January 22, 2019
Dorado, Puerto Rico
Every so often throughout history, the peasants grab their
pitchforks and come for the elite. It happens when the wealth gap
grows too extreme… when people feel like they are getting left
behind, with no opportunity to advance.
Central banks around the world have printed trillions of
dollars over last decade, and pushed interest rates to zero, and
sometimes below. And all of that stimulus went directly into the
pockets of the wealthy.
Since 2009, the world’s billionaires more
than DOUBLED their combined wealth. All the billionaires in the
world had $3.4 trillion in 2009. By 2017, they amassed $8.9
trillion.
Mark Zuckerberg multiplied his wealth almost 20 times over,
from $3 billion in 2009, to over $58 billion in 2019.
$8.9 trillion is a massive, almost incomprehensible amount of
wealth.
But it really shouldn’t be that surprising if you think about
it… these people are wealthy for a reason. Typically, they are
pretty good at making money. And with the snowball effect, if you
give them more time, they will probably make even more.
For the last ten years, we’ve seen a huge asset price
inflation in everything from the stock market, to bonds and real
estate, and even fine art and wine.
But if you’re a wage earner without assets, you’ve been left
out. Wages and
median household wealth have stagnated.
And this is a global issue…
The combined wealth of the poorest half of the world--3.8
billion people--fell by 11% just last year, according to Oxfam, a
group working to alleviate poverty.
The New
York Times claims the richest 8 people on the planet have more
wealth than the poorest 3.8 billion.
And Forbes
says the 3 richest Americans have as much wealth as the poorest half
of the country’s population.
People feel trapped, like they have no path to prosperity.
They see money thrown around by the government, and the rich. They
see stocks and real estate boom… but where is theirs?
It’s this lack of MOBILITY that really gets the masses worked
up.
3.4 billion people got poorer
last year. How many more stayed exactly where they were, or barely
budged? The vast majority of the global population is the same or
worse off than they were 12 months ago.
Meanwhile a tiny group got embarrassingly rich.
I’m not trying to sound like some radical, left-wing, social
justice warrior. I just know that throughout history, whenever the
wealth gap gets large enough, it corrects.
Sometimes that happens through legislation and sometimes it
happens through violence. People demand that their politicians
forcefully redistribute the wealth. And the politicians, always
hungry for more power, are happy to step up to the plate.
We’re starting to see this in America today.
Last week we talked about New York City Mayor Bill
de Blasio’s speech in which he said:
“Brothers and sisters, there’s plenty of money in the world. There’s
plenty of money in this city. It’s just in the wrong
hands.”
What he meant was that the people who earned the money
shouldn’t get to keep it.
Then there’s the new star of Congress, Alexandra
Ocasio-Cortez. She supports hiking income taxes up to
70%, providing free medical care, free
college, a chicken in every pot and a unicorn in every
garage.
And, of course, she blames capitalism for everything wrong
with the United States… and says “it will not always exist in the
world.”
Ray Dalio, manager of Bridgewater, the world’s largest hedge
fund, is hobnobbing with the global elite at a Swiss ski resort in
Davos. He says that among the attendees, the ideas of this
29-year-old freshman Congresswoman are actually taking
root.
Nobel Laureate economist Paul Krugman thinks AOC’s 70% is too
low.
Somewhere between 73% and 80% is the optimal tax rate he
says. Under his plan, the government will graciously let you keep up
to 27% of what you earn.
Unfortunately, the public likes what it hears.
According to Gallup, 51% of 18-29 year olds view socialism
favorably.
Only 45% view capitalism positively. That’s down from 68% in
the same age group just a few years ago.
And membership in the Democratic Socialists of America has
swelled 7x just in the last two years.
Their candidates are certainly crowding the 2020
primary.
There’s Elizabeth “you didn’t build that” Warren. Bernie
Sanders and his tens of trillions of dollars worth of promises for
free-stuff.
Former Obama cabinet secretary Julian Castro is one
Presidential contender who wants “free” two-year college. Like
Bernie, he has also endorses Medicare for all, a government run
socialized healthcare scheme.
Other likely contenders, Senator Corey Booker and Senator
Kirsten Gillibrand, want a federal guaranteed jobs program to hand
out cushy government job with benefits to anyone
who wants one.
And now Kamala Harris is officially in the race.
Harris is a Senator from California who will undoubtedly
appeal to the socialist uprising. Already she endorsed AOC’s call
for a 70% tax rate, and won’t rule out BANNING
private car ownership to address climate change.
Her campaign slogan is “For the people.” And the campaign
colors are red and yellow… just missing the hammer and
sickle.
