Why the gap between rich and poor is so wide – fiat money

Wondering just why the gap between rich and poor has grown so much in the last few decades?

I’ve written about it here several times before, but here’s another take on it – Dominic Frisby’s. The words below are his and so is the YouTube link. It is worth reading and watching, but I do warn you that it won’t exactly cheer you up.

The gap between rich and poor is the widest it’s ever been in history. And it keeps on getting wider.

Plato is purported to have said (but I can’t actually find the quote) that , ideally, the person at the top of an organisation should earn six times more than the person at the bottom. J.P. Morgan said it should be 20 times.

Barclays is currently advertising for a cashier in one of its West Midlands branches, salary £12,665. If I multiply that by 500 times I still don’t get to the £6.5m bonus (on top of £250,000) that Bob Diamond, the Barclays boss, was recently awarded.

Bob Diamond and whoever gets the West Midlands job have almost become different animals. It doesn’t take an anthropologist to tell you that a society has become extremely distorted when you have gulf like that between top and bottom.

I can remember hearing people complaining about this on TV 30 years ago when I was a child. But the gap just keeps getting wider. All attempts by government to deal with this through taxation or legislation have failed. There are calls for more, but I’m wondering if we’ve reached ‘peak regulation’.

The fact is it’s a simple, inevitable, direct consequence of our modern fiat system of money. This fiat system, in which governments and banks have the power to create money, benefits those closest to the issuance of money – those who get it first – at the expense of those furthest away – those who get it last.

And this short video, beautifully animated by Pola Gruszka, shows how the whole process works. Have a watch – it’s only three minutes long – and by all means discuss some of the issues raised in the comments section below.

The system of money, as regular readers will know, is one of my big bugbears. I’d like to see it changed. We need ‘independent money’.

A shorter version of the video appears in the soon-to-be released Renegade Economist film, The Four Horsemen, on which I helped out as a writer.