221–230 of 265 posts
The rich world needs cheaper housing. Fix that and the average family can allocate more resources to other things like health and education instead of diverting more resources to rent seekers.
Economist Michael Hudson often writes about this. The housing bubble is mostly beneficial to banks, as they get more interest. They know that house prices will go as high as they are willing to lend out.
Earlier quoted context omitted.
While that might be true, it seems like incorrectly accounting for quality improvements in a subset of goods is a rather small nitpick in comparison to things like poor accounting for rapid changes in housing, healthcare, education, and child care costs in many locations. PCE is a better measure of inflation than CPI in my opinion, and even that is lacking.
The CPI shows higher inflation than the PCE, which would seem to contradict your claim that PCE is better measure for capturing those categories. Given the large errors I have observed in measurement of electronics and wireless plans (biased towards overstating inflation) it wouldn’t necessarily surprise me if the CPI or PCE erred in measuring the prices of housing, healthcare etc in the opposite direction (biased to…
Both indexes take into account tuition, for example, but not student loan obligations, which are absolutely massive in comparison to things like electronics and wireless plan obligations. The same is true for medical expenditures, but not medical debt. And of course a huge issue is that any national measure of inflation is not accurate for people who live in places outside the median, such as cities in California where rising costs of living routinely push local CPI increases far beyond national levels (BLS does provide more local numbers, but they're rarely discussed).
I don't doubt that your data is correct, I just don't think it's very important in the scope of the overall contributing factors to real-world inflation for most people.
Earlier quoted context omitted.
> If you reallocate money without creating new currency, what you get isn't really inflation You’re forgetting about velocity. A dollar in a middle class earner’s hands gets spent faster than a dollar in a billionaire’s. That faster spending stokes both growth and inflation.
> You’re forgetting about velocity. A dollar in a middle class earner’s hands gets spent faster than a dollar in a billionaire’s. That faster spending stokes both growth and inflation. At a fixed money supply, growth causes deflation . People want to engage in more transactions and they need money to do it, which increases demand for currency. You often see inflation during periods of growth because when there are hi…
Raises aren't automatic, they often have to be fought for. Especially in the public sector. What tends to happen in tones of inflation is labour unrest; people find their food prices have gone up by 10% so they need a >10% raise urgently, taking to the streets if necessary.
I think the root cause of most of these problems, is that most people don't add economic value. That isn't to say they are bad people (of course not!), but that we have reached a stage in technology driven capitalism where only a small percentage of people can gain large pieces of the pie (software engineers and CEOs), while middle income jobs are too inefficient to survive (lawyers displaced by discovery software, a…
Earlier quoted context omitted.
> Billionaire's don't hoard cash Velocity’s relationship with income is well documented. (Note, too, that velocity most properly measures the purchase of goods and services. Transaction velocity also includes investment. Even that goes down as income goes up.)
I'd like to see some documentation that rich people hoard cash. Note that money stuffed into a checking account is still invested - the bank loans it out to people who spend it. Even so, I seriously doubt wealthy people have non-trivial amounts of money in checking accounts, because the interest paid on them is nearly non-existent. Wealthy people know how to manage their money, and investing it in 0% checking account…
https://www.frbsf.org/economic-research/publications/economi...
Earlier quoted context omitted.
I'd like to see some documentation that rich people hoard cash. Note that money stuffed into a checking account is still invested - the bank loans it out to people who spend it. Even so, I seriously doubt wealthy people have non-trivial amounts of money in checking accounts, because the interest paid on them is nearly non-existent. Wealthy people know how to manage their money, and investing it in 0% checking account…
Federal Reserve Bank of San Francisco, even after massaging the numbers by suggesting measurement issues may account for differences, shows a 30% difference between poor and rich in terms of average propensity to consume. https://www.frbsf.org/economic-research/publications/economi...
But the rich aren't hoarding cash. They're investing it. The money is put to use. The rich do not have pallets of cash in the basement.
You'd think that professional bankers would understand this.
Here's the salient quote from the paper:
"Surveys show low-income households tend to spend a larger share of their income than high-income households. Because of this, temporarily redistributing income from the rich to the poor could stimulate consumption and, through that, the economy as a whole."
Yup, that's the "rich people hoard cash" theory.
Earlier quoted context omitted.
Federal Reserve Bank of San Francisco, even after massaging the numbers by suggesting measurement issues may account for differences, shows a 30% difference between poor and rich in terms of average propensity to consume. https://www.frbsf.org/economic-research/publications/economi...
That paper makes the fundamental error I am talking about. It assumes that if rich people aren't spending on consumption, they are hoarding cash. It then makes economic sense to redistribute that hoarded cash in order to put the money to use. But the rich aren't hoarding cash. They're investing it. The money is put to use. The rich do not have pallets of cash in the basement. You'd think that professional bankers wou…
As a general statement, that's just as much an assumption as the GP's claim. Where are the studies to back it?
I could certainly imagine situations where someone owns a lot of wealth but never developed the skill to manage it - classical example being inheritance.
Also (unrelated to the argument), "investing" != "put to good use". If an investor chooses the strategy that gives themselves the best ROI that doesn't mean the investment is necessarily beneficial for anyone else. (Except in an abstract "stimulating the economy" sense. But if that is all you want, you could just spend all your money continuously digging holes and filling them again.)
Earlier quoted context omitted.
The employment rate covers point 1 and 3: it is simply the number of people in work divided by the working age population. I think you might be confusing cyclical and structural unemployment with your first point. I think it is valid to talk about the two numbers separately as they deal with pretty different problems (labour market liquidity/efficiency versus skills shortages). The employment rate is at an all time h…
>it is simply the number of people in work divided by the working age population. Nah, this would be the labor force participation rate - and that one took a plunge since 2008 and never recovered since. https://data.bls.gov/timeseries/LNS11300000
The OECD chart linked (if you play with the sliders) shows that both are increasing globally. I know that in the UK the employment rate is at an all-time high [3].
Your link seems like it might be using a strange measure of employment [4] which excludes agricultural workers and the military in the numerator and includes all people who are aged 16+ in the denominator, so as your population ages, the indicator would worsen.
[1] https://data.oecd.org/emp/employment-rate.htm
[2] https://data.oecd.org/emp/labour-force-participation-rate.ht...
[3] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor...
[4] https://www.investopedia.com/terms/c/civilian-labor-force.as...
Earlier quoted context omitted.
That paper makes the fundamental error I am talking about. It assumes that if rich people aren't spending on consumption, they are hoarding cash. It then makes economic sense to redistribute that hoarded cash in order to put the money to use. But the rich aren't hoarding cash. They're investing it. The money is put to use. The rich do not have pallets of cash in the basement. You'd think that professional bankers wou…
> But the rich aren't hoarding cash. They're investing it. The money is put to use. The rich do not have pallets of cash in the basement. As a general statement, that's just as much an assumption as the GP's claim. Where are the studies to back it? I could certainly imagine situations where someone owns a lot of wealth but never developed the skill to manage it - classical example being inheritance. Also (unrelated t…
There's no rational reason to borrow money and make a pile out of it.
Even people who operate cash businesses (like casinos) rush to deposit the cash in a bank ASAP.
> If an investor chooses the strategy that gives themselves the best ROI that doesn't mean the investment is necessarily beneficial for anyone else.
Actually, it does mean just that. An investment is giving someone else money to do something productive with that money. That person will take their cut, and so benefit.
Earlier quoted context omitted.
That paper makes the fundamental error I am talking about. It assumes that if rich people aren't spending on consumption, they are hoarding cash. It then makes economic sense to redistribute that hoarded cash in order to put the money to use. But the rich aren't hoarding cash. They're investing it. The money is put to use. The rich do not have pallets of cash in the basement. You'd think that professional bankers wou…
> But the rich aren't hoarding cash. They're investing it. The money is put to use. The rich do not have pallets of cash in the basement. As a general statement, that's just as much an assumption as the GP's claim. Where are the studies to back it? I could certainly imagine situations where someone owns a lot of wealth but never developed the skill to manage it - classical example being inheritance. Also (unrelated t…
Never in my life have I ever heard of anybody (other than criminals and a few mentally ill people) with a cash hoard. Nor have I ever known anyone to do this. I've never seen any newspaper article about anyone with a hoard. Never a magazine article profiling millionaires with cash hoards. No books about it.
And yet, it is apparently conventional wisdom that wealthy people hoard cash as a general rule.
Name one wealthy American with a cash hoard.