<story><title>Who Rules America: An Investment Manager&apos;s View on the Top 1%</title><url>http://sociology.ucsc.edu/whorulesamerica/power/investment_manager.html</url></story><parent_chain><item><author>Astrohacker</author><text>It makes perfect sense that most people in the top 0.1% are associated with the financial  and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes the distribution of the purchasing power of the money away from most people who have the money and to the people who get the new money. This is where the wealth of the top 0.1% comes from. Freshly printed money. It is a terrible system. The people with the highest wealth are not contributing in proportion to their wealth. Rather, they are stealing their wealth from the bottom 99.9% by stealing their purchasing power by printing new money.&lt;p&gt;If you would like to read a thorough argument about how fractional reserve banks and the Federal Reserve are scams, read &quot;The Mystery of Banking&quot; by Murray Rothbard. Google it and you will see it is available for free at mises.org.&lt;p&gt;For some reason this subject is very polarized and I get downvoted whenever I explain this. Don&apos;t downvote me just because you are uncomfortable with what I&apos;m saying. Note that I am not ignorant. I have learned about economics. It just so happens that when trying to understand the issues myself, I have arrived conclusions that are not mainstream. But they are the correct conclusions in so far as I presently understand.</text></item></parent_chain><comment><author>trunnell</author><text>This misses the point of the article, which is that many in the top 0.1% got there from some form of self-dealing.  His argument is that they are profiting from their &lt;i&gt;position&lt;/i&gt; in the economy rather than from the &lt;i&gt;value&lt;/i&gt; they add.&lt;p&gt;And by position, he doesn&apos;t mean nearness to the money press.  I think he means nearness to the center of wealth and power, which at the moment happens to be the financial industry.&lt;p&gt;&lt;i&gt;&amp;#62; This is where the wealth of the top 0.1% comes from. Freshly printed money.&lt;/i&gt;&lt;p&gt;I&apos;m sorry but this statement is very wrong.  Newly printed money enters the economy through interbank loans.  If I borrow $100 my net worth is exactly the same as before.  I&apos;m not any wealthier.&lt;p&gt;To set the record straight: the ability to expand or contract the money supply is an essential tool in managing the economy: the Fed can cool things down in a bubble (by raising rates and contracting the money supply) or heat things up in a downturn (by lowering rates and expanding the money supply).  Otherwise, inflation or deflation can spiral out of control.&lt;p&gt;&lt;i&gt;&amp;#62; Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth.&lt;/i&gt;&lt;p&gt;Ok, but creating new money in an effort to grow the economy while &lt;i&gt;managing&lt;/i&gt; inflation does create new wealth-- or more accurately, creates an environment in which wealth can more easily be created.  Especially in comparison to the alternative: an unmanaged economy that is completely at the mercy of panics and bubbles.  Think the last crash was bad?  The unemployment rate rose to 14% during the six years following the panic of 1873, which was largely caused and substantially prolonged by the inflexibility of the money supply (which was still tied to silver and gold).&lt;p&gt;I&apos;m getting a little tired of the anti-fiat currency crowd.  You say you learned about economics; you might want to get your money back.  I&apos;m sure you&apos;re a very smart person, astrohacker, but your perspective here is unsupported and stands in direct contradiction to the last 80 years of economic thought.  And no, the bitcoin crowd do not count as economists.</text></comment>
<story><title>Who Rules America: An Investment Manager&apos;s View on the Top 1%</title><url>http://sociology.ucsc.edu/whorulesamerica/power/investment_manager.html</url></story><parent_chain><item><author>Astrohacker</author><text>It makes perfect sense that most people in the top 0.1% are associated with the financial  and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes the distribution of the purchasing power of the money away from most people who have the money and to the people who get the new money. This is where the wealth of the top 0.1% comes from. Freshly printed money. It is a terrible system. The people with the highest wealth are not contributing in proportion to their wealth. Rather, they are stealing their wealth from the bottom 99.9% by stealing their purchasing power by printing new money.&lt;p&gt;If you would like to read a thorough argument about how fractional reserve banks and the Federal Reserve are scams, read &quot;The Mystery of Banking&quot; by Murray Rothbard. Google it and you will see it is available for free at mises.org.&lt;p&gt;For some reason this subject is very polarized and I get downvoted whenever I explain this. Don&apos;t downvote me just because you are uncomfortable with what I&apos;m saying. Note that I am not ignorant. I have learned about economics. It just so happens that when trying to understand the issues myself, I have arrived conclusions that are not mainstream. But they are the correct conclusions in so far as I presently understand.</text></item></parent_chain><comment><author>danenania</author><text>Yep, fiat money systems are at the core of modern wealth inequality. Regulations and other measures will have little impact until we address this. Bailouts, taxes, budgets, deficits, regulations: none of it has much relative quantitative significance when the Fed is doling out many trillions behind the scenes. This money directly benefits the very wealthiest and regressively dilutes the rest on a scale that vastly exceeds the effects of any other policies. Abuse of fiat money is the ultimate economic elephant in the room.</text></comment>