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Unfortunately, when wealthy people get money they do not spend it on goods and services that employ people and drive the economY. Rather, the invest it in the f
by bawana 7y ago
Unfortunately, when wealthy people get money they do not spend it on goods and services that employ people and drive the economY. Rather, the invest it in the financial vehicle with the highest ROI. Giving money to the rich does not trickle down to people. It goes into a holding pattern of financial engineering. That maybe why there has not been any inflation with all the quantitative easing that has been going on these past 2 decades. Instead of having more money chasing the same amount of goods and services (which would happen if all that QE hit the real economy) there is more money chasing more financial products. That is why the value of financial products(stocks,etc) has been skyrocketing for a decade.
- aianus 7y ago> Giving money to the rich does not trickle down to people. All of my well-paying tech jobs have been funded by VC money from rich people and/or IPO money from rich people. Same goes (indirectly and partially) for all the people who have been selling me goods and services over those same years.
- einpoklum 7y agoYeah, paying a few programmers high salaries doesn't quite count as trickling down. Let's say it's extremely-limited trickle down. > Same goes ... for all the people who have been selling me goods and services over those same years. No, it doesn't. Unless you only buy services from VC-financed startups?
- aianus 7y ago> No, it doesn't. Unless you only buy services from VC-financed startups? I buy things using my salary which trickled down from the VCs and shareholders.
- WalterBright 7y ago> the invest it in the financial vehicle with the highest ROI And then where does the money go that was spent on the investment? Consider that a high ROI means the money is used for something useful. For example, investing into a financial vehicle that loans money to people buying a house. Let's say the rich person buys a yacht. The yacht construction employs a large number of people. The money goes into the pockets of the people who made the yacht. > Giving money to the rich does not trickle down to people. For this to be true, it would follow that if all the rich people were made not-rich, it would have no material effect on the rest of the people. But that isn't how historical examples played out. Getting rid of rich people made everyone else worse off. Every time.
- bawana 7y agoIt's not about getting rid of rich people. It's about the relative flow of wealth and the behavior of rich people that makes life miserable for 'the rest of the 99%'. how about housing? The digital divide? These are negative externalities from the increasingly large numbers of extraordinarily wealthy people. Inflation will never happen no ,matter how much money the govt prints. Since when does a lower Fed rate help the common man who cannot even get a loan? Since when does the purchase of massive amounts of Tbills help the guy who doesn't have a job? These ancient economic tools date from the time before derivatives, before financial giants and their complex tools. It goes to financial vehicles which just invest it in more financial vehicles.
- briandear 7y ago> when wealthy people get money they do not spend it on goods and services that employ people and drive the economy That’s such a naïve statement. Those financial vehicles actually do things: provide capital for other businesses. Provide market liquidity so that capital can flow to the areas that are in demand. Grandma saving money under the mattress does a lot less than a “rich” person investing in REITs.
- bawana 7y agoThere are no grandmas that can save money anymore. The wealthy can afford to pay so much for housing that real working people can even afford it. The wealthy consume so much simply because they can. And there are a LOT more of them thanks to financial engineering.