Economic Times – Capital controls and transfer of wealth from Private Sector to Public Sector

Capital controls and transfer of wealth from Private sector to Public

While the policy of building walls to keep people from entering a country has become more prevalent, what is rarely discussed in the mainstream financial media is the prospect of another type of wall: a financial wall, prohibiting savers and investors from transferring, repatriating, or even using their capital. Capital controls are now reappearing as a “macroprudential” tool, aimed at addressing global crises. Financial repression is a term coined by the Stanford economists Edward Shaw and Ronald McKinnon, and relates to policies under which the government transfers wealth from the private to the public sector, by generating cheap funding for the government. The mechanism is fairly straightforward: Artificially low nominal interest rates, accompanied by a mild dose of inflation, will erode the real value of government debt. The main policies to achieve this are capital account restrictions and foreign exchange controls to create an internal “captive” market for domestic debt, caps or ceilings on interest rates and/or direct ownership / heavy regulation on the banking system. Given the rise of inward-looking and panicked politicians around the globe and the monetary policy extremes after the 2008 crisis, a financial repression via blanket capital control regime could be the policy response to the next crisis. In this process, the global financial system would be totally fragmented, while wealth would be transferred from the private sector to the government

Read More


The new Private Terminal where Rich are pampered and normal people suffer

( reminds me of The hunger Games movie)

There is an iPad that sat on a counter at the entrance, with a typed little note: “Here is a glimpse of what you’re missing over at the main terminal right now.” The screen linked to videos of travellers looking harassed and being swallowed into pushing, shoving paparazzi scrums – routine hazards for the 80 million people who pass through LAX each year. “There they process thousands of people at a time, they’re barking. It’s loud. Here it’s very, very lovely,” said Gavin de Becker, who runs the new terminal, called Private Suite. Welcome to Los Angeles international airport’s (LAX) new private terminal for the mega-rich: the plush, hushed privacy, the beds with comforters, the massages, the coriander-scented soap, the Willy Wonka-style array of chocolates and jelly beans, and the Napa Valley cabernet. The $22m facility, the first of its kind in the US, opens on Monday, giving the 1% a whole new way to separate themselves from everyone else’s reality. Instead of battling the traffic jams that clog LAX you reach Private Suite via the Imperial Highway, leading to a discreet turn-off where an armed guard checks your identity and pushes a button. Tall grey gates open and you enter the haven. It is pricey. In addition to annual membership of $7,500, you pay $2,700 per domestic flight and $3,000 per international flight. The cost covers a group of up to four people

Read More


How college has become a racket

The cost of college education in western countries especially US has exploded in last few. College tuition and expenses has risen at a financially devastating rate for students and their financially trapped families and these kids who have joined working population after completing getting their precious college degrees collectively owns USD 1.4 trillion of student debt .  What few however can answer satisfactorily is: Why has this occurred? Most students takes loans for college education which is guaranteed by their parents but there was a steep increase in this debt inducing juggernaut from 2010-11. What happened in the early part of this post financial crisis decade? Certainly, more students didn’t suddenly start wanting to go to college? College operating costs on the other hand didn’t abruptly get more expensive? What happened was The US Government accepted the full risk of student loans and financially Guaranteed Student Loans to the bankers. The banking lobbyist pulled off the biggest heist in history by having student loans made fully Non-Recourse loans, not dis-chargeable in bankruptcy court. To the ‘money lenders’ this was a dream opportunity!   An opportunity for “risk free” lending that needed to be fully capitalized on before the magnitude of the mistake was fully appreciated and consumer protection laws changed.

Read More


The end of oil in 10 years

We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history. By 2030, within 10 years of regulatory approval of autonomous vehicles (AVs), 95% of U.S. passenger miles travelled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call “transport-as-a-service” (TaaS). The TaaS disruption will have enormous implications across the transportation and oil industries, decimating entire portions of their value chains, causing oil demand and prices to plummet, and destroying trillions of dollars in investor value — but also creating trillions of dollars in new business opportunities, consumer surplus and GDP growth. High vehicle utilization (each car will be used at least 10 times more than individually owned cars) will mean that far fewer cars will be needed in the  vehicle fleet, and therefore there will be no supply constraint to the speed and extent of TaaS adoption that we forecast.
Taken together, this analysis forecasts a very fast and extensive disruption: TaaS will provide 95% of the passenger miles travelled within 10 years of the widespread regulatory approval of AVs. By 2030, individually owned ICE vehicles will still represent 40% of the vehicles in the U.S. vehicle fleet, but they will provide just 5% of passenger miles.

Read More


Leave a Reply

Your email address will not be published.