Private equity is one of the greediest forms of unregulated capitalism.  It deceives the public, misleads investors, and bribes politicians and regulators at the state, local, and national levels.  And that’s just for starters.

Private equity can harm businesses, restrict market access for individual investors, and, in the real estate market, distort the housing market, making it unaffordable for average people to buy a home.

This is old news.  However, like everything else that involves money and politics, private equity takes a long-term view and is not distorting or exploiting markets.

Many homeowners are receiving unsolicited phone calls from unidentified individuals asking if their homes are for sale.  They primarily come from private equity firms that offer cash and purchase homes on an as-is basis.  They will then modestly fix it up, list the house, or rent it at a high market value to recoup their investments.  They do this thousands of times a month, and soon homes are removed from the realm of local real estate firms and added to a private equity portfolio on a spreadsheet.

This decreases the available supply, raises prices and rents, and is another reason why housing is out of reach for so many buyers.

Private equity also distorts the stock market.  When a private equity firm acquires a public company and takes it private, it is delisted from the stock exchanges, and its financial information becomes inaccessible to the public.

What the public does see when this happens is that the operation of the firm acquired by private equity decreases. In restaurants, portion sizes shrink, ingredients are cut, staff size is reduced, service levels decline, and then consumers realize the restaurant is no longer appealing.  When this happens, lenders get stuck with significant debt, and investors suffer a loss.  Only the managers of the private equity firms make money, often from fees and other charges.

This is what happened to Payless ShoeSource, Sears, Red Lobster, Walgreens, Kmart, PetSmart, Party City, and Staples in the consumer sector.  Private equity has also expanded into the medical technology, healthcare, and even veterinary clinics, preschools, and funeral homes.

The best description of how they work, aside from the explanation given by Senator Elizabeth Warren in the attached video, is to watch the episodes of The Sopranos when the gang takes over a sporting goods store from its owner, who has huge gambling debts.  The owner first mortgages his house.  Then stops paying on it.

Soon, the episode shows the gang ordering massive amounts of sporting goods on credit, borrowing from anyone who does business with the store.  The unpaid bills pile up. One of the last scenes shows the owner sleeping on the store’s floor in a camping tent, with the store nearly empty.  In short, the Sopranos looted the business, victimized the owner and his employees, and the gang keeps all the money. As for the store’s owner, he loses everything.

That’s the private equity business model.

Corrupt Politicians Let Private Equity Into 401(k)s

Since the government accepts campaign contributions (bribes) from big business, private equity firms have given cash to allow their private equity funds to be included in the 401(k) plans of average, unsophisticated workers.

A recent decision by the US Department of Labor and the Biden administration to allow private equity funds into 401(k) plans is a significant benefit to major Wall Street investment companies, which will now enable investors to be exposed to high-fee, high-risk private equity funds.

In the latest setback for investors, the Biden administration’s Department of Labor (DOL) has reversed its earlier proposal to oppose the extension of private equity investment into 401(k) plans, now supporting it.

Biden earlier rejected this idea of allowing private equity into 401(k)s when Donald Trump proposed.  At that time, “Biden’s campaign criticized the Trump move,  that Biden “staunchly opposes regulatory changes that will lead to skyrocketing fees and diminished retirement security for savers. This regulatory action is another example of President Trump putting the interests of Wall Street ahead of American workers and families.”

But Biden was a weak leader, a corporate Democrat, with a massive ego.  He was ideal for a private equity attack.

The Fee Scam

Private equity, like banks and credit card companies, thrives on fees.

How much private fee income are we talking about?

One expert cited in the Daily Poster estimated these fees participants will pay to be near $13.7 million annually. To obtain the DOL’s approval, the Biden administration is rewarding the private equity industry for its significant campaign contributions. These came from a few private equity funds, but the largest was from the Blackstone Group, whose president, Steve Schwartzman, was a major donor to Trump and Biden.  Blackstone is the largest private equity firm in the US.

As noted in this article on this site, Bloomberg News found that Schwartzman, “the private equity mogul single-handedly accounts for the vast bulk of the reported contributions toward Trump’s re-election effort over the past 18 months from people associated with the 31 banks and investment firms that dominate the U.S. financial industry.”  His contributions alone amounted to $3.7 million of the $4.8 million from this group of private equity firms and banks.

As for Biden, the Daily Poster said, “Biden’s election bid was boosted by $350,000 worth of donations from top Blackstone executives to a super PAC backing his campaign. One of his top 2020 fundraisers was Jon Gray, the heir apparent to Blackstone CEO Steve Schwarzman (in the photo with Trump).

In all, Biden’s campaign raked in more than $3.8 million from donors at private equity and investment firms, according to OpenSecrets.”  Now, it appears that the Biden administration has appeased the private equity industry.

Revoke the Carried Interest Tax Loophole

Like other predatory capitalists in hedge funds and real estate development, not paying taxes is a huge part of their profitable business model.

Carried interest is an accounting provision that allows any profits earned by the general partner of a private investment fund to be treated as a long-term capital gain. These gains are taxed at a lower rate than ordinary income.It is also worth noting that this tax loophole was never enacted as a law. It was part of a revenue action issued by the Internal Revenue Service in 1993 and originally applied to real estate transactions.

According to Slate, the IRS tried to address when a piece of property was sold or traded in the future and determine how it would be taxed.  The IRS refers to this as a “realization event,” and if the transaction occurred more than a year after the real estate was acquired, the tax would be considered a long-term capital gain.  When carried interest was developed, hedge funds were not popular.

In this 2015 article posted here, Obama, like Biden, made campaign promises to close this tax loophole that favors private equity funds, hedge funds, and real estate developers. This carried interest loophole allows these hybrid financial firms to pay ordinary income tax rates on their compensation at the lower rate of 20%, as opposed to the higher rate associated with capital gains.Obama’s campaign pledge on tax reform was to close this loophole that the Obama administration said would raise $1 trillion over the next 10 years.

But Obama was never a reformer, a progressive, or a take-charge leader, and his administration eventually caved to the big donors.  Like the Clintons and Biden, Obama was a corporate Democrat, closer to a conservative Republican than the prominent reformer he pretended to be.

Taking Action at the Local Level

The best way to prevent the contagion of private equity is at the state and local level.  Petitions to local city councils, county boards, and state legislatures to avoid private equity takeovers would help maintain jobs, keep local businesses local, preserve the available housing supply for average buyers, and curb greedy firms from ravaging the local economy.

Eliminating the carried interest tax loophole would be possible with new Democratic and progressive leadership that does not accept bribes from private equity and hedge funds.  Without these reforms, the current “affordability crisis,” which is another way of talking about income redistribution and predatory capitalism, will ensure that the nation is run by corporations for generations to come.

This is a perfect description of the Democrat Party.

This aphorism works perfectly to describe the Democratic National Committee and all the other elite Democrat groups that have been mistakenly entrusted to get Democrats elected in every state over the past decade.

This hasn’t happened, and the evidence is obvious because neoliberals cannot accommodate democratic socialists.  The reason: the bedrock of liberalism is the protection of capital accumulation and capitalism.  At best, when neoliberal Democrats take power, their central accommodation to the protection of capitalism is regulation, however tepid, and temporary.  This is why liberals are anti-socialist, as socialists aim to alter the ownership of capital and the inequitable accumulation of wealth.

This is personified by the Democratic leaders who have run for national office over the past decades.

Reams of descriptions have been written about the perceived weak leadership of Joe Biden, Kamala Harris, Barack Obama, Hillary Clinton, Bill Clinton, Corey Booker, Chuck Schumer, Hakeem Jeffries, and numerous other senators. The deficiencies of all these top Democrats are evident to average party regulars outside the Beltway. Still, those deficiencies in decision-making, the lack of forcefulness against the dangerous MAGA enemy, the

appointments of weak Cabinet members (such as Merrick Garland, the worst AG in history), and catering to corporate donors have all resulted in a directionless, listless political party.

As recently as Oct. 7, 2025, Senator Chris Coons (D-DE) was asked on MSNBC what the Democrats need to do to regain power. This was a throwaway question, but Coons’ listless response was that the Dems have to explain what they are all about, and how they will benefit the American people.

This pathetic response from a veteran Senator aptly describes how the Democrat leadership is totally lost. Ten months into Trump’s second term (can you believe that Americans elected this criminal twice?), the Dems are still searching for an identity, even as Trump sends in armed ICE thugs and the National Guard into Blue cities, as a precursor for something much more ominous. At best, the Democrats today are a center-right party when their base is left and populist. This is a fatal disconnect.

As if to emphasize their powerlessness, the Dems have staged a filibuster that achieved nothing, and now have finally responded by shutting down the government, as their only way to show they have some power.

Clearly, the Dems need something new to show they are a viable party.  That’s why the top leadership of the DNC, along with its most visible leaders, must step aside to allow an open convention, enabling local candidates to gain national exposure for their respective local elections.  If a candidate wants to run as a democratic socialist in their state and meets specific voter strength criteria, the DNC should endorse and financially support them.

There is no longer a need for a corporate Democrat, neoliberal purity test, since it may have won elections, while at the same time losing grassroots backing. Many state, local, and national Democrats in office hold positions, but do not receive respect from their constituents.  That’s because they largely don’t stand for anything. They are placeholders for the minority whip, who are told how to vote and when. They do not lead on policy issues, even those that affect their districts.  This is why many struggle with fundraising.

It’s time for the DNC and its top leadership to recognize that following the corporate Democrat neoliberal policy test is a losing proposition.  If the DNC follows that pattern in the future, it will be too far right for the majority of Democrats, most of whom are trending younger and are being excluded from financial advancement.

The Democrats’ identity problems stem from their policy anchor in a neo-liberalism that favors privatization of functions provided by local and federal government, and converting them into profit-making entities that benefit corporations and their management and shareholders.

But the Democrats’ neoliberalism cannot reconcile with its loyal, liberal, average-American, working-class constituency. One study* found that 40% of Democrats are progressives, yet they are not represented in that proportion at the top levels of the DNC.

Instead, the top advisors, cabinet members, and major department heads reflect the neoliberal hold on the party and were chosen by the upper class of American society. For instance, in the Biden administration, 60%, or 30 members, in Biden’s list of appointees graduated or worked for one of the top 10 universities in the world.  Another 63% of Biden’s team were closely associated with four of the major Washington D.C. think tanks (the Council on Foreign Relations, the Brookings Institution, and the Carnegie Endowment).* These think tanks develop policies related to monopoly capitalism and economic and foreign policy decisions.

Time for the Class Consciousness Discussion

With the Dems trying to serve two masters at once—being the paragon of neoliberalism, yet putting on the populist mask—it’s no wonder they have trouble formulating even the most basic message that appeals to average Americans, many of whom live paycheck to paycheck.

The Democratic elite should drop “identity politics” and become more class-conscious.  They should stop pretending that class is not a factor in winning elections and that the U.S. has the largest wealth gap in its history. The MAGA Republicans know this.  They are not ashamed to say they cater to the Top 1%. At the same time, they feed the underclass   stories about shared prosperity, job protection, nationalism, forging a white society, and anything else their pollsters find to be attractive hooks.

Wealth Inequality in America

Remember that Donald Trump borrowed talking points from Democratic Socialist Bernie Sanders during the 2020 presidential campaign to attract younger voters with the economic benefits he promised to provide if he became president.

At the same time, Trump was borrowing Bernie Sanders’ talking points; his Democratic opponent’s campaign manager, Debbie Wasserman Schultz, considered Sanders more of an enemy than Trump.

Wasserman-Schultz wasted valuable time and money opposing Sanders, while Trump was never attacked as a fake democratic socialist.  Wasserman-Schultz was taking orders from Hillary Clinton and the top Democratic leaders.  She was merely protecting the neoliberal wing of the party.

That is one reason the Dems lost, especially since polls showed that Trump was wildly unpopular.

The DNC Forgets About Corporate Socialism

Finally, while the Dems are apoplectic about endorsing a democratic socialist for mayor of New York, they should mention that corporate socialism is as American as apple pie.

Corporations have readily accepted federal money since President Dwight Eisenhower identified the military-industrial complex in his famous 195X speech.  This marked the beginning of a concerted effort to fund the entire defense sector with federal dollars.  Federal subsidies are now common in agriculture, research, fossil fuel production, energy production, forestry, and high-tech industries.

The DNC and grass-roots Democrats should educate the public about corporate socialism and how it worked (in a pre-Trump period) to reduce costs on everything from Happy Meals to energy and autos.  Being a democratic socialist only means that these federal expenditures would be directed toward individuals, not the large corporations listed in this chart.  This would be uncomfortable for giant corporations and would be vigorously resisted, but this is to be expected.  Corporations are people (as the Supreme Court says), and powerful people never give up power without a fight.  No major social or political change has ever occurred without conflict, and in 2025 America, the same holds true.

For the DNC to talk about corporate socialism, it will also have to address its corporate, neoliberal controllers who have immense decision-making power behind the scenes. For people outside the Beltway, it looks like the reason the Dems are floundering at this dangerous time in history is that the neoliberals do not have the answers or guts to counter Trump.

To answer Trump, the Democratic leadership will have to renounce many of their neoliberal policies, including global domination and catering to the Top 1%, and focus on restructuring programs that benefit average Americans.  This requires a much broader approach than simply restoring Obama’s health care subsidies, but rather reforming the for-profit health care system, imposing a serious progressive tax structure, and implementing other policy planks that are publicized at every Democratic convention and then often discarded.

Naturally, taking power and the easy money opportunities (such as serving on boards, speaking and consulting fees, book deals, etc.) away from those in the elite levels of government never happens without a fight. This means the battle will come from the bottom up, not the top down. This explains why the DNC and the Democrats struggle to clearly define who they are and what they stand for as a party.  The reason is that the truth would not be palatable to the majority of average citizens who are Democrats.

*Monthly Review, Biden & the Council on Foreign Relations, by Lawrence H. Shoup, Vol. 73, No. 1, May 2021.

Since Trump wants to create America’s first oligopoly, here ARE the ETFs that would allow average people to cash in on the unprecedented corruption of the federal government

Since the financial services industry is always looking for new products, here is a suggestion for some Trump Oligarch ETFs (Exchange Traded Funds) that should attract average investors.

The Trump Oligarch ETF is based on underlying companies whose owners or top shareholders donated a minimum of $1 million to Trump’s presidential campaign.  In exchange for these donations, any astute multimillionaire would expect favorable treatment from the federal government for donating to Trump.

In return, the billionaire owners of these corporations should receive favorable regulatory treatments, tax breaks, immunity from antitrust investigations, more federal contracts, non-prosecution of labor, workplace OSHA, and environmental violations.

According to Forbes, “26 billionaires have already given more than $1 million apiece to pro-Trump PACs and committees.”  However, ten billionaires have privately held companies, so they cannot participate in the ETFs.

But that still leaves 16 companies for the ETF. The underlying companies’ ETFs are diversified in the following industries: casinos, finance, and oil and gas.

Even better, since Trump has a verified and solid record of bankrupting companies and making them worthless, the Trump Oligarch ETF would be managed by outside investment professionals, so it has an exponentially better chance of succeeding than if Trump had anything to do with it.  Plus, in the Trump administration, “greed is good,” and donors to Trump are well-known as being some of the greediest people in the Top 1% of Americans. That’s why they should benefit from the looting and receive the spoils of Trump’s presidency.

Now, as Trump reshapes America into an unregulated oligopoly as part of what the Marxists call “monopoly capitalism,” this last stage of capitalism will look like the Sodom and Gemorrah of financial engineering and elevate greed into the Republican Party’s new Golden Calf. Looking ahead, there will not be any safeguards against mergers and antitrust. This leaves entire industries to be consolidated as part of monopoly capitalism. 

As Matt Stoller has written in his newsletter, Big, “look for mergers in Comcast buying Charter, Exxon merging with Chevron, banks consolidating, and Amazon and Google once again going out and making large acquisitions. “the blatantly illegal LIV Golf-PGA Tour deal is going to move through, as long as Elon Musk is involved somehow.”  Others, such as Citigroup CEO Jane Fraser, said M&A activity will increase after Trump takes office. 

So what are these companies and their billionaire owners or top shareholders whose companies will benefit from the Trump spoils system?  Here is the list:

The Oligarch ETF Component Companies

Las Vegas Sands (NYSE: LVS).  Miriam Adelson, the widow of casino magnate Sheldon Adelson, donated about $200 million to Trump in his presidential bids in 2024 and 2020.  Miriam Edelson, a physician, now owns a majority stake in the LVS and the NBA’s Dallas Mavericks.  Adelson wants to convince Trump that Israel should annex the West Bank and Gazza Strip, which it looks like the Israelis have now begun.  Adelson’s contributions, along with those of the Republican Jewish Coalition, were very divisive for the American Jewish community, of which about 70% supported Kamala Harris. Trump owes Adelson, and she should be able to get whatever she asks for within her area of expertise, such as an ambassadorship.

World Wrestling Entertainment (“TKO”) donated $16 million to Trump groups, mainly through Linda McMahon (the wife of Vince McMahon).  Linda McMahon is a Trump loyalist. Forbes reported that she  “has been involved in politics for years, running unsuccessfully for Senate in Connecticut in 2010 and 2012 and then serving as head of the Small Business Administration under Trump. She’s still close to the center of the MAGA orbit, chairing the pro-Trump nonprofit America First Policy Institute, serving on the board of Truth Social’s parent company, Trump Media and Technology Group, and contributing more than $15 million to Trump’s PACs.” If you ever wondered why Trump rallies looked like professional wrestling spectacles, complete with the sideshow of cheap performers, McMahon provided the model for these political carnivals.   

Energy Transfer Energy Transfer L.P. (NYSE: E.T.).  Kelcy Warren’s company is best known for the highly controversial Dakota Access Pipeline, which Trump helped expedite in one of his first acts in office.  Warren donated $5.8 million to Trump.

Artificial Intelligence. AI is considered the most important technical advance since the invention of the printing press around 1440.  AI has several ways for investors to access this market, including via the chip side, generative AI, AI data and infrastructure, AI software, and AI services. Among the AI ETFs to look at are the iShares Future AI & Tech ETF, the iShares Innovation and Tech Active ETF, Xtrackers Artificial Intelligence and Big Data ETF (XAIX), Global X Artificial Intelligence & Technology ETF (AIQ), Global X Robotics & Artificial Intelligence ETF (BOTZ), Global X Data Center & Digital Infrastructure ETF (DTCR), and the Invesco AI and Next Gen Software ETF (IGPT).

Major Bank ETFs.  Global banks have the best intelligence on Trump’s tariffs, deals, and favorites but face interest rates and political risk.  If you want global bank exposure, look at these ETFs: Invesco KBW Bank ETF (KBWB), the SPDR S&P Bank ETF (KBE), and the First Trust Nasdaq Bank ETF (FTXO). iShares US Financial Services ETF (IYG): Tracks U.S. financial services companies, iShares U.S. Regional Banks ETF (IAT): Tracks U.S. regional banks, Financial Select Sector SPDR (XLF): Tracks central U.S. money center banks, including Bank of America, JPMorgan Chase, and Wells Fargo, Roundhill Big Bank ETF (BIGB): Tracks a handful of big-bank stocks, including Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo 

Intercontinental Exchange (NYSE-ICE).  Major Trump donors Jeff Sprecher and his wife, former Georgia Republican Senator Kelly Loeffler, donated about $5 million to Trump.  As noted on this site, Sprecher and Loeffler are the most corrupt public couple in public life. 

A series of articles on this site explain that Sprecher and his wife, a sitting Senator, were involved in an insider trading scandal as NYSE chairman, but they got away with it because of an outdated SEC rule. The fact that they got away with it must have impressed Trump, who can now do the same thing on a much larger scale.

Even better for Trump, Loeffler was involved in the Georgia vote-stealing scheme that failed to materialize.  That alone would prove her loyalty to Trump.  As expected, neither Loeffler nor Sprecher were ever prosecuted by the law.  This pattern will be much more evident in the new Trump administration.

Loeffler and the other senators accused of insider trading got their get-out-of-jail-free cards because 1) they were Senators, 2) they were both major Republican donors and 3) a controversial rule, Rule 10b5-1, that benefits members in Congress.  One of the hallmarks of the American legal system is that there are at least two systems of justice: rich vs. poor, and elected officials vs. average citizens.

According to attorney Patrick Daugherty, senior SEC partner at the Chicago law firm of Foley & Lardner, SEC Rule 10b5-1 says that “if you are a corporate insider, you can enter into a plan that will allow for shares to be sold at stated intervals in dollar amounts, according to an algorithm with the trades done in a certain way.  This means the corporate executives take themselves out of timing decisions about when to buy or sell.  They give control to an outside advisor or brokerage firm that is not communicating with them.”  That is the scheme.

What makes Sprecher’s donations worth watching is that ICE owns the New York Stock Exchange, a designated self-regulatory organization that has to report to the Securities and Exchange Commission (SEC).  The fact that Sprecher, the NYSE chairman, was connected to an insider trading scheme would be scandalous in another era, but not now.  Given the regulatory accountability of ICE, Sprecher’s significant donations to Trump and his anti-regulation policies will make the new head of the SEC a vital post in the deregulation world.  Sprecher should directly benefit from lax SEC oversight, including appointing a new, more lenient SEC chairman. 

Johnson & Johnson (JNJ).  Thanks to the $2.7 million in donations to Trump, Robert “Woody” Johnson has a right to ask for some favors.  Johnson has already cashed in some favor when Trump appointed him ambassador to the United Kingdom.  Johnson is also the owner of the New York Jets.

Charles Schwab (NYSE: SCHW).  The link to Schwab is J. Joe Ricketts, who donated $2 million to Trump. Rickets sold his brokerage firm to T.D. Ameritrade is now a subsidiary of Charles Schwab. Like Sprecher, Rickets has a direct regulatory relationship with the SEC, and whoever Trump picks to be SEC chairman will undoubtedly know which firms were major Trump donors. 

United Rentals, Inc. (NYSE-URI)   Don Ahern donated over $1 million to Trump and is a long-time supporter.  Ahern, with a net worth of about $1 billion, owns a firm that rents construction equipment.

Wynn Resorts Limited (NASDAQ: WYNN).  Steve Wynn donated $1.1 million to Trump and his various groups.  As Forbes reported, Wynn’s name is displayed on casinos in Vegas and Macau, but his ex-wife now controls the empire.

The Satellite Investments to the Oligarch ETF

Aside from the Oligarch ETF, some individual sectors and firms will benefit from the Trump right-wing agenda.  The Oligarch ETF can be combined with these particular companies or ETFs in defense, crypto, or energy.  This can be done via a core-satellite strategy, also known as core and explore, that uses a core portfolio holding  (the Oligarch ETF) complemented by satellite positions, often in other mutual funds or Exchange Traded Funds (ETFs), to meet specific client needs.

Here are individual companies that could be part of a satellite strategy for the Oligarch ETF:

Geo Group (GEO) is a large private prison firm that will benefit from the Trump anti-immigration and incarceration program. GEO is big with ICE (Immigration and Customs Enforcement) processing centers and USMS (U.S. Marshals Service) detention centers. Remember, each arrested immigrant is a few dollars in profit for GEO.

Coinbase Global (COIN)

Exxon Mobil (XOM)

Nucor (NUE)

JPMorgan Chase (JPM), a beneficiary of deregulation

Lockheed Martin (LMT)

The Private Equity Mafia Will Profit in Trump World

Private Equity, aka predatory capitalism, will have an outsized role in the Trump administration.  Their crucial man inside the Trump family is Musk, who could be named to head a group of outside special billionaire advisors in a think tank to severely reshape and cut the federal government’s budget and workforce numbers. 

This will be a technocrat’s dream.  Private equity people will use big data, A.I., libertarian philosophy, and a heavy reliance on automation and technology to replace people and programs with the next stage of big tech.  They could also use crypto, the world’s largest Ponzi scheme, to make federal payments and thus artificially boost the price of crypto. 

As discussed on the site many times, cryptocurrency only has a few purposes:

–To destabilize the Federal Reserve

–To launder money, secretly transfer funds, and pay gambling debts

–To scam other investors

— To evade paying taxes

Moreover, despite the hype, crypto is neither an asset class nor has any of the classic characteristics of an investable asset (price-driven financials, a dividend history, fair value, a time horizon to hold the investment, transparency).

But these are priorities for traditional investments. In the private equity world, crypto has another, as yet undisclosed purpose, known only to the people who control its origins, price direction, and liquidity. For these mysterious reasons, we expect crypto to be woven into Trump’s future policies. 

Since private equity is all about making money by cutting jobs, cutting costs, maintaining secrecy, and paying the most negligible taxes possible, these businesses will seamlessly transition into the Trump business world.  

Naturally, they will be investing in companies before the public knows what is happening so they can benefit from their big-brain ideas and make huge profits.  Ethics is not a core belief among the private equity crowd, so conflicts of interest, self-serving programs, and making more money will drive this group of outside Trump advisors.

Although the masses cannot invest in private equity firms since they are not qualified investors, they can watch as their government is reduced, jobs are cut, and the private equity firms decimate unions.  At the top of the list these people will attack is the US Postal Service.  The U.S. Post Office (created in 1775 by Ben Franklin) is America’s largest union. It could be privatized in favor of UPS and Federal Express and regional private mail and package delivery firms that have yet to be created.  Also, look for the privatization of airports, public harbor facilities, waterworks, and electric companies. 

Although Trump will work with many private equity firms to get their approvals, as well as a share of the profits, here are the leading people in this business who will have the inside track among the private equity firms:

Antonio Gracias, a co-investor and friend of Elon Musk, has donated about $1 million to Trump. As Musk’s protégé and owner of a private equity firm, Gracias is involved with Tesla, SpaceX, X Corp. (formerly Twitter), xAI, Neuralink, and The Boring Company.

Another private equity baron is Sequoia Capital executive Douglas Leone, who donated $1 million to Trump.  Leone is a long-time Trump supporter. He has a net worth of about $8 billion.

Individuals Who Made Big Contributions Will Benefit

The wealthy Republican donors to Trump are the stars of Wall Street. As such, they want to pay less taxes and be free of regulation and anti-trust threats.  Importantly, they all want the famed and profitable Carries Interest tax loophole to remain in place or, better yet, be expanded.

This controversial loophole benefits the hedge fund, private equity fund, and real estate businesses, aka the elements of predatory capitalism. The preferential tax treatment of carried interest reduces federal revenues, putting pressure on the federal budget.  Carried-interest-loophole graph “The Congressional Budget Office estimated that treating carried interest as ordinary income would raise $12 billion over ten years — including revenues from both individual income taxes and self-employment taxes,” according to the Peter G. Person Foundation.

Howard Lutnick (Cantor Fitzgerald, net worth $1.5 billion); the late Bernie Marcus (Home Depot, co-founder, net worth $8.6 billion); William Albert Ackman (net worth $9.3 billion); Stephen Schwarzman (co-founder of Blackstone, net worth $41 billion); Barry Sternlicht (Starwood Capital, net worth $3.8 billion); Steve Mnuchin  (former US Treasury Secretary); David Oliver Sacks, (co-founder of PayPal, net worth $1.7 billion); Larry Ellison (Oracle, net worth $31 billion); Paul Singer (Elliott Investment Management, net worth $6 billion); Leonard Blavatnik (Warner Music Group, net worth $31 billion); and Dr. Miriam Adelson (widow of Sheldon Adelson, with a net worth of $34 billion).  Adelson contributed $100 million to Trump’s campaign.   Cliff Asness  (AQR Capital Management), Paul Singer (Elliott Management), Harvey Golub (former Chairman, American Express Co.), Bruce Kovner (Caxton Alternative Management), Susan Lebovitz-Edelman (Edelman Family Foundation), Jay Lefkowitz (Kirkland & Ellis), Ben Horowitz, a partner in the prominent venture capital firm Andreessen Horowitz; Dan Loeb (Third Point), and Robert Rosenkranz (Delphi Capital Management)

Trump’s Role in the Shady Crypto World

The crypto industry was Trump’s largest corporate donor.  In exchange, Trump said he would make the U.S. “the crypto capital of the planet and the bitcoin superpower of the world, and we’ll get it done.”  The U.S.  and federal regulators, especially the SEC, have not been friendly to crypto because it has no financial purpose.  While its proponents say it is an “alternative investment,” there is no evidence that it is anything less than a Ponzi scheme.  Trump is no stranger to Ponzi schemes; his family has invested in crypto, and Trump himself has issued crypto gimmicks for donations.  As a crypto-friendly president, crypto is one more scheme he will push on the naïve American people.

While the crypto industry will try to capitalize on their significant donations, their primary beneficiaries could be Cameron and Tyler Winklevoss, who donated $1.3 million to Trump.  The brothers made their money by getting a $65 million settlement in 2008 from Facebook and its founder Mark Zuckerberg.  The Winklevoss brothers claimed they invented an earlier version of Facebook, which Zuckerberg stole from them.  The Winklevoss twins invested some settlement proceeds into Bitcoin and other crypto scams and founded the Cryptocurrency exchange Gemini.  

As part of the shady world of crypto, the brothers were forced “to return at least $1.1 billion to customers of its defunct lending program and pay a fine of $37 million for unsafe and unsound practices as part of a settlement with the New York Department of Financial Services.”  Since they are heavily involved in crypto, they are in touch with Musk.

Trump’s economic policies will affect wealth management, financial and retirement planning, average incomes, tax and trade policies, employment, and the quality of the labor market.

Here is the video.

Carville told campaign workers that the three issues facing Americans were health care, avoiding the same mistakes perpetuated by George Bush, and the economy.

About 32 years later, little has changed.  Today, the economic issue facing Americans is not the economy or inflation but something more insidious: income inequality.

Again, this is nothing new.

Income inequality has fluctuated since 1915, when the government began to track income inequality, and it has fluctuated since due to changes in inflation, unionization declines, economic shocks, and tax policies.  But since 2016, income inequality has been steadily increasing by almost any measure:

• The share of American adults living in middle-income households has decreased from 61% in 1971 to 51% in 2019. This downsizing has proceeded slowly since 1971, with each decade after that typically ending with a smaller share of adults living in middle-income households than at the beginning.
• CEO pay has skyrocketed by 1,460% since 1978. According to the Economic Policy Institute, CEOs were paid 399 times as much as a typical worker in 2021. 

This constant and widening wealth gap affects every aspect of America’s economic and political life.  It happens because of technological change, globalization, the decline of unions, and the eroding value of the minimum wage.  Most professional political pundits miss the political economy of the wealth gap, and for good reason.  The neoliberal political-economic problems are systemic; they question whether unregulated capitalism works.  It does not.

The wealth gap affects people’s political outlook, their faith in the U.S. democratic system, their future plans, and where they live.  A recent article in Bloomberg found that “the wealth gap between homeowners and renters has never been higher. In the past three decades, the average wealth of homeowners increased by almost $900,000. For renters, the increase is only by $56,000,” according to Saleah Mohsin.

Housing ownership only exaggerates the wealth gap between the haves and the have-nots.  Owning a home remains the most significant wealth creation engine in the U.S. Without ownership; families are stuck as renters on a treadmill of payments.

In the same article, Shaun Donovan, the secretary of Housing and Urban Development during the fallout of the 2008 financial crisis, said, “There’s plenty of data that shows that our economic mobility has slowed down and that moving up the economic ladder is harder and harder in the US. I’ve never seen the affordability crisis this bad.”

More Problems With Anti-Trust Enforcement

Antitrust regulation helps everyone participating in the economy, from small businesses to individuals who can shop around for better prices, services, and amenities from more innovative and aggressive suppliers for the best deals that fit their budget.

Buying from a few providers benefits the bog providers, not the average consumer.

This is evident in housing, food, medical services, and industry sectors that have become a limited source of sellers due to distortions created by private equity firms.  Institutional investors owned about 4% of the 15.1 million single-unit rental properties in the U.S. as of February 2024.  Worse,  CNBC claims that by 2030, institutional investors will own nearly 40% of the nation’s single-family rentals.

The income gap is possible through the lack of antitrust enforcement, monopoly tendencies in mature markets, and private equity firms that use speculative capital to target industries where private equity speculators see opportunities (private prisons, medical practices, technology, and healthcare.)

How Income Inequality Disrupt Everyday Life

In everyday life, American consumers now have to compete against organized business forces like private equity, whose primary purpose is to extract more profit from every business sector they consume.  Profit maximization creates a spiral of high prices even as the quality and level of services decline.

In housing, people looking to buy their first home or buy a more prominent house face dealing with corporate sellers whose primary goal is to increase prices and reject more offers because they have the backing to keep the house off the market for as long as they want until they get an offer that meets their price and target profit margin.  Private equity firms have become the country’s most prominent corporate landlords.  In 2023, private equity accounted for 44% of all flipped homes nationwide.

Private equity home purchases disrupt the buy-sell market since corporate, private equity sellers have deeper pockets and are not enticed to sell because the private equity corporation does not have a new job or expanding family to deal with.  That’s the problem when individuals are dealing with corporations versus another human family with more human considerations, such as let’s move before the new school year starts.  Private equity corporations couldn’t care less about these factors.

So, when voters say they are concerned about “the economy,” what do they mean?

It’s not only inflation, which originates in monopoly capitalism and “sticky prices.” It’s the more powerful impact of income inequality, disproportionate income distribution, and all the economic and political distortions it creates.

Corruption in the U.S. Supreme Court, politicians owned by corporations, lobbyists who write legislation at the state and federal levels, buying politicians, and pay-to-play access to political discussions are all part of income inequality.

The media ignores this because they cannot criticize the capitalist system or even begin to explain unregulated capitalism to regulated capitalism.  The American public is too ill-informed to understand the differences.  As detailed in this article, this sad fact has been verified in years of surveys and studies.

So, as Americans go to the polls, only the progressive Democrats led by progressive Senators Bernie Sanders and Elizabeth Warren have addressed the dangerous impact of the wealth gap.  Most mainstream politicians, including Democrats, avoid this discussion because they believe it is too contentious or would undermine confidence in the existing economic and political systems.

But that is precisely what is happening anyway.

The electorate is way ahead of the politicians.  The negative impact of income inequality explains why government at all levels is held in low esteem and why voters think too many politicians are corrupt or bow to bid donors.

All this verifies the point: It’s the wealth gap, stupid.

Address it and see the results.  Closing the gap will benefit 95% of all  Americans.

Wealthy, Elitist American Jews are now pushing their right-wing Republican, pro-Trump agendas, despite the fact that 80% of American Jews are democrats.  With friends like these, who needs enemies?

Rhetorical disputes and sometimes violent attacks between Jewish groups are not new in the 3,000-year-old history of the Jewish civilization.

From the wars during the periods of the united and divided monarchies of Israel and Judah (circa 1000-586 BCE) to the gun battles between Haganah and the Irgun in 1948, Jews have resorted to the entire range of actions, including violence, to settle disputes.

But the current presidential campaign by Donald Trump has re-ignited a new, modern political battle between American Jews that is as pointed and divisive as any in history.

The current war between the Jews is ideological and related to privilege, self-interests, and economic class.  This conflict is not especially religious.  It pits a numerically small number of Jewish billionaires who support Trump against the millions of American Jews, 80% of whom are Democrats.

It is also not primarily about the current state of Israeli politics.  However, support for the right-wing policies of the Netanyahu government plays a role for some donors; it is not the focal point of the dispute.

Instead, the new war between American Jews hinges on a handful of pro-Trump political action committees (PACs), think tanks and wealthy individual donors. These rich people are using their considerable contributions to push Trump into the presidency despite his long history of trafficking and entertaining white nationalists and pro-Nazi-groups.

Despite their wealth and college degrees, many of Trump’s Jewish supporters are only concerned with two issues: Israel and preserving their wealth. This includes maintaining tax loopholes, especially the carried interest tax break that primarily benefits hedge funds, private equity, and real estate developers. Another financial benefit is preserving estate planning tax breaks.

But the most significant future attraction for these wealthy Jewish Trump supporters is to benefit from Republican policies concerning the privatization of federal agencies and assets. This is how they will reap the politically connected billions of dollars. Putin rewarded the politically connected businessmen in Russia with this model. The oligarchs kicked back millions to Putin to get these coveted state agencies. This led to the creation of an oligarch class with Putin as its head, making Putin the wealthiest man in the world.

In the process, these wealthy Jews want to become America’s first oligarchs. Using their political positions buttressed by huge donations, they will be closest to the trough when Trump decides to sell favors, contracts, access, tax benefits (including the valuable carried interest tax loophole), and regulatory relief to the most favored donors if he becomes president.

Since cash is king in Trump’s world, being close to Trump through the donation pipeline will make the Jewish Republican billionaires into American oligarchs.  In the process, they will be working against the interests of their brethren as they ignore Trump’s favoritism to right-wing policies that victimize immigrants, the less fortunate, minorities, and women as he pushes a Christian-oriented conservative agenda. To become oligarchs, these wealthy people will have to be in bed with some disgusting people. 

Who Will Become American Oligarchs

The big donors’ names and affiliations with Republican Jewish groups, such as the Republican Jewish Coalition and Jewish Republicans of Nevada, are well-known.

At the individual level, the big donors come mainly from the world of finance (hedge funds, private equity, real estate development) and gambling.  These are regulated industries the billionaires must tolerate even though they restrain their money-making deal opportunities.  Trump is their man because he will cut regulations and through in the added favor of cutting taxes.

Plus, as Trump said during a meeting in April in Florida, he will be willing to kill regulations and offer tax benefits in exchange for $1 billion in donations to roll back environmental regulations for the oil and gas industry.  This blatant solicitation of favors in exchange for money is the fertile ground to create a new class of American oligarchs.

The wealthy Republican donors are the stars of Wall Street.  Howard Lutnick (Cantor Fitzgerald, net worth $1.5 billion); Bernie Marcus (Home Depot, co-founder, net worth $8.6 billion); William Albert Ackman (net worth $9.3 billion); Stephen Schwarzman (co-founder of Blackstone, net worth $41 billion); Barry Sternlicht (Starwood Capital, net worth $3.8 billion); Steve Mnuchin  (former US Treasury Secretary); David Oliver Sacks, (co-founder of PayPal, net worth $1.7 billion); Larry Ellison (Oracle, net worth $31 billion); Paul Singer (Elliott Investment Management, net worth $6 billion); Leonard Blavatnik (Warner Music Group, net worth $31 billion); and Dr. Miriam Adelson (widow of Sheldon Adelson, with a net worth of $34 billion).  Adelson said she will contribute $100 million to Trump’s campaign.

But there are more. The latest comes from the Manhattan Institute think tank comprised of libertarians and rich people who don’t want to pay taxes and embrace neoliberal causes, like private schools, no regulation, race, immigration, and gender policy.  As usual, many of these elitists are Jewish.  They include many hedge and private equity fund moguls, lawyers, and foundation heads. The list consists of Cliff Asness  (AQR Capital Management), Paul Singer (Elliott Management), Harvey Golub (former Chairman, American Express Co.), Bruce Kovner (Caxton Alternative Management), Susan Lebovitz-Edelman (Edelman Family Foundation), Jay Lefkowitz (Kirkland & Ellis), Ben Horowitz, a partner in the prominent venture capital firm Andreessen Horowitz; Dan Loeb (Third Point), and Robert Rosenkranz (Delphi Capital Management). As usual, they favor tax cuts for the wealthy and are against gun control. A Bloomberg article says Singer, the chairman of the Institute, has “attacked diversity, equity, and inclusion as dangerous left-wing woke-ism.”

According to Bloomberg, Jeff Yass, “Pennsylvania’s richest man,” opposes regulation and is a strict libertarian who hires professional gamblers for his hedge fund operation. Yass opens a new topic for discussion since he wants to make national gambling great again because, like most libertarians, he thinks he is more intelligent than others. Because of his deep pockets, he can stay longer in a card game to beat his opponents.

What do all of the wealthy American Jews have in common?

They want to dominate the 80% of American Jews who vote for Democrats and support candidates that favor liberal policies, many of which are in the Jewish tradition, as they push their right-wing Republican, pro-Trump agendas. With friends like these, who needs enemies?

Jewish Oligarchs in Russia

While the potential appointment of Jewish American oligarchs will open a new tawdry chapter in American Jewish history, there is a long list of Jewish oligarchs who have emerged from the turmoil in Russia to become some of the wealthiest people in the world.  But the price they paid is significant.

The Jewish Russian oligarchs owe their entire fortune to Vladimir Putin, who is reportedly the wealthiest person in the world but has naturally kept his fortune hidden as only a KGB agent can do.  Putin is reportedly close to Jewish billionaires Roman Abramovich and Lev Leviev.  But, all of the oligarchs operate at Putin’s whim, and if they fail to pay homage or make a required deposit, their lives will be in danger.

Russian oligarchs, like their American counterparts, are in industries re-assigned from Russian state properties to a portfolio of privileged, loyal individuals, regardless of their business knowledge.

The Russian Jewish oligarchs are:

1. Mikhail Khodorkovsky: Once Russia’s richest man, Khodorkovsky was the head of Yukos Oil Company. He was arrested in 2003 and spent several years in prison on charges widely viewed as politically motivated.
2. Roman Abramovich: Abramovich made his fortune in the oil industry, mainly through the Sibneft company, which he later sold to Gazprom. He also owns the Chelsea Football Club.
3. Leonid Nevzlin: A former Yukos executive and close associate of Mikhail Khodorkovsky, Nevzlin fled to Israel in 2003.
4. Boris Berezovsky: An influential political figure and businessman in the 1990s, Berezovsky was involved in various industries, including media and oil. He lived in exile in the UK from 2000 until he died in 2013.
5. Vladimir Gusinsky: Gusinsky was a prominent media executive who faced legal challenges and left Russia in the early 2000s, spending time in Israel and Spain.
6. Viktor Vekselberg: An aluminum and energy industrialist, Vekselberg is the chairman of Renova Group and is known for his extensive collection of Fabergé eggs.

While the established Russian and emerging American Jewish oligarchs came into their fortunes differently, they also have made significant cash contributions and engaged in philanthropy to their respective Jewish communities in Russia, the US, and Israel.

This puts a different light on their activities.  On the one hand, they do business with Putin and contribute to Trump, but they also have a charitable side or at least one that recognizes the tax benefits of philanthropy.

Billionaires Like Trump, Even Though Trump Works With Anti-Semites

The difference with the American oligarchs is that their support of Trump is visible at the same time Trump meets with white supremacists and nationalists, who do not hide their dislike of Jews.

This was dramatically played out during the early years of Trump’s presidency when two Jewish members of the Trump team left after Trump famously said there were good people” on both sides of the white nationalist rally that turned deadly in Charlottesville, Virginia, in 2017.

When Trump defended the Nazis at the rally Gary Cohn, then the Director of the National Economic Council, resigned in March 2018.  Cohn’s cover story was that he left over disagreements with Trump’s trade policies, particularly tariffs on steel and aluminum, but his later comments fleshed out the resignation story.

Similarly, Reed Cordish, an assistant to the president for intergovernmental and technology initiatives, resigned in February 2018.  Cordish’s departure was reportedly for personal reasons.  Still, it came amid a broader wave of resignations and departures from the administration and may have been tied to Trump’s defense of the white supremacists.

When Cohn left his position, he said, “Citizens standing up for equality and freedom can never be equated with white supremacists, neo-Nazis, and the KKK.  I believe this administration can and must do better in consistently and unequivocally condemning these groups and do everything we can to heal the deep divisions in our communities.”

Cohn added, “As a Jewish American, I will not allow neo-Nazis ranting ‘Jews will not replace us’ to cause this Jew to leave his job.”

These resignations were in contrast to the actions of other Jewish members of Trump’s administration, such as Steve Mneuchin, who defended Trump’s defense of the Charlottesville rioters.

When Good Jews Support Bad People

When wealthy people back a political leader, they do so for various reasons, which reflect their personal goals, personality flaws, political atmosphere, and conscience.

In the past, Jews have supported fascist dictators for reasons that historians say look untethered or naïve.  In Italy, a few wealthy Jews supported Benito Mussolini and his Fascist regime.  Aldo Finzi, a prominent Jewish lawyer and politician, was one of Mussolini’s earliest supporters.  He became a member of the Fascist Grand Council and held various governmental positions until his fall from grace in the mid-1920s.  Giorgio Del Vecchio, a philosopher and jurist, held academic and governmental positions under the Fascist regime.  Margherita Sarfatti, an art critic who was also Mussolini’s mistress, helped shape Fascist cultural policies.  She used her position to promote Italian art and culture in alignment with Fascist ideals.

In Germany, there were very few Jews or Jewish groups who Hitler fooled.  One exception was the small group, the Association of German National Jews (Verband nationaldeutscher Juden).  This organization was led by Max Naumann, who proposed that Jews should assimilate and show their loyalty to Germany, even under Nazi rule.  Naumann believed Jews could gain acceptance by showing their patriotism and loyalty to the nation.  This meant that German Jews should denounce any political ideology that conflicted with German nationalism, such as Zionism and Marxism.  The Nazis had a different opinion and rejected the idea that Jews could ever be Aryan Germans.

In 1935, the Nazis shut down the Association as part of their vicious campaign to eliminate Jewish influence and presence in Germany.  That same year, Naumann was arrested by the Gestapo and briefly imprisoned.  He was released, then re-arrested in 1939, and interned in Sachsenhausen concentration camp.  He was eventually released, but he died in May 1939, probably as a result of the treatment he received in the concentration camp.

Bad Comparisons Still Contain a Message

Of course, comparisons between the genocidal authoritarian.  Fascist movements that led to WWII do not apply to today, but sometimes well-meaning people get entangled with sociopaths for a variety of complex motives.

Trump’s history speaks for itself.  He embraces authoritarianism nationalism and encourages the erosion of democratic norms.  His associations with white supremacists are well known.  So, given all this, why would wealthy Jews contribute millions to his campaign?

Greed, avarice, ego, self-advancement, profiteering, and power are the engines of this membership.

But at the same time, some in this elite group have made very positive contributions through their philanthropy.  While some of this may be done for tax purposes, it also has a more extended history, even if it is unknown to the donors.  Talmudic law includes extensive discussions on the ethical and legal responsibilities of the wealthy toward the less fortunate.

These responsibilities are rooted in the broader Jewish legal and moral framework, which emphasizes justice (tzedek), kindness (chesed), and communal responsibility, including the responsibilities of the wealthy toward the larger Jewish community.

This includes the concept of arevut, which holds that all Jews are responsible for one another.  This principle is derived from the Talmudic teaching “Kol Yisrael arevim zeh bazeh,” which translates to “All of Israel are responsible for each other.” This has a double meaning in day-to-day life.  This mutual responsibility includes economic support, spiritual well-being, and protection from harm.

It also covers damaging the community’s reputation.  The idea of Shanda happens when Jews publicly violate the law and receive public condemnation and punishment.  Unfortunately, in the era of “greed is good,” many Jews have been convicted of white-collar crimes or flirted on the edge of bad business practices but have escaped legal punishment.

The Shanda stigma may seem archaic and outdated in modern society, where Jews comprise every level of political affiliation, religious observance, and lifestyle in a dispersed global contemporary society.  Still, as a totem of tribal affiliation, and regardless of religious identity and observance, the impact of public transgressions by individual Jews does not go unnoticed by the greater Jewish community.

Maybe that’s why one of the first questions asked in the afterlife is whether a person conducted their business faithfully (the Talmud, Shabbat 31a).  If Trump wins or loses, it looks like many wealthy Jews may be asked this question in the next world.

Hedge funds are the real “rootless cosmopolitans” who go anywhere where there are tax breaks, minimal regulations, and a luxurious lifestyle.

One of the biggest attractions of hedge funds since their inception in 1949 was that they could skirt many regulations and always love the “edge.”

The “edge” is a trading term meaning “the advantage.” That advantage comes in many forms, ranging from an informational advantage over the trading crown,  a leverage advantage,  the ability to trade faster than the competition, a talent advantage, a niche trading advantage, and the paramount advantages, a regulatory and tax-free or reduced tax advantage.

Trading is all about net profits, including the all-in trading costs. These can seem insignificant to average investors, but these trading costs add up when hedge funds trade in huge volumes on listed exchanges in shares, options, or currencies. Things like market impact (when a big trade moves the market against the trader because the market is too thin), clearing fees, trading costs, regulatory costs, and tracking errors all impact trading profits.

Hedge funds use the all-important measure of “alpha” as their measure of profit, or out-performance, compared to a benchmark. The textbooks define Alpha as an investment strategy’s ability to beat the market or its “edge.” Alpha is thus also often referred to as “excess return” or the “abnormal rate of return” about a benchmark when adjusted for risk.

So when a hedge fund seeks Alpha, it also must consider its risk. The goal is to reduce or eliminate as much risk as possible. Some of this risk is inherent in the global markets, and another source of risk comes from regulators and taxation. If hedge funds can reduce these artificial risks, they can maximize profits better.

Managing or Eliminating Regulatory Risk

To reduce tax and regulation risks, hedge funds lobbying groups and other political pressure groups in the financial services industry have developed the most aggressive and well-funded lobbying groups in Washington. Estimates say the financial services lobby (comprised of finance, insurance, and real estate)spent $609 million in 2022 that it deploys to curtail actions by the SEC, CFTC, taxation legislation, changes in real estate taxation, and the hated Consumer Protection Financial Board.

The financial services lobby has waged war against several landmark regulatory efforts that benefit average investors, pensioners, and 401(k) participants. These include the epic seven-year campaign against the Department of Labor’s enactment of fiduciary standards that would make self-dealing and conflicts-of-interest in selling and trading investments in pension and 401(k) plans violate DOL rules. The DOL rule specifically addresses excessive fees and expenses charged to pension and 401(k) plan investors.

When the DOL’s regulations (specifically 404 (a) (5) were implemented in 2012, the DOL said it would produce savings to investors of $15 billion by cutting fees and expenses. (Source: How 401(k) Fees Destroy Wealth and What Investors Can Do to Protect Themselves, by Chuck Epstein, 2012, page 63.)

The Scourge of Carried Interest

Since taxes are one of the biggest hits to bottom-line profitability, hedge funds, private equity, and real estate developers, which all exploit this loophole, have gone to great lengths to protect their tax advantages. The little-known carried interest tax loophole is the most significant benefit to hedge funds, private equity, and real estate.

This tax loophole allows these industries to evade paying their fair share of taxes in exchange for a very preferential tax rate. As a result, average taxpayers pay more taxes than the owners and investors in the billion-dollar hedge, private equity funds, and real estate developers.

CARRIED INTEREST DEFINED

Carried interest is a nerdy accounting term that allows private equity, real estate developers, and hedge fund managers “to mischaracterize their earnings as capital gains rather than income,” according to Patriotic Millionaires University. This group says private equity and hedge funds claim “they are in a ‘partnership’ with their investors, and their earnings should be classified as capital gains instead of income (because they’re investing their time and expertise into the firm).” But this is any small business’s exact definition of how they work. The big difference is that they pay a higher tax rate.

This category of firms loves this loophole since it allows their owners to reduce tax bills by about half. This happens because they are taxed at the much lower capital gains tax rate, just 20%, rather than the top income tax rate of 37%.

The loophole hits the federal tax collection purses hard, so it has attracted the attention of more populist politicians. In the 2020 presidential election, the sociopath Donald Trump rhetorically called for the loophole to be closed, although it was another blatant lie. In the 2012 presidential campaign, candidate Barack Obama criticized Republican candidate Mitt Romney for his profits from the carried interest loophole. He made a powerful argument that should be repeated today.

“How much Mr. Romney benefited from the carried-interest loophole could not be determined since he refused to release his tax returns before 2010. But as a former Bain Capital partner, he received substantial carried interest — 31 percent of his 2010 and 2011 income, The Boston Globe reported,” according to the New York Times. Having 31% of your total multi-million dollar income linked to the carried interest loophole is worth fighting for, and that’s precisely what the financial service lobbyists do daily.

Tax Freedom and Luxury in the Desert

But fighting to keep tax loopholes alive is a constant and expensive task. So hedge funds and other predatory capitalist businesses do what anyone else does when it gets tough: move to another country.

Enter Abu Dhabi, the capital of the United Arab Emirates, which sits off the mainland on an island in the Persian (Arabian) Gulf.  

According to a comprehensive article in Bloomberg News, over 100 high-powered financial trading firms have moved some staff to the capital of this desert nation. In the process, they have boosted office rents to a level comparable to London and New York.

“One in five of the world’s top 100 hedge funds now has an office in Dubai, while 10 out of 15 of the top-tier multi-strategy hedge fund platforms have a presence, according to industry tracker With Intelligence,” according to the Bloomberg article.

Accompanying the hedge funds has seen a rise in private jet use at the local airport, a surge in rents at luxury living spaces, and packed expensive restaurants. The article noted that people rent penthouses in the new waterfront development, where four- and five-bedroom apartments rent from about $9,000 to $11,000 a month. To keep the art crowd happy, Dubai has also reached a deal with the Louve and the Guggenheim to open art museums nationwide.

“People want to move to a place from a tax purpose that’s efficient, where the quality of life and connectivity is great,” said Arvind Ramamurthy, chief of market development at ADGM,” the Bloomberg article said.

But that’s an understatement. “UAE citizens and foreigners with residence visas are exempt from taxes on income, capital gains, gifts, inheritance, wealth, and luxury. When buying or selling property, individuals pay a property transfer tax,” according to PWC.

So, anyone working with hedge funds can get a residence visa and pay no taxes. As for corporations, the benefits are still huge. “Business activity in the United Arab Emirates will be subject to UAE CT at 9% where the total turnover from such business or business activity exceeds 1 million UAE dirham (AED). For this purpose, wages, personal investment income, and real estate investment income will not be considered for determining such turnover,” according to PWC.

Hedge Fund: Rootless Cosmopolitans Who Hate Taxes

So, as the world gets smaller and tax rates go higher in some localities, the best way to cut tax risk is to go to a friendly nation.

Now, Dubai offers significant tax relief. Pay less taxes in Dubai but enjoy all the benefits of the U.S. trading system infrastructure and deep, liquid markets. This gives new meaning to the old saying, “Take the money and run.”

While retirement planning for Millennials and Gen Y is expected to be more complicated than it was for earlier generations, there are some basic strategies to follow that can make it easier to boost retirement savings.  Here is your comprehensive checklist to follow to get more traction for your retirement planning.

Like other generations, Millennials are genuinely concerned about their retirement future. Millennials (people who are between the ages of 18 and 34), as well as Gen Y (people born in the 1980s to 1990s and are between ages 18 to 24) also are in an enviable position to prepare for a secure financial future since they have the earnings power now to generate sufficient wealth.

However, unlike other older generations, these two major age groups also have some larger financial burdens to bear, specifically higher debt loads due to college loans and credit card debt, and a lack of wage growth in their jobs.

According to The Project on Student Debt, while Millennials are facing a slowly improving job market, the bad news is that wages have remained relatively stagnant.  To complicate matters, Millennials have major financial burdens to face, such as rising student loan debt and rising rent prices. The Project study also found that college grads from the Class of 2013 have an average debt load of $28,400. This group also values its luxuries, including traveling and dining out at nice restaurants.

But there is also some good news.  Gen Y and Millennials are well-positioned to enhance their retirement plans since they are in, or entering, their peak earning years.

Here are some important tips to consider in your retirement planning:

Take Advantage of Compound Interest

None other than Albert Einstein called compound interest “the greatest mathematical discovery of all time.”   While the math may be complicated, the idea is simple: interest paid out over time is added to your principal contribution and then that interest is added to whatever your total contributions.  Here is an example: a $100,000 deposit that receives 5% simple interest would earn $50,000 in interest over 10 years.  (Simple interest is just an amount of money multiplied by the interest rate over a time period.)  Meanwhile, compound interest of 5% on $10,000 would amount to $62,889.46 over the same period, or a difference of $12,889, or about 25%, over the ten years.

The Benefits of Compounding: The Differences Are Significant Over Time*

*Assumes federal tax rate of 25%, state tax rate of 5% and an annual investment return of 4%.  Source:  www.investor.gov, U.S. Securities and Exchange Commission

The flip side of compound interest is also important.  For Millennials and Gen Y participants who accumulated student loan and credit card debt, compound interest can add just as significantly to your payment balances. It’s best to pay this off as soon as possible.  And while it is very difficult to balance the needs of contributing to a retirement account and paying off student or credit card debt, financial planners agree that reducing one balance while building the other is the safest way to go.

Contribute the Most You Can to a Roth  IRA

As this chart shows, there is probably nothing more dramatic than seeing the combined impact of saving on taxes on retirement contributions, combined with making regular contributions over time, than by looking at how money accumulates in a Roth  IRA. As demonstrated in the chart, investing in a Roth  IRA can make a significant difference in retirement savings. Since there are no tax deductions for contributions to a Roth  IRA, all future earnings are sheltered from taxes. The Roth IRA provides exceptional tax-free growth opportunities.

The Dramatic Benefits of Compounding in a Tax-Free Roth vs. Traditional IRA*

*Assumes single taxpayer, starting with a $0 balance, $5,000 annual Roth contributions made at the start of each year, the pre-retirement tax rate of 20.5; retirement tax rate of 16%%, and an annual investment return of 5%.  Source: http://www.interest.com/savings/calculators/Roth -ira-calculator/

Take Advantage of Funding an IRA

The maximum annual IRA contribution of $5,500 is unchanged for 2015. It is important to note that this is the maximum total contributed to all of your IRA accounts. The contribution limit increases with inflation in $500 increments. An annual change to the contribution limit only occurs if the cumulative effect of inflation since the last adjustment is $500 or more, according to Bankrate.com.

If you are 50 or older you get a break and can make an additional “catch-up” contribution of $1,000. This “catch-up” contribution amount of $1,000 remains unchanged for 2015. To qualify for this contribution, you have to turn 50 by the end of the year in which you are making the contribution.

Beware of High Fees on Mutual Funds and Other Investments

The most important is controlling the fees and expenses of any investment, such as mutual funds.  A recent study by S&P Dow Jones Indices found that 86% of active large-cap fund managers failed to beat their benchmarks in 2014, while almost 89% of those fund managers underperformed their benchmarks over the past five years and 82% did the same over the last decade.

These poor results for active fund management raise the question: Why do investors pay fees to active managers who try, and often fail, to outperform an index fund, when index funds have proven to be much cheaper?

No matter what the investment return to anyone’s portfolio, fees are always being charged.  Thigh fees have a very corrosive effect on any investor’s net return. For example, an investor with a $100,000 401(k) portfolio can pay a 1.5% management fee to an adviser and a 1.4% annual fund expense charge, handing over almost 3% of a portfolio in total expenses annually. Nobel Prize-winning finance professor Burton Malkiel estimated that, over time, fees of just 3% can devour up to 50% of an investor’s returns, as cited in the book, How 401(k) Fees Destroy Wealth and What Investors Can Do To Protect Themselves.

The importance of fees also was illustrated in a May 2015 New York Times article, which cited an audit of New York City pension accounts.  The audit found that over the past 10 years, five pension funds paid out over $2 billion in fees to money managers and “have received virtually nothing in return,” according to New York City Comptroller Scott M. Stringer. The audit covered funds with assets of almost $160 billion. The funds involved cover 715,000 city employees, including teachers, police officers and firefighters.

Maximize Your Retirement Fund Contributions

Maximizing your contributions to any retirement account, such as a 401(k) or Roth  IRA, is one proven strategy to build retirement wealth. This is especially important whether you are a business owner or employee. The combinations of tax benefits, matching contributions, and the power of compound interest over time are both excellent ways to capitalize on a tested method of preparing for retirement.

In 2015, the IRS increased the contribution limit to $18,000 to help reach your retirement savings goals. While the limits on the various tax-deferred retirement accounts are straightforward (as seen in the charts below), there are some exceptions for specific cases.

For instance, if you participate in a retirement plan at work, you can still make contributions to a Roth  IRA or traditional plan. However the IRS says “you might not be able to deduct all of your traditional IRA contributions if you or your spouse participates in another retirement plan at work.” The IRS also said that Roth  IRA contributions may be limited if your income exceeds a certain level.

There also are similar restrictions for persons who may have to pay taxes if they make contributions in excess of the contribution limits, for spousal IRAs, and for making contributions to a retirement account after age 70 ½. See the IRS web site for more specifics.

Consider Investing in Passively-Managed Mutual Funds and ETFs

In a low investment-return environment, investors should recognize that the one variable they can control is fees.  For example, a calculation in Forbes Magazine cited in a Department of Labor paper, showed the impact of high fees on two employees’ investments.  In the example, two employees each contribute the same amount annually into mutual funds. The funds each return 9% annually, but one has an expense ratio of 0.2% while the other has an expense ratio of 1.2%, a difference of 100 basis points, or 1%. At the end of 35 years, the less expensive fund has a balance 23% higher than the other.

Passively managed funds and exchange-traded funds (ETFs) that use indexes can significantly reduce your fees and improve your bottom line return.  You can find out the fees you’re paying for your 401(k) plan and get a projection of how much those fees may eat into your potential returns by logging on to Brightscope,  a site that rates 401(k) plans and offers free reports about fees on about 30,000 plans. You can also research your company’s 401(k) plan yourself by requesting the Summary Plan Description from the human resources department or plan administrator.  The SEC also has information on calculating mutual fund fees.

So, how do you know if your plan’s fees are too high? Christine Benz, director of personal finance for Morningstar, says investors should be on the lookout for 401(k) plans with administrative expenses above 0.5%.

Also, Benz points out that the average expense ratio for actively managed U.S. stock funds is 1.23%. The average expense ratio for stock index funds is 0.72%. And the average expense ratio for stock ETFs is 0.53%

Start a Roth  IRA for a Child

If you have maxed out your contribution limits to your retirement accounts and are in a solid financial position, here is another beneficial choice to consider: Make a gift to a young child by starting a ROTH. In this instance, if your son or granddaughter, for example, earns $1,000 being a lifeguard and would otherwise qualify, she could put $1,000 into a Roth  IRA. Alternately, if she saved half of what she made, you could gift a matching contribution for $500 to allow her to put the full $1,000 into the ROTH. Kids need to earn money if you are going to contribute to an IRA on their behalf. For the 2014 tax year, the limit for a Roth  IRA contribution for those under 50 is the lesser of the worker’s earnings or $5,500.

Consider Buying a House…If You Can

One of the best, time-tested methods of building wealth is by owning real estate.  In this category of asset ownership, the most common is buying a home.  Ownership allows you to build equity, access home equity loans, and over time, to do a reverse mortgage to take out the equity as you approach retirement.  While home prices fluctuate during recessions and are also much localized, home prices have appreciated since around 2000.  Buying a house requires a down payment, as well as money for closing costs, taxes, insurance, moving, and immediate improvements.  Still, it is a better alternative than renting and for building long-term wealth, if it can be done.

When to Retire, Where to Retire?

Most advice on retirement planning for Millennials and the Gen Y age groups focus on the basics of portfolio construction and other financial considerations.  But there is also another important aspect of retirement that only gets marginal coverage.  That aspect is happiness.  Various indexes, such as the World Happiness Report, now exist which measure the “happiest” nations on earth, as measured by factors such as stress, physical health, livability, job, and physical security.  Millennials and Gen Y groups can take advantage of these indexes to break out of the mold to find alternative places to retire outside of the U.S.

While extending retirement past age 65 does earn you greater Social Security benefits, it may require a longer working period than many people planned.  It may also require that you remain in a location that is no longer appealing.  This makes the options of retiring early, moving to a different state or nation more viable than ever. Yes, there are Social Security, federal tax, Medicare, and other health care access considerations, but expanding global internet access, including electronic funds transfers, affords more opportunities than ever to spend your later years elsewhere.

Take Action: 2015 Contribution Limits for Retirement Planning Accounts

Here are the 2015 IRS contribution limits for retirement savings accounts, including contribution limits for Roth , 401(k), 403(b), and most 457 plans.  (A 457 Plan is a non-qualified, deferred compensation arrangement created by state and local governments, tax-exempt governments and tax-exempt employers.) These charts also list the income limits for IRA contribution deductibility.

401(k), 403(b), and most 457 plans

Roth  and Traditional IRA contribution limits

Traditional IRA modified adjusted gross income (MAGI) limit for partial deductibility*

Roth  IRA modified adjusted gross income (MAGI) phase-out ranges*

 * MAGI is an amount used to determine a taxpayer’s IRA eligibility. Generally, it’s the taxpayer’s adjusted gross income calculated without certain deductions and exclusions.

For more information, visit the IRS page on retirement contribution limits.

A new report from the Organisation for Economic Co-operation and Development (OECD) finds “unprecedented wage stagnation.” Despite a more robust economy with record low unemployment rates and a far-reaching and controversial tax cut, the average wages of American workers have not budged since the late 1970s when “the average American has been stuck since the Reagan era in a predawn darkness of stagnation and inequality, and we still haven’t shaken it off,” according to Nicholas Kristof.

In a nutshell, the OECD report found:

“In June 2018, the OECD released a report titled “Inequalities in household wealth across OECD countries,” which examined the distribution of household wealth across 28 countries and it discovered that America is the number one in the world for financial inequality. About 10 percent of American households own 79% of all the wealth in the country. Meanwhile, the poor and middle class, about 60% of American households, only own 2.4% of the country’s wealth,” according to ProTrading Research.

How the wage stagnation happened is no mystery. Numerous financial policy think tanks and academics have produced scores of studies, but financial planners have ignored most of them. One typical explanation from the Economic Policy Institute (EPI) found that “abstract economic trends did not create wage stagnation for the vast majority.

Instead, wages were suppressed by policy choices made for those with the most income, wealth, and power. In the past few decades, the American economy generated lots of income and wealth that would have allowed substantial living standards gains for every family.”

How bad is income inequality in the U.S.? According to the EPI, “the unequal income growth since the late 1970s has brought the top 1 percent income share in the United States to near its 1928 peak.”

However, wage inequality also contributes to the retirement crisis worldwide. According to “The Changing Face of Retirement: the Aegon Retirement Readiness Survey 2013,” conducted by Aegon, the Transamerica Center for Retirement Studies, and Cicero Consulting, the Aegon Retirement Readiness Index of 12,000 individuals polled in 12 countries shows that only 12% “are optimistic that they will have sufficient financial resources in retirement. Only 20% claim to understand financial matters about effective retirement planning.”

Other statistics also paint a bleak picture:

• Nearly half of families “have no retirement account savings at all,” the EPI reported.
• A Bankrate Security Index survey found that  39% of survey respondents only have $1,000 in savings as an emergency fund.
• While the average American family has $95,776 in retirement savings, that number is inflated when you consider the median savings, or those at the 50th percentile, for all families in the U.S. is just $5,000. The median for families with some savings is $60,000,  according to the Economic Policy Institute.

As someone who has been covering the retirement industry since the 1970s, I have never seen a flurry of positive news stories saying the financial picture for retirees has greatly improved, especially since the decline of pensions, bad decisions made in 401(k) plans, accompanied by rising living expenses that erode the ability to save for retirement.

Wage Stagnation Is the Best Explanation for the Retirement Crisis

In addition to wage stagnation and income inequality in the U.S., pension experts continue to reiterate that there is a retirement crisis. To understand the depth of their predicament, more people approaching retirement have smaller accumulated savings, accompanied by poor knowledge of essential finances. While these warnings have been repeated to policymakers, employers, the retirement industry, and elected officials for decades, little has changed for the better.

It is time to consider this crisis a permanent fixture in American life. Worse, the financial services industry continues to offer the same tired advice as timid advisors, and their investment firms encourage people to start saving for retirement earlier, save more, or reduce expenditures even as many acknowledge that incomes have stagnated.

Many of these tired financial services industry recommendations confuse an expanding economy with the assumption that wages are rising. They also confuse a rising stock market with greater prosperity. Both are patently false. Financial advisors who ignore these facts as they continue to recommend products, even low-cost funds and ETFs, should seriously revamp their sales and recommendation approaches to include this new reality.

Advisors who are bothered by these issues should also push their firms to make a fundamental political shift towards a more equitable wage growth policy to reduce the world’s largest level of income inequality in the developed world. However, this is not part of the corporate and economic worldview that considers the “unprecedented wage stagnation” a “structural problem” in economic jargon, not a political or social one. It is part of the rise in corporatism and neoliberalism worldwide.

The financial services industry is one of Washington’s most significant lobbying forces. As such, it uses its money to lobby against the interests of its clients. Something fundamentally wrong with that has been going on for decades even as the industry continues to oppose the DOL’s fiduciary standard. In contrast, some global firms continue victimizing their clients by selling look-alike, high-fee products or blatantly falsifying new account applications.

If the industry continues to promote income inequality and the subsequent retirement crisis through its inaction, other political forces can come into play. As Brendan Greeley, editor of Financial Time Alphaville, said in a CNBC interview (July 17, 2018), “It is hard to talk about wage stagnation without sounding like Karl Marx.” Now, that is something the financial industry should seriously ponder.

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But whatever the payout, it is clear that the winner will be paying more in taxes than some of the nation’s largest corporations.

What is wrong with this picture?

According to MSN.com, based on a Power Ball jackpot of $1.4 billion, if the winner takes a lump-sum distribution (as opposed to the alternative: a 29-year annuity), the winner will be paid $868 million. Now, depending on how the winner chooses to take their money, they can choose the annuity option, but if they die before collecting the full amount, the present value of the remaining payments becomes part of their taxable estate for federal estate tax purposes. “The first $5.45 million (indexed for inflation in future years) will be sheltered by your federal estate tax exemption, but anything in excess of that amount will be taxed at a 40% rate,” MSN said.

Since all lottery jackpots are fully taxable and jumbo jackpots are taxed at the maximum federal rate of 39.6%, the federal income tax hit would approach $344 million, (assuming an $868 million win.) Federal income tax is automatically withheld from any lottery prize, but only at a 25% rate. So on an $868 million payout, you would still owe the federal government almost $127 million, according to Marketwatch.

While this amount can be reduced if the winner lives in a state with a low tax rate (Nevada, Texas or Florida), but it’s safe to assume this will approximate the winner’s tax bite.

Corporations That Do Not Pay Taxes

While that certainly is a lot of money, it is more than what 20 of America’s top corporations paid in federal taxes in the second quarter of 2014, according to CBS Marketwatch.

This number is comprised of “20 companies in the Standard & Poor’s 500, including drug maker Merck (MRK), computer storage company Seagate (STX) and automaker General Motors (GM), which reported effective tax rates of 0% or lower in the second calendar quarter despite reporting a profit during the period, according to a USA TODAY analysis of data from S&P Capital IQ,” according to the site.

Here is a list of the companies that paid no taxes in 2Q 2014:

So what’s the moral of this story?

While the media is rightfully agog over the huge amount of money to be won at random, it has failed to note that the tax structure of this country is slanted against average Americans. This is a gross oversight at any time, but is especially worse during an election year when such injustices can be corrected.

The reality is that the average American (the one who randomly won the Power Ball) assumes too much of the tax burden than the nation’s largest corporations that regularly make the tax rules.

But we can be sure that if an American corporation won the big lotto prize (after all, corporations are people, too) they would not pay anywhere near the amount the average citizen is paying. After all, those are the corporate rules made by the corporations.