Who Rules America: An Investment Manager's View on the Top 1% • Hacker News Board

Re: Who Rules America: An Investment Manager's View on the Top 1%

#51

Post by jwingy » Thu, Aug 04, 2011, 4:31 AM UTC

I personally don't care much that these people are wealthy or even able to evade paying as much taxes as we do. The problem I have, and the problem I think the author is trying to expose is that DUE to their wealth, these top 0.1% are able to exert a vastly disproportionate amount of influence on our political and legal system, often times to the detriment of the other 99.9% of us, and preventing politicians from making the level headed, balanced decisions they need to make.

Even if the people as a organized collective can get together to rally against a certain issue, and even if that group can win, anybody with lobbying power (e.g. money) can simply lobby again at a later time to throw in some rider on a completely unrelated bill to pass some law getting what they want.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#52

Post by tedkimble » Thu, Aug 04, 2011, 4:32 AM UTC

rmason wrote: post #21

Take a good look at the Forbes 400. The vast majority of them are entrepreneurs and though a sizeable number made their money from the financial industry it's no where near a majority - not even close. http://www.forbes.com/wealth/forbes-400/list

What's your point? The author is talking about the top 0.5%, or even just the top 0.1%.

The Forbes 400 represents the top 0.0000132%.

Sure, maybe entrepreneurs are the majority in that group, but don't trick yourself into thinking the other 1.5 million in the top 0.5% are too.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#53

Post by mkramlich » Thu, Aug 04, 2011, 4:43 AM UTC

This started off sounding like it was going to be a Repub/TeaParty/Koch-style political propaganda piece, but the further I went into it the more pleasantly surprised I became. Makes some good points about the distinction between different groups and tiers at the top of the American income ladders. It's true that the concerns and goals and challenges of upper income "working class" folks like small business entrepreneurs, doctors, lawyers are different than the folks from Real Money and the big financial firms, banks, executives of huge multi-nationals, etc. I also have become increasingly confident in the theory that the so-called credit crisis a few years ago was basically a setup or con job. There's a lot of evidence, at least at the level of circumstance and motive and means, aligned with it being true.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#54

Post by waterlesscloud » Thu, Aug 04, 2011, 4:47 AM UTC

Astrohacker wrote: post #43

It makes perfect sense that most people in the top 0.1% are associated with the financial and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes th…

It makes sense that the members of the top 0.1% that a professional money manager comes in contact with are associated with the financial and banking industries. Yes, that I agree with.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#55

Post by eternal_skeptic » Thu, Aug 04, 2011, 4:50 AM UTC

Astrohacker wrote: post #43

It makes perfect sense that most people in the top 0.1% are associated with the financial and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes th…

You say "Banks, and the Federal Reserve, create new money". That is factually untrue: only the Federal Reserve can legally create new money in the US. Since you mentioned it by name, you are definitely talking about the US, but the same state holds in virtually all developed countries as well: one designated "central bank" entity creates money, the others don't.

Per your main point, yes, the central bank creates money, but it doesn't "give" it to anyone. Seriously, you describe it as if there's a "printing party" at the FR, and only the rich get invited to grab booty bags stuffed with trillions of freshly minted dollars.

The truth, of course, is that the FR (and secondary banks) can only lend that money. They lend it for a variety of people and reasons. Not too long ago, they lent it to too many people. Not because their kind heart, but because it's a business: they lend it out hoping to get it back with interest.

Who do they lend it out to? Well, to some of the people here, for starters. Because what you failed to consider is that if I'm already at the top 0.1%, the best thing for me is to keep the situation static: not printing any new money. Because you're talking about the top 0.1% dollar earners and holders. Inflation dilutes their assets and earnings just like everybody else's, and in absolute values, they lose more.

Lending is (generally) an instrument of economic growth, a way to fund innovation and investment in production of new products and services. Guess what, if nobody can get loans, new businesses and startups won't get funding either.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#56

Post by dantheman » Thu, Aug 04, 2011, 4:51 AM UTC

arjunnarayan wrote: post #4

There's a pretty simple solution: Abolish the capital gains tax, and tax all capital gains at the income tax rate. There is no more "capital gain". Only income. Whether your income was earned through labor or rents on capital that you own seems rather irrelevant to me.

Rents on capital have the possibility of loss, whereas income does not.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#57

Post by recampbell » Thu, Aug 04, 2011, 4:51 AM UTC

Regarding those who will only bring home 15k per month post retirement:

"And, for those folks who made enough to accumulate this much wealth during their working years, the reduction in income and lifestyle during retirement can be stressful."

This is where I started laughing out loud! What a profound lack of perspective.

Re: Who Rules America: An Investment Manager's View on the Top 1%

#58

Post by [deleted] » Thu, Aug 04, 2011, 4:54 AM UTC

danenania wrote: post #49

Astrohacker wrote: post #43

It makes perfect sense that most people in the top 0.1% are associated with the financial and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes th…

Yep, fiat money systems are at the core of modern wealth inequality. Regulations and other measures will have little impact until we address this. Bailouts, taxes, budgets, deficits, regulations: none of it has much relative quantitative significance when the Fed is doling out many trillions behind the scenes. This money directly benefits the very wealthiest and regressively dilutes the rest on a scale that vastly ex…

[deleted]

Re: Who Rules America: An Investment Manager's View on the Top 1%

#59

Post by jwhitlark » Thu, Aug 04, 2011, 4:55 AM UTC

lefstathiou wrote: post #48

potatolicious wrote: post #42

Earlier quoted context omitted.

Echoing what rayiner said - where are the rich going to go? Europe is less friendly to the rich - extremely so in the most pleasant of places. China? India? Neither are very pleasant places, and even with truckloads of cash has a hard time competing with the quality of life enjoyed in the US even under onerous taxation. I think you're not giving enough credit to the American quality of life - it's why my family immig…

That's not true. How about Hong Kong or Singapore where you certainly get a western style life with extra benefits: safer, cleaner, live-in maid service, better access to healthcare and a 15-20% all in tax rate. Have you been to Thailand or Indonesia? Sounds ridiculous but this is happening right now. I'm in banking and I hear my clients talk about it all the time. They're doing it as we speak (slowly migrating their…

Drawbacks also... http://www.freedomhouse.org/template.cfm?page=363&year=2...

Re: Who Rules America: An Investment Manager's View on the Top 1%

#60

Post by Astrohacker » Thu, Aug 04, 2011, 4:55 AM UTC

eternal_skeptic wrote: post #55

Astrohacker wrote: post #43

It makes perfect sense that most people in the top 0.1% are associated with the financial and banking industries if you know how banks work. Banks, and the Federal Reserve, create new money. They give this money to themselves, and then loan it out. This is as bad as, and effectively equivalent to, counterfeiting. Creating new money, i.e. counterfeiting, i.e. inflation, does not create new wealth. It merely changes th…

You say "Banks, and the Federal Reserve, create new money". That is factually untrue: only the Federal Reserve can legally create new money in the US. Since you mentioned it by name, you are definitely talking about the US, but the same state holds in virtually all developed countries as well: one designated "central bank" entity creates money, the others don't. Per your main point, yes, the central bank creates mone…

Here's how banks counterfeit money. You deposit $100. The bank loans out $80 of your money to someone else. They put that money back in the bank. The bank now has $100 - all your money. But your checking account says $100, and the loanee's checking account says $80, for a total of $180. The bank has now effectively created--that is, counterfeited--$80 in new money. They gave this new money to themselves, and then loaned it out. Since their reserves are still over 20% (or whatever the present reserve requirement is), they keep doing this until 80% of the money is money they have counterfeited and loaned out.

And the Fed does give money to banks. They gave loans at 0% interest to Goldman Sachs who then buys government debt with it and earns interest >0%. That is the same as giving them the new money. And that is only one way, but there are others. Another way is by buying government debt from banks using freshly printed money at prices that are necessarily above what the market value would be if there wasn't an institution like the Fed that can print new money any time it wants to buy stuff.