To: tejek who wrote (874710 ) 7/25/2015 9:19:08 AM From: RetiredNow Read Replies (2) | Respond to What's Really Killing Capitalism bonnerandpartners.com Stifling Growth Zombies and cronies stifle the process of growth and wealth creation. New knowledge – accumulated by others – is threatening. It is what causes disruption. And what economist Joseph Schumpeter called “creative destruction.” in his latest book, Knowledge and Power: The Information Theory of Capitalism and How It Is Revolutionizing Our World, is that an economy is fundamentally a learning system, not a way for distributing wealth , believes that this obstructionism is a bigger threat to prosperity than debt. When Capitalism Fails In an economy, the person who is the source of most important new information is the entrepreneur. He is the fellow who takes risks, builds a new business, and then – surprise, surprise – it works! The cronies want to stop him, before he undermines the value of their old assets and old business models with new information. But without the entrepreneur, capitalism fails. Interest rates are noise, rather than signal. Interest rates near zero cause finance to hypertrophy, as privileged borrowers reinvest government funds in government securities. Only a small portion of these funds goes to useful “infrastructure,” while the rest is burned off in consumption beyond our means. Gilder believes the signals must move through channels – secured, but not corrupted – by government! Politicians don’t have the information or experience to provide guidance. They are zombies. They don’t want to learn the nitty-gritty details of real wealth building. They should just make sure basic laws – against murder, theft, and fraud – are enforced.
