Second Gilded Age?

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Thomas Malthus was right. He was so right in such a mathematically flawless way that its easy to overlook. We will expand our populations until we use up all the fundamental resources we need to surive. We innovate our way out of the tight spots over time, but at some stage we will reach the maximum possible population on the planet. In my view, we will stumble and fall a long time before then, just as all other civilisations have failed before. Its how we fail that is the question, not if. I don't buy the notion that we will just ride off in spaceships fuelled by some hitherto undiscovered powerful energy source contained in a minute atomic entity.

I got to thinking about this last night.

My speculation - we'll have a whole new Athenian age of philosophy. Guys will be jobless living at home, really all they'll be able to do is read and go to the gym, and with that in mind we'll likely turn out the finest couch-potato philosophers of all time.

Its quite possible in my opinion that the Plato or Socrates of the 21st century will emerge from the cave of his parent's basement at age 40 with his brand new precepts to show the world. In another place, guys less blessed, will be wearing skimpy clothes trying to flag down career Janes who can't find a guy with a job and hence do what they have to on the side.

It's going to be a very different sort of world than what we're used to thinking of as successful living.

The record low Bond rates, the record high stock market, are because money makes money, and people with money are buying stock in anything that still makes money.

Less return has become the norm, less than inflation is better than all of inflation.

Next come robot factories that take all the profit from everything.

Management, Government, tends to change sides, they will sell out everyone, for money, but when faced with being voted out, will pillage the rich.

Since the 99% are still living in a five year recession, with no emerging technology likely to end that, the next election will be about Social Support. It is happening now with cutting defense, government, to continue unemployment, and Social Security.

This will not improve the economy, but it avoids taxing the rich like Reagan did, or farther back, Ike. Even Clinton rates would be paying down the national debt.

Wait and see what happens does not always solve problems, and this is one of those times.

There is no one to tax but the people making 99% of the income.

Low taxes for the rich destroy incentive. Tax free munies, Capital Gains, OK up to a million, after that, all income is income, and taxed as such.

At 66% tax, it makes sense to invest and hire, as that is tax avoidence.

At 15%, pay the tax, bank the rest.

That is the current problem, the money stops flowing. Raise taxes, Investing in buildings, hiring people, becomes the only tax shelter.

The other side is the cost of labor, now at 85% counting capital gains, that has to be reduced to 33% by raising tax rates to 66%.

Then there will be a labor shortage, rising wages, and more and better consumers.

More people will be paying taxes, reducing the national debt, shoring up Social Security, and the dollar will become worth more.

At current rates housing will recover, maybe in twenty-five years. 1.5% from the most hopeful projections. That is still dropping, but inflation is 2%.

At 5% inflation housing would recover in seven years. It would also make investing in stocks and bonds less interesting.

High taxes and Inflation! Hard to sell as a Political Message, but the only way out of this mess.