Friday, May 20, 2016

Are the Super Rich Devouring My Modest Wealth?

From ‘The Age of Acquiescence,’ by Steve Fraser
Book Review by NAOMI KLEINMARCH 16, 2015 New York Times
“Could the superrich kindly cease devouring the world’s wealth? And while they’re at it, could they quit using their financial might to influence public policies that favor the rich at the expense of everyone else?”
My response:

Lets see. Are the superrich dovouring my modest wealth? There's my modest home equity. Are the superrich eating up my home equity? How would I know? Maybe I won't realize it until I try to sell my house. The superrich might be there at the closing demanding a percentage. Will they demand a processing fee or a recording fee? Certainly it won't be a broad daylight mugging (I hope not). Oh, wait, that sounds like the government and the realtors, not the superrich. The biggest hit on the value of my home came in 2009 as a result of Freddie and Fannie's yielding to Administration demands and the incompetent acquiescing of mortgage lenders. That debacle has left me about 20% low. I doubt if I'll get a rebound soon and I'm not blaming the superrich for that.

Are the superrich devouring my 401k? I want to know the details so I can fend them off. Are they siphoning a percentage every month? Maybe they take it at tax time as a percentage or a fee. Do they have my account number? Oh, I get it. It's the IRS. They're not the superrich, are they?

Could this theft of my wealth by the superrich be in the form of inflation, where they make everything else more expensive, reducing the buying power of my assets? Are those superrich people causing inflation so my wealth will be devalued? Are rich people raising the price of cars? I'll probably need another one in about 6 or 8 years. Car prices might be a lot higher and my income might not keep pace. Gotta think this through.

Are the superrich devouring my priceless art collection? Haha, just kidding. But there are some priceless assets I have here in my memento trunk. They'll still be just as valuable ten years from now, so I don't think I'm losing the priceless value of my family mementos.

How are the superrich influencing public policies that favor the superrich? Are they using lobbyists? What policies are being influenced? How are the policies impacting my home value or my 401k? How are those policies driving up the cost of my next Subaru? If public policies are pumping up inflation, don't my Representatives and Senators have the brains to figure it out?

Something I do trust is supply and demand as a fair and equitable driver for consumer prices. I understand that when materials or services are impacted by shortages or surpluses, shifting prices and availability of substitutes drive the market back to equilibrium. But in a free market where innovation is free to work, prices would be expected to go down, not up. In markets with prices and quotas frozen by law, all bets are off because prices and inflation both rise to a new (artificial) equilibrium. How about the effect of the law? Industries operating as monopolies are watched by our FTC, and to suspect there's a restraint of trade through an evil monopoly seems unlikely without government complicity. Hush my mouth about government complicity and explain the role of the superrich here.

What if we authorized a fixed amount of money and a tight credit limit? Would it be predictable that the superrich would corner the money supply? Could we have a situation where only the rich could buy goods? Who would produce the goods? Who would fix the washing machine? Who would grow the potatoes and the corn? Who would milk the cows? My questions are useless, because other factors would be born to adapt to a fixed money supply. Barter would be the currency of the less rich, and commerce would flourish despite the lack of dollar bills.

I'm not getting the buzz about domination by the superrich. In fact, I'm not convinced that there's anything except envy driving this opinionated book and its review.

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