Central Banks Have Pushed the Middle Class Down into Neofeudal Serfdom
December 21, 2015
The injustice of central-bank enforced neofeudalism cannot be suppressed like interest rates.
In traditional feudal systems, serfs were the landless peasantry who worked the land of their feudal lords in exchange for protection. In our present-day neofeudal system, serfdom has a different definition: present-day serfs own little or no productive capital and have few opportunities to ever acquire any.
The Marxist term wage-slaves describes those who, lacking capital, have only their labor to sell. This describes the vast majority of people in both capitalist and socialist systems, but what makes the present system neofeudal is the central banks: by extending essentially unlimited credit at near-zero interest rates to financiers and corporations, the central banks have given the top .01% the ability to outbid mere savers for income-producing assets (i.e. productive assets).
The
X22 Report and I discuss
this and related topics in the podcast
Central Bankers Are Creating A World Where We Are All Serfs (38:10).
As I outlined in
The Flaws in Basic Income for Everyone, all the guaranteed basic income
schemes being proposed as solutions to automation are merely institutionalized serfdom
as they sentence the unemployed to the marginalized political status (equivalent to
powerless serfs) of state dependents while stripping them of purposeful work and the
opportunity to acquire the means of production and productive capital.
Guaranteed basic income is thus the perfection of neofeudal serfdom.
The central banks are the critical enforcers of this neofeudal system. Without
access to unlimited credit at near-zero rates, financiers and corporations would not
be able to outbid savers for productive assets.
Here's an example that illustrates how central banks have created a neofeudal system.
In an economy not suffering from extremes of central-bank financial repression, home
mortgages in recent decades were around 7.5%. This rate of interest (coupled with strict
lending standards) was high enough to make credit-fueled bubbles difficult to inflate,
so homes cost $100,000.
Those who had saved $50,000 had an advantage over financiers who were borrowing
the full $100,000. The base operating costs of buying the home as a rental (investment)
property was roughly $4,000 more annually for the financiers than for the savers:
the savers' $50,000 mortgage cost around $4,000 a year (not including property taxes
and other expenses of ownership) while the financiers' mortgage was around $8,000 annually.
This difference was large enough to make the property unprofitable for the financiers
to buy and rent out, and large enough to make it a risky bet to buy the home and
hope appreciation exceeded the annual expenses.
If the home rented for (say) $1,200 per month, the financiers' higher mortgage expenses
put them at a disadvantage to the saver/owner, who had a significantly lower monthly
expense.
Contrast this with the world of today, where financiers can borrow essentially
unlimited sums at rates far below what savers can get. As a direct result
of ultra-low rates for banks, corporations and financiers, even high-earning wage-slaves
cannot outbid the financiers for productive (i.e. income-producing) assets.
If a person is unable to earn enough to save, and is unable to compete with
financiers and corporations for productive assets, that person is a modern-day serf,
a debt-serf indentured to banks and stripped of opportunities to own the sort of assets
the Financial Nobility use to accumulate ever-greater wealth and income.
The injustice of this central-bank enforced neofeudalism cannot be suppressed like
interest rates.
Central Bankers Are Creating A World Where We Are All Serfs (38:10) (X22 Report
podcast).
Of related interest:
What Does It Take To Be Middle Class? (December 5, 2013)
How Many Slots Are Open in the Upper Middle Class? Not As Many As You Might Think
March 30, 2015
America's Nine Classes: The New Class Hierarchy (April 29, 2014)
Imagining A Middle Class Does Not Create One (October 12, 2010)
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