[engineeringwoke]

Eh, I'll bite.

I haven't read the source but for one, there wasn't really even a US dollar until 1935. When banks failed, and they did unlike now when they artificially don't, you lost everything. There was no FDIC. All of those mechanisms are artificial and serve to make the banking industry large and profitable.

Not to mention currency debasement, another aspect of the modern world that makes finance uniquely profitable and, really, white collar work existent in any major form at all. It's ingenious. Since capitalism is naturally deflationary, as competition removes all profit over the long term, let's interfere and make it so workers make less money every working day. Hence, in order to make even the same amount of money each year, one has to either rise in the hierarchy, or argue for raises, which is inherently risky.

Basically, before 1935, it was hard to accumulate that much wealth. It wasn't generally backed by any nation state guarantee. Real estate has always been a great store of wealth, but it has physical limitations. The world since 1935 is now a world of nation state wealth guarantees. The only reason this amount of wealth is allowed to occur, is because of it. We took a strange path since 2008, when the banks were not allowed to fail. Everything eventually comes to pass.

[smallmancontrov]

No.

I'm surprised someone who picked the name "engineeringwoke" has no love for FDR. He's the GOAT!

The largest bank in the US is #14 on the S&P by market cap. If the Federal Reserve is a conspiracy to make banks profitable, it is doing a poor job. More to the point: I challenge anyone who doesn't like the Fed and the compromise it represents (money printer exists, but is guarded from the politicians by a council of 12) to name their alternative. Hard money? Politicians can print? You picked "hard money." Let's go!

Everyone who learns about the Cantillon Pump thinks they would love to run it in reverse. This is because they don't understand that it does not run in reverse. It is not symmetrical. They underestimate the pain of a deflationary shock, where everyone (namely your employer) gets an incentive to not participate in the economy and then stops participating in the economy (namely by employing you). Rent and debt is still due, of course. This is the pain that inspired the USA to split from Britain (scrip/specie). This is the pain of the Great Depression -- you threw out that 1935 date like it was the culmination of a Bond bad guy plot, not the capitulation of a country tired of deflation. We even have the counterfactual: Germany, having just escaped the Weimar inflation, decided in 1929 to take the deflationary response to the Great Depression. It led them to a very dark place.

Returning to the USA: they weren't called "robber barons" because they failed to accumulate wealth. Capitalism does not guarantee competition (quite the opposite, strong property rights are the nexus of anticompetitive opportunity) which does not remove all profit over the long term, it squeezes it onto assets, which is where that unearned income we were talking about originates from. If you have ever heard or given a business pitch, attended a class in business school, or listened to a VC for 30 seconds you have heard some heinously anticompetitive scheme and their plan to leverage it for personal gain by turning it into an asset they own. Network effects, platform effects, two sided markets, returns to scale, etc etc etc. Usually they don't work, but when they do and you get a stock or a deed or a title to a money fountain (exploitation fountain, seen from the other side) you get to stack trillions while the competition spends decades trying to cross your capitalism-created and capitalism-guaranteed moat.

Yes, in recent times the money printer has been used to exacerbate inequality. But it isn't the cause of inequality -- certainly not if you look at what happened in the 1935: https://ceprdc.tumblr.com/post/87307310830/piketty-in-one-gr...

Turns out you can have an inflationary adjustment and unwind inequality and boost the economy at the same time, so long as you remember to tax the rich. FDR sends his regards!

You'd like Capital in the 21st Century.

[engineeringwoke]

> This is because they don't understand that it does not run in reverse. It is not symmetrical. They underestimate the pain of a deflationary shock, where everyone (namely your employer) gets an incentive to not participate in the economy and then stops participating in the economy (namely by employing you).

If you think of inflation as money supply growth, or growth relative to gold, the economy has barely grown since 1971 when Bretton Woods was ended. However, the economy did grow in gold terms in the period beforehand. Why would that be? Is your theory from a textbook truly applicable or just a way of enforcing the current economic norms that heavily benefit nation states? If you force all assets to go up, you bleed your asset holders via tax as well. They don't want people to believe in ideas that could break their hegemony.

> Capitalism does not guarantee competition (quite the opposite, strong property rights are the nexus of anticompetitive opportunity) which does not remove all profit over the long term

This is a different conversation, regulatory versus monetary. It also weakens your r > g business book pseudoscience argument. I studied economics and finance enough, I don't need some cheap armchair economist slag.

> tax the rich

Nice, if I didn't need any more proof that this is just another diatribe based on another faddish idea about how to fix the economy. Wait, did I say that earlier? Something about how ideas can be used to control the bounds of policy, the Overton window.

[smallmancontrov]

FDR's results speak for themselves. Reagan's results speak for themselves. We could benefit enormously from shifting the Overton window back to FDR.

You still haven't explained why we should expect hard money to fix America when hard money broke America in 1750 and America and Germany in 1929.

[BoiledCabbage]

> Capitalism does not guarantee competition (quite the opposite, strong property rights are the nexus of anticompetitive opportunity) which does not remove all profit over the long term, it squeezes it onto assets, which is where that unearned income we were talking about originates from. If you have ever heard or given a business pitch, attended a class in business school, or listened to a VC for 30 seconds you have heard some heinously anticompetitive scheme and their plan to leverage it for personal gain by turning it into an asset they own. Network effects, platform effects, two sided markets, returns to scale, etc etc etc. Usually they don't work, but when they do and you get a stock or a deed or a title to a money fountain (exploitation fountain, seen from the other side) you get to stack trillions while the competition spends decades trying to cross your capitalism-created and capitalism-guaranteed moat.

I made this point many times a number of years back and gave up. It's incredible how an entire message board of HN that supposedly is extremely pro market competition, seems to entirely be unaware (or just collectively puts it's head in the sand) that the #1 strategy that most VC backed firms seem to target is "figure out out as quickly as possible how we can get out of having to compete with others". And they do so under the name of "a moat".

Building a moat is one of the most anti-market actions that can be taken. You hear commenters post non-stop about the ills of communism as it avoids market competition, but somehow every seems to just gloss over or ignore the fact that moats are designed to do the same thing and cause the same issue. Terrible allocation of capital.