"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 2 hours Bitcoin Plummets On Price Manipulation Investigation
  • 17 hours The Multi-Billion-Dollar Business Of Influence Peddling
  • 18 hours Goldman Backed ‘Stablecoin’ Hopes To Curb Crypto Volatility
  • 19 hours Consumers Lost $1.6M To Crypto Fraud In Australia
  • 20 hours Facebook May Soon Become A Paid Service
  • 21 hours How Far Can Gold Prices Fall?
  • 23 hours The Battle For Shkreli's $2 Million Wu-Tang Record
  • 1 day The Bitcoin Miner Eyeing A $1 Billion IPO
  • 2 days China’s Social Credit Score Blacklists Travelers For Bad Behavior
  • 2 days Micron Soars On $10-Billion Share Buyback
  • 2 days Nearly Half Of All Americans Are Struggling Financially
  • 2 days Could Crypto Solve The Middle East’s Currency Crisis?
  • 2 days The Biggest Hurdle For The Buffett-Bezos Healthcare Plan
  • 2 days Gold Is Facing An Uphill Battle
  • 2 days Cryptos Struggle To Break Out Of Bear Territory
  • 3 days Could This Software Giant Beat Apple To $1 Trillion?
  • 3 days Kenya: The Blockchain Capital Of Africa
  • 3 days Can Anyone Compete With Netflix?
  • 3 days Can Europe Beat U.S. Sanctions on Iran?
  • 3 days U.S.-China Trade War “On Hold”
PayPal’s Latest Acquisition Has Competitors On Edge

PayPal’s Latest Acquisition Has Competitors On Edge

PayPal’s latest acquisition allows the…

Are Markets Showing Signs of A Topping Pattern?

Are Markets Showing Signs of A Topping Pattern?

The U.S. stock market indexes…

The Five Most Important Market Indicators

The Five Most Important Market Indicators

Stock markets can be overwhelming…

Why is Crony Capitalism Happening?

With Gordon T Long & Charles Hugh Smith

24 Minutes, 17 Slides


Why has classical capitalism devolved to crony-capitalism/crony-kleptocracies?

In this 24 minute video Gordon T Long and Charles Hugh Smith discuss through the aid of 17 slides the rapid advancement of Crony Capitalism in America. The facts are undeniable, but why is it becoming so obvious and undeniable? Why is it accelerating without any apparent 'checks and balances'? Where have the safeguards against this happening gone?


Understanding Why This Is Happening

1. Those who control most of the wealth are willing to risk systemic collapse to retain their privileges and wealth. Due to humanity's virtuosity with rationalization, those at the top always find ways to justify policies that maintain their dominance and downplay the distortions the policies generate. This as true in China as it is in the U.S.

2. Short-term thinking: if we fudge the numbers, lower interest rates, etc. today, we (politicians, policy-makers, money managers, etc.) will avoid being sacked tomorrow. The longer term consequences of these politically expedient policies are ignored.

3. Legitimate capital accumulation has become more difficult and risky than buying political favors. Global competition and the exhaustion of developed-world consumers has made it difficult to reap outsized profits from legitimate enterprise. In terms of return-on-investment (ROI), buying political favors is far lower risk and generates much higher returns than expanding production or risking investment in R&D.

4. The centralization of state/central bank power has increased the leverage of political contributions/lobbying. The greater the concentration of power, the more attractive it is to sociopaths and those seeking to buy state subsidies, sweetheart contracts, protection from competition, etc.

5. Any legitimate reform will require dismantling crony-capitalist/state-cartel arrangements. Since that would hurt those at the top of the wealth/power pyramid, reform is politically impossible.

6. Understood in this light, it's clear that central bank monetary policy -- zero-interest rates, asset purchases, cheap credit to banks and financiers, QE, etc. -- is designed to paper over the structural problems that require real reform.

Japan is a case in point: the Powers That Be in Japan have put off real reforms of the Japanese economy and political system for 25 years, and they've enabled this avoidance by pursuing extremes of fiscal and monetary policy that have eroded the real economy and created long-term structural imbalances.

 


THE FINANCIAL REPRESSION AUTHORITY

For more detail signup for your FREE of the GordonTLong.com
THESIS PAPER: FINANCIAL REPRESSION:
Signup for notification of the next MACRO INSIGHTS

Request your FREE of the Global Macro Tipping Points (GMTP) Report at GordonTLong.com
No Obligations. No Credit Card.

 

Back to homepage

Leave a comment

Leave a comment