Does QE Cause Wealth Inequality? • Hacker News Board

Re: Does QE Cause Wealth Inequality?

#151

Post by ruined » Tue, Nov 16, 2021, 7:28 PM UTC

xxpor wrote: post #143

ruined wrote: post #136

Earlier quoted context omitted.

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.

payday loan APR is generally around 300% to 700%. this is not a rate set by a market, it is the claw of a predator, useful only to deal a killing blow.

Re: Does QE Cause Wealth Inequality?

#152

Post by xxpor » Tue, Nov 16, 2021, 7:30 PM UTC

cies wrote: post #119

bradleyjg wrote: post #13

Earlier quoted context omitted.

> QE requires low interest rates as I understand it. It’s the other way around. QE lowers interest rates; that’s the main purpose. The idea is that low interest rates force investment in risky ventures (since safe ones are offering low yields) and those risky investments on net will generate excess economic growth.

> those risky investments on net will generate excess economic growth. Economic growth comes from increased consumer spending. Not from investment. We will all learn that lesson very soon.

This is the most frustrating thing about the current situation. We finally juiced the economy in a way that we've created a supply side constraint for the first time since at least 2000! People finally feel free to quit their jobs and demand higher wages! Of course, if you're a media company owner who's friends with other billionaires, you don't like this. So all of the coverage has been almost exclusively negative. Biden isn't helping himself by appearing to do nothing, but there's a lot of upside here.

Re: Does QE Cause Wealth Inequality?

#153

Post by whimsicalism » Tue, Nov 16, 2021, 7:30 PM UTC

Jensson wrote: post #144

whimsicalism wrote: post #132

Earlier quoted context omitted.

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.

Refugee is not synonymous with immigrant.

The US has admitted more than 1.2 million refugees (I believe the number is closer to 3 million), this chart only counts refugees under UNHCR mandate.

Re: Does QE Cause Wealth Inequality?

#154

Post by [deleted] » Tue, Nov 16, 2021, 7:31 PM UTC

pram wrote: post #37

fdgsdfogijq wrote: post #27

Earlier quoted context omitted.

The fed keeps printing money and inflating assets. You can generate 200k a year much easier by "risking" it in the markets. You are wasting your life for a pittance that can be made easily in the markets. This is how rich people think, its only the lower classes that somehow think they are being paid a fair wage

I dunno about that. Even if you could make consistent gains, most people probably don't have the disposition to trade options long term. It's extraordinarily stressful and definitely a ticket to an early grave. A 200k IT job is a lot easier lol

[deleted]

Re: Does QE Cause Wealth Inequality?

#155

Post by trutannus » Tue, Nov 16, 2021, 7:31 PM UTC

jasode wrote: post #135

trutannus wrote: post #85

Earlier quoted context omitted.

Yes, that makes sense for those in the US, but the FED does not really factor into the thinking of, for instance, a German. The argument of "if you read the blog you know what it means" somewhat falls flat when the link is posted on HN for people who don't already read the blog to see. Quantitative Easing isn't just an American thing, and plenty of Germans might know it as Quantitative Easing, but have never seen it…

>The argument of "if you read the blog you know what it means" somewhat falls flat when the link is posted on HN for people who don't already read the blog to see. I don't understand your complaint here. The author (Lyn Alden) is not the person who posted it here on HN. In any case, she's an American writing about USA policy where her audience already knows what "QE" is. Seems unreasonable that she should predict tha…

You're right, I wasn't making a point about the author, just how the comment I was replying to didn't make sense given the context. I might have replied to the wrong comment. There was one which was saying something to the effect of "you would know what it means if you can understand the article".

My core point is you can know what Quantitative Easing is while still not immediately recognizing QE as its abbreviation. For example, I thought this was going to be about some sort of Qsomething Equity, since I've seen PE to mean Private Equity.

Re: Does QE Cause Wealth Inequality?

#156

Post by xxpor » Tue, Nov 16, 2021, 7:31 PM UTC

ruined wrote: post #151

xxpor wrote: post #143

Earlier quoted context omitted.

>they get payday loans and 19% credit cards, or a tent. The rates for those are still lower than they otherwise would be.

payday loan APR is generally around 300% to 700%. this is not a rate set by a market, it is the claw of a predator, useful only to deal a killing blow.

A lot of states have capped those rates relative to prime.

Re: Does QE Cause Wealth Inequality?

#157

Post by whimsicalism » Tue, Nov 16, 2021, 7:32 PM UTC

ruined wrote: post #151

xxpor wrote: post #143

Earlier quoted context omitted.

>they get payday loans and 19% credit cards, or a tent. The rates for those are still lower than they otherwise would be.

payday loan APR is generally around 300% to 700%. this is not a rate set by a market, it is the claw of a predator, useful only to deal a killing blow.

Rates are set by a market.

It's interesting how even as formal christianity is in decline, the moral constructs that it popularized (distaste for usury, protestant emphasis on liberty over well-being) morph into new forms.

Re: Does QE Cause Wealth Inequality?

#158

Post by Clubber » Tue, Nov 16, 2021, 7:33 PM UTC

sokoloff wrote: post #111

Clubber wrote: post #52

Earlier quoted context omitted.

You get what you incentivize. We are currently incentivizing debt over savings, so that's what we get. When I was in college, the bank would give something like 6-7% on savings. If I had a million dollars in the bank I could comfortably live off that interest for life. Now if I put a million dollars in the bank, I lose wealth due to inflation, so I'm incentivized to put it in a fund or something now, which is a lot r…

Was there ever a time where a savings account of $1M both provided a livable income over many decades and didn’t lose value to inflation? What were inflation rates while savings rates were 6-7%?

Sure, say I had $1M in the bank in 1996, it would yield ~$70K which would provide a comfortable living situation both then and today. Inflation was around 2-3%, which is generally the target.

>lose value to inflation

Inflation always erodes money of course, so there was never a time when that didn't happen when there was inflation.

Re: Does QE Cause Wealth Inequality?

#159

Post by lend000 » Tue, Nov 16, 2021, 7:33 PM UTC

notahacker wrote: post #145

AnimalMuppet wrote: post #122

Earlier quoted context omitted.

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.

If there were no other options besides asset stimulus and doing nothing, I may agree with you. But we can do other things (like UBI) that improve equality of opportunity, provide a safety net, and are probably net positive to the overall value of the economy in the long run (compared to the modern bailout/asset inflation economy, anyway).

Re: Does QE Cause Wealth Inequality?

#160

Post by coliveira » Tue, Nov 16, 2021, 7:34 PM UTC

cies wrote: post #119

bradleyjg wrote: post #13

Earlier quoted context omitted.

> QE requires low interest rates as I understand it. It’s the other way around. QE lowers interest rates; that’s the main purpose. The idea is that low interest rates force investment in risky ventures (since safe ones are offering low yields) and those risky investments on net will generate excess economic growth.

> those risky investments on net will generate excess economic growth. Economic growth comes from increased consumer spending. Not from investment. We will all learn that lesson very soon.

That's right, the only thing PE is accomplishing is to inflate asset valuation, but the increase in economic activity is very marginal without robust consumer spending.