The Video Thread

Orginally posted byLithose


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http://www.rerolled.org/showthread.p...l=1#post125755

Because the method used by most people to obtain wealth right now is financial manipulation through speculation and liquidity control. This is why wealth can be amassed without tangible (Or "real world") investment. In a good market, in order to amass more wealth, one needs tangible investments (Like opening a business or investing in one), which include labor purchases. This grows the market and then the wealthy person takes a cut of that growth. In that type of scenario, everyone wins. But it also maintains a parity, because in order to grow the pie, said capital controller needed to give up a small piece of his initial wealth to invest in the market (Or at least offer up his wealth as collateral.)

To be precise, how the above works is that investor goes to bank. Bank "creates" money with the power invested by the government. Money is created with investor growth in mind--so each dollar is tied to a new machine, a developed piece of land or potential job. More money is in then pumped into the market. This money goes to workers, and other capital controllers to build the machines and develop the land needed for X business. These people who receive money for these new products (Or for their labor) then go and buy goods, in fact they buy MORE now because more money is in the system. This eventually trickles back to the original business which can now sell it's product in the newly grown market. This is precept of good capitalism, more money for everyone, and more customers. The person who started this gets a generous cut and everyone is happy.

However, that's not how it works now. In this current market, wealth can and is amassed through speculation and unfair market control by unchecked liquidity for certain institutions. An example of this is Bain capital (I use it because it's easy to read about, but trust me, a vast majority of the market is now speculative or inflationary in nature.)....How this market makes money is by using high access to liquidity, then speculating upon the demise of competition in the market they are killing. They make money from eliminating the competition, then they take their debt saddled company, which borrowed far more than it could ever rationally pay back (Which is the only reason they COULD corner the market, in say paper, like Bain did.) and give themselves bonuses to cannibalize any residual profits, and then declare bankruptcy and extricate themselves from the rational consequence of their behavior.

To be specific in this market...One invests in an already proven market or business, like say a paper company. They borrow money in an irrational plan to expand, but unlike above, the money is not soundly invested, so the underlying assets and potential profits don't match up--but it's allowed anyway because of collusion and corruption in the top circles. The company uses this irrational amount of money to kill it's competition, and make it's ledgers look obscenely good (But it's all a lie). It then pays out it's liquidity to it's CEO's through bonuses. Then the company eventually has a liquidity crisis and bankruptcy is declared. The CEO's cannibalize the assets to a company overseas, then are hired by said company as "consultants" (With winks and nudges and thanks for the new market which has absolutely no competition and it's whole supply chain willing to accept lower prices because they have no customers!).

This kind of wealth acquisition actually is an overall negative from a market perspective because the borrowed money can't be repaid, and the stifling of competition which lowers labor power and supply chain demand/bargaining. The supply chain stuff and labor stuff lead to less money having to be paid out by capital, even for the same job or product (Which has knock on effects down the line, it's not just the people at bain who lost work, now layoffs happen for everyone who supplied bain because the new dominant factor in the market can dictate terms because it has no competition). The lack of repayment eventually leads to a debt crisis, which requires printing and leads to inflation (And eventually deflation). However, because in this process said investors accrued more individual units of currency, even if all of said currency is reduced in value by a nominal amount (Lets say 10%), they still come out ahead because they simply have more. In this way, this system of bad debt practices and speculative market corruption is a kind of "reverse" tax, rather than growing the market, they are taking money by making yours less and less valuable.

This combined with the fact that this kind of wealth acquisition freezes liquidity because it's such high gain, which prevents investment in actual growth (Like opening up new businesses, which is why you see even in the time of record bank profits, loans distribution is barely above government mandates)....This has a net effect of making everyone poorer by freezing wages, preventing job creation and making current wages less valuable--all while making a few select people wealthier.