In response to an FT article by Chris Giles on 18th August 2015, entitled 'Inequality is unjust, not bad for growth'
Madame Lagarde may say that 'the rich should thank the poor', she may even believe that on some level, but she knows full well that to a large extent the monetary system dictates the distribution of wealth, and that this system is built, whether by design or accumulated stupidity, to produce power and wealth for the people who control it, at the expense of those who don't.
Inequality cannot be 'solved', without addressing the financial system which 'feeds' it, and the financial system that feeds it cannot be solved without addressing the thing that feeds it - ever expanding credit.
The global economy is fuelled by ever expanding debt. Control of the debt has become the primary goal for banks; the continuation of rolled over debt has become the primary goal and absolute necessity for governments. Money printing and ZIRP are increasingly the only things keeping it going, capital controls are being introduced to the same end, the abolition of cash is a step further down the road. Central Banks are propping up the whole house of cards.
The people closest to the money spigot get richer, the folks furthest away, such as the poor, the disadvantaged, and the people on fixed incomes get poorer. Growing inequality is an inevitable product of this system, as are periodic deflationary busts that grow in severity until the system reaches a phase transition and a collapse. We've had two this century, three strikes and you are out.
We didn't just get here overnight. The global economy has expanded for the past four decades on the basis of exponential growth in debt. Look at a graph of consumer debt, business debt, government debt, total debt, and/or unfunded entitlements and you will see a classic hockey stick curve developing since the seventies. Whilst consumer debt has fallen slightly since 2009 (much to the disgust of the 'aggregate demand' gurus who give academic credibility to the system) government debt has continued to rise, and entitlement pressures are exploding on the basis of demographics.
This expansion has favoured the people who control and distribute the debt - banks , governments and the revolving doors that link them together. 40 years have twisted capitalism out of all shape until we now have a Frankenstein's Monster that is better described by the terms crony capitalism and/or socialism for the rich.
Why don't governments address this problem? Do you honestly expect Hillary Clinton and Jamie Dimon to say thanks to poor people? How about Jeb Bush and Lloyd Blankfein? Turkeys don't vote for Christmas or Thanksgiving.