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America's 1% Has Taken $50T From the Bottom 90%

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Re: America's 1% Has Taken $50T From the Bottom 90%

#381

Post by onlyrealcuzzo »

natenthe wrote: post #57

Correction: The Fed's policies have taken $50T of wealth from the Bottom 90%. When you bail out irresponsibly over-leveraged and nearly bankrupted banks and corporations, and pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. Most importantly, when the Fed decides to print money ad nauseam, they create massive asset inflation, which steals from the poor and gives to the rich. T…

Pedantic - but QE does not "print money" - which is why we didn't see significant inflation (as measured by CPI) for most of the QE timeline.

If the Federal Government isn't putting out massive amounts of debt (like it is now) then The Federal Reserve buys bonds from banks & pension funds to lower yields.

This is what happened in QE2 & 3 and why we didn't see inflation then (as measured by CPI).

This time, though, the Federal Reserve is almost literally printing money. The Federal Government's massive debt is mostly because it's giving helicopter money to the bottom 50%. This is only possible because the Federal Reserve is "buying" that debt from the Federal Government. The money is coming from nowhere and being handed directly to people. This IS printing money. But it wasn't the case in the past.

That being said - it's hard to argue this is a massive handout for the .1% at the expense or the bottom 90%. The bottom 50% are getting free money! In percentage terms - they're doing the best.

If we must treat this as a zero sum game and go with the pie analogy - then the people with incomes too high to get free money and no assets to get inflated are the ones who got less pie.

It's not a zero sum game, though! We all MASSIVELY benefited by not going through a 2nd great depression.

It's interesting to me, though, that the vast majority of Americans think the way it's working out is fair - that people with high incomes who could keep their jobs should be the ones footing the bill - not people with massive amounts of wealth (especially massive since it was pumped up by The Federal Reserve).

Re: America's 1% Has Taken $50T From the Bottom 90%

#382

Post by nullcat »

h3rsko wrote: post #2

Inequality seems to be a completely pointless buzzword to me. The only thing that matters is if there are more or less poor people, and how poor are those people compared to similar percentiles in the past. It shouldn't matter how rich the richest people on earth are. I really love seeing people on the Internet try to convince themselves that because Bezos or Musk are worth $100B, they must be stealing it from poor p…

Yeah, I agree. As a billionaire like you, I too wonder why poor people always think I'm stealing money from them. Just because I lowered wages doesn't mean I'm stealing, heck they can go work for someone else if they wanted to... it's not my fault.

Re: America's 1% Has Taken $50T From the Bottom 90%

#383

Post by tylerhou »

anchpop wrote: post #355
InitialLastName wrote: post #336

Earlier quoted context omitted.

> B. A balancing mechanic -- Some more universally-accessable way to inject income at the base of the economy. Something like, for example, giving $1000 to every adult?

This is risky, because if the fed accidentally injects too much money by buying back too many bonds, they can always un-inject it by selling the bonds back (and banks are compelled to buy). This lets the fed be more aggressive because it knows that if it goes too far and starts seeing more inflation than it intended, it can always walk back its decision. But there's no realistic way to do that after having given $100…

Taxes?

Re: America's 1% Has Taken $50T From the Bottom 90%

#384

Post by PragmaticPulp »

hn_asker wrote: post #248
natenthe wrote: post #57

Correction: The Fed's policies have taken $50T of wealth from the Bottom 90%. When you bail out irresponsibly over-leveraged and nearly bankrupted banks and corporations, and pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. Most importantly, when the Fed decides to print money ad nauseam, they create massive asset inflation, which steals from the poor and gives to the rich. T…

So this must be why Bitcoin has no inflation.

Not really. You could invest in real estate or stocks or gold or just about anything other than cash and also dodge the effects of currency inflation. Remember: Inflation is defined as rising price. If you hold cash, that's a problem. If you hold inflating assets, then it's largely neutral. If you have taken out cash-denominated loans to purchase inflating assets (e.g. a mortgage for a house), you actually benefit from inflation as your assets increase in value relative to your loan amount. (Over-simplified version)

Bitcoin is explicitly deflationary by design, which is different than 0% inflation. If you have the same fixed supply and an ever-increasing demand (new population, new Bitcoin owners) then the currency is deflationary. If your economy is deflationary, you will enter a deflationary spiral which discourages anyone from doing anything other than hoarding the currency. It's no coincidence that HODL is the unofficial motto of Bitcoin proponents.

This creates a different set of problems. If you thought wealth inequality is bad now, just imagine how bad wealth inequality would be if everyone had to buy into Bitcoin, making early adopters orders of magnitude richer. The inequality between early and late adopters would be insane. Early adopters love this idea, of course, because they're at the top of the pyramid. Doesn't work out so well for the late arrivals, though.

Re: America's 1% Has Taken $50T From the Bottom 90%

#386

Post by DC1350 »

lcc wrote: post #340
ItsMonkk wrote: post #320

Earlier quoted context omitted.

This is exactly how I take it. We thought it was Capitalism vs Communism, but what we learned is you can have Centralized Communism(Cold War Russia) and Decentralized Capitalism(Cold War USA) but it is just as much possible to have Decentralized Communism(Any examples?) and Centralized Capitalism(Current USA). As it turns out it's the Decentralized that's the important part. You need many people making decisions for…

> Decentralized Communism(Any examples?) Nordic countries? Canada/UK? Though they are socialist, not communist.

Those countries are nothing close to socialist

Re: America's 1% Has Taken $50T From the Bottom 90%

#387

Post by tylerhou »

ItsMonkk wrote: post #369
tylerhou wrote: post #357

Earlier quoted context omitted.

> The rich simply store the money in assets like stocks and houses and it never touches consumption. But these do affect consumption. 1) Stonks going up means that companies have more capital (through stock issuances and equity raises). Companies use this capital to buy things and pay workers, so the dollars end up recirculating through the economy just like if a regular person spent it. 2) Buying houses is consumpti…

1. When the money supply is increasing at a rate faster than stuff, the best use of capital is to hoard it. Can you show me examples of major companies issuing stock right now? Looks to me like they are all buying back their stock, which has the opposite effect. 2. Buying houses is an investment and is specifically carved out in the CPI. Consumption is Owner's Equivalent Rent, buying is not.

https://www.cnbc.com/2020/12/08/tesla-to-raise-up-to-5-billi...

https://www.ft.com/content/a59c2a9d-5e0b-4cbc-b69e-a138de76a...

https://www.bloomberg.com/news/articles/2020-12-21/u-s-stock...

Stock and bond issuances are at all time highs.

Housing is an investment in the CPI because most people don’t buy houses as consumption. The CPI aims to create a basket of consumption for normal people. Rich people do consume houses, and their consumption leads to money circulating.

Should rich people be rich enough to buy houses willy-nilly? That’s a different question. Maybe they shouldn’t, to the current degree.

Re: America's 1% Has Taken $50T From the Bottom 90%

#388

Post by Retric »

tylerhou wrote: post #357
ItsMonkk wrote: post #348

Earlier quoted context omitted.

This is an inaccurate narrative. The more wealth inequality there is in a nation, the less that increases in the money supply effect the economy. This is why we have no inflation with trillions injected. The rich simply store the money in assets like stocks and houses and it never touches consumption. The only thing that needed to happen to keep the economy afloat was the Congress passing their bills.

> The rich simply store the money in assets like stocks and houses and it never touches consumption. But these do affect consumption. 1) Stonks going up means that companies have more capital (through stock issuances and equity raises). Companies use this capital to buy things and pay workers, so the dollars end up recirculating through the economy just like if a regular person spent it. 2) Buying houses is consumpti…

1) No.

Stock prices only directly impact companies when they actually sell stock. So, propping up the market has zero long term impact as the value of future cash flows is unchanged. It’s simple a handoff of money from the government to people selling stocks over a short period.

It’s popular because it keeps highly leveraged investments viable.

Re: America's 1% Has Taken $50T From the Bottom 90%

#389

Post by pmiller2 »

mixmastamyk wrote: post #331
pmiller2 wrote: post #277

Earlier quoted context omitted.

You are arguing a minor, irrelevant, and largely incorrect point of semantics. > Who owns the Federal Reserve? > The Federal Reserve System is not "owned" by anyone. The Federal Reserve was created in 1913 by the Federal Reserve Act to serve as the nation's central bank. The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress. (emph…

You are the only one in the thread who doesn’t appear to understand it.

What is difficult to understand about "the board of governors is directly accountable to Congress?"

Re: America's 1% Has Taken $50T From the Bottom 90%

#390

Post by tastyfreeze »

majormajor wrote: post #218
readams wrote: post #88

Earlier quoted context omitted.

The question is, based on standard of living, would you rather be poor now or some time in the past? I don't think there's anyone who would choose the past.

Poor is a loose word, but there are quite a few people I grew up with who do basically the same job as their parents yet can't afford as much of a house as their parents did at the same age and have less future financial security (retirement savings, pensions, whatever) as their parents did at the same age. Their TV is bigger, but they're also much more stressed about their security...

Say hello to the result of inflation. Where saving is discouraged and what you earn is continually worth less.

The best way to demonstrate inflation is to index historical prices to another asset like gold.

http://pricedingold.com/us-home-prices/

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