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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%

#621

Post by dragonwriter »

f38zf5vdt wrote: post #566
pembrook wrote: post #556

Earlier quoted context omitted.

I have nothing against you personally. I'm just refuting your idea that Fed actions from the 2010s are responsible for wealth inequality that has been rising since the 1970s. So how do you explain everything that happened on the wealth inequality front from the 1970s up to the financial crisis of 2009? I don't agree with everything in the original article either, but many of the points it made are correct.

So this all started when the US went off the gold standard then?

No, the oil shocks of the 1970s were short term disruptions which unsettled things, but the big durable change was the major tax burden shift under Reagan.

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

#622

Post by willis936 »

fat_pikachu wrote: post #328
NittLion78 wrote: post #243

Earlier quoted context omitted.

I always found this graph enlightening, but strictly on its face: https://fee.org/media/17509/prices2-1.png?width=645&height=6... I don't agree with the argument FEE is trying to make: "Consider each product or service shown. College is heavily subsidized, regulated, and exclusionary, and the costs are soaring. The textbook industry is hobbled by extreme copyright regulation, and can depend on captive buyers. Childca…

The things that have seen large price increases are things that aren't scalable i.e. they still require the same amount of human input labor to produce Childcare is constrained by the fact that each childcare worker by law (for better or worse) can only look after so many children at once. This ratio varies by state but it's usually around 4 children per childcare worker. The result is that it has to be expensive bec…

If this was remotely true then service and transportation costs would be astronomical. They are not.

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

#623

Post by dane-pgp »

WalterBright wrote: post #586
pembrook wrote: post #556

Earlier quoted context omitted.

I have nothing against you personally. I'm just refuting your idea that Fed actions from the 2010s are responsible for wealth inequality that has been rising since the 1970s. So how do you explain everything that happened on the wealth inequality front from the 1970s up to the financial crisis of 2009? I don't agree with everything in the original article either, but many of the points it made are correct.

> how do you explain everything that happened on the wealth inequality front from the 1970s up to the financial crisis of 2009? In one word: computers. In tsunami after tsunami from 1975 to the present, computers have revolutionized everything we do. I remember one tsunami in 1975, when slide rules in September were $125 and by December they were $5 and in January they disappeared. The calculator had arrived. In 1980…

> The top 1 percent of taxpayers paid roughly $616 billion, or 38.5 percent of all income taxes

What's that as a percentage of their annual increase in wealth? By my calculation, with a wealth increase of "$2.5 trillion a year" (from the article), that income tax amount works out as a flat 25% rate.

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

#624

Post by biztos »

BenoitEssiambre wrote: post #588
jkhdigital wrote: post #553

Earlier quoted context omitted.

Not sure if you intended to, but despite the hand-waviness this sounds like you’re making an argument for a return to hard currency...

Because I am fairly pro market but read enough mainstream economics to know that government paper retaining value more than private assets is much more of a distortion than said paper gradually losing value towards its intrinsic value of nothing. The thing is, stable money that predictably loses value is a great thing to have for the economy as it allows people to negotiate contracts and conduct business in a predict…

I think I follow this, but isn’t owning say an index fund just another IOU, itself made up of smaller IOU’s?

And isn’t that the main way normal people’s savings can be tied to “real stuff?”

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

#625

Post by chii »

willcipriano wrote: post #420
ItsMonkk wrote: post #414

Earlier quoted context omitted.

> highest-profile recent example of borrowing for buybacks: > Apple (ticker: AAPL). The tech giant sold $14 billion in bonds this month, and said it would use at least part of the proceeds on buybacks and dividends.[0] Kinda problematic when one large company doing buybacks dominates over thousands doing issuing reversing your entire narrative. Taking out bonds to give to shareholders is not something that helps main…

I post this here for posterity: Within ten years a film will come out about the next economic disaster and everyone will be saying "how could we be so stupid to allow firms to buy their own stock with debt?" much like the housing crisis.

> buy their own stock with debt?

why not? What's wrong with altering a company's capital structure to be more efficient?

Stocks have a cost (aka, cost of equity), just like debt. Sometimes, cost of equity is higher than cost of debt (aka, the interest rate). Sometimes, the cost of debt is higher than cost of equity. This is determined by the general market conditions and economic environment.

A company may find itself in a situation where the cost of equity is very high, and cost of debt is very low. In this case, it makes a lot of sense for the company to borrow to reduce the amount of outstanding equity on the market. There is an equalizing point, where the total cost of capital is lowest, and that is where the company's money source is most efficient.

There is absolutely nothing wrong with company buying back stocks, if this is the case. The only problem, really, is that buybacks gives capital gains for stockholders, and this is taxed lower than normal income. This is a question of taxation policy, not stock buybacks. Is it fair that capital gains are taxed less than earned income?

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

#626

Post by Geee »

PragmaticPulp wrote: post #589
Geee wrote: post #557

Earlier quoted context omitted.

Deflation doesn't lead to hoarding. It leads to using your money wisely. You only buy what you need, and you buy things that last a long time.

> You only buy what you need If you only spend when it's absolutely necessary because you want to keep as much currency as possible, that's the definition of hoarding. What would you define as hoarding? Spending so little that you starve to death? Keep in mind that spending includes things like investing in businesses. If currency itself provides the highest return because it's a race to hoard more than anyone else,…

It's somewhat subjective of course. I think there's a healthy balance where you buy things that provide value to you at the moment. I think hoarding means something unhealthy, when you suffer just to keep the money. The money wouldn't provide the highest return - it would grow with the economy, i.e. provide average return.

People don't hoard stocks, index funds or gold. They spend the profits when they want something for themselves. Why not have money that works like that.

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

#627

Post by ceejayoz »

tick_tock_tick wrote: post #365
ceejayoz wrote: post #178

Earlier quoted context omitted.

I think the argument is less "we don't spend enough" and more "we spend a lot on the wrong sort of education".

Most of the time the argument is "if we spend less on military and more on education it would solve X". So I disagree. The people I get into a discussion with on education funding always seems to think the USA spends less than other first world countries.

In general, yes, but the parent poster makes a different claim than usual.

> America's education system emphasizes nationalism and obedience. It doesn't encourage critical thinking or alternative worldviews.

They're not complaining that we're not teaching enough, they're complaining that we're teaching the wrong things; that the same resources could be used for better teaching.

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

#628

Post by willcipriano »

chii wrote: post #625
willcipriano wrote: post #420

Earlier quoted context omitted.

I post this here for posterity: Within ten years a film will come out about the next economic disaster and everyone will be saying "how could we be so stupid to allow firms to buy their own stock with debt?" much like the housing crisis.

> buy their own stock with debt? why not? What's wrong with altering a company's capital structure to be more efficient? Stocks have a cost (aka, cost of equity), just like debt. Sometimes, cost of equity is higher than cost of debt (aka, the interest rate). Sometimes, the cost of debt is higher than cost of equity. This is determined by the general market conditions and economic environment. A company may find itsel…

If the firm instead took out loans to pay out dividends would you feel differently? Now what if they did it every year at a increasing pace to the point where it's expected that firms take on debt to support ever larger dividends? That bubble pops eventually and is what I see happening with buybacks.

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

#629

Post by [deleted] »

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…

[deleted]

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

#630

Post by cameldrv »

23iofj wrote: post #551
rbultje wrote: post #523

Earlier quoted context omitted.

The official inflation numbers do not appear to reflect people's significant worries that rent prices or health care cost (etc.) keep going up.

In particular: education, insurance, and housing really is accurately reflected in the CPI, but the true price of non-shit consumer goods are consistently under-estimated in the CPI.

Yes. When Apple comes out with a new iPhone, and last year's model is discounted by $100, that is counted as deflation in the CPI. When an appliance costs the same as it did 20 years ago, but lasts 5 years instead of 20 because it's made more cheaply, that's generally not factored in.
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