Inequality of Wealth
1904 View of Standard Oil
During the Progressive Era around 1910, the Marxist view of the world was all about the massive wealth of the very rich like Rockefeller. Standard Oil would always rule the world. How could that possibly change? They argued this was undermining economic opportunity for others. The government championed the progressive income tax and attacked inheritance taxes to solve what everyone assumed was not fair – the inequality of wealth. We are talking about total net worth, not income.
WHERE DO YOU RANK IN WEALTH
(If you have a household net worth of X … you rank in the Y percentile):
$50,000 … 60th percentile
$93,000 … 50th percentile
$100,000 … 48th percentile
$200,000 … 34th percentile
$500,000 … 18th percentile
$750,000 … 12th percentile
$827,000 … 10th percentile
$1 million … 8th percentile
$1.4 million … 5th percentile
$6 million … 1st percentile
$93,000 … 50th percentile
$100,000 … 48th percentile
$200,000 … 34th percentile
$500,000 … 18th percentile
$750,000 … 12th percentile
$827,000 … 10th percentile
$1 million … 8th percentile
$1.4 million … 5th percentile
$6 million … 1st percentile
Inequality in wealth is approaching record levels again as everyone now harps on not the 1%, by the top 10%. The top 10% of families own 75.3% of the nation’s wealth. So if you have $827,000 in total net worth (real estate, stocks, savings, everything), that’s you. The bottom half of families own 1.1% of it. The families squished in between those two groups own 24.6% of the national wealth.
The fascinating solution is always to tax the rich bastards more to drag them down to even the scale. This is like seeing someone with a nice watch and you go take it because it is not fair they have something you do not. Hillary, who is clearly in the top 1%, claims she stands for toppling the top 1%. I suppose her goal is to make everyone equally poor except her and her backers. When she was championing healthcare, her response to a question that it would put small mom and pop stores out of business was crude. IF they could not afford it, then they should not be in business.
Nobody ever looks at what is keeping the bottom 90% of families from reaching the top 10%. Two primary factors come into play. Government cares nothing about what they preach and neither do the hosts on MSNBC who champion hating the rich, yet they themselves all earn enough to be in that top 10%. On top of that,four of MSNBC hosts had serious tax liens against them and owe the government millions. Al Sharpton allegedly has owes $4.5 million so he is in the top 1%.
I worked hard during the Nineties to try to save social security. I fought to privatize the fund when there was still money there and the Dow was 3500. The Democrats would not stand for it. They wanted the spoils and if the politics changed, they wanted to appoint their buddies to manage the fund. Others hated the dreaded word “privatize” for the free markets were risky and government would be the better care-taker of everyone’s money. It would always go to a good cause – their reelection.
All we hear is we have to tax the rich. Others claim, without a shred of historical research, that great disparities in wealth lead to war or revolution. They typically point to the French Revolution where heads rolled. They ignore the American Revolution and the oppression of the King with taxes. They also ignore all the other tax revolts from the 14th century. They remember Shakespeare’s words, “The First Thing We Do Is Kill All The Lawyers”, but omitted that the king was the only person who had a lawyer in those days so the proper term ins prosecutors – not lawyers.
The advocates of robbing anyone with $827,000 in total net worth saved over the course of their life, also omitted the fact that the French Revolution followed a bailout. Remember the Mississippi Bubble? Well, the French government was involved and people from all over Europe had invested in the scheme. The French government had to guarantee all losses from the 1720 Mississippi Bubble. They strip-mined their economy just as Greece is doing right now. Louis XV (1715-1774) rules during this time. Louis XVI (1774-1793) for 19 years. The bailout from the aftermath of the Mississippi Bubble in 1720 was devastating to the economy. So it was not just a rich v poor issue. It was the oppression of the people by government to meet its debts.
From the beginning of the Depression until well after the end of the second world war, the middle class’s share of total wealth rose steadily, thanks to the recovering in the economy and the shift from agriculture to skilled labor. Of course, the top income bracket was raised to $5 million because they introduced the payroll tax.
The socialists want to claim it was taxing the rich that somehow lifted the lower class. It also sent capital fleeing offshore then just as the rich have left France and Greece leaving behind rising unemployment. Their argument that taxing the rich raises the lower class is total bullshit. This has just never happened even once in history. When Spain was rich from all the gold they brought back from the America’s the borrowed against the next ship coming in and they imported even French labor to man the docks. They squandered their wealth like someone who just won the lottery and ended up dead broke in the end.
Roosevelt created the 30 year mortgage so wealth among the lower classes increased raising the middle-class if we measure it by home-ownership and inflation ignoring the debt and taxes. They then try to blame Reagan arguing that the early 1980s saw this trend reverse. Of course, they also ignore that Volcker raised interest rates to 14% at the Fed and set in motion a major recession and the explosion in the debt.
AMONG the most controversial of Thomas Piketty’s arguments in his bestselling analysis of inequality, “Capital in the Twenty-First Century”, is that wealth is increasingly concentrated in the hands of the very rich. Rising wealth inequality could presage the return of an 18th century inheritance society, in which marrying an heir is a surer route to riches than starting a company. Piketty totally misrepresents that era completely. This was pre-Industrial Revolution and more than 70% of the population were farmers. The inheritance was the land. However, this was largely a Villa Economy where there was no income tax and people worked as a group. These farms were mostly self-sufficient and did not participate in a market economy selling excess.
Piketty’s data is a gross misrepresentation of the entire period. Money was often still commodity based. Tobacco was used as money. This was the barter system and cannot be related to the post-Industrial Revolution period where wages became the dominant form of money rather than commodities.
This entire socialist argument ONLY looks at punishing the “rich” rather than raising the lower classes. When I debated Steve Forbes and NJ Governor Jim Florio at Princeton University, what was really interesting was I seemed to convert Jim Florio, which had the reputation of tax ‘em till they die. I mentioned how the income tax was applied in the form of payroll taxes since 1935 and the net result was that the government was borrowing from the lower classes and handing them a refund check at the end of the year, but was cheating them out of any interest. Then Social Security only buys government bonds and PREVENTS the lower classes from rising in wealth since they are denied the right to participate in the creation of wealth.
You will never make it better for the lower classes by raising the taxes on the top 10%. All that does is lower economic growth and the money stays in the pockets of government. It never trickles down to the people lowering their tax burdens or raising their living standards. It is about time we stop the bullshit and look at restoring the middle class.
The people are burdened with student loans nobody can go bankrupt on so they will confiscate your home and deny you the ability to raise your net worth. The children cannot find employment in the field they spent a fortune on in education making it a total waste of money anyway. That now amounts to 65% of graduates.
State and local taxes keep rising for there too it has been fiscal mismanagement of local government. Healthcare has skyrocketed and is now a tax. Car insurance you pay based on the value of the car when you bought it, but if something happens, they argue it is not worth what you paid and the claim is settled for a lower amount while they charge you the full value every year. Book a travel ticket on and you will see that about half the ticket is tax. The same is true for phone lines.
Taxing the rich will not solve any of these problems. The only way to reform is to elect non-lawyers who will actually reform all of these industries that the legal profession sees as a gravy train to riches for them. Nobody serves in Congress without leaving a multimillionaire. Now that’s public service.
IMF Reports Warns of Financial Instability – Low Interest Rates Will Be Our Doom
While people argue over fractal banking and derivatives, the dark clouds are on the horizon approaching from an entirely different direction. A virtual secret meeting took place in Washington with the IMF and World Bank present over the weekend. The mainstream media reported only that they spoke about Greece. But behind the curtain, there was a hell of lot more going on based on our sources.
The IMF issued the Global Financial Stability Report as it does every April, but this year it is a sobering account of the complete failure of financial elites to manage the global financial system. If anything blows the conspiracy theories out of the water that somehow someone is in charge and has deliberately steered society over the cliff, this is it. It would be nice if someone was in charge – a demigod of world finance. Maybe they would at least blink. But reality is far worse. The whole thing is run by lawyers who think they can just write a law and shabam – they solved the problem,.
This new IMF report on global financial stability is an admission of failure of the lawyer/alchemists of the era of New Economics. These people who play financial god, have been completely clueless when it comes to managing an economy. The collapse in socialism is underway which was set in motion by Karl Marx and just as Communism fell, note this time it will be the West’s Free World which is headed to a complete unmitigated disaster.
The IMF report concedes that the smallest crisis in the world can now set off a crash far worse than ever before. The financial elites have no solutions whatsoever. From here on out, this is really going to be every man for himself. Savers, taxpayers, bank customers, investors, and local politicians, will have to exercise the utmost vigilance as everything comes into focus for October – the change in trend.
The report covers the recent efforts to prevent a crash, but strangely, mainstream media is not covering this report other than a gloss-over. Why should it be covered? It might scare the hell out of people. We can’t have that now – can we? Politics is really a religion. People believe in their politicians because they want to. This is like a weird cult. Meanwhile, some of the most elite towns of the top 10%, like Moorestown, New Jersey, also now want to militarize their police. People just believe whatever government says and they will pay the price for this stupidity.
The report states: The risks in the global financial system have increased, since October 2014 and have migrated into other sectors of the economy that are more difficult to detect. This is like the Swiss Loan disaster brewing in Eastern Europe the report does not cover in any real detail. The developed economies are now even more dependent on the policy of their Central Banks for interest rates have been kept low, which reduces interest expenditures and artificially create a fake sense of things are OK for now.
The dark side effects of a global low interest rate policy is the wiping out of the elderly along with pension funds and it has inspire a huge increase in cross-currency borrowing such at the emerging market dollar borrowing. The low oil prices set, together with the strong dollar, send the emerging economies into chaos and is now having a serious impact upon the Middle East economies as well.
The insane obsession with the Greek crisis illustrates that the network on the global financial system has become so complex that a collapse in Greece, will set off a contagion and at least the smarter elites are deeply concerned while other see this as Greece must pay of the bubble will burst. Then we have the insanity of the Obama Administration and its sanction on Russia that have deeply wounded the European economy.The geopolitical tensions in Russia and Ukraine expressly, as well as those of the Middle East, parts of Africa and Greece, all combine to introduce yet another wildcard to the global mix.
The IMF takes note that the euro-zone banks to bad loans (non-performing loans NPL) are about €900 billion euros. In contrast, take the €250 billion euros that was provided by the international creditors to Greece that would evaporate in a Greek default, and the crisis in Europe appears to be beyond any manageable position. The IMF calculations show that the majority of these bad loans in the Italian and Spanish banks, as well as in Ireland, Cyprus and Greece are outsourced which sets the stage for a contagion.
The ECB has achieved more power with the acquisition of banking supervision in Europe and it has tried to inject new rules. But are these measures from in any way to tackle the problem of bad loans in the handle.The IMF therefore proposes that the banks would have to actively deal with these bad loans. At the same time, the IMF recommends to build more efficient legal and institutional framework to create a forum for these bad loans from around the World. The IMF has supported the tough stance of the Austrian government against the creditors of the scandal bank Hypo Alpe Adria. This has impacted German public banks who are huge creditors. This is sort of letting the chips fall as they may, but nobody understands how far the contagion will ripple through the financial system with more than one crisis.
The support of the IMF in the Austria crisis illustrates that the international financial elites do not know how to deal with the debt crisis. Their position is simply to maintain a degree of intractability of the debt problem. We are dealing with a crisis where everyone is now trying to blame the other guy rather than look at the system as a whole.
Te elites only demand that Greece clamp down on collecting taxes without any consideration for the future economy. They believe that the problem is to extract more and more money from the people to cover the failures of government. Their only solution remains higher taxes and to arm the police in case of a civil uprising that Draconian taxes have historically ALWAYS produced without exception.
The idea on taxation or a compulsory levy on savings and assets to solve the debt problem, the bail-ins, has infected all governments. They see a massive compulsory levy on property and bank assets as the silver bullet to solve the debt crisis. This is in part the drive to eliminate cash and force people into electronic money.
The IMF report notes with disarming frankness that the expansion in the money supply by central banks has had no impact upon inflation. They fail to comprehend that inflation is set off not by an increase in the money supply, but a collapse in confidence of government and thereby the value of money. That is when people switch and buy assets. Negative interest rates may have that effect in the fall.
More importantly, the increase in the money supply has contributed to the low interest rates. However, the IMF concedes that this is undermining pensions and has introduced an extremely dangerous side effect for the insurance industry. Life insurers hold in the EU a portfolio of €4.4 trillion euros, which is severely threatened by the low interest rates and can send that industry into insolvency. The IMF warns that these difficulties of life insurers could lead to the IMF itself because of the high cross-linking with the entire financial system that can spark a contagion. The IMF sees this as evidence that the risks of the financial system have migrated from the banks to other institutions thanks to the low interest rate policies.
It’s Snowing in Michigan
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A reader just sent this in. It is snowing in Grand Rapids. Thank God for global warming. Can you imagine how much snow they would be getting without it?