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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%

#541

Post by chiefalchemist »

kazen44 wrote: post #329
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…

which is highly dangerous to the general stability of society. When economic policy results in massive finanicial instability for the common worker (thanks to hyperinflation and insane asset prices) it creates a power vacuum which can be filled by those promising to fix the problem quickly and swiftly.

Yes. But hyperinflation and insane asset prices aren't required. You simply need a highly dissatisfied and highly motivated "fringe group" to set off a chain reaction. We're flirting with that now. The next POTUS election is the one to watch. 2020 was overrated in terms of significance. The next vacuum filler(s) will have intent and focus. They've seen what's possible without out really trying. The market hasn't improved; the "competition" remains blind and/or in denial. There's still plenty of opportunity.

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

#542

Post by pjmorris »

jb775 wrote: post #517
bseidensticker wrote: post #499

Earlier quoted context omitted.

Inject the money somewhere else? UBI perhaps?

I mean as a personal investment hedge to protect against the artificial inflation

IMO the way to decide that follows from questions like: What does the Fed buy? Second question: What do the sellers to the Fed buy (where do they spend the proceeds?), and wherever the spending chain goes from there. To my eye, stocks and real estate, at least right now.

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

#543

Post by 908B64B197 »

klmadfejno wrote: post #18

"But poor people have iphones now" when people can't afford food, healthcare, or any leisure time is the 2021 equivalent of "Let them eat cake". The balance of wealth is insulting when we have so many basic needs not being met for those at the bottom "Stealing" is a word that gets knee jerk reactions. But the more polite way to phrase it is that the rich benefit from societal structure 1000x more than the poor and ar…

> But poor people have iphones now

A second hand or refurbished iPhone SE is probably the best deal out there. It replaces a land line, especially for lower income folks who move a little more, has built-in internet access (a gateway to accessing government services, jobs, healthcare and knowledge) and built-in navigation, making navigating confusing public transit easier. And Apple supporting hardware forever means that it won't be left out without updates after two years like most lower-priced handsets.

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

#544

Post by yonran »

The author, Nick Hanauer, has a podcast (https://pitchforkeconomics.com/) that is heavy on demonizing the very rich 1% and vaguely blaming “neoliberalism” (by which he generally means Milton Friedman-style libertarianism; not sure what he thinks of progressive neoliberals https://exponents.substack.com/p/what-neoliberals-believe). It’s similar to how the Democrats promise not to raise taxes on anyone whose income is under $400,000 (https://joebiden.com/two-tax-policies/).

I think this populist “Don't tax you, don't tax me, tax that fellow behind the tree!” sentiment is probably the wrong focus. I hope people will eventually support broader policies to promote equality (https://www.niskanencenter.org/faster_fairer/agenda.html), antimonopoly policies, and broader tax increases (such as land value taxes and closing capital gains tax loopholes) instead of singularly focusing on bogeymen.

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

#545

Post by KorematsuFred »

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 think it is lack of education.

I do not think you mean education as in formal education but rather people have not systematically thought about these things. And, I think people will never be educated enough on this topic. Inflation and Climate change in some sense are pretty much alike. Both are some serious market externalities as a consequence of which they do not benefit from market signals (the biggest teacher of them all).

For issues like this the biggest teacher is the market and not books. A lot of climate change deniers have invested in Tesla and Solar companies and a lot of climate change maniacs have purchased Bitcoins and oil stocks. Some of the biggest proponents of climate change hysteria own private jets and ocean front properties. A lot of people call this hypocrisy and assign motives of fraud to these people but I do not think so. When it comes to climate change the market signals are clear that we need to look for an alternatives to our current energy sources and these sources will be more popular while completely rejecting alarmist claims. One might argue that market signals are not correct. But that is irrelevant. The point is people react to market signals FAR FAR better than anything that gets pushed by intellectuals, even those intellectuals who share their own political biases.

Markets signals around bailouts or inflation are missing. As someone like Milton Friedman pointed out, there is simply nothing that an average American can do to prevent government from printing money. If nothing you do will have an impact people wont do anything. The market signals are missing because there is no competition where you can see what works and what does not.

Instead of taking strong ideological positions I think we should work on making market forces operate more freely in this space. Bitcoin is already challenging the dollar in this space. It is a David (USD) vs Goliath right now but at some point people will figure out that a constant inflation for USD would mean higher price for Bitcoin over time.

For bailouts I think we need ot come up with solution that is more market like. Perhaps increase of creating ad-hoc bailouts for large corporations, pass a clear law that describes the terms of bailout well in advance and provide different options to chose from for the corporations and then stick to it.

You will be surprised how quickly people will vote in favor of better bailout policies.

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

#546

Post by toiletfuneral »

tylerhou wrote: post #357
ItsMonkk wrote: post #348

Earlier quoted context omitted.

This is an inaccurate narrative. The more wealth inequality there is in a nation, the less that increases in the money supply effect the economy. This is why we have no inflation with trillions injected. The rich simply store the money in assets like stocks and houses and it never touches consumption. The only thing that needed to happen to keep the economy afloat was the Congress passing their bills.

> The rich simply store the money in assets like stocks and houses and it never touches consumption. But these do affect consumption. 1) Stonks going up means that companies have more capital (through stock issuances and equity raises). Companies use this capital to buy things and pay workers, so the dollars end up recirculating through the economy just like if a regular person spent it. 2) Buying houses is consumpti…

do you have any evidence of a company's positive financials correlating with them paying their workers more? I have literally never seen this, though I absolutely have seen they cut workers wages on negative financials.

And don't say worker's stocks go up too, because we all know how disproportionate shareholders take it.

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

#547

Post by deelowe »

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…

We're entering a potentially deflationary period. An aging demographic and technology create deflarionary pressure as people leave the workforce and technology improved efficiency. The Fed wants to create inflation. We know what's going to happen over time by observing germany and japan.

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

#548

Post by jackcosgrove »

In the near term, we need to find a way to raise rates without causing a depression, before inflation gets out of control.

In the long term, more and more of the federal budget is being paid for by the Fed. While this isn't necessarily unsustainable, it is fraught with danger. The main reason is that there is very little democratic control over Fed policy. Vesting Congress with taxing power places taxation under democratic purview.

I shudder to think of the corruption that will occur when the Fed funds most of the federal budget. There will be no democratic control over most of the government.

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

#549

Post by pembrook »

asdffdsa wrote: post #518
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…

Please read the article. It clearly mentions income as a reason for income inequality and not asset value inflation which is due to the fed policy.

I was replying to OP's claims that the Federal Reserve is the "evil puppet master" behind wealth inequality.

This is patently false. Inequality has been expanding since the 1970s, long before the "evil bank bailouts" and accommodative monetary policy of the 2010s Federal Reserve.

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

#550

Post by adam_arthur »

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…

Except the situation we're in is unprecedented. Never before has the government stepped in with this much force in response to an economic crisis.

The March crash was the event that was going to normalize asset prices, but really just became a blip due to the pump.

Should the government have done nothing? Absolutely not, but aid should have been better targeted. Overleveraged and poorly run businesses should fail. People who made excessively risky and speculative bets should have had them go belly up. The business cycle is no longer a cycle at all, things just go up.

Was the virus a predictable event? Not at all, but pretty much every bust in the business cycle is due to a new unforeseen tail risk that materializes. That's why it's prudent not to excessively leverage yourself in the good times, because bad times will come.

Certainly businesses such as restaurants, that were forced by the government to close, or travel, where it truly was an apocalyptic scenario, should have received the bulk of the aid.

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