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Why Is Wealth/Income Inequality Soaring?
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
If conventional labor and finance capital have lost their scarcity value, then the era in which financialization reaped big profits is ending.
Why is wealth/income inequality soaring? The easy answer is of course the infinite greed of Wall Street fat-cats and the politicos they buy/own.
But greed can't be the only factor, for greed is hardly unknown in the bottom 90% as it is in the top .1%. The only difference between the guy who took out a liar loan to buy a house he couldn't afford so he could flip it for a fat profit and the mortgage broker who instructed him on how to scam the system and the crooked banker dumping toxic mortgage-backed securities on the Widows and Orphans Fund of Norway is the scale of the scam.
The difference isn't greed, it's the ability to avoid the consequences or have the taxpayers eat the losses, i.e. moral hazard. The bottom 90%er with the liar loan mortgage and the flip-this-house strategy eventually suffered the consequences when Housing Bubble 1.0 blew up in spectacular fashion.
Moral hazard describes the difference between decisions made by those with skin in the game, i.e. those who will absorb the losses from their bets that go south, and those who've transferred the risks and losses to others.
The too-big-to-fail banks that bought political protection simply shifted the losses to taxpayers. Then the Federal Reserve helpfully paid banks for deposits at the Fed while reducing the amount banks had to pay on depositors' savings to bear-zero, effectively rewarding the banks with free money for ripping off the taxpayers.
America's financialized cartel-state system institutionalizes moral hazard. This is one cause of rising inequality, as the super-wealthy are immunized by their purchase of political influence.
The top .1%'s share of the pie has been rising in the era of financialization and institutionalized moral hazard, everyone else's share has declined:
But that may not be enough to describe the decades of stagnation in incomes of the bottom 90%.
The U.S. economy (along with the global economy) is undergoing a sea change equivalent to an industrial revolution, only this time it isn't just industrial, it's digital.
What's scarce is changing, and since profits flow to what's scarce, that's upending the whole chain of value creation. As Erik Brynjolfsson, Andrew McAfee, and Michael Spence explain in their 2014 article New World Order: Labor, Capital, and Ideas in the Power Law Economy, the gains from the digital economy follow a power law distribution: the few at the top reap the majority of the gains while the dregs are distributed to the majority below.
This is akin to the Pareto Distribution, something I have mentioned here many times over the years. This is also known as the 80/20 rule, as the top 20% typically gather 80% of whatever economic unit is being measured: land, sales, etc.
The 80/20 rule distills down to the 64/4 rule, as 80% of 80 is 64 and 20% of 20 is 4: the top 4% reap 64% of the gains.
We can see that the top 10% in the U.S. own 74% of the wealth--a rough approximation of the Pareto Distribution:
Spence et al.: Machines are substituting for more types of human labor than ever before. As they replicate themselves, they are also creating more capital. This means that the real winners of the future will not be the providers of cheap labor or the owners of ordinary capital, both of whom will be increasingly squeezed by automation. Fortune will instead favor a third group: those who can innovate and create new products, services, and business models.
The distribution of income for this creative class typically takes the form of a power law, with a small number of winners capturing most of the rewards and a long tail consisting of the rest of the participants. So in the future, ideas will be the real scarce inputs in the world -- scarcer than both labor and capital -- and the few who provide good ideas will reap huge rewards.
Higher education is one example of the declining scarcity value of old models of labor and capital. When college degrees were scarce, college graduates commanded a high scarcity value. Now that tens of millions of people have degrees, the scarcity value is falling dramatically.
In response, people have worked their way up the academic food chain, earning masters degrees and PhDs. But now many of these higher degrees are also over-abundant, and the scarcity value of MBAs, etc. is declining.
These realities will have major impacts. If conventional labor and finance capital have lost their scarcity value, then the era in which financialization reaped big profits is ending.
If labor has little scarcity value, and productive ideas are what's now scarce, then what has leverage isn't a college degree--it's the ability to move across multiple fields of knowledge, learning new skills and seeking out new collaborations--the attributes of what I call mobile creatives, a new class I describe in my book Get a Job, Build a Real Career and Defy a Bewildering Economy.
We can't wait around hoping the Power Elites relinquish their lock on monetary and political power: we have to individually seek out what's scarce in the emerging economy and learn the skills and make the connections to move up the value creation scale on our own power.
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Because wealth is finally being distributed globally. http://zhc0.com
but forget about the Zero Hedge Fan Coin for a moment, instead, google a swedish man named hans. Who does statistics. Google him, or click here: https://www.youtube.com/watch?v=hVimVzgtD6w
Note that he does more impressive presentations, but you can find them yourself, if you doubt his method in this particualar video.
Bad mindsets. Proper education is the solution. Something to consider: http://www.businessinsider.com/how-rich-people-think-differently-2015-9?...
Today is final step in digitization of fiat currency, when all wealth is become virtuality. Soon future money is cut off like spigot. Then you are enjoy income inequality in full grandeur.
That's Alatovkrap, Boris, (sorry couldn't help it... ;-) Wealth inequality is a self correcting phenomenon. Eventually the shat upon get tired of being shat upon and break out the torches and pitchforks and dangle their tormentors from various tall structures until they accidentally drop them and then a new round of exploitation begins.
Yiro yiro,
;-D
"The easy answer is of course the infinite greed of Wall Street fat-cats and the politicos they buy/own."
It's not just the "easy" answer. It is the correct answer.
15horses1donkey.
IF ZERO HEDGE HAD A FUCKING CURRENCY OF IT'S OWN, IT WOULD BE MINTED IN INCORRUPTABLE NON HYPOTHECATED NON DERIVATIVE NON MARGIN ABLE SILVER OR GOLD.
Jesus, fucking kids these days. You all think technology is a miracle. All it is is electrons that can be made to go poof any fucking minute now.
Crypto currency is just a fancy name for digital fractional reserve banking - without the reserve, or the bank.
If I blew up your phone right now, you would look like a cow at the slaughterhouse just at the moment the bolt gun goes off - " How could you do this to me ? What'll I do now ? "
Improvise. Adapt. Overcome. Triumph over adversity.
And, transform your idea into minting a fucking physical coin out of noble metals, with Tyler's permission before he copyright lawyers your ass into bankruptcy.
Let's completely ignore the decoupling of the dollars from gold, globalization, and an infinite supply of labor coming across the border Charles. At least you got the automation and socialization of losses parts right.
no one wants a 20,000,000 word post. :)
I agree with the first half or so of this piece. But the 2nd half seems to think the economic principles of such things as "supply and demand" still exist. I believe that this and many other basic tenets of economic theory no longer apply as they previously might have due to our centrally planned economy.
Supply and demand still exists but is being suppressed. We are in the process of creating a new class system where you can only rise if your a good little propaganda poster child. The black market is making a comeback across the world and it's not the sheep, but the wolves that the elites fear.....
Many valid points - but an unstructured, freely creative, technical skill absorbing neo-profession is a bit amorphous don't you think? 30% of global profits come from the IT world. Should we all become digital chameleons?
Technology is boundless. But computer technology, the IT world, only adds incremental changes to farming outputs. However, mining and fishing, technology, PC's and software, totally kill fisheries and rape the earth. Technology makes a difference in those industries, but it is a one-off trick pony. http://zhc0.com
Shove your crypto currency where it belongs - down under. And, I don't mean Australia, mate.
I feel used.
was it good for you?
If I use you as well, does that make you feel more or less used?
Police state, MSM propaganda, bread and circuses, lustful greed - then the New Rome collapses.
It will be like Katrina and New Orleans, just in every major city.
"Small number of rich, large number of poor and just enough middle class to service the rich. As it has been in most societies throughout most of human history"
- NoDebt
The entire 20th centrury was an anomaly, particularly in the US. Cheap energy, last industrialized country that came out of WWII without all it's infrastructure bombed flat.... we had a good run. But that's over now. Now we have the Dark Ages II. Kinda like the first Dark Ages, but with iPhones.
Dark ages my ass. You're just pissed because you aint rich. By the way, as an Aussie, I figure the US will continue the good run. we can't get funds in australia, 1 in 100 new high tech businesses can get VC or Angel Funds. In the US, this ratio is better. ergo australians --> US to do business.
The moral of the story: get rich.
Invent. Inherit. Invest. Just do it.
Australia is just an open pit mine and future landfill site for China.
Ergo, Aussie rats try to leave sinking ship and swim to USA.
Wi Awn Yu - IS NOT GONNA LET THAT HAPPEN.
Moving across multipe fields=prime time ass kissing cocksuckers.
Unless you're 'chipper' 24-7 forget it.
Some people will do well with this, most won't. It's not a solution, it's a way for a very small % to survive.
Also, these qualifications sound like the perfect job for a robot.
Because progressives.
Please remember to not blame the banks...They are pieces of shit, but the true turd in the punchbowl is the enabler...The enabler of all this bullshit comes right back to the federal government and the FED..Without them, the banks would have to take on real risk....Fuck the GOV, Fuck the FED.
The banks created the Fed. The banks bought the government.
"The banks bought the government" ....Thanks for proving my point that Government is the culprit, not the banks. Our Government is broken, it is not the fault of the banks for taking advantage.
so if someone paid an assassin to come after you, you'd only blame the assassin not the guy who paid him?
The international Monetary system is based on debt.
The Central Bank takes a government debt and puts it in it's asset collumn. Then it creates an amount of currency equal to the debt's face value in the liability collumn...and that amount of currency is 'born'.
Paying interest on this credit backing the currency retires that currency, leaving too little currency to retire the rest of the debt.
So new debts must be issued, and new additional currency created, to keep those older debts from defaulting... This process must be continued in perpetuity.
This process is also itself systematic monetary inflation.
Systematic monetary inflation systematically redistributes wealth from whoever engages in real production to whoever gets the newly created currency first before it bids up prices...which is to say, bankers, central bankers, governments and the cronies of all of the above.
Because interest compounds, this process also makes the real debt burden of the currency's backing debt-service to progressively increase relative to the real production. Central bank's response to impaired ability of the real-economy to service debt is to inflate (devalue) the currency...which means to create newer, even larger debts backing the creation of even more currency...accelerating the redistribution of wealth away from producers to bankers, governments, and cronies.
There's your 'wealth inequality' beyond the inequality that people choose for themselves by way of differing economic values (i.e. valuing other things higher than additional production).
Sorry, but there are people who more value time with families, rest, education, or a wide variety of things over the value of additional production. Their wealth in terms of real production is going to be less as a consequence, even if we were to presume their abilities were identical. Nothing is ever going to change that.
But the systematic wealth inequality....
That is a consequence of the international monetary system.
Agreed, nice post!
All money is not equal. First money is worth more..
Much of the poverty in America is simply caused by individuals making bad decisions.
Millions would rather have fun, watch TV and sports rather than get up and make an effort toward self improvement. This is not helped by the fact they have also discovered they can vote themselves the resources other people have earned.
When you pay people to be poor - guess what, there are many who will take that job of being the victimized poor in order to get free everything and not have to go to a job every morning. The result is generations of families living off the public dole because they have no marketable skills.
You start at the bottom and work yourself up. Whaaaa! I can't do it! Gemme a free living!
The welfare state has existed for a couple generations now and it is absoultely obvious it has caused even more people to give up and become poor and reliant on government handouts.
Yep, truth is a bitch.
It's easier to throw arrows down, rather than up.
The problem is the Fed. I know that's the problem because no one in power talks about what they are doing.
BTW, do folks know that corporate people take more in government welfare (in the form of tax breaks and free interest cash from the Fed reserve) than the entire poors combined?
And yes, "corporate" = "white" and "poor" = brown, in case you haven't figured that out yet.
The last shall be first, motherfuckers.
This concept may be hard for some to grasp -
First of all sure - corporate "welfare" does exist -
But when a company does something to get a tax break - like they spend $20 million on a new plant and it saves them $10 million in taxes - that is NOT welfare.
If you think it is then fuck you -
Allowing a taxpayer to keep more of their own money is not the same as giving someone foodstamps or a housing allowance or a free phone - just because they are breathing.
I would rather have no special breaks - and drasticly lower the tax rates - for all taxpayers - individual & corporate -
But don't ever think allowing someone to keep some more of their own money as fucking welfare.
That guy that flew his plane into an IRS building found out the hard way that some tax breaks don't apply to the little people. "Equal Protection under the Law" is just a platitude.
You seem to think we're still in the 1950's, when someone could work hard at a job and actually get ahead. Those days are long behind us. The deal being offered to the average prole nowadays is "work until you drop for a pittance." Kind of hard to pull yourself up by the bootstraps when your job won't allow you to be able to afford boots, and when the average person finds themselves poorer and more in debt every month no matter how hard they work, it is more than understandable that the appeal of work begins to diminish in their eyes.
Didn't read the article, did you?
The author explicitly noted that the new way to riches is to BE SMART AND CREATIVE. Invent something, write some software, write a book/movie/TV show, whatever.
There is only one irreplaceable input, time, and there is only one irreproducible skill, brains. With the intertubes and libraries, no one (in the civilized West, at any rate) has an excuse not to know anything he or she wants to know. All that prevents most people from getting ahead is their own inertia, and that's been true for roughly 10,000 years.
If your skills are indistinguishable from those of 6.9 billion other people on the planet, guess what? You're not getting rich.
So the way to riches in the banking mafia's new world order is
a) be creative
or
b) be part of the banking mafia.
Now given that most people can't do either of those two things they need to think about an option c) which is
c) get rid of the banking mafia.
The vast majority of poverty in America is caused by
- 1965 immigration act
- off shoring
- money lending
In this paragraph...But greed can't be the only factor, for greed is hardly unknown in the bottom 90% as it is in the top .1%. The only difference between the guy who took out a liar loan to buy a house he couldn't afford so he could flip it for a fat profit and the mortgage broker who instructed him on how to scam the system and the crooked banker dumping toxic mortgage-backed securities on the Widows and Orphans Fund of Norway is the scale of the scam.
...and later when the article suggests TBTF banks bought protection...the idea that government was 100% involved in the process is completely ignored.
The article also ignores the (perhaps) $2 trillion underground economy that may be concentrated in those lower income levels. Add to this the astounding entitlement explosion at these levels and what you end up with might be a population at those lower levels that may be cemented into a segregated lower class.Without question, this group has suffered greatly by wholesale offshoring of manufacturing jobs, but also since that began, what has occurred in regard to overall education levels? Arguments suggest education levels have fallen. Perhaps this is because entitlements and trillions of dollars of underground economy money numbs the individual of the realization that their advancement requires education and the application of personal initiative.
And for anyone who claims to care so much about these lower income levels here in the U.S., where were your shoes made? Where was your shirt or blouse made? Dress? Light bulbs? Even pencils you use? You name it...where was it made. These questions apply to those lower income levels, too. Are they supporting their own economic demise by buying foreign products?
We can't discount our way out of this. The real turn-around and rebuild won't be easy but as Kennedy said in the 60s about going to the moon, "We choose to do this because it is hard."
Nixon ended the gold standard in 1971 and the Damn Dirty Fed has been inflating assets ever since.
Short and sweet, i like it. With a little thinking about "inflating assets" , you can see how the problem expands. +1
"Seek out what's scarce....and move up the valuation scale".
I think maybe one of the very biggest problems today is the value systems that now prevail. For example, one can approach a party to offer value - but that doesn't help when the other party exhibits tunnel vision focused only on the next earnings report and their immediate greediness, ego, etc. Or in the case of private industry, failure to appreciate what is even being presented in the first place - or financial lack of ability to utilize what is offered to them. Of course, then one can self-finance and perhaps lose everything if it doesn't materialize as expected. UNLIKE THE BANKS WITH THEIR MORAL HAZARD STILL INTACT WITH GUARANTEED BAILOUTS IF SOMETHING LIKE THIS WERE TO HAPPEN TO THEM
That's not enough though.The Central Banks of countries have a duty to enforce compliance on its banks.It's obvious nobody does their jobs until the crooks make it too obvious.Then the big fines when it becomes plain as day.
http://news.sky.com/story/1574604/uk-bank-trio-agree-924m-forex-rigging-...
Where's the next market rigging scandel?There's already too many to list.
see federal reserve
"The bottom 90%er with the liar loan mortgage and the flip-this-house strategy eventually suffered the consequences when Housing Bubble 1.0 blew up in spectacular fashion."
Dead Beat Home Scammers in my subdivision live rent free for 6 years before getting tossed to the curb. I could never imagine saving that much money!!!
Sure, but they were allowed to do so because the real money was being made several layers above them. It benefitted the financiers to pretend those people were paying for their lodging, so they could turn around and sell that debt obligation numerous times before anyone figured out is was phony.
If those people's living rent-free for 6 years was not in the interest of the finance sector, it would never have been allowed. Sure, if those people were smart, they were banking that money and had enough over 6 years to do quite well for themselves. I'd be stunned if that were the case, however. But the banks made out just fine. I haven't heard of a lot of mortgage derivatives ladders having been unwound and sorted out to account for the fact that they were all fake. Except, of course, those offloaded onto the taxpayers.
Because I ain't got any money?
I'm having my usual problem with CHS' columns. In general, I think he's on the right track most of the time. But in every argument, he gets right to the edge of a major realization, and drops it. It seems he trusts the integrity of the basic system of finance capitalism, and seeks solutions within that system. More and more, I think the problem IS finance capitalism, or at least the fundamental flaw of basing an entire system on debt at interest, with fiat money. Such a system has to collapse periodically; typically about once a generation, because it creates debt better and faster than it creates actual wealth inputs to offset that debt. Such a system also has to expand without limits, or the interest and debt will compound beyond the ability to repay it.
The problem is that those who benefit most from such a system are unwilliing to risk losing their advantages as the system requires to function properly. So they use their advantages to buy power to prevent the system from resetting. That works in the short-term but not in the long term. The risk doesn't go away; it merely compounds as it is postponed.
Fiat money is one such stalling tactic. Capitalism has always had the defect of concentrating more and more wealth into fewer and fewer hands. The game of Monopoly is simplistic, but contains some basic truths. At some point, one player has all the money, properties, houses and hotels. The other players can't play anymore. At that point, the kids go outside and throw a football around because Monopoly is just a game. In real life, we've decided to just make up more money, by creating more debt, so the game can continue. The money is diluted, but not actual wealth derived from ownership, which continues to accrue to fewer and fewer people. As new crises develop due to the accumulated stresses which are never allowed to resolve themselves, those with the preponderance of wealth use their wealth to buy power to enact additional short-term procrastination techniques, which add to the accumulated stresses.
The solution is to either allow the system to collapse periodically, and take measures to limit the human suffering so incurred, or to develop a new system that doesn't allow wealth to gather into fewer and fewer hands so rigidly. That's probably not a goal that can be achieved, but there are benefits to pursuing unachievable goals.
Our system requires periodic resets. If we don't allow them to happen, we're no longer really functioning according to capitalism. Capitalism, for all its obvious flaws, has worked better than the other systems we have so far attempted. A capitalism which safeguards the elites above all other functions is actually feudalism. Feudalism ends with stuff on fire and heads on stakes. We've done that enough times to know.
CHS is correct that the anomalies of 20th Century American society are no longer valid today, and that for those of us not currently in the Elite, conventional measures no longer lead to personal satisfaction and success, by which I mostly mean personal autonomy and a sense of security. That's not something to be regretted, though. It's something that should happen all the time in a functioning capitalist system. It's messy and scary, but that's key to the functionality of the system.
The guy is a shill. He could work for the Cato Institute or Americans for Prosperity think tanks and there would be no difference in what he writes and conclusion he reaches.
Take this piece today. His conclusion is basically is to pull yourself by your own bootstraps, which is the same conclusion reached by the likes of Charlie Munger and Wall Street bankers after they were bailed out.
He's a shill, using the language of the good guys and then pulling a bait and switch at the end.
But Big Hughie said a few wks ago he expected a huge rally to new highs because that's all the Fed can do
to turn attention away from the economic farce that we currently find ourselves facing. Lo and behold!
Money tickles up through the following mechanism:
a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.
You can make money when you have Capital without any hard work but through your investments.
Inheritance is the mechanism by which wealth concentrates giving the next generation a great Capital base to start with.
Rich parents also pay for the private schools and Universities that give the best education where you make the right contacts to set you on the best possible path.
Social mobility in the US is lousy and rich parents are the key, not hard work.
http://www.oecd.org/centrodemexico/medios/44582910.pdf
The American Dream is just that.
When the system trickles up, the elites believe in trickle down and set tax rates accordingly.
Low inequality came when tax rates were high for the wealthy.
With concentrated wealth the imperative is conserving fortunes and not creating them, creativity is stifled.
The system and mechanisms the wealthy put in place to conserve their wealth destroy the system which is why all great civilisations fail and new ones arise.
If you kill the top .1% - divide their money up and give it to the bottom 50% - how long until the bottom 50% have the exact same amoiunt of wealth as they do now?
A month? Maybe a year?
It is hard to train a monkey to think past RIGHT NOW - I have some cash - let's PARTY.
That probably would come to about $200,000 for about 100,000,000 adults!
Where are you going to find even 10 adults, let alone 100mm of this extinct species?
Here?
http://acidcow.com/pics/20131231/people_of_walmart_07.jpg
Here?
http://theawesomedaily.com/wp-content/uploads/2013/12/crazy-nfl-football...
Then what - 6 months until it is all gone?
If you put the banking mafia in jail and scrapped their parasitic money lending then it would take a very long time.
It's true some people are smarter than others and over time in a fair society the smarter ones would end up with more money but the *mechanism* of money lending is a specifically predatory form of monetary drug dealing that siphons wealth out of the economy to the money lenders.
Not only is the money lending mechanism inherently parasitic on an individual basis it is also bad for the economy as a whole because as all the wealth is siphoned upwards there is less money circulating in the economy.
This is why apart from all the personal misery the banking mafia cause they always destroys the economy of nations they take over as well.
I will admit this is a small sample - but I have watched this happed enough times I think it is the norm.
A typical average Joe & Jane - owns a home with a mortgage - couple cars - one paid for - couple kids - not rich - not poor - they work hard but pay the bills.
Grandpa dies - they inherit a few hundred thousand -
First thing they do is buy a new car and a new pick up - then they buy a bigger house - then they take a vacation - then they buy either - an RV - a motorcycle - or a boat - some do all three.
Bing bam boom - they are now actually more in debt than they were before.
Now you take someone that is actually poor you think they will do a better job managing the money?
The reason many poor people are poor is because they make bad decisions - couse not all - but most.
"The reason many poor people are poor is because they make bad decisions - couse not all - but most."
Sure but money lending is specifically designed to trap people into making bad decisions.
And you might say that's a moral argument not an economic one but it's both. If you allow wealth to be over concentrated at the top then the economy will collapse simply because no one has any money to spend.
If you allow parasitic financial predators to siphon up all the wealth then the economy dies.
People like the Quakers figured this out during the industrial revolution - if you want to keep the economy healthy then you can't just extract - you have to plow the profits back in.
I was driving along the other day - stopped at a redlight - I look around and notice -
One one corner a Chase bank branch, the other corners are a Cash America, a payday / title loan store and a pawn shop.
I then see guys coming out of both payday loan places with guns - they were pointing them at my head ordering me to stop and get a loan - I was about to pull into the Chase bank parking lot to escape when I see a loan offerer with a shotgun coming right at me - my guess was a mortgage refi or a home equity line of credit - he wasn't going to take no for an answer!
But lucky for me the light turned green and I was able to escape without borrowing any money.
Give me a fucking break - borrowing money to buy worthless shit is a choice - at least it is most of the time -
I have been there - my car needed major repairs - like $700 worth and I didn't have the money - I needed a car to get to my job so I borrowed the cash - I paid it back by cutting back on other stuff like food.
To say everyone is some sort of victim because the banks loan them money is pathetic - weak - stupid and fucked in the head.
You seem to want to focus exclusively on the moral argument while ignoring the economic one.
If you allow financial parasites to prey on people's weaknesses to the extent that wealth becomes too concentrated then the economy dies because only the rich have any spending money.
It's that simple.
Money lenders are like financial drug dealers preying on people's weakness - and you are quite correct it is weakness - but as with drug dealers, ignoring the consequences of people preying on other's weakness has consequences for the rest of society.
Moral arguments nearly always turn out to be practical arguments underneath.
Stupid should hurt - that goes for both lender and borrower.
So you want to ban loans?
Maybe have some government agency approve every loan so they can decide which are good and which are bad.
Maybe regulate loans like a prescription drug - you go to the credit doctor and he writes you a RX - but then you would have loan sharks - just like we now had drug dealers.
The Evolution Revolution!
https://www.youtube.com/watch?v=9JMkKKX3IsY
Great, now explain to me how to develop connections with the one per cent given that they don't have an effin' fucking clue what they are doing and could not possibly fucking comprehend Quantum Behavioural Economics let alone what happened to Global economics when Bear Stearns imploded in a bear raid?
Who in the one per cent even remotely understands Economics? Frankly, if they understood Economics whatsoever they would have collectively done away with Financialization, and Securitization, long ago instead of waiting for the world to blow up in 2008.
The banking mafia only understand short term profit which is why they always destroy the societies they hijack.
You are so right, tumblemore. Short term profit, short term investment, short term expectations, short term interest rates, short term planning, short term fixes, short term highs, rinse & repeat until the host is consumed, move to next victim. Financialization/Securitization allowed the cartel to replicate exponentially. All subsystems of the Global economy are replicating the same way as the Central Planners planned the economic matrix of wealth transfer, and money siphoning mechanisms. Systemically duplicitous in the extreme type behaviour.
How could the brighter minds in Economics have ever allowed this lunacy to proceed?
Quite.
Read Kurt Vonnegut's novel Player Piano.
If conventional labor and finance capital have lost their scarcity value, then the era in which financialization reaped big profits is ending.
As long as productive people tolerate robbery of the fruits of their labor, the thieves are likely to do better than they do.
So, what I get from this is that the ONLY thing that is being kept scarce now is the fiat-power to create money out of thin air. That power is held by a few ... and they have been using that power to destroy billions.
However, they cannot completely destroy the billions that they do not want to share this world with until they replace the billions with robots and automated systems.
"The easy answer is of course the infinite greed of Wall Street fat-cats and the politicos they buy/own."
Yes, and the many shills they buy to put up smoke screens for them.
The 20th century was an "anomaly" because the banking mafia were partially kept down by strong republics.
Any time the money lenders are kept down by a strong republic the same anomaly will recur.
I'll tell you exactly what happened. The combination of cheap imports and the average American consumer's willingness to buy those products instead of American made products. This was all driven by the American consumer. Corporations found out that Americans wanted cheaper stuff and gave them what they wanted. The more cheaper stuff they could buy, the happier they were. Because of wages, you couldn't make cheaper stuff in the US, so they moved production overseas. Virtually no American consumer refused to buy the new cheap stuff. Sure they complained, but it didn't stop them from buying. Now you have a situation where the average shmoe can't get a decent paying job, but they still love buying cheap stuff at WalMart.
"Corporations found out that Americans wanted cheaper stuff and gave them what they wanted."
No they didn't.
The banking mafia changed the laws on hostile take overs and created junk bonds so that if corporations weren't maximizing their short term profits they could be taken over.
This forced corporations to off shore who up till then were happily not maximizing their profits and sustaining a large middle class.
The banking mafia did it. The banking mafia own the media so most people don't know the banking mafia did it.
With millions of millionaires in China now, I would say you are correct.
Because that is what happens when Socialists/Communists/Dhimmicrats/Repuclicrats are in charge.