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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%

#691

Post by swixi »

pembrook wrote: post #556
natenthe wrote: post #502

Earlier quoted context omitted.

The article that this thread is based off of is literally the opposite take from my original post. The article claims that America's 1% is responsible for the wealth inequality. That is why I posted my comment. My opinion, and the "majority" opinion according to you, is that wealth inequality is because of Fed policies, not the 1% boogey-man. The people protesting are not protesting the Fed. No institution (i.e. medi…

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 how do you explain everything that happened on the wealth inequality front from the 1970s up to the financial crisis of 2009?

Of course there's never a single thing that explains a complex issue, but the root of the current Fed's monetary policy goes back to Greenspan, so the poster's argument could easily be extended to that iteration of the Fed.

Also, the 1980s is when (modern) wealth inequality really started to take off. And it's much worse today.

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

#692

Post by natenthe »

pembrook wrote: post #549
asdffdsa wrote: post #518

Earlier quoted context omitted.

Please read the article. It clearly mentions income as a reason for income inequality and not asset value inflation which is due to the fed policy.

I was replying to OP's claims that the Federal Reserve is the "evil puppet master" behind wealth inequality. This is patently false. Inequality has been expanding since the 1970s, long before the "evil bank bailouts" and accommodative monetary policy of the 2010s Federal Reserve.

Fed went on the gold standard in 1970.

I never characterized the Fed as an "evil puppet master" - that is an exaggeration. However, the Fed is certainly responsible for wealth inequality. It's a simple concept that is 100% backed by the financial and socioeconomic data:

- Rich people (small percent of population, i.e. "the 1%") own the vast majority of assets

- Fed is pumping massive amount of money into financial markets, which pumps up asset prices artificially

- Cost of living sky-rockets since the rich use their increased net worth to buy more assets, causing housing prices and other assets to skyrocket

- Purchasing power of the dollar to buy assets is severely decreased. Wages are stagnant but assets have skyrocketed. This causes feedback loops where the poor / middle-class don't have money to buy assets and the rich keep getting more money to buy more assets, hence runaway wealth inequality and social unrest.

No reason to have so much contempt against this argument. It's based on the evidence.

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

#693

Post by RayVR »

The Federal Reserve has a mission which can be very simply understood [1]

The reasons for specific actions can be read and understood by the majority of people on HN, assuming they are willing to devote the time required to read through the research which guides the Fed's actions.

Stating that it is the Fed's policies which have taken $50T of wealth from the bottom 90% is, in my not so humble opinion, an extremely naive and shallow assessment of the situation.

There is very little debate that the Quantitative Easing and ZIRP of the Fed and other central banks generally hurt savers, it also likely prevented significant harm to any equity holdings they had, which would account for the vast majority of the volatility in their portfolios.

To place the blame at the feet of an institution which is controlled by congress is silly. The tax policies of the last fifty years get a pass? The protectionism that helped usher in the demise of the american steel industry? The excessive power of unions to push wages well above the global market, without the support of politicians to penalize offshoring of jobs? The general trends of automation of repetitive, moderately skilled work? The explosion in software which has a marginal cost of production approaching zero? The willingness of the populace to ignore where and who made their trinkets, so long as they can buy a dozen for the cost of one locally made? The willingness of state and local politicians to hand out tax incentives to mega-corps at the expense of small businesses? The shift toward knowledge work, which study after study has shown has significant network effects, pushing people into more densely populated cities, harming small towns and the tax bases of rural communities? I could go on. None of these things matter? It's all the Federal Reserve?

[1] https://www.federalreserve.gov/faqs/what-economic-goals-does....

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

#694

Post by throwaway9870 »

cromwellian wrote: post #652
throwaway9870 wrote: post #507

Earlier quoted context omitted.

As opposed to having the government do what? Have a great COVID response? Have a coherent industrial policy? Have great fiscal management? Have financial integrity? Grant monopolies to service provides (ahem Comcast) instead of building proper infrastructure? Not building sufficient electrical infrastructure? Enticing poor young people to make terrible money decisions relative to school and then saddling them with no…

> Moderna created a vaccine in less than a day. Moderna benefited immensely from decades of publicly funded research as does most of Pharma, as well as direct aid from Emory University, NIAID, etc Look, if you believe the market works as the best mechanism for allocating goods and services, then you've also got to believe it won't work properly if prices are distorted, otherwise Garbage In, Garbage Out. If a firm is…

I love good government and am not afraid of big government one bit. However, I HATE incompetent government that coasts on the work of others and whenever a problem comes up points fingers at everyone but themselves.

Add to my list above supplying safe drinking water and having an effective hurricane evacuation plan (I am looking at you New Orleans).

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

#695

Post by notacoward »

pessimizer wrote: post #258
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…

A lot of magic is happening in your second paragraph. Inflation reduces debt and wealth at the same time. Wages at the low end rise with the cost of living. Debt and wealth are denominated nominally. The cost of a new car may go up, but the cost of the car you're currently driving (and haven't paid off) is going down. Printing money doesn't steal from the poor. Printing money and giving it to the rich steals from the…

> Printing money and giving it to the rich steals from the poor.

Exactly. The participants in our tumor-like financial sector collect a risk premium, without actual risk. They have responded accordingly. It's Moral Hazard 101.

> consistently stepping in as the silent guarantor of last resort

Right again. GP's claims about buying are nonsense, and they're clearly projecting about lack of education. Not counting the exceptional last year, the big issue has not been buying but paying off loans (either their own or bailout beneficiaries') with made-up money. Giving made-up money to regular people is comparatively a lot better, either in itself or as a way to avoid worse kinds of collapses, but still not something to make a habit of.

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

#696

Post by swixi »

BenoitEssiambre wrote: post #520
pembrook wrote: post #480

> It amazes me why most people do not grasp this. I think it is lack of education. Huh? Literally everybody grasps this. This is the most widely parroted mainstream narrative about the economy right now on the internet. Hell, you can't throw a rock at the Wall Street Journal (conservative) or the New York Times (liberal) without hitting a sentence that mentions wealth inequality brought on by fed policy. For further…

Exactly. Mainstream actually educated economists are right, not people hyperventilating about money printing. On top of what you said about the effect of printing making valuations high, only temporarily and only on paper, the opposite lack of printing, is actual redistribution towards the rich in a much more real and persistent way. Insufficiently inflationary money can be used as a way for the rich to withdraw from…

> Mainstream actually educated economists are right, not people hyperventilating about money printing.

This statement is so vague, I don't know what it means. Are you implying that all "mainstream actually educated economists" (whatever those are) are all in agreement about something? What exactly are they "right" about here?

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

#697

Post by parasubvert »

jokethrowaway wrote: post #682
BenoitEssiambre wrote: post #520

Earlier quoted context omitted.

Exactly. Mainstream actually educated economists are right, not people hyperventilating about money printing. On top of what you said about the effect of printing making valuations high, only temporarily and only on paper, the opposite lack of printing, is actual redistribution towards the rich in a much more real and persistent way. Insufficiently inflationary money can be used as a way for the rich to withdraw from…

While I agree with you on inflation, I disagree that mainstream (Keynesian) economists are in the right. I'm with Peter Schiff on this one. The crises we're getting are the price to pay for government interference in a self regulating market.

Peter Schiff has been wrong consistently for 15+ years. Why do you think his theory explains anything?

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

#698

Post by buzzert »

kaishiro wrote: post #655
buzzert wrote: post #651

Earlier quoted context omitted.

Presumably the "other nations" are the tiny island nations (New Zealand, Singapore) who implemented extremely strict measures to re-open sooner. An extremely unfair comparison, in my opinion, considering the population difference, physical location, and trade obligations of the US and other countries in the EU.

Is Australia a "tiny island nation"?

Yes. The population of Australia is about the same as the greater Los Angeles metro area (25.36 million vs. 23.86 million)

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

#699

Post by Andaith »

bvanderveen wrote: post #644

One of the things that ruffles my feathers about this genre of made-for-mass-consumption clap-trap is this sort of proclamation: > Other nations are suffering less from COVID-19 because they made better choices Which other nations? As someone who regularly reads francophone european news, I can assure you it isn't any nation in Europe. OP goes on to cite minimum wage, overtime pay, state-funded healthcare/childcare/e…

> Which other nations?

The ones doing really well are: China, Vietnam, Taiwan, New Zealand, Australia, South Korea, Singapore, Iceland, Ireland, Thailand.

For some pure numbers comparison: https://www.worldometers.info/coronavirus/

Sort by "Total Cases/1M Pop, ascending". USA is 215 out of 221.

Sort by "Total Deaths/1M Pop, ascending". USA is 213 out of 221.

Sort by "Active Cases, ascending". USA is 221 out of 221.

Sort by "Total Deaths, ascending". USA is 221 out of 221.

So, uhm, most other nations? Every time this gets discussed we hear how the USA couldn't do what other countries did because the USA is: Bigger/Smaller/Not an island/Testing too much/Not testing enough, etc etc.

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

#700

Post by kaishiro »

buzzert wrote: post #698
kaishiro wrote: post #655

Earlier quoted context omitted.

Is Australia a "tiny island nation"?

Yes. The population of Australia is about the same as the greater Los Angeles metro area (25.36 million vs. 23.86 million)

I'm still unclear as to what you're asserting. Is it that the US was destined to fair this abysmally due to their special mix of circumstances?
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