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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%

#581

Post by f38zf5vdt »

notahacker wrote: post #496
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.

Yet, paradoxically, the economic golden era of post-WW2 United States from 1946-1969 was entirely on a gold standard.

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

#582

Post by whitymcwhite »

Isn't it completely unreasonable to assume the income distribution would have stayed the same if rich people had done nothing?

For one thing, population size has grown.

But apart from that, let's look at an example, like Ford. So Ford workers earned well for a while. If rich people had done nothing, would Ford still be building the same cars as 50 years ago, only more of them, employing more people, all with the same good wages? I don't think so.

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

#583

Post by tomger »

natenthe wrote: post #502
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…

The article that this thread is based off of is literally the opposite take from my original post. The article claims that America's 1% is responsible for the wealth inequality. That is why I posted my comment. My opinion, and the "majority" opinion according to you, is that wealth inequality is because of Fed policies, not the 1% boogey-man. The people protesting are not protesting the Fed. No institution (i.e. medi…

Can we sum this up as: hate the referee, not the player?

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

#584

Post by pembrook »

adam_arthur wrote: post #550
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. Pe…

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

The main reason it was a blip, is because earnings have returned almost to pre-COVID levels for large public companies. Just as everyone expected. Did fiscal and monetary policy help smooth things out? Sure. But again, earnings are normalizing, like we knew they would. Markets discount the entire future, not just what's going to happen next month.

> Overleveraged and poorly run businesses should fail. People who made excessively risky and speculative bets should have had them go belly up.

Most companies pre-COVID were nowhere near "excessively leveraged." I think you (as well as OP) are conflating 2009 with COVID. These are two distinctly separate things. As are monetary (The Fed) and fiscal policy (Congress).

> The business cycle is no longer a cycle at all, things just go up.

So you're saying "this time is different." Let's see how that plays out.

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

#585

Post by torwayburger »

f38zf5vdt wrote: post #581
notahacker wrote: post #496

Earlier quoted context omitted.

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.

Yet, paradoxically, the economic golden era of post-WW2 United States from 1946-1969 was entirely on a gold standard.

You denote the end of the era. I assume you understand why it ended.

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

#586

Post by WalterBright »

pembrook wrote: post #556
natenthe wrote: post #502

Earlier quoted context omitted.

The article that this thread is based off of is literally the opposite take from my original post. The article claims that America's 1% is responsible for the wealth inequality. That is why I posted my comment. My opinion, and the "majority" opinion according to you, is that wealth inequality is because of Fed policies, not the 1% boogey-man. The people protesting are not protesting the Fed. No institution (i.e. medi…

I have nothing against you personally. I'm just refuting your idea that Fed actions from the 2010s are responsible for wealth inequality that has been rising since the 1970s. So how do you explain everything that happened on the wealth inequality front from the 1970s up to the financial crisis of 2009? I don't agree with everything in the original article either, but many of the points it made are correct.

> how do you explain everything that happened on the wealth inequality front from the 1970s up to the financial crisis of 2009?

In one word: computers. In tsunami after tsunami from 1975 to the present, computers have revolutionized everything we do. I remember one tsunami in 1975, when slide rules in September were $125 and by December they were $5 and in January they disappeared. The calculator had arrived. In 1980 at Boeing you could hear the roar of the tsunami coming in the form of CAD. Then spreadsheets, word processing, on and on.

It's no coincidence that the biggest companies in the world are all American, and all computer companies.

The big increase in wealth was created by the computer companies, and accrued to the people working in them and those smart enough to have invested in them.

BTW, according to Google: "The top 1 percent of taxpayers paid roughly $616 billion, or 38.5 percent of all income taxes, while the bottom 90 percent paid about $479 billion, or 29.9 percent of all income taxes."

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

#587

Post by positr0n »

mattmanser wrote: post #490
fullshark wrote: post #406

Earlier quoted context omitted.

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.

Exceptional as in there are no longer slaves and a bunch of rich people with swords killing anyone who disagrees with them? As that's not "exceptional", that's justice.

Exceptional as in "unusual, not typical" not as in "awesome, outstanding"

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

#588

Post by BenoitEssiambre »

jkhdigital wrote: post #553
BenoitEssiambre wrote: post #520

Earlier quoted context omitted.

Exactly. Mainstream actually educated economists are right, not people hyperventilating about money printing. On top of what you said about the effect of printing making valuations high, only temporarily and only on paper, the opposite lack of printing, is actual redistribution towards the rich in a much more real and persistent way. Insufficiently inflationary money can be used as a way for the rich to withdraw from…

Not sure if you intended to, but despite the hand-waviness this sounds like you’re making an argument for a return to hard currency...

Because I am fairly pro market but read enough mainstream economics to know that government paper retaining value more than private assets is much more of a distortion than said paper gradually losing value towards its intrinsic value of nothing.

The thing is, stable money that predictably loses value is a great thing to have for the economy as it allows people to negotiate contracts and conduct business in a predictable manner. Medium of account, medium of exchange etc. Money being a store of value is an unfortunate consequence of it being a medium of exchange that often has to be mitigated. Fiat should never be widely used for saving. Money is just an IOU. When everyone's savings are IOUs, on average everybody indirectly owes everybody else their savings. Instead, savings should be tied to real stuff such as businesses, inventory, production capacity etc. not just all be pure promises. When too many people hoard pure promises and all believe that it's true wealth, bad things happens.

Hard currencies while not good for conducting business since they are too unstable might be better as stores of value as they fluctuate and have negative returns when they should so tend to not crowd out other asset markets as much as government stabilized currencies do when inflation is not high enough. Just make sure the government does not try to stabilize hard currencies. That caused the great depression.

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

#589

Post by PragmaticPulp »

Geee wrote: post #557
PragmaticPulp wrote: post #384

Earlier quoted context omitted.

Not really. You could invest in real estate or stocks or gold or just about anything other than cash and also dodge the effects of currency inflation. Remember: Inflation is defined as rising price. If you hold cash, that's a problem. If you hold inflating assets, then it's largely neutral. If you have taken out cash-denominated loans to purchase inflating assets (e.g. a mortgage for a house), you actually benefit fr…

Deflation doesn't lead to hoarding. It leads to using your money wisely. You only buy what you need, and you buy things that last a long time.

> You only buy what you need

If you only spend when it's absolutely necessary because you want to keep as much currency as possible, that's the definition of hoarding.

What would you define as hoarding? Spending so little that you starve to death?

Keep in mind that spending includes things like investing in businesses. If currency itself provides the highest return because it's a race to hoard more than anyone else, investing in businesses becomes less attractive.

Currency should facilitate the economy, not be the economy.

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