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

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

#761

Post by ThinkingAgain » Fri, Feb 12, 2021, 5:38 AM UTC

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 have been thinking what is the best way to solve inequality. There are two problems one is wealth creation and other is wealth distribution. - Communism doesn't do a good job of wealth creation. - Capitalism doesn't do a good job of wealth distribution and causes inequality.

-Increasing the taxes, only gives money to the government and my impression is they are not efficient in using money so overall the wealth of the society doesn't increase.

If we limit how much a rich person can hold in large companies as stock, will it force the rich people to invest in small companies? Now we will have a mechanism of spreading the wealth by the rich person who knows how to use money efficiently. However the rich person will still become richer, not sure yet how to solve it completely. Maybe inheritance law should be changed so that once the person dies all his wealth goes to the employees in some fashion.

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

#762

Post by zaptheimpaler » Fri, Feb 12, 2021, 5:39 AM UTC

alacombe wrote: post #705

DeRock wrote: post #657

Earlier quoted context omitted.

Canada is probably the most apt comparison here. They have about 4x less coronavirus cases per capita [source]( https://ourworldindata.org/coronavirus-data-explorer?zoomToS... ) IMO, a lot of this had to do with the federal response and cohesive messaging they provided. It wasn't perfect, but they at least took action with things like CERB payments, enforced travel quarantines, etc. On the other hand, the US is way a…

> Canada is probably the most apt comparison here. Oh come on... Canada is less populated than California with 25x more land...

90% of the Canadian population lives within 100 miles of the US border. Most of Canada is very cold and uninhabited. So a straight up population density comparison doesn't make much sense. The meaningful measure is something like population density in inhabited areas, and that is pretty close to Euro/US density.

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

#763

Post by jaycroft » Fri, Feb 12, 2021, 5:39 AM UTC

ItsMonkk wrote: post #558

jaycroft wrote: post #432

Earlier quoted context omitted.

This seems sort of like what the Fed intends to do now, only with maybe lower rates overall - 0 for a few years, ramping to a target of 2 or 3, but I guess no real guidance after that. Unfortunately the Fed has pretty blunt tools, even after their upgrade back in March 2020. Using some of the surplus wealth from the asset holding class (top half of the K) to implement UBI, healthcare education, for the class that has…

The 30 year rate has been dropping at 2% every decade for the last 5 decades at a steady rate[0]. If the fed attempts to taper inflation by increasing the interest rate above the 30 year, we will hit a yield curve inversion and trigger another recession, just like every previous recession in the past 50 years. So no, we can't go back to 2 or 3. And by 2030, we can't even stay at 0. The big problem with bottom up is t…

Yeah, that's sort of the conclusion I keep coming to. If I understand correctly, I'm assuming that when you say that bottom up triggers inflation, you're referring to price inflation / core CPI / any of the other 20 measures of inflation in physical consumable goods required for survival. Whereas top down (as we have been doing because fed and treasury can't seem to work together) tends to keep price levels for core CPI constant, but does lead to monetary expansion, or the multiplier between higher M's like M3 M4 and total assets over base money to grow, putting most of the price inflation into financial assets instead (My house is up 30% compared to bread this year from pre-pandemic prices, my 401(k) is up 80% investing in "low risk equities" compared to the same).

What are other alternatives? More of the same and hope technological multipliers for productivity continue to outpace CPI inflation so that there aren't bread lines? Charity? I suppose you can keep doing monetary stimulus without fiscal, and then increase taxes, and spend it on infrastructure that improves everyones lives?

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

#764

Post by sergefaguet » Fri, Feb 12, 2021, 5:43 AM UTC

The title assumes that this wealth was created by the bottom 90% and not by the top 1%.

I’d argue a better formulation is “the bottom 90% failed to force the top 1% to hand over $50T to them.”

The majority of people in any society just do not create wealth, just as the majority of people in society do not create beautiful art or useful science.

The idea that wealth created by some is owed to everyone in the country is a morally bankrupt relic of nationalism. And thankfully the structure of the global digital economy is finally starting to reflect that fact. This is just the beginning.

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

#765

Post by anm89 » Fri, Feb 12, 2021, 5:46 AM UTC

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…

> You're angry because it feels like everybody is getting rich and you aren't. What you don't understand is that bull markets are always temporary. This stuff moves in cycles.

I've benefited massively in financial terms during the pandemic and resulting fed action and I still think it's dangerous and misguided. You are painting with very broad, simple strokes here.

Regardless of the fact that there is press coverage, the average American could not in any meaningful terms describe what the fed is or what it does, while maybe a quarter might know that it has something to do with "printing money" (obviously anecdotal). The idea that the complex consequences of fed policy are well understood by the average American is preposterous. The "experts" can't even agree on basic facts about what the consequences will be or have been.

Case in point, go ask financial twitter if we should be expecting inflation or deflation and watch that aisles divide.

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

#766

Post by nmfisher » Fri, Feb 12, 2021, 5:47 AM UTC

tylerhou wrote: post #469

webmaven wrote: post #415

Earlier quoted context omitted.

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.

Paying dividends to shareholders accomplishes the same thing as buying back stocks: both return capital to investors. Increasing the company pension would not have saved them from their current woes: they would still need to issue debt or equity.

Not exactly, because share buybacks are optional. A shareholder can decline to participate, increasing their stake in the company (meaning the investor believes that the net present value of the shares is higher than the price offered under the buyback).

It’s not common, though (and for the purposes of the comment you responded to, the distinction isn’t relevant). If management are saying “we can’t think of anything to do with this money”, most investors won’t disagree with them.

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

#767

Post by anm89 » Fri, Feb 12, 2021, 5:52 AM UTC

coderaptor wrote: post #679

pembrook wrote: post #584

Earlier quoted context omitted.

> 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 f…

> Did fiscal and monetary policy help smooth things out? We're assuming the crash in March was due to COVID - though there's no proof this was the case. This very much could have been a correction to more realistic valuation. > So you're saying "this time is different." Let's see how that plays out. Agree here - I think we're in for an interesting year. We may have amplified the upswing dynamics with Fed action, but…

I get what you are saying but cmon. We very well may have had a recession without covid but covid has certainly majorly shaped what our current economic situation looks like.

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

#768

Post by anm89 » Fri, Feb 12, 2021, 5:55 AM UTC

pembrook wrote: post #584

adam_arthur wrote: post #550

Earlier quoted context omitted.

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 f…

>The main reason it was a blip, is because earnings have returned almost to pre-COVID levels for large public companies.

Those earning are structurally very different from an accounting perspective than normal earnings (one example being ppp loans). I'm not saying your wrong that these earnings are justifying PE based valuations but I don't think anyone is arguing that propping up earnings won't work in the short term. I think a lot of people are arguing that propping up earnings will backfire in the longer term.

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

#769

Post by alacombe » Fri, Feb 12, 2021, 5:56 AM UTC

zaptheimpaler wrote: post #762

alacombe wrote: post #705

Earlier quoted context omitted.

> Canada is probably the most apt comparison here. Oh come on... Canada is less populated than California with 25x more land...

90% of the Canadian population lives within 100 miles of the US border. Most of Canada is very cold and uninhabited. So a straight up population density comparison doesn't make much sense. The meaningful measure is something like population density in inhabited areas, and that is pretty close to Euro/US density.

Canadian cities population density don't even register compared to US cities...

https://en.wikipedia.org/wiki/List_of_United_States_cities_b...

vs.

https://www12.statcan.gc.ca/census-recensement/2011/dp-pd/hl...

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

#770

Post by arrosenberg » Fri, Feb 12, 2021, 6:02 AM UTC

themacguffinman wrote: post #683

arrosenberg wrote: post #284

Earlier quoted context omitted.

Your freedom is pretty narrow in scope though. Amazon has so much market power, and regulators are so weakened that instead of the government setting the boundaries, billionaires and PE are with financial weapons. Yeah, you can go pop a Shopify store open whenever you want, but if you want to succeed you are going to see a lot of Bezos-built barriers to climb. Further, do we have "greater access to markets" and is th…

> but if you want to succeed you are going to see a lot of Bezos-built barriers to climb. Like what, though? How is Amazon unfairly stopping indie stores from succeeding?

Lots of ways. Directly, such as - https://www.wsj.com/articles/amazon-scooped-up-data-from-its.... It's a marketplace for laundering counterfeit and knockoff goods, harming the interests of legitimate businesses. Also indirectly by creating market pressures around logistics, pricing, SEO, and paid advertising that make it very difficult for a small operator to succeed against. A small business can struggle against a vertically integrated giant like Amazon, but only a very small portion will succeed to any degree.

Moreover, it's incredibly frustrating, as a merchant, dealing with an unregulated private bureaucracy like Amazon's. I know plenty of merchants who have had their inventory mixed with counterfeit competitors, received arbitrary account bans (including having funds frozen), and had to spend large amount of cash to comply with new policies that they invent with little warning.