Saturday, December 5, 2020
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Wealth Gap Flywheel

Trillion is the New Billion

For the average person, the difference is negligible between trillion and billion. It’s just another larger number that is incomprehensible. When I was younger, a million was crazy, and a billion was unimaginable. Now the goalposts have shifted, and a billion is completely normalized, and a trillion is “just the way it is.”

It’s no secret that currencies are morphing from fiat to infinite. Countries that scoffed at the idea of negative interest rates at the beginning of COVID now are pushed into a corner where they are “considering” the idea. Why is this happening? And what does this have to do with wealth inequality?

Stimulus money is being thrown around like candy. Your politicians are playing a game to decide how much sugar to sprinkle on you, the people. As we’ve come to discover, that money all ends up with billionaires. As billionaires become richer, the majority stay level. And the majority only stay level due to trillions of dollars of stimulus checks.

It’s Fine As Long As Everyone Prints Money Together

The problem is you can’t have your cake and eat it too (at least not forever). If the money being pumped into the system is designed to keep the majority afloat with the side effect making the rich richer… that assures the disparity in income inequality. The moment you take away the stimulus money, the economy will experience a vacuum. Money in the stock markets must be liquidated to put food on the table or pay rent. For the unemployed not fortunate enough to own stock or assets, they suddenly face more dire consequences such as eviction.

Now put on the finest oxfords of your state Senator and realize that they will never stop printing money. Because the moment they do, the economy stalls, and nobody truly knows where we bottom out. Politicians will do what’s best for their self-preservation: print more money to give to the people. Billionaires inching towards trillionaire status is simply the better of two outcomes. It’s not some grand conspiracy. It’s the best of the two cards we have left.

Why Are We So Dysfunctional?

Add the observation that COVID has proven our government’s leadership starts and ends with throwing money at problems since 2008. It’s become our de facto answer to everything. So much so that when it comes time to use any other tool in our toolbelt, we look down and realize there are no other tools at our disposal. All those skills have atrophied.

So our path forward is going to be print more money in ever larger sums year over year. That’s just to keep everyone on level. While making the wealth gap larger. And before the people complain about how much richer the rich are getting. How they have no chance and the world is unfair. The people need to stop and check themselves: the rich getting richer is a side effect of the stimulus money people receive to avoid ending up homeless and begging for food.

America is one of the only countries that can sustain this free money train because we are the world reserve currency. Take that away, and many will wish for the good old days of stimulus checks and easy money. It’s just the less painful of our only two choices.

The Answers Are Known

America is failing an open book test. Because instead of simply looking up the answers in the book, we insist on cheating off our neighbor’s answers. The problem is no one listens to the smart kid, everyone finds it more amusing to mimic the popular kid. When it comes to passing tests, the popular kid just fills out every answer on the scantron with “C: print more money.” And it keeps working as long as you print more. And we can because money is just numbers in a spreadsheet.

To save America: politics needs to be tasked with solving real problems (where intelligent planning precedes money), quality education needs to be restored, and the creation of money needs to be pried from the hands of politicians. Until then, we’re just biding our time before an economic reckoning.

We Create Our Own Headwinds

America has sailed into the ugliest form of capitalism. The reason education will not be solved, problems will not have real executable plans, and money creation will never leave politics is because the very people in control will prevent it.

They don’t do it because they want to cripple America. They do it because they want to be the best capitalists possible and take every last dime via the path of least resistance. The path of least resistance is no longer through innovation, free market competition, and hard work. The path of least resistance is through policy-making to protect the status quo.

This is why the story of Elon Musk is so inspiring: he innovated against all the odds to break the status quo. And did the status quo pour their billions into R&D? No, they fought tooth and nail to outlaw electric cars. We are our own worst enemy. And until we remember that hard work, innovation, and ingenuity are what got us to the dance; we will continue to slump into irrelevance.

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