Spoleto, Italy
August 28, 2015
Charles Dickens opened his 1859 masterpiece A Tale of Two Cities with one of the most famous introductions in literary history:
“It was the best of times, it was the worst of times… “
This line is notoriously incomprehensible to high school students around the world.
But as paradoxical as it sounds, it truly hits the nail on the head in describing social inequality.
Dickens wrote his book about the struggles in England and France just prior to and during the French Revolution.
For the aristocracy it was the best of times.
These people were born into a life of unparalleled prestige and luxury simply by accident of birth, without ever having to work a day in their lives.
The working class, on the other hand, toiled away in starvation devoid of any opportunity, freedom, or hope.
For them, it was the worst of times.
Right now the Fed is going to meet in Jackson Hole, Wyoming to discuss what they’re going to do about interest rates.
Interest rates have been kept at zero for years, and now there is talk that they might raise rates to 0.25%.
This is far from a guaranteed thing. In fact, one of the most influential members of the Fed has already stated that with stocks swooning they likely won’t raise rates after all.
That tells you everything you need to know about the Fed. They’re not there for the economy; they’re there to keep stocks in a bubble.
Through their interventions they’ve created massive risks in the financial system, from which the tiniest elite has received disproportionate benefit.
Over the last four years, the top 80 billionaires saw their wealth increased by 50%, while the incomes for the rest of the population remained stagnant.
Adjusted for inflation, the average worker is actually far worse off than they were 15 years ago.
They are the ones who have had to suffer the consequences of the Fed’s actions.
They’ve endured gyrating financial markets, banks that are pitifully capitalized, and insolvent national pension funds—taking all of the risk, but none of the reward.
It might not be the worst of times, but with inequality rising, it’s getting there.
There’s nothing wrong with inequality itself.
There are no two human beings on the planet who are equal. In fact, even trying to strive for equality is both impossible and really boring.
We all have different talents and different productive abilities.
I’m never going to run as fast as Usain Bolt, and I’m just going to have to live with that.
The issue arises when people are able to disproportionately benefit without having to lift a finger at the expense of the rest thanks to a corrupt financial system.
When an entire class of people is able to grow wealthier to the tune of trillions of dollars, simply because central bankers print money and stick everyone else with the bill—that creates huge problems.
Right now, while the Fed is meeting in Jackson Hole, there is a group of activists also meeting there to protest against Fed policy.
100,000 people have signed a petition telling the Fed not to raise interest rates.
They claim that the recovery has only helped Wall Street and the wealthy, whereas for the working class wages haven’t gone up at all. And they’re right.
But what is really sad about this is the fact they’re begging the Fed to not raise rates until wages have gone up.
All these people have their hopes and dreams tied on a quarter of a percent.
That’s how ridiculous things have become.
People are so horrified that if money isn’t absolutely free that all hell will break loose—that people are going to go broke, the market’s going to crash, and that there won’t be any jobs.
That’s a pretty sad state of affairs, and it is by no stretch of the imagination the foundation for a free and prosperous nation.
It is the height of central planning and it is a form of economic tyranny.
Fortunately, this system is on the way out.
Nations are going bankrupt, entire banking systems are nearly insolvent, and national pension funds are already broke.
Governments and central banks have backed themselves into a corner with no way out.
Just look at China: one of the most authoritarian governments in the world can't control its own market.
And that's what's so exciting.
When everything they try isn't working, it's clearly time to hit the reset button.
And for those who are ready for it, this will bring a whole new world of opportunities.
Dickens closed his book with a poignant quote that I think it very fitting here:
“I see a beautiful city and a brilliant people rising from this abyss, and, in their struggles to be truly free, in their triumphs and defeats, through long years to come, I see the evil of this time and of the previous time of which this is the natural birth, gradually making expiation for itself and wearing out.”
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