Money makes money. If you’re wealthy, it’s easy to make more wealth. And that means they get to do stuff differently to everyone else.
If you’ve got blank space on a wall, you pop to IKEA and pick up a print of an abstract flower that looks like a good color match for your sofa.
The wealthy don’t think IKEA when they want to buy art. They can buy a painting by a popular and acclaimed artist for a figure that would make our eyes water. But they don’t blink at paying $20 million for art from a top artist. Because they know that in a few years, that painting could be worth $30 million. $10 million profit for doing nothing, other than being fabulously wealthy to start with.
Of course, it’s only profit if they sell the painting. And then they no longer get to enjoy owning a piece of art that others desire. Worse than that, they’d have to pay capital gains tax, so they don’t even get the full $10 million.
This is when the wealthy leverage the painting. Instead of selling it, they borrow money against it. That way, they can get the full $10 million. And while they have to pay interest on the borrowed money, that’s more than offset by the value of the painting continuing to rise and is much less than the tax anyway.
Now imagine you were so wealthy, you can help politicians win elections. In return, those politicians will use their power to show their gratitude and do things that help you.
For example, allowing you to leverage the rest of the population.
The wealthiest 10% of Americans have wealth of $118.26 trillion, more than three times the US national debt of $39 trillion. The US government effectively borrowed $39 trillion and gave it to already wealthy Americans. They clearly didn’t give it to the poorest 50% of Americans who share just $4.27 trillion between them.
If the wealthiest 10% paid off the debt, they’d still have $79.71 trillion. And they’d still be incredibly wealthy.
But obviously they’re not going to use their money to help everyone else.
So, the interest payments of more than $1 trillion every year, are paid from taxes that are meant to help all the American people. But in paying off a debt that could easily be paid by the wealthiest 10% of Americans, that money is used to help just the very wealthy.
Should the wealthy be allowed to leverage the poor?
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