John Aziz — The Subtle Tyranny of Interest Rates

Must-read on interest rates and Keynes rationale of euthanizing the rentier. It's short and to the point, so I won't try to summarize it.

Azizonomics
The Subtle Tyranny of Interest Rates

John Aziz | economics and business correspondent at TheWeek.com, and an associate editor at Pieria.co.uk

Billionaire says Americans have to "set their sights lower"

Jeff Greene is a guy who displays the typical arrogance of the rich. He's a billionaire speculator who lives in a $200 million mansion in Beverly Hills. He made his money shorting subprime back in the crash. (Now there’s a really useful occupation that adds a lot to society.)

He says that the real problem that Americans have is that their expectations are too high. They need to set their sights lower. (Not his of course.)

Too high? Set their sights lower?

Is this guy a pompous ass or what? There’s forty million people on food stamps and half of Americans who have no net worth at all and people need to set their sights lower?

He goes on. He says, while tech is a big job killer the real nemesis for prosperity-desiring Americans is the trend toward equalization of wages, globally. Apparently in his mind it’s all convergence to the bottom and not the other way around?

History would prove him wrong on both counts. Technological advances have always spurred massive creation. Did he ever hear of Henry Ford? Furthermore, wage trends always tended to converge from low to high, not other way around.

The reason we have declining or static wages has been due to policies specifically designed to make that happen. It’s called Neoliberalism and it’s been in place for the last 40 years. Deregulation, “free trade,” the elevation of markets, profits and capital over labor, the environment, common sense and everything else. That’s the reason  it’s happening. Policy has shut the door on prosperty for all but a few and only policy can reverse it. 

Greene departs from other, typically pompous rich brethren when he says that the rich should pay more taxes. However, I’m sure he says that knowing that he’ll never have to worry about that because his “kind” have bought the system and they’re not about to let that happen. So he can feign being a magnanimous good guy when he’s really just a pompous ass.

Resetting expectations lower is nothing more than accepting a form of imprisonment.

This guy is proof that Keynes was right when he said “Let’s euthanize the rentiers.”

Landlords are doing extremely well!

For 35 years following WWII rental income as a percent of GDP was trending down. Then came Reagan and the beginning of the "financialization" of our economy.

From the mid-1980s rental income started to trend higher and in the 1990s, it literally exploded to the upside as a percentage of GDP.

Then we had the financial crisis and it dropped, briefly.

But now it's higher than ever. This means that more and more of our national income comes from people doing nothing more than extracting rents from assets (property). Sadly, incomes from actual production of goods and services is a declining percentage of GDP.

I am tempted to invoke Keynes here and say, "Euthanize the rentiers!!" (I guess I just did.)