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> In a sense basic income would be an improvement over this in that the money would be going to everyone instead of primarily to the rich. Quite the opposite.

> In a sense basic income would be an improvement over this in that the money would be going to everyone instead of primarily to the rich. Quite the opposite. The people who benefit the most from quantitative easing and inflation are people who are in debt. The rich tend to be net debtholders, not net debtors, so they're the ones primarily harmed by quantitative easing and an increase in the money supply. EDIT: Fixed typo

sdljfslkjfdsj 9y ago
It's stunning that anyone who has witnessed per asset class appreciation (consider wages an asset class as well) since the GFC could believe what you said. Inflation obviously helps those in debt but QE didn't inflate anything except risky asset classes objectively held by the wealthy. Even by the feds own studies & public communications by the chair woman inflation continues to remain "subdued" almost 10 years after. Wages have stagnated & only recently picked up, GDP has been the lowest post-recovery ever, net household debt is again at new highs, interest rates at forever in the history of human civilization lows. Meanwhile every single risk seeking asset class primarily owned by the wealthy has appreciated to levels last seen at prior bubble peaks. QE helps the rich & if it helps anybody else it's an accident. Sadly by the time non-rich households are able to participate in risk seeking asset classes they are so expensive that when objectively measured against historical readings future returns are flat to negative. Uncle Warren said "the fool does in the end what the wise man did in the beginning" & QE will guarantee the non-rich fall into the same foolish traps.
- chimeracoder 9y ago
  > It's stunning that anyone who has witnessed per asset class appreciation (consider wages an asset class as well) since the GFC could believe what you said. Between the two of us, one has a degree in economics from one of the top universities in the US and is posting under an established, identifiable handle. The other is posting from a brand-new throwaway account. I'm willing to accept that I might be wrong about things sometimes, but when a random, anonymous person on the Internet says they're "stunned" by me paraphrasing an established economic principle, I'm going to be pretty unconvinced unless they present some compelling evidence and solid analysis. As for the rest of your comment, even if one takes your statements about the current state of the world at face value, it doesn't leave you anywhere. You can't generalize entire economy of the last ten years and assume that it reflects the effects of quantitative easing (and no other confounding factors). I don't really want to litigate the post-2008 economy here, because that's pretty off-topic. In the context of the orginal statement - the claim that "basic income would be better than EQ because QE primarily benefits the rich" - yes, it's pretty clear that that goes against a rather straightforward and established body of both economic theory and empirical research.
  - sdljfslkjfdsj 9y ago
    More than $4.5T in bonds bought in multiple policy regimes over years and have been halted for sometime but we can't use that as a benchmark? I suspect it has something to do with not aligning with your narrative. How about Japan pre GFC since they started QE in March 2001[1] meanwhile CPI in japan since 2001 has remained near 0[2]. Is 17 years enough data points? Which QE regime that resulted in any meaningful inflation or wage growth would you like to discuss? I'm afraid any I'd bring up from G7 sovereigns would be marginalized due to your credentials. Buying bonds does not help out anyone other than the rich. Artificially reducing interest rates makes borrowing easier which companies take advantage of[3] to buy back stock[4] which adds buying pressure to risk assets. Fewer shares to buy[5] helps the "E" in the P/E through financial engineering. Who buys those corporate bonds for the juicy yield (besides the ECB & BOE)? Hedge funds & those who have disposable income that can be allocated to risky assets via pensions & mutual funds. Not part-time workers or FTE's that live pay check to paycheck which most do[6]. QE doesn't primarily benefit the rich, it ONLY benefits the rich. [1] https://en.wikipedia.org/wiki/Quantitative_easing#Japan_before_2007 https://en.wikipedia.org/wiki/Quantitative_easing#Japan_befo... (see its citations) [2] http://www.inflation.eu/inflation-rates/japan/historic-inflation/cpi-inflation-japan.aspx http://www.inflation.eu/inflation-rates/japan/historic-infla... [3] https://fred.stlouisfed.org/series/TDSAMRIAONCUS https://fred.stlouisfed.org/series/TDSAMRIAONCUS [4] https://www.yardeni.com/pub/buybackdiv.pdf https://www.yardeni.com/pub/buybackdiv.pdf [5] https://www.yardeni.com/pub/sharesos.pdf https://www.yardeni.com/pub/sharesos.pdf [6] https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html https://www.cnbc.com/2017/08/24/most-americans-live-paycheck...
  - sdljfslkjfdsj 9y ago
    Forgot to cite my earlier comments. > Wages have stagnated & only recently picked up[1] > GDP has been the lowest post-recovery ever[2][6] > Net household debt is again at new highs[3] > Interest rates at forever in the history of human civilization lows.[4] > Meanwhile every single risk seeking asset class primarily owned by the wealthy has appreciated to levels last seen at prior bubble peaks.[5] [1] https://tradingeconomics.com/united-states/wage-growth https://tradingeconomics.com/united-states/wage-growth (can you even spot QE?) [2] http://fortune.com/2015/07/30/us-gdp-economy/ http://fortune.com/2015/07/30/us-gdp-economy/ [3] https://www.reuters.com/article/us-usa-fed-debt/americans-debt-level-notches-a-new-record-high-idUSKCN1AV1PY https://www.reuters.com/article/us-usa-fed-debt/americans-de... [4] https://www.cnbc.com/2016/11/17/200-years-of-us-interest-rates-on-one-chart.html https://www.cnbc.com/2016/11/17/200-years-of-us-interest-rat... [5] https://stansberrystreaming.com/presentations/grant-williams.html https://stansberrystreaming.com/presentations/grant-williams... (this years stansberry vegas conference) [6] https://www.economist.com/blogs/dailychart/2011/07/american-recessions-and-recoveries https://www.economist.com/blogs/dailychart/2011/07/american-...
LyndsySimon 9y ago
> The right tend to be net debtholders, not net debtors Do you have a source for this?
jm__87 9y ago
So net debtors benefit if there is inflation before they have to make payments. The more inflation there is before you make payments, the greater the benefit to the debtor. As inflation naturally occurs over time, this benefit is less pronounced for debt where the principal repayments are amortized - the most common type of debt regular Americans have (e.g. car loans and mortgages). The US has averaged about 2% inflation over the past 10 years which is not very substantial. On the contrary, central banks buy financial assets with the money they print from QE. This directly benefits investors who hold those assets as the central bank buying increases the prices of those assets.
- jm__87 9y ago
  To add to this, it is very hard to argue that QE has not been good for those who are rich and have bought and held financial assets over the last 7 years or so. It is harder to say whether it has been beneficial for average individuals.. on the one hand, they can borrow at much lower rates, but on the other hand, certain asset prices have skyrocketed. We also need to consider the number of companies that have been able to keep employees on the payroll due to being able to finance debt at lower rates when the economy was doing poorly... in general, QE was good for everyone in the short term. The better question is, who does it hurt in the long term.

sdljfslkjfdsj 9y ago

It's stunning that anyone who has witnessed per asset class appreciation (consider wages an asset class as well) since the GFC could believe what you said. Inflation obviously helps those in debt but QE didn't inflate anything except risky asset classes objectively held by the wealthy. Even by the feds own studies & public communications by the chair woman inflation continues to remain "subdued" almost 10 years after. Wages have stagnated & only recently picked up, GDP has been the lowest post-recovery ever, net household debt is again at new highs, interest rates at forever in the history of human civilization lows. Meanwhile every single risk seeking asset class primarily owned by the wealthy has appreciated to levels last seen at prior bubble peaks. QE helps the rich & if it helps anybody else it's an accident. Sadly by the time non-rich households are able to participate in risk seeking asset classes they are so expensive that when objectively measured against historical readings future returns are flat to negative. Uncle Warren said "the fool does in the end what the wise man did in the beginning" & QE will guarantee the non-rich fall into the same foolish traps.

chimeracoder 9y ago
> It's stunning that anyone who has witnessed per asset class appreciation (consider wages an asset class as well) since the GFC could believe what you said. Between the two of us, one has a degree in economics from one of the top universities in the US and is posting under an established, identifiable handle. The other is posting from a brand-new throwaway account. I'm willing to accept that I might be wrong about things sometimes, but when a random, anonymous person on the Internet says they're "stunned" by me paraphrasing an established economic principle, I'm going to be pretty unconvinced unless they present some compelling evidence and solid analysis. As for the rest of your comment, even if one takes your statements about the current state of the world at face value, it doesn't leave you anywhere. You can't generalize entire economy of the last ten years and assume that it reflects the effects of quantitative easing (and no other confounding factors). I don't really want to litigate the post-2008 economy here, because that's pretty off-topic. In the context of the orginal statement - the claim that "basic income would be better than EQ because QE primarily benefits the rich" - yes, it's pretty clear that that goes against a rather straightforward and established body of both economic theory and empirical research.
- sdljfslkjfdsj 9y ago
  More than $4.5T in bonds bought in multiple policy regimes over years and have been halted for sometime but we can't use that as a benchmark? I suspect it has something to do with not aligning with your narrative. How about Japan pre GFC since they started QE in March 2001[1] meanwhile CPI in japan since 2001 has remained near 0[2]. Is 17 years enough data points? Which QE regime that resulted in any meaningful inflation or wage growth would you like to discuss? I'm afraid any I'd bring up from G7 sovereigns would be marginalized due to your credentials. Buying bonds does not help out anyone other than the rich. Artificially reducing interest rates makes borrowing easier which companies take advantage of[3] to buy back stock[4] which adds buying pressure to risk assets. Fewer shares to buy[5] helps the "E" in the P/E through financial engineering. Who buys those corporate bonds for the juicy yield (besides the ECB & BOE)? Hedge funds & those who have disposable income that can be allocated to risky assets via pensions & mutual funds. Not part-time workers or FTE's that live pay check to paycheck which most do[6]. QE doesn't primarily benefit the rich, it ONLY benefits the rich. [1] https://en.wikipedia.org/wiki/Quantitative_easing#Japan_before_2007 https://en.wikipedia.org/wiki/Quantitative_easing#Japan_befo... (see its citations) [2] http://www.inflation.eu/inflation-rates/japan/historic-inflation/cpi-inflation-japan.aspx http://www.inflation.eu/inflation-rates/japan/historic-infla... [3] https://fred.stlouisfed.org/series/TDSAMRIAONCUS https://fred.stlouisfed.org/series/TDSAMRIAONCUS [4] https://www.yardeni.com/pub/buybackdiv.pdf https://www.yardeni.com/pub/buybackdiv.pdf [5] https://www.yardeni.com/pub/sharesos.pdf https://www.yardeni.com/pub/sharesos.pdf [6] https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html https://www.cnbc.com/2017/08/24/most-americans-live-paycheck...
- sdljfslkjfdsj 9y ago
  Forgot to cite my earlier comments. > Wages have stagnated & only recently picked up[1] > GDP has been the lowest post-recovery ever[2][6] > Net household debt is again at new highs[3] > Interest rates at forever in the history of human civilization lows.[4] > Meanwhile every single risk seeking asset class primarily owned by the wealthy has appreciated to levels last seen at prior bubble peaks.[5] [1] https://tradingeconomics.com/united-states/wage-growth https://tradingeconomics.com/united-states/wage-growth (can you even spot QE?) [2] http://fortune.com/2015/07/30/us-gdp-economy/ http://fortune.com/2015/07/30/us-gdp-economy/ [3] https://www.reuters.com/article/us-usa-fed-debt/americans-debt-level-notches-a-new-record-high-idUSKCN1AV1PY https://www.reuters.com/article/us-usa-fed-debt/americans-de... [4] https://www.cnbc.com/2016/11/17/200-years-of-us-interest-rates-on-one-chart.html https://www.cnbc.com/2016/11/17/200-years-of-us-interest-rat... [5] https://stansberrystreaming.com/presentations/grant-williams.html https://stansberrystreaming.com/presentations/grant-williams... (this years stansberry vegas conference) [6] https://www.economist.com/blogs/dailychart/2011/07/american-recessions-and-recoveries https://www.economist.com/blogs/dailychart/2011/07/american-...

LyndsySimon 9y ago

> The right tend to be net debtholders, not net debtors Do you have a source for this?

jm__87 9y ago

So net debtors benefit if there is inflation before they have to make payments. The more inflation there is before you make payments, the greater the benefit to the debtor. As inflation naturally occurs over time, this benefit is less pronounced for debt where the principal repayments are amortized - the most common type of debt regular Americans have (e.g. car loans and mortgages). The US has averaged about 2% inflation over the past 10 years which is not very substantial. On the contrary, central banks buy financial assets with the money they print from QE. This directly benefits investors who hold those assets as the central bank buying increases the prices of those assets.

jm__87 9y ago
To add to this, it is very hard to argue that QE has not been good for those who are rich and have bought and held financial assets over the last 7 years or so. It is harder to say whether it has been beneficial for average individuals.. on the one hand, they can borrow at much lower rates, but on the other hand, certain asset prices have skyrocketed. We also need to consider the number of companies that have been able to keep employees on the payroll due to being able to finance debt at lower rates when the economy was doing poorly... in general, QE was good for everyone in the short term. The better question is, who does it hurt in the long term.