How Socialism Runs American “Capitalism”
Virtually no one understands how our financial system works.
First, it starts with understanding this…
The dollar is a socialist monetary monopoly.
In other words, it’s created by the government and it’s our only legal tender.
Gold, silver, crypto, foreign currencies, etc. are considered assets and are therefore taxable if they increase in value.
So with a socialist monetary monopoly lying at the heart of our financial system how does it distort “capitalism”?
The government prints them and then gives them to the big banks for virtually free.
The big banks are little more than government subsidiaries who then lend their cheap money at a slightly higher interest rate to virtually anyone who wants it in order to generate a profit.
The richer you are the freer this money is to you!
When the government forces interest rates down it’s basically forcing the rich to borrow a $1 because if it costs them 2% — 5% to borrow and the stock market gives them a 10% return then what choice do “capitalists” have but to become money mules?
In other words, Democrats and Republicans compromised by building an economic system where the government gets to spend a lot more so long as it washes its money through “private” institutions and individuals.
This money-washing fuels massive inequality!
On the fiscal side, Congress spends a lot of money too, which overwhelmingly goes toward making institutions and individuals even more dependent upon the state where total government spending is about $28,000 per person (more than virtually any country on Earth) with over $100,000 of national debt per person.
The government then assumes the primary functions of the banks.
Banks primarily store and lend money, but the government is really the one effectively storing the money because even though a tiny fraction of it may be in a bank’s vault, the money is actually stored so-to-speak in the government’s promise (Federal Deposit Insurance Commission) where up to a minimum of $250,000 the federal government will reimburse a depositor, therefore, you as a depositor aren’t so much putting your trust in Chase bank as much as you’re putting it in the full faith and credit of the United States government.
The government also forces the big banks to lend to people who can’t afford it (e.g. caused the 2008 crash) because again if a bank can borrow $300,000 from the government at 1% and then give a homebuyer that money at 5% interest then what choice does a bank have but to make money?
After all, they’re bigger now than ever before.
Their borrowers may default, but about 30% of all mortgages in the US are government-backed, which means if the borrower defaults then the government will partially reimburse the lender, and then overall the bank gets the property and then can resell it on the private market or to the government, such as in the lead-up to the 2008 crash Fannie Mae and Freddie Mac owned about half of all outstanding mortgage debt in the United States (and still do).
And then if despite all this government protection, the banks still overextend themselves then the government could bail them out.
Academia naturally downplays their financier’s culpability (the government) and instead argues that the 08 crash was due to “greed” as if Wall Street all of a sudden got greedy; or 1980’s “deregulation” even though since then regulations have increased a lot.
Here’s some regulatory examples:
Financial: Large firms report that the average cost of maintaining regulatory compliance is about $10,000 per employee.
Manufacturing: According to the National Association of Manufacturers, the regulatory cost is about $30,000 per employee.
Healthcare is heavily regulated where it costs over $1 billion to bring a new drug to market and where over 65% of healthcare spending is government, which gives the government a lot of leverage in dictating to medical providers what they can or can’t do.
Occupational licensing is rampant in many industries even though there is little-to-no evidence they increase quality or quantity. It’s never consumers who lobby for occupational licensing, but those in the profession who wish to limit their competition.
Housing: Zoning laws however wise constrain supply.
Education isn’t so much about education, which you can get for free nowadays, but the little piece of paper at the end. The government constrains the number of accredited diplomas and then ramps up their price by guaranteeing students can afford it.
Energy: America could 100X its energy production if the government didn’t constrain drilling nor regulate away nuclear energy.
The influence-industrial complex’s solution to virtually every problem is to give the government even greater control over the economy, which in the name of reducing bubbles have made them bigger…
And in the name of reducing inequality has made it worse…
The money is then taken out via taxation, which is not only massive in quantity…
But how it’s taken out also distorts “capitalism.”
There’s 97+ taxes.
Inflation is arguably the biggest one and it’s a regressive hidden tax, which to avoid wealthy people hoard necessities like housing and energy, therefore, driving up their cost especially.
The personal income and payroll tax disproportionally taxes earned income.
The corporate income tax is lower than the personal income tax, therefore, disproportionally penalizing small businesses since they pay at the personal income tax level.
Businesses are also taxed on their “profits,” but since there’s a subjective nature to what constitutes a “legitimate” expense large corporations can afford the best tax accountants to avoid taxes.
One of the many ways they’re able to do this is via borrowing so that we end up with a situation where the highest revenue-generating companies in the world are in the most debt, which overtime hallows them out as they get passed around from one parent company to the next who are themselves increasingly owned by the big three — Black Rock, State Street, and Vanguard (their the largest shareholder of each other and nearly every major public company where they then pressure them to become more socialistic/progressive).
All of this is to say that our tax system favors hoarding over working; paperwork over real work; no(n)-profit over profit; borrowing over saving; big over small.
Imagine how much richer society would be if we massively cut printing, spending, regulations, and taxes so that America’s economic growth could once again average above 3%.
In conclusion, the next time you hear someone say America is a capitalist free-market you can correct them with this essay so that for the first time in their life they’ll learn that the gold is plastic.