The Resentment Machine

Politics is angry because most people are working harder than their parents did and still falling behind, and nothing in their daily life shows them what’s causing it.¹ When people feel robbed but can’t see the thief, they turn on each other. The anger is real and it’s rational. It’s mostly aimed at the wrong target.

The mechanism underneath

Technology keeps making things cheaper to produce, because better tools let the same work create more output. Where money can’t be created at will, that saving reaches you as falling prices for most goods and services. Your savings then buy more over time. You can see it in the corners of life the money system doesn’t dominate. Your phone does what a camera, a map, a stereo, and a torch used to do, for close to nothing.

But our money is built on debt. Most new pounds come into existence when someone borrows [when a bank makes a loan, it creates the deposit it lends out], and those debts are fixed in pounds.² That matters when prices fall. A system built on debt can take a slow fall that comes with better tools. In that fall it’s the cost of making things that drops, and pay drifts down slowly behind it, so the money to meet a fixed payment is still there. What it can’t take is a sudden fall in the prices credit pushed up, houses first, because then the losses spread through the banks. In that fall it’s the lending that has stopped, so incomes and the house fall together and at once, and the fixed payment is hit from both sides in the same year. Houses come first because people buy them with borrowed money. The debt takes a bigger bite of every income. And where the loan was written against a house, the house is worth less too, so the bank stands to lose more on that loan. So every time a sudden fall in those prices threatens, the system is rescued with new money, and the rescues keep getting bigger.

In between, policy targets rising prices of about 2% a year, forever.³ Central banks publish why they aim there. They want room to cut interest rates in a downturn, they know wages resist falling, and they say the official measure of prices overstates the rise.⁴ Those are the reasons they give, and the debts aren’t among them. The debts show up in the rescues, not in the everyday 2%. Getting there takes new money that first cancels the fall better tools would have delivered, and then adds two on top. Governments and central banks create that money and credit to push prices up.⁵

That new money doesn’t arrive evenly. It reaches financial markets first, so house and share prices jump quickly.⁶ Wages move last, because pay gets renegotiated slowly, maybe once a year (that order has a name, the Cantillon effect, whoever receives new money first benefits before prices adjust for everyone else).⁷ So over a stretch, people who own assets get richer in pound terms while people who live on a payslip find their pay buys less. In Britain since 2008 that’s what the figures show.⁸ That’s what happens when money is created faster than productivity grows. Pay rarely catches up in full, so the gap builds over years. Rising prices and falling real wages are the same event seen from two sides. Technology made things cheaper to produce, you worked just as hard, and you didn’t get the saving as a lower average price. Part of it reached you as higher pay, late and unevenly.⁹ The rest went to whoever got the new money first, through house and share prices. Working harder than your parents did is what chasing that missing saving looks like.

Why that comes out as anger at each other

The loss is real but invisible. Nobody’s payslip shows a line called “transferred to asset owners”. People just feel the results. Rent up again. The food shop dearer. The deposit further away year after year. So they look for someone to blame, and the visible candidates are other people. The landlord, the boss, the banker, the immigrant, the boomers, the other party’s voters. Some of them even gain from the transfer. None of them built the machine. A few do touch rules that bear on what people pay. The biggest banks help write the money’s rules, and homeowners who vote in local planning help set what housing costs.¹⁰ Housing supply rules are a second real cause of the anger, and anger aimed there isn’t misdirected.

Scarcity makes groups fight. At a summer camp in the 1950s (the Robbers Cave experiment), researchers split boys into two groups and put them in competition over scarce resources.¹¹ The groups turned hostile fast. History outside the lab shows the same pattern. Given a shared goal that needed everyone, the hostility faded. Our money system takes the price falls technology would deliver and replaces them with rising costs in the things people must buy, housing most of all, which manufactures the feeling of scarcity in the most productive era so far. Part of the rise in care, health, and education would have happened under any money, because better tools have changed those jobs less. That manufactured scarcity is why the anger feels so out of proportion. People can sense the abundance exists and can’t reach it.

Why politics feeds the anger instead of fixing it

Where the currency still works, the honest deal doesn’t get offered, election after election. Imagine the honest pitch. “Your pay will go from £50,000 to £48,000, but your costs will fall by more, so you’ll be better off.” Voters hear the £48,000 and choose the candidate promising £52,000, even though the first deal wins. We’re used to judging pay by the number, not by what it buys. People living with an unstable currency learn sooner to ask what the number buys, because they have to. Where the currency has visibly failed, the honest deal does get offered, and it can win. Where the currency still works, that’s a standing bias in what gets offered, not a guarantee that an honest candidate loses a given election.

So the parties compete on promises of relief. Subsidies, transfers, rent caps, and help-to-buy schemes.¹² Most of those promises are paid for by borrowing, because the sums run past what taxes raise. Time and again the central bank has ended up buying a large share of that debt with new money.¹³ It buys from existing holders, so the new money reaches them first and lifts asset prices before it reaches pay.¹⁴ That reopens the gap the relief was meant to close, even where the relief raised incomes at the bottom while it lasted.¹⁵ Election after election, the divide compounds, and each side becomes more certain the other side is the problem. The one thing never on your ballot paper is the money system itself.

Media and social platforms then pour fuel on the anger, because outrage holds attention and attention is what they sell. But the feed isn’t what made people’s pay buy less. What it takes is their attention. The falling behind is real. What the money system does is take the saving that technology would otherwise have delivered as falling prices. The money system isn’t the only force pressing on people’s pay. Automation and global wage competition push the same way, and fixing the money doesn’t stop either of them.¹⁶ Economic stress makes tribes. The feed just sorts people into one of them.

Where it goes if nothing changes

Toward control. A system that keeps mass-producing losers has to manage them, so you get more surveillance of money and speech, and emergency powers that don’t expire. The worst historical version is Germany in the 1920s, where printing destroyed savings, and a decade later, with the worldwide slump on top of it, people hunted for someone to blame and a strongman offered them targets.¹⁷ I’m not predicting that. I’m saying the direction of travel is set by the incentive, not by the character of whoever’s in charge.

The arguments that point away from the money

“Anger has many causes: culture, education, social media, immigration.”

True, and they matter. But the money pressure reliably deepens the fault lines people already have, because it makes life feel zero-sum, and people fight harder over their differences when they feel they’re falling behind. That’s a tendency, not a certainty, and measured political hostility hasn’t risen together across rich countries.¹⁸ Social media is petrol. The money system is the match.

“Redistribution will fix the divide.”

Inside this system, relief on this scale is paid for by borrowing rather than out of taxes. Some of that borrowing is taken up by savers, which moves money that already exists. Time and again, the rest has been bought by the central bank with new money.¹⁹ Year after year the sums run past what taxes do raise, and no tax rate pays off the debt those promises have already run up.²⁰ Growing the economy faster than that debt is a different thing, and it does help. But when technology keeps pushing prices down and the debts are this large, the path governments lean toward is paying those savers less than prices rise, so the debt is repaid in pounds that buy less. The gap reopens after each transfer, because the new money reaches asset owners before it reaches pay. Tax fights attack the effects while the mechanism keeps widening the gap. Politics can blunt the worst of it at the margins. Politics inside this system hasn’t stopped the transfer, because the lever, the power to create money, stays with the people who write the rules. Parliaments have rewritten the monetary rule more than once.²¹ What no rewrite has done is take away the power to rewrite it, and a promise not to pull a lever isn’t the same as removing it. While the lever stays, a change of government changes who benefits and leaves the transfer itself running. That’s a big part of why decades of redistribution haven’t closed the divide.

“Politics was ever thus. This is just tribalism.”

Tribalism is ancient, but whether tribes fight tracks how zero-sum life feels. Money outranks the law, because it shapes what laws get written and who they serve. Fix the base and the same tribal instincts have far less to feed on.

“Bigger government is a choice, not monetary fallout.”

It looks like a choice. Follow the incentive underneath it. When the money system pushes rents, food, and deposits up year after year, voters demand relief from rising costs, and politicians respond with new programmes. The one who refuses is the one offering £48,000. Debased money creates the pain that makes the expansion politically inevitable. Fix the money and the pain that feeds the expansion drains away.

Where it goes if the base gets fixed

Whoever wins the shouting match inside the system, the way out is still fixing the base, which means money nobody can create more of, so productivity reaches everyone as falling prices. Do that and saving works again, the hidden transfer stops, and the manufactured scarcity drains out of politics. Fixing the base doesn’t stop automation or global wage competition. What it changes is who ends up with the saving. Once prices are free to fall, that saving reaches people as cheaper goods and more free time, which cushions the change instead of leaving them a pay packet that buys less. That’s where bitcoin comes into this story. Its role here is the neutral base that lets abundance reach people, not a trade to be in. That holds only while it stays decentralised and secure, and only if people use it as money rather than just hold it. It’s also the kind of shared goal that ended the hostility at the camp. People who agree on nothing else can agree on rules nobody can bend. When someone can feel life getting cheaper over time, they need someone to blame far less.

Anger is a stage. When people first see the transfer, they’re furious, and that’s better than not seeing it. But it’s a rung on a ladder, not a place to live.