It seems to me that our current system of “Capitalism” is in fact drawing us ever nearer an autocratic socialism, and that the only secure means forward to a socialism that would improve the world is through more complete capitalism.
Our markets are not free. Big Money, in partnership with Big Government, has the power to levy almost unlimited taxes–in the form of wealth redistribution called inflation–with NO regulatory checks whatsoever. This is the state of affairs. Taxes are levied both domestically, through deficit spending, which necessarily involves money creation, since money is spent that we don’t have; and internationally, where MORE money is spent on our behalf–for example the bailout of the Euro–that we don’t have.
Now, one fact that is easy to miss is that inflation can happen without prices increasing here in the United States. The value of money only diminishes when it is competing with other money, which for our purposes would mean money that was being circulated in the United States.
What happens, though, when dollars flow out to, say, the Chinese, in exchange for goods, and stay there, in effect hoarded? Those dollars represent real buying power, and hence a real net transfer of our wealth. Yes, we get in the exchange real goods, but in the process–since that was fiat money–our net wealth decreases invisibly. If the Chinese dumped their dollar holdings, in the form of securities and actual dollars, the hidden wealth transfer would become obvious in the fact that our money would no longer be worth anything. That transfer happened with the dollar transfer, and is merely hidden, for now. It may remain hidden for the foreseeable future, since China will not for some years be in a position to challenge us directly; yet things are flowing, for them, in a positive direction. We are bleeding, and the more debt we incur, the faster the blood loss.