The Anti-Capitalists in the Gulch
The traditional story is that farming is everyone's bread and butter. Bankers and speculators produce nothing, but skim their profits from the suffering of others. The Garden of Eden is populated only by a mythical middle class of retail grocers, doctors, lawyers, and plumbers ("engineers"). No one is poor; and no one is rich.
And no one has friends in city hall or Congress - though the streets are, indeed, cleared of snow; and anyone who destroys a skyscraper eventually meets a Navy SEAL team.
The claim is made that in our glory days, the middle class produced the most wealth, but now in our evil times, the middle class is being crushed between the rich and poor. We like that narrative. We never question it. We never define the terms, never identify the individuals in aggregate.
The fact is that the richest 1% produce about 30% of the "wealth" if we measure that only by income. If we understand "wealth" to be capital, then the picture is much different.
"Eighty-seven percent of upper-income Americans -- those making $75,000 or more annually -- own stocks, as do 83% of postgraduates and 73% of college graduates. Sixty-four percent of Republicans hold stocks, compared with half of Democrats and independents. Men are more likely than women to be stock owners. Those aged 50 to 64 are the most likely of any age group to say they have money invested in the stock market." -- http://www.gallup.com/poll/147206/Sto... (And the poll shows that this is these are lowest numbers in in 15 years.)
Now, we can decry the recession. Indeed, I do. But I also know from US economic history - the stuff of numismatics, which is the touchstone of economics - that the so-called "Great Recession" (1873-1896) was a time of great growth, expanding opportunities, new inventions and new technologies: the 1890 census was completed because of punched card tabulators, i.e., the root and rock of computing machinery.
Everyone loves silver dollars, especially those fat-faced Roman ladies from George Morgan. But the Morgan Dollar was inflation money. And it was, indeed, good for gold - if you wanted... which, apparently no one did, in gross violation of Gresham's Wild Conjecture. (http://necessaryfacts.blogspot.com/20...) The fact is that, like now, the US economy continued to "contract" even as more money was pumped into it. But life got better for everyone. The world of 1896 was 23 years cleaner, safer, better fed, better housed, more educated, and entertained. Just like now.
How was that possible?
The fact is that back then, just like now, the richest 1% were just barely capably of making the smallest incremental improvements in financial management and creative investment. Using their influences with governments, they cut their own taxes, creating foundations that funded huge astronomical instruments, and even rockets for exploring the upper atmosphere... as well as hospitals, universities, and libraries...
They did not have to do that. They could have held it all in cash and swum around in it. Henry Ford wanted to. He was incensed to discover that he could not go to a bank and withdraw "his" money ($3 million at that point) in small bills and coins right from the vault. The bank did not have it. They had stocks, bonds, real estate, insurance policies,... Including stock in his firm and those of his competitors, because the market is inscrutable, even for those who like to think they can control it. They know that. So, they hedge their bets.
The commodities markets are driven by producers. Co-operatives of farmers buy and sell long and short futures contracts on the very products they bring to market. It is how they even things out over the calendar year. Meanwhile, about 90% of other investors buy on enthusiasm and sell into their misery. And they do that voluntarily.
Very few of us billions of others actually do that. We do play sports for fun. So, we know why athletes earn what they do. Most of us would rather be in a room full of spiders than to be on an stage in front of an audience. So, we know why movie stars are millionaires. But very few of us actually buy and sell anything, except our own labor -- and most people want to sell it once for life.
Therefore, they call bankers gangsters, and denounce "crony" capitalists for the friends they themselves do not have - even though city hall and the halls of Congress are wide open to any and all.
If you do not want to go yourself, you could hire someone. In this market, you can find any kind of a lobbyist for about $100 per hour, and a good one for about twice that. You can collect that kind of money from a living room full of football fans. But it is easier to condemn the rich.
And no one has friends in city hall or Congress - though the streets are, indeed, cleared of snow; and anyone who destroys a skyscraper eventually meets a Navy SEAL team.
The claim is made that in our glory days, the middle class produced the most wealth, but now in our evil times, the middle class is being crushed between the rich and poor. We like that narrative. We never question it. We never define the terms, never identify the individuals in aggregate.
The fact is that the richest 1% produce about 30% of the "wealth" if we measure that only by income. If we understand "wealth" to be capital, then the picture is much different.
"Eighty-seven percent of upper-income Americans -- those making $75,000 or more annually -- own stocks, as do 83% of postgraduates and 73% of college graduates. Sixty-four percent of Republicans hold stocks, compared with half of Democrats and independents. Men are more likely than women to be stock owners. Those aged 50 to 64 are the most likely of any age group to say they have money invested in the stock market." -- http://www.gallup.com/poll/147206/Sto... (And the poll shows that this is these are lowest numbers in in 15 years.)
Now, we can decry the recession. Indeed, I do. But I also know from US economic history - the stuff of numismatics, which is the touchstone of economics - that the so-called "Great Recession" (1873-1896) was a time of great growth, expanding opportunities, new inventions and new technologies: the 1890 census was completed because of punched card tabulators, i.e., the root and rock of computing machinery.
Everyone loves silver dollars, especially those fat-faced Roman ladies from George Morgan. But the Morgan Dollar was inflation money. And it was, indeed, good for gold - if you wanted... which, apparently no one did, in gross violation of Gresham's Wild Conjecture. (http://necessaryfacts.blogspot.com/20...) The fact is that, like now, the US economy continued to "contract" even as more money was pumped into it. But life got better for everyone. The world of 1896 was 23 years cleaner, safer, better fed, better housed, more educated, and entertained. Just like now.
How was that possible?
The fact is that back then, just like now, the richest 1% were just barely capably of making the smallest incremental improvements in financial management and creative investment. Using their influences with governments, they cut their own taxes, creating foundations that funded huge astronomical instruments, and even rockets for exploring the upper atmosphere... as well as hospitals, universities, and libraries...
They did not have to do that. They could have held it all in cash and swum around in it. Henry Ford wanted to. He was incensed to discover that he could not go to a bank and withdraw "his" money ($3 million at that point) in small bills and coins right from the vault. The bank did not have it. They had stocks, bonds, real estate, insurance policies,... Including stock in his firm and those of his competitors, because the market is inscrutable, even for those who like to think they can control it. They know that. So, they hedge their bets.
The commodities markets are driven by producers. Co-operatives of farmers buy and sell long and short futures contracts on the very products they bring to market. It is how they even things out over the calendar year. Meanwhile, about 90% of other investors buy on enthusiasm and sell into their misery. And they do that voluntarily.
Very few of us billions of others actually do that. We do play sports for fun. So, we know why athletes earn what they do. Most of us would rather be in a room full of spiders than to be on an stage in front of an audience. So, we know why movie stars are millionaires. But very few of us actually buy and sell anything, except our own labor -- and most people want to sell it once for life.
Therefore, they call bankers gangsters, and denounce "crony" capitalists for the friends they themselves do not have - even though city hall and the halls of Congress are wide open to any and all.
If you do not want to go yourself, you could hire someone. In this market, you can find any kind of a lobbyist for about $100 per hour, and a good one for about twice that. You can collect that kind of money from a living room full of football fans. But it is easier to condemn the rich.
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If you can refuse it, it has no compulsion.
I suppose it's like voting. You have the privilege of voting for their choices. No matter which choice you are only rubber stamping 'feel good' baskets of no consequence to convince yourself you had 'choice.' Had they just announced the winner and be done with it the result would be the same.
The problem with that is the equal and opposite claim of socialists that the USSR (China, Sweden, Cuba, take your pick, or take them all) is not "really" socialism, but "state capitalism." True socialism has never existed because it was not allowed by the capitalists. Lenin was in the employ of Wall Street. That is the Myth of Jekyll Island.
The writings of American Marxist theoretician Daniel De Leon are the basis for the Socialist Labor Party. They were opposed to the Bolsheviks.
Of course, we lump them all together, socialist-this, socialist-that, fascists or syndicalists left or right,... Just as they lump all of us together: corporatists, banksters, Austrians, Chicagoans, Keynesians, conservatives, libertarians, Objectivists...
Some libertarians dislike the word "capitalism" because they claim that it was invented by Karl Marx. They claim, also, that "capital-ism" is the control of society by those who hold capital. They offer free enterprise or personal enterprise or free market or open market, to make it clear that they do not want society to be controlled by anyone.
Similarly, our information age, as a consequence of the industrial era was possible only because of the rationalism, empiricism, humanism, and secularism of the Enlightenment. But it was not a "pure" Enlightenment because it had elements of religion in it.
And this is not a "pure" information age because we have failing schools, ignorant masses watching "reality" television ...
Calls for perfection are a fallacy in debate.
Alan Greenspan wrote "The Assault on Integrity" for Capitalism: the Unknown Ideal edited by Ayn Rand, with essays by Ayn Rand and others. Capitalism depends on integrity, which you fail to see in the people you condemn.
Debt is the seed of civilization. Read about how numeracy and literacy were both invented through the use of clay tokens that represented promises to pay in the future. Keywords: Denise Schmandt-Besserat; Sumerian clay tokens; the origins of writing.
See my reply to cranedragon below. (https://www.galtsgulchonline.com/post...)
Particularly at what you enjoy , or/and love doing.
This is one of the "juiciest" discussions I've participated in the Gulch. A lot to absorb, a lot of insight to achieve.My brain might need a higher capacity processor to get it all.
It's more than possible to maintain Objectivist principles and live a very comfortable life. You'll probably have to comply with some regulations and licensing that shouldn't exist, but obeying the law isn't un-Objectivist, even stupid ones. At some level of success, however, you're likely to run into resistance that was created by government, likely because of "encouragement" from your competitors. At this point honoring Objectivism may be become very difficult because you will have to participate in a very non-Objectivist system and seek special deals, favoritism or even outright alms from your government servants.
In those cases, however, you only have constrained choices. Without real freedom we may consider it perfectly reasonable NOT to consider seeking special deals, favoritism or alms from government servants as abandoning Objectivist principles. If you believe that strict adherence to Objectivist principles would require a person to "go on strike" instead of dealing, that's OK too.
Doug Casey
Porter Stansberry
Bill Bonner
Nick Vertucci
I probably have others but I can't dredge up their names right now.
"Most of us would rather be in a room full of spiders than to be on an stage in front of an audience." I'd rather sleep on a bed of nails for a year than be in a room full of spiders. Two things would be required for me to survive that horror, a flame thrower and a year in an institution where everything was padded.
Why was Spain made poorer by every shipload of gold and silver, as you comment below? Was that true of every shipload of copper, or seed corn? Was Britain more productive, and Spain less so, because Spain was good only at finding gold and compelling people to mine it for them and Britain was good at technological successes like steam engines and factories, or was it entirely that Britain debased its coinage more aggressively? This does not square with my understanding that Britain was on some form of the gold standard from the time of Isaac Newton in 1663 until 1931, with a brief suspension during WWI, even if they did issue paper notes. Did the Enlightenment open up Britain to middle-class endeavours while leaving the upper class predominantly bound to the land, leading to the great economic expansion of the 19th century, on both sides of the Atlantic?
If your point is that wealth is reinvested and therefore, to quote Hello Dolly, is like manure, spread around, encouraging young things to grow, you get a hearty thumbs up from me. If your additional point is that most investors, especially small investors, are saps, buying on enthusiasm and selling into their misery, amen to that. [When your gardener or the cabby says he's buying a $500K house with nothing down, it's a hint that the market is a teensy bit over the top....]
It is indeed easier to condemn the rich, particularly if you've never done the heavy lifting to get anywhere close to their exalted realm. I love the story about the man who accosted one of the Gilded Age moguls [JD Rockefeller?] and demanded "his share" of said mogul's fortune. He was handed a dime.
I don't like the revolving doors between Wall Street, K Street, and the White House, with the Fed keeping interests rates lower than low, impoverishing savers and seniors, while banks reel in money hand over fist over hand over fist. But ultimately the power is, or was at one point, with the people who voted in legislators who started treating other people's money as if it were their own, to engage in philanthropy with extorted tax dollars and staying in power [excuse me, in office] by robbing Peter to buy votes from Paul.
p.s. Hope to see you back at Meetup sometime soon.
Michael Jordan
Penn & Teller
John Mauldin
Lacy Hunt
Marc Faber
You, not surprisingly, take the lower interest rate/lower monthly payment plan with a balloon payment. At the end of five years, you probably still owe $75,000 out of the original $80,000 but in the interim the value of the house has declined to $60,000. Please explain to me why I was guilty of fraud to write a mortgage with a balloon payment where I refused to refinance indefinitely? Much can change in 5 years. You could be unemployed. You could have allowed the house to deteriorate. You could have made it a rental and allowed the tenants to trash the house. We could be in the trough of a business cycle. That last is not your fault, but neither is it my fault. Had you asked if I would refinance the loan indefinitely, even under any of those scenarios, you know and I know that the answer would have been No {and what where you smoking when you asked that question, anyway}.
Any contract is a delicate dance between what you want and what I want, what you are willing to give and what I want to take, and vice versa. Particularly in states where home loans are non recourse -- that is, where the bank's only option is to reclaim the house and try to make itself whole on the mortgage, and cannot pursue the borrower for the deficiency between the outstanding balance on the loan and what is realized in the foreclosure -- the banks need to do all that they can to ensure that the value of the asset exceeds, by a comfortable margin, the outstanding balance on the loan.
The solution you propose -- to mandate that balloon-repayment loans are guaranteed to be renewable, indefinitely, would have at least two certain results. First, such loans would become almost impossible to obtain, and your friend would have had no alternative to a fixed-term standard 30-year mortgage at a much higher monthly payment -- which might have priced your friend out of the market and could have been the better solution for him, not that he would have been happy when he wanted to buy a house. Second, mortgage rates would rise across the board, for all borrowers, to compensate for the increased risk on those indefinitely renewing loans.
If your response is that you are not proposing a government mandate, but rather only that the original loan documents were fraudulent because they did not include, as the bank's standard loan offering, an indefinite renewal provision, I would reply that the bank is in business to make money for its owners, and such a provision is risky and therefore inadvisable. Any bank that offered those loans would become very popular for the short period of time before it went out of business, buried under the avalanche of people who need indefinitely-renewing loans because they trash their houses and buy at the top of the market.
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