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-dayneofeudal 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).
Just as the feudal-era serf had no choice
but to enslave himself and his family to the manor-house lord, the modern-day
serf must indenture himself to banks to "own" a car or home or
"buy" a college education.
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.
