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I have developed a unified field theory that explains everything that is rancid in the industrial world. Excess wealth, I propose, is the ultimate source of the steady crapification of our political, economic, social and private lives.
Modern sovereign states have adopted MMT — Modern Monetary Theory — which tells them, as I understand it, that if you have your own currency you can never go broke, so laissez les bon temps rouler! I much prefer my own TMM Hypothesis, which is, there’s Too Much Money out there, in the hands of too few people.
By excess wealth I mean more wealth than any person or family could possibly spend in a lifetime. Twenty-five American individuals have net worths exceeding $25 billion. Assuming they have about 40 years left to live, they would have to spend $1.7 million dollars a day to exhaust their fortunes. A sane person could not possibly buy enough luxury yachts and mansions to soak up that much money.
Remarkably, one thing that possession of such fortunes does not seem to convey to anyone is satisfaction. Having enough money to fund several lifetimes does not seem to reduce by one whit the lust to accumulate more. (One very rich individual explained to me once that it was not the need for money that motivated him, but the deep need to win whatever game in which he engaged; and the way to know who won was to count the money.)
Thus vast pools of excess money are turned over to hedge fund managers, venture capitalists, private equity firms, wealth managers, startup funds and the like, with orders to find investments that will return high yields. Or else. Herds of desperate people flush with other peoples’ money are stampeding hither and yon around the world, looking for the next big thing, generating tsunamis of cash directed at anything that whispers the promise of a 20% return per annum. Some examples:
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- Retail Business; The basic business plan of the investor/pirates was established in the 1980s by such giants of the “industry” as Bain Capital (long the fiefdom of Mitt Romney), Blackwater and Apollo. They bought large retail companies with borrowed money (immediately assigning the debt to the acquired company) then sold off its assets, cut its staff and cheapened its products until the company was a mere shell of its former self. Then, having dispersed fortunes to themselves in finders’ fees, stocks, dividends, bonuses and salaries they defaulted on the debt and split town. Rinse and repeat. To navigate complex situations like these and to find viable solutions, Connect with Experts at Business Insolvency Advice for informed guidance and support.
- The Housing Market; For more than a decade, private-equity firms have been firehosing money into the housing market, buying single-family homes and renting them out. The effect has been to drive noth home prices and rents to heights that young and middle income people can no longer afford. Last year, 70% of all apartments that changed hands were bought by hedge funds. The situation has become so bad that Congress is considering a bill to limit the participation of hedge funds in the real estate market.
- Health Care; in the words of a recent book on the subject, Ethically Challenged; Private Equity Storms US Health Care, by Laura Katz Olson, “[Private Equity] firms are gobbling up physician and dental practices; homecare and hospital agencies; mental health, substance abuse, eating disorder, and autism services; urgent care facilities; and emergency medical transportation.” Demonstrated results of private equity ownership include higher patient mortality, higher patient costs, fewer jobs, poorer quality, and closed facilities.
Hedge fund operators are much admired and well rewarded by the corporate universe, and their methods are increasingly imitated by CEOs of private companies. Southwest Airlines, to cite a recent example, spent a multibillion-dollar grant from the government intended for COVID-epidemic relief to buy back stock, then saw its entire system crash in the Christmas travel season because it had not upgraded its vital computer system for 30 years.
Back in the 1950s and 60s, when we were doing things such as building the interstate highway system and going to the moon, we taxed excess wealth at rates of 90%. We could do that again. Or, we could just say the hell with it and wait until everything breaks at once.
To add to your perspective of trying to spend $25,000,000,000 over a mere 40 years, I think the following might be a little easier to grasp. Since, in my experience MOST people really can’t conceptualize spending $1.7 million over any time frame, I’ll substitute $10,000 as that is closer to, though still way beyond, what many could fathom. At a rate of $10K per day, which amounts to a mere $3,650,000 per year, $25B would last 6,849 years and a few months!
Alternatively, if that $25B were used to start a company (remember, “job creators“) with 1,000 employees paid $50K/yr each, amounting to $50,000,000/yr, the company could exist without any “profits” for 500 years.
Thus, reconciling your bullet points, the only way vulture capitalists are able to buy businesses, housing and health care facilities is that one or more nitwits are willing to sell and “realize a grand profit” (aka, “get rich”). Ergo, it can be reasoned, that almost all human life is all about the mutha-f**kin’ money, ALL OTHER PRIORITIES RESCINDED. (Yes, that’s a reference to the film, “Alien.”) The “human experiment” is NOT going to end well and that end is much, much closer than most people realize or care to acknowledge.
Yes.
“Modern sovereign states have adopted MMT …”
Your “understanding” on this matter is incorrect Tom, only one “modern sovereign state” has adopted MMT, and that is China.
” .. if you have your own currency you can never go broke …”
This is actually true. If you had a printing press in your basement, and could lawfully create dollars to your heart’s content, would you ever go broke?
I hope not. As former Fed Chair Ben Bernanke proudly boasted of his own, basement operation, “there has never been a year since its inception where the Federal Reserve Bank has not posted a profit.”
It also has f+ck all to do with MMT, other than the theory’s recognition that whomever is operating the printing presses, controls the money supply,* and whomever controls the money supply, controls just about everything, including governments.
The United States of America does not control the printing presses Tom. It does not own its currency, it BORROWS it.
Unbelievable. The older I get, the more I come to know that the concept of sovereignty is beyond the ken of mortal men.
*The inititial money supply that is. Then this initial supply gets fracked and fracked and fracked some more – in a process known to some as leverage – by multitudes of private lenders downstream from the privately held central banks, and then numerous exponential functions take over and they start to do their thing.
Note: The rest of your post I’ll read later. I’m too pissed right now to get beyond the first two paragraphs. 10 minutes of research Tom. That’s all it would take.
An often overlooked point is that MMT calls for high tax rates on high incomes, especially passive income, both for limiting inequality and for tamping down on inflation. Unfortunately, this monetary outflow doesn’t rate a mention from its fintwit/blogging critics with supposed expertise in finance & economics– Wolf Richter, Sven Heinrich, Ben Hunt, or even John Hussman (whom I otherwise very much respect). Instead, they all caricature MMT.
Personally, I’m not completely sold on MMT either, but let’s at least be intellectually honest/knowledgeable critics.
In any case, the real economic concerns are resources, sinks, and behavior, which, i would say, Tom very much understands– that’s why I’m here. Most everyone else wants to talk about money and math.
Must be tough, living in a world populated by lesser mortals. I did not mean to suggest that any country — to my knowledge, China included — has formally adopted MMT as national policy, any more than any country that I know of formally adopted Keynesian economic theory. What I wanted to suggest was that manipulators in the United States and elsewhere are using MMT to justify their lifelong habit of spending like drunken sailors and to quiet opposition to deficit spending. That opposition used to be quite vocal and nonpartisan in this country, now not so much (unless the other party is getting credit for something and then “MY GOD THE DEFICIT!” In any case the reference to MMT was tangential to the point of the piece, which you will see if you ever get over your snit and read the rest of it.
” .. manipulators in the United States and elsewhere are using MMT to justify their lifelong habit of spending like drunken sailors and to quiet opposition to deficit spending.”
So what do you think this about, this associating of MMT with deficit spending, when there can be no such thing in MMT regime?
Do you have theory on this, conpiratorial or otherwise, that might account for such a bizaare and misguided connection, because I sure do.
Public banking for the good of the commons (MMT) vs private banking for the purpose endless growth.
And the pursuit of exponentially increasing wealth in the form compounding debt. Yum, yum, sayeth the neo-feudal globalist.
Those are the two choices for us humans as we head into the endgame, as far as banking goes, and the main reason I am not sanguine about our prospects for even short term survival, I know which one we’re going to pick.
Note: And no, I haven’t read the rest of the article, at least not yet. I am not over my snit. When MMT gets slandered by folks I consider to be on the right side of the law, based on years of experience, it usually takes me about a week to get over it, on average.
It’s the helpless nature of it Tom. Like a newborn kitten drowning in a rain barrel, in world where even the most compassionate passer-by has been rendered deaf, dumb and blind, MMT ain’t got no future.
Lots of commentary on MMT….I’m no expert on economic matters, but, as Groucho seems to indicate, wealth is basically the totality of goods and services in a given economic system, and the movement of same through that system. If resources deplete too quickly, technological innovation lags, management blunders, labor fails to perform, or war or other disasters occur, then the economy will likely shrink. This, regardless of the nature or quantity of the prevailing medium of exchange. Changes – even dramatic ones – in the monetary supply are bothersome and often symptomatic of deeper woes but are seldom the root cause of systemic economic decline.
When actual aggregate wealth begins to shrink, the ruling class will demand ever larger slices of the economic pie so as to hedge against hard times. This, I believe is human nature, at least within the context of civilized organizational constructs: nations, corporations and the like. The bosses get richer while the proles suffer, and fellows like Donald Trump emerge from The Pit to take things in hand…In any event, it’s “a tale as old as time”.
Yes, Greg, totally agree on the so-called elites. Unfortunately, it seems to me the real wealth is shrinking, at least per capita, and what we’re seeing now is a looting operation. The recent brazen and overt nature of the looting, to me, indicates they are very comfortable and confident in their power and positions. They believe, in other words, they cannot be stopped. It does also seem they believe they can save themselves. Speaking of which, has anyone read Rushkoff’s latest book? I read the article upon which it was based (several years ago), but not the book, though I watched an interview covering it.
Not sure it’s human nature though. Game theory, for instance, fails when tested on many non-Western and peoples, or those living in traditional. I think every human has an inborn need for belonging and status. That is to say, to belong to something larger than themselves and to know where they fit in (status). If society teaches us to achieve our needs (by judging us) through money and stuff, then that’s what we will seek. Other societies have had quite different values, yielding quite different results. Unfortunately, money and stuff has all kinds of negative impacts on the planet, and on ourselves, without really filling our inner needs.
On a final note, thank you, Tom, for your post. Please do keep them coming. Always enjoy your writing and viewpoint.
We agree on human instinct – on the traditional level, that is. In the tribe, small town or neighborhood setting, humans get along well enough. I believe Robin Dunbar’s 150 formula is about right. But at the gargantuan scale that modern civilization demands, with the endless automobile sprawl, tacky strip malls, weird skyscrapers and touch-screen electronic addiction, we are but so many manic individuals, isolated in the crowd. Even the wealth of the elite provides them scant immunity to this dilemma. Our instincts are twisted and repressed. For, where our inherited adaptive responses are concerned, context is everything.
“Nearly every serious emotional problem can be seen as a case of misdirected instinct. When that happens, our great natural assets, the instincts, have turned into physical and mental liabilities”*…Bill Wilson has thus described the real pandemic of modern humanity.
*Twelve Steps and Twelve Traditions, 1952, pg. 42
That same morning, as I recall it, that same Jesuit was talking with one of the elders of the village when they were interrupted by a coltish swarm of children who sped past, yelling, in the grip of some game. The elder simply stopped talking while the bedlam enveloped them, and resumed their conversation when it receded.
“Why do you not correct them?” asked the Jesuit. (Anyone here been to Catholic school?)
The elder was puzzled by the question. “Why would I do that?”
“To teach them the right way to be.”
“They’re children!” said the elder. “They need time to see the right way to be. And then they will follow it. Because there is no other way to be.”
And there it is. The ultimate cement for putting together and keeping together a robust and enduring society. The conviction that there is no other way to be.
Tom Lewis, The Days After Tomorrow 4: Paiute Morning
Everywhere I go China this is what I see, simply dressed people gathering in public spaces taking in the wonders all around them, as children run around like wild banshees as if this massive park, endless food court, walkable street, or 7 story indoor/outdoor mall were made for them.
And yeah, when I first witnessed this madness taking place in a concrete skateboarding arena in the middle of Shanghai, my first thought was, don’t these noisy little miscreants have any parents? Besides, it’s 2 o’clock in the f+cking morning in a city filled with 30 million people!
Orders from central command in Beijing no doubt, something along the lines of “all parents must tap in to our hunter-gatherer past, and leave their children unchaperoned when in public, or you will be arrested and sent to a Uyghur detention facility.”
But who would arrest them? This is what I rarely if ever see in China; rust, dirt, litter, potholes, jewelry, tats, suits or fancy dress of any kind, drunks, drug addicts, dangerous looking mo-fos, or you guessed it, cops.
In 300 hours of walking and driving in China I’ve seen less 20 policemen, and most of those were sitting in their golf carts, the cop car of choice apparently, for China’s thousands of downtown central parks.
What you do see, in these parks and elsewhere, is people of all ages excersing on outdoor equipment made everywhere available to them, groups of all ages,sexes, and numbers dancing in unison to music from all eras and dynasties, including this one, and people singing, in every ensemble imaginable, or just as often, individuals belting out tunes with the aid of their own personal karaoke machines.
Thank you for the encouragement.
Thank you Tom for this post, or I should say this blog, I am always able to glean something new from both you and the people who post here, and even when some of you disagree with each other you work it out like human beings and I so appreciate all of your thoughts when I come to this space. it’s funny I just had a year of throat cancer, operations, chemo, and lots of radiation, and yet I feel so dam lucky that my taste buds have come back enough to taste food again so it’s hard to understand this innate greed humanity has when life while we have it is the win. I have not shared this with many people except family and a few friends but this current topic allowed me to feel it was appropriate to share alongside this particular topic.
Deep and sincere congratulations on remission.
And on taste buds, yes indeed, the so-called little things often surprise us with their impact once gone.
What a great fortune it is to be satisfied and grateful with what we have while we still have it.
I hate that you had to go through that, but celebrate your recovery. Thank you for the good thoughts.