If some of the top 1% can't retire comfortably, then who IS retiring these days?
Who Rules America: An Investment Manager's View on the Top 1%
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Re: Who Rules America: An Investment Manager's View on the Top 1%
#92Regarding those who will only bring home 15k per month post retirement: "And, for those folks who made enough to accumulate this much wealth during their working years, the reduction in income and lifestyle during retirement can be stressful." This is where I started laughing out loud! What a profound lack of perspective.
The point of the article isn't that we should pity those folks making "only" $300k/year. They have nice houses and nice cars and eat at nice restaurants. However, they still need to worry about money. If your $300k/year is coming from your labor as a lawyer, and you go blind, your financial situation does a 180. If your $300k/year is coming from dividends on the huge pile of stock you own, that's a totally different ballgame.
Re: Who Rules America: An Investment Manager's View on the Top 1%
#93Earlier quoted context omitted.
As much as I favor low taxation and hate class warfare attacks on the wealthy, I think we ought to tax "freshly printed money" at a much higher rate, or figure out a more equitable way to create money... if we have to create money . Our financial system (the one created and regulated by the U.S. Federal Government) is so corrupt, as evident by TARP and the lack of lending and recovery. The only way its gonna change i…
There's no reason to create new money[1]. As I argued in my post, all inflation can do is change the distribution of the purchasing power of the money... not create new wealth. But the market already handles the distribution or purchasing power just fine through normal market forces. Good businesses get more purchasing power and grow. Bad businesses lose purchasing power until they collapse. The only reason to inflat…
Right, new dollars have to enter the economy somewhere, and the purchasing power is increased at those points of entry, decreased everywhere else by an proportional amount.
I'm all for bitcoin but the powers at be will find a way to stop it if it catches on. But the cat is out of the bag. I just can't see the dollar standing up to all the benefits a technology like bitcoin affords.
Re: Who Rules America: An Investment Manager's View on the Top 1%
#94Earlier quoted context omitted.
Here's how banks counterfeit money. You deposit $100. The bank loans out $80 of your money to someone else. They put that money back in the bank. The bank now has $100 - all your money. But your checking account says $100, and the loanee's checking account says $80, for a total of $180. The bank has now effectively created--that is, counterfeited--$80 in new money. They gave this new money to themselves, and then loa…
Ok...so I am going to bite. Fractional reserve banking is the process you described. Give the bank $100, it is then legally obliged to only keep X%, let's say 10%. Hence, why most - if not all - banks today are vulnerable to a 'run on the bank', because banks never have 100% of outstanding liabilities immediately liquid. However, that being said, you make it sound as if those banks are lending/giving that money to ri…
I am SICK and TIRED of people bashing the current fiat system when there is no other viable alternative in sight
Bashing something when you don't have a better option is timeless. People do it all the time. I don't blame you for getting a little warm under the collar over it. Heck, I'm currently irked by the same thing with power. Alternative power never gets to move forward because nuclear is scary, windmills kill birds, etc. Coal is the worst by far, but we're sticking with it because we haven't found the perfect free energy source.
Re: Who Rules America: An Investment Manager's View on the Top 1%
#95Possible self-rectification Elite keeps serfs ignorant by providing no economics education. Voters fail to grasp debt situation. US soft defaults, inflation etc. Dollar loses preeminence, 50% of value, the unwarranted part. Massive inflation affecting all imports, which is most of what people buy, since America makes very little. Inflation acts as wealth tax, and transfers value from old to young. Many factories move…
So in a modern economy, accumulated wealth as an "earmark" on current and future productivity. People don't buy food and store it for retirement. They buy shares in Intel and get dividends from the labor of future workers to pay for their retirement. The current state of affairs seems to be one where too much has gotten earmarked. Those booming corporate profits that come from layoffs rather than above-the-line growth are going partly to CEOs, sure, but they're going mostly to retirement, pension, etc, funds. Retirees/near-retirees earmarking future productivity.
I think inflation is inevitable as the younger generation decides to reallocate this distribution of the fruits of its own labor.
Re: Who Rules America: An Investment Manager's View on the Top 1%
#96Coming from HN, this just caught my eye on the NYT: "Even Marked Up, Luxury Goods Fly Off Shelves" (http://www.nytimes.com/2011/08/04/business/sales-of-luxury-g...) while the country struggles to pay its debts and is losing its future. Just goes to show how separated the top .5% of American society has become from the rest... What I as a an "Asian-European" will never get is the unmitigated adoration of material wealth in American society/mass culture. Can't help but feel that is also a part of the problem. I mean, you don't have to be all ethical and bright to realize that Einstein, for instance, was not particularly wealthy and yet deserved (and commanded) orders of magnitude more respect than your typical billionaire. What's with the obsession about bling?
Re: Who Rules America: An Investment Manager's View on the Top 1%
#97Earlier quoted context omitted.
Here's how banks counterfeit money. You deposit $100. The bank loans out $80 of your money to someone else. They put that money back in the bank. The bank now has $100 - all your money. But your checking account says $100, and the loanee's checking account says $80, for a total of $180. The bank has now effectively created--that is, counterfeited--$80 in new money. They gave this new money to themselves, and then loa…
Ok...so I am going to bite. Fractional reserve banking is the process you described. Give the bank $100, it is then legally obliged to only keep X%, let's say 10%. Hence, why most - if not all - banks today are vulnerable to a 'run on the bank', because banks never have 100% of outstanding liabilities immediately liquid. However, that being said, you make it sound as if those banks are lending/giving that money to ri…
I have been wondering about this and you may be the person to answer it. My thought is that inflation only occurs when the increase in money supply is greater than the increase in wealth generated in the economy. So if an economies' wealth increases at 5% a year and so does the money supply then there's no inflation.
Have I got this right or even close to the mark?
Re: Who Rules America: An Investment Manager's View on the Top 1%
#98Earlier quoted context omitted.
Here's how banks counterfeit money. You deposit $100. The bank loans out $80 of your money to someone else. They put that money back in the bank. The bank now has $100 - all your money. But your checking account says $100, and the loanee's checking account says $80, for a total of $180. The bank has now effectively created--that is, counterfeited--$80 in new money. They gave this new money to themselves, and then loa…
Ok...so I am going to bite. Fractional reserve banking is the process you described. Give the bank $100, it is then legally obliged to only keep X%, let's say 10%. Hence, why most - if not all - banks today are vulnerable to a 'run on the bank', because banks never have 100% of outstanding liabilities immediately liquid. However, that being said, you make it sound as if those banks are lending/giving that money to ri…
> However, that being said, you make it sound as if those banks are lending/giving that money to rich Saudi princes who squander it. They are not. They are lending it to entrepreneurs that have built a business to X point that want to expand.
Banks create 80% of the money and declare themselves owner of it, which they then loan out. There is nothing wrong with loaning money. But there is something very wrong with creating new money and then loaning it out, which is what banks do. They are money trolls... hijacking 80% of the money and charging a toll for using it.
> I apologize if this reply comes across as very terse and perhaps facetious, but I am SICK and TIRED of people bashing the current fiat system when there is no other viable alternative in sight.
Bitcoin is a viable alternative. (I'm aware of all the limitations of bitcoin, like the maximum rate of transactions. But the fundamentals are sound. The problems that exist can and will be fixed in time. Bitcoin will scale to be a global currency.)
> The fiat system is one where the global economic systems evolved into it - not because bankers wanted to get rich, but because policymakers realized that by being able to print more currency on-demand, it would soften economic pullbacks.
Nope. It very much is because bankers wanted to get rich. The Federal Reserve was designed by bankers. Other central banks are designed by bankers. Governments go along with it because they get to benefit from the inflation just like the bankers.
> At the end of the Fiscal year, if the Fed has profited from it's monetary activities during the year, it writes a fat ass check to Uncle Sam. Sometimes in the $50B range.
The Fed does not produce wealth. Any profits they give to the government, thus saving taxpayers a little money, are more than offset by the loss in purchasing power the taxpayers suffer through inflation.
Re: Who Rules America: An Investment Manager's View on the Top 1%
#99If there is a reluctance among the very wealthy to pay taxes, I'd guess that they don't trust a government that they believe to be inefficient, and that they see no benefit in paying taxes for themselves or their businesses.
It seems like in order to get into that top .5 percent, you'd usually have to have a certain kind of perspective about reality, and to change the mindset of someone who takes every possible action in terms what's best for the growth of their wealth or their business might not be easy, sometimes close to impossible. Regulation is important here to keep these folks from getting carried away.
You'd have to get them to see the value in growing the economy as a whole and how that serves their interest. And hey, they may already know that and just not think the government is any good at growing the economy.
I guess it's about finding common ground and moving in a way that the very wealthy and everyone else thinks is beneficial and responsible.
Re: Who Rules America: An Investment Manager's View on the Top 1%
#100Why the fuck does he consider CEOs and others who sell their companies to be "directly connected to the finance industry?" To that extent, a cashier at wal-mart is directly connected to the finance industry because she helps a traded corporation make revenue.
As far as I can tell he equates making money from the sale of stock rather than from salary with being part of the finance industry. I stopped reading when I realized that.
Yeah, craziness. If he'd be open about his agenda but consistent with the terms reality uses, I'd be fine with it.
I actually think carry should be taxed as regular income (except that the people who get carry are the kind of people who could structure to get around this).
I'd also be ok with capital gains and regular income being taxed at the same rate IFF that top rate were low (say, 25%) without deductions/credits, AMT, etc. A flat ~25-30% tax for everyone, plus a decent personal exemption (possibly even refundable, so if it's "$20-30k in free money from the government per person per year, paid in cash or paid as a credit against taxes owed", some people can live 100% on the credit and not work.
Allowing capital gains to offset capital losses, with carryover, probably is enough privilege to capital gains vs. regular income. It may create some disinvestment at the margin, but there's plenty of capital out there. For a startup founder making $100mm at exit, there isn't really an argument that he'd take the $200k/yr job instead of the $100k/yr job with the shot at the big exit due to being taxed 25% vs. 15% at exit; the uncertainty remains in the "will my company sell (and will it be for big money)", not the tax rate at that time.
That said, I'm totally happy taking every capital gain benefit available to me; waiting 5 years for a $10mm tax-free capital gain (Small Business Jobs Act of 2010, good for investments including founder shares purchased until 12-31-2011) is pretty damn nice.