(13d) Implosion

Here a very interesting article that writes about a man who predicts the implosion of our financial system and thus our whole society, just as I discussed before. Of course, 'real' economists are trying to find out where he is wrong so they can continue claiming they can continue taking as much as they are still taking now.

Indeed, he too says the inequality between the majority who, although they earn more than their parents earned at their age, become poorer because the wealthy are becoming so rich they force prices upwards so that in real terms people become worse off.

When people have too much money, they start earning money not by working but by for instance buying many houses to let to others who can't earn enough any more to buy something for themselves. Or these people sell at a higher price, therefore further increasing prices. Because, those who bought want a return to their investment and thus increase rent prices or sell at a higher price, therefore further increasing prices. In the end, everything becomes too expensive and prices will come down in order people are still able to rent or buy. Even starting a new business becomes more and more difficult when people have to compete with competitors that have so much more money. And as the wealthy earn ever more, they absorb more money so less is left for the majority who then have to divide less money amongst a large group and thus they will start earning less. The majority then needs to pay even more taxes because the wealthy get even wealthier by reducing their own taxes, claiming low taxes are necessary for the economy to continue growing. And as the burden falls more on the ordinary people who have less, income for governments start falling and thus they start talking about cutting expenses: first benefit systems but afterwards also healthcare and education.

In the end, economist Thomas Piketty also predicts civil wars or even wars may erupt worldwide such as around the time of WWI and WWII when societies needed major corrections such as a depression and war to stop inequality getting even bigger. Afterwards, societies promised it would never ever happen again and thus invented systems to average the inequality such as high taxes for the wealthy but also the benefit system for the unlucky. Of course, there were always people profiting from the system so that people become angry with the system while they should focus on those profiting and not on the whole system (but this is indeed difficult because someone who is very long unemployed may never have profited because the person may always have tried to find work unsuccessfully, still people may think the person profited while they may admire the person who manage to pay low taxes).

In the end, the implosion of a system is one of the worst things that can happen as people turn onto each other, mostly first on immigrants but also other parts of their society. It can destroy countries as is now already happening in many parts of the world such as in Syria and Egypt but also Ukraine (where many people want to join Russia as they think life is easier there).

Many years ago it also happened in the USSR, and the West saw that it was good. Only because there was a great leader, i.e. President Gorbatsjov, the country was allowed to fall apart and few people died. Still, for this he is still despised by many in his own country; indeed, recently some Russian MPs even want to prosecute him again for treason for allowing the disintegration of the country while they are celebrating President Putin who may bring war and destruction upon them because of his desire to enlarge Russia. I think they should not blame Mr Gorbachev but instead the first president of Russia as he and some others signed a deal to end the USSR. Still, how many leaders would allow the end of their country in a peaceful way? I think, not many.

Let them eat cake ... or stop them

Just now British bishops are protesting that too many people have to use the food bank because they are poor (although they are living in the sixth richest country in the world). This doesn't mean all of them have no jobs, many however have such low-paid jobs that even having two jobs may not be enough to earn enough to buy food and thus many go hungry to bed. Of course, many of those who don't need to use the food bank claim that food banks should stop because it makes people lazy as they think these people prefer free food and not to work while they also claim it is the people's own fault as they can't manage their own finances (thus why not teach them?). Also in other countries such as Greece, Spain and of course, developing countries, many people have little food, whether they work or not.

And where may this end? In the US it seems that the numbers of homeless people are increasing as many people used all their savings after loosing their job at the start of the crisis and thus, as their money is gone and they can no longer pay the rent or mortgage, they need to live on the streets while if they are lucky they may still have a car to sleep in. But, the rich don't like cheap cars in their streets and thus are starting to forbid people from sleeping in cars in the hope it will keep people out of their area. However, the more people become homeless because more people have no or only very low-paid jobs, the more people will have to live in either cars (will be forbidden) or on the streets (is also not allowed in many cities) and thus these people will have nowhere to go. Still, as the wealthy (and banks) continue buying houses because the owners had to sell them, fewer people will be able to live in houses until the bubble burst. Nevertheless, as climate change starts hitting us, what the wealthy bought may all be destroyed during storms and revolts and thus in the end, all of us may end without anything and as a result, people may become equal again. Certainly because many wealthy are still in denial about climate change (a pity the first comment by LordHealey was removed as it was a good example of someone in denial) and hope for even more profits by selling energy, they make it even more likely they will loose everything during climate change.


By the way, it seems the Bank of America has made big losses, mainly because they had to pay a settlement because of incompetence while also Co-Op bank reported losses as high as £2.5bn. Of course, many investors didn't expect this loss at the Bank of America as it seems they are completely blind to whatever reality because having to pay this huge bill should have been known to everyone. Still, if one can be cynical, it seems there is also good news as the article suggest: 'It cut staff levels'. Now the bank may start claiming that having to pay these bills may ruin them and thus may start claiming that to save them we should agree they pay less or nothing (and thus they can continue paying bonuses). Maybe indeed, we need to accept lower fines as otherwise they will need to take our savings to pay those bills but we should also accept imprisonment for criminals.


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