The .01% Conspiracy


Student Krugman is learning economics, or what one ought to call meta-economics, ever better. We will give him a gentleman’s D. Said he in Who Wants A Depression?”:

“One unhappy lesson we’ve learned in recent years is that economics is a far more political subject than we liked to imagine. Well, duh, you may say. But, before the financial crisis, many economists — even, to some extent, yours truly — believed that there was a fairly broad professional consensus on some important issues.”

Yes, we know all too much: on so many issues, the economists’ consensus was both very injurious to society in general, profitable to economists, and thoroughly idiotic counterfactual. For example, a master idea was that hedge funds and the future markets, in spite of their leveraged size dwarfing the real economy, had neither impact nor even any connection with the real economy.

This monstrosity of a lie was long fostered by Krugman and his self-admiring society of friends and estimable Nobelized or Nobelizable colleagues.

That sort of fairly broad professional consensus on some important issues allowed all these creatures to live a grand life of importance and influence, as it pleased the Masters of the Universe to no end (what the Masters do then, is that they bring some money or chairs, or buildings to some Pluto universities such as Princeton, and everybody is happy: Meg Whitman get her sons in Princeton, where they can do whatever, etc.)

They can call it whatever, I call it corruption.

Krugman agrees that there is corruption:

“Who are these always-wrong, never-in-doubt critics? With no exceptions I can think of, they come from the right side of the political spectrum. But why should right-wing sentiments go hand in hand with inflation paranoia? One answer is that using monetary policy to fight slumps is a form of government activism. And conservatives don’t want to legitimize the notion that government action can ever have positive effects, because once you start down that path you might end up endorsing things like government-guaranteed health insurance.”

But it does not stop there. Krugman and colleagues have discovered the obvious:

“The really big losers from low interest rates are the truly wealthy — not even the 1 percent, but the 0.1 percent or even the 0.01 percent. Back in 2007, before the slump, the average member of the 0.01 percent received $3 million (in 2012 dollars) in interest. By 2011, that had fallen to $1.3 million — a loss equivalent to almost 9 percent of the group’s 2007 income.”

That low interest rates punish the “rentiers”, there is no doubt. Wealthy people in the Nineteenth Century were called by the French word “rentiers” precisely because they could live off rents. Being wealthy means to be able to live off interest, without touching the inflation adjusted principal.

So this is a reason to dislike low interest rates if one is very wealthy. But those with an aversion to risk, inflation or wild market fluctuations also detest very low interest rates, and rightly so.

Thus the question: are there other aspects of a policy of low interest rates that the wealthy do not like? In other words, can we go further than pointing out the obvious as our little Krugman does?

Well, first of all, THE WEALTHY LOVE DEPRESSIONS. During those, everything is so cheap that the wealthy, especially financiers, buy things for pennies on the dollar.

Nowadays, hedge funds allow the hyper rich to profit handsomely from financial and economic shocks. That’s why vultures funds are out to get countries that restructure their debt, with help from USA courts. They dearly regret not to have forced Greece, Portugal, Spain, Italy into bankruptcy. So Argentina makes an excellent target.

A successful economy is, by itself of little value for the hyper rich. Quite the opposite. As said above, they tend to be rentiers. They are lions who made a killing, and want to keep what they got for themselves. Empowering, with a more economic clout the Populus is to be feared: if the poor is empowered, it can shake things up, and made demands to the rich, force them to share. The Revolution of 1789 was driven by the small bourgeoisie: newly empowered poor people.

Fundamentally, wealth, power, are relative. Nearly everybody lives so much better than Louis XIV, that, after due consideration, they would never exchange their lives for his. To be wealthy means to have things others do not have. Depriving the poor some more works as well as enriching the rich.

So our plutocratic leaders pursue both now.

Patrice Aymé


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12 Responses to “The .01% Conspiracy”

  1. Paul Handover Says:

    How’s your little girl?


    • Patrice Ayme Says:

      Thanks for the concern, Paul. Epic flight. She was sick, and relapsed significantly during the flight (I had checked with very experienced doctors first… although her own pediatrician was unreachable!!!!!!!!!!!!!!!!!!!), including serious vomiting. I had medications and various back-ups. In the end, I did not sleep for three days.

      Once in France, out of the plane, in a place full of doctors and hospitals within walking distance, she was given a very powerful, specific prescription antibiotics, and her acute symptoms started to disappear within 2 hours. But she is still shaken, and eats little.

      Overall, I am happy I made it to France: she had an “infection intestinale aigue”, and in the USA, she would have been given no serious treatment until close to death. The next question is how she got this, and a possible culprit is the “Russian River” of Northern California, next to Geyserville.

      I will long remember the change of plane in Paris with a passed-out child…


  2. gmax Says:

    Flight from Obamacare hell! Child rescued!
    Funny that “The Krug” wakes up to the .01 percent!


  3. Benign Says:

    When I learned my PhD macroeconomics in the 1970s one of the generally accepted lessons learned from the Great Depression was that monetary policy does not work in a liquidity trap, ie, with zero interest rates. But when no one else likes your debt it is amazing how quickly this lesson was forgotten by economists of the mainstream persuasion. The profession has lost any shred of integrity it may have had.



    • Patrice Ayme Says:

      Indeed. The surprising thing is that Krugman himself forgot the lesson, so did Bernanke and company.

      When Hoover, yes Hoover, was president, he encouraged, or at least tolerated a massive construction program (Hoover dam, in particular; Empire State Building, etc.). FDR boosted that enormously. As early as March 33 (he had just become president days before), FDR ordered a massive 24 fleet aircraft carriers (which came in handy on December 7, 1940, and thereafter). And that was not the largest piece of FDR’s work program.
      So we need work.


  4. Chris Snuggs Says:

    “In the 7th Century, the moral advance of “Equality, Fraternity” occurred only because more advanced technology allowed to get rid of slavery.”

    Chris Snuggs The French motto is hilarious. “Equality”? Very funny. “Liberte”? Not from horrendous taxes and moronic economic (and road policing) policies you’re not. “Fraternite”? Ha, Ha …..


    • Patrice Ayme Says:

      I agree with you, Chris, in the light of how the situation has evolved. I am all for putting King Francois Normal I on trial for betrayal of some sort. Sarko I ought to do 10 years in jail for Bling Blingness and unlawful Americanization.

      Yet, Chris, the fact remains that, in the grand scheme of history, those are massive violation from the French ideals, and the “Jacquerie” is not far. Happily so.

      The foundations of the present British system were mostly set by Guillaume of Normandy (William I) and Montfort (who himself duplicated the political system in Toulouse of which he was count, system which was a duplication of the Roman Republican system).

      In other words, the present British system is directly a heir of the “RENOVATIO IMPERIUM ROMANORUM” of 800 CE, which was Rome, with slavery replaced by technology. And that system was imposed (by force of superior armies) from Scotland to Sicily and Spain to Poland. Being superior, be it only militarily, it conquered the world, and created the United Nations (17 centuries of history in a few sentences). The rest is footnotes.


    • Dominique Deux Says:

      That motto did set high standards. They’ve been lost to rampant plutocracy, in which Britain has been very actively complicit of late with its push for a deviant Europe. Well, nobody says political progress is a rose path – more like a Sisyphus endeavor. I fail to see, however, anything “hilarious” either about the motto or its betrayal. And as Patrice will remind you, it still serves as an explicit or implicit beacon for international law.

      Honni soit qui mal y pense… and that means you!


      • Patrice Ayme Says:

        Agreed 100% Dominique! Let’s see what Chris dare say….
        I add this:

        The big difference between the Germanoid Franks and the Fourth Century Romans was Liberty Equality Fraternity. It was much more pronounced with the Franks, and core to the Vase de Soissons drama.

        So it was a universal mood, that spread to all of Europe, and, 14 centuries later, to the 1789 Revolution. So being against it in the guise of anti-French hatred is self defeating for Western Europeans, because it’s the hidden, but deep down, motto of all of Europe… Including the Frank/French founded Britain.


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