A few points to add to the argument above Consider the following scenario: I am a very rich man : i have 1 trillion dollars, everybody else has < 1 million d

A few points to add to the argument above Consider the following scenario: I am a very rich man : i have 1 trillion dollars, everybody else has < 1 million dollars. Goal : I want to continue being the richest man on the planet and control its resources An easy way: Whatever new assets are created, I raise the price far above the value that normal people can afford. If they can afford 1 million, I offer 50 million. It doesnt make a difference to my life, because I have 1 trillion, but I put it out of reach of all the people who have 1 million. In 1977 my parents bought a 1 bedroom apartment for INR 47000. At that time, my dad told me, salaries for average jobs were about INR 600. 100 times 600 = 60,000, so the max leverage was about 100 times. Today in 2013, an average white collar salary in India is about 50,000 a month. Today In Bombay in my locality a 1 bed apartment is 85 lakhs (INR 8.5 million). What's the leverage? 50,000 x 1000 = 50,000,000 = INR 5 million. My leverage is > 1000 times. But wait, if you consider the dollar (my dad was a marine engineer who earned in dollars), I have seen it go up from INR 18 to today's INR 50. So multiply that another 4 times, my leverage is about 4000 compared to 1977. What happened? Inflation. a. Now consider the 6% dividend the Federal reserve share holders pay themselves on the interest gained by bonds raised. b. I need an asset where I do no work, but earn money. Every year people do economic business activities and generate wealth. Private equity companies invest in these companies and hence are able to increase their investors holdings. But consider the extra income from 6% dividend. This is money that gives them an extra edge over everybody else. If the US raises 1 trillion dollars in bonds from the FED at 1% interest, the FED income is USD 10 billion. 6% of USD 10 billion is 600 million USD. But that income is only for the year 2013, to understand the total interest you must add up for all the bonds raised where the debt has not been paid back. The private banks have this extra money to play with, which keeps increasing their ability to jack up prices and decrease the common man's leverage.