Economics 101

Economics 101

Economics balances access to finite resources and how this affects human incentives to balance their productivity and consumption.

It is about people as much as it is about money, goods and services.

For tips on Money, see the section of The Golden Rules.

For more in-depth, see the books on Money & Economics.

Index

• Supply vs Demand
• GDP – Gross Domestic Product
• Government Price Fixing Causes More Severe Shortages
• Inflation is the result of Government Money Printing
• Government Spending – Why They Print Too Much Money
  • The Result – Inflationary Price Rises
  • The Reaction – Raising Interest Rates
• Universal Suffrage has been an Economic Disaster
• Everything in Western society is designed to Transfer Wealth from Men to Women
• The Gold Standard
• End the Fed – Central Banks scams you via Inflation
• Fractional Reserve Banking is a House of Cards
  • Banking Insurance
  • Corruption of Incentives
  • Too Big To Fail
  • Monopolies
• State Pensions are an Unsustainable Ponzi Scheme
• The “Free Market” is a Myth
• The Value of Labor
• Big Government = Big Corruption, & Mega-Corporate Capitalism
• Socialism was an Absolute Disaster Everywhere It’s Been Tried All Over The World Every Time
• The Gender Pay Gap is a Scam by Feminists
• Social Security is a scam to Subsidize Women & The Government
• Women are a $150,000 net loss to the state each
• Immigration pushes up Cost of Living while pushing down Wages
• Trade Deficits
• Inflation Continued
• Moneylanders

Supply vs Demand

Prices are typically a balance between the amount of goods or services available and the demand from people or companies who want to consume them.

This price signal feedback mechanism allows millions of people to make adjustments in their personal lives about how much they consume, increasing or decreasing the supply to meet the demand.

GDP – Gross Domestic Product

Gross Domestic Product is the total amount of goods and services produced within a country, per year or per quarter. It is often used as a proxy for how well an economy is doing, but this is a scam. This number hides a lot of problems and is subject to political manipulation. For example, items sold and resold on are double counted, and the broken window parable that smashing a window and repairing it technically adds to GDP, but at the expense of real productive gain that capital could have otherwise served.

GDP also tells you little about the prosperity of individuals within the country. The GDP of India is higher than the GDP of the UK, but because India is so heavily over populated, the average Briton is far better off than the average Indian.

Women’s higher workforce participation rates increases GDP at the expense of birth rates and demographic sustainability. Rewarding women via work to not have enough children is a mistake of historic proportions.

It’s the equivalent of thinking one is rich by spending beyond one’s income via credit cards – eventually the bill will come due.

Government Price Fixing Causes More Severe Shortages

Government price fixing to legally enforce artificial suppression of prices in an attempt to make goods or services more affordable, invariably backfires.

The price signal mechanism is what would have encouraged more people/companies to produce those goods or services by chasing the higher profits until the increased supplier competition brings the price back down to a natural equilibrium.

By suppressing the price signal mechanism, future supply is suppressed because new people/companies will not enter the market to supply that good or service, stunting the supply side.

The supprssed price will also allow people with more money will buy more than they absolutely need, making demand even worse and shortages even more severe.

Inflation is the result of Government Money Printing

Governments steal the value of your money by getting their central banks to “print“ more money.

In practice, this is often just adding a few digits into a computer system – after all what are bank accounts these days other than ledgers in a computer.

They then giving that money to their friends via crony capitalism government contracts or lending it out via secondary banks.

Those closest to the money printer receive the biggest benefit by receiving and spending that new money before the rest of the market can react by marking up their prices. This is called The Cantillon Effect.

“Inflation discourages all prudence and thrift… It encourages squandering, gambling, reckless waste of all kinds. It often makes it more profitable to speculate than to produce. It tears apart the whole fabric of stable economic relationships”

Henry Hazlitt’s – Economics in One Lesson

Government Spending – Why They Print Too Much Money

Governments are forced to print money to spend beyond their means – more than they can receive from high taxes. This leaves them with three options:

1. raise taxes even further (already too high due to universal suffrage)
2. increase national debts (already too high due to universal suffrage)
3. print more money

The Result – Inflationary Price Rises

When central banks print too much money too quickly, the resulting inflationary price rises lead to problems across society.

Central banks have only one tool to try to suck some of that excess money out of circulation – interest rate rises.

The Reaction – Raising Interest Rates

Raising interest rates causes borrowing to become more expensive, and encourages both people and banks to bury money in savings accounts rather than spend it or loan it out to companies or consumers, thereby reducing demand for goods and services because both people and companies become disincentivized to continue to buy things using more expensive loans.

They also suffer from any debts they already have which have non-fixed interest rates that track the central bank’s interest rate – they invariably try to cut back their spending and repay their existing debts.

Mortgages on housing become more expensive, with landlords passing this on as higher rents, taking money out of the pockets of most households, reducing their amount of spending money and therefore their demand for goods and services.

This can push an economy into recession, so the central bank has to balance the problem of price inflation vs causing a recession, so they tune up the interest rates over a series of months and watch how the market reacts.

“The first ‘solution’ of the failing nation is inflation, the second is constant useless war. Both bring temporary riches, then permanent ruin”

Ernest Hemingway

Universal Suffrage has been an Economic Disaster

Universal suffrage, aside from giving women the majority vote and wrecking the divorce and family laws, has also been an economic disaster.

It pushed governments into permanent budgetary deficits, which historically usually only happened during times of war.

No country has ever benefitted from a perpetual state of war

Sun Tzu

Yet women’s voting has pushed governments into the same budgetary deficits as permanent war.

Universal suffrage forced governments into inflationary money printing.

This is because roughly half the adults don’t even pay income tax, but can vote for “free money” and “free services”, driving up your tax rates. ^{1 2 3 4 5 6 7 8 9 10}

“Decoupling voting from taxpaying is unsustainable by any society”

Imran Khan, The Futurist

Each woman is a $150,000 net loss to the state.

Politicians have no choice but to make big promises, essentially buying votes to win elections. You get the worst elections under this corruption of incentives.

This has pushed up the tax rates over time, slow-boiling you like a frog.

High income taxes did not exist in the US before universal suffrage.

US government spending went from 3% to 30-40% of GDP after universal suffrage.

US government debts also rose to around 100% of GDP, which is insane. The interest on the debt alone is a huge waste of money.

This is what forces governments into inflationary money printing as they cannot keep raising taxes and taking on debts as eventually they’d “default” – fail to keep up with the interest payments – which would lower the government’s credit rating and result in nobody being willing to lend them money in future, or having to pay even higher interest rates to counter balance the increased risk of not being repaid.

Inflationary money printing is essentially a stealth tax on both working incomes and savings.

This inflationary money printing has caused asset prices such as houses to rise faster than wages, leaving the younger generations behind economically while allowing the older generations unearned asset wealth increases.

Older people vote in higher percentages, which is why governments are powerless to solve the intergenerational wealth inequality as they would be voted against if they tried to rebalance this.

The inter-generational wealth inequality caused by universal suffrage policies economically constricts the birth rates of the society (as well as the feminist family laws), leading to a downward spiral of unsustainability.

This results in too few young workers being born to support the universal state pensions of an ageing population. The government is subsequently forced to accept mass immigration and ethnic replacement just to delay the state collapse. But immigrants get old and claims pensions too, requiring ever more mass immigration.

Everything in Western society is designed to Transfer Wealth from Men to Women

This is the result of universal suffrage.

Women vote for ever more feminist subsidies – divorce law, child support, welfare state, gender quotas for cushy office jobs. This leads to men subsidizing women throughout life, even in corporate jobs.

Decoupling women’s access to resources from being accountable to the men providing them, also lowers the birth rates.

Women would rather live a life of luxury on men’s productivity than give them the commensurate number of children.

The resulting low birth rates results in too few workers to support the state, leading to the mass immigration downward spiral described in the section above.

The Gold Standard

The inflation graphs of how they screwed you by taking you off The Gold Standard – the government’s guarantee to exchange their government paper money for gold on demand:

http://wtfhappenedin1971.com/

Universal suffrage economics and the Vietnam War forced the US government off The Gold Standard because they printed so much money that the government could no longer meet the obligation to exchange paper notes for gold.

Once they decoupled the dollar from gold conversion, the US government continued to print ever more and inflate away the value of the dollar, causing wages and cost of living to start to diverge, with terrible results on US standard of living.

End the Fed – Central Banks scams you via Inflation

Central Banks are cartels that print the money and then give it out to their friends.

This is what causes inflation which erodes your purchasing power.

The Federal Reserve is a private banking cartel. Income taxes were introduced to pay the interest on the national debt to that bank.

90% of the value of the US dollar and UK pound have been inflated away since the creation of The Federal Reserve over the last few decades. Woodrow Wilson’s election campaign was funded in exchange for signing off on the creation of The Fed and snuck through the legislation while there weren’t enough politicians available to vote to oppose it.

Income Tax Rates across different countries:

https://tradingeconomics.com/country-list/personal-income-tax-rate

Fractional Reserve Banking is a House of Cards

Banks lend out 10x the money they hold in their vaults.

They do this because adding entries in their computer systems means that they can generate more profit via charging interest to clients.

But this is a house of cards because if 2/10 of the depositors by volume decide to withdraw, this causes a “bank run” which means the bank would actually have enough money to meet their obligations, causing the bank to collapse.

The entire banking system is built on people not withdrawing their money. It’s a House of Cards.

Banking Insurance

The solution for this potential of banks to collapse at any time via “bank runs” prompted the creation of the FDIC and FSCS deposit insurance schemes in the US and UK respectively.

But they can only cover roughly 1% of deposits, which is why banks only guarantee a limited amount of deposits per person in the case of a collapse of the bank, such as £85,000 per person or company in the UK.

Corruption of Incentives

However, this insurance causes an arms race between banks to take ever greater risks to generate profits because they have some insurance.

Too Big To Fail

This limited insurance cover, and also the number of people employed, is why governments step in to save big banks at the expense of the taxpayer, hence the “Too Big To Fail” phrase from the 2008 Global Financial Crisis. This is why the UK government bailed out and became the majority owner of the Royal Bank of Scotland.

Monopolies

This system favors larger banks, while letting smaller to medium banks to fail, only to be bought out at firesale prices by larger institutions such as JP Morgan, creating a market monopoly of larger players.

As usual, governments ruin what they touch.

State Pensions are an Unsustainable Ponzi Scheme

State pensions cannot be sustained with an aging population and declining birth rates as there are ever fewer young working taxpayers to fund the pensions.

The first generation to receive state pensions didn’t pay anything into the system, so the “social security” taxes paid by each generation has not been invested for their future but instead used to pay the checks for the current people of pension age.

As feminism destroyed the birth rates, there won’t be enough young people to sustain the welfare state.

The unsustainable welfare state burden is another result of universal suffrage:

https://moneyweek.com/499206/votes-for-women-and-the-rise-of-the-welfare-state

As life expectancies have risen since pensions were first introduced, governments are forced to pay for much longer than originally intended, and while governments have tried to gently raise the age of state pension, this has led to riots in France, burning cars/streets that were suppressed in mainstream media but seen on social media videos.

The “Free Market” is a Myth

Governments make laws that choose who can do what.

Government creates the rules by which the economic game is played., up to a point. For example they cannot just print money, as we see in the section on inflation.

Governments choose which companies get subsidies from your taxes. Big government = big corruption. I personally know people who have become millionaires from nowhere via this Crony Capitalism corruption.

Not all government restrictions were bad, as this is what prevents the use of child labor which would be cheaper than adult labor as adults have higher expenses, or slavery which would be even cheaper as you don’t have to pay them at all.

Conversely, free market fundamentalism ignores that some of the most major technological breakthroughs that form the basis of smartphones such as the internet, GPS, touchscreens and even the precursor to the microchip are the result of government research – not private enterprise, even if Google, Amazon and Apple are huge private beneficiaries of that government investment.

“The best economic system, that creates the most prosperity for the greatest range of people, is a free-market system that employs regulation to contain industries that profit in correlation with misery of others“

Kartik Gada, https://www.singularity2050.com/gems.html

The Value of Labor

What happens when you double the labor force?

You halve the value of labor.

Women’s mass entry into the labor force benefitted rich business owners because it gave them more cheap workers.

This is the same reason the rich elites love mass immigration, providing their businesses with cheap workers, and higher rents.

We hear a lot of complaints about the cost of childcare for women to return to work. It’s almost as though things were better when most women stayed home with the kids in traditional gender roles… 🤔

… rather than causing a dual-income cost of living arms race between families.

The winners of this system are short-termist governments to get a larger labor force at the expense of borrowing against future generation’s human capital via lower birth rates, and of course DINKs – “Dual-Income No Kids” couples. Needless to say this is unsustainable by any society.

Big Government = Big Corruption, & Mega-Corporate Capitalism

Big Government favors Mega Corporations via:

1. Regulations:
   • complex regulations are bigger hurdles for smaller competitors
   • bigger companies can absorb the cost of regulations more easily to economy of scale
2. Taxes – complex tax codes with buried tax breaks for big corporations & the rich – that benefit those with scale & wealth
3. Patents – patents prevent other companies from making similar products for less cost, creating a moat around their business and allowing companies like Apple to jack up prices for record profits
4. Banking – large banks are “Too Big to Fail” and receive bailouts at the taxpayers’ expense, while small banks are allowed to go bankrupt to get bought out by bigger players for a bargain price
5. Subsidies aka Corporate Welfare – eg. Walmart, McDonalds, Amazon, Tesla and other large corporations are subsidized by US government invarious ways. Tax subsidies on warehouses or electric cars, to welfare benefits for low-paid workers. This gives big corporations a competitive advantage in labor & other costs compared to smaller companies, but at the taxpayer’s expense ^{11 12 13 14 15 16 17 18 19}

Corporations spend millions lobbying politicians in government. Campaign contributions come with strings. Promises of later bills they want passed to change the game in their favor.

These factors creates a convergence towards ever larger mega-corporations while hurting small to medium sized businesses who cannot benefit from the tax advantages or subsidies and therefore cannot compete.

Many giant corporations, like Facebook, and billionaires like Jeff Bezos and Elon Musk, have paid less tax in a year than the average middle class worker – even when they were already billionaires. ^{20 21 22}

Even in years when billionaires do pay tax, it’s at a rate that’s a tiny percentage compared to the rates the working classes pay. ^{23 24 25 26 27 28 29 30 31 32}

Capitalism is based on free market competition bringing prices down. But there is no free market when the government is setting these lopsided rules.

The above reasons are why bigger companies are dominating and becoming monopolies, as per this article:

The Paradox of Left-Wing Decline & Mega-Corporate Capitalism

Socialism was an Absolute Disaster Everywhere It’s Been Tried All Over The World Every Time

When people cite wanting to fix or end capitalism, whether implicitly or explicitly stating to replace it with socialism, they usually mean they want to correct the injustices and inequalities caused by Big Government Corruption & Mega-Corporate Capitalism described in the section above.

“If socialists understood economics they wouldn’t be socialists”

Friedrich Hayek

Socialism breaks the price feedback mechanism from millions of individuals making rational decisions about how much they want or need something, and this leads to shortages because it corrupts the incentives of individuals to increase or decrease the supply vs the demand.

Worse yet, as people stop working, stop producing, create black markets, the governments inevitably react by becoming ever more authoritarian and aggressive, often resulting in the deaths of millions of people. This is a systemic fatal flaw in socialism.

Unfortunately, Feminism cannot succeed without Socialism. This has been acknowledged by feminists themselves. ³³

Feminism is the new Communism, but worse, because it destroys the birth rates and in the West leads to demographic replacement from abroad over time, meaning the original populations can never recover back to their pre-feminist state.

Socialism: The Failed Idea That Never Dies is the best resource I’ve found to educate why we must never attempt socialism ever again.

This critical book shows the catastrophe socialism has caused all around the world every time it’s ever been tried, across countries, generations, geographies and decades it always ends the same way.

It thoroughly debunks what have become running jokes among the economically educated that “this time it’ll be different”, “that wasn’t true socialism”, “if I did it my way”… etc.

It shows no matter how or where socialism was tried, it destroyed incentives, productivity, living standards, and inevitably resulted in authoritarianism, atrocities and horrific human rights abuses to try to force people to work without fair incentives besides the threat of state-sanctioned violence.

When the state becomes the economy it’s game over, because the state is not a producer, but a burden on the productive classes.

FYI, Nordic countries aren’t actually socialist. Also, they have small populations of only around 6 million people each, with Sweden being the largest at 10 million people. This is not comparable to big countries with lots of poor people like the US, since social policies that work at one scale, fail at another, as we see with the state of the UK’s NHS now.

The Gender Pay Gap is a Scam by Feminists

That is covered separately in depth here:

The Gender Pay Gap Scam

Social Security is a scam to Subsidize Women & The Government

Women are a $150,000 Net Loss to the State Each

“Among civilized peoples, especially the very wealthy population of the United States of America, women have become objects of luxury who consume but do not produce.”

Vilfredo Pareto, 1927

Today, each woman is on average a $150,000 net loss to the state over her lifetime, at the expense of higher taxation paid mostly by men. And that doesn’t even include often higher subsidies by force of feminist divorce laws.

Research finds that as a group, only men pay tax

What happens when people who aren’t net contributors like women vote for “free” money and services:

Immigration pushes up Cost of Living while pushing down Wages

People moving into a country or territory such as California or New York within a country have negative consequences including:

1. increased housing costs
2. pressure of services – hospitals, schools, traffic on roads etc.
3. increased competition for jobs – pushing down wages relative to cost of living

Possible Solution

People should be given a referendum on immigration policy. Their votes should be recorded and they should be legally obligated to either:

1. house at least one refugee or immigrant in their own home or
2. pay a higher tax rate to the government to cover the costs of both the immigrants and building more homes to undo the negative impact on the housing market for the local citizen population

This would be fair, because it would tie the authority to make the choice to the responsibility to pay for the choice.

When you let people decide things they don’t themselves pay for, of course they’re going to make bad decisions because they pay no personal cost for them.

Brexit

The shock Brexit result was the result of pent-up frustration of too high immigration levels to the UK causing a housing crisis and impoverishing the recent generations across the country as people were moving further and further out until there was nowhere left to retreat to.

The UK is also 25% replaced by foreigners according to the 2021 Census. By comparison, the largest invasion in UK history was the Norman Conquest in 1066 which resulted in 5% population replacement.

https://www.ons.gov.uk/peoplepopulationandcommunity/culturalidentity/ethnicity/bulletins/ethnicgroupenglandandwales/census2021

Trade Deficits

Importing more than you export means your country gets poorer over time.

China got rich at the expense of the West via this corruption of globalist capitalism where rich capital owners sent manufacturing overseas to increase their own profit margins and give cheaper products on the market, but this impoverishes the citizens over time as the money flows out but does not flow back in. This is why Chinese investors then start buying up assets such as property.

Inflation Continued

Two Types of Inflation:

1. Demand-Driven Inflation – too much consumer demand, usually caused by printing too much money flying around the economy vs too few products, causing price of products to rise to match demand
2. Supply-Side Inflation – caused by shortages, such as when Covid shut down supply chains and people don’t making things, leading to pent up demand but not enough products, such as computer chips which even impacted car manufacturers ability to deliver new cars

Moneylanders

Rich global elites, known as Moneylanders, buy up assets in countries in the West, including prime real estate in places like London and New York, pricing out the locals as investors and making the housing crisis in those areas even worse. This includes Chinese investors, Russian oligarches, African leaders embezzling their state’s finances etc.

Possible Solution

Ban foreign ownership of land or property – homes for citizens are more important than foreign investors.

References

1. https://moneyweek.com/499206/votes-for-women-and-the-rise-of-the-welfare-state/ ↩︎
2. https://www.taxrebateservices.co.uk/is-everybody-paying-income-tax ↩︎
3. https://money.howstuffworks.com/only-53-percent-pay-income-tax.htm ↩︎
4. https://www.statista.com/statistics/242138/percentages-of-us-households-that-pay-no-income-tax-by-income-level/ ↩︎
5. https://www.marketwatch.com/story/45-of-americans-pay-no-federal-income-tax-2016-02-24 ↩︎
6. https://www.theguardian.com/politics/2016/apr/26/barely-more-than-half-of-adults-pay-income-tax-says-report ↩︎
7. https://www.scotsman.com/business/why-its-wrong-nearly-half-population-pays-no-income-tax-bill-jamieson-1411333 ↩︎
8. https://www.sciencedirect.com/science/article/pii/S0047272714000048 ↩︎
9. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3436438 ↩︎
10. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2266956 ↩︎
11. https://subsidytracker.goodjobsfirst.org/parent/walmart ↩︎
12. https://www.sanders.senate.gov/press-releases/taxpayers-subsidize-poverty-wages-at-walmart-mcdonalds-other-large-corporations-gao-finds/ ↩︎
13. https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-top-employers-of-medicaid-and-food-stamp-beneficiaries.html ↩︎
14. https://ilsr.org/rule/banning-public-subsidies-for-big-retailers/ ↩︎
15. https://www.salon.com/2020/12/12/government-study-shows-taxpayers-are-subsidizing-starvation-wages-at-mcdonalds-walmart/ ↩︎
16. https://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html ↩︎
17. https://www.businessinsider.com/elon-musk-list-government-subsidies-tesla-billions-spacex-solarcity-2021-12?r=US&IR=T ↩︎
18. https://edition.cnn.com/2021/12/07/tech/elon-musk-wsj-government/index.html ↩︎
19. https://www.foxbusiness.com/politics/tesla-takes-biden-7-5b-subsidy-agrees-open-charging-network-white-house-says ↩︎
20. https://www.independent.co.uk/tech/facebook-paid-only-ps4-327-in-uk-tax-last-year-less-than-the-average-worker-a6689731.html ↩︎
21. https://metro.co.uk/2015/10/12/facebook-paid-just-4000-tax-in-britain-last-year-less-than-most-workers-5434562/ ↩︎
22. https://www.irishtimes.com/business/technology/facebook-paid-less-than-5-000-in-uk-corporation-tax-last-year-1.2388630 ↩︎
23. https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax ↩︎
24. https://finance.yahoo.com/news/billionaires-jeff-bezos-elon-musk-164830206.html ↩︎
25. https://news.sky.com/story/wealthiest-americans-including-elon-musk-and-jeff-bezos-paid-no-income-tax-12328061 ↩︎
26. https://www.forbes.com/sites/sarahhansen/2021/06/08/richest-americans-including-bezos-musk-and-buffett-paid-federal-income-taxes-equaling-just-34-of-401-billion-in-new-wealth-bombshell-report-shows/ ↩︎
27. https://www.theguardian.com/business/2021/jun/08/richest-25-americans-jeff-bezos-elon-musk-tax ↩︎
28. https://www.businessinsider.com/how-billionaires-avoid-paying-federal-income-tax-2021-6 ↩︎
29. https://www.cbsnews.com/news/income-tax-wealthy-bezos-buffett/ ↩︎
30. https://www.businessinsider.com/26-billionaires-paid-fraction-in-taxes-average-american-owes-2022-5 ↩︎
31. https://www.bbc.co.uk/news/business-57383869 ↩︎
32. https://www.cnbc.com/2021/06/08/bezos-musk-buffett-bloomberg-icahn-and-soros-pay-little-in-taxes.html ↩︎
33. https://www.theguardian.com/commentisfree/2019/mar/08/celebrate-international-womens-day-why-not-join-union ↩︎