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Does QE Cause Wealth Inequality?

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Re: Does QE Cause Wealth Inequality?

#11

Post by dageshi »

Ericson2314 wrote: post #6

The thing is we want less stupid speculation and asset bubbles and yet the economy is running far below potential, with the "tight labor markets" right now just a glimpse of how it was before (and probably a fleeting one if the inflation class warriers have their way like in the 1970s). To fix both problems --- because we need to stop just making ourselves poorer and less coordinated with prudish neoliberalism --- we…

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?

Re: Does QE Cause Wealth Inequality?

#12

Post by fdgsdfogijq »

How have people not caught onto this yet?

When the Fed prints money, its a guaranteed bet that assets go up. The rich use their wealth and huge amounts of leverage via financial instruments to generate massive returns. This has been going on for a long time. Literally all you need to do is throw your whole bank account into call options. Working a 200k-300k a year job is almost a waste of time with how much money they are printing. This is how the wealthy see it, your small paycheck (yes 300k a year is small) is a joke within the context of financial leverage.

Just to reiterate, you are better off risking everything in financial markets and sitting at home watching those assets very closely than you are working.

Re: Does QE Cause Wealth Inequality?

#13

Post by bradleyjg »

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…

> 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.

Re: Does QE Cause Wealth Inequality?

#14

Post by anarticle »

justinzollars wrote: post #5

It really feels like we are at the end of the road and the Fed is damned if they end QE (deflation and market crash) and dammed if they don't (very high inflation). Ray Dalio does a great job describing the end of the the "long-term debt cycle" and differentiates it from a typical "business cycle" that we are all familiar with [1]. The scary thing he describes is the end of a fiat money system, which will resemble a…

A run on goods is demand gone wild, aka hyperinflation.

Re: Does QE Cause Wealth Inequality?

#15

Post by Ericson2314 »

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 fight, but that doesn't mean all trying to "fix the policy-academic consensus" is useless.

For example, Republican Jerome Powell is no Pinko, but under his watch the fed has become less closed minded about that "full employment" should look like. This is good, and is precisely because that and the pandemic checks that we are seeing great bottom half wage gains (in real terms too) and increased strikes.

So yes, ultimately you can't trick "the man" with new ivory tower shit, but you can at least attack the straw mans and deflections. Maybe the best theory of change is to create new pandemics so they will have to print more checks to defend the system, and eventually, one of those strike waves will be the revolution :D. (Is this conservationism? I don't think so, because it's about the system's response to a bad thing making "working class lives" better not worse.)

Re: Does QE Cause Wealth Inequality?

#17

Post by worik »

Well duh!

Print lots of money

Give it to people who have lots of money (banks)

The rich get richer.

What is so hard to understand about that?

The powers that be decided that an increase in wealth disparity was a price worth paying to keep economic activity happening (that and inflation, interest rates could well balloon over the next decade).

An alternative was to print lots of money and give it to poor people. That would still have cause inflation, but improved wealth disparities.

But the powers that be do not have that sort of power.

Re: Does QE Cause Wealth Inequality?

#18

Post by Iolaum »

fdgsdfogijq wrote: post #12

How have people not caught onto this yet? When the Fed prints money, its a guaranteed bet that assets go up. The rich use their wealth and huge amounts of leverage via financial instruments to generate massive returns. This has been going on for a long time. Literally all you need to do is throw your whole bank account into call options. Working a 200k-300k a year job is almost a waste of time with how much money the…

Can you elaborate on how one can use call options to make a 200K/year job a 'waste of time'?

Re: Does QE Cause Wealth Inequality?

#19

Post by [deleted] »

dageshi wrote: post #11
Ericson2314 wrote: post #6

The thing is we want less stupid speculation and asset bubbles and yet the economy is running far below potential, with the "tight labor markets" right now just a glimpse of how it was before (and probably a fleeting one if the inflation class warriers have their way like in the 1970s). To fix both problems --- because we need to stop just making ourselves poorer and less coordinated with prudish neoliberalism --- we…

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?

[deleted]

Re: Does QE Cause Wealth Inequality?

#20

Post by kelseyfrog »

dageshi wrote: post #11
Ericson2314 wrote: post #6

The thing is we want less stupid speculation and asset bubbles and yet the economy is running far below potential, with the "tight labor markets" right now just a glimpse of how it was before (and probably a fleeting one if the inflation class warriers have their way like in the 1970s). To fix both problems --- because we need to stop just making ourselves poorer and less coordinated with prudish neoliberalism --- we…

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?

> Which means those jobs have to pay more

The assumption being made here is "all other things being equal". All other things are never equal.

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