Ex-Citibanker Who Made Millions In 2011 Says 'Capitalism Is Over'

Gary Stevenson, a multi-millionaire and former trader, says “capitalism is over” after making a pile during the 2008 financial meltdown and warning that a disaster is in the offing unless the wealth gap is addressed globally, Anoosh Chakelian reported for New Statesman.

Photo Insert: Gary Stevenson was once Citibank's most profitable trader.

Stevenson is an economist and former interest rate trader in London and Tokyo. In 2011, he became Citibank’s most profitable trader globally by correctly predicting that the aftereffects of the 2008 crisis would lead to long-term stagnation in interest rates and a rapid rise in asset values.

In 2014 he retired, at 27, as a multimillionaire, to study economics and inequality at Oxford University. He is currently working on economic models of inequality, wages, and asset prices.

As early as April 2020, Stevenson said the rich will benefit from the pandemic as their incomes (rents, interest, bills, high-income jobs) have largely not been affected, but their expenses, largely discretionary spending on luxuries, have declined sharply.

Governments have borrowed money from central banks and given it to workers who can’t work. Because the government is borrowing to do this, it will be left sitting on large debts.

Central banks have printed a huge amount of money. This goes (via the government) to workers who pay it to the rich, where it stays, since the rich aren’t spending. The overall quantity of money in the system increases a lot.

A significant number of companies and individuals are losing out due to falling through the gaps in the current support package. Most obvious are small business owners, the recently self-employed, and those between jobs.

He said he expects panic to take hold in Stage 1. The sharp decline in revenues for many companies and individuals will cause panic. Many people and companies desperately need cash to avoid bankruptcy, and some may be forced to sell assets to raise cash.

Central banks will continue to pump cash into the system, which ends up in the bank accounts of the rich. But the rich, fearful of high volatility in asset markets, and uncertain of which companies will go bankrupt, either hold onto the cash or buy the safest assets – gold and government bonds – which have already seen prices going through the roof.

Some individuals may be forced to sell their houses to replace lost incomes and support struggling businesses.

In Stage 2, there will be bailouts and the huge inflation of assets.

Eventually, governments will make it clear who will be bailed out and who will not be bailed out. New information will also make it clearer how long the economic shutdown will last. By this point, the rich will be sitting on large piles of cash and will be keen to put it to work.

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