Meet The Extreme Super Rich

Meet The Extreme Super Rich: A List Of The 80 People Who Own As Much As The World’s Poorest 3.6 Billion

Submitted by Tyler Durden on 01/28/2015

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Before I get into the meat of this post, I want to make it clear that the definition of oligarch, a term I use a lot, does not center solely around money.

Late last year, in the post Inside the Mind of an Oligarch – Sheldon Adelson Proclaims “I Don’t Like Journalism,” I attempted to frame the word oligarch as I use it. I wrote the following:

In a nutshell, while many oligarchs are extremely wealthy (or have access to extreme wealth), not all people with extreme wealth are oligarchs. The term oligarch is reserved for those with extreme wealth who also want to control the political process, policy levers and most other aspects of the lives of the citizenry in a top-down tyrannical and undemocratic manner.
They think they know best about pretty much everything, and believe unelected technocrats who share their worldview should be empowered so that they can unilaterally make all of society’s important decisions.
The unwashed masses (plebs) in their minds are unnecessary distractions who must to be told what to do. Useless eaters who need to be brainwashed into worshipping the oligarch mindset, or turned into apathetic automatons incapable or unwilling to engage in critical thought. Either outcome is equally acceptable and equally encouraged.

With that out of the way, Five-Thirty-Eight provided the following:

Eighty people hold the same amount of wealth as the world’s 3.6 billion poorest people, according to an analysis just released from Oxfam. The report from the global anti-poverty organization finds that since 2009, the wealth of those 80 richest has doubled in nominal terms — while the wealth of the poorest 50 percent of the world’s population has fallen.

There you have it. The reason the wealth of the richest has doubled since 2009, is because “it’s not a recession, it’s a robbery.” Central bank and government policy has done this, it is no accident.

For more evidence…

Four years earlier, 388 billionaires together held as much wealth as the poorest 50 percent of the world.

Thirty-five of the 80 richest people in the world are U.S. citizens, with combined wealth of $941 billion in 2014. Together in second place are Germany and Russia, with seven mega-rich individuals apiece. The entire list is dominated by one gender, though — 70 of the 80 richest people are men. And 68 of the people on the list are 50 or older.

Oxfam notes that global wealth inequality is increasing while the rich get richer. If trends continue, the organization projects that the richest 1 percent of people will have more wealth than the remaining 99 percent by 2016.

Now here’s the list:

I didn’t provide this list to say whether these people are good or bad. I provide it, because whenever 80 people own as much as the poorest 50% of the globe, we sure better know who they are. We should also be cognizant of the disproportionate influence any of them can have on public affairs should they want to.

Fractional-Reserve Banking

From Goldsmiths To Hedge Funds To… Chaos

 

Submitted by Tyler Durden

From Chapter 15 of The Money Bubbleby James Turk and John Rubino:

Banking didn’t start out as a reckless, parasitical plaything of a moneyed and politically-connected aristocracy. In the beginning, in fact, bankers weren’t even bankers. They were jewelers and goldsmiths who had to maintain their inventory with vaults, guards etc., and offered storage services to others with valuables to protect. So the original banks were, in effect, very safe warehouses.

Eventually some goldsmiths noticed that the paper receipts they gave to their customers to evidence the valuables left in storage began to circulate as currency alongside their countries’ coins. A shopkeeper accepting these receipts in payment knew that he could go to the goldsmith to redeem them for gold and silver, and also recognized that a paper receipt was more convenient to use as currency than were pieces of metal. Gradually these receipts became a widely-accepted form of payment, circulating among buyers to sellers and saved like other forms of wealth.

The goldsmiths then noticed something else about their new paper-money invention: Only a tiny fraction of their clients asked for the return of their valuables in any given period, which led to a bright – but legally and morally-dubious – idea. Why not start issuing receipts in excess of the gold and silver on hand? The goldsmiths could spend this currency themselves or lend it to others – thus inventing the business/consumer loan. Henceforth the total gold and silver in the vault (the goldsmith’s reserves) would equal only a fraction of the receipts circulating as currency.

“Fractional reserve banking” was thus born of deception if not outright fraud, because for the receipts to retain their value the goldsmiths had to pretend that those paper claims to gold and silver were backed by an equal amount of metal and were therefore of equivalent value. They were not, of course, because a tangible asset is more valuable than a promise to pay a tangible asset, particularly when the latter outnumbers the former.

The goldsmiths, having evolved into more-or-less recognizable bankers, then realized that more deposits equaled more profits. So they began paying people for deposits of gold and silver rather than charging for their storage, thus inventing the interest-bearing account.

The resulting system had some inherent dangers, most obviously that it tempted bankers to lend out ever-greater multiples of deposits, increasing the odds that they would be unable to meet withdrawal requests and collapse. This happened frequently early-on, eventually leading governments to regulate the amount that a given bank could lend against its capital.

For a sense of how this works, imagine a bank with $100 in capital that is required to hold a reserve equal to 20 percent of its loans outstanding – which based on experience is usually more than enough to satisfy a typical day’s withdrawal requests. In our example, the bank can lend 4/5ths of its depositors’ money, or $80, while 1/5th, or $20, remains in reserve. Now here’s where it gets interesting: When our hypothetical bank makes a loan, the recipient deposits the proceeds in another bank, which can lend out 4/5ths of that deposit. The recipients of those loans make deposits in other banks, and so on, until a huge multiple of the original deposit base has been turned into circulating currency.

The result is an “elastic” money supply. When borrowers are optimistic and want to increase their borrowing, banks in a fractional reserve system can in the aggregate offer them immense amounts of new credit. So the money supply, instead of being determined by the amount of gold, silver or other bank capital in the system, can expand dramatically to accommodate an energetic society’s demands.

But it can also contract dramatically. If an economy that has greatly increased its money supply through bank lending suddenly takes a downturn or is unnerved by an unexpected crisis, borrowers will pay off their loans or default on them and banks won’t replace them, while depositors seek the return of their cash. These actions cause the money supply to collapse, potentially all the way back to the level of base money in the system. The result of this fluctuation in the supply of circulating currency is a recurring series of booms and busts that wipe out businesses, individuals, and banks and frequently send the general economy into recession or depression.

Fractional reserve banking was, in fact, a major cause of the Great Depression. To condense a long, complex story into a single paragraph, the extra currency that was printed by the belligerents during World War I (which ended in 1918) was recycled through the fractional reserve banking system and massively amplified via the process we’ve just described. This tsunami of new credit caused the Roaring Twenties boom in asset prices – especially global equities – that popped in 1929, destroying the pseudo-wealth created in the previous decade. The collateral supposedly guaranteeing bank loans evaporated and sentiment turned negative, sending the fractional reserve credit machinery into reverse and collapsing both the banking system and the real economy.

Today’s situation is much, much worse. To see how, click here.