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Piketty Is Rickety On Government Complicity

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French economist Thomas Piketty’s book on inequality – Capital in the Twenty-First Century – has gone completely viral.

Mainstream economists like Paul Krugman and Joseph Stiglitz endorse it.   So does Economist magazine.  The Financial Times and New York magazine both call him a ”rock star economist”.

Slate notes:

While recently passing through D.C., he took a little time to meet with Treasury Secretary Jack Lew, the Council of Economic Advisers, and the IMF. Even Morning Joe, never exactly on the leading edge of ideas journalism, ran a segment about Capital Tuesday morning.

Is Piketty right or wrong about inequality, its causes and the prescription for addressing inequality?

Piketty Is Right about Inequality

We noted in 2010 that extreme inequality helped cause the Great Depression … and the 2008 financial crisis.  We noted in 2011 that inequality helped cause the fall of the Roman Empire.

In a few short years, mainstream economists have gone from assuming that inequality doesn’t matter, to realizing that runaway inequality cripples the economy.

Pikettey correctly notes that inequality is now the worst in world history … and will only get worse.

Asset Prices Rise Faster than Wages

Piketty argues that the main cause for inequality is that the rate of return on capital – land, natural resources, stocks, bonds and other assets – is far higher than the growth rate of the economy:

Because the growth rate is much slower than the rate of profit from holding capital assets, the asset-holders’ wealth increases much faster than the wealth of workers. In other words, working stiffs can’t keep up with those who make their money from investing in (and seeking rent from) land, stocks, bonds and other assets.

Piketty – a rigorous data researcher – is probably right that this is one of the main causes of inequality.

Government and Central Bank Policy Is What Is Making Assets Soar and the Economy Sink

But Piketty underplays the fact that bad government and central bank policy have greatly widened the gap between growth rate. After all, Fed chairman Bernanke, Treasury Secretary Geithner and chief economist Summer’s entire strategy was to artificially prop up asset prices – including the stock market – and see this, this, this and this.

At the same time, government policy has harmed the general economy, caused unemployment and hurt the average American.

Indeed, real wages have actually plummeted since 1969, and most of the new jobs that have been created are part times jobs with no benefit.

In other words, bad government and central bank policy have made the rate of return on capital much higher … but lowered wages.  As such, bad policy is the core cause of the recent increase in inequality.

Nobel economist Joseph Stiglitz said in 2009 that the government’s toxic asset plan – a scheme to inflate the value of assets held by banks – “amounts to robbery of the American people”.

Bailouts Feather the Nests of the Fatcats, While Doing Nothing for the Average American

The American government’s top official in charge of the bank bailouts writes:

Americans should lose faith in their government. They should deplore the captured politicians and regulators who distributed tax dollars to the banks without insisting that they be accountable. The American people should be revolted by a financial system that rewards failure and protects those who drove it to the point of collapse and will undoubtedly do so again.

 

Only with this appropriate and justified rage can we hope for the type of reform that will one day break our system free from the corrupting grasp of the megabanks.

What’s he talking about?

Well, the Fed threw money at “several billionaires and tens of multi-millionaires”, including billionaire businessman H. Wayne Huizenga, billionaire Michael Dell of Dell computer, billionaire hedge fund manager John Paulson, billionaire private equity honcho J. Christopher Flowers, and the wife of Morgan Stanley CEO John Mack

And the bank bailouts weren’t a one-time thing in 2008.  The government has been – continuously and massively – been bailout out the big banks for the last 6 years.

Indeed, virtually all of the banks profits comes from government bailouts.  A top banking analyst estimates that subsidies to the giant banks exceeds $780 billion dollars each year.

A study of 124 banking crises by the International Monetary Fund found that bailing out banks which are only pretending to be solvent  – like most of the big American banksharms the economy.  So growth is slowed, while the richest fatcat bankers rake in the dough.

Indeed, the bailout money is just going to line the pockets of the wealthy, instead of helping to stabilize the economy or even the companies receiving the bailouts:

  • A lot of the bailout money is going to the failing companies’ shareholders
  • Indeed, a leading progressive economist says that the true purpose of the bank rescue plans is “a massive redistribution of wealth to the bank shareholders and their top executives”

(Top economists, financial experts and bankers say that the big banks are too large … and their very size is threatening the economy. They say we need to break up the big banks to stabilize the economy.

If we stop bailing out the Wall Street welfare queens, the big banks would focus more on traditional lending and less on speculative casino gambling. Indeed, if we break up the big banks, it will increase the ability of smaller banks to make loans to Main Street, which will level the playing field.

We’re all for forcibly breaking them up. But we don’t even have to use government power to break up the banks … the big banks would fail on their own if the government just stopped bailing them out.)

QE: the Greatest Wealth Transfer in History

It’s been known for some time that quantitative easing (QE) increases inequality (and see this and this.)  Many economists have said that QE quantitative easing benefits the rich, and hurts the little guy.   3 academic studies – and the architect of Japan’s quantitative easing program – all say that QE isn’t helping the American economy.

The Federal Reserve official responsible for implementing $1.25 trillion of quantitative easing has confirmed that QE is just a massive bailout for the rich:

I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.

 

***

 

Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank’s bond purchases had been an absolute coup for Wall Street. The banks hadn’t just benefited from the lower cost of making loans. They’d also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed’s QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.

 

You’d think the Fed would have finally stopped to question the wisdom of QE. Think again. Only a few months later—after a 14% drop in the U.S. stock market and renewed weakening in the banking sector—the Fed announced a new round of bond buying: QE2. Germany’s finance minister, Wolfgang Schäuble, immediately called the decision “clueless.”

 

That was when I realized the Fed had lost any remaining ability to think independently from Wall Street.

Even the president of the Federal Reserve Bank of Dallas said that Fed’s Fisher said that “QE was a massive gift intended to boost wealth.”

Billionaires have admitted that they are the beneficiaries of QE. For example, billionaire hedge fund manager Stanley Druckenmiller said the following about QE:

This is fantastic for every rich person,” he said Thursday, a day after the Fed’s stunning decision to delay tightening its monetary policy. “This is the biggest redistribution of wealth from the middle class and the poor to the rich ever.

 

“Who owns assets—the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday.”

 

Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed’s policy is that the rich will spend their wealth and create jobs—essentially betting on “trickle-down economics.”

 

“I mean, maybe this trickle-down monetary policy that gives money to billionaires and hopefully we go spend it is going to work,” he said. “But it hasn’t worked for five years.”

And Donald Trump said:

“People like me will benefit from this.”

Economics professor Randall Wray writes:

Thieves … took over the whole economy and the political system lock, stock, and barrel. They didn’t just blow up finance, they oversaw the swiftest transfer of wealth to the very top the world has ever seen.

Economics professor Michael Hudson says that the big banks are trying to make us all serfs.

Economics professor Steve Keen says:

“This is the biggest transfer of wealth in history”, as the giant banks have handed their toxic debts from fraudulent activities to the countries and their people.

Money “Creation” Stuffs Bankers’ Pockets with Money

The advent of central banks hasn’t changed this formula. Specifically, the big banks (“primary dealers”) loan money to the Fed, and charge interest for the loan.

the banking system is founded upon the counter-intuitive but indisputable fact that banks create loans first, and then create deposits later.

In other words, virtually all money is actually created as debt. For example, in a hearing held on September 30, 1941 in the House Committee on Banking and Currency, the Chairman of the Federal Reserve (Mariner S. Eccles) said:

That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.

And Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, said:

If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.

Debt (from the borrower’s perspective) owed to banks is profit and income from the bank’s perspective. In other words, banks are in the business of creating more debt … i.e. finding more people who want to borrow larger sums.

Debt is central to our banking system. Indeed, Federal Reserve chairman Greenspan was so worried that the U.S. would pay off it’s debt, that he suggested tax cuts for the wealthy to increase the debt.

The big banks (“primary dealers”) loan money to the Fed, and charge interest for the loan. This is in contrast to what the Founding Fathers intended, and a massive redistribution of wealth … unnecessarily transferring extra money on every loan to the big primary dealers.

Lawlessness Is a Core Cause of Inequality

Joe Stiglitz said:

Inequality is not inevitable. It is not … like the weather, something that just happens to us. It is not the result of the laws of nature or the laws of economics. Rather, it is something that we create, by our policies, by what we do.

 

We created this inequality—chose it, really—with [bad] laws

Conservative Ron Paul points out that the system is rigged for the rich and against the poor and the middle class:

 

We asked the top regulator and prosecutor during the S&L crisis, who obtained over 1,000 felony convictions for major white collar fraud – professor of law and economics, Bill Black – what are the core causes of inequality. Professor Black told Washington’s Blog:

The industry that is the largest single driver of surging income inequality is finance. Finance dramatically increases inequality through three primary means. The obvious means is the massive flow of profits out of the productive sector and into finance, particularly compensation for finance elites. We know that a very large amount of that compensation is the product of the “sure thing” of accounting control fraud. They have been able to lead the fraud epidemics with absolute impunity. No Wall Street elite officer who led the frauds that caused the crisis has ever been prosecuted. [Background.] There are virtually no cases of “claw backs” from the C-suite perpetrators’ compensation even when it is now inescapable that the “income” they reported to “earn” their bonuses were lies and they were actually creating horrific losses.

 

The second means is that the three most destructive epidemics of financial fraud in history caused our financial crisis and hyper-inflated the bubble. This too was a “sure thing” because of the fraud “recipe.” The household sector’s wealth loss was over $11 trillion. Over 10 million Americans lost their jobs. The productivity loss is estimated at over $21 trillion. Each of these actions caused a vast loss of wealth suffered disproportionately by the 99%.

 

Third, finance, even absent fraud, is a major cause of increasing inequality. It is the means of tax evasion, which is (in $ terms) a crime that is all about the 1%, hedge funds, and large corporations. It is also the means, and the excuse, for outsourcing American jobs in the productive sector and extorting domestic tax giveaways by putting U.S. states and cities in competition to induce them to locate in a particular city.

 

In the savings and loan debacle we sought to remove all the proceeds of fraud from the guilty elites.

Indeed, the big banks continue to manipulate every market and commit crime after crime and … and profit handsomely from it, while law-abiding citizens slide further and further behind.

Yet Obama is prosecuting fewer financial crimes than Bush, or his father, or Ronald Reagan.  Indeed, the government has actively covered up for – and encouragedcriminal fraud.

Indeed, there are two systems of justice in Americaone for the big banks and other fatcats, and one for everyone else.

Holding the little guy to the letter of the law – while letting the fatcats run around immune to the law - is making inequality much worse.

Black points out that we should claw back ill-gotten gains from criminals under well-established fraud principles.  Specifically, the government could use existing laws to force ill-gotten gains to be disgorged (see this and this) and fraudulent transfers to be voided.

Economist Michael Hudson also criticizes Piketty for failing to address crime and fraud as core causes of inequality:

The other thing that is left out of the income tax statistics is of course how fortunes are really made, and that’s crime and fraud. The good thing about Piketty is he points out, why is it that French novelists and English novelists tell you much more about wealth than economics? And he points out that in the 19th century novels by Jane Austen and Balzac, the way to make a fortune is to marry into it. That’s true, but what Balzac also said is that behind every fortune is a great theft.

Government Subsidies to the Biggest Fatcats

The government shovels mass quantities of money to giant corporations through direct and indirect subsidies.

This includes subsidies to:

Why You’re Paying Too Much In Taxes Today: Because the Ultra-Rich Pay Nothing … Or Get Tax Refunds

The big boys use loopholes – including claiming their profits in foreign countries – to pay little or no taxes .. or to get tax refunds.

The middle class gets saddled with a heavier tax burden because the richest avoid taxes.

Government Creation of Monopolies

Wikipedia notes:

A better explainer of growing inequality, according to Stiglitz, is the use of political power generated by wealth by certain groups to shape government policies financially beneficial to them. This process, known to economists as rent-seeking, brings income not from creation of wealth but from “grabbing a larger share of the wealth that would otherwise have been produced without their effort”

 

Rent seeking is often thought to be the province of societies with weak institutions and weak rule of law, but Stiglitz believes there is no shortage of it in developed societies such as the United States. Examples of rent seeking leading to inequality include

  • the obtaining of public resources by “rent-collectors” at below market prices (such as granting public land to railroads, or selling mineral resources for a nominal price in the US),
  • selling services and products to the public at above market prices (medicare drug benefit in the US that prohibits government from negotiating prices of drugs with the drug companies, costing the US government an estimated $50 billion or more per year),
  • securing government tolerance of monopoly power (The richest person in the world in 2011, Carlos Slim, controlled Mexico’s newly privatized telecommunication industry).

(Background here, here and here.)

Stiglitz says:

One big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy …. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end.

Government creates monopolies even in the U.S. (and see below regarding government creation of the too big to fail banks.)

War Makes Us Poor … But Makes Fatcats Richer Quicker

War makes the bankers and executives in defense companies rich.

But – contrary to a long-standing myth – it makes the rest of us poor.

As such, war is a major cause of inequality.

Over-Financialization

When a country’s finance sector becomes too large finance, inequality rises. As Wikipedia notes:

[Economics professor] Jamie Galbraith argues that countries with larger financial sectors have greater inequality, and the link is not an accident.

Government policy has been encouraging the growth of the financial sector for decades:

http://2.bp.blogspot.com/-2DxXTVc4xnc/USfwvMBlO-I/AAAAAAAAB_Y/a1dyx_5U5Hs/s1600/financial+and+nonfinancial+sectors+-+compensation+Les+Leopold.jpg

And see this.

Economist Steve Keen has also shown that “a sustainable level of bank profits appears to be about 1% of GDP”, and that higher bank profits leads to a ponzi economy and a depression.

The government is largely responsible for this over-financialization. For example, MIT economics professor and former IMF chief economist Simon Johnson points out that the government created the giant banks, and they were not the product of free market competition.

Inequality Started Soaring When Nixon Took Us Off the Gold Standard

The New York Sun notes that inequality started soaring in 1971 … the same year that Nixon took the U.S. off of the gold standard. The Sun shows the following chart from Piketty’s book:

Zero Hedge emphasizes the inflection point:

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/04-overflow/20140422_piketty.png

Money Being Sucked Out of the U.S. Economy … But Big Bucks Are Being Made Abroad

Part of the widening gap is due to the fact that most American companies’ profits are driven by foreign sales and foreign workers. As AP noted in 2010:

Corporate profits are up. Stock prices are up. So why isn’t anyone hiring?

Actually, many American companies are — just maybe not in your town. They’re hiring overseas, where sales are surging and the pipeline of orders is fat.

 

***

 

The trend helps explain why unemployment remains high in the United States, edging up to 9.8% last month, even though companies are performing well: All but 4% of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.

 

But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9%, says Robert Scott, the institute’s senior international economist.

 

“There’s a huge difference between what is good for American companies versus what is good for the American economy,” says Scott.

 

***

 

Many of the products being made overseas aren’t coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.

Government policy has accelerated the growing inequality. It has encouraged American companies to move their facilities, resources and paychecks abroad. And some of the biggest companies in America have a negative tax rate … that is, not only do they pay no taxes, but they actually get tax refunds.

(And a large percentage of the bailouts actually went to foreign banks (and see this). And so did a huge portion of the money from quantitative easing. More here and here.)

Conclusion: Piketty Is Rickety On Government Complicity

The bottom line is that Piketty has done a great job of documenting the extent of inequality, and some of its causes.  But he misses the degree to which bad government and central bank policy is responsible.

 

 

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Tue, 04/29/2014 - 06:02 | 4706900 AdvancingTime
AdvancingTime's picture

Our investment world is built on a foundation of faith and trust, if that begins to crack or crumble, real problems quickly form. People quickly forget how an economy grinds to a halt when suppliers or factories refuse to ship without securing "payment up-front". Unfortunately much of what we see and are told is a lie, and that is a fact, remember MF Global and Enron.

If a market move occurs fast, most investors can not react and are left holding the bag at the bottom, these same investors then act as a roadblock to a market rebounding. If they loose faith and become disillusioned they often dump their stock over a period of years and at the sign of any rally. The financial crisis that began in 2007 also seems to indicate a fundamental flaw at the heart of the consumer society, the flaw being its emphasis on debt-propelled retail therapy. More on this subject in the article below

http://brucewilds.blogspot.com/2013/03/central-banks-can-only-do-so-much...

Mon, 04/28/2014 - 23:19 | 4706426 ableman28
ableman28's picture

There goes that socialist Obama again, making sure the rich get richer.  He can't even get socialism right.

Mon, 04/28/2014 - 22:10 | 4706254 the grateful un...
the grateful unemployed's picture

i wish everyone would quit talking about the redistribution of wealth, there is no plan to distribute wealth in the first place

Mon, 04/28/2014 - 21:14 | 4706064 AdvancingTime
AdvancingTime's picture

The Bank for International Settlements (BIS) said in the middle of 2013 that banks have done their bit to help economic recovery and now it is time for governments to do more. This means that governments must take responsibility for their economic policies and responsibility for how these policies effect the economic prosperity of their nation both in the short term and the long haul.

Governments should oil the wheels of the economy by reforming labor markets and undertaking a forceful program of "repair and reform" this is only way to bring about a lasting economic revival, the BIS said. Across the world people are waiting and the governments continue to do little. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/07/governments-must-take-responsibil...

Mon, 04/28/2014 - 22:05 | 4706238 Radical Marijuana
Radical Marijuana's picture

BIS: King of Kings of Frauds.

The BIS puts the "I" in BullShit!

Mon, 04/28/2014 - 19:34 | 4705782 disgruntled hou...
disgruntled housewife's picture

From Ayn Rand (1905-1982)

"Upper classes are a nation's past; the middle class is its future."

 If this holds true then the U.S. has seen its finest days. 

Mon, 04/28/2014 - 20:57 | 4706001 Radical Marijuana
Radical Marijuana's picture

Nothing less than a wide-spread intellectual scientific revolution that applied to politics could PERHAPS save the U.S. ... which appears to require a series of political miracles for that to happen. America is the heart of the beast of globalized electronic frauds, backed by the force of atomic bombs. It is in that context that America needs a Second Revolution and Second Civil War, which must have at their core radical paradigm shifts in the philosophy of science, around which everything else would have to revolve. No more stupid violence, for its own sake, could be enough to make such events as Second American Revolution and Civil War provide the necessary transformations. Rather, any more stupid violence, for its own sake, will only compound all the problems, and make them way worse (which currently looks like the most probable default condition.)

The best theoretical solutions should be based upon a creative synthesis of postmodernizing science with ancient mysticism. That is, a convergence which was a spiritual renewal, which was expressed scientifically. The history of science, especially through the industrial revolution (which started with both the steam engines and the debt engines), are what created the problems which we now have, which are trillions of times bigger than ever before in known human history. The potential political solutions for the problems that a technologically based society faces must be found in the philosophy of science. That is the crucial battleground for there to perhaps become some worthwhile Second American Revolution and Civil War.

The currently established systems are NOT possible to be "reformed." They must, one way or another, sooner or later, go through radical revolutions. The most probable ways currently appear to be that they continue to drive themselves madly self-destructive. However, precisely as we travel along that tragic trajectory, we are simultaneously being forced to think differently, and perhaps to have enough paradigm shifts in the philosophy of science in order for those to then be applied to the monetary and military systems?

Both America, and the whole world, could still have better days ahead of them, but if, and only if, they went through sufficient political revolutions, and civil wars, which had those revolutions, and civil wars, in the philosophy of science at their core. Future American, and global, historical developments may well simply become too self-destructive for civilization to survive. However, it is still theoretically possible that the same ways of thinking that created the runaway problems due to technologies becoming trillions of times more powerful and capable, could also be applied to transform political science sufficiently for civilization to survive, by Neolithic Civilization becoming Translithic Civilization.

The future of America, and the rest of the world, is perhaps what was described in the book by Thomas Kuhn, on The Structure of Scientific Revolutions, pumped up by many orders of magnitude more than ever before, through political science ... since, every day, advances in science and technology are otherwise pumping up the social pyramid systems of legalized lies, backed by legalized violence, to become more grotesquely insane ...

As long as the majority of "middle class" morons continue to not want to sufficiently understand what it means that private banks were making the public "money" supply out of nothing as debts, then they do not have a hope in hell of coping with their accumulating problems. In that context, guys like Piketty are being promoted to continue to mislead them, because guys like Piketty DELIBERATELY IGNORE the ways that the SOURCE of the "money" is the SOURCE of these social inequality problems.

However, once one starts to pay attention to how and why the public "money" supply was privatized, and so, about 99% perverted, one starts plunging down through an apparently infinite rabbit hole. Taking that trip requires one to go through the kinds of scientific revolutions which I have mentioned above, in order to understand what has happened. America, and the whole world, should take that trip, through the looking glass of the Bizarro Mirror World Fun House, wherein a "rock star economist" can become famous, while DELIBERATELY IGNORING the most important social facts, that should have been addressed as basic to the problems he was addressing.

Although way more frequently encountered in Zero Hedge articles, and comments, than elsewhere in society, the basic problem that we are living inside of the structure of an established and entrenched money-as-debt system, IS THE PROBLEM, and that is why there are no possible "reforms" to that system, but rather, there must necessarily be some "monetary revolutions." However, in my view, almost all Zero Hedge articles, and comments, continue to be still offered by various kinds of reactionary revolutionaries, who still stay within the old-fashioned false fundamental dichotomies, and their related impossible ideals, when proposing their preferred kinds of "solutions" to these problems.

My points continue to be that nothing less than monetary revolution is enough, and that must be based upon an intellectual scientific revolution. Such a real, radical revolution, would spread through every other aspect of civilization, the same as the monetary system now spreads through every other social institution. The main driving engine for those developments will continue to be the degree to which the currently established systems are driving themselves through their own series of psychotic breakdowns, because they were based upon lies, backed by violence, which could never make those lies become true, but only thereby drive their contradictions to get bigger and more blatant.

Everything that was already set up by the privatized money-as-debt systems, in America, and around the world, are going to automatically drive worse social polarization, and destruction of the natural world. Although civilization as a whole may finally not even survive through that, those processes are also driving the possibilities for sufficiently emerging radical truths, and related revolutions to occur ???

Tue, 04/29/2014 - 18:31 | 4706858 honestann
honestann's picture

Well, we can all certainly agree that "money as debt" is bad news and destructive, that doesn't get to the core of the issue as you appear to believe.  To prove that, just imagine money was NOT based on debt, and that in fact, no central bank exists at all.  However, if the federal government simply prints up endless fiat, and spends it on wars, militarized police state, monitoring of the population and other destructive ends... the same disaster occurs (with minor variations around the edges).

In other words, the banksters are NOT the only problem.  They are indeed, as you claim and we all understand, at the core of the problem today.  However, they are not the only problem.  The entire military industrial complex, and drug-medical complex, and poison-food complex and a few other evil complexes are also problems today and could absolutely be just as destructive in a world WITHOUT debt money... as long as money is still fiat.

The core of the problem can be stated two ways (but ends up being the same in the end).  That is, the misdirection of resources to non-productive ends, and especially towards destructive ends.  This misdirection is inevitable as long as ANYONE has access to resources they did not have to earn themselves (by production actions).  EVERY such system lacks a feedback loop to direct resources to beneficial endeavors.  When ANYONE can create spendable money out of thin air, no feedback mechanism exists to prevent them from applying resources destructively and wastefully.  They live in an "anything goes" world, while EVERYONE ELSE is stuck taking up the slack.

So money-as-debt is bad, but FIAT MONEY is a more fundamental problem.

However, neither is THE fundamental problem.  THE fundamental problem is the lack of that feedback mechanism on the individual level.  The term I coined for this is fundamental problem is "consequences shifting", because it makes clear what is happening.

The only way to have a healthy, productive, benevolent world is to eliminate "consequences shifting".  Whenever any individual takes an action, they must be the individual who enjoys/bares/suffers all the consequences of that action.  This is the positive and negative feedback that encourages every individual to take wise, prudent, rational, productive, benevolent actions.

Why?  Because then an individual can take prudent, productive, benevolent actions in order to... enjoy the positive consequences (a great life), and avoid negative consequences (a terrible life).  Such an individual is not involved in consequences shifting:  he does not shift the destruction he causes onto others, and he does not shift the goods and goodies others cause onto himself.

ANY and EVERY other system is GUARANTEED DISASTER.  Why?  That should be obvious... just read the previous paragraph.  Almost every individual who can shift the pain and destruction he causes onto others will do so, and almost every individual who can shift the goods and goodies others produce onto himself will do so.

And, of course, when entire populations of continents and planets can be dominated by a few [hundred or thousand] individuals, they can create and shift astronomical quantities of destruction onto everyone else, and shift astronomical quantities of wealth onto themselves.  Which means, we need individualism, not "one world government".  In fact, any "government" of any size of form is inherently in the business of "consequences shifting" (or nobody would call it "government").

You repeatedly ask for a "paradigm shift in the philosophy of science".  Well, I will repeat that portion of the "paradigm shift in the philosophy of science" that is required to reverse the spiral of mankind down the toilet.  I generally call this particular portion of the new philosophy of science is "natural ethics", but others might call it something else.  To be specific, this is "causality applied to human actions".

By the nature of reality, every action taken by every individual causes consequences.  Some individuals suffer/bare/enjoy the consequences of those consequences.  The simple principle I identify is most easily called "no consequences shifting", but that's a negative statement, which is non-optimal even though it is rather easy to understand.  So the positive formulation is something like:

Every individual should enjoy/bare/suffer all the consequences of his own actions, and enjoy/bare/suffer none of the consequences of the actions of other individuals.

This is just another way to identify the [positive and negative] feedback that would encourage everyone to be honest and attempt to only take actions that cause good consequences (since they must enjoy/bare/suffer those consequences).

EVERY other system, EVERY other scheme, EVERY other mechanism encourages human beings to DESTROY... and shift the consequences of their destructive actions onto others.  EVERY other mechanism encourages human beings to STEAL and DEFRAUD... and thereby shift the consequences of productive actions other individuals take onto themselves.

-----

Note that EVERY other system, scheme, mechanism makes you and I and every other individual on this planet mortal enemies.  Why?  Because this scheme does NOT impose any of my decisions (or their consequences) upon you, and does NOT impose any of your decisions (or their consequences) upon me.  But EVERY other system, scheme, mechanism that you or any other individual dreams up INHERENTLY DOES.  And thus they all inherently make us mortal enemies... even those of us who like each other, respect each other, and are impressed with each other.

So you have a choice.  As much as you'd love to spin fancy theories about what kind of death controls [and endless other schemes] you want to implement, you cannot avoid the fact that I will kill you if I can when you attempt to impose ANY of those on me.

Why do you want to pit EVERYONE against EVERYONE?

Don't you see that cannot ever work?

Don't you see that is what the predators-that-be are doing now?  They have just about everyone fighting everyone else all the time about endless trivial issues?  How could they possibly create such an absurd situation?  Simple.  The INSTANT you accept that you should be able to force your favored ideas, systems, schemes, mechanisms upon me and everyone else, we MUST fight against you to prevent you from imposing your BS on us.  And, of course, the reverse is just as true if we adopt your approach and attempt to impose our schemes, systems, mechanisms upon you.

Which means, the INSTANT humans accept ANY scheme, system, mechanism other than the one I identified, we unavoidably have 7-billion squared conflicts times the number of issues humans invent.  That's a huge number!  No wonder humans waste so much time trying to convince or force others of their absurd ideas... because everything accepts the premise that everyone must be imposed upon.

The ONLY exception is the approach I outlined above.  This is inherently true, and trivial and obvious for every honest human being to understand if they take a few minutes to think about it.

So the bottom line is this.  Do you want ETERNAL WARFARE between every human being and every other?  Or do you want ETERNAL PEACE because human beings to be the default, with only individual bad actions by individuals to sort out as they occur?

You have no other choice.  If you disagree, you MUST clearly state how any other approach can avoid the inherent problems that I mentioned.  Otherwise you are no different and no better than every other disingenuous predator who walks this planet.

I want peace with you... and everyone else.

Why is that so objectionable?

Why is that inconceivable?

Why do you want war?

Mon, 04/28/2014 - 21:11 | 4706052 Seer
Seer's picture

"However, in my view, almost all Zero Hedge articles, and comments, continue to be still offered by various kinds of reactionary revolutionaries, who still stay within the old-fashioned false fundamental dichotomies, and their related impossible ideals, when proposing their preferred kinds of "solutions" to these problems."

No way can I be lumped in there.  Further, I would like to hear your take on the "growth problem" (you know, that one about the perpetual consumption of finite resources).

Tue, 04/29/2014 - 03:51 | 4706219 Radical Marijuana
Radical Marijuana's picture

Yes, Seer, you are one of the few that makes a point of reminding us about the FACT that the planet is finite. Gail Tverberg is one of the few featured contributing authors who does similar things, since, after all, her own Web site is http://ourfiniteworld.com/ "Our Finite World."

My take on the "growth problem" is that we are probably going to be going through some drastic "punctuation points" in the ways that evolutionary ecologies tend to develop their "punctuated equilibria." As you know, Seer, it seems that human beings will likely continue to deliberately ignore the real environmental limits, until those limits themselves force them to pay attention, which process will be extremely difficult and dangerous to go through, especially since the established social pyramid systems make a point of attempting to deliberately ignore those, since the ways that those systems used to work is that, when things got bad, then people at the bottom died, while those at the top still survived.

Indeed, that is what the trends towards runaway social inequality appear to be about! The ruling classes appear to be covertly planning and preparing to resolve the limits to growth by mass murdering the majority of human population, through more genocidal wars, along with democidal martial law, in which context, the runaway social polarization appears to be part of the preparation for those processes. Anyway, for tons more of my kind of bla, bla, blah on that topic of the "growth problem:" Overshoot in a nutshell

I tend to believe that there are potentially an abundance of creative alternatives, BUT, those require alternative death controls as their central core, lynch pin, or keystone. That is, the limits to growth must and will be resolved by changes in the human evolutionary ecologies, BUT, that also more and more includes whatever might emerge as the industrial evolutionary ecologies. At present, we are acting like weed species, in the still relatively early stages of ecological succession. The limits to growth will change the schedules of reinforcements for different beliefs and behaviors, which may gradually change the ways that things work (with some of those change episodes being not so gradual, but rather, becoming extremely punctuated social storms, in which a lot could change fast.)

In case you are curious, I have been collecting some links to the topics about Alternative Energies & Society Adapted to Them? Of course, in that context, I return over and over again to the crucial question of the death controls, because those are the central controls. After one has life, then the evolution of that life, and its evolutionary ecologies, are due to the selection pressures imposed by the death controls. Human beings have been paradoxically driving their own evolution, in ways which were denied and suppressed, and therefore, absurdly entangled.

Our biggest problem is how to continue to operate combined money/murder systems, after those have been amplified by things like electronics and atomic power! So far, the main ways that our civilization deals with the limits to growth is by continuing to deliberately ignore them. That is mostly because the history of warfare, through human murder systems, were the main ways that we consciously dealt with real limits in the past. Although famine killed more people, and disease killed way more people, it was warfare that we cared about, and made our priority.

Since success in warfare was based on deceits, the truth about human ecology was deliberately denied and suppressed, by both those at the top of the social pyramids, and through their controlled opposition, all the way down to the bottom. Therefore, we are driving backwards into the limits to growth, looking into the rear view mirror on the way, while most of us are not aware that everything appears backwards in a mirror, since almost nobody bothers to read the fine print on those rear view mirrors.

P.S.

http://www.doomsteaddiner.net/blog/2014/04/28/interview-with-steve-ludlu...

Fundamentals of Capital Destruction and the Waste Based Economy
Tue, 04/29/2014 - 04:19 | 4706819 AnAnonymous
AnAnonymous's picture

The ruling classes appear to be covertly planning and preparing to resolve the limits to growth by mass murdering the majority of human population, through more genocidal wars, along with democidal martial law, in which context, the runaway social polarization appears to be part of the preparation for those processes.
___________________________________________

On the world stage, the ruling class aka WeThePeople aka the 'american' middle class would prefer to solve this issue the classical way of runners of the business of extorting the weak, farming the poor: attrition.

When an extorted, a farmed has no longer value to extract from, the extorter/farmer leaves that one to die from attrition (starvation, thirst, disease etc...)
It is the most economical way to do.

No war here.

Now wars might be triggered by those who are falling from their 'american' middle class status.

As they are no longer part of the ruling class, their emergency is to find the best position in their new class. Considering how many people this class already amounts to, those falling 'americans' might be tempted to trigger wars to make room for themselves.

Mon, 04/28/2014 - 20:29 | 4705943 blindman
blindman's picture

yes but, rand was about the individual using the
machine of the state to accomplish an ideological
goal and agenda. now, she is dead, the individual
is in ruin and the fascist corporate structure rules
the land, the governments and the people? the middle
class lost the middle and all its class. not the usa,
the world, financialised, does not transcribe to the
money overlords, no one will hear them scream either.
.
good day.

Mon, 04/28/2014 - 21:08 | 4706048 Seer
Seer's picture

PLUS (PS), we're running out of resources.  Other than that I think that there's still hope of turning things around! </sarc>

Mon, 04/28/2014 - 18:53 | 4705684 Radical Marijuana
Radical Marijuana's picture

I already commented on this here:

http://www.zerohedge.com/news/2014-04-28/critique-pikettys-solution-widening-wealth-inequality

A Critique Of Piketty's Solution To Widening Wealth Inequality

The moronic mainstream middle class are being wiped out because they were too successfully brainwashed to believe in the biggest bullies' bullshit social stories, and that is why we would probably not even be discussing this unless Piketty DELIBERATELY "misses the degree to which bad government and central bank policy is responsible."

Tue, 04/29/2014 - 04:28 | 4706823 AnAnonymous
AnAnonymous's picture

The policy of growth. Since 'americans' know how to overcome the environment, there cant be limits to growth because of the environment. Only bad policies.

In reality, the 'american' middle class is being shrunk because the 'american' middle class reaches an overpopulation point, they have saturated the environment on a global scale.

And therefore, sustaining it is no longer possible.

The bad policy was to play the 'american' card that somehow 'americans' were able to overcome their environment.

What 'americans' have been extremelly apt a doing is thieving the environment from others.

Problem follows: when others are thieved of their environment, one moment, the theft spree peaks. And it turns hard from that moment...

Tue, 04/29/2014 - 04:36 | 4706828 TheFourthStooge-ing
TheFourthStooge-ing's picture

The policy of growth infirms concurrence assiduously. It cannot be otherwisely.

Mon, 04/28/2014 - 18:29 | 4705646 kchrisc
kchrisc's picture

End income/wealth inequality, give the people the printed money first, not the banksters or Wall St.

"My guillotine will still prefer to 'eat' banksters."

Mon, 04/28/2014 - 16:36 | 4705263 moneybots
moneybots's picture

Mainstream economists like Paul Krugman and Joseph Stiglitz endorse it.   So does Economist magazine.  The Financial Times and New York magazine both call him a ”rock star economist”.

 

Martin Armstrong describes Piketty as the new Karl Marx.  Maybe that is why Krugman is so enamored with it. Krugman noted that Greenspan needed a housing bubble to recover the economy from the .com bust.  How did that housing bubble work out?  Krugman is one of those who thinks we need another world war or its economic equivalent to solve the economic problem.  Krugman would say that the stimulus failed because there wasn't enough of it.

The irony is that Armstrong places a photo of IMF chief Christine Lagarde next to Piketty and notes them as being the new French elite.  The banker and the economist paired together.

The IMF wants to loan billions to Ukraine, which will turn Ukranians into debt slaves to the IMF.  Lagarde also wants a "one time" global wealth tax.  She wants her hands on everyone's money.

What good has Karl Marx done for economies and thus what good will Piketty do for economies?

Those who speak of income inequality, speak of social justice.  Social justice brings suppressed economies, as faux equality overrides all else. Tyranny rules.




 

Mon, 04/28/2014 - 16:41 | 4705284 George Washington
George Washington's picture

I agree with every statement except the last paragraph.

The solution to the greatest income inequality in world history (the poker game stops when one person holds all of the chips) is NOT redistribution of wealth, i.e. taxing the wealthy.

It IS for the government to STOP systemically gaming the system in a way which redistributes wealth from the American people to the big banks.

Mon, 04/28/2014 - 17:50 | 4705556 blindman
blindman's picture

with a golden metal pipe, law, the fed is beating
the brains and hell out of the holders
of their notes, and they have no gold or golden pipe.
the government is gaming the system ...?
stop right there. the government is the system.
no? they are not gaming anything, they are it.
the people in the government are gaming the system
to increase their personal wealth and power, pretending
at being "representatives", "senators", "executives"
and "judges or justices" for federal reserve note
accumulation potential, personal.
.
they destroyed the spirit and letter of the
law in one act, it just took a few years to
unfold.
.
the american people are just plain screwed, that was the
entire point of the 1913 federal reserve act, legal tender laws
and the creation of the irs. there is no hope for ye who
enter here, which is funny and curious as i see the chinese
are buying the choice, high property tax, real estate around
here. they are the last gamblers left in this casino.
the big banks, read the fine print, own it all even when
it becomes unpriceable in the feds funny money notes.
they will use the power of the sovereign, bought that, to
seize the land.
fascism leading to global company town, everywhere.
http://en.wikipedia.org/wiki/Company_town

Mon, 04/28/2014 - 21:05 | 4706040 Seer
Seer's picture

Actually, the feast was arranged from the very beginning.  1913 was when they really sat down to feast.

Mon, 04/28/2014 - 18:26 | 4705639 Optimusprime
Optimusprime's picture

+1000

Mon, 04/28/2014 - 15:51 | 4705119 moneybots
moneybots's picture

"The US),selling services and products to the public at above market prices (medicare drug benefit in the US that prohibits government from negotiating prices of drugs with the drug companies, costing the US government an estimated $50 billion or more per year)"

 

The drug program itself is a cost to the tax payers, negotiated prices or not.  That is why our taxes are so high.  "We need a benefit" gets very expensive when they are all added up.

Canada gets a discount.  That means Canada does not pay for the research, developement and years of testing of U.S. drugs.  Thus we pay more to make up for that.

How much does it cost for a drug company to bring a drug to market?  Under fast track it takes 7 years to get approval.  The drug company then has exclusivity, a monopoly for a number of years after, until generic competition is allowed, bringing down price.  This skews the market.

 

Mon, 04/28/2014 - 21:04 | 4706028 Seer
Seer's picture

The US govt is enabling insurance companies.

Look up the background on AIG to better understand why this has evolved this way...

Mon, 04/28/2014 - 15:11 | 4704933 novictim
novictim's picture

Libertarians are confused.  They think that when you get rid of Government then you are left with Freedom.

This is not the case.

The state of order that will exist when you have fully eliminated Government is Monopoly and Plutocracy.  It is a slave-society where the Wealthiest Few and their paid thugs make up the rules as they go along and everyone else lives in servitude.

That is the free market.  It is the race to the bottom.  We get there through the dismantling of our democracy. 

Mon, 04/28/2014 - 16:41 | 4705287 moneybots
moneybots's picture

"Libertarians are confused.  They think that when you get rid of Government then you are left with Freedom."

 

I was not aware that libertarians wanted to get rid of government.

Mon, 04/28/2014 - 21:02 | 4706021 Seer
Seer's picture

Worth rethinking...

From Rothbard himself (read the entire article http://mises.org/daily/2801):

I do not here intend to engage in a detailed exposition of this system, but only to answer the question, is this anarchism? This seemingly simple question is actually a very difficult one to answer in a sentence, or in a brief yes-or-no reply. In the first place, there is no accepted meaning to the word "anarchism" itself. The average person may think he knows what it means, especially that it is bad, but actually he does not. In that sense, the word has become something like the lamented word "liberal," except that the latter has "good" connotations in the emotions of the average man. The almost insuperable distortions and confusions have come both from the opponents and the adherents of anarchism. The former have completely distorted anarchist tenets and made various fallacious charges, while the latter have been split into numerous warring camps with political philosophies that are literally as far apart as communism and individualism. The situation is further confused by the fact that, often, the various anarchist groups themselves did not recognize the enormous ideological conflict between them.

Since the time that Rothbard wrote that there has been a lot of effort given to defining what anarchism really means.  And as far as I am able to tell from all that I've read, this from Chomsky (seeing as he's been a self-described anarchists for a long time) hits the core the best (article http://www.alternet.org/civil-liberties/noam-chomsky-kind-anarchism-i-be... NOTE that I am focusing on the definition, that he brings up Libertarianism is not of interest for this exercise- don't let it distract you from the purpose of trying to better understand what anarchism IS):

Noam Chomsky: Well, anarchism is, in my view, basically a kind of tendency in human thought which shows up in different forms in different circumstances, and has some leading characteristics.  Primarily it is a tendency that is suspicious and skeptical of domination, authority, and hierarchy.  It seeks structures of hierarchy and domination in human life over the whole range, extending from, say, patriarchal families to, say, imperial systems, and it asks whether those systems are justified.  It assumes that the burden of proof for anyone in a position of power and authority lies on them.  Their authority is not self-justifying.  They have to give a reason for it, a justification.  And if they can’t justify that authority and power and control, which is the usual case, then the authority ought to be dismantled and replaced by something more free and just.  And, as I understand it, anarchy is just that tendency.  It takes different forms at different times.

And my very favorite piece on this subject is this (it's got general use in it [speaks to "isms," not just for anarchists/anarchism):

http://www.spunk.org/texts/intro/practice/sp001689.html

(for probably a good decade the very first hit on Google for "Creeds versus. Deeds" was this article; with 5.3 million hits it's now ranked #3- something to pause and consider: a LOT of people are aware of it)

Mon, 04/28/2014 - 19:48 | 4705820 novictim
novictim's picture

Good Point!  You are right!

Who cares what Libertarians think?!  Well done, moneybots!
Mon, 04/28/2014 - 16:07 | 4705172 George Washington
George Washington's picture

IMHO ...

The problem is not solely “bad government” or “corrupt corporations”. The deeper problem is that the two have become intertwined in a malignant, symbiotic relation.

Mon, 04/28/2014 - 15:56 | 4705136 mraptor
mraptor's picture

You are confusing that moving toward free-market or liberarianism is an EVENT !!! It is not ....

It is a PROCESS .... a process away from mob-democracy towards voluntarism in as much areas as possible .... which we will probably never reach..

 

Mon, 04/28/2014 - 15:47 | 4705104 Seer
Seer's picture

There is no "democracy."  All that you "think" you've seen has been an abnormality, transient.  Wanting something does not make it so.  We cannot summons up a pile of resouces that don't exist.  No matter how well-intentioned people might be, no matter how well the cooperated, when scarcity occurs the direction "up" is not in the equation.

I would not deny the existence of a burglar entering my house.  Why deny the existence of something else that poses a risk, just because it's not a happy/positive thing?

Mother nature will do the "dismantling."  Humans have little say over it.  You can fight the inevitable or you can analyize and strategize with an open mind so that you're best able to adjust.

Mon, 04/28/2014 - 14:46 | 4704802 moneybots
moneybots's picture

"Why You’re Paying Too Much In Taxes Today: Because the Ultra-Rich Pay Nothing … Or Get Tax Refunds"

 

We are paying too much in taxes because the government is too big.

I don't know what Bill Gates is worth now, but i recall he was worth 40 billion at one time.  If the government took his entire fortune, how long would it cover the current annual federal deficit?  With 40 billion, it would be less than a month.  Once you have gone through his 40 billion, you can't come back to him for another 40 billion.  Yet the government expenses continue month after month, year after year.  So what happens when the government runs out of other people's money?

The total national debt is 17 trillion.  That doesn't include unfunded obligations.  How does Bill Gate's or Warren Buffett's or the Koch brother's personal fortunes collectively stack up in comparison to that?

 

 

 

 

 

Mon, 04/28/2014 - 18:19 | 4705617 blindman
blindman's picture

we pay taxes because the design, structure and function
of the "money"/debt system demands it by fiat. no
other reason. it is the "law". it is a slave money.
debt. system. and it applies to the "sovereign" which
could be a democracy, republic, banana or otherwise, a
communist state, a socialist state, an oligopoly, a dictatorship,
a pimpship, a commonwealth, you name it. doesn't matter.
so long as that entity will supply the beating the public
requires to do the will of the fraudulent creditor positioned
to give the word to the local ham headed strong man to beat the
property or credit instrument out of the local population.(persons)
.
here, an interesting thing happens. everyone becomes a
miscreant or criminal, or in the popular lexicon, a potential
terrorist. all the more convenient for the fascist overseers
locally empowered by the patriot act and ndaa. there is an
obvious plan here my friends. consider nafta and tpp and the other
corporate empowerment trade deals and you see something, a particular
design. it is fascism and it is global and it all starts at the
fed.
have a nice day.
Butch Hancock - Junkyard in the Sun
http://www.youtube.com/watch?v=DKFE-Sltw7w
.
" for every grave yard in the moonlight
theres a junkyard in the sun." b.h.

Mon, 04/28/2014 - 19:57 | 4705847 daedon
daedon's picture

I would replace the word overseers with Overlords, that's all.

Mon, 04/28/2014 - 20:42 | 4705970 Seer
Seer's picture

As a Seer I thank you for correcting that!

Mon, 04/28/2014 - 14:57 | 4704856 Seer
Seer's picture

Are you sure you're wanting to chase this?

Dump ALL of govt and we're STILL flat-ass broke (and in debt) AND without sufficient resources to "generate" growth.  No, the problem is MUCH bigger than taxes and govt (not that I'm a fan).  You also have to figure that this isn't isolated to just the US.  Shouting out into/at the darkness...

Mon, 04/28/2014 - 16:47 | 4705310 moneybots
moneybots's picture

"Are you sure you're wanting to chase this?

Dump ALL of govt and we're STILL flat-ass broke (and in debt)"

 

Total U.S. debt is 59 trillion, of which 17 trillion is federal debt.

 

 

Mon, 04/28/2014 - 20:41 | 4705966 Seer
Seer's picture

Well, we MAY have a shot at it, if it's only $42 trillion (59 - 17) in the hole! </sarc>

http://www.americaneconomicalert.org/ticker_home.asp

Never mind!

Mon, 04/28/2014 - 16:24 | 4705240 X_mloclaM
X_mloclaM's picture

yes.

govt' is the thing that has enabled entitlements and conditioning, hence big losses in real productive capital (labor incl) yet we still have more than others, as you point out it isnt an issue isolated to the US. Arguably the EU and Japan are worse off, China, Russia, Brazil and India grow relatively, but well under any natural free market pace

end govt transfers, incentive perversion, retain immigration and the US can lead far into the future -- its all about the jubilee after giving ppl screed for real goods... to what extent this was done with oil remains to be audited, but its likely there (at the Army base anyhow) and mine production is/was just locked in for the ME ... the perversion of education is the most serious of injury, yet we retain leadership (in a relative sense) in the US as well.

Mon, 04/28/2014 - 20:39 | 4705962 Seer
Seer's picture

I'm having a hard time following, it "seems" all over the place.

I'll reiterate my point: no matter how well any particular system is (and feel free to apply it to the entire happy world where everyone believes the same thing), that IF that system is based on growth it WILL fail.

The corruption.  The incompetencies.  All of it is the natural decay of systems/empires.  Kicking and screaming about this fact does nothing to alter the outcome.  It works well to distract others so that you can get a little more of the cheese, but it does nothing to alter the eventuality (if you don't face it then perhaps your offspring, or Their offspring; BUT, it WILL happen).

Here, read this and let me know what you think:

http://www.rexresearch.com/glubb/glubb-empire.pdf

Mon, 04/28/2014 - 14:59 | 4704864 Seer
Seer's picture

I WISH that it was all level, in which case that would clear all the smoke so we can really see the on-coming train. (maybe we don't really want to see...)

Mon, 04/28/2014 - 14:15 | 4704687 moneybots
moneybots's picture

"War Makes Us Poor … But Makes Fatcats Richer Quicker"

"Inequality Started Soaring When Nixon Took Us Off the Gold Standard"

Nixon did not start the Vietnam War.  The Great Society President did. Guns and butter spending.  For the gold standard, push came to shove.  Shove won.

The average American did rather well as a result of WW2.  The spoils of war tend to make the winner richer.

 

Mon, 04/28/2014 - 16:04 | 4705157 mraptor
mraptor's picture

And several hundred thousand people died .... would you have liked to be one of those average americans ...

Not to mention millions all over the world..

Mon, 04/28/2014 - 14:41 | 4704790 Seer
Seer's picture

"The average American did rather well as a result of WW2.  The spoils of war tend to make the winner richer."

WW2 stoked pent-up demand, much of which carried over for quite a number of years.

Second part is correct, in the short-term (we won't really know the final outcome until the book are closed.  And for the US the benefit was that most of the rest of the world's industry was crushed while its got pumped up (and was never under attack).

We don't have the luxury of an alternate universe to see how things would have gone had WW2 not happened, in which case most is just conjecture...

Mon, 04/28/2014 - 14:30 | 4704735 George Washington
George Washington's picture

Wrong ...

Mon, 04/28/2014 - 14:06 | 4704647 csmith
csmith's picture

Deflation solves all.

Mon, 04/28/2014 - 20:28 | 4705940 Seer
Seer's picture

Especially propagation of species.

Mon, 04/28/2014 - 14:03 | 4704632 Walt D.
Walt D.'s picture

What is really wrong with Piketty's Marxist baloney is that there are lot of people who have become very rich outside of the "Robber Barron" stereotyple - Google, Facebook, Hollywood, Katie Couric, and even cooking show host Rachael Rae. If we ignore the NSA with Google and Facebook, nobody ripped anybody off, or forced people to hand over their money under threat of violence. 

Mon, 04/28/2014 - 14:16 | 4704653 George Washington
George Washington's picture

I agree ... wealth obtained through criminal fraud should be "clawed back" through basic fraud prosecutions.

Wealth obtained through hard work and innovation should be kept ... otherwise, it ain't capitalism.

But gov should STOP TILTING THE BLOODY PLAYING FIELD ... and let a more-or-less level playing field (level in terms of opportunity) be re-established.

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