America's 1% Has Taken $50T From the Bottom 90% • Hacker News Board

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

#401

Post by natenthe » Thu, Feb 11, 2021, 11:12 PM UTC

tylerhou wrote: post #227

tobmlt wrote: post #150

Earlier quoted context omitted.

Yep. The fed is an engine, whose purpose is to move wealth silently from the masses to the powerful monied few, via time-asymmetric inflation. (Mostly Inflation of assets presently) The resulting data looks like corporations have used their power to directly disenfranchise/disempower workers, and so the mass clamber for protective laws. More laws will be enacted by those in power. The time is certainly right for it.…

The Fed is stabilizing the price of the USD because of the coronavirus pandemic. If it were not printing money, then there would likely be a deflationary spiral that would cause a depression. That's one of the reasons why the Great Depression was so bad: the US was on the gold standard at the beginning. The US can't create gold out of thin air, so the USD started deflating, people stopped spending, and capital stoppe…

This is one of the worst takes I've read in awhile.

First off, there is no general consensus about the exact cause of the Great Depression and the cause of the recovery. If you're going to make an attempt at a history lesson, at least get it right. We know that the stock market crash and banking panics played a large role in the contraction of economic activity, but there is absolutely no general consensus for the exact causes. Your theory, that was portrayed as a fact, is solely an opinion that is disputed by many economists and historians. Academics are split as to the exact cause of the great depression and stopping deflation made possible by the gold standard is not an accepted fact in any economics or history debate. [1]

Secondly, the Fed providing liquidity is not "stabilizing the price of the USD", as you say. Printing money out of thin air at extreme rates (22% of all dollars were printed in 2020) is massively devaluing the USD and is borrowing against the future of the country, thus ultimately destabilizing the USD. Just like how many things that feel good in the short term are unhealthy for us, providing artificial short term liquidity that ends up destabilizing society long-term is not healthy or intelligent. As we add trillions of dollars of debt to the US balance sheet, we will soon get to a point where the vast majority of federal expenditure will be on interest payments (it is currently less than 10% but increasing exponentially). At that point, the US will either be forced to hike taxes to ridiculous levels to pay down the debt, or will essentially be bankrupted, and the country's assets will be taken over and dissolved to pay back its lenders by some supranational organization.

The only thing you said with a hint of truth was that the Fed is like an engine that serves to move a train. However, the train is off the tracks, not moving the economy forward. The fed is actively destroying the economy by devaluing the USD and destroying the future of this country. Look around you - companies have already started hedging against the dollar and moving into anything that won't surely be devalued at dangerous levels like the USD in the next decade (i.e. Bitcoin). The Fed is being disrupted, similarly to how Amazon disrupted Barnes and Noble, Netflix disrupted BlockBuster, Uber disrupted Taxis, AirBnB disrupted hotels, and so on. The Fed is NOT a not a net positive on society and people are waking up to it. Hence crypto (deflationary in nature) being the highest returning asset in the last decade, appreciating at 200% each year against the dollar, which people are flocking to. The economy will surely be destructured, but it will be away from centralization and the Fed, because it only serves to enrich the monied interests, while putting on a facade that it exists to 'lower unemployment' and 'stabilize the USD'.

[1] https://www.britannica.com/story/causes-of-the-great-depress...

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

#402

Post by BirdieNZ » Thu, Feb 11, 2021, 11:13 PM UTC

tobmlt wrote: post #342

learc83 wrote: post #326

Earlier quoted context omitted.

If you're talking Austrian economists, who are the primary proponent of the "fed is the bad buy, bring back the gold standard" argument, they explicitly reject any attempt at modeling or mathematical analysis. They are only interested in arguments based on "self evident" axioms. I've read many of the books you're talking about, and there's a reason they are "unpopular" and “discredited".

There is no need to throw out the baby with the bathwater here. Who cares about gold? Who cares about avoiding math? Not me. I guess I am no Austrian for those reasons. I do care, however, about restraining the inflationary tendencies of governments because I believe they are an engine of wealth redistribution from the poor to the rich and powerful. And sure, I suppose I do care about avoiding mathematical naval gazi…

But where's your evidence? For any economic school of thought to be a good approximation of truth, it needs to be able to make models that both describe what has happened, and predict what will happen. Any economist that can't do that is ultimately a quack.

Where are the Austrian models that describe and predict accurately?

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

#403

Post by letstaxtherich » Thu, Feb 11, 2021, 11:13 PM UTC

raiyu wrote: post #54

ryanmercer wrote: post #32

Around the same time this was shared to HN I Tweeted/FB/LinkedIn variations of the following >If I earned $10,000 a day it would take me 273.97 years to have earned 1 billion dollars. Meanwhile, Elon was worth about 20 billion a year ago, last month he was worth an estimated $185bn. Oof. In reality, I make a little over $17 an hour His net worth increased an estimated 4.66 million times my annual gross income in the…

By the same token, Elon Musk is someone who succeeded, while thousands upon thousands of entrepreneurs fail, end up with debt, and don't have much to show for their work. So using survivorship bias to compare yourself to Elon Musk which is an atypical result when it comes to business formation doesn't make sense. You should probably compare yourself to the average business creator and see how you fare compared to the…

Except Michael Jordan is arguably the best ever at Basketball and Elon fails to delivery consistently.

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

#404

Post by belval » Thu, Feb 11, 2021, 11:13 PM UTC

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…

Much better than that actually, those massive investments of money in the stock market is benefitting people outside the US as well. A lot of foreign interests are heavily invested in the US market because it shows stronger growth than domestic stocks.

I am Canadian with a strong exposure to the US market and all these injection of moneys to keep the market high made for nice returns in 2020.

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

#405

Post by Weebs » Thu, Feb 11, 2021, 11:13 PM UTC

andrewljohnson wrote: post #266

The top 1% changes a lot. Most people don't stay in the top 1% for many years in a row. Many people below the 90th percentile benefit from the growth of the top levels when they have their brief time in the top 1%.

1% is a colloquial way of saying "those who own capital for a living, instead of working for a living". The high income of athletes and highly trained professionals has little to do with our situation. However, most capital and expenditure is controlled by a small group of people that have asymmetric power in employment agreements and political process, and that is concerning

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

#406

Post by fullshark » Thu, Feb 11, 2021, 11:14 PM UTC

AlotOfReading wrote: post #343

salmonellaeater wrote: post #232

The framing in the article is ahistorical. The post-WW2 period was a period of exceptionally _low_ inequality. If you look back to just the 1800s there were swings in inequality comparable to the present day. We're now moving back to the historical baseline. There are some contributing factors to the shift in inequality, a major one being that labor is now oversupplied compared to the post-war period, and the competi…

The concept of a 'historical baseline' is nonsensical. As you extend your timeline, inequality is going to decrease because most human societies have not had the kinds of disparity we measure today. Moreover, we're not beholden to historical norms of any sort. Collective action can change things. It's happened quite a lot historically. If you insist on a specific citation, check out Ten Thousand Years of Inequality .…

I think it's worth considering the post WW2 period as possibly exceptional in the planet's history, and understanding why that may have been, and what can be done policy wise to extend the best parts of it.

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

#407

Post by ummonk » Thu, Feb 11, 2021, 11:14 PM UTC

salmonellaeater wrote: post #232

The framing in the article is ahistorical. The post-WW2 period was a period of exceptionally _low_ inequality. If you look back to just the 1800s there were swings in inequality comparable to the present day. We're now moving back to the historical baseline. There are some contributing factors to the shift in inequality, a major one being that labor is now oversupplied compared to the post-war period, and the competi…

If we're comparing to the Gilded Age, can we at least start calling today's ultrawealthy robber barons?

I'm not sure what you mean that "the framing in the article is ahistorical". Such framings were common throughout history.

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

#408

Post by ClumsyPilot » Thu, Feb 11, 2021, 11:15 PM UTC

hedora wrote: post #260

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…

There's a hole in your argument: It takes $500 to build a well-diversified portfolio with a roboadvisor, and that portfolio will behave comparably to a larger one (it'll be a bit worse, but also taxed at a lower rate). So, if everyone invested their savings rationally, then when the Fed propped up stock prices, it wouldn't change the distribution of savings across the population. The real issue is that a larger perce…

This entire narrative falls apart when you consider credit and why rents exist.

There are people living in London that have been paying rent on the dot for 20 years and still can't get a mortgage because they are not deemed credit worthy. Each month they pay £1,500, they landlord pockets £200 and uses the rest to pay the bank. 30 years later, landlords owns a home worth £300,000 + £72,000 of recurring income, and the family owns nothing. Being self employed or on zero hour contract can do that to you.

But even if you are an upper-middle class homeowner, you still loose against someone who own real assets. They can borrow ridiculous sums against existing assets at near-zero interest rates and invest with leverage, making millions of capital gains while you squirrel away whatever pennies you can spare into your pension and mortgage.

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

#409

Post by Aunche » Thu, Feb 11, 2021, 11:15 PM UTC

paulpan wrote: post #319

throw0101a wrote: post #202

Earlier quoted context omitted.

> 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. Or, you know, the Fed is not authorized to deal directly with individuals via the Federal Reserve Act. The Fed's job is monetary and financial stability through credit markets. That's the tools that it has, and it uses them when n…

> Or, you know, the Fed is not authorized to deal directly with individuals via the Federal Reserve Act. The Fed's job is monetary and financial stability through credit markets. That's the tools that it has, and it uses them when needed. Is this really true anymore? At least the past year, the Fed has taken an unprecedented powers to counter the effects of the pandemic. We've all heard of quantitative easing but the…

> We've all heard of quantitative easing but there's a handful of programs such as SMCCF that allows the Fed to buy debt directly from large corporations.

I agree that this was questionable. The problem is that elected politicians are becoming increasingly dependent on the Fed to solve mistakes that they caused themselves. It's like a morbidly obese patient giving a surgeon to permission to do more and more invasive surgery. The surgery itself will only ensure that their body will stabilize, but it's up to the patient to actually get healthier.

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

#410

Post by NortySpock » Thu, Feb 11, 2021, 11:16 PM UTC

jaycroft wrote: post #352

NortySpock wrote: post #327

Earlier quoted context omitted.

So, we need to see loan-forgiveness for businesses then? Trying to figure out how you unwind it slowly when apparently "slowing raising rates" still destroys many businesses with a lot of debt...

I'm starting to think that it's time to let the unproductive businesses that have blossomed over the last 12 years go bankrupt and be removed from the system. Unfortunately a lot of productive businesses that are temporarily unproductive had been using their cash for stock buybacks and using easy corp debt to run operations, and so with the pandemic, those wold get washed out too. Maybe the laws banning stock buyback…

Save the people (using unemployment) and ditch the hollow husks of marginal companies that have rotted from within?

Dumb idea: maybe if you had a published interest rate schedule that planned out 10 years, 15 years, whatever. So everyone knew what the bond/loan base interest rates would look like for the next 15 years.

years 0 - 7: base interest rate ramps up from 3% now to 10%

years 8 - 15: base interest rate ramps down from 10% to 3%

years 16-21: repeat

years 22-28: repeat

Downside I'm sure is that people who come of age during high-interest-rate periods can't get car loans or education loans that don't eat them alive...