Billionaires Come and Go; Global Debt Grows

Roughly two-thirds of the billionaires built their own fortunes, 13% inherited them and 21% have been adding on to fortunes they received. _Forbes 2014 Billionaires List

There is a good deal of turnover among the ranks of billionaires. In productive economies, billionaires can build their own fortunes. In despotic and corrupt countries, a close connection to government plays a stronger role. Either way, fortunes can be both made and lost.

High turnover can indicate either a very turbulent economy, or rapid changes in fortune due to shifting government favouritism. In the third world, close connections to government must be maintained, if one hopes to maintain his wealth in-country. Perhaps that is why so much third world wealth is rapidly transferred to Swiss banks.

In Russia, for example, less than 25% of a country’s wealth from billionaires comes from productive industries (see graph below). Corruption played a large factor in the rest.

One of the factors contributing to shifting fortunes in China:

… several men previously on the billionaires’ list have landed in jail [in China]. This suggests that the state may be stepping in to quash excessive and misbegotten fortunes, a policy akin to killing a few chickens to scare the monkeys.

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In most prosperous countries, the billionaire’s share of national GDP is minimal. The global economy overall is drowning in debt — debt that is growing deeper all the time.

The 2007/2008/2009 financial crisis was only a foretaste of what could easily happen anytime in the near to intermediate future. The longer the debt orgy plays out, the greater the damage. After a certain level of debt, governments will no longer be able to control the fallout.

Outstanding Derivatives ZeroHedge

Outstanding Derivatives

We have seen the evaluation of money change, as governments grow. $Billions became the new $millions — and now $trillions are becoming the new $billions. How long before $quadrillions become the new $trillions? What happens when large debt bubbles collapse at those levels of debt?

Large governments have become “weapons of mass destruction” not only for the damage their militaries can do, but for what damage their economic policies can do. International financial conglomerates — closely tied to governments — amplify the potential damage via excessive government-guaranteed risk.

On the global scale, billionaires are significant mainly for the amount of leverage they can exert upon government spending and government policies. When a significant amount of economy-damaging corruption is found within governments and persons/groups that lobby governments for their own self-interest — that is where the guillotines need to be brought to bear.

Beyond a certain level of corruption, debt, and demographic decline, ordinary constitutional safeguards can no longer remedy the problem of bloated, toxic government. Everyone with an IQ above the mean understands this, at least subconsciously. The problem becomes almost insoluble when the majority of a voting population becomes beholden to one form of government corruption or another. When the masses have been bought off, the wealthy depend on government to hold their wealth, and the productive middle are squeezed to the point that they cannot prosper and raise families according to their own values — a society sinks into an extended stagnant end-game.

Grassroots populist movements such as The Tea Party in the US can only hold back the tide of decline for a limited time, once debt, demographic decline, and creeping corruption are all in full sway.

By the time most members of the productive classes wake up to their plight, it is too late to take up the most obvious historical solutions to oppression and extortion.

Resilient and dangerous communities that are well-sited, can network with other similarly positioned R & D communities to form nuclei of future prosperity — once corrupt systems collapse and opportunity returns.

That is the fallback position. Other solutions would rely on significant technological advances, and exquisitely careful planning.

Whatever the eventual solution to this steamroller’s ride to economic hell, any prosperous society in the future will need a competent and resilient human substrate.

More: How billionaires like to fly

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