Record “Wealth” in America: 72% of US businesses are NOT profitable


Source: Sovereignman.com
Simon Black
June 12, 2017

The Federal Reserve in the United States just released a new report showing that “Total Household Wealth” in the United States has reached a record $94.8 trillion.

That’s an impressive figure.

Even more impressive is that Total Household Wealth has increased by $40 trillion since the lows of the Great Recession in 2009.

No doubt there’s probably a multitude of central bankers and bureaucrats toasting their success in having engineered such magnificent prosperity.

And it’s certainly an achievement worth celebrating. As long as you don’t look too closely at the data.

Total Household Wealth is exactly what it sounds like– the total net worth of every person in the United States, from Bill Gates down to the youngest newborn baby.

So when you add up all the 330+ million folks in the Land of the Free and tally up their combined net worth, the total is $94 trillion.

The thing is that the VAST majority of that wealth, especially the incredible growth over the last 8 years, has been from increases in just two asset classes: real estate and the stock market.

In fact, stocks and real estate alone account for roughly 2/3 of the wealth increase since 2009.

I’ll come back to that in a moment.

Now, simultaneously, we see plenty of other interesting data, also published by the Federal Reserve and US federal government.

Both the Fed and Census Bureau, for example, tell us that over 80% of businesses in the US are “nonemployer” companies, i.e. businesses which only employ one person (the owner), and often provide his/her primary source of income.

Yet according to the Federal Reserve, only 35% of these small businesses are profitable. Most are operating at a loss.

In other words, only 35% of the companies which make up 80% of American businesses are profitable.

You’re probably already doing the arithmetic– this means that a whopping 72% of all US businesses are NOT profitable.

That hardly sounds like record wealth to me.

Shifting gears, there’s the little factoid that an astounding 40% of young Americans are living with their parents– the highest percentage in the last 75 years.

And who can blame them considering student debt in the Land of the Free also hit a record $1.4 trillion three months ago, more than double the amount since the Great Recession.

Speaking of record debt, US credit card debt passed a record $1 trillion, and total US consumer credit hit a record $3.8 trillion last month.

Again, all of this hardly seems like ‘wealth’ to me.

Then there’s the issue of wages, which have remained essentially flat since the 2009 Great Recession if you adjust for inflation.

According to the US Department of Labor, inflation-adjusted wages, aka “real hourly compensation” in the US fell an annualized 0.9% last quarter, and fell a dismal 5.6% in the previous quarter.

Adjusted for inflation, the average American isn’t making any more money.

Once again, this is a pitiful excuse for ‘wealth.’

American businesses aren’t more productive either.

The same Labor Department report shows that productivity in the Land of the Free was flat in the first quarter of this year.

And productivity actually declined in 2016– something that hasn’t happened in at least the last 50 years.

Not to mention total economic growth in the Land of the Free has been pretty pitiful, logging a pathetic 1.6% last year.

And GDP growth in the first quarter of 2017 was just 1.2% on an annualized basis.

The US economy has exceed hasn’t surpassed 3% growth in more than 10-years, and it’s only happen two times so far in this millennium.

Seriously? This is “wealth”?

Look, I get it. Houses are ‘worth’ more than they used to be, and the stock market is much higher.

But these effects are heavily influenced by the trillions of dollars that was conjured out of thin air by the Federal Reserve.

ExxonMobil may be the most telling example.

In early September 2008, just prior to the financial crisis, Exxon had recently reported revenues of $72 billion, with $11.1 billion in net operating cashflow.

For the first quarter of 2017 the company reported revenues of $61 billion and net operating cashflow of $8 billion.

Plus, ExxonMobil managed to add nearly $20 billion in debt to its balance sheet over that same period.

So over 8-years, Exxon is making less money and has more debt. Yet its stock price is actually HIGHER.

More broadly, 66% of the largest companies in the US that have given estimates of their earnings for next quarter have issued “negative guidance”.

Companies expect to make less money. But stocks are near all-time highs.

Does this make any sense? Is that also wealth?

No.

This is nothing more than the result of paper money that has been created by central bankers, allocated to a tiny financial elite, and dumped into the stock market.

It’s the same with real estate. Sure, prices are higher. But it’s not because of fundamentals.

In terms of population, there’s only been a 7% increase in the number of households in the United States since 2009.

There’s been a commensurate increase in the supply of homes as well.

So in terms of supply/demand fundamentals, the average price nationwide shouldn’t be that much higher.

But take a look at this chart, courtesy of the Federal Reserve.

The red line shows interest rates, which have been generally falling since 1990. The blue line shows home prices, which have been rising like crazy since 2012.

It doesn’t take a rocket scientist to spot the correlation: record low interest rates mean higher home prices.

This isn’t wealth.

It’s just phony paper.

And as the Great Recession showed in late 2008, phony paper wealth can go ‘poof’ in an instant.

With that in mind, it may be time to consider taking some of that paper wealth off the table and setting it aside for a rainy day.

Read More At: SovereignMan.com
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About the Author

Simon Black is an international investor, entrepreneur, and founder of Sovereign Man. His is about using the experiences from his life and travels to help you achieve more freedom, make more money, keep more of it, and protect it all from bankrupt governments.

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America’s Hidden Jobless Rate

real-unemployment-figures
Source: TheDailyBell.com
June 6, 2016

Trump … said he thinks the jobless rate is close to 20 percent and not the roughly 5 percent reported by the Labor Department. And, of course, Crudele reported, anyone who buys the 5 percent figure is a “dummy,” according to Trump. This, in a nutshell, is typical of the usual economic conspiracy theories we have discussed in the past. -Bloomberg

Good for Trump.

The jobless numbers are actually part of a much larger mainstream “conspiracy” (as Trump would put it) that goes the heart of the way economies work in 21st century America.

There are something like 100 million Americans not working, including older people and young people. That’s a fairly well accepted statistic.

These people are not counted in the “jobless” figures though in fact they may want to work.

They may be working as a matter of fact. It is impossible to tell because they probably work in the gray or black economy.

The gray or black economy in the US is very large because of invasive taxation and heavy-handed regulation.

More:

Like much demagoguery, [Trump’s accusation] oversimplifies. This much is true: The employment data is complex. The average layperson with little or no economic background is likely to find it confusing.

It is true that many people have been unhappy with this recovery. While there are lots of boom towns and growth is strong in many industries, they are not evenly distributed throughout the country. That is the nature of slow recoveries from credit crises.

But Trump ignores these facts and goes down the path of several thoroughly debunked conspiracy theories.

The article then goes on to claim that the government provides a variety of statistics that are not widely reported.

If Trump would simply investigate more thoroughly, he would find the real data.

In fact, the editorial suggests the true rate of unemployment when everything is considered is around 10 percent.

But as we have often pointed out, the US does not even have a “real” economy.

The economy itself is distorted by judicial decisions implemented by force.

These decisions include giving corporations “corporate personhood” that allow the controllers of corporations to hide behind a legal shield.

Then there is the growth of intellectual property rights that brings the force of the state to bear on behalf of inventors.

These inventors don’t have to protect their own creations: The state will do it for them.

Finally, there is monopoly central banking. Great surges of fiat money empower the largest corporations while causing cyclical recessions and depressions.

The idea that the US – or other countries in the West – have anything approaching a free market is contradicted by these broad judicial decisions.

What would a real free-market economy look like?

It would be one where corporate leaders are personally responsible for the behavior of their companies.

And one where intellectual property rights would be enforced by individuals rather than the state – if they could be enforced at all.

It would be one that ran on private money, not fiat debt notes printed by monopoly central banks.

Allow the marketplace to function as it should rather than as the state requires, and people would likely find opportunity as they wished within far more vibrant, local circumstances.

The current system creates fabulous, multinational corporations employing hundreds of thousands too build often-useless consumer items … then laying off as “business” warrants.

In a real economy, most enterprises would be far smaller and less ambitious. Size would be achieved by partnerships not formal corporate structures. Goods and services would be more necessary and less fanciful.

Again, employment might be not be an issue given that people would be working for themselves or for local enterprises.

Conclusion: It is the force of the state that creates the overwhelming bigness of multinationals – to the detriment of smaller corporations and entrepreneurs. That’s the real employment “conspiracy”.

Read More At: TheDailyBell.com

Entrepreneur Quits Financial Industry to Bring Leftovers to Hungry People

article-food-rescuing_leftovers-735-350
Source: NaturalSociety.com
Christina Sarich
February 2, 2016

It doesn’t matter who you are; experiencing the high from taking perfectly good food from restaurants and local businesses that would ordinarily end up in the trash and giving to the hungry will change you. Even for high level business men making millions, giving back could beat any bull market rush.

Sourced from CivilEats.com
Sourced from CivilEats.com

Robert Lee would know. He left his high-powered job to start feeding the hungry and keep good food out of the waste stream.

The co-founders of Rescuing Leftover Cuisine, Robert Lee and Louisa Chen were both part of a university organization called Two Birds One Stone, which delivered leftover dining hall food on campus to homeless shelters. Through their volunteerism, the two learned best practices for the operations side in delivering food, fostering relationships with key partners within the industry, and the management skills needed to make it all work.

Lee has said, “It was kind of shocking to see how much food waste was happening around campus. I wondered: Why doesn’t every institution do something like this?”

Lee has been called the ‘Robin Hood of Leftovers’ for good reason. He has already ‘rescued’ and donated more than 290,000 meals since 2012 for those who often go without ample food. His organization, started in 2013 and called Rescuing Leftover Cuisine, saves food from the abundance we throw away every year. As his website details, millions suffer from food insecurity every year, and we throw way enough food just in our country to practically feed the entire world.

article-Scribble Food Waste

Continue Reading At: NaturalSociety.com