“As a rough measure, we can say that the rise of wealth of the super rich account for about 80% of the rise in the combined debt and the rest can be attributed to the wealth increase of the regular rich”
We have long recognized the upwardly redistributive effect of Republaissez faire capitalism.
The study cited shows that we are guilty of a failure of imagination.
What is really going on would, if done in the context of a private business, be a classic mob bust out.
(For those who are not from New Jersey, think of the sporting goods store that Tony Soprano loots in compensation for a gambling misadventure suffered by the proprietor in Tony’s poker game. They order enormous quantities of merchandise against the good credit previously established by the store, sell it "off the back of the truck at drastically reduced prices (vs. normal retail…) and then declare bankruptcy after stringing out their creditors as far as possible)
Of course, because OUR mafia is a sovereign regime, the piper gets paid in different fashion.
But the principle is still the same. Run up a credit card that belongs to someone else, “fence” the goods (ie, let out goverment contracts) to return you ten cents on the dollar spent (kind of like when your neighborhoood crackhead sells your plasma flat screen tv for twenty dollars because that’s the cost of his next rock).
Then walk away from the debt, and leave the losses to fall where they may (in this case, bondholders as inflation eats up their principle and future taxpayers for the remainder…)
To debate: Is the congruence of the debt rise and the wealth rise mere coincidence; if not, how does it differ from a bust-out-in-progress?
[QUOTE=alaricthegothThen walk away from the debt, and leave the losses to fall where they may (in this case, bondholders as inflation eats up their principle . . .[/QUOTE]
Ummm . . . Isn’t most federal bond debt held by those same “superrich”?
nope–according to the study, it’s foreign central banks, and other overseas.
Of course, when hyperinflation ricochets through society, everyone takes a hit, more or less proportional to their liquid assets and inversely proportionate to their tangible assets.
I’m really quite surprised that the usual defenders of the wealthy are not here to argue that what’s going on is simply capitalism proceeding in good order. I would assume that they are avoiding this thread because they know they have no case.
Of the 8.1 trillion $ of debt 42 % is owned by intragovernment agencies ( trust funds, SS, Pension plans). The remaining 58 % is the Public Debt & of this 44% is foreign held, mostly by Central Banks. So although quite a good chunk is held by foreign central banks it is still only about 20% of the total debt.
I think I overstated that component of the underlying study’s thesis, which goes to the question whether the cash flow to the super and regular rich represents undercapitalized borrowing; I may have gotten sucked into too granular a deconstuction of the future stakeholders’ relative risks. Naturally when the mob owns a printing press, and bankruptcy is accomplished through hyperinflation, the "bag-holders’ when the piper is paid are not necessarily (nor even probably) the beneficiaries of the looting of the public purse as it occurs.
I think you give them too much credit for circumspection.
They DO consider it the appropriate function of government to borrow from the poor to regale the rich; since they see nothing wrong with the bust-out, they wonder what the fuss is all about. After all, they’ll be long gone with the boodle when the roof falls in (ed note:metaphor scramble ahead…)