[taneq]

I'm just trying to get my head around this too. I think the basic mechanics of it are:

1) Abolish gold standard, enabling government to print money

2) Government prints money which is captured by large corporations

3) 90% of the population still owns the same amount of money but it's now worth far less because the rest of the pie is having cash pumped into it.

We're seeing a current example of 2/3 with the Coronavirus government stimulus, which went directly into plutocrat pockets while the masses were handwaved away with a token gesture.

[cryptica]

>> We're seeing a current example of 2/3 with the Coronavirus government stimulus, which went directly into plutocrat pockets while the masses were handwaved away with a token gesture.

This helps to maintain an illusion of scarcity. It keeps the productive working class desperate for fiat money. The realist is that there is no scarcity of fiat at the top echelons; this is made clear by the high valuation of cryptocurrency projects.

The top 1% has so much free money coming in that they can toss it away some cryptocurrency projects with no effect at all on their lifestyles... And in doing so they also hedge their personal risk against the reality of an unsustainable fiat system of which they are currently beneficiaries.

[mrow84]

Yeah in principle the money printing could have been used to devalue the assets of the wealthy and redistribute wealth, decreasing inequality. That didn't happen, presumably because corporations captured the wealth in the way that you describe.

Further, it is clear that some of those corporations (e.g. FAANG) are not the "original wealthy", which is often used as part of an argument suggesting that there is a lot of wealth mobility, but it seems incredibly limited to me, and the flow is hardening just as it did before.

[waldfee]

that's pretty much my train of thought as well.

trickle down economics don't work like the theories would want it to, just look at quantitative easing and the ECB equivalent. all those cheap loans to banks never ended up in the real economy

[Super_Jambo]

This doesn't really stand up to the facts. Governments went off the gold standard far before 1971. By this logic the New Deal and WW2 government spending should've caused huge inequality through inflation.

It seems far more about the success of neoliberal policy allowing economic & political power to concentrate. The various ways that concentrated power then kept capturing more and more of the pie can't be reduced to a single simple narrative.

You have for example:

* Tax cuts

* Unregulated Monopolies

* IP law

* Owned Media

* Unlimited Campaign donations

And on and on.

[taneq]

I don't think what you're saying here disagrees with my theory. You're describing the mechanics of the second half of part 2 ('which is captured by large corporations').

As government policy is restructured to concentrate more and more wealth at the top, the rest of the economy slowly becomes illiquid and the government has to keep printing money to keep the axles greased. It's unsustainable and we're seeing the endgame now.

[Super_Jambo]

Your original post put the blame for inequality on government intervention via money printing.

Govt Inflation -> Inequality.

If only we still had the gold standard then they couldn't cause inequality!

This theory however is contradicted by a bunch of historical data.

There was massive inequality on the gold standard pre-WW1. The New Deal was a huge govt intervention which reduced inequality.

My explanation is that the problem is not government interference in 'free' markets but inequality in power. Economic power via monopolies & weak labour bargaining position AND political power via lobbying, strong parties, gerrymandering.

This power inequality is then leveraged by the powerful to create wealth inequality. The exact mechanisms by which they corrupt the systems to capture that wealth be it inflation or deflation or government handouts or M&A regulations or even slavery doesn't matter. If the systems are controlled by this massive inequality in power then it will find a way to corrupt the rules in powers favour.

So arguing for any particular economic policy is less important than reforming the voting systems, the tax system, the lobbying system and ownership of the media.