From American Dream to Corporate Lie

Before we start, I want to make it clear to everyone - I no longer consider the American Government and the American Corporate landscape two separate entities. They have been melded together and when I refer in this article to "Corporate", I refer to both as one.

Ahhh, the American Dream. It began as a reflection of our forefathers' desire to give every citizen an equal opportunity to succeed, to get ahead in life. The desire to move up, achieve a greater social and economic status are all the trademarks of the New World, as no other modern society before the United States of America has provided such an opportunity. This premise of wealth and prosperity through hard work and dedication proves elusive to most. Yet through most of American history, it has yielded some of the most productive working and middle classes in the world. This concept has given the Corporate structures a great advantage in terms of innate motivation and productivity. Furthermore, people are unlikely to rise up and rebel against the Corporate structures, as this very premise makes the people believe that by rising up or rebelling they are risking a lot. While the average American citizen that followed this premise in the past was unlikely to achieve the American Dream, the very pursuit was good enough to earn a decent living - something we Americans often take for granted. 

It is, of course, pure genius from a managerial perspective. You have a productive dedicated workforce and a mental safety net for the Corporate without a whole lot of effort needed from the top. However, since the time of our forefathers, there have been significant changes in economic and societal landscapes.

From a Corporate standpoint, a person can earn money, which means that he or she can be taxed on the money earned. Furthermore, that very same person can be a productive worker for any Corporate structure. Therefore, that person has the potential to provide the Corporate structures with profit twice. As far as the Corporate landscape is concerned, the more ways money can be generated from the same source, the better.

In present day, the American Dream no longer stands as just a premise of a better tomorrow through personal effort, but rather a well-crafted concept of acquisition of goods and status, regardless of means. You've all heard the standard consumerism version - a good education, a house, two kids, two cars. This is the Corporate Lie.

This is just Corporate Propaganda to make you feel like you're doing what you think is an accepted tried and true path to prosperity. In reality, for most people who blindly follow this version of the American Dream, it is a path to financial and personal ruin.

Let's break this down. For every part of the American Lie shown above, I will give you the following - the way the Corporate structures profit from the person and an alternative the person can pursue in order to benefit himself or herself instead of the Corporate structures.

I will start with Education, both emotional and academic. This is the foundation for all successful individuals that I have come across. The Corporate Lie dictates that pursuing a higher education (College or University) can provide you with a big salary, consequently financial stability and is crucial to your career. However, this lie is pushed by the for profit schools, which are in fact corporations themselves. These corporations make money from Student Loans and Government Grants. Grants are often paid for by the American Taxpayer, while Student Loans are an easy way to make money off the student who follows the Corporate Lie. As a result, The School Corporations profit from tuition, the Bank Corporations profit from loan interest, while the American Taxpayer and the Student are paying. What's worse, the same Corporate structures are outsourcing the very professions you are being trained to fulfill. So it is very likely that after leaving a higher education facility with an enormous debt, you may not have a reasonable opportunity to pay it off.

Let's take a step back - a good academic education begins with the right mindset at a young age. That mindset can only be framed through good emotional education from parents. It is only once a person feels good about him or herself and knows how to handle emotions, as well as how to express them, that a kid is able to get the most out of academic education. Next, all the building blocks a person needs for a good academic foundation can be found from first grade through the end of high school. There are classes of both general and specialized nature that any student can take in high school, which are applicable in the workforce. By the time you leave High School, if you have dedicated yourself, you should be ready for the workforce in a general sense. Now a student needs to acquire what is considered "higher education", which I consider to be skills relevant to your profession. Now I am not saying that students should skip college, far from it. In fact certain professions - Doctors, Lawyers, Engineers, actually require college. And some fields do not require higher education at all. However for majority of academic fields, a combination of less costly book study with online courses can yield better results than attending a far costlier four year university. In a four year university a student will wind up taking courses that have nothing to do with their given profession, while an online curriculum can be crafted to include just the relevant courses - after all you're paying for it. Also, while you're going through online study and book study, make sure to get an internship in your field of choice - it will teach you to apply academic knowledge to practice. And that is all you need to get the higher education necessary to enter the work force. The rest of what you need in your given profession is on the job training, that's how the vast majority of graduates (including from ivy leagues) get started anyway.

Home ownership is the most advertised part of the Corporate Lie. We have heard all the monikers - it is the first step to raising a family, it is an investment. First of all, you can raise a family in an apartment, a condo or a log cabin, if you are so inclined. Last time I checked, human reproduction in America does not coincide with owning a home. Second, a home is not an investment, far from it. A house is a depreciating asset that in most cases loses value over time and is susceptible all kinds of risks beyond your control. The "investment" myth came about the inflating home prices during the latter end of the 20th century and the first few years of the 21st. However, if you track people's salaries with respect to home values, you will see that the home by itself serves as a preservation of capital at best and a total loss of equity at its worst. A home is a dwelling that the Corporate landscape loves for a multitude of reasons, here are some:
1) Banks Collect Interest - With a 3.75% rate on a 30 year mortgage, you will wind up paying an additional 50% of the value of your home in interest over the life of your loan.

2) Mortgage Backed Securities (MBS) - These bonds represent future earnings from home loans.
3) Insurance Premiums - You are required by the lending bank to pay for home insurance, which increases over time.

4) Property Taxes - Local townships love the taxes collected from home owners and constantly increase them.

5) Home Improvement Stores - Where you will spend money to make the home fit your style.

6) Furniture Stores - Where you will get a bed, couches, chairs, and tables.

And don't forget the implied repair costs associated with home ownership - a leaky roof, torn siding, burst pipe, termites, carpenter ants, mold, heating/ac problems, etc. These are all things you would likely not be responsible for, had you been living in an apartment or a condo. When you add up the difference in costs of living in a house versus apartment/condo, and add that difference to cost of the home, you can consider yourself lucky if you get half that money back when you are ready to sell your "investment".

The only way that a house becomes profitable for the consumer is if you are renting it out to tenants or its land becomes suddenly valuable due to a natural resource discovery or proximity to a desirable site.

My advice is to go for an apartment or a condo, and you will be pleasantly surprised by how much more money you can save. With the condo, make sure to only buy it when you have the money to pay for it outright - you don't want to pay the interest on the loan, trust me. You will have far fewer headaches and more money in your pocket.

Next up are the children. The Corporate structures do not see your kids as pride and joy, they see them as dollar signs and future consumers/taxpayers. With the kids, you have to pay for baby formula, diapers, clothes, medicine, daycare, etc. Yet some adults in this country are not prepared to be parents at all, neither emotionally nor financially. Life is not a lock-step approach where you hit a milestone and move on to the next one - it is a path specific to the person you are (as well as your partner) that is unique in every sense. And you should only have kids when you're absolutely ready to be responsible, in every sense of the word, for bringing another life into this world. Introducing a child into this world by parent(s) who are unable to provide the right environment for that child, is downright criminal in my opinion.

Cars, the Corporate Lie emphasizes status symbols above all else. And much like the house, a car is a status symbol. Even more so, it is also a depreciating asset that will need to be replaced at least a couple of times in your lifetime. In most cases it requires a loan, where the banks make money on interest. It provides business for the Auto Repair shops, Auto Body Shops, Oil Change facilities, Auto Parts stores, Insurance Companies, etc. Unlike the house, you do need a form a transportation. And for most people who live outside large cities where Mass Transit can be a viable substitute, a car is a necessity. However, heed my advice and don't treat it as a status symbol - get something that meets your needs for transportation while taking the least out of your wallet, nothing more. A Bentley is not going to get you to work any faster than a KIA during a traffic jam in the morning.

Don't live the Corporate Lie, live your own version of the American Dream that is based on personal fulfillment and true happiness that is not tied to anything you can buy.

Doing the Right Thing

A guest speaker at my company's holiday party decided to quote one of my favorite characters in history - Winston Churchill. The quote: "You can always count on Americans to do the right thing - after they’ve tried everything else." While that quote was a not-so-subtle jab at the United States for their late entry into World War II, it applies universally, to humanity in general. The generic form of this quote is a motivational speech moniker: "Change will not occur, until the pain of not changing surpasses the pain of change itself".

As we get older, human beings tend to take fewer and fewer chances turning into conservative beings. As professional adults we have already established ourselves and want to preserve our current standing, often overlooking potential improvements to our lives that require significant change. In this stretch, we have forgotten what it was like to choose where to go to college, what to study, where to take your first professional job and where to live. As adolescents and young adults we make these choices without much to lose, because we are just starting out in life. Further down the line, we acquire a steady level of income, a circle of friends, a comfortable place to live, and a level of familiarity with our daily routine that makes us want to preserve the Status Quo.

Personal tendencies ultimately trickle down into professional behavior as well. Therefore, the fearless leaders of monetary policy at the Federal Reserve are not immune to doing what is the easiest, rather than doing the right thing. When the financial crisis hit our national economy in late 2008, the government and Federal Reserve had important decisions to make. Specifically, whether or not they would allow free market's natural selection kill the banks and corporations who were borrowing irresponsibly and leveraging their assets foolishly. On one hand, the officials could have elected to allow these institutions to fail - showing that there are consequences for being foolish and irresponsible, while plunging the economy into an immediate crash that would have been quite severe in the short term. On the other hand, the officials could save these institutions by using taxpayer money to create bailouts, and borrow money to provide means of further financing - the proverbial "kicking the can down the road" for future generations to deal with.

At first he government allowed Lehman Brothers, a financial institution with too many toxic mortgage-backed securities, file for bankruptcy and fail. The same fate awaited Bear Sterns. The stock market's initial reaction was positive, because everyone saw that the government will not protect failing businesses and believed that financial institutions will be held accountable for their transgressions. But in the long run, that was not the case. The government turned around and chose to provide large sums, many of which were undisclosed to the general public until very recently, to Citigroup, Bank of America, Goldman Sachs and countless others. The government chose to save their financial pillars of the status quo at taxpayers' expense.

The treasonous criminal nature of that act may not be evident to the naked eye at first. However, as you look closer you see how the government told the average Americans to pull down their pants and bend over so that they can service our accounts. We were all intentionally mislead to believe in 2008 that the initial bank bailout was in the amount of 700 billion dollars. At the end of November of 2011, we discovered that the initial amount was actually 7 trillion dollars. Just so that the average reader understands - the Federal Reserve intentionally mislead the American public, which is responsible for the bill of all government bailouts, that the amount of money being borrowed was 1/10th of the actual amount. When, in reality, the actual amount of $7,000,000,000,000 was slightly less than 1/2 of the entire Gross Domestic Product of the United States. If you, as an individual, take 10 times more money from your employer than you are supposed to, you will be in hand-cuffs facing prison time.

But there's more to this fraud against the American people. Imagine you have a mortgage with Bank of America which you have signed at the peak of the housing bubble in 2006. Bank of America has claimed profits from that transaction and truly appreciates your business. Usually, on a 30 year fixed rate conventional mortgage, the finance charge over the life of the loan will be a little over 105% of your home's face value at 5.25% interest rate.

Now, with that profit on the books Bank of America packages your projected profit value into an investment called a mortgage-backed security. This security amounts to nothing more than an IOU in the amount of projected profits from your loan's lifetime payments. It turns out that this projected profit security was packaged with some not-so-certain (sub-prime loans) projected profit securities, and now the bank is in trouble, because the investors can't get rid of these securities fast enough, even at discounted prices. As a result, Bank of America receives a bailout from the government, which taxpayers must pay. So, in addition to paying 105% of your home's value to Bank of America in finance charges, you are now shelling out your tax dollars to help the bank survive the consequences of acting irresponsibly with the 105% you paid initially.

But wait, there's more! As a result of the $7,000,000,000,000 bank bailout, the government must borrow and print more money. As I've discussed previously in 'Real Money' post, when the government prints money without real asset value to back that money, they are in effect devaluing (diluting the value of) existing money in circulation. So over the past three years, the Federal Reserve has more than tripled the amount of money in circulation without any real asset value to back that money (just the faith of the US Government). Therefore, doing the math, your $1.00 in 2008 is mathematically worth $0.33 today. The only reason why you didn't feel that is because deflationary forces kept the purchasing power at the same level over the same time span. In the short-term, there are more deflationary forces in play (European Crisis, Asian Crisis, etc.). So the dollar may get stronger, before the actual inflationary crash occurs. But when the inflation catches up to the reality of dollar devaluation, it will be lightning fast and severe.

To summarize, you have paid the Bank of America 105% of the face value of your home in finance charges, the tax dollars to save for its irresponsibility with the money you paid. And to thank you for all of this, the government has stolen two thirds of your lifetime savings and all the money you earn through devaluation of the dollar. The Banks made money, the Government made money, while the people were left bent over with their pants down... waiting for the banks and the government to double-team them.

The Federal Reserve has recently said that they will "Do the Right Thing" by not printing any more money - they are currently rejecting any notion of a Quantitative Easing 3 program. Which means, for the time being the amount of dollars in existence will remain unchanged (if you trust Bernanke). However, it remains to be seen whether or not the Federal Reserve and our government will stick to this position.

As I've alluded to in the beginning of this post, change will not occur until the pain of not changing becomes too great. For those who are in power and have nobody to hold them accountable for their actions, the pain cannot be too great until it is inflicted by the people whom they are meant to serve. Our forefathers understood this concept and created means to hold each other accountable. However, the government has corrupted these means over centuries to a point where an average American is ignorant, if not altogether indifferent, to the actions of people who are supposed to represent their best interests.

So I ask you, my fellow Americans, are you willing to wait until the pain of not changing becomes too great?