Monday, July 13, 2020

What Went Wrong in 1971 Authors Say This Explains Wealth Inequality

Income and wealth inequality has become a huge issue in the United States. There is no doubt that this issue will be a factor in the upcoming US elections. Most everyone agrees that a gap exists and that the middle class has been under pressure for some time. The debate centers around what conditions have led to the gap and what are the best policies to try and reduce the gap.

Recently, the authors of a new theory on this issue did an interview with Jan Nieuwenhuijs of Voima. They argue that events you can trace back to 1971 have had a major impact on our monetary system and have greatly contributed to the wealth gap the most everyone agrees exists today. Does their theory have merit? Readers can assess that for themselves by reviewing this interview. Below are some excerpts.


Jan: "The “Nixon Shock”—as the unilateral suspension of Bretton Woods is often referred to—brought about a sea of change in economies and societies around the world, because from that moment on all national currencies stopped having an anchor. Fiat currencies could be created boundlessly. To get an understanding of the changes since 1971, I decided to interview the gentlemen behind the website “What Happened in 1971?

. . . .

"Jan: What do you say are the most significant developments that have occurred since 1971.

Collin: Monetary expansion—but we get a lot of criticism on this. People say, “oh you're not taking into account many of the regulatory changes, or the socio-cultural changes that happened around that same time period, that caused some of these second and third order effects that you attribute to this one 1971 data point.” If you were to sit down and talk with us, we'd tell you that the story goes back much further. We would trace it back to 1944 and 1933, and we would look at the Great Depression in America in 1929. We'd look at the creation of the Federal Reserve in 1913, and then ideally, we'd go all the way back to the birth of fiat currencies in the United States before the U.S. was even a country. We'd look at the early fiat experiments, we'd go back to the bi-metal standards, we'd look at the process of coin clipping under the feudal lords. The story obviously doesn't start in 1971, but certainly that's when there's an interesting inflection in the data that you can point to and say: “look what happened here, everything went crazy.”  

My added comments: The issue of the the wealth gap is a major issue for millennials who are directly impacted by this phenomenon. The authors of "What Happened in 1971?" say they can explain what led to this problem. Their views are a legitimate contribution to this discussion, so we are happy to feature them here.

Added related news note: Reuters - Fed's $3 Trillion Virus Rescue Inflates Market Bubbles

No comments:

Post a Comment