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

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

#491

Post by gwright »

lazerpants wrote: post #376
salmonellaeater wrote: post #232

The framing in the article is ahistorical. The post-WW2 period was a period of exceptionally _low_ inequality. If you look back to just the 1800s there were swings in inequality comparable to the present day. We're now moving back to the historical baseline. There are some contributing factors to the shift in inequality, a major one being that labor is now oversupplied compared to the post-war period, and the competi…

I think the issue with inequality that bothers many people includes an extra feature, how difficult it is for someone to move between percentiles of wealth. If it were easy to join the top 10% in wealth via intelligence, grit, and hard-work, I doubt many would be bothered by even deeper inequality than the USA currently has. However, if it is both difficult to move up the wealth ladder and highly unequal, it is a rec…

This doesn't align with what I've read. For example:

https://www.cato.org/blog/middle-class-shrinking-households-...

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

#492

Post by jandrewrogers »

SigmundA wrote: post #181
randomdata wrote: post #126

Earlier quoted context omitted.

> actual rich people make most of their money not as income, but as unrealized capital gains. Technically, they make most of their wealth as as unrealized capital gains. It doesn't become money until they realize the gains, at which point it is taxable income.

Then typically only taxed long term cap gains rates of 20% or less...

That is just the base Federal rate. After NIIT, State, etc it can be >35%, which is actually quite high for a country where the cost basis is not inflation-adjusted. That is higher than most countries in Europe.

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

#493

Post by nexthash »

natenthe wrote: post #57

Correction: The Fed's policies have taken $50T of wealth from the Bottom 90%. When you bail out irresponsibly over-leveraged and nearly bankrupted banks and corporations, and pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. Most importantly, when the Fed decides to print money ad nauseam, they create massive asset inflation, which steals from the poor and gives to the rich. T…

I wouldn't say that the Fed is corrupt or incompetent by intention, rather it is part of a set of policies giving lenience to the financial system written by a generation that doesn't understand the need for strong regulation. Such generations come and go, usually in 50-year cycles as the older policymakers with memories of financial crises like the Great Depression die off.

This lack of regulation is part of the inequality issue. Other factors include a potentially flooded labor market driving down wages, allowing people in control of economic resources to reap more work for the same price. However, some skilled people in labor also use this as an opportunity to move up the ladder. It's complex, ever-changing system with multiple variables and outputs. Read more here:

https://aeon.co/essays/history-tells-us-where-the-wealth-gap...

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

#494

Post by tobmlt »

BirdieNZ wrote: post #402
tobmlt wrote: post #342

Earlier quoted context omitted.

There is no need to throw out the baby with the bathwater here. Who cares about gold? Who cares about avoiding math? Not me. I guess I am no Austrian for those reasons. I do care, however, about restraining the inflationary tendencies of governments because I believe they are an engine of wealth redistribution from the poor to the rich and powerful. And sure, I suppose I do care about avoiding mathematical naval gazi…

But where's your evidence? For any economic school of thought to be a good approximation of truth, it needs to be able to make models that both describe what has happened, and predict what will happen. Any economist that can't do that is ultimately a quack. Where are the Austrian models that describe and predict accurately?

I think local predictions are hard for any school to make accurately in economics, but broad swath stuff is doable. So, to have a decent shot at a good theory, you need to figure out what the most important drivers are in your situation of interest. In business cycle theory, I think it is the action of the interest rate over time which is the most important thing that gets short shrift in the main, and which drives the dynamics I speak about above.

I can make a regression say anything, but I predict the fed continues to operate, and the status quo of wealth flow from poor to rich continues. Now it can be modified by laws, and certainly will change with time, but the dynamics are there. You can superimpose other things on top and the results will vary. You can then make a model that focuses on one thing or another, and evaluate it statistically, and again, results will vary. This is some of how we ended up with a pluralist economics today.

I wrote up some other stuff about my anecdotal experience with modeling and searching for "good governance" in grad school, and how I disagreed with methodology of the papers I was reading, before abandoning the enterprise for a return to physical engineering, but I guess this is my chief point. Methodology designs in what you want to see. Economics is not a controlled science (I mean mostly the studies can have no actual control group), and therein festers a great rub. Good fun learning the statistical analysis methods though.

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

#495

Post by wyre »

willcipriano wrote: post #420
ItsMonkk wrote: post #414

Earlier quoted context omitted.

> 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.

I don’t think the average person really knows how stocks work and isn’t even aware firms are able to buyback stock with debt.

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

#496

Post by notahacker »

pembrook wrote: post #480

> It amazes me why most people do not grasp this. I think it is lack of education. Huh? Literally everybody grasps this. This is the most widely parroted mainstream narrative about the economy right now on the internet. Hell, you can't throw a rock at the Wall Street Journal (conservative) or the New York Times (liberal) without hitting a sentence that mentions wealth inequality brought on by fed policy. For further…

This narrative also has the effect of deflecting attention from other policies which contribute towards inequality an awful lot more.

It's not like the majority of recorded history on the Gold Standard was noted for the bottom 90% enjoying relatively large shares of national wealth and income security.

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

#497

Post by dragonwriter »

afarrell wrote: post #312
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…

Agreed. The problem is that the Fed only has the power to inject dollars at the top of the economy, yet sales taxes and the IRS drain dollars from a broad base of the economy. I think an MMO designer would suggest two options: A. Nerf the Fed, which would have the problems you note. B. A balancing mechanic -- Some more universally-accessable way to inject income at the base of the economy.

> The problem is that the Fed only has the power to inject dollars at the top of the economy

No, that's not the problem.

The problem is Congress [0] has been asleep at the switch on fiscal policy since the administration of George W. Bush.

[0] in the sense of “the body that legislates, including the effect of the President acting in his legislative role”.

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

#498

Post by cmmeur01 »

pembrook wrote: post #480

> It amazes me why most people do not grasp this. I think it is lack of education. Huh? Literally everybody grasps this. This is the most widely parroted mainstream narrative about the economy right now on the internet. Hell, you can't throw a rock at the Wall Street Journal (conservative) or the New York Times (liberal) without hitting a sentence that mentions wealth inequality brought on by fed policy. For further…

So we haven't been experiencing inflation? I guess it's just me seeing all the real items in the economy skyrocket in price.

But I guess when you can just readjust the definition and what's included it doesn't matter.

The fed won't be able to raise interest rates without crushing the same people they were lowered to support.

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

#499

Post by bseidensticker »

jb775 wrote: post #487
tchalla wrote: post #467

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. And by doing that, we have the Cantillon Effect [0]. > The Cantillon Effect refers to the change in relative prices resulting from a change in money supply. The change in relative prices occurs because the change in money supp…

What's a good hedge against the Cantillon Effect?

Inject the money somewhere else? UBI perhaps?

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

#500

Post by ska »

refurb wrote: post #463
Weebs wrote: post #405

Earlier quoted context omitted.

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

Top of 1% of income for a household was $421k in 2018. So $210k if a two person household with each working. There are plenty of Silicon Valley low level engineers who are in the top 1%. Doctors and top lawyers are in the top 1%. I would fathom most in the top 1% are wage earners and not owning so much capital they can live off of it.

> Doctors and top lawyers are in the top 1%.

According to BLS, median physician salary doesn't quite make your list, at 208k. Median lawyer is more like 120k. And you are assuming there are two such wage earners per family here, which is probably the minority case. I know a few two doctor couples, by I know far more where the other career either doesn't exist or is much less lucrative.

Any way you cut it, top 1% of income, let alone wealth, doesn't look anything like a typical job and it doesn't do anyone (other than the very wealthy) favors to pretend otherwise.

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