Wealth concentration

As the slow pace of growth continues in most global economies, banks have nowhere to invest their money; as they do not want to risk giving loans. Forecasts that deposit rates would rise from near zero have been proved wrong for six years running, as the global financial system remained fragile and growth fails to reach pre-crisis momentum. In fact the European Central Bank and now the Swiss Central Bank are charging major banks money, to hold large deposits. The rush of money coming out of Russia and other troubled economies is leading to these negative interest rates, as the Euro and Swiss Franc are being driven higher. This may also lead to deflation which will be the central bank’s nightmare, given the anemic growth rates.

At a time of falling commodity prices like oil at below $ 60 a drop of 50% from recent prices and iron ore at new lows, there is a time for economies like India and China to rejoice; but they are suffering their own growth pains. The Chinese are struggling for a soft landing and the Indians are looking for a hard take off and neither can carry the world economy forward. The beacon on the hill remains the US which despite its dysfunctional government, continues to plow ahead in economic growth. Its old rust belt is suddenly starting to gain in manufacturing activities, and new productivity gains continue to rise; due to innovation and technology breakthroughs. Fracking has finally driven oil prices to levels where we will all have a little extra spending money, in our pockets.

This is all happening while the rich continue to get richer; and the poor are increasing in number and have decreasing opportunities available for education and employment. The digital divide and the disparity in wealth continue to grow. Average wealth of the upper middle class doubled from $ 300,000 to approx. $ 600,000 from 1983 to now. The lower middle class and the poor have increased their desperation in the meantime; and are barely able to make a living wage, much less accumulate wealth. Their world has turned upside down as upward mobility has stalled and the American dream is turning into a daily nightmare. Broken families are struggling just to survive and remain human.

There are no easy fixes, as we are facing a world of uncertainty. While the American consumer continues to be fearless and is ready to start the race to spend even more, the rest of the world is still oiling its economic engine. The race may have been lost even before it began, as the animal spirits that are supposed to encourage economic growth; is strangely missing, in most of the world. The conservatives husband their wealth and the liberals are largely discredited and have been cast into the political wilderness. Obama stands alone while the congress dithers. Senator Warren warns that nobody is looking after the needy and senators across the aisle tell her, welcome to Washington. Jeb Bush will be the next President and then we will have the makings of a truly great nation, as he declares war on Russia, Pakistan and any other nation that the military industrial complex, chose next. Oh and my only wish is that my guardian angel will give me so much wealth, that my grandchildren will happily pay their bankers; to just keep it safe, for their trust fund babies!

This entry was posted in Economics, Happiness, Hope, Life is valuable, Nature, Self actualization by Rajiv Kapoor. Bookmark the permalink.

About Rajiv Kapoor

Rajiv Kapoor was born in New Delhi. He was educated by the Jesuits at St Xavier’s, and graduated with Honors, from The University of Delhi. Rajiv Kapoor did his MBA in International Business from Penn State and is now settled in the US. He has traveled across most states of India, when he was working on modernization of Rice Mills, and understands their diverse culture and history. This book is a historical fiction, dedicated to his city of birth. His extensive research dives deep into a critical moment, in India’s long history, for his latest Historical Thriller “The Peacock Throne Wars”..

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