271–280 of 593 posts
The returns that capital demands (and the government obliges to) are ultimately unsustainable. That's the core problem here. Rising wages? There has been no meaningful real increase in wages in 40 years despite a massive increase in productivity. Profits keep going up and up. The expectations for profits keep going up. The problem here is that the people who make companies possible don't get to share in the proceeds…
Earlier quoted context omitted.
The lower classes hold a lot of debt? Can you source that? I would assume middle/upper class would hold most debt.
The upper/middle classes hold more debt overall, but it's debt that's much easier to shed - mortgages. You can just walk away from that mortgage at any time. The lower classes are saddled with medical debt, credit card debt, and student loans which aren't dischargeable in bankruptcy.
Poor people either don't go to college, or go to a cheap community college, or get scholarships/financial aid.
Very rich families just pay for college without taking out student loans.
https://www.brookings.edu/blog/up-front/2020/10/09/who-owes-...
> The highest-income 40 percent of households (those with incomes above $74,000) owe almost 60 percent of the outstanding education debt and make almost three-quarters of the payments. The lowest-income 40 percent of households hold just under 20 percent of the outstanding debt and make only 10 percent of the payments.
Also, medical and credit card debt can generally be discharged in bankruptcy. Student loan debt can't, but consider this from the same link:
> What may be more surprising, however, is the difference in payment burdens. A growing share of borrowers participate in income-driven repayment (IDR) plans, which do not require any payments from those whose incomes are too low and limit payments to an affordable share of income for others. And some borrowers are in forbearance or deferment because of financial hardships. As a result, out-of-pocket loan payments are concentrated among high-income households; few low-income households enrolled in IDR are required to make payments.
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I think you would need monarchy (or something more tyrannical) to get that. Democracies seem reliably short-sighted. The personal responsibility of taking on debt is so thoroughly attenuated in a democracy that piling on ($90k per citizen and counting, in the US) debt is the expedient thing to do, and it's seemingly impossible to overcome the electoral price paid for trying to reject that expedient option.
AFAIK it was how Keynesian economics was supposed to work. Also AFAIK the only country that did intentionally tighten at the top always Israel as they were worried that an economic crisis would leave them vulnerable to attack from their neighbors * * source is from a bar talk with an economist, I didn’t do my own research here…
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What's the good play here? Cause a recession or price those lower middle class out of being able to afford the cost of living? Typically they aren't the ones with the best negotiating power.
I don't see why people think inflation hits the bottom of the wealth distribution the most. If you own your home but make the minimum payments, inflation is good. Your payments stay the same but the dollars are worth less, and hopefully your wages go up (as many people's have been). If you owe student debt, healthcare debt, same thing. Almost every lower middle class person has one of these kinds of debt. Inflation h…
That's my struggle with this part, and that was my point with the less bargaining power. Everything else you say is true, but I have concerns about this bit. My wage required a job jump to increase and I'm by no means lower middle class.
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...and the lower classes hold a lot of debt, which under high inflation would start to vaporize. It would effectively transfer a lot of wealth from those who hold a lot of cash to those who don't. Can't have that.
The lower classes hold a lot of debt? Can you source that? I would assume middle/upper class would hold most debt.
The fed is aggressively raising rates as the economy goes into recession. The last time something similar to this happened was in 1980. A very bad unusual situation, but on the other hand, the worst may be over. I think Google, Microsoft, Facebook, Amazon, and other large cap tech stocks are good buys at these levels and are more immune to macro factors (compared to other sectors ) and can hedge inflation by raising…
I have mixed feelings on tech stocks. I feel like the general competence has gone down, and that makes them vulnerable. Google is a shitshow right now. I don't think they can do B2B. Chrome Extensions. GSuite Free. Google Workspace App security audits. I can list of dozens of other disruptions like that. No one trusts them. At the same time, cost structure is astronomical; employee count has grown exponentially, to m…
Something I haven’t seen discussed much is the impact of inflation on the existing federal debt. This is actually a positive for taxpayers as the federal debt will become cheaper. Obviously we’re still spending a ton and are issuing debt at higher rates now, so it’s not some kind of magic cure or anything.
It's true that we are incrementally getting out of debt commitments by debasing the currency But as others have pointed out, bonds eventually come to term and then have to be rolled over into the higher prevailing interest rate. With such a high debt burden, that debt service can become a significant portion of all tax receipts, at which point all services are funded from deficit spending. 2021 tax receipts estimate…
You can argue either side to this, and make a good case. My personal preference is to trigger a recession and reduce inflation. The easy cop-out solution is to say a "big f*ck off" to pensioners, lower middle class, and poor people and let inflation soar, but I believe that long term this would be more destructive to the general economy. Better take the long term view here and not kick the can down the street.
I don't think it's that simple. Lower middle class and poor people have debt, and inflation is good for making debt less valuable in real dollars. Pensioners, maybe, but social security is indexed to inflation if I'm not mistaken? I wouldn't be surprised if many public and private pensions are as well. This is much more a move in favor of the rich that are owed money by the poor imo.
inflation is a monster that destroys the low and middle class. the rich and powerful have tools to profit and dance around it.
The returns that capital demands (and the government obliges to) are ultimately unsustainable. That's the core problem here. Rising wages? There has been no meaningful real increase in wages in 40 years despite a massive increase in productivity. Profits keep going up and up. The expectations for profits keep going up. The problem here is that the people who make companies possible don't get to share in the proceeds…
There are plenty of affordable places to live. People just don't want to move there. Buying a house in a hip U.S. city/suburb isn't a human right.
The thought that we are going to turn the table and make the slate clean finally is very troubling to me. I mean 1) this is a non-insignificant possibility right now, and 2) just reached mid-age, the worst time to get hit by a depression.
I thought the worst time to get hit by a depression was right before you enter the job market for the first time and/or as you attempt to buy your first house. I guess every stage of life has unique challenges that come along with a depression.
Actually, I graduated right after the 08/09 crash and had to go into graduate study shortly. After graduation as a Ms.c it still took me a few years to get an IT job (master has nothing to do with IT). But if I'm fired right now, I really have no confidence that I can easily grab an equivalent job. Part of the reason is that during these years I had to hop a few jobs to reach something I really want to do, so my experience in the field is very little (<= 2 years).