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“If You Want To Get Rich…Climb Into A Time Machine”

Authored by Charles Hugh Smith via OfTwoMinds blog,

There's a profound difference between assets that produce no income and those that produce net income.

To those of us nutty enough to pore over dozens of pages of data on wealth and income in the U.S., the Federal Reserve's quarterly Z.1 reports and annual Survey of Consumer Finances (SCF) are treasure troves, as are I.R.S. tax and income reports.

Allow me to share a few observations on family wealth and income drawn from my review of these documents:

Changes in U.S. Family Finances from 2013 to 2016 (42 pages)

Financial Accounts of the United States (198 pages)

Corporate profits clock in at $2.135 trillion annually, around 11% of the nation's GDP (gross domestic product). (Page 10 of Z.1) This has changed very little over the past few years; corporate profits totaled $2.140 trillion in 2014.

Most people who follow financial matters closely probably know corporate profits have been around $2 trillion annually for awhile.

But how many know that proprietors' income from small businesses ($1.375 trillion) and rental income of persons--i.e. not corporations--($740 billion) together equal corporate profits? ($2.115 trillion for small biz/rentals, $2.135 trillion for corporate profits.

How many financially savvy people know that proprietors' income and private rental income rose by $189 billion since 2014, while corporate profits flatlined?

Clearly, the families that own the proprietorships and rentals pulling down $2.1 trillion in annual profits are doing a bit better than OK.

As the charts below reveal, most of this profitable business equity is owned by the top 10% of families. There are a few clues that suggest that family-owned business equity is distributed along a power-law curve, i.e. the majority of wealth and income is held by the top and the rest is distributed over the rest of the owners.

On Page 28 of the Survey of Consumer Finances (SCF), we find that the business equity owned by families in the bottom 50% of family incomes has a mean value of $208,000, up marginally from $204,000 in 2010, the business equity held by the top 10% of families rose from $2.265 million in 2010 to $3.3 million in 2016--a gain of over $1 million.

As always, I want to stress the profound difference between assets that produce no income and those that produce net income. This excludes hobby businesses that lose money or tax shelters that are intended to lose money. I'm talking about businesses that generate revenues in excess of all expenses: net profit that is taxable.

Owning a vacation home that is rented out a few weeks a year is one thing, owning a rental property that's rented out 50 weeks a year is considerably different. The first is an expense, the second generates net income.

Somewhat to my surprise, almost 14% of households own some residential property equity other than their primary residence (page 18 of the SCF). Unfortunately, the Fed lumps second homes and vacation properties in with rental properties of up to 4 units, while rentals with 5 or more units are lumped in with farmland and commercial properties in equity in nonresidential property.

Only 6% of households own any equity in nonresidential property, a category of wealth that gained 72% from 2013 to 2016. Interestingly, the percentage of families owning this form of wealth actually declined from 7.2% in 2013 to 6.2% in 2016, suggesting to me that the corporations and hedge funds snapping up multi-unit residential properties are buying properties from families.

Based on my previous surveys of I.R.S. income tax data, much of this small-business equity and family owned-rental property is owned by the top 4% to 5% of families, with the majority owned by the top 10%, as shown in the chart below.

The number of families with business equity has been declining, eroded by recession and stagnation, despite the recent bounce higher.

Most of the biz-equity is owned by the top 10%:

While the financial media focuses on billionaires and hedge fund managers playing for billions, much of the wealth and income of the nation is firmly in the hands of families that own proprietorships and rental properties.

These assets have risen sharply in value, and they've also generated gains in income.

If you want to get rich, you can climb into a time machine, return to 2010 and buy a couple thousand bitcoin for $1 each. Alternatively, you can marry extremely well. If neither of these options is available, then starting a profitable proprietorship that enables the purchase of rental properties is another option.

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If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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Republican Group That Helped Finance ‘Trump Dossier’ Revealed

In what will probably be remembered as a footnote in the Congressional inquiries into the credibility of the infamous "Trump dossier", the mysterious Republican anti-Trump group that retained opposition research firm Fusion GPS during the Republican primary has finally been revealed.

And surprisingly, it wasn't John McCain, the RNC or the Cruz campaign. It was...the Washington Free Beacon? The conservative website reportedly told a Congressional panel that it paid Fusion GPS to conduct opposition research on Trump during the primary, but asked it to stop in May 2016 when it became apparent that Trump would be the nominee. The DNC and Clinton campaigns, through lawyer Marc Elias, contracted Fusion to dig into Trump's background in April 2016, which is when the real work that led to the dossier's creation began.

The Free Beacon famously is funded in large part by New York hedge fund billionaire Paul Singer of Elliott Management Corp. Singer strongly opposed Trump during the primary. The conservative-leaning news website confirmed its relationship with Fusion in a post published Friday night. In the post, the Free Beacon explained that it had withdrawn its financial support before former British spy Christopher Steele was brought on to begin the research that led to the dossier. The Free Beacon also paid to fund opposition research into other candidates besides Trump.

Lawyers for the conservative publication Washington Free Beacon informed the House Intelligence Committee Friday that the organization was the original funder for the anti-Trump opposition research project with Fusion GPS.

The Free Beacon funded the project from the fall of 2015 through the spring of 2016, whereupon it withdrew funding and the project was picked up by the Democratic National Committee and the Hillary Clinton campaign.

The original arrangement between the Free Beacon and Fusion GPS involved opposition research into multiple Republican candidates, not just front-runner Donald Trump.

Sources close to the Free Beacon stress that the project, when the Free Beacon funded it, had nothing to do with Russia and did not involve Christopher Steele, the former British spy who gathered anti-Trump dirt in Russia. Steele was retained by Fusion GPS when the project was funded by Democrats, and not in its initial phase, when the Free Beacon was involved.

The Free Beacon has a history of employing so-called opposition research firms to assist in news articles critical of targets ranging from Mr. Trump to Mrs. Clinton, according to the New York Times.

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Rental Nation: Unique ‘Solution’ Emerges To Address Flood Of Off-Lease Vehicles…Lease Them Again

We've written frequently of late about the coming wave of off-lease vehicles that threatens to flood the used car market with excess supply, crush used car prices and simultaneously wreak havoc on the new car market as well. 
As we recently noted...

The post Rental Nation: Unique ‘Solution’ Emerges To Address Flood Of Off-Lease Vehicles…Lease Them Again appeared first on Forex news forex trade.

Frustrated Trump Urges State To Release Remaining Clinton Emails

More than nine months after the DOJ and a handful of Congressional committees launched probes into Russia's efforts to influence the election, President Donald Trump is finally pushing back by aiding Congressional Republicans' efforts to investigate the Clinton's Russia ties, which are as extensive than Trump's, if not more so.

Earlier this week, he reportedly ordered the Department of Justice to lift a gag order on an FBI informant, freeing him to testify before Congressional probes into the Obama-era Uranium One deal. And just minutes ago, CNN reported that the president has made it clear to the State Department that he wants to accelerate the release of any remaining Hillary Clinton emails in its possession as soon as possible.

The order comes as calls for the DOJ to appoint a special prosecutor to investigate the deal are growing following the revelation that the FBI had investigated possible corruption related to Russia's push to buy up uranium in North America, but neglected to inform Congress. That probe led to the arrest of a Russian who was head of the US-based subsidiary of Rosatom, a nuclear energy company backed by the Russian state. Three Congressional committees have launched investigations into the deal. The central question is whether Hillary Clinton and her husband entered into a quid pro quo whereby she voted in 2010 to approve the sale of 20% of US uranium supplies to Russia - and in returned received hundreds of millions of dollars for the Clinton foundation from entities with ties to the Russian government. Her husband also received a $500,000 speaking fee from a bank with ties to the Russian government.

The FBI's decision to release documents pertaining to the infamous "Trump dossier" also appears to be part of this wave of transparency. The sources described the President's interest in the release of the emails - and the testimony of the FBI informant - as rooted in a commitment to "transparency," with one source adding that "the law requires cooperation with Congress and the courts."

The White House actually started pressuring State to speed up the process earlier this year. So far, the department turned over to Judicial Watch, a government watchdog group, 1,617 pages of documents, including 97 email exchanges not previously disclosed, after being hit with a series of FOIA lawsuits, according to the Washington Examiner.

It's unclear how many more emails remain to be released.

Trump has reportedly expressed frustration with government agencies that have been slow in responding to requests for information that he believes should be public, especially given congressional and court-ordered requests for the information. One source also said this effort is not about any individual or any particular item of evidence. However, both the lifting of the gag order and the effort on the emails involve one political figure who happens to be the President's favorite target: Hillary Clinton.

And there's still a chance that more emails might be discovered. The State Department still has 40,000 pages of records - which may include emails sent by Clinton as secretary of state - that it needs to review for potential release. These documents were discovered by the FBI and handed over to the State Department over the summer as a result of its investigation of former Congressman and recently minted felon Anthony Weiner.

The State Department has already processed 32,000 pages of the records from Weiner's computers, according to Judicial Watch.

Of course, while Trump might boast about being transparent, his decision to kowtow to the CIA and delay the released of thousands of pages of files related to the JFK assasination would suggest otherwise. However, we wonder, what will Trump ask for next?

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