21 August 2021
I prefer a society that is biased toward trader/merchants; where one lives on the spread and retains the majority of her earnings. Wage earning is a fancy term for slavery where many in the labor market are subjugated to selling a precious commodity over which they have illusionary control: time.
The irony is that what one earns for their time is inversely related to the wealth of knowledge they have amassed over time. Unfortunately for the wage earner, the valuation of their labor is made not by the ultimate end user of their product but by the middle man corporation that employs them. Rather than selling time to the corporation, time should be another input that labor uses to create and sell their product.
Today’s technology makes such a self-ownership approach increasingly feasible depending on the wage earner’s vocation. Some of us can transition from wage earner to merchant due to digitalization and that sector of the information/knowledge/problem solving industry that we sit in. So used are we to selling time that we must now start to think of the utilities, database subscriptions, and equipment costs incurred in producing an information product and sell that product at a sufficient margin; to live via the “carry trade.”
The trader wants a profitable balance sheet, one where she has a healthy surplus. Bankers that provide liquidity to traders also want traders to enjoy a profitable balance sheet because it assures repayment of leverage.
But bankers also want to fund activities generating high returns and I think to ensure that traders are disciplined enough to seek out information on high return activity, banks will want to assess higher interest rates and other margin requirements in order to weed out low-return low value activity. The Federal Reserve could encourage high-value search behavior by increasing the fed funds and discount window rates. The Federal Reserve could also start driving up rates by unwinding its monthly purchases of $120 billion in US Treasury and agency-backed mortgage securities.
Higher rates will encourage living on the spread and the seeking of higher returns.
For a consultation on any regulatory or legislative discussions or announcements, please reach out to us at altondrew@altondrew.com for information on consultation rates and to reserve an appointment.
