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Does QE Cause Wealth Inequality?

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Re: Does QE Cause Wealth Inequality?

#181

Post by CuriousSkeptic »

Ericson2314 wrote: post #125
spamizbad wrote: post #21

Earlier quoted context omitted.

I don't understand how higher interest rates on savings accounts would meaningfully impact the middle class. The median savings account balance is just $5,300[1]. And the thing about savings accounts is that they generally do get spent down periodically - they typically aren't used to continuously squirrel away cash for decades, so you're not compounding interest over the long term. You might save for 5 years and the…

I rarely see this spelled out, but in the more modern thinking, the working class are "creatures of flows", and the capitalist class are "creatures of stocks": i.e. the latter has meaningful assets, but the former subsists on wages. Obviously this is just an approximation, but "class is calculus" is a very useful mental model. By that ones, yes, the vast majority of people have negligible liquid savings. So the inter…

So a monthly redistribution of, say, 10% of the money supply as public dividend would take care of that no?

Re: Does QE Cause Wealth Inequality?

#182

Post by Ericson2314 »

njarboe wrote: post #175
Ericson2314 wrote: post #125

Earlier quoted context omitted.

I rarely see this spelled out, but in the more modern thinking, the working class are "creatures of flows", and the capitalist class are "creatures of stocks": i.e. the latter has meaningful assets, but the former subsists on wages. Obviously this is just an approximation, but "class is calculus" is a very useful mental model. By that ones, yes, the vast majority of people have negligible liquid savings. So the inter…

Money at rest is not taxed (yet, in the US) and money that flows is. The state is going to promote the flow of money because it means more money flows to them.

What? The state can print all the money it wants. There are plenty of corrupt politicians but let me tell you that does not create more desire to pull in money sheesh.

This money-sucker beaurocracy stuff makes for more sense with e.g. CIA selling drugs rumors than taxation. This isn't some bullion-based monarchy we live in.

Re: Does QE Cause Wealth Inequality?

#183

Post by Aunche »

It's so sad to see people blame one of the few parts of government still managed by competent people. Blaming the Federal Reserve for things like inflation or wealth inequality is like blaming a cardiac surgeon on side effects of a triple bypass operation. The fault doesn't lie on the expert who needs to resort to increasingly aggressive interventions to maintain some semblance of stability. It lies on the patient to can't help but endlessly gobble pork.

The real "money printing" occurs when Congress decides to fund trillions in spending on debt. The Fed flipping a switch to convert that debt into digital dollars is just something their job obligates them to do. Unlike the government, the private sector can't decide to borrow as much as it likes without impunity. With the government swallowing up a large fraction of the liquidity, in a world without QE, interest rates would skyrocket and the private sector would fall into a downward spiral and we would head straight to another Great Depression.

Re: Does QE Cause Wealth Inequality?

#184

Post by theonlybutlet »

ralusek wrote: post #26

If you increase the amount of USD, the USD cost of anything that isn't USD goes up. So, a lot of the market gains, housing gains, crypto gains, etc, are at least in some part to do with all of these countries increasing their money supplies. So anybody that has wealth kept in anything other than the inflating currencies is going to win, and anybody who either has savings only in fiat or is paid primarily in fiat is g…

This is the interesting thing, and the whole premise of MMT (Modern Monetary Theory), the currency being the reserve currency is not prone to devaluation relative to other currencies which allows them to keep printing USD and in effect exporting their inflation, all until someday something replaces the currency as a reserve. The inequality comes from this excess cash in the market with nowhere productive to be spent on, people merely invest it in the assets they were already going to invest in, driving up asset prices (creating asset bubbles).

Re: Does QE Cause Wealth Inequality?

#185

Post by lostgame »

groby_b wrote: post #31
dageshi wrote: post #11

Earlier quoted context omitted.

I'm still yet to understand how a lot of relatively poorly paid work that probably still needs to be done, gets done under UBI. UBI leads to people not doing particular jobs because sitting at home on UBI with less but enough money is preferable. Which means those jobs have to pay more, which leads to inflation which leads to UBI raising to keep up with inflation... repeat?

It won't. It's only poorly paid because there's a power imbalance - the tradeoff is "do shit work for shit money, or starve to death". UBI removes the "or else clause". Which will fundamentally shift how we pay for work - instead of overvaluing rare skills, we will value willingness to do the work that needs to get done. It doesn't necessarily lead to inflation because UBI doesn't automatically mean all jobs will pay…

I haven't seen a baggage clerk in years here in Canada.

Probably just an extra person to pay, tbh - and there's also starting to be quite a few self-checkouts, with some places like Dollarama having entirely self-checkout operations.

We're going to see a lot of these jobs just replaced with machines, and reasonably so - which is also why UBI is going to be increasingly necessary as the years pass.

Re: Does QE Cause Wealth Inequality?

#186

Post by theonlybutlet »

rndmind wrote: post #150

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.

Why do you say 3-6 years, I'm curious?

Re: Does QE Cause Wealth Inequality?

#187

Post by jseban »

I keep reading between the lines that the fiscal policies are incentivising and prioritising innovation and higher education and knowledge work, and getting rid of manual labor by automation or outsourcing. Seems like a good thing, the way she is phrasing it is like a conspiracy by the "elite" that just decided to sabotage a prosperous large working class for no particular reason. Technological advancement must play a big part in this.

Re: Does QE Cause Wealth Inequality?

#188

Post by Ericson2314 »

dragonwriter wrote: post #142
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…

> 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…

The mainstream in the last 10 years is down with more fiscal spending in the form of investment, but that is still supply side. They are not down with "aggregate demand being structurally low, even between recessions".

Also the theory has not kept up. A lot of people spout decent ideas and do decent empiracle stuff, but the theory is not reformed and opposed to those conclusions so they just ignore it.

Really, the crazy Chicago people to their credit were always more honest about what the mainstream theory actually said. The saltwater people were rather two-faced in making sure they sounded less rediculous but not having an epicycle-free theory underpinning their more reasonable suggestions.

Re: Does QE Cause Wealth Inequality?

#189

Post by Ericson2314 »

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.

Yes good thing Merkel did that. But they also are crazy austrians and crazy anti-nuclears.

"Syrians good, Greeks bad, let's breed Neo-Nazis with austerity so Syrians bad soon too. Oh and more coal." Is that really net good?!

Re: Does QE Cause Wealth Inequality?

#190

Post by spamizbad »

Clubber wrote: post #52
spamizbad wrote: post #21

Earlier quoted context omitted.

I don't understand how higher interest rates on savings accounts would meaningfully impact the middle class. The median savings account balance is just $5,300[1]. And the thing about savings accounts is that they generally do get spent down periodically - they typically aren't used to continuously squirrel away cash for decades, so you're not compounding interest over the long term. You might save for 5 years and the…

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…

Okay, but now you're talking about using monetary policy to change American culture away from consumption and more towards saving. I'm not sure such change is politically sustainable.
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