Do you understand the significance of ‘3 years’? 3 years could mean anything so I need to provide some context.
3 years is how long it took the stock market to ‘unwind’ after the 1929 October crash.
Yes good citizen, while many of us have a mental image created by reports of stockbrokers leaping to their deaths on 'Black Friday' that the stock market had somehow ‘crashed’ in a single day...but this was not, in fact, the case.
While it’s common knowledge that the events of ‘Black Friday’ marked the beginning of an economic downturn that lasted ten long years, I was unaware that the stock market, instead of one significant plunge, dropped steadily over the next three years due to the ‘excesses’ of the late twenties.
I’m currently in the process of slugging my way through ‘Wealth and Democracy’ by Kevin Phillips wherein the author takes the reader on a hunt for nothing less than the elusive American Aristocracy!
It’s a long, hard journey filled with enough graphs and charts to make your eyes glaze over (permanently.) That said, the effort yields a result not unlike watching a train wreck in slow motion...and you’re a passenger on that train!
It’s also important to add that this book was published in 2003 so certain events like the Dow breaking the 12,000 mark are not covered...although the past implies what this means and it isn’t good.
What’s happening to our nation today has happened to others with striking parallels. The author examines 17th century Spain, 18th century Netherlands and early 20th century Britain.
The first thing to strike the eye is a ‘domino effect’. It seems the ‘center’ of world power chases cheap labor with each society experiencing an inflow of foreign capital followed by a phase of expansion. This explosive expansion leads to world primacy and an affluent middle class...with an even more affluent owner investor class.
This leads us to a final stage, a stage where the emphasis shifts from producing wealth to consolidating it.
Once the working class comes into its own it seems the owner class starts looking for someplace else to invest.
Once the next host nation or (nations) were established there came a flood of imported goods. Which were, naturally, made by the industries financed by the owner class of the former host nation.
The end result is a strikingly familiar story. Jobs dried up as domestic operations found themselves unable to compete with the better-financed and more modern foreign invaders.
The masses suffered the grinding erosion of their earning power silently while the owners turned their interest from production to finance.
Just as the past thirty years have been marked with an obsession with ever more creative financial instruments/vehicles with some of these borderline Ponzi schemes being backed {guaranteed} by no one other than John/Jane Q. Public!
Oh, one more thing...in each case prior to the host countries’ collapse as a global power there is a war that runs up an incredible amount of debt...
Cue theme to ‘The Twilight Zone’ here.
I need you to get this straight because it’s important, very important that you understand this!
When he says ‘financial markets or creative financial instruments what he’s telling us is many (if not most) of today’s top corporations earn more income from their investments than they do from shipping product!
Don’t get the wrong idea, these are NOT investments in infrastructure. This is an obsession with buying and selling existing assets for fun and profit that has nothing to with true wealth creation and everything to do with raiding the nation’s treasury!
The past twenty to twenty-five years have marked a strange set of circumstances where companies were laying off millions of workers yet still earning record profits.
The question formerly without answer was how?
This book provides the answer to that mystery, asset inflation.
The so-called housing bubble may be the best illustration of this weird phenomenon as most of us have the same unanswered question running through the back of our minds...'who the hell can afford these places (at these prices?)'
Well, we all know these houses (were) selling but they were doing so as a result of increasingly ‘creative’ financing coupled with (extremely) relaxed lending standards.
Our current situation is disturbing, deeply disturbing but what I find even more disturbing is the fact it has all happened before!
Back to the title of this book for a moment because I want to disabuse anyone of the notion that wealth = democracy.
What the author is saying is wealth hijacks democracy, that the two concepts are incompatible.
One need only point to the growing wealth gap and the much diminished economic prospects of the working classes for evidence of this claim.
We have a ‘hocus-pocus’ economy good citizen, the rising GDP numbers aren’t real, this false prosperity only exists on paper driven by massive amounts of government debt.
Some will be quick to point out that neither Spain, the Netherlands nor Britain has ‘dried up and blown away’ and the same will be true for the US...in a physical sense.
For the book goes on to illustrate the end result of what happens when a society is ground down under the heel of this variety of economic oppression.
Poverty leads to famine and famine yields to plague.
The rich continue to import what they need leaving the poor to fend for themselves in the blighted landscape that results from money creating more money without the use of labor.
Not only has it happened before but it IS HAPPENING again...right here and now!
There is, in my mind, but one way to put an end to this viscous circle and that is to ban the exploitation of humans by other humans/human constructs.
Let no human be another human’s income stream which (rightly) restricts the accumulation of wealth to one’s own labor.
No one was put here to be someone else’s cash cow.
Think about it.
Thanks for letting me inside your head,
Gegner