easy of terms and they know it.
• As asset prices begin to fall, they face bankruptcy because their capital ratios plummet through the legislated minimums.
• This begins to make them concerned for THEIR OWN survival and so they begin to suggest that caring about the fate of the little guy is perhaps a good idea.   
• Germany did not "bail out" the PIIGS because it cared about them.  It simply did not want its creditors to BK and discharge their debts.  BTW, nobody got bailed out.  Debt was not forgiven.  More loans were provided in order to make payments on the prior ones.  Good money was thrown after bad.  The can was kicked down the road, nothing more.
• First we begin to hear oligarchs speak publicly about their “concerns regarding the wealth gap”).   Of course, they didn’t care about it until it began to affect their own growth so in truth they are just talking their book. 
•  Later on we get new focus on minimum wage laws (like the IMF right now) which is always a crowd pleaser even though it does nothing but kick the can down the road because those higher wages QUICKLY show up as higher store prices.  This is when the end game really begins because this is when the rank and file finally realize that their ignorance and apathy over the past decades have not been without significant consequences.

·         This cycle repeats multiple times in the generational cycle but it cannot continue forever.  At some point the higher minimum wages do not materialize broadly enough or quickly enough or the increases are not large enough to re-ignite the "animal spirit" of consumerism and the consumer goes into survival mode. They opt for smaller houses (or apartments or cardboard boxes) and smaller vacations (or a newly developed love of Yahtzee with the family around the kitchen table instead of going on those troublesome Disney vacations, etc.).

•  It is not always the fault of greedy corporations that they do not raise minimum wages!  Corporations are not bottomless pits of wealth and wages are their largest expense.  As the debt Ponzi has grown so has the monetary base in order to support the expanding credit.  This pushed up the price of things not bought with credit like food and energy.  Case in point: DRD cannot make a profit with gold at $1300 because their “all in” cost of pulling from the ground is higher than that.  While the price of gold has gone up, so has the cost of mining it.  Assuming DRD employs people at minimum wage, DRD cannot just nearly double the wages of these workers even if it wanted to at this point. 
• OK, that’s DRD at the bottom of the “care scale”.  What about Wal-Mart, the largest employer in the country with many minimum wage workers.  Current TX minimum wage is $7.25. It is a fallacy to believe that Wal-Mart whose profit margins are only 3%, can double that to $15 like many are requesting without it absolutely collapsing their business model.  Wages are their biggest cost!  People who cannot do math want to double Wal-Mart’s biggest cost like it was some kind of trivial bureaucratic exercise with no blow back.  Note that I did not say it will not happen.  All I said was that there will be repercussions.  Big ones.  Those same workers shop at Wal-Mart and they will find that a gallon of milk begins to sell for $6-$8.  Ground beef starts costing $8 per pound.  Prices only skyrocket from there until the government then turns on its buddy Wal-Mart, demonizes it for trying to stay in business and institutes price controls.  Fade Wal-Mart!!

·         Cycles, including the oceans, the cycle of life, and economic cycles all ebb and flow.  Trees do not grow to reach the sky and debt Ponzis do not last forever.  The current one is about 100 years old and long in the tooth.  Eventually the flow phase is done and it rolls over into an ebb induced collapse.  During the collapse phase of the economy we get things like runs on banks and price controls.  Government begins making up laws that set limits on the prices that people can charge for their goods and services irrespective of their input costs.  They basically ask businesses to “take one for the good of the country”.  The result is predictable: people will not give something away for free or at a loss for very long before they just roll up the sidewalks and hunker down.  Government tries to respond by stealing their assets.  See appliance stores in Venezuela.  At some point this behavior results in predictable mass product shortages and of course at the extremes of a cycle we get civil unrest and the potential for war, perhaps civil war.  Every time the government meddles with the economy:

•  It does so for the benefit of its own corrupt self AND FOR NO OTHER REASON despite how the con men running the show try to market their moves to ignorant sheeple.
• It creates other problems somewhere else.
• The situation, in aggregate gets worse each time.
• The associated trouble curve is always exponential in nature.  For this reason, things just seem to “blow up” in their faces with little warning.  They never see it coming.

So this call by the IMF was predictable and predicted.  Don’t put too much stock in what these people say one way or the other at this point, their influence and power has run its course.  The IMF will collapse and be disbanded for all intents and purposes in the coming deflationary collapse.  Many people still have not come to grips with this which is perfectly understandable because it has seemed for nearly their entire lives that big organizations like the IMF are really in charge.  But in fact, they are only in charge as long as the herd says they are and as the credit Ponzi continues to collapse we will see globalism and big government both take a huge correction downwards.  Globalism and big government are both liberal concepts.  They will both get creamed in the coming swing toward conservatism.