Monday, January 27, 2014

The root of inequality...

Here's The Root Of The "Inequality" Problem
By, Chris Rossini

While mainstream American pundits fumble over themselves with how to fix "inequality," it's important to understand that all of their mounds of "careful studies" will only lead to them making the situation worse. There are two main reasons: 1) People with different thoughts, values, skills, and desires will never (nor should ever) be economically equal. 2) The pundits will not touch the most important creator of economic inequality: The Federal Reserve.

I'm going to let the great Henry Hazlitt do most of the talking here. This is from Newsweek, May 16, 1960. (I add all emphasis.)

Inflation never affects everybody simultaneously and equally. It begins at a specific point, with a specific group. When the government puts more money into circulation, it may do so by paying defense contractors, or by increasing subsidies to farmers or social-security benefits to special groups. The incomes of those who receive this money go up first. They begin to buy at the old prices. But their additional buying forces up prices. Those whose money incomes have not been raised are forced to pay higher prices than before; the purchasing power of their incomes has been reduced.
So right out of the chute, government and its money creator show favor to those who receive fresh new money. And this favor comes at the expense of everyone else.

This creates class or group divisions. The victims of inflation resent the profiteers from inflation. Even the moderate gainers from inflation envy the bigger gainers. There is general recognition that the new distribution of income and wealth that goes on during an inflation is not the result of merit, effort, or productiveness but of luck, speculation, or political favoritism.
Who doesn't hate Wall Street? The bailouts were opposed by an overwhelming majority of Americans. But the banksters got the money nonetheless. Who doesn't hate the Crony Corporations that swim in government contracts and handouts? Many people know of these problems, they just have a hard time locating the source. We're doing that here. Let's continue.

An inflation tends to demoralize those who gain by it as well as those who lose by it...Those who have made money from speculation prefer to continue this way of making money to the former method of working for it.
The economy can grind to a screeching halt, but as long as the punditry can point to a rising Dow, it must mean things are ok, right? Plus, thanks to the Fed, you're not going to earn any interest by keeping money in the bank. So let's go! Get all the Grandma's and Grandpa's, and put them into some really good mutual funds. It's a terribly artificial situation created by the banksters, and they have everyone wrapped up in it.

It must be clarified, that in a free market (which obviously we don't have) speculation, stock markets and commodities markets are all vitally important. However, they would be reserved for the people who are actually interested in them, and who are skilled enough to earn money in those areas. It wouldn't be anything like what we see today.

The profiteers from inflation tend to spend freely, frivolously, and ostentatiously.
Turn on a mainstream television channel, and you're bound to find a TV show covering frivolous and ostentatious spending. Here a EPJ, we cover where the prices are skyrocketing: sports tickets, art, high-end mansions, high-end apartments, etc.

This increases popular resentment. The incentive for ordinary saving, in the form of savings bank accounts, insurance, bonds, or other fixed-income obligations, tends to disappear. The spectacle of quick and easy returns increases temptation to corruption and crime.
Almost 54 years after Hazlitt's words were written, we can see that nothing has changed as far as who the main cause of inequality is. The "solutions" that will come from the government will do exactly as you'd expect: make the inequality problem worse.

There's only one solution that would (and will eventually) work:

End the Inflation...End The Fed.


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