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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%

#851

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> You're angry because it feels like everybody is getting rich and you aren't. This is uncharitable. In fact most middle class folks who sign on to this frame are motivated by basic ideas like justice and fairness. Realistically policies designed to address wealth inequality are going to make very little difference to anyone here making a typical engineering salary. It's easy to sign on to "a rising tide lifts all bo…

The problem is that more people are middle class+ than ever... so while you complain of "decades of waiting" the fact remains that all boats ARE rising. The only difference is that you now have a direct connection to the few that have risen faster - there have always been those people. But you now see them. They are still the 1% but they are in your face like never before. "it's time to try something else" What else…

> more people are middle class+ than ever

Are you citing absolute numbers? The study people usually talk about most here is the Pew one: https://www.pewresearch.org/social-trends/2020/01/09/trends-...

Over the past half century, the middle third of the income distribution has dropped from 62% of aggregate income to 43%, mostly at the expense of the upper third (the bottom third is mostly flat, but certainly not "rising").

> "it's time to try something else" What else is there?

The New Deal seems to have done pretty well. Minimum wage laws used to be vastly more effective due to inflation, and we grew just fine in the 60's. Some of it is just fairness: Upper incomes and short term capital gains used to bear a much larger share of the tax burden, and those cuts seem to have done nothing but make rich people richer.

This canard is so tiresome. Someone does the peasant "I think we should improve society somewhat" thing and inevitably they get accused of being a (pause for breah) COMMUNIST. Every time.

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

#852
post #703

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If the firm instead took out loans to pay out dividends would you feel differently? Now what if they did it every year at a increasing pace to the point where it's expected that firms take on debt to support ever larger dividends? That bubble pops eventually and is what I see happening with buybacks.

taking out debt to pay out dividends does not make any change to the capital structure of a company (i.e., the debt load increased, but the equity structure stayed the same). This basically means the company is losing that money paid out, and thus, the equity's price would drop by that equivelent amount, and then added a debt obligation (so an even more loss). This, no shareholder controlled board would ever authoriz…

> This, no shareholder controlled board would ever authorize taking out debt to pay dividends, unless there's some special circumstances

Energy (oil & gas) companies certainly did last year. Those stocks are a little different than the broader market, in that investors in them generally aren't looking for appreciation in share price, they want consistently high dividends. Exxon is a good example of this.

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

#853

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Peter Schiff has been wrong consistently for 15+ years. Why do you think his theory explains anything?

That's rather extreme. If he always predicts gloom and doom sometimes he will be right. Especially within the last 15 years. Wasn't he predicting the last financial crash for a couple years before it happened?

The boy who cried wolf was eventually correct too. A broken clock is right twice a day. Etc.

Peter Schiff currently believes Bitcoin is going to collapse, that anyone who buys it is a fool and charlatan, that hyperinflation is around the corner, and the only solution is a return to the gold standard. Do you agree with this?

I don’t like Bitcoin (too many grifters) but even I can admit it has value as a hedge asset against systemic shocks. He just doesn’t like that it may supplant Gold.

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

#854

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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…

large institutions going bankrupt doesn't mean millions of americans will be thrown out of work. that's a boogeyman used by economists to short-circuit that line of thinking because it threatens moneyed interests. the value of those businesses remains and they'll be quickly bought up and revitalized by excess capital looking for returns (part of the problem is concentrated wealth that doesn’t know what to do with its…

So true. The Fed is essentially a dam built to stop the existing machinations of capitalism from flowing as they were intended. The longer it remains in place, the harder it will be to prevent these forces from occurring until eventually (like now) the economy no longer resembles a capitalist system.

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

#855

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https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... "Even in the long run, it's really really hard to cut nominal wages..." Don't get it wrong. Inflation is a tool to cut wages. It is fundamentally anti-labor.

Yes, it makes real wage cuts instead of catastrophic job cuts more practical when particular forms of work lose market value, which also reduces the degree to which future risk of decline needs to be built in up-front to wages. But it's a blunt instrument. Providing tools to aid those workers adversely affected by those market shifts, whether by declining real wages or lost jobs, is the role of fiscal, not monetary p…

It's really presumptuous to say that it's better to cheat the labor class out of its earnings than have them deal with job losses (which you don't even know would happen).

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

#856

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> 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…

Basic financial planning. Unstable cash flow (for example the cyclical airline industry) requires cash reserves and ideally a cost structure that emphasizes variable costs tied to actual units (passengers) to lessen impact of up/down cycles. Bailouts short-circuit this type of healthy planning.

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

#857

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Great comment! Def made me think alot. Seems you can replace your entire argument with crypto. Money printer goes brrr, money gets locked in crypto, does nothing for the economy, leading to massive inequality. Crypto can be though of as "Savings" in your analogy. BTC might cause a economic meltdown if $10T gets locked in'Savings'.

I've been wondering about that. I'm not sure if crypto coins without being stabilized by central banks are a powerful enough force to cause the type of havoc that gold did during the great depression. Then again, the potentially stronger network/memetic effects of cryptocoins, along with the amplification factor from markets being synchronized through instant all-encompassing global communications nowadays might make…

I was kinda following you and then the hitler thing came out of nowhere. Why exactly will bitcoin lead to the next hitler? Asking for a friend.

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

#858
post #701

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Even without a money printer and everyone mass adopted bitcoin, massive inequality would still ensue. This is because Bitcoin is inherently deflationary. Both inflation and deflation are natural drivers of inequality... they just work in different directions.

Bitcoin is inherently deflationary...if the entire world moves to bitcoin, and somehow we prevented the extension of credit based on bitcoin collateral by financial intermediaries... Which is already happening. Financial institutions are already extending credit (aka 'printing money') based on bitcoin and other cryptocoin collateral. Bitcoin is not necessarily deflationary.

this is a common misconception.

Bitcoin is EVENTUALLY deflationary. Right now, about 900 coins are created every day leading to inflation of ~$45M a day that buying pressure needs to eat up. Every four years that inflation is cut in half, but it's still inflationary.

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

#859
post #719
post #677

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The whole point of medians is that half of them are below that. So half of physicians don’t get there even if they double up (2 physician incomes per family) I’m certainly not arguing that all of the 1% are living off capital only, but it’s worth noting that the people in there that primarily do it off a wage are unusual even amongst high wage earners. Absolutely the top 0.01% is different than the top 1%. But that d…

There you go, someone did the analysis. For top 1%, salary makes up the same fraction of income as capital gains. ” This fraction declines and for the top 1 percent (those making $783,000 or more), their income is about equally split between capital and labor income.” I’d bet if you looked at those in the top 1% but under $1M range the vast majority of income is salary. https://www.taxpolicycenter.org/taxvox/let-me-t…

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

#860
post #719
post #677

Earlier quoted context omitted.

The whole point of medians is that half of them are below that. So half of physicians don’t get there even if they double up (2 physician incomes per family) I’m certainly not arguing that all of the 1% are living off capital only, but it’s worth noting that the people in there that primarily do it off a wage are unusual even amongst high wage earners. Absolutely the top 0.01% is different than the top 1%. But that d…

There you go, someone did the analysis. For top 1%, salary makes up the same fraction of income as capital gains. ” This fraction declines and for the top 1 percent (those making $783,000 or more), their income is about equally split between capital and labor income.” I’d bet if you looked at those in the top 1% but under $1M range the vast majority of income is salary. https://www.taxpolicycenter.org/taxvox/let-me-t…

That seems consistent with my point.
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