Inequality and banking

In earlier writings, I have made clear my views on currency mismanagement and corporatism. Perhaps what I haven’t made so clear, is that, it is in fact the banking sector, with its unlimited control over currency, which has become the biggest and most powerful cartel the world has ever known.

It is easy to see, once you look past the smoke and screens of the keynesian framework, that all the interest manipulation, easing lending conditions etc. that we hear about, is doing nothing but favouring the banking sector, at the expense of everyone else.

Indeed, when the Central Bank issues money, like I’ve said before, this creates inflation. But this doesn’t happen automatically. So what does this mean? That the first recipients benefit from an increase of the money supply without the increase in prices. The money is being created when the ECB, for example, makes a loan, the first hand recipients of this newly created money? A selection of 1500 eligible banks.

This analysis, completes what I wrote previously on income inequality, which has jumped dramatically since 2009 and coincides precisely with a period of very high Central Bank intervention.

Income inequality has become a popular subject since Obama’s speech on the subject a few days ago. However, his well intended speech did as much to raise awareness on the matter as it did on expanding the misunderstanding of the issue.

Profit and loss, and therefore income inequality, are a central part of the Capitalist system. Rewarding those who create wealth creates the incentive to take risks and innovate, taking away the benefits in form of increased taxation or minimum wage increases destroys wealth creation. When a business is successful in what it does and makes profits, this is a sign that it is in fact making society richer, since consumers are rewarding the firm. Any income inequality created here is the result of individual choices and amounts to more wealth. People get richer because they make other people richer, not at their expense.

This is not the case, however, when governments and central banks step in to help their rich friends at the expense of society. This kind of behavior does indeed create income inequality, and is an accurate representation of the rich taking from the poor, a reversed form of wealth redistribution, you might call it. This is not the result of wealth being created, but simply the result of wealth being redirected.

This, again, comes to show that not much has really changed, in the way that most people think. Power still lies in the hands of a few privileged men and the individual is helpless, and worst of all, clueless.

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