Tuesday, November 16, 2010

Trickle-up economics

With all the talk about tax cuts as a universal cure (for which of course there is exactly zero statistical evidence) that are prevalent in US media I wonder why no one is talking about much more obvious concept - a trickle-up economics, where the well-being of the population is certain to benefit the people at the top of the economic ladder.

After all, to earn more money companies need more people who can afford their products. The debt-financed prosperity of 1990s is perverse, but recent, evidence for this. By supporting policies that lead to growing inequality, the top 1% of earners are actually digging a hole for themselves. With the debt as a source of income nearly exhausted, the population will soon not be able to afford much, and the inevitable result will be collapsing incomes at the top as well...

1 comment:

BadTux said...

Your problem is that you believe money is wealth. It isn't. Money is pieces of toilet paper with pictures of dead people on it. What is wealth is what you *buy* with money -- things like, say, dachas on the Black Sea, McMansions on the ring road, that sort of thing.

During times of inflation, people took on debt or purchased assets at inflated costs. During times of deflation, people can not pay their debts in the now-suddenly-scarcer currency, and have everything taken from them by the ownership class. From 1937 to 2008, the supply of currency rose every year. Note that monetary inflation is the same thing as debt deflation -- your debts become worth less in real terms every year during times of inflation. Indeed, people made major life decisions such as purchasing a home based upon the notion that prices would always rise -- a notion which 70 years of Keynesian economics applied to the money supply reinforced, because nobody under the age of 70 had any experience with deflation.

Until now, that is. The ownership class really doesn't care if the money supply collapses all the way and they can't sell anything for money. Because they will own you. Think Latin America's oligarchs. They own everything, so their minions have no place to go and must labor in their fields and workshops to produce the goods and services they want. Their every need is taken care of by their serfs, who beg for crumbs of bread in exchange for being allowed the privilege of placing a bathrobe upon their master's back upon their master exiting his bath. Do these people care that they can't sell anything to their serfs? No. And neither will our ownership class, once they own everything -- including us.

- Badtux the Mexico North Penguin