But once this last swimming pool of wealth– America’s middle class– has been siphoned dry, then who’s left to stripmine and make use of?
Neoliberalism likes markets, because markets make it possible for the wealthy to own whatever that produces income and capital gains. Neoliberalism— the ostensibly appealing notion that opening local markets to international capital produces success for all involved– is all enjoyable and video games when it’s stripmining some remote developing-world country, but given that chances have actually dried up worldwide, the stripmining maker has come home to America and its target is America’s middle class.
I have long called this the Neocolonial-Financialization Model: in essence, Neoliberalism is a new, enhanced version of the old Colonial Model, in which the capital-rich colonial power grabs the political and financial reins via force or subterfuge and continues to strip the colonized nation of its wealth and resources and exploits its manpower to make cheap goods for home markets.
In Neocolonialism, the forces of financialization (financial obligation and leverage managed by reserve banks and banking cartels) are utilized to indenture the regional populace to the financial center: the peripheral “colonials” obtain money to purchase the completed goods offered by the “core” corporations, twice as enhancing the center with 1) interest and the transactional “skim” of financializing possessions such as property, and 2) the earnings made offering products to the debtors.
Important to the appeal of this colonialist model is the broad-based access to credit: everyone and her sibling can all of a sudden manage to hypothesize in housing, stocks, commodities, and so on, and ride this speculative bubble to a way of life that was when the special protect of the upper class.
Credit-poor colonials are all of a sudden used generous credit at modest rates of interest. It is a deal that’s too great to refuse and the resultant explosion of personal credit feeds what seems a virtuous cycle of rampant consumption and rapidly rising possessions such as equities, land and housing.
However all bubbles pop, and once the possession bubble pops, the credit bubble pops, and all the illusory wealth vanishes, leaving just the debt and the squashing month-to-month payments. Invite to the Neocolonial-Financialization Model, neofeudal debt-serfs and tax donkeys!
Having actually lacked chances internationally, America’s Financial Elite has actually come house to stripmine the last offered swimming pool of wealth: America’s middle class. You might have been wondering why America’s international corporations have actually been investing trillions of dollars buying back their own shares.
The response is two-fold: 1) this reduction in the float (variety of shares readily available for trading) enhances share costs, improving experts and super-wealthy owners, and 2) because these international giants can’t find any low-risk, high-return opportunities worldwide to purchase.
The secret to stripmining the middle class is simple: as soon as a market has actually been de-regulated and opened to worldwide capital, the definitive aspect becomes the expense of borrowing money, as those with the lowest borrowing costs can outbid everybody else for income producing possessions.
Consider a bidding war for a single household home. 9 of the bidders can obtain money (a home mortgage) at around 4% interest, and one can borrow at 1%. This benefit in the cost of capital allows this celebration to outbid the other bidders since the expense of an extra $50,000 is minor at 1%.
The bidder with 1% capital likewise has lower bring expenses, which means they will gain greater make money from lease than the bidders who should pay greater rates of interest.
This is how the Neocolonial-Financialization Model sluices income-producing properties into the hands of the Financial Elite, who have limitless credit with reserve banks. The secret to the entire Neocolonial-Financialization Design is the reserve bank, which offers unrestricted almost free money to banks, financiers and corporations, which then provide out this Federal Reserve-supplied almost free money to debt-serfs at much higher interest rates.
This is how financiers can purchase 20% of all U.S. single family homes in big gulps, funded by Federal Reserve-supplied nearly free money. This is how the once-middle class winds up “owning” a rapidly depreciating $55,000 truck (via a monstrous loan to a Fed-funded bank or corporation) while the investors and leading tier wind up owning practically all the nation’s income-producing properties.
Prior to you hurry to quibble, consider the reality that 97% of all income from capital flows to the top 10%, and the large bulk of this flows to the top 0.1%. The bottom 90%, which by meaning consists of the middle class, makes a near-zero share of the nation’s income from capital.
Monopoly Versus Democracy: How to End a Gilded Age (Foreign Affairs)
“10 percent of Americans now control 97 percent of all capital income in the country. Almost half of the brand-new earnings created given that the global monetary crisis of 2008 has gone to the most affluent one percent of U.S. people. The wealthiest three Americans collectively have more wealth than the poorest 160 million Americans.”
Europe’s Financial Elite led the way, loosing the Neocolonial-Financialization Model on Greece and other European Union peripheral nations. In essence, the “core” nations of the E.U. colonized the “peripheral” nations through the financializing euro, which allowed a massive expansion of debt and consumption in the periphery. The banks and exporters of the “core” countries exacted enormous benefit from this expansion of financial obligation and intake.
This is the excellence of Neofeudalism. The peripheral nations of the E.U. are effectively neocolonial debtors of the Core countries’ banks, and the taxpayers of the Core countries are now feudal serfs whose labor is dedicated to making great on any bank loans to the periphery that go bad.
In America, the middle class has actually been stripped of income-producing possessions and encumbered the tax problems shirked by the billionaires, investors and worldwide corporations. Having actually already stripped and made use of America’s working class, now an asset-less class of precariats, America’s Financial Elite are busy mopping up the last of the middle class’s assets.
Once this last swimming pool of wealth– America’s middle class– has been siphoned dry, then who’s delegated stripmine and exploit? The Federal Reserve has no answer, and neither does anyone else. So here’s the answer too shocking to say aloud: similar to rats dumped in a sealed 55-gallon drum, America’s Financial Elite will have only itself to feed on from now on.
The E.U., Neofeudalism and the Neocolonial-Financialization Design (May 24, 2012)
< img align ="center"src=" https://www.oftwominds.com/photos2021/wealth-inequality4-20.png "/ > If you found value in this material, please join me in looking for options by becoming a $1/month client of my work by means of patreon.com.
My brand-new book is readily available! A Hacker’s Teleology: Sharing the Wealth of Our Diminishing Planet 20% and 15% discounts (Kindle $7, print $17, audiobook now available $17.46)
Read excerpts of the book for free (PDF).
The Story Behind the Book and the Introduction.
Current Videos/Podcasts:
The World Simply Got a Lot Riskier (with Gordon Long, 36 minutes)
My current books:
A Hacker’s Teleology: Sharing the Wealth of Our Shrinking World (Kindle $8.95, print $20, audiobook $17.46) Read the first area free of charge (PDF).
Will You Be Richer or Poorer?: Profit, Power, and AI in a Distressed World
(Kindle $5, print $10, audiobook) Read the very first section free of charge (PDF).
Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Check out the very first section totally free (PDF).
The Experiences of the Consulting Thinker: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); checked out the first chapters totally free (PDF)
Cash and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).
Become a $1/month customer of my work via patreon.com.
NOTE: Contributions/subscriptions are acknowledged in the order got. Your name and e-mail remain private and will not be offered to any other individual, company or company.
|
Thank you, Sean M. ($5/month), for your marvelously generous pledge to this website– I am significantly honored by your assistance and readership. |
Thank you |
, Jerry D. ($5/month), for your monstrously generous pledge to this website– I am greatly honored by your assistance and readership. |
|
Thank you, Jeffrey L. ($5/month), for your monumentally generous promise to this website– I am considerably honored by your assistance and readership. |
Thank you |
, Susan F. ($5/month), for your splendidly generous pledge to this site– I am considerably honored by your support and readership. |