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Does QE Cause Wealth Inequality?

lynalden.com

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Re: Does QE Cause Wealth Inequality?

#131

Post by criddell »

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…

The Treasury sells savings bonds that are at 7.12% right now. It's not the same thing as a savings account and you can't put a million dollars in, but you can still get a good interest rate on smaller amounts.

Re: Does QE Cause Wealth Inequality?

#132

Post by whimsicalism »

Ericson2314 wrote: post #128
whimsicalism wrote: post #106

Earlier quoted context omitted.

Immigrants are much more of an underclass in Europe than they are in America.

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?

Re: Does QE Cause Wealth Inequality?

#133

Post by Ericson2314 »

whimsicalism wrote: post #86
xibalba wrote: post #54

Earlier quoted context omitted.

> 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…

No comment on the GP, but many of the revolutions you are listing marked the end of feudalism and monarchic rule. I think it is difficult to say now that those were necessarily horrific and needless, without considering the horrors experienced daily under feudal/serf systems. Moreover, the selection of revolutions you have put together seems one-sided. It was revolution that gave people in Britain the vote, it was (a…

The black plague eventually broke feudalism, and if Manchin doesn't completely cuck us Covid-19 might eventually break neoliberalism.

Re: Does QE Cause Wealth Inequality?

#134

Post by Ericson2314 »

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?

I don't know! :)

The best-of-both-worlds is what I want. The first decently country to let in immigrants while reducing working hours is going to crush everyone else with a strong, more technologically- and culturally-advanced society. I am excited to see it happen.

(incidentally a very vague materialist take on why the soviet union sucked is it began too underdeveloped, and in the rush to do more work they ended up too military-industrial. A lot of people say "not enough consumption" but you ought to connect it being able to let demand "pull" investment rather than centrally "push" investment. More consumer goods or less working hours are somewhat equivalent once you are (post-)industrialized.)

Re: Does QE Cause Wealth Inequality?

#135

Post by jasode »

trutannus wrote: post #85
vishnugupta wrote: post #9

Earlier quoted context omitted.

Those who typically visit Lyn Alden’s blog and follow her news letter (as well as her target audience) already know what QE stands for. Besides, now a days with fed so much in the news I suspect it’s becoming widely known which is a good thing.

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 that a German on HN would be irritated by it.

Re: Does QE Cause Wealth Inequality?

#136

Post by ruined »

whimsicalism wrote: post #94
bhupy wrote: post #60

Earlier quoted context omitted.

That's the logical hypothesis, but the article we're commenting on seems to show that it's more complicated. FTA: "The logical case for why the Fed’s activities cause wealth concentration is that low interest rates and high levels of QE tend to boost asset prices, such as stocks and real estate, which are primarily owned by the wealthy. By making homes and stocks more expensive and unaffordable, it widens the wealth…

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 income. modern poor people generally have zero assets.

Re: Does QE Cause Wealth Inequality?

#137

Post by dragonwriter »

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…

> MMT is linked to QE

No, its not. MMT rejects the fiscal/monetary dichotomy as fiction, and tends to prefer more targeted (traditionally “fiscal”) stimulus, without typical fiscal constraints, because it views the only real constraints on “fiscal” actions as monetary effects; QE is blunt stimulus that respects the classic monetary/fiscal divide that MMT argues against.

Re: Does QE Cause Wealth Inequality?

#138

Post by whakim »

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…

I'm not really sure that "mainstream economic theory" genuinely believes or believed that monetary policy alone is a substitute for fiscal policy (in particular, redistribution via taxation - UBIs, capital endowments, equitable investments in education, etc.). I think instead there's a willingness to handwave away all the thorny details of taxation and outsource decision-making to non-democratic institutions (i.e. central banks) rather than really tackle these sorts of challenges head on.

Re: Does QE Cause Wealth Inequality?

#140

Post by whimsicalism »

Ericson2314 wrote: post #133
whimsicalism wrote: post #86

Earlier quoted context omitted.

No comment on the GP, but many of the revolutions you are listing marked the end of feudalism and monarchic rule. I think it is difficult to say now that those were necessarily horrific and needless, without considering the horrors experienced daily under feudal/serf systems. Moreover, the selection of revolutions you have put together seems one-sided. It was revolution that gave people in Britain the vote, it was (a…

The black plague eventually broke feudalism, and if Manchin doesn't completely cuck us Covid-19 might eventually break neoliberalism.

not in eastern europe it didn't :) feudalism was ongoing when the february revolution occurred.
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