The year of our Lord 2014

Pope Francis in the Eternal City, Bill de Blasio in the Big Apple, Obama in the White House…

From the pulpit to the Oval Office to city hall – capitalism is coming under attack in 2014.

Obama has made income inequality a central bugaboo for the last two years of his presidency. De Blasio is hot on it, too. A tale of two cities was his campaign theme. De Blasio figured there were more votes in the poor city than in the rich city. He gambled that the folks on the po’ side of town – in Brooklyn and the Bronx – were getting sick and tired of watching Manhattan folks make money. And he was right on both counts.

Nothing is more galling that watching a neighbour get rich, unless that neighbour is your brother-in-law. Then it’s intolerable.

In the present circumstances, the poor have a legitimate beef. They claim the rich are getting richer unfairly. They’ve got a point. Rich people own stocks and bonds. Thanks to manipulation by the government (through the Fed), US stocks are worth $3.7trn more than they were at the start of last year. With no effort, wealthy stock owners now have a huge additional claim to the world’s wealth.

Money is just a placeholder. It lets you know how you stack up against others. The amount of available goods and services is always limited, more or less if you gain wealth faster than general output increases, you must be taking it away from someone else. You have more. He has less.


Bill Bonner on markets, economics & the madness of crowds

To sign-up to Bill's free daily email just enter your email address below

Because these emails are completely free, we do have to fund them with advertising. Occasionally we will send you promotional emails, however we will never give, sell or rent your email address to any other companies.For more information, please see our Privacy policy.


At 2% GDP growth, the US gains around $350bn in additional wealth. So, if stockholders gained $3.7trn, most of that has to have come from others. They gained $3.35trn more than GDP growth. In other words, they win. And others lose.

But someone has to be able to buy the nicest house on the block. Someone has to be able to buy the fanciest car or take the most luxurious vacation. Someone has to win the great game of economic life.

Well, the rich are not only ahead, they’re kicking butt. Look at every other income category. Only the top 10% of households made any real income gains over the last ten years. All the rest lost ground. And the top 1% has done even better – thanks largely to hefty increases in stock and real estate prices.

So what’s wrong with that? Nothing, except maybe that this sort of underhanded conniving with the feds gives capitalism a bad name. It’s not the capitalists who have got the most loot from the feds’ bail-outs, zirps and QE. It’s their cronies.

Too bad, but people think the rich are capitalists and that capitalists are rich. Not so. A real capitalist takes losses as well as gains. He makes mistakes and pays for them himself.

Sometimes it’s not about the money. Often, he doesn’t know how much he’s got and doesn’t care. It’s the journey he likes, not necessarily the destination.

The capitalist is misunderstood. So is capitalism. It is not so much a ‘system’ as it is what happens when there is no system. It is what people get up to when they are left to their own devices.

Is it good? Bad?

We don’t know, but it’s better than being told what to do by some jackass with his own agenda.

• Don't miss Bill's next Daily Reckoning. To receive the next article straight into your inbox as soon as he's written it, enter your email address below.

Because these emails are completely free, we do have to fund them with advertising. Occasionally we will send you promotional emails, however we will never give, sell or rent your email address to any other companies.For more information, please see our Privacy policy.

ScreenHunter_01 Mar. 25 09.51

New to MoneyWeek?

Bill-bonner

Welcome, and thank you for visiting us.

Here at MoneyWeek, our aim is simple. To give you intelligent and enjoyable commentary on the most important financial stories of the week, and show you how to profit from them.

If you've enjoyed what you've read so far, we've got something you'll definitely be interested in.

Every week day, Monday to Friday, we send out a thought provoking and often controversial email called the Daily Reckoning. In it, we try to figure out the markets and how current economical events are shaping the world we live in. If you're interested in investment opportunities and the markets, we think you should be reading it…

With your permission, I'd like to send you the Daily Reckoning for FREE.

To sign-up enter your email address below.

(No thanks)

We hope you enjoy your stay on the site.

Bill Bonner,
Editor, The Daily Reckoning

Because these emails are completely free, we do have to fund them with advertising. Occasionally we will send you promotional emails, however we will never give, sell or rent your email address to any other companies.For more information, please see our Privacy policy.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

 

3 Responses

  1. 06/01/2014, Wotan wrote

    Bill Bonner is wrong. Risk-taking capitalists became extinct a long time ago, i.e. they no longer exist. We are now left with out and out parasites, who know how to exploit the system and the population. We need a complete change involving ethics, macro-economic fairness, accountability, personal freedom as well as completely new political systems.

  2. 06/01/2014, Boris MacDonut wrote

    It is 2014 by modern reckoning ,but not the year of our Lord 2014. Since the change from the Julain to Gregorian calendar in 1753 we have l;ost 13 days .So the yearof our lord starts on 14th January. But acroos the UK the old new Yera began on Lady Day (March 25th) which now falls on April 6th.

  3. 07/01/2014, blondie wrote

    I love receiving your emails Bill but you have been saying get out of stocks & shares and your colleague Bengt Saelensminde believes they will continue their winning streak this year. So what should we do?. I took your advice a year ago and bought gold, just wish I had waited until now !!!

Comment on this article

MoneyWeek magazine

Latest issue:

Magazine cover
Walking out on the banks

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 3 FREE Issues
Shale gas 'fracking' promises to transform Britain's energy market. Find out what it is, what it means, and how to invest.

More from MoneyWeek

The problem with the Bank of England

Fracking: Nine reasons not to get carried away

Five small-cap stocks worth a flutter

This Dutch company could help us tame floods

ScreenHunter_01 Mar. 25 09.51

The latest investment opportunities & how you can profit - sign up to our FREE daily email HERE