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Here are the latest essays and articles written by myself for this site. I started this site with my own work and continue to write for it as much as I can. To read all my work check out the My Articles menu link. For other posts and latest news from a wide range of diverse sources please visit the news section.

David Camerons Plans To Crack Down On Encryption

January 26th, 2015
David Camerons Plans To Crack Down On Encryption Topsec Technology | News From the World of IT Security By Niall Mackey UK Prime Minister David Cameron announced legislative plans this past Monday to ban online messaging that can’t be accessed by government security agencies. His statements came as part of an initiative to resurrect the Data... [read more]

Russell Brand End The Drugs War

January 10th, 2015
Russell Brand End The Drugs War By Dark Politricks As someone who has been around drugs all my life in the UK it is interesting to see different people's perspectives on drugs. You can read my own thoughts on drugs and the war on it here: The Drug Laws Need Re-Thinking. If you know my history and my current conitions then you will... [read more]

Another Royal Sex Slave Scandal Involving Prince Andrew

January 4th, 2015
Another Royal Sex Slave Scandal Involving Prince Andrew By Dark Politricks No suprise to see that the Royals are involved in sex orgies and clandestine meetings with under aged girls. Rumours of sex scandals inside Buckingham Palace and with the Royal offspring (I guess the Queen is a bit too old to engage), have been running around for years... [read more]

Happy New Year DarkPolitricks Readers

January 2nd, 2015
Happy New Year Dark Politricks Readers By Dark Politricks Happy New year to all my readers and hopefully I live the next one out. I have spent too much time in hospitals and doctors surgeries this year plus I have just had a major operation that has left a nice 5" scar on my gut that I have little time in the last few months to write any articles. So I... [read more]

A Documentary On The New World Order

December 13th, 2014
A Documentary On The New World Order By Dark Politricks As I have been recovering from a major operation that seems to have gone wrong (just my luck), I have spent hours in bed with my legs raised watching YouTube on my TV. I have an idea for an article about the NHS and my experience of it (lots) which I am working on. Howver as I do that I have... [read more]

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Then check out the rest. I have written essays on all kinds of topics from Climate Change to 9/11, from Israel to America, from Religion to History and from Internet Surveillence to the rise of the new high tech police state. To see all the articles I have personally written for this site you can visit the Dark Politricks articles section for a full listing.

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The Internet is under attack by big business and big government who are trying to control the flow of information any way they can. Using the threat of Terrorism and Cyber attacks the western world (especially USA/UK/Australian governments) are expanding their power to control internet traffic and recently Google and Verizon signed a deal that will end net neutrality.

What this means is alternative news sites like Dark Politricks and many others will find it harder to bring you the news that the mainstream media wished you didn't know about. This is because they will be either blocked by Chinese style firewalls (as Australia has already introduced) or they will be pushed down the Google rankings by special algorithms that control a sites listing.

Web servers and bandwidth costs money and articles take time to write. Whilst I try to bring you the best of the alternative news every day I have also personally written hundreds of articles for this site and you won't find many one paragraph or half hearted articles with my name at the top of them.

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Whilst you may not want to donate money to an information clearing house website that collates articles about the war on terror in one place I would like to remind you that:

  • I am asking you to help me continue my OWN writing not the collation of other articles written by others.
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David Camerons Plans To Crack Down On Encryption

David Camerons Plans To Crack Down On Encryption

Topsec Technology | News From the World of IT Security
By Niall Mackey
David Camerons Crackdown on Encryption

UK Prime Minister David Cameron announced legislative plans this past Monday to ban online messaging that can’t be accessed by government security agencies. His statements came as part of an initiative to resurrect the Data Communications Bill (otherwise known as the “Snooper’s Charter”) that was shot down by its political opponents in 2012.

Popular chat and social applications such as Apple’s iMessage and FaceTime, WhatsApp, Google Hangouts, Microsoft’s Skype, CryptoCat, etc. incorporate the use of encryption to block surreptitious access to online messages sent between people. Mr. Cameron said he intends to put a stop to internet communications that can’t be read by police, security, and intelligence forces – even with a warrant.

According to Mr. Cameron, the reason for this is to eradicate a private and safe method of communication between terrorists and other criminals who compromise national security. Mr. Cameron’s surveillance proposal comes at the heels of the recent tragic shootings in PARIS. However, heavy debates have risen up because of communication privacy issues related to this potential ban on encryption. Taking this into account, let’s examine some of the pros and cons on whether government officials should be able to tap into online personal communications without encryption.

The Pros of the Encryption Ban

In support for this surveillance measure, authorities cannot read online messages sent via encrypted apps if they have an appropriate legal warrant. Conversely, authorities are able to read traditional letters, listen into someone’s calls, etc. if they have a warrant. Encrypted apps block officials from investigating criminal suspects’ communications if officials have permission from the courts.

Access to emails, letters, and phone calls is critical in missing persons, homicide, and other criminal investigations. Mr. Cameron states:

“The first duty of any government is to keep our country and our people safe. The attacks in Paris once again demonstrated the scale of the terrorist threat that we face and the need to have robust powers through our intelligence and security agencies, and the policing in order to keep our people safe.”

The ability to reach all forms of modern communication with the right warrants will reinforce law enforcement’s efforts to combat terrorism and resolve criminal cases.

The Cons of the Encryption Ban

If the Data Communications Bill turns into official legislation, use of the aforementioned encryption-based applications would be thrown out and made illegal. That is, U.K. residents wouldn’t be able to chat with someone via iMessage or Google Hangouts. Encrypted end-to-end messaging services offered by these companies make it very difficult, if not impossible, for them to provide decrypted messages for legal purposes. Strong encryption algorithms are part and parcel of these social chat applications.

According to UK Deputy Prime Minister Nick Clegg, the move to block encrypted communications for complete accessibility in terrorist investigations is only a small part of the Snooper’s Charter.He told BBC:

The Snooper’s Charter would do absolutely nothing to deal with this issue of how we as a country have access to data which originates overseas but might relate to people who want to do us harm. The Snooper’s Charter was about storing the social media activity and websites visited by everyone in this country.”

He goes on to say that this bill doesn’t balance the fine line between national freedom and security. Heavily tracked social media and other online activity would be an utter waste of national resources because it’s not targeted toward specific people and areas, and U.K. residents would experience an intrusion of privacy because their online activity is carefully monitored. These online surveillance measures are getting blowback especially in the wake of Edward Snowdon’s (a whistleblower for the U.S. National Security Agency) shocking revelations on NSA’s spy tactics.

The bill’s push for decryption and complete transparency also undermines people who want their online actions to remain anonymous for valid reasons, such as whistleblowers, advocates, enterprises that deal with confidential data, and so on. Further, businesses have a legal right and responsibilty to protect thier sensitive information, such as health records, credit card and other financial details, and identity information, through tight security protocols that include encryption. They could face prosecution and stiff penalties if they don’t protect their confidential information.

Now that we have examined some of the pros and cons of this controversy, we are excited to find out what you think! Which side are you on and why?

By Dark Politrcks

I say,,,,,

David Cameron is basically a Luddite that has no idea how encryption or the Internet works.

Whatever he tries to do people will find a way round it, they always have.

The Snowden leaks show that not just targetted terrorists are being spied on but everyone. Put the wrong word in an email along with a sexy photo of yourself meant for your lover on a business trip and it will be flagged up for further viewing after basic keyword analysis (same as Google do for showing adverts as you type in gmail – and what ECHELON was doing decades ago)

This is from a BBC News report

Remember people are only human and if they saw something amusing you could have a whole office laughing as they showed the pics around. Some people might not mind photos of their hairy private bits being passed around an office, most people probably would.

I hate hearing the “if I have nothing to fear I have nothing to lose” argument – yes you do have something to lose – privacy, liberty, freedom.

The war on terror has seen a massive increase in terrorist attacks from the 90′s after we stopped the IRA and a massive loss in our basic civil liberties. I feel sorry for Americans who now live under the Orwellian named PATRIOT ACT, National Security Letters and the NDAA that allows the President to kill a US citizen without any legal process.

How are we going to know when the war on terror has been won?

Who are our top generals going to sit down with to sign treaties to end the war on a tactic?

It’s the US scratching about, looking for enemies to fight to keep their war economy going now the Soviets are gone.

What better enemy than one you cannot see – the big boogey man terrorist who could be living next door to you.

Scare the population enough and they will allow you to do anything like automated naked strip searches at Airports or sending all our banking transactions to the USA under EU agreements.

Plus we have the most CCTV cameras on earth in this little island. Filmed on average 300 times a day by different cameras one study proved.

Ever watched the TV Programme “Person of Interest”?

The super computer within that show that can hook into every telephone and CCTV camera is not so far fetched after all.

The US have a system called TRAPWIRE that links CCTV cameras up across the country from airports to shopping centres and roads. Plus they are building an almost city sized data warehouse in UTAH to store it all.

You will be on camera long after you die:

People don’t seem to realise they are sleep walking into a surveillance state by putting everything they do up on Facebook or Instagram. The next generation will be wearing cameras on their “Google Specs” that records eveything they do and then use tools to interpret the important parts of the day and probably upload those – these already exist, James May from Top Gear did a show on it.

The concept of privacy, a private conversation will be lost to them.

Also Cameron doesn’t understand encyption. With open source tools people are already able to create their own strong encryption tools and making a conversation over a VPN will prevent most snooping anyway unless they have keyloggers and malware already installed on your PC’s.

Clever coders will always be able to bypass any method the Government comes up with and with the Snowden leaks we know the extent of the data they are collecting plus they are working with Google/FaceBook/Microsoft and every big tech company on the planet.

Even back in the 90′s the BBC reported on the NSA adding chips to Windows PC’s to bypass strong encryption methods:

Whatever site gets shut down e.g PirateBay others spring up in their place. For those interested here is a guide I wrote to use blocked Torrent sites by going through TOR and using PeerBlock:

For a detailed look at privacy and ways to bypass being snooped on read this:

Any real terrorists knows the CIA/NSSA/GCHQ is listening to their communications.

If I was a terrorist I would go back to basics e.g:

  • Meet people in parks and talk face to face.
  • Never leave a “To do list” for your next bombing op on your PC.
  • Use VPNs and other encryption sources and use proxy servers to get to applications if your ISP or Country blocks access.
  • You have to even making your own chat app isn’t hard, I remember doing it back in 2000.

If only the people you wanted had the app and it was using SSL with your own certs then how is David Cameron going to:

  1. Know about it 
  2. Be able to ask for logs going a year back when there aren’t any 
  3. Plus your a private citizen not a big international company like Facebook anyway

How will he handle all the secure search engines e.g DuckDuckgo/StartPage which run searches from Google without recording your details.


  • Your IP address is never recorded, 
  • Your visit is not logged 
  • No tracking cookies are placed on your browser. 
  • Free proxy surfing available. 
  • Praised by privacy experts worldwide. 
  • Fourteen-year company track record. 
  • Third-party certified. 
  • No IP address recorded. 
  • No record is made of your searches. 
  • No identifying or tracking cookies used. 
  • Connection using powerful SSL encryption.

So there are many ways already to bypass Google/CIA snooping and whatever David Cameron does he will have trouble getting big international companies to comply wirth him unless he gets Obama onside on the matter.

Servers can be rented in any country to host content and ISP’s can only block so much.

Just remember privacy is one of the corner stones of a free modern civil society along with free speech.

If people think they cannot say what they want due to fear of being labelled or put on a list of “lefties” or “pirates” and maybe even banned OR searched more thoroughly wherever you go then free speech will crumble into the dust.

I am no criminal or terrorrist but I certainly don’t want the NSA/GCHQ being able to read my private thoughts or watch what I a doing when I communicate over Skype to my girlfriend in Iceland.

Remember the whole chain of being monitored in the first place starts with basic keword analysis of text. This conversation will probably be scrutinised by someone in detail just because of the frequency of certain “watch list” words. Any terrorist worth their profession would at least use a code to prevent this.

Also remember it’s the big IT and Media companies that are propagating terrorist PR in the first place. Newspapers showing Jihad John on the front page, YouTube uploads of his latest beheadings and Facebook pages devoted to these groups.

These could all be stopped easily with the keword and content analysis I talked about to prevent people creating pages devoted to ISIS and bans on the media using fear porn to sell their daily rags e.g laws to not give breath to these groups just like Gerry Adams in the 80′s.

These laws would have to be tightly written to prevent creep into stopping people who are anti government e,g Occupy protestors from falling into the category.

A simple law like “any group that chops a persons head off” cannot have content uploaded to the major sites (they will still have their own ones of course on servers based in Saudi Arabia)

And of course why are we at war with ISIS when Saudi Arabia chops limbs and stones people to death constantly. Oh yeah, Oil and arms sales. Our government has no morals or ethical foreign policy. It’s all about the Benjamins.

View the original article at Topsec Technology | News From the World of IT Security.

Posted in Analysis & Review, Civil Rights and Privacy, Computing, Dark Politricks Articles, Freedom of Speech, Intelligence Agencies, Internet.

Tagged with Computing, Data Communications, Data Communications Bill, David Cameron, David Camerons, ECHELON, encryption, Freedom, GCHQ, Google, Intelligence Agencies, Internet, Liberty, NSA, Person of Interest, Police State, Prime Minister, Privacy, Security, social media, surveillance, Technology, the Data Communications Bill, The Snoopers Charter, TRAPWIRE, War on terror.

The Communist Manifesto Today

The Communist Manifesto Today
By Mateo Pimentel

Karl Marx and Friedrich Engels published the Manifesto of the Communist Party in 1848. By no means did Marx and Engels set out to read the fortune of future capitalist societies, or to develop some high-resolution photograph of future international political economy amongst states. Nor did they predict the various incarnations of communism that would arise after their time. Instead, the manifesto was a commissioned work; its intention was to communicate the purposes and platform of the Communist League, an international political party started in 1847 London.

The manifestos investigation of historical and then class struggle included polemicizing capitalism and the capitalist mode of production. Not surprisingly, the manifesto remains integral to the comprehension and investigation of a globalizing economy and roiling world order. The industrial revolution of a Modern West has since carried capitalism, like the malignant contents of a virus, injected into the nuclei of different governments its inhuman system, and sought thusly to possess centralized power everywhere for the benefit of the global hegemon, the 1%, the plutocracy. Saliently so, the United States has made itself a vector for a super strain of this selfsame, mutating capitalist virus. Now, it enjoys its last gasps of hegemony, stamping the world with its seal of war and free trade ad nauseam.

The paradigm persists amongst many of the 21st centurys living, however, that socialism will replace capitalist society though the populations that Marx and Engels treated in their language have changed in makeup. Arguably, another read of the authors words gives life to virtually the same message today, in 2015, which it did in the 19th century. What is more, todays targeted demographic shares much of the proletarian struggles of Marxs time however different the particulars may be. So, indeed, the history of global society still is a history of class struggles. As such, it is paramount to explore some reasons why the impetuses for publishing the Communist Manifesto of so many years ago still matter.

Consider what Marx and Engels say of Modern Europes bourgeois society, which arose from a decomposing feudal society. Bourgeois society had not done away with class antagonisms endogenous to feudalism, but rather, it established new classes, new conditions of oppression, new forms of struggle in place of the old ones. Though certainly not alone in reinventing this axiomatic condition between rich and poor, the US stands perhaps head and shoulders above other nations in its efforts to maintain a global hegemony, especially after World War II. US domination has heretofore translated as global markets that deify wealth and eschew human development or welfare, and which also extract anything of worthwhile material value.

Soon after the Second World War, America preyed on decolonizing nations via military and capitalist inroads on the Third World. The US did not want any pushback from groups that might radicalize during their overthrow of colonialism, thus precluding the commodification of goods or the extraction of saleable materials. To be clear, after WWII, American industry had the world to gain; so the US sided with militarized nationalism in decolonizing states specifically to resist the abolition of private property there, or manifold other communist proclivities that might emerge. America spent this system into existence, dubbing the process modernization, or development.

Well before the Second World War, however, Marx and Engels would note the discovery of America advanced capitalist industry alongside a quickly globalizing world of interlacing markets. As a market itself, America provided fertile ground for the development of commerce, navigation, and communication. In turn, Marx and Engels claim such development had reacted on the extension of industry Capital thereby increased in the same proportion the bourgeoisie developed, they wrote, and synchronously pushed into the background every class handed down from the Middle Ages.

Does the US, in 2015, seek to advance capitalist industry among a seemingly subjugable population of the worlds poor who live pocketed away in the nation-states of the capitalism-oppressed Third World? For those who would thunder a resounding and patriotic no, well, what then might be an appropriate apology for the post-WWII American penchant for war and economic disenfranchisement all around the world? Would the underlying rationale broach the defense of security? Of freedom? Stable markets? Prosperity? Private property? One should question just how necessary a system like capitalism truly is if America need yet sell it from behind loaded guns, or punctuate it with bullets so as to maintain an equilibrium of acquiescence among weaker states that it seeks to relegate with free trade agreements.

Marx and Engels write that the political advance of the bourgeoisie followed from [e]ach step in the development of that class. They write that from the launch of Modern Industry, and of the world-market, the bourgeoisie had conquered for itself, in the modern representative State, exclusive political sway. In 21st century America, estimated spending on the countrys 2014 midterm political elections reported spending estimates upwards of $4 billion. There is no reason to believe that spending in upcoming presidential elections will not also exceed the amounts of previous years. By asserting in 1848 that the executive of the modern State is but a committee for managing the common affairs of the whole bourgeoisie, Marx and Engels throw down the gauntlet for Americans yet: Does money determine the American democracy? If so, then who has that money? The moneyed class does.

Just as Marx and Engels argued from their own European nexus, the American bourgeoisie of 2015 also embraces that single, unconscionable freedom Free Trade, especially in lieu of the numberless indefensible chartered freedoms that a healthy democracy requires. On behalf of exploitation, veiled by religious and political illusions, the authors write the bourgeoisie of their time had substituted naked, shameless, direct, brutal exploitation. Today, America is at war with terror the world over, and the popularly misconceived and emotionally charged American crusade against fundamentalist Islam certainly reeks of religious and political illusion.

Today, the survival of the American bourgeoisie yet requires that it revolutionize instruments of production, the relations of production, and society as a whole. There is yet a need to incessantly expand into markets, to expand markets for goods, to exploit the world-market, and to give a cosmopolitan character to production and consumption in every country, just as Marx and Engels observed. National industries face certain destruction with the emergence of new, private ones, and the introduction of such private industries still contour life and death for all civilized nations, and which yet extract raw material from the remotest zones for products that get consumed in every quarter of the globe. New wants continue to replace old ones. Economic intercourse still constitutes the universal interdependence of nations. The adoption of the capitalist class mode of production yet creates a world after its own image.

What Marx and Engels effectively bench-marked with the Communist Manifesto was a moment in time when factors that buoyed the dominion of the oppressors over oppressed reached crystallization in changing Europe. Nevertheless, so much of the content of their manifesto re-reads and so authentically resounds with readers today. Not surprisingly, Marx and Engels words serve a timely purpose for millions of Americans that egress out of 2014. There still exists a grueling battle between the unquestioned sanctity of private property and that of a human future. Nations and capitalist classes still war to preserve power where it is concentrated, and thus to amplify the distortion between wealthy overseers and the wage-slaves their system treats as little more than oft-rebellious druids of flesh. America largely spearheads that battle for continued oppression, whether Iraq, Eurasia, or Venezuela. So long as this history continues into 2015, so, too, will Marx and Engels 1848 Communist Manifesto remain essential for consideration.

Mateo Pimentel lives on the Mexican-US border, writing for many alternative political newsletters and Web sites. He can be reached at: [email protected]. Read other articles by Mateo.

View the original article at

Posted in Analysis & Review, Finance & Economics.

Tagged with America, Americans, Communist Manifesto, Communist Party, Friedrich Engels, guns, Iraq, Karl Marx, Mateo Pimentel, power, Second World War, State, Third World, virus, War, World War, World War II, WWII.

Hundreds of Drone Operators Quit Air Force

By Dr Stuart Jeanne Bramhall

photo credit: KAZVorpal via photopin cc

Latest posts by Dr Stuart Jeanne Bramhall (see all)

View the original article at Veterans Today

Posted in Analysis & Review, Television Video & Film.

Tagged with Author Latest, Autism, Drone, Veterans.

Saudi-Iranian Detente

By Sami Jamil Jadallah

Latest posts by Sami Jamil Jadallah (see all)

View the original article at Veterans Today

Posted in Analysis & Review.

Tagged with Charlie Hebdo, Free Speech, Speech, Veterans.

Pentagon Asks College to ‘Honor’ Dead Saudi King in Essay Contest

Pentagon Asks College to ‘Honor’ Dead Saudi King in Essay Contest

U.S. establishment continues praise of tyrannical dictator

Mikael Thalen
January 26, 2015

Pentagon officials announced the creation of an essay competition Monday to honor recently deceased Saudi King Abdullah bin Abdulaziz.

According to a press release from the U.S. Department of Defense, attendees of the National Defense University have been tasked with formulating a written tribute to the “life and leadership” of the “Saudi Arabian monarch.”

“The king, who died Jan. 23 at age 90, oversaw the modernization of his countrys military during the time he spent as commander of the Saudi Arabian National Guard, a position he held from 1963 until he became king in 2005,” the press release states.

Headed up by Joint Chiefs of Staff Chairman Gen. Martin Dempsey, the essay contest will focus on both Abdullah and the region as a whole.

“This is an important opportunity to honor the memory of the king, while also fostering scholarly research on the Arab-Muslim world, and I can think of no better home for such an initiative than NDU,” Dempsey said.

Marine Corps Major General and National Defense University President Frederick’M. Padilla had no issue with praising the late King, calling the competition a unique research opportunity.

This scholarly research competition presents NDU students with a unique opportunity to focus their research and writing efforts on relevant issues at the intersection of U.S. security interests and the Arab-Muslim world, Padilla said.

Dempsey went one step further in his idolization of the ex-ruler by calling him a man of “remarkable character and courage.”

In my job to train and advise his military forces, and in our relationship since, I found the king to be a man of remarkable character and courage, Dempsey said.

Since Abdullah’s passing, members of the U.S. establishment have given endless praise to the former dictator, seemingly ignoring his barbaric rule and world-renowned brutality.

As noted by the Intercept’s Murtaza Hussain, prominent U.S. leaders such as John McCain, Joe Biden and John Kerry wasted no time in highlighting Abdullah’s alleged accomplishments following his death.

In a statement last night Senator John McCain eulogized Abdullah as ‘a vocal advocate for peace, speaking out against violence in the Middle East.’ John Kerry described the late monarch as ‘a brave partner in fighting violent extremism’ and ‘a proponent of peace.’ Not to be outdone, Vice President Joe Biden released a statement mourning Abdullah and announced that he would be personally leading a presidential delegation to offer condolences on his passing.

Similarly, President Obama expressed his grief over the loss of Abdullah as well, ridiculously pointing to his so-called search for peace.”

He took bold steps in advancing the Arab Peace Initiative, an endeavor that will outlive him as an enduring contribution to the search for peace in the region,” the President said. “At home, King Abdullahs vision was dedicated to the education of his people and to greater engagement with the world.

The British government and the Royal Family paid their respects to the dictator by ordering all flags over state buildings and palaces to be flown at half mast, a move which produced an almost immediate backlash.

In reality, King Abdullah’s leadership produced atrocities nearly identical to that of alleged U.S.-enemies in the Islamic State.

Western leaders made no mention of the country’s “record level” beheadings in 2014 for crimes such as adultery, apostasy and “sorcery.”

Self proclaimed women’s rights supporter Hillary Clinton, who publicly praised the Saudi king last week, had no issue with two females being taken to terrorism court last month over the offense of driving a vehicle.

Many politicians who claim to support free speech were silent as a Saudi court sentenced a human rights lawyer to 15 years in prison for inciting public opinion” last July.

View the original article at

Posted in Analysis & Review, Prison Planet Articles, Television Video & Film.

Tagged with Arab, Defense, Honor Dead Saudi, Honor Dead Saudi King, Islamic State, John Kerry, John McCain, Mikael Thalen, Muslim, National Defense, National Defense University, Pentagon, Pentagon Asks, Pentagon Asks College, President, Saudi Arabian, University, War on terror.

The Federal Reserve Has Declared the Winner in the Generational Financial War

The Federal Reserve Has Declared the Winner in the Generational Financial War

By Charles Hugh Smith

The policy of safeguarding Boomer benefits with asset bubbles will lead to the destruction of the unprepared, the unwary and those who foolishly trusted our “leadership” and central bank to tell them the truth.

Though it is exceedingly politically incorrect to mention it publicly, a financial war between the generations is being fought in the U.S. and every other developed nation that has promised social welfare benefits to its burgeoning class of retirees.

The war is being fought on multiple fronts: political promises, interest rates, housing, central bank policies and official rates of inflation, to name a few of the top battlefields.

Though no one in power will state this publicly, the Federal Reserve has already declared the winner of the generational war: the Baby Boomers won and Gen-X and Gen-Y lost. Fed policies insure the Boomers will benefit from financial bubbles inflated by the Fed, and the following generations will lose–not just this year or next year, but for decades to come.

Any nation that offers its retirees social welfare benefits (pensions and healthcare) faces a no-win demographic crunch: the number of retiring people entering the class of beneficiaries far exceeds the number of additional full-time jobs being created. In other words, it’s not just a matter of having enough young people to support the rapidly expanding cohort of retirees–there must be enough good-paying full-time jobs for the young people so they can pay high taxes to fund the retirees’ benefits and support their own consumption/saving.

Let’s cover the fundamentals of the mismatch between what was promised to retiring Baby Boomers and the generations that must support their retirement.

The fact is that the number of full-time jobs paying more than minimum wage has stagnated while the number of retirees qualifying for pensions and healthcare benefits has soared. In the good old days of expansion, there were roughly 10 full-time workers for each retiree drawing social benefits (Social Security and Medicare).

The ratio fell to 5-to-1, then to 3-to-1, and is now 2-to-1: that is not a ratio that is sustainable without crushing tax burdens on the young.

Estimates are even worse in other developed nations. In Europe, the ratio of retirees over 65 to those between 20 and 64 will soon reach 50%–and that’s of the population, not of people with full-time jobs paying taxes to fund social welfare programs. (source: Foreign Affairs, July/August 2014, page 130)

All government social welfare programs are pay-as-you-go. The Trust Funds touted in propaganda are illusions, backed by nothing but the promise to sell more Treasury debt.

The Problem with Pay-As-You-Go Social Programs: They’re Ponzi Schemes (November 5, 2013)

While the costs of defined-benefit programs such as Social Security can be extrapolated relatively accurately, the program’s revenues cannot be predicted because they come from wages. If recession slashes millions of jobs, or earned income declines as wage increases slip below the rate of inflation (which is precisely what’s been happening for the past 6 years), revenues won’t meet wildly optimistic forecasts that presume high, sustained wage and employment growth forever.

No official forecast of tax revenues supporting Social Security and Medicare ever factor in a recession, much less a decade or two of declining wages. If the forecasts were more realistic, the programs would be revealed as insolvent.

That is of course a political impossibility, so delusional forecasts are issued and accepted as “real” lest the unpalatable reality be recognized.

Defined-benefit programs such as Social Security have costs that can be estimated with some accuracy, but programs such as Medicare are open-ended: their costs cannot be predicted. Every attempt to control the ballooning costs of healthcare benefits for the retired lowers the rate of growth for a year or two, and then the costs soar once again as the number of beneficiaries and costs of delivering ever-expanding services both explode higher.

As a result of these fundamentals, the Powers That Be face a dilemma: they cannot reveal the insolvency of these huge social welfare programs, even though the insolvency is guaranteed by demographic and global-economic dynamics.

There are a very limited number of financial solutions to this dilemma.

1. Taxes can be raised. This is problematic for several reasons. One is that taxes on the self-employed and upper-middle class are already 40%-50%, as I have outlined many times. Two, the number of “wealthy” people (households earning $250,000 or more) is tiny compared to the 100+ million army of social welfare program beneficiaries.

Higher taxes and junk fees are already suppressing consumption. Every dollar of additional tax paid is a dollar that won’t be spent by the household that earned the dollar.

Tax the rich is politically popular but in practical terms, it doesn’t generate the revenues that are expected, for the simple reasons that A) the number of wealthy is relatively tiny and B) the super-wealthy either move their capital elsewhere or they buy political favor-tax breaks.

2. Slash benefits and limit the total Medicare costs per beneficiary. Since young people tend not to vote and older people tend to vote, this is a political non-starter, at least until 90+% of young people start voting.

3. Raise interest rates to 10+% to encourage saving and to generate a healthy return on pension funds and retirement accounts. The net result of 10% yields is the immediate collapse of the Fed-fueled asset bubbles in housing, bonds and stocks. All these currently bubblicious assets would implode.

This is also a non-starter, because the financial/political Aristocracy and owners of these assets would be devastated by the implosion of the bubbles.

4. Inflate bubbles in housing, stocks and bonds to boost the value of pension funds, retirement accounts, and government tax revenues from capital gains by pushing interest rates to zero and extending credit to speculators, financiers and marginally qualified borrowers.

The Federal Reserve has clearly chosen #4 as the only politically palatable solution. While asset bubbles create the politically positive illusion that pension funds can pay the benefits promised, retirement accounts are swelling in value and tax revenues are rising thanks to higher property taxes and capital gains taxes, this legerdemain comes with a heavy price:

Younger generations are either priced out of assets such as housing or they are forced to buy assets at inflated prices– prices that will inevitably implode as these stupendous speculative bubbles pop. When the bubbles pop, the young people who bought into the illusion that asset bubbles can expand forever will be underwater, and not for a year or two but for a generation.

The system rewards silence and complicity. Everyone bellying up to the social welfare trough is implicitly encouraged to support the Status Quo, lest their share of the swag be diminished. That the trough will collapse is not important to each beneficiary; what’s important is that their share of the swag is not diminished, even if cuts are the only sustainable way to save the programs from collapse.

I am a Baby Boomer, and in 4 short years I will be entitled to belly up to the trough and extract hundreds of thousands of dollars in open-ended benefits (at least for Medicare). I have long proposed that the Boomers collectively fall on our swords and accept the draconian cuts necessary to align our benefits with the cold reality of declining wages and employment.

The equally cold reality is that the current “solution” impoverishes the younger generations and generates a tsunami of risk that will wash away the Status Quo–including the benefits of the Boomers.

Right now, we as a nation are greedily collecting the financial fish flopping around as the coming tsunami pulls the water out of the bay and briefly exposes the sea floor. The Federal Reserve and our self-serving political “leadership” is reassuring us the water has left for good and we are free to collect the free fish forever.

This is a blatant lie. The demographic and economic tsunami is gathering force over the horizon, and the policy of safeguarding Boomer benefits with asset bubbles will lead to the destruction of the unprepared, the unwary and those who foolishly trusted our “leadership” and central bank to tell them the truth.

View the original article at Washingtons Blog

Posted in Analysis & Review, Business, Finance & Economics.

Tagged with Baby Boomers, Charles Hugh, Charles Hugh Smith, Federal, Federal Reserve, Foreign Affairs, Generational Financial, Go Social, interest rates, Medicare, power, Security, Social Security, Status Quo, tax, The Federal Reserve, Trust Funds, War.