Does QE Cause Wealth Inequality? • Hacker News Board

Re: Does QE Cause Wealth Inequality?

#141

Post by whakim » Tue, Nov 16, 2021, 7:18 PM UTC

xibalba wrote: post #54

Ericson2314 wrote: post #15

Earlier quoted context omitted.

The mainstream economic theory genuinely believed that handing out central bank securities would work just as well as, say. adjusting a UBI or normal fiscal policy. Yes, it's a suspiciously convenient idiocy --- especially because they also think wealthy households spend less (even if they don't think wealthy bussinesses do something similar) --- so certainly it's not something that can be completely fixed without a…

> revolution Revolutions almost always result in prolonged mass violence. Most often of the horrific, needless, and soul shattering kind. A sampling of recent revolutions: the Bolshevik Revolution, the French Revolution, Cambodian civil war/Khmer Rouge takeover, Nazi takeover of Germany, Chinese Communist Revolution, the Cuban Revolution, etc etc. I propose a new heuristic for my fellow HN'ers: if someone pines for r…

There are plenty of examples of economic revolution that were totally bloodless. For example, over a period of 10 years in the early 1900s, Sweden transformed itself from one of the most explicitly censitarian regimes that history has known (people who owned more property literally had their vote counted more times) into one of the most social-democratic regimes in Europe.

Re: Does QE Cause Wealth Inequality?

#142

Post by dragonwriter » Tue, Nov 16, 2021, 7:19 PM UTC

Ericson2314 wrote: post #15

photochemsyn wrote: post #8

It doesn't necessarily, but there are some issues to think about: 1) Interest rates that are low mean that middle-class savings accounts don't grown in size. QE requires low interest rates as I understand it. 2) MMT is linked to QE but guess what, an oligarchic system isn't going to distribute QE capital to middle class and poor people, it's going to go into the pockets of the ruling class. In any case, you really ca…

The mainstream economic theory genuinely believed that handing out central bank securities would work just as well as, say. adjusting a UBI or normal fiscal policy. Yes, it's a suspiciously convenient idiocy --- especially because they also think wealthy households spend less (even if they don't think wealthy bussinesses do something similar) --- so certainly it's not something that can be completely fixed without a…

> The mainstream economic theory genuinely believed that handing out central bank securities would work just as well as, say. adjusting a UBI or normal fiscal policy.

No, it didn’t.

Mainstream economic theory (or even the major heterodox theories) has never held that monetary policy is a sufficient substitute for fiscal policy in general, and mainstream economists in the US (of all stripes, though they differ on what fiscal policy should be) are always complaining about Congress not taking what they see to be appropriate fiscal action and leaving the economy to the Fed and monetary policy.

Re: Does QE Cause Wealth Inequality?

#143

Post by xxpor » Tue, Nov 16, 2021, 7:19 PM UTC

ruined wrote: post #136

whimsicalism wrote: post #94

Earlier quoted context omitted.

It seems like many people in this thread are missing that poor people are often underwater in debt, so lower rates help them. There is a reason most of the farmer uprisings in the early US were over wanting more inflation rather than deflationary policy that made the value of their debt payments higher.

poor people don't get lower rates. they get payday loans and 19% credit cards, or a tent. inflation is "good" for debts if your budget is otherwise balanced and your income rises apace, but if either is not the case inflation will only depress purchasing power. historical farmer revolts were interested in higher inflation because they had land, a real asset, and sold crops, real commodities, that provided appropriate…

>they get payday loans and 19% credit cards, or a tent.

The rates for those are still lower than they otherwise would be.

Re: Does QE Cause Wealth Inequality?

#144

Post by Jensson » Tue, Nov 16, 2021, 7:21 PM UTC

whimsicalism wrote: post #132

Ericson2314 wrote: post #128

Earlier quoted context omitted.

Immigrants mainly just don't exist in Europe to the same degree. They are culturally more shat on there, but materially better off as they get more safety net, and aren't the backbone of the shitty service industry like here. Letting in immigrants while you are trying to reduce working hours is a good idea because a) moral b) you are trying to show off you have the best society, let people vote with their feat c) you…

Well, is it better to be let in and provided with services (what the US does) or kept out and in an impoverished country?

Germany alone has taken in more refugees than the entirety of USA. USA is not immigration friendly at all for those who really need it.

https://www.unhcr.org/refugee-statistics/

Edit: Btw, I think the poster above meant the millions of undocumented immigrants living in USA without full rights.

Re: Does QE Cause Wealth Inequality?

#145

Post by notahacker » Tue, Nov 16, 2021, 7:21 PM UTC

AnimalMuppet wrote: post #122

lend000 wrote: post #50

An important takeaway from the wealth inequality chart: every time that wealth inequality has substantially decreased in recent history was during a recession. Staving off recessions at all costs for political reasons is a horrible policy. Market cycles are natural; we don't live in a perfect world. Market forces clearing out the inefficiencies/rebalancing power in the economy is better for long term capital allocati…

Well... the people who have a job and lose it in a recession (and many do) really don't care whether overall wealth inequality is going down. They're being destroyed financially; they don't care that the rich are also taking damage.

This. The 20% haircut to the value of the companies' equity is a paper difference to their wealthy majority shareholders. But the 10% of staff they lay off have no income at all, and the remaining staff don't exactly feel better off because their bosses are poorer either. Levelling down isn't any sort of solution to wealth inequality.

Re: Does QE Cause Wealth Inequality?

#146

Post by whimsicalism » Tue, Nov 16, 2021, 7:23 PM UTC

ruined wrote: post #136

whimsicalism wrote: post #94

Earlier quoted context omitted.

It seems like many people in this thread are missing that poor people are often underwater in debt, so lower rates help them. There is a reason most of the farmer uprisings in the early US were over wanting more inflation rather than deflationary policy that made the value of their debt payments higher.

poor people don't get lower rates. they get payday loans and 19% credit cards, or a tent. inflation is "good" for debts if your budget is otherwise balanced and your income rises apace, but if either is not the case inflation will only depress purchasing power. historical farmer revolts were interested in higher inflation because they had land, a real asset, and sold crops, real commodities, that provided appropriate…

> poor people don't get lower rates. they get payday loans and 19% credit cards, or a tent.

Rates are relative, looser money absolutely translates to lower rates, even for poor people. Claiming otherwise is (social) science denial.

> modern poor people generally have zero assets.

Poor and lower class people are often deeply in debt. Many poor people will even have homes with very large mortgages outstanding, and without a route to paying it down. The median black person in Boston, for instance, (not to conflate race and poverty, it is just an illustrative statistic that comes to mind) has $8 to their name. That does not mean they literally only have $8 in a wallet somewhere, but it does mean half of those people are underwater in debt. This is before you even start looking at mortgages. I'm assuming that is not unique to Boston.

That is actually very analogous to the situation we are finding ourselves in. Tighter policy would increase the real value of the payments that poor people have to make on their homes, etc.

Re: Does QE Cause Wealth Inequality?

#147

Post by coolspot » Tue, Nov 16, 2021, 7:23 PM UTC

It is well known that in the future, it won’t matter how many factories (or other hard assets) your nation has.

To succeed, a nation will have citizens that know all TikTok dances by heart and their metaverse avatars own most of the legendary NFT items.

Hence I am confident that the US is on the right path!

Re: Does QE Cause Wealth Inequality?

#148

Post by jollybean » Tue, Nov 16, 2021, 7:26 PM UTC

The USA is quite different than anywhere else in that:

1) Vast social inequality from issues arising from the ex-slave population and undocumented migrants, which creates a big 'long tail' of social malaise, cost, and limited productivity.

and 2) On the high-end, the US has a lot of truly exceptional talent doing truly world-leading things and having a truly global impact, or in other words, they are in some ways 'earning' very high returns.

Imagine if Germany were the size of the US: no historical ethnic issues, and more institutional conglomerates instead of newer, cutting edge companies (i.e. more BMW's not more Ubers and AirBnBs').

What would that look like, even with the Seignurage of currency etc?

I think inequality would be a lot less.

I think the author makes some great points, but they just don't overcome the fundamentally different situation that the US is in vis-a-vis everyone else.

Re: Does QE Cause Wealth Inequality?

#149

Post by Clubber » Tue, Nov 16, 2021, 7:26 PM UTC

whimsicalism wrote: post #113

Clubber wrote: post #103

Earlier quoted context omitted.

>generally impoverished people would rather have lower rates on the debt that they have. Generally impoverished people aren't granted lower rates because of the credit system. They typically pay usury rates. Only people with existing assets / collateral get low rates. >They'd also rather have jobs, which again comes with more investment. Generally impoverished people have shit jobs, that's why they are generally impo…

1. If you get higher interest rate returns, how do you think that is being paid for if poor people aren't getting higher rates? 2. Unexpectedly lower interest rates increase employer competition in the labor market, raising wages. This is well studied. 3. The quality of life of a poor person in the US is unimaginably better than that of someone ranked relatively the same 100 years ago. That is due to investment. Deny…

>1. If you get higher interest rate returns, how do you think that is being paid for if poor people aren't getting higher rates?

Loans to business, home loans, etc. Education loans really weren't a big thing because education used to be subsidized. Also, poor people aren't the only source of ROI on loans. They're quite lucrative though because they seldom are able to pay the principal and are an endless source of interest payments.

2. Unexpectedly lower interest rates increase employer competition in the labor market, raising wages. This is well studied.

Yet wages have been largely stagnant for 40 years, how do you account for that? Got links?

https://www.epi.org/publication/charting-wage-stagnation/

3. The quality of life of a poor person in the US is unimaginably better than that of someone ranked relatively the same 100 years ago.

I'm interested in how you are measuring this. Got any links? How about the quality of life from someone 40 years ago before neoliberalism?

>Denying those massive quality life improvements is absurd

Which quality of life improvements are you referring to? Are you being intentionally vague? I mean we can buy cheap plastic crap from China, but that's at the expense of US manufacturing jobs, isn't it? Food certainly isn't cheaper. Healthcare and housing isn't either. So yes, if you believe buying cheap disposable stuff from overseas is a massive quality of life improvement, then ok. Take a stroll down middle America and tell me how good they have it. I know lots of towns with boarded up main streets because all the manufacturing went overseas. That's where the investment went.

Again, you're quoting macroeconomic theory when microeconomic conditions on the ground subvert any gains in macroeconomic theory.

How does investment drive up wages when labor investment is say 90% overseas or automation?

Re: Does QE Cause Wealth Inequality?

#150

Post by rndmind » Tue, Nov 16, 2021, 7:27 PM UTC

Quantitative Easing will continue on until all the boomers are happily retired. Give it another 3-6 years, then the Fed is going to "get religion" and you will want to hold hard assets. Until then... its stocks and crypto on a moon mission.