The United States of Serfdom

  • Hillary’s “serfdom” speech: Did it really happen?
  • Why Americans already live amid a high-tech feudalism
  • How to take charge of your life despite the power elite’s machinations
  • A “relief rally” that’s no cause for relief… Crude soars… Where gold goes from here
  • American values and Trump “taking care of the people”

“Service is the rent we pay for living in this great country.”
So said Hillary Clinton last Saturday at a rally in New Hampshire. Or so we think. The sole source for this quotation appears to be a tweet by a New Hampshire lawyer and Clinton apparatchik who goes back to “Slick’s” 1992 campaign…

Terry Shumaker tweet

We don’t know the full context in which she said it. Maybe she didn’t say it at all. But it sounds like her, right?
[Fair warning: Yes, The 5 is venturing into politics today. We don’t like it, but at times it’s unavoidable. A few years back, a reader urged us to stick to “coldhearted financial research.” The rejoinder from our executive publisher and the founder of this e-letter, Addison Wiggin, was, “Politics are the problem, and you ignore them at your peril.”]
National Review writer Kevin Williamson spotted the tweet… and nailed the implications. “There is a very old English word for people who are required to perform service as a rent for their existence, and that word is serf. Serfdom is a form of bondage…
“The American proposition is precisely the opposite of what Herself imagines: The U.S. government exists at our sufferance, not the other way around.”
“I sometimes think that we are living in a second medieval age,” writes the veteran Washington journalist Sam Smith, “in which the strong have enormous power but can only exercise it behind moats and in heavily walled castles because, in the end, they are truly scared.
“The rest of us live in villages on farms owned by the lords but in a culture that still retains some of the traditions, freedoms and values the elite no longer experiences. We are victims, but also models and preservers.”
We like to cite Mr. Smith now and then. He’s a man of the left — but in our book, he’s one of the good guys. He likes an activist government, but he also values federalism — even if he prefers to use words like decentralization. (He also sniffed out the Clintons as grifters long before they sauntered into the nation’s capital.)
But he’s is speaking only metaphorically, no? We’re not really living as serfs yet, are we?
It’s no metaphor: Many Americans already live a serf-like existence, says the urban studies scholar Joel Kotkin.
“Housing now takes the largest share of family costs,” he explains this week in The Daily Beast, “while expenditures on food, apparel and transportation have dropped or stayed about the same. In 2015, the rise in housing costs essentially swallowed savings gains made elsewhere, notably, savings on the cost of energy. The real estate consultancy Zillow predicts housing inflation will only worsen this year.”
The phenomenon is worst on the coasts — where land-use regulations have served to limit the housing supply, especially single-family homes. Cities are increasingly home to only wealthy elites and inner-city poor. The dwindling middle class is confined to ever-more pricey rentals… unless they finagle job opportunities in interior cities like Atlanta, Dallas-Fort Worth or Pittsburgh.
On a national basis, the homeownership rate sits near its lowest point in 30 years. And among homeowners who have a mortgage, 14.4% are still underwater — owing more money than the house is worth.
“Following our current path,” says Kotkin, “we can expect our society — particularly in deep blue states — to move ever more toward a kind of feudalism where only a few own property while everyone else devolves into rent serfs.
“The middle class will have little chance to acquire any assets for their retirement and increasingly few will choose to have children. Imagine, then, a high-tech Middle Ages with vast chasms between the upper classes and the poor, with growing dependence — even among what once would have been middle-class households — on handouts to pay rent.”
And then there are the feudal aspects of Obamacare, as someone noticed on Twitter a couple months ago…

Kelly Rek tweet

For all the nattering about Obamacare as “socialism,” the feudal “fiefdoms” have been making out like bandits. It was the first law in Washington history forcing you to buy a product from a private company.
As we mentioned in passing a few days ago, the primary architect of Obamacare is one Elizabeth Fowler. She was a VP at the insurer WellPoint before joining the staff of Sen. Max Baucus (D-Montana). “If you drew an organizational chart of major players in the Senate health care negotiations,” said a 2009 Politico article, “Fowler would be the chief operating officer.”
Once Obamacare became law, she moved over to the White House — to become the point person for implementing the law. With her work done by the end of 2012 — before the scope of the damage became evident — she returned to the “private sector” as a honcho dealing with “global health policy” at Johnson & Johnson.
Most days, we try not to leave you despairing over the sorry state of the world. We try to give you something to do to take control of your affairs — even if that means, ahem, inviting you to click on one of our sales promotions.
Today is no different. Taking control of your life within a feudal America is still doable. Did you know, for instance, that even in the age of Obamacare, you can get a $130,000 procedure for as little as $18,000 — with no sacrifice in quality? Did you know about the “Amazon secret” to dirt-cheap medical tests? Or how to avoid getting caught in Obamacare’s red tape?
And that’s just the Obamacare section of Laissez Faire’s 2016 Guide to Happiness. Other sections show you how to save thousands on your taxes… reclaim your privacy… even earn extra income with minimal effort.
We’re not even 45 days into 2016. There’s still plenty of time to make this your best year yet. Here’s where you can get started.
To the stock market… where it’s still make-or-break time.
When we left you yesterday, Jonas Elmerraji of our trading desk said 1,825 was the level to watch on the S&P 500. If it closed at 1,825, it would amount to “a pretty definitive sell signal for the broad market.”
In the event, the S&P closed at… 1,829. Ooh, sigh of relief! This morning, it’s rallying hard for no obvious reason — up nearly 1.5%, to 1,855, at last check.
But that’s hardly an all-clear signal. Jonas has been eyeing another level closely — 1,875. “Ever since last August,” he said here yesterday, “the S&P has reversed higher every time it’s come down into the 1,875 range. Sometimes, it’s busted through 1,875 temporarily, only to end back above that level.”
Sorry, not there yet…
Since stocks are moving up and down in tandem with oil these days, we should note that crude is up $2.68 a barrel as we write.
Which doesn’t sound like much, but at present prices, that amounts to a more than 10% increase. A barrel of West Texas Intermediate now fetches $28.89.
Once again, rumors abound of a coordinated production cut between the OPEC nations and Russia. But we’ve been here before and it hasn’t panned out. Right now, all there is to go on is a stray remark by the oil minister from the United Arab Emirates.
Gold, meanwhile, is doing the backing and filling Greg Guenthner told us to expect yesterday.
After the biggest one-day move in four years, past $1,250… the Midas metal has pulled back to $1,235.
“You can’t expect a change in trend like this one to be perfect,” says Greg. “It won’t be easy to buy. And you’ll experience plenty of whipsaw moves. This big move in precious metals isn’t moving under the radar. Every trader with an Internet connection sees what’s happening and is trying to profit from it. So hold on tight. We could see some huge moves (up and down) from gold over the next few weeks.”
“The Fed is still on track to raise rates,” says Jim Rickards, now that he’s digested two days of testimony by Federal Reserve chair Janet Yellen to Congress.
“As long as Yellen sees job creation advancing steadily, she will not be deterred from the planned course of rate increases.”
Recall on Wednesday, Jim cited two ways the stock market could tank that would force her to reconsider — a sudden drop to 1,690 by the end of next week or a drop to 1,615 by the time the Fed meets next on March 16. Those targets are still in place.
“Other than those types of extreme moves,” says Jim, “the Fed does not care about the stock market during a tightening phase.”
“By the way, I like Trump,” says a newer reader who’s quickly become one of our “regulars.”
[Well, we might as well be equal-opportunity offenders today. Heh…]
“Why?” the reader continues. “A friend of mine got his BS in political science. I thought it useless, but we had many interesting conversations. The main one being a source of enlightenment that has guided me ever since.
“Politics in its purest form is none other than the title of Trump’s best-seller The Art of the Deal. You negotiate a deal with every one of your relationships every day, period, end of sentence.
“Don’t particularly care for Trump’s morass, but globalization and government as well as society are no more than striking deals. You may not like how he talks, but the art of the deal is very real!”
The 5: If you must bring it up, here’s our take on the Trump phenomenon…
It’s safe to say there’s nearly as much revulsion with the federal government now as there was 40 years ago, after Vietnam and Watergate. You know, Peter Finch in Network telling everyone to scream out their window, “I’m as mad as hell and I’m not going to take this anymore!”
That’s how a peanut farmer from Georgia became president; it was a radical thing in 1976 to elect a candidate with no previous Washington experience. But the dysfunction continued, and by 1980, people were receptive to the message that government isn’t the solution, it’s the problem. (Never mind that government continued to grow like a weed and Reagan raised taxes 11 times; that’s a story for another day.)
But the zeitgeist now is very different. People don’t think government is the problem; it just needs someone to kick ass and take names.
“People compare Mr. Trump to Putin,” said a 50-something Trump supporter in Iowa last fall. “There’s something to be said about the man, who takes care of the Russian people.”
In what alternate universe is “taking care of the people” consistent with “limited government” or “individual rights”? Just askin’.
As for Trump’s vaunted “deal-making” ability, even the most dunderheaded conventional thinkers on both the left and the right have seen through it. “His view of the economy is entirely zero-sum — for Americans to win, others must lose.” (Ezra Klein at Vox). “He seems to view most of human life as a series of transactions and in the unsentimental, Darwinian universe he inhabits, the deals are always zero-sum.” (The Wall Street Journal editorial board.)
“What if our system of governance is so deep into the fabric of big government in the second decade of the 21st century that all the presidential candidates really believe that most voters actually want the government to care for them?” writes Andrew Napolitano in one of his occasional what-if Op-Eds.
“What if all major candidates in both major political parties promise a federal government that can right any wrong, regulate any behavior, tax any event, solve any problem and borrow unlimited amounts of money?”
We’ll wrap up today’s episode more or less where it began. Name one candidate who understands “the U.S. government exists at our sufferance, not the other way around.”
Crickets, we hear.
Act accordingly, we say.
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. We’re back tomorrow as usual with 5 Things You Need to Know — the easiest way to catch up on the week’s most important themes here in The 5 if you got busy and missed an episode or two.
U.S. markets are closed on Monday for Presidents Day, and we’ll take a short break. The weekday edition of The 5 returns on Tuesday.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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