Economic stratification

This induces progressively greater stratification unless action is taken to limit a runaway condition.

Corruption of the feedback mechanism is the most dangerous threat to any balanced system, since it can lead to economic oscillations of increasing magnitude until runaway inflation or depression results.

Such collapses can occur because the circulation of capital (M1) in such systems becomes highly dependent upon continually increasing apparent quantities of M2.

A percentage of M2 is continually being converted into M1 until a point is reached in which the rate of conversion of M2 into M1 cannot be sustained by the available quantity of M1.

It is apparent that under these conditions, neither increasing the supply of M1 nor decreasing it (relative to M2) can effectively prevent an economic collapse.

Social connectedness to people of higher income levels is a strong predictor of upward income mobility. [ 1 ] However, data shows substantial social segregation correlating with economic income groups. [ 1 ]