It is irrelevant whether the super-rich deserves their wealth, and they will use it more wisely than the less well off or government. What is relevant is that a democracy can not survive with the massive gaps between the rich and poor that now exits. Equally important, the people can not there are not in an economic system with such an enormous divide between the rich and the poor. Riots and mass uprisings will increase as income inequality grows.
The public is told a lie that high interest rates are necessary to compensate the lender for risk and taking the lender’s money out of circulation tying up their money. The public is not told the truth. Almost all the money banks loan are created by the banks. No cash investors are involved. What high interest rates do accomplish is to make those in the financial services wealthy, inexorably increase the wealth gab, creates debt slaves and mask some of the effects inflation which is driven by government. In short, High interests rates do not grow the economy. Thus, compensating for inflation that occurs during the life of the loan is just a disguised tax government forces you to pay. compensates the borrower for government created inflation. The bower not compensating for inflation costs the bank nothing. The only lossers are bank executive’s excessive salaries, bonuses and compensation packages and the Congress being able to masks the real costs of pointless wars, exorbitant government salaries and retirements
Reading the above, one would be tempted to argue that the solution is to control interest rates. Unfortunately, the solution would on be a temporary fix. Within a generation new inequities would crop up. The real issue is that any economic system not clearly designed to enslave the people or shamelessly exploit them to benefit the few, will by its very nature ultimately become distorted creating masses of poor with a few rich on top with little upward mobility or downward mobility. At which time economic, political and social collapse usually follow.
Why is this conundrum so? Whu if there is no economic system that will not end up transfering wealth into the hands of the few no matter how well designed to be equilitarian and debt is not bad in itself, and debt will always ends up distorting financial transactions with or without interest which will always result in increasing wealth concentration and widening the income gab. Was Christ correct in his statement, “the poor will always be with us?”
The answer is simple. Yes, the poor will always be with us, but the, the poor and rich don not have to be so far apart. All economic system are based on feedback and all feedback is always imperfect and subject to increasing distortion over time No matter how well designed, all economic systems become dysfunctional over time due to internal distortions. All economic systems require people. Human interaction is based on perception and understanding which is always imperfect. Value is a social construct and money’s value is based on perception of value which is a social function that is never static.
The possible solution would be to stop distortions that allows wealth to, over time, become grosly unevenly distributed and dysfunctional for the majority of peoole? Simply, force a periodic Debt Jubilee. A periodic Debt Jubilee every generation or when the gap betwen the top and bottom reaches a magnitude of 100 percent would rebalance the economic system, eliminate the grossest distortions and reduce revolutions. The simplest Debt Jubilee would be to declare that all loans with interests that exceed principal is recalculated to return only the principal and a maximum of 10% total loan interest. Debt repayment would then be based on the prinipal plus 10% of the principal (simple interest). The amount already paid would subtracted from the new debt recalculation. All loans that have already paid back principal and 10% would be considered paid in full.
Would a Debt Jubilee end all economic inequality, distortions and problems? No! But, a Debt Jubilee would reduce the magnitude of the distortions and injustices. Looking for honest caring leaders or bureacrats to look after the People’s interests is not going to end well for most.
Food for thought!