America's 1% Has Taken $50T From the Bottom 90% • Hacker News Board

Re: America's 1% Has Taken $50T From the Bottom 90%

#411

Post by satellite2 » Thu, Feb 11, 2021, 11:18 PM UTC

tylerhou wrote: post #227

tobmlt wrote: post #150

Earlier quoted context omitted.

Yep. The fed is an engine, whose purpose is to move wealth silently from the masses to the powerful monied few, via time-asymmetric inflation. (Mostly Inflation of assets presently) The resulting data looks like corporations have used their power to directly disenfranchise/disempower workers, and so the mass clamber for protective laws. More laws will be enacted by those in power. The time is certainly right for it.…

The Fed is stabilizing the price of the USD because of the coronavirus pandemic. If it were not printing money, then there would likely be a deflationary spiral that would cause a depression. That's one of the reasons why the Great Depression was so bad: the US was on the gold standard at the beginning. The US can't create gold out of thin air, so the USD started deflating, people stopped spending, and capital stoppe…

Every indicators point to precisely that. Tax rates are too low. It's extremely unpopular but we have to say it and repeat it. They are far too low for the highest earning quantiles but they are also too low for the rest of the population. They are at their lowest for the last 70 years in most western countries. We need to increase tax.

Re: America's 1% Has Taken $50T From the Bottom 90%

#412

Post by chordalkeyboard » Thu, Feb 11, 2021, 11:19 PM UTC

Apocryphon wrote: post #392

chordalkeyboard wrote: post #377

Earlier quoted context omitted.

> So is property. So is language. So is symbolic thought. Language and symbolic thought are not opinions or value judgments. > I, of course proudly admit to being a criminal ( https://www.youtube.com/watch?v=EEXTt9OmJis&t=1m18s ) insofar living in modern society makes criminals of us all, yourself included, even under duress. I’m not convinced that it is meaningful to make that assertion. But this is fine, I’m an ana…

> Language and symbolic thought are not opinions or value judgments. They are according to John Zerzan. > But this is fine, I’m an anarchist because I oppose coercion and you’re a criminal for supporting it. Anarchism, fwiw, is not meant to be a pejorative, but a reference to an actual ideological framework, albeit a radical one. One that has both left and right variants, including the aforementioned ancaps. > And so…

> No, it's moral to provide people with food and shelter

Then it must be immoral to take food and shelter from people. How do you then justify taxation?

> funded by surplus wealth generated by a society, in a manner deemed agreeable by societal consensus, so as to create a stable social order.

And in order to maintain consensus, and order, anyone who doesn’t agree is subject to violence. No, thats not moral.

> But by crowing "taxation is theft", you have clearly virtue-signalled yourself to be a libertarian.

> you might as well label yourself an anarchist. Which is fine, plenty of mutualist ideologies exist, but you should at least identify yourself so people will understand the very different ideological framework you're arguing from.

So you continue to insist on labeling me, but the point is that the ideas exist independently of labels and must be dealt with on their own merits.

Re: America's 1% Has Taken $50T From the Bottom 90%

#413

Post by nostrademons » Thu, Feb 11, 2021, 11:19 PM UTC

NortySpock wrote: post #327

nostrademons wrote: post #285

Earlier quoted context omitted.

I've heard (from finance professionals) that big elephant in the room is corporate debt. Corporations need to roll over their debt when it comes due, and a fair amount of it is short-term paper. If interest rates rise, that debt will become a lot more expensive, which will make many of the more marginal companies insolvent. Not software companies, which are sitting on hoards of cash, but all of the ordinary manufactu…

So, we need to see loan-forgiveness for businesses then? Trying to figure out how you unwind it slowly when apparently "slowing raising rates" still destroys many businesses with a lot of debt...

I don't like loan-forgiveness for all the reasons brobdingnagians mentioned. Also, it introduces moral hazard into the economy: companies assume further loan-forgiveness is coming, so they think nothing about taking on unsustainable levels of debt. (To a large extent, this is what's happening now: after the 2009 bailouts companies figured they were too big to fail.)

The root cause of this is that our economy has become hyper-optimized around monetary policy that's unsustainable. With markets trending toward efficiency, all major companies that exist today build in the assumption of 0% interest rates into the cost & capital structures of the business. Many activities they engage in would probably become unprofitable at higher interest rates, which means mass layoffs, restructurings, different business processes, possibly adoption of different technologies, products & services going away, etc. Change the monetary environment and you get different companies, different technologies, different supply chains. But the current monetary environment means that whenever there's a demand shock, the Fed has nowhere to drop rates, and whenever there's a supply shock, there's a potential inflationary price spiral.

The Fed, to their credit, recognizes this predicament. That's why they're targeting > 2% inflation, so there's room to raise rates. They've also said that any increase in rates will be well-telegraphed, to give companies time to adjust.

But I have doubts that this'll work. Simply because this isn't a tweak now, this is an existential change to how companies structure their operations. And any company that prepares for it before the Fed actually raises rates will be outcompeted by companies that do nothing, so no company is going to take the mere warning seriously.

It occurs to me that post-Volcker monetary & government policy has basically served to weld the economy & government together so that it's impossible for one part to fail without it all failing. We used to have recessions every 5-10 years; these would clear away uncompetitive businesses so the capital could be recycled into new ones. In trying to "smooth over" these recessions, and then outright bailing them out in 2009, and then failing to raise rates in 2013/2015/2018, we've coupled the whole economy's fortunes together, and then coupled it to the government. As a result, we can't sweep away companies that are doing the wrong thing without widespread civil unrest.

Re: America's 1% Has Taken $50T From the Bottom 90%

#414

Post by ItsMonkk » Thu, Feb 11, 2021, 11:19 PM UTC

tylerhou wrote: post #387

ItsMonkk wrote: post #369

Earlier quoted context omitted.

1. When the money supply is increasing at a rate faster than stuff, the best use of capital is to hoard it. Can you show me examples of major companies issuing stock right now? Looks to me like they are all buying back their stock, which has the opposite effect. 2. Buying houses is an investment and is specifically carved out in the CPI. Consumption is Owner's Equivalent Rent, buying is not.

https://www.cnbc.com/2020/12/08/tesla-to-raise-up-to-5-billi... https://www.ft.com/content/a59c2a9d-5e0b-4cbc-b69e-a138de76a... https://www.bloomberg.com/news/articles/2020-12-21/u-s-stock... Stock and bond issuances are at all time highs. Housing is an investment in the CPI because most people don’t buy houses as consumption. The CPI aims to create a basket of consumption for normal people. Rich people do consume ho…

> highest-profile recent example of borrowing for buybacks: > Apple (ticker: AAPL). The tech giant sold $14 billion in bonds this month, and said it would use at least part of the proceeds on buybacks and dividends.[0]

Kinda problematic when one large company doing buybacks dominates over thousands doing issuing reversing your entire narrative. Taking out bonds to give to shareholders is not something that helps main street.

[0]:https://www.barrons.com/articles/debt-fueled-stock-buybacks-...

Re: America's 1% Has Taken $50T From the Bottom 90%

#415

Post by webmaven » Thu, Feb 11, 2021, 11:21 PM UTC

tylerhou wrote: post #335

matwood wrote: post #313

Earlier quoted context omitted.

> The Fed is stabilizing the price of the USD because of the coronavirus pandemic. The pandemic is a case of exactly when the gov. should step in. Unfortunately the gov. is slow and takes so much time to do anything. > That's a distributional issue, and the main solution is tax policy. Exactly. I think a better argument could have been made by looking at the tax cuts a couple of years ago. Companies didn't go on hiri…

CEO bonuses, not always a good thing. Buybacks are not always good (because stock-compensated corporate managers sometimes abuse them to increase the stock price), but for airlines, buying stock was the right choice. You can read Matt Levine's argument, but basically: If airlines didn't spend money on buying back stock, they could have: 1. Invested it in growth. But if they had invested it in all the normal things an…

What about paying dividends to stockholders or (heaven forfend) raising wages?

As for "rainy day" uses, giving the company pension fund a windfall would probably qualify.

Re: America's 1% Has Taken $50T From the Bottom 90%

#416

Post by tylerhou » Thu, Feb 11, 2021, 11:22 PM UTC

natenthe wrote: post #401

tylerhou wrote: post #227

Earlier quoted context omitted.

The Fed is stabilizing the price of the USD because of the coronavirus pandemic. If it were not printing money, then there would likely be a deflationary spiral that would cause a depression. That's one of the reasons why the Great Depression was so bad: the US was on the gold standard at the beginning. The US can't create gold out of thin air, so the USD started deflating, people stopped spending, and capital stoppe…

This is one of the worst takes I've read in awhile. First off, there is no general consensus about the exact cause of the Great Depression and the cause of the recovery. If you're going to make an attempt at a history lesson, at least get it right. We know that the stock market crash and banking panics played a large role in the contraction of economic activity, but there is absolutely no general consensus for the ex…

I didn’t say the gold standard caused the Depression; I said it exacerbated it. This is well supported by your link and other historical sources.

The point is, without control of the money supply, a government cannot prevent deflationary spirals. Since Fed can print money temporarily, that makes recessions much milder.

You're right, in a sense, that money printing is inflationary. But when money printing happens, it's to avoid a far greater evil: severe deflation.

https://www.history.com/news/how-did-the-gold-standard-contr...

Re: America's 1% Has Taken $50T From the Bottom 90%

#417

Post by jandrese » Thu, Feb 11, 2021, 11:22 PM UTC

fullshark wrote: post #406

AlotOfReading wrote: post #343

Earlier quoted context omitted.

The concept of a 'historical baseline' is nonsensical. As you extend your timeline, inequality is going to decrease because most human societies have not had the kinds of disparity we measure today. Moreover, we're not beholden to historical norms of any sort. Collective action can change things. It's happened quite a lot historically. If you insist on a specific citation, check out Ten Thousand Years of Inequality .…

I think it's worth considering the post WW2 period as possibly exceptional in the planet's history, and understanding why that may have been, and what can be done policy wise to extend the best parts of it.

It was exceptional for the US because the infrastructure wasn't bombed out and were very well poised to supply goods to a rebuilding Europe. International shipping wasn't efficient enough to outsource the jobs to countries with low wages so there was actual opportunity for the middle class to grow and get ahead.

Re: America's 1% Has Taken $50T From the Bottom 90%

#418

Post by Lammy » Thu, Feb 11, 2021, 11:24 PM UTC

natenthe wrote: post #401

tylerhou wrote: post #227

Earlier quoted context omitted.

The Fed is stabilizing the price of the USD because of the coronavirus pandemic. If it were not printing money, then there would likely be a deflationary spiral that would cause a depression. That's one of the reasons why the Great Depression was so bad: the US was on the gold standard at the beginning. The US can't create gold out of thin air, so the USD started deflating, people stopped spending, and capital stoppe…

This is one of the worst takes I've read in awhile. First off, there is no general consensus about the exact cause of the Great Depression and the cause of the recovery. If you're going to make an attempt at a history lesson, at least get it right. We know that the stock market crash and banking panics played a large role in the contraction of economic activity, but there is absolutely no general consensus for the ex…

> but there is absolutely no general consensus for the exact causes

Yeah, in such a complicated system there are so many parties involved that trying to break down one cause seems like an impossibility. All one can do is look at effects and try to speculate backwards from there to see whose incentives may have aligned and who might benefit from the outcomes we got. Maybe nobody, since accidents happen, but in the case of the Great Depression I think it's very interesting to learn how the 1929 stock market crash stemmed the tide of people leaving the south for better-paying industrial jobs in the northeast cities: https://en.wikipedia.org/wiki/Great_Migration_(African_Ameri...

"Between 1910 and 1930, the African-American population increased by about forty percent in Northern states as a result of the migration, mostly in the major cities. The cities of Philadelphia, Detroit, Chicago, Cleveland, Baltimore, and New York City had some of the biggest increases in the early part of the twentieth century. Tens of thousands of blacks were recruited for industrial jobs, such as positions related to the expansion of the Pennsylvania Railroad."

Re: America's 1% Has Taken $50T From the Bottom 90%

#419

Post by DominikPeters » Thu, Feb 11, 2021, 11:25 PM UTC

Weebs wrote: post #405

andrewljohnson wrote: post #266

The top 1% changes a lot. Most people don't stay in the top 1% for many years in a row. Many people below the 90th percentile benefit from the growth of the top levels when they have their brief time in the top 1%.

1% is a colloquial way of saying "those who own capital for a living, instead of working for a living". The high income of athletes and highly trained professionals has little to do with our situation. However, most capital and expenditure is controlled by a small group of people that have asymmetric power in employment agreements and political process, and that is concerning

The working paper that the article is about does not mean what you say 1% means.

Re: America's 1% Has Taken $50T From the Bottom 90%

#420

Post by willcipriano » Thu, Feb 11, 2021, 11:25 PM UTC

ItsMonkk wrote: post #414

tylerhou wrote: post #387

Earlier quoted context omitted.

https://www.cnbc.com/2020/12/08/tesla-to-raise-up-to-5-billi... https://www.ft.com/content/a59c2a9d-5e0b-4cbc-b69e-a138de76a... https://www.bloomberg.com/news/articles/2020-12-21/u-s-stock... Stock and bond issuances are at all time highs. Housing is an investment in the CPI because most people don’t buy houses as consumption. The CPI aims to create a basket of consumption for normal people. Rich people do consume ho…

> highest-profile recent example of borrowing for buybacks: > Apple (ticker: AAPL). The tech giant sold $14 billion in bonds this month, and said it would use at least part of the proceeds on buybacks and dividends.[0] Kinda problematic when one large company doing buybacks dominates over thousands doing issuing reversing your entire narrative. Taking out bonds to give to shareholders is not something that helps main…

I post this here for posterity:

Within ten years a film will come out about the next economic disaster and everyone will be saying "how could we be so stupid to allow firms to buy their own stock with debt?" much like the housing crisis.