The US is not a democratic republic. It cannot be. Big Money rules. We are now an oligarchic plutocracy or plutocratic oligarchy, whichever you prefer to call it (rule of a wealthy few). We gave the ruling power to a cabal of private bankers and their wealthy friends.

The very rich are steadily extending their ownership and control over the nation, apparently aiming to own it all. And, if you graph the wealth shifting to a tinier and tinier percentage of Americans, it is clear that they are well on their way! Special privileges speed the journey.

Privileges for the wealthy

The word privilege comes from a Latin word meaning a law for just one person – a private law. And, that is what the very rich money creators have in our system: they have privileges available to no one else.

General Privilege

There are general privileges that come with being rich that exist in any money system. These privileges are amplified in our system.

It is easier for the rich to get richer. It is not only a matter of getting the best tables in a restaurant for dinner. The wealthy are paid more than someone who comes from a poor background for doing the same work. Research by the Institute for Fiscal Studies with Harvard University and the University of Cambridge found that even with the same education from a prestige university the 10 percent highest-earning male graduates from richer backgrounds earned about 20 percent more than the 10 percent highest earners from relatively poorer backgrounds.188

There is a marked link between parental income and the earning potential of their children. And with control of tax laws very wealthy people today can hold on to most of their wealth for their descendants, passing their privilege on to the next generation and establishing an aristocracy of inherited wealth.

Our money system gives advantages to this tiny elite, ensuring they never have to play on an equal playing field. While some people work hard or innovate and build companies that make them extraordinarily wealthy, once they reach a certain level of wealth, they have the opportunity to join the tiny elite who can create new money for their own financial gaming and keep it for generations.

Privilege of determining the direction of our economy and culture

Money-creators decide where the money they create goes first. And, once they’re extraordinarily wealthy, they have power to determine where our public spending goes too, by controlling the media, the propaganda, and the lawmakers with their contributions. Money-creators determine whether we invest in a global war machine; or sustainable energy; or use our wealth to assure everyone has food, shelter, healthcare and education; or whether we have a few with closets bigger than houses and thousands of thousand-dollar shoes. They decide the nature and direction of the economy, which determines what opportunities are available to you and how easy or hard it will be to achieve your goals. That is power.

In 2017 JPMorgan held over $2.5 trillion in assets. In a very broad systemic sense this means that it created or controls over 18 percent of the total 2017 money supply.189 One bank. A twelve-member board of directors set policy that determined the choices made when this money was created. TWELVE people decided what the priorities were for the creation of roughly one in five dollars. They decided whether the money would be created for gaming on Wall Street, or to build another mall, or repair highways or buy back stock to pump up CEO salaries, or build schools or merge and acquire another company, or invest in new energy technologies, set aside green space, or pay teachers. That is power. And, keep in mind the FDIC can only cover about one percent of total consumer deposits in a systemic collapse, so all by itself, JPMorgan could take down our entire economy with a few bad decisions.

These choices matter because they set the quality of our lives. Decisions are made with no input from our democratic government. This is the privilege of a plutocracy, and they maintain their power and wealth by avoiding risks and giving preference to investments with short-term personal benefits and proven technologies.


A small angel investor class shoots for the Big Win in new technology. But neither this group, nor the bank money lender-creators make many investments in technologies that may take decades to produce income or that may produce dispersed value for the nation as a whole, but no direct profits for private individuals. Without investment in long-term potential, we shortchange the future.

The very rich have reduced their taxes such that we have fewer tax dollars for long-term government research and development. Our investment in R&D has dropped from 1.2 percent of GDP in 1980 to 0.7 percent in 2018. As a percent of the federal budget, the drop is from 10 percent down to 3 percent.190 This is a mistake.

For example, while reaching for the stars, many space program inventions found their way into our lives – memory foam, radiant heat shield insulation, water filters, invisible braces, to name only a few of thousands of innovations. Today the National Aeronautics and Space Administration (NASA) barely scratches along. At the height of the space program in 1966, NASA’s budget was 4.4 percent of government spending. Today it is about 0.5 percent.191 This is shortsighted.


Banks generally choose to create new money by lending to existing, proven profit-making industries. This is one reason why, despite innovations, the dinosaur fuel industry still gets the biggest support from the financial sector and the political sector.

In the mid 1990s I was at a social event in Marin, California. I was fortunate to enjoy a conversation with Mark Reisner, American environmentalist and author of Cadillac Desert: The American West and its Disappearing Water – originally published in 1986, revised and reprinted in hopes someone would finally listen in 1993.192 He talked passionately about the rice field burning in California. This burning polluted the air and wasted a resource. In Asia, for centuries they had been cutting the leftover straw and using it for many different applications, including building materials. There were profitable models for this kind of factory. Reisner said he had been working for decades to get banks or venture capital to lend or invest in this environmentally friendly approach. No one was interested; it was new and unproven in the US.

The good news is that the Central Valley rice industry and the California legislature finally listened and worked together to reduce the burning from about 95 percent of the crops in 1980 to less than 10 percent in 2010. Thirty years of asthma were a preventable hardship, but good sense finally prevailed. And, note: it took government intervention and encouragement. Private business was not willing to do it on their own.193

The first solar collector was created in 1767. In 1839 a French scientist identified the first photovoltaic effect. In 1873 the photoconductivity of selenium and it’s emission of solar energy was discovered.194 It took until the late 1940s – nearly 200 years later – for solar power to become commercially available. By the 1950s it was used to power our space station. Early public investment in renewable technologies could have dramatically changed our nation’s energy usage, reducing the reliance on military might to maintain our access to oil.

In 1979 to support such an effort President Jimmy Carter put solar panels on the White House to demonstrate their viability. In 1981, one of President Reagan’s first actions was to remove the solar panels - a clear message of his values and his support for the dinosaur fuels making money for the owners of great wealth. Think how many bombs we’ve dropped, and how many of our service men and women have died, or been permanently harmed over the past 30 years to protect our fossil fuel dependence – unnecessarily! If asked, would citizens have invested in innovative technology that could save everyone in the nation a bundle and save unnecessary war deaths? Probably. However, the decision was made by Big Money to benefit themselves in the short term. There are countless examples of innovative technologies that took overly long to develop because they required a longer investment timeline than capital owners and money creators were willing to risk: high speed rail transit; water conservation technologies; wind, wave, and geothermal energy.

We have given this privilege of choosing the direction of our economy to people who look out for their own short-term bottom line, whether or not it benefits the nation – and we suffer accordingly. The nations that lead the world in sustainable energy had robust public funding for their development – Sweden, Costa Rica, Nicaragua, Scotland, and Germany. The US is #10 on the list.195


Banks, bankers and their friends do not need to own money to use money to make money. For example, in 2017, our largest bank JPMorgan Chase owned $9.97 for every $100 they had earning income by US accounting standards. By European accounting standards, they only owned about $6. This ratio of owned to invested is called leverage.196 Note that regulations matter. This 2017 leverage is up from the 2–4 percent leverage of 2007.

The average person or business cannot be leveraged so highly. If you have $6,000 in net worth, the bank is not going to lend you $100,000 to use for speculating in the market place. You would have to be good friends with an unprincipled banker.

Here’s how this privilege extracts wealth from the marketplace: If you invest $100,000 you own for a 10 percent return, you will earn $10,000. Someone with access to a big line of credit can put only $1,000 of their own money on the line for this same investment. They can borrow $99,000 and make the same bet. They earn the same $10,000, minus interest on the borrowed money. A high-speed trader holding the investment for microseconds, will pay next to nothing in interest. They will earn the same $10,000 on a $1,000 investment. This is one of the ways hedge funds and Wall Street gamers make annual returns of 20–30 percent. It is not because they have invested capital in a business that tripled in size; they earn these returns gaming the system because they have access to credit that ordinary people in ordinary business do not have.

Privilege of low taxes

Our tax laws favor business and a wealthy few. This was true before Republicans passed a new tax law in December 2017 that for 10 years gives the top 0.4 percent of all filers 16.5 percent of the total benefits. From 2028 and thereafter, the bill gives 82 percent of the total benefits to the top 0.6 percent of all filers. A little carrot and then a big stick for the general population. A big carrot and then more carats for the wealthiest Americans.197


The very wealthy make most of their money in the form of capital gains, or what they sometimes call carried interest; wages are a relatively small part of their income. The reverse is true for 90 percent of us. The tax rate is set to advantage the very wealthy: taxes on capital gains are considerably lower than they are on wage income. Multi-billionaire Warren Buffet famously noted he pays a lower tax rate than his secretary.

Adding to favorable tax policy, wealthy individuals avoid as many taxes as possible. In the 1920s, those with the highest incomes and extreme wealth reduced their tax rates down into the 20th percentiles. After the mess they made of the economy, the 1929 crash and the Great Depression, the rate slowly rose to a high of 94 percent in 1945 - in part due to President Franklin D. Roosevelt’s belief that the very wealthy should pay their full share to support the war effort.

This highest rate remained at about 90 percent through the 1950s and 1960s. We invested in a strong infrastructure and had a booming economy.198 This high rate balanced some of the extraordinary privileges of the money power and kept money recirculating on Main Street. This highest rate was never applied to all the money a very rich person made; the rate climbed the more they earned, so for the first brackets of income, they were paying rates the same as someone whose income topped out at those lower brackets. In 2018, after decades of the wealthy promoting limited government, trickle-down economics, and the idea that taxes are a form of theft, individual tax rates for the very rich have dropped to a maximum rate of 37 percent – and this is only on their income over $500,000 (2018). Most of the super-rich use tax avoidance schemes that either eliminate taxes, or reduce their rate to single digits. The average effective tax rate of the top one percent of tax filers was 27 percent in 2016.199

And, when these few super-rich people die they can now preserve most of their estates for their children. Eliminating estate taxes benefits less than 0.2 percent of Americans (remember the top 0.1 percent owns 22 percent of all wealth in America).200 Estate taxes hit the top tiniest percent of people almost entirely. But, the super-rich have successful sold the idea that taxing big estates is a death tax and double taxation. One study found the financial support for eliminating inheritance taxes came from 18 super-rich families. These people provide the anti-government activists with most of the money for this anti-tax effort. So, 18 families are driving a grassroots campaign to cut their focus-group tested death taxes – leaving most Americans to fill the gap in government revenues.201 If you’re on this bandwagon, the super-rich are conducting the band.


We have a curious mindset about taxes. A wage earner can take a few specific deductions from gross pay to arrive at taxable income. One of these, the mortgage deduction is designed to get more people borrowing to buy houses. But, the gross income of an individual without deductions can equal net taxable income. People don’t get to deduct the expenses of living.

In contrast, a business entity – a money-making-for-owner-entity, can subtract all its expenses before arriving at a net taxable income. This policy says we value the money-making of businesses over the wage-earning of individuals. We value the supply side over the demand side, businesses over consumers, owners over wage earners. Those values are not in line with a Constitution that was written to promote the General Welfare and Domestic Tranquility.

If corporations are people when it comes to electioneering and free speech, why not consider them people when it comes to taxes? Some may argue businesses pass their tax on to consumers. But this argument applies to labor, too. Labor must demand enough in wages to live and pay taxes, and the expense of labor is added to the cost to consumers.

In addition to their policy advantage, corporations have successfully lobbied to shrink their taxes. In the 1950s, a decade considered a prosperous economy, corporations as a group paid an average of more than 49 percent of their profits in federal corporate income taxes. Decade by decade this average shrunk: 1960s – 38 percent; 1970s – 33; 1990s – 25 percent. By 2017, they paid 18 percent, though by statute the tax rate never dropped below 35 percent for all those years.202 203

In 2012, America’s 10 most profitable corporations paid an average income tax rate of only 9 percent – including JPMorgan Chase our biggest bank and money creator, and Wells Fargo Bank. Oil company ExxonMobil paid a tax rate of 2 percent, and Chevron paid 4 percent.204

The Institute on Taxation and Economic Policy analyzed 258 of the Fortune 500 companies that earned $3.8 trillion in profits over the eight years from 2008 to 2015. They found:

  • 8 paid ZERO in taxes over the full eight-year period.
  • 100 paid zero – or less – in at least one profitable year during the eight-year period, and 58 of those companies had multiple zero-tax years.
  • 24 companies zeroed out their taxes in at least four of the eight years.
  • 48 companies paid a rate between 0 and 10 percent over eight years.205

Corporations have shrunk their overall share of taxes, too. Corporate income tax as a share of GDP dropped from a high of 6 percent in 1952 to 1.6 percent in 2017.206 207

Corporate income tax as a share of the federal government’s operating fund dropped from 43 percent in 1952 to 14 percent in 2017.208 In part this is because there has been an increase in wealthy individuals filing as S-corporations, but overall, the share of corporate business taxes has dropped.

In 2017, individual income tax payments were five times the contributions of corporations. Individuals paid $1,526 billion in income taxes, and ALL the corporations in our great nation only paid $299 billion in corporate income taxes on $2,248 billion in all-time high corporate profits.209

The Institute for Policy Studies found, “Of America’s 100 highest-paid CEOs, 29 received more in pay last year than their company paid in federal income taxes – up from 25 out of the top 100 in our 2010 and 2011 surveys.” 210 We’ve either got a bunch of loser businesses or unethical, immoral weasels, unwilling to pay a fair share for the benefits they reap living in this once great nation. This is privilege for the few. If your politician is talking about business fleeing the US because of high tax rates, they are creating a smoke screen for Big Money.

While corporate profits have been running at all-time highs for several years, Republicans passed the 2017 tax law. It cut corporate tax rates from a range of 15–25 percent for businesses with incomes under $75,000, and a range of 34–39 percent for corporations with incomes of $75,000 and above. The 2018 corporate tax rate is a flat 21 percent. This tax cut is expected to reduce government revenues by $1.5 trillion over the next ten years. This will require cuts to government programs that today assure some circulation of money in local communities. Support for the common wealth will shift further toward individual taxpayers. By June 2018 Republicans were presenting bills to make up this revenue loss by cutting Medicare, Social Security and other safety net programs like food stamps for poor children. Cuts to these programs will further increase income extremes, transferring wealth from the 99 percent to the one percent.

Privilege of operating broke

When an ordinary business makes too many mistakes and loses too much money it goes out of business. When a big bank makes too many mistakes and loses too much money, it will be saved by its central bank – with a guarantee for the save from the US Government. Banks justly argue that a Big Bank failure will take the entire economy down, so a taxpayer guarantee is in the nation’s best interest.

Nearly all the big US banks were insolvent in 2007.211 Their assets had dropped more than 4 percent in value; it would have taken more than they had in reserve and in equity to cover their promises coming due. The central Fed bailed them out, with a US government guarantee. These bailouts were often used by the banks to pay wealthy creditors who had made poor investments themselves.

With this government-common wealth guarantee, the Big Banks safely make more profitable higher risk bets, though they are putting the nation at risk of bigger busts. The profits are privatized and the risk shifts to the public. In 2008, access to the central bank’s lender- of-last-resort-save-mechanism was extended to our biggest privately owned corporations. But it is a privilege accorded to no one else.

Crime does pay

The root of the word privilege is private law. Bankers have their own set of laws, that allow them to lie, cheat and steal, and in nearly every case they will be ignored, protected or exonerated.

Privilege of being above the law

Back in 2014 I wrote that despite evidence of fraud, criminal negligence and other criminal activity, not one banker went to jail after the 2007–2008 meltdown. This was true through 2016.212 Double checking references in 2018, I find that, yes, 35 bankers went to jail!213 So some wheels of justice turned. However, it took almost ten years. And remember that if we’d jailed a proportionate number to Iceland’s arrests after their 2007 meltdown, we’d have arrested 600,000 – probably a more accurate reflection of the number of people who participated in the fraud that led to the economy’s collapse. So, the point holds. Bankers are still mostly quite privileged.

Here’s a significant example that took place at the highest level of our privatized global money creation system: Our big global banks created global central banking institutions for the same reasons national banks create a central bank (Chapter 3.25 & 4.32). The British Bankers Association, which is a cartel of big international banks, monitors the rates at which its members lend to each other. This global interbank lending rate is called LIBOR (London Interbank Offer Rate). This rate underpins over $350 trillion in bank lending/ money creation and derivatives worldwide.

An investigation begun in 2012 found a number of international banks had been making false reports to rig this rate to the benefit of traders back as far as 2003. For at least 10 years, traders at big banks rigged a rate that impacted the buying and selling of over $350,000,000,000,000 in loans every year. The rate was rigged to benefit a few at the expense of the many on $3.5 QUADRILLION in loans over the 10 years. For this crime, the banks and their traders were given a slap on the wrist fine of $9 billion. This is a tiny, tiny, piddling fine compared to the profits they made on their crime. A few individuals were charged, and acquitted. No one was jailed. In 2012, they made a specific law stating this rigging is a crime, as if existing laws about fraud did not cover it. This is crime that did pay the privileged bankers and traders.214 215

While the LIBOR scandal took place on a global scale with global impact, the pattern is common at our national level. As some have noted, the Ponzi artist Bernie Madoff did go to jail – because he robbed the very rich. The bankers robbed the rest of us, and got off mostly scot-free.

CEO – Kings

Kings of the money-making temples

Not so long ago, we recognized it takes everyone in a business to make it a success. And we believed that there should be a fair and equitable ratio of executive pay to worker pay. In recognition of these values, in 1965, CEO salaries were 26 times their average worker pay. Through the 1970s, CEO pay was determined based on a comparison with the pay of other employees in the company, described as internal equity. As recently as 1980, CEOs made roughly 43 times their average employee’s salary.

But, as we head up the steeper and steeper exponential curve of our money supply growth, CEO pay rose along a similar curve. A new industry of executive compensation consultants arose in the 1980s and convinced companies to switch to basing CEO salaries on external equity. This meant that instead of being viewed as part of a team creating a successful company, CEOs would be viewed as a unique and special class of people competing with other CEOs. If a company wanted a better-than-average CEO, it would have to pay more than the median CEO pay. Since everyone can’t be above average, this drove a steady, exponential increase in CEO pay.216 In 2018, estimates of this ratio range from 300 to 500.

In 2015, the Securities and Exchange Commission (SEC) ruled that U.S. companies that are already required to publish an annual report, must publish, “the ratio of the median of the annual total compensation of all employees to the annual total compensation of the chief Executive officer… effective on or after January 1, 2017.” 217

We are beginning to have solid data on the disparity between CEO pay and workers, so the justifications for this disparity are coming out as well. In February 2017, Alex Edmans at the Harvard Business Review explained that CEOs were like one-of-a-kind sports or entertainment stars and their salary should not be compared to ordinary people.218 The problem with this argument is that there is no evidence that CEOs deserve this prima donna royal status.

Modern Index Strategy Indexes (MSCI) sampled 429 large-cap US companies between 2006 and 2015, and found that “average shareholder returns were higher when a company’s CEO was in the bottom 20% (of total compensation) than it was for companies whose executives were in the top 20% of earners.”219 Could it be that people work harder and produce more in companies that treat them as respected contributors? Companies that have a king and serf model do not fare as well.

Our actions and policies say we value those who sit atop the ranks of the money-makers more than we value anyone else to an extraordinary and astounding degree. We have allowed the wealthiest people to rule our country and our lives. I don’t believe this matches are true values and our commitment to equal justice, broad-based national prosperity, and domestic tranquility?

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