Capitalism, Socialism and Communism Documentary
Summary
TLDRThe video script explores the unprecedented accumulation of wealth among the UK's super-rich, facilitated by new financial techniques and a sharp fall in the cost of money, orchestrated by the US Federal Reserve. It highlights the impact of low interest rates and the global supply of credit, leading to a borrowing spree that has inflated asset values and created vast fortunes. The script also delves into the luxurious lifestyles of the wealthy, showcasing extravagant properties and the significant economic contributions of London's financial sector to the UK's growth.
Takeaways
- 💰 The UK is experiencing an unprecedented accumulation of wealth among the super-rich, a scale not seen in 100 years.
- 🏙️ London, particularly its financial services, has been a major contributor to the UK's economic growth, attracting a significant number of billionaires and high earners.
- 💼 The number of Brits earning over half a million pounds a year has surged, with City executives and hedge fund professionals earning substantial bonuses.
- 🏡 The wealth of the super-rich is also evident in the real estate market, with properties in London and its outskirts being sold at exorbitant prices.
- 💸 The creation of wealth among the super-rich is not primarily due to new resources or technology, but rather through financial techniques and leveraging money.
- 📉 The US Federal Reserve's decision to keep interest rates low, following economic downturns and crises like 9/11, has made borrowing cheap and facilitated wealth accumulation.
- 🌐 The global nature of finance has led to a surge in credit availability, enabling both individuals and businesses to borrow heavily, driving up asset prices.
- 🔍 The concept of leverage, or borrowing to invest, has been a key driver in the creation of vast fortunes, as it multiplies profits in a rising market.
- 🏦 Banks have been willing to lend at unprecedented multiples, fueling a borrowing spree among the wealthy and financial institutions.
- 🌐 The UK, under the Labour government since 1997, has been a favorable environment for the new super-rich, with policies that cater to their needs and lifestyles.
Q & A
What scale of wealth accumulation is being discussed in the UK according to the transcript?
-The transcript discusses a scale of wealth accumulation in the UK that hasn't been seen for 100 years.
What is the claim about the wealth of the super rich and its impact on the rest of us?
-The claim is that the way the super rich create wealth is supposed to make everyone else better off, but the transcript questions this in the current context.
What has been the role of the City of London in the UK's economic growth?
-The City of London's financial services have contributed a third of all the UK's economic growth.
How many billionaires are said to call Britain home according to the transcript?
-The transcript mentions that more than 50 billionaires call Britain home.
What is the significance of the year 2006 in terms of bonuses for City Executives?
-In 2006, 4,200 City Executives took a bonus of a million or more, indicating a significant wealth accumulation among executives.
What comparison is made between the current wealth accumulation and the Industrial Revolution?
-The transcript compares the current wealth accumulation to the Industrial Revolution, noting that both periods saw a rapid increase in fortunes but the current one has occurred over a much shorter time span.
What is the role of the US Federal Reserve in the creation of wealth for the new super rich?
-The US Federal Reserve played a role by setting low interest rates, which made borrowing cheap and facilitated the leveraging of investments, leading to wealth accumulation.
What is the concept of 'Leverage' as mentioned in the transcript?
-Leverage is the concept of borrowing money to invest, which can multiply profits when the value of the investments increases.
How did the lowering of interest rates by the Federal Reserve affect the borrowing spree?
-The lowering of interest rates made borrowing extremely cheap, leading to a frenetic borrowing spree among tycoons, financial institutions, and businesses.
What was the impact of the cheap debt on the valuation of assets?
-The cheap debt led to an increase in the valuation of assets such as property, shares, art, and jewelry, as people borrowed more against the inflated values.
What is the view of Tom Hunter on the UK being a good place for the super rich since 1997?
-Tom Hunter suggests that since 1997, the UK has been a favorable environment for the super rich due to the policies implemented by the labor government.
Outlines
💰 Wealth Accumulation in the UK: The New Super Rich
The script discusses the unprecedented accumulation of wealth in the UK, particularly among the super rich. It highlights that this phenomenon is not due to traditional means such as finding new resources or exploiting technology, but rather through financial techniques. The city of London, being a financial hub, has seen a significant contribution to the economic growth, with a large number of billionaires and high earners residing there. The script also mentions the luxurious lifestyles of these individuals, including the purchase of extravagant properties. The era of wealth accumulation is compared to the Industrial Revolution during the Victorian age, emphasizing the rapidity of wealth creation in the last decade.
📈 The Impact of Low Interest Rates on Wealth Creation
This paragraph delves into the role of the US Federal Reserve in facilitating wealth creation among the super rich. The script explains how the sharp fall in interest rates, orchestrated by Alan Greenspan in response to economic faltering and the 9/11 attacks, led to a surge in borrowing. The availability of cheap credit allowed for significant investment in assets, driving up their value and enabling the wealthy to leverage their investments. The script further discusses the global nature of finance and how the actions of central banks, particularly in managing inflation rather than asset prices, contributed to this wealth accumulation. It also touches on the benefits of this economic environment for those in the financial sector, particularly in the UK, where favorable policies have been in place since 1997.
Mindmap
Keywords
💡Fortunes
💡Super Rich
💡Financial Techniques
💡City of London
💡Billionaires
💡Leverage
💡Asset Inflation
💡US Federal Reserve
💡Borrowing Spree
💡Wealth Inequality
💡Congestive Charge
Highlights
Fortunes are being accumulated in the UK on a scale not seen for 100 years.
The new super rich have used different financial techniques to enrich themselves.
They are the big winners while the rest seem to be the losers in the global greed game.
London's financial services have contributed a third of all UK economic growth.
London is the capital of capital, attracting international community and wealth.
Over 50 billionaires call Britain home, a level of wealth not seen since the 19th century.
At least 30,000 Brits now earn more than half a million pounds a year.
In 2006, 4,200 City executives took bonuses of a million or more.
150 people in hedge funds alone earn more than 2 million a year.
The new super rich travel in armored limos and own private airfields.
They've created ghettos of fabulously expensive property.
A North London house recently sold for 50 million, with additional costs for renovations.
A 26-bedroom mansion outside London is on the market for over £70 million.
The mansion has a running cost of over a million a year, accessible only to billionaires.
The new super rich have amassed wealth not through new resources or technology, but through financial maneuvers.
A sharp fall in the cost of money, engineered by the US Federal Reserve, helped them become wealthy.
Low interest rates and cheap credit led to a frenetic borrowing spree.
The power of leverage, borrowing to invest, multiplied their profits in a rising market.
The UK has become a land fit for the new super rich since 1997.
Transcripts
[Music]
fortunes are being accumulated in the UK
on a scale we haven't seen for a 100
years we've been told that the way the
super rich create wealth makes all of us
well a bit better off but does
[Music]
it this time around they've used new and
different Financial techniques to enrich
them
elv and right now they're the big
Winners and we seem to be the
[Music]
losers I'm going to tell you how the new
super rich are making their fortunes and
why we're picking up the bill in a
global greed game
[Music]
in the past few years the city of London
Financial Services have contributed a
third of all our economic growth London
is the capital of
capital London for the International
Community is a beautiful city a lot of
people are living in London that they
might find interesting to meet it's got
the restaurants it's got the clubs it's
got the bars it's got the decent hotels
it's got the nice houses it's safe it's
secure there's a lot going for
it more than 50 billionaires called
Britain home not since the 19th century
have there been such opportunities for
so many to make quite so much
money at least 30,000 Brits now earn
more than half a million pounds a year
in 2006
4,200 City Executives took a bonus of a
million or
more and among hedge funds alone 150
people have been earning more than2
million a
year the only other period we have seen
similar accumulation was during the
Industrial Revolution in the Victorian
age when the whole raft of Victorian
industrialists uh made massive fortunes
very quickly but even that was over a
period of 40 or 50 years
years this has been in the last 10
years when you're coming here with
several billion pounds you travel around
in armored limos guarded by people who
look after you the idea of the
congestion charge is wonderful to you CU
it clears the roads of the Riff raft you
can get out to a private Airfield
quickly to get on your your jet to go
and see farflung operations as part of
your
[Music]
Empire and they've created ghettos of
fabulously expensive
[Music]
property this house in North London
recently sold for 50
million the new owner will be spending
probably another up to3
million creating what will will probably
be the most desirable house in the
world and just outside London is this
brand new 26 bedroom mansion it's on the
market now for over £70 million but it's
the running cost of over a million a
year that means only proper billionaires
need bother to view it even so the
developer lesli Allen verco tried his
best with
me so this is the private swimming pool
is it simply for the owner of the house
yes of course the owner of the house
wants to allow people to use
it the on sweet swimming pool why would
you want five pools you because you got
five pools have you in this house what
family needs five pools you genuinely
need to like
swimming this bathroom area is about 800
square ft putting it into perspective is
about the size of the average
two-bedroom flat in London that's just
for your towels that room it feel rather
disappointed I haven't got one of those
the size of a decent size kitchen
for julan crusted C very good very
ni definitely going to have to have one
of these in my
[Music]
home so how have all these people become
super rich in such a short time unlike
the past it's not been about finding new
resources or exploiting new technology
the Arts are lies in how they've plunged
with money
itself and they were helped to become
wealthy Beyond anyone's Wildest Dreams
by a sharp fall in the cost of money for
them and all of us engineered by the US
Federal Reserve it sets interest rates
for America and in a way for the
world a clear September Day the American
economy was already faltering after the
bursting of the dot bubble and
then the world's most powerful Central
Banker Alan Greenspan feared the
terrorist outrage would further
undermine the confidence of businesses
and consumers so he kept interest rates
unusually low American interest rates
were tonight cut by a half of 1% the
Federal Reserve Base rate now stands at
just 1 and 1/4% the lowest for 41 years
after the bursting of the bubble and 911
Greenspan slashed rates to just 1% and
the supply of credit soar because the
great exporting Nations such as Japan
China and those of the Middle East were
generating vast surfaces and lent much
of their cash to us in the West
Finance is global so it became cheap to
borrow money
anywhere for private individuals and
especially for businesses tycoons and
financial institutions they went on the
most frenetic borrowing spree the world
has seen with so much money slushing
around the price of assets from
paintings to houses to entire companies
sold £65,000
so people borrowed more against the
inflated value of their assets the
valuation of property the valuation of
shares art jewelry etcc was soaring and
the central banks on the whole said this
is not our business we don't manage
assets we only manage price
inflation with markets Rising borrowing
vast sums for investment was the root to
magnificent fortunes it's what Bankers
call using Leverage
Leverage is simply borrowing to invest
you're not investing your own money uh
or you investing part of your own money
but you borrow to invest
more um so that's simply that's Leverage
is borrowing to invest when we borrow
for a mortgage we're
leveraging as simple as
that the power of Leverage to multiply
profits is a common experience for
millions of us who borrow to buy a house
if you put down a
£10,000 deposit when buying a
£100,000 home and borrow the other
90,000 and that house then rises in
value to say
£10,000 well your
£10,000 doubles to
£20,000 you make a 100% profit that's
the magic of using the bank's money to
finance most of the purchase and in a
rising market the more you borrow the
greater your
profits the level of debt that became
available for deals became very very
high and what was really uncomfortable
was that not only was it a high level of
debt but every passing month you could
get more and more
debt with debt so cheap deal makers were
borrowing mind strling amounts to invest
in financial markets in property and in
Commodities or to buy entire
companies Banks were willing to land on
multiples that they'd never known before
the past five six years have been
unprecedented in terms of cheap debt
quite frankly and have we been benefited
from that absolutely you know I would
rather be lucky than clever every time
um so we'll take every bit of luck
that's going our
way and for Tom Hunter Britain was a
pretty good place to be because since
1997 labor has tried to make the United
Kingdom a land fit for the new super
rich well I think first of all you've
got you've got to thank your lucky STS
if you are an economy which has the
vibrant and successful Industries
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