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U.S. Billionaire Wealth Surged During the Pandemic
- deadalus 6y agoFED pumping trillions was bound to drive up asset prices.
- adammunich 6y agoI've noticed a lot of young people giving up lately on supporting the economic system. Anyone else seen this?
- pjc50 6y agoIt's a lot more visible on social media; I've no idea how well that translates into real life, and whether it also comes with disengagement from voting. On the other hand, the Occupy movement appeared and vanished after the 2008 financial crisis without really leaving lasting traces. We've yet to see what post-COVID politics looks like; the US is bracing for the November election, and the UK facing the end of the Brexit transitional arrangements. An entire generation of young people is going to have a disruption "fossil layer" across their education. If this isn't taken into account and employers expect business as usual, they are going to be really unimpressed.
- adammunich 6y agoOccupy definitely didn't vanish. The same people who were protesting then are out protesting now. But now, they're more organized and zealous than before.
- throwanem 6y agoYes, and why shouldn't they?
- adammunich 6y agoI'm just wondering what's going to come next. Nature abhors a vacuum.
- throwanem 6y agoIt depends who most successfully manages to direct the energy building up behind the demand for some kind, any kind, of substantive change. Historically, that whole process used to typically take a decade or two, maybe more. But we have social media now, so I give it a couple-three years, tops. Maybe a decade if it peters out again this time like it did in 2011. But I don't think that's very likely. Easy to get the idea that a statue of Lincoln got torn down because protestors are historically illiterate, or there's fascist spoilers in among the crowds, or whatever. No. There are no wrong statues to tear down, because who put those statues up? Rich people. Old people. People who've failed to justify their hold on power. I don't think it's quite too late for them to start to do so. But I do think they're far too stupid to realize and act on the necessity. Being as the only reason I'm not getting fucked the same way - not quite so hard, at the moment, anyway - is the luck of having had 20 more years to work with and a chance to make a start in a somewhat less viciously extractive time, my sympathies lie with those who say that either that power will be justified or it will be taken from those who have it now and placed in other hands. Sure, things could end up worse than they are now. But they could also end up better. If anyone could make a convincing case for how they end up better under the status quo, we would not be here. Hell, Bernie Sanders tried twice, and look what happened to him - not that I think he'd have been able to deliver on his promises, but it would've been smart to have given him the chance to try. Could probably have bought a decade or so that way, I suspect, maybe more. But instead, in 2016 the DNC rigged the primary for a candidate decades past electability who ultimately gave us Trump, and in 2020 the boomers just stomped the babies flat and gave us another possibly senile neoliberal has-been for the general, which he may still contrive to lose despite the Republican revolt against Trump - they've made a lot of ads, but we won't really know how it played out until December or maybe January, and no matter which way it goes it'll be the most questionable US presidential election result in living memory. Maybe ever. Even the AOC/Ilhan Omar crew, the best hope of a better future the status quo ante has so far managed to ante up, has started to get some real side-eye: they still have a solid Twitter game, but in policy terms they're moving toward the center, and people have started to suspect, I think rightly, that DC's capturing them. At this point there is basically no credibility left. So it depends on who manages to direct the energy to make some kind of change. We haven't seen them emerge yet. If history is any guide, we won't see them coming, either. How it plays out in the long run is anyone's guess. How it starts is in large part up to them, whoever they turn out to be.
- barney54 6y agoWhat does it mean for people to "support the economic system?" I'd like to understand what that means.
- adammunich 6y agoBelieve in the narrative of careerism, work at companies until you retire, all that. Lots of young folks are saying "it's all a scam", dropping out, buying RVs, vans, moving to farms, etc.
- joelbluminator 6y agoThere's also the environmental issue. If you're environmentally conscious you can't work for a lot of companies, commuting becomes a problem etc. I don't know how much of a factor it is but I believe for some people it is.
- adammunich 6y agoDefinitely the case for some people but I don't think it's driving force for a large percentage (yet). Maybe a few more droughts and food shortages would change that though.
- xwdv 6y agoThe young folk who say this are often ones who were sold on a lie that getting massive student loan debt for a degree from a university was a ticket to the good life and the right thing to do. Unfortunately that’s not really true and they find they wasted a lot of time and money and have no prospects and mounting debt.
- adammunich 6y agoIndeed, so how can the situation be corrected?
- syshum 6y ago
- echelon 6y agoAccording to Reddit and Twitter, we're going to tax over half of it back once the Democrats take power. At least this was the rhetoric when Bernie was still in the running. I try explaining non-liquid assets and how selling all of that stock would change control structures and sink the stock price, but it doesn't resonate. A lot of them also hate the stock market outright and don't know (or care) that stocks comprise retirement funds.
- adammunich 6y agoRetirement funds are something boomers have. It's a luxury for a lot of young people if they can make it work.
- jusiool 6y agoRetirement funds are something a lot of young people expect to never see if current trends of debt and healthcare prices keep up. I'm quite young (<25), we're not stupid and a lot of us understand basic economics, but rhetoric is important in these times because a candidate trying to tax the rich is better than one that doesn't try at all. Future generations will be burned once they realise living like the baby boomers did is unsustainable, hence a lot of us have given up on the economy, whatever that means.
- SaintGhurka 6y agoIf the world doesn't end, and it usually doesn't, you'll wish you had put something into your 401k. Please view your own pessimism with a bit of skepticism. Pessimism tends to betray people who buy into it too much. I heard very similar things 30 years ago when I was <25 and in part I bought into it. And buying into it did me damage because none of it came to pass. Society continued to muddled along. It's possible that the system will suffer a disorderly collapse, or maybe it will be uprooted and replaced with something more progressive. Just don't bet your future on either outcome.
- mattacular 6y agoReally surprised to hear that you condescending on young people about the stock market and retirement funds (which they tend to feel should never have been tied to the stock market) isn't resonating with em.
- cwhiz 6y agoIt’s a pyramid scam that the fed won’t allow to fail. But one day we will run out of money to print, and it will indeed catastrophically fail. Young people are correct to outright reject this. We’re kicking the can down the road so that boomers can have one last hurrah.
- adammunich 6y agoSo what's next?
- Aunche 6y agoThe US economy is inflated, but US treasuries are still in high demand and we might as well milk it for what its worth. The US is like the lannister’s of the world in that they’re rich because they always pay their debts (historically, their bonds have been the most stable.) Allowing, the economy to collapse basically denies us this otherwise free money and helps no one, besides those who fill the power vacuum, which could very well be big corporations.
- adammunich 6y agoYou raise a /very/ good point. But I worry that it is not working in a way that's favorable to those who rely on cash holdings (most people) for their budgeting and daily goals.
- rmah 6y agoPoor people, sort of by definition, do not have "cash holdings". They tend to live paycheck to paycheck or are in debt. Inflation helps debtors. And wages do tend to rise with inflation, albeit with a delay.
- ixvvqktiwl 6y agoYes, I include myself in that. The system doesn't work, and it needs to be reconfigured. We've listened to decades of BS from politicians and rich people on TV telling us we just need to work harder, but the truth. The more I learn about the financial system and how it works with government, the more I have become convinced that the whole thing is a scam, robbing the working class in a way that only benefits the very wealthy.
- adammunich 6y agoHow would you reconfigure it?
- ixvvqktiwl 6y agoProbably the most obvious place to start would be to end programs like QE by the central bank, and replace it with UBI. Instead of giving free money to big banks and high net worth individuals, put that money directly in the hands of consumers and those who need it most. QE can be thought of as a tool to accelerate the wealth transfer from poor to rich. Every time we go through one of these cycles the whole thing speeds up. Additionally, I think we should reconsider the idea of making it easy to acquire debt. An economy based on debt serves only to inflate assets that are easy to acquire debt for (i.e., houses) and prices out everyone who isn't in a position to acquire debt (which is a huge number of people, mostly young and poor people, including myself).
- adammunich 6y agoEnding QE definitely seems like a step in the right direction. If money is inflated away, what's the point of it really? I don't know enough about UBI to say if it's a good replacement. I am curious to learn more about your reasoning. The debt thing to me seems like a "band aid" on keeping consumption going. If people have no meaningful money saved, then to keep consumption going cheap credit needs to be made available.
- ivanche 6y agoBenefits of UBI would immediately disappear. Landlords would know you have more money and they would raise rents the same day. Car mechanics would know you have more money so they would just charge more. Same with hairdressers, painters, restaurants...
- LatteLazy 6y agoI've seen the opposite. I'm 35, but loads of people I know in their 20s are asking how markets work. I think they've seen markets go down and then 40% and thought "i could have made money on that"...
- adammunich 6y agoAre the markets really "working" when the FED is making a habit of bailing them out?
- dimgl 6y agoA lot of cynics on Hacker News tonight.
- ReptileMan 6y agoStill right though. Too big to fail means too big to be allowed to exist. Either there must be stringent regulation with scale in winner takes all fields or some form of serious punishment if the fed is going to be the saviour of last resort. And I don't mean punishing the corporation itself but the top management.
- adammunich 6y agoSeems to me like we're seeing the definition of "moral hazard" incarnate lately.
- sho 6y agoYou say cynicism - I say finally recognizing the emperor has no clothes. The fed now buying junk bonds - directly propping up the LBO/PE industry - crossed a fundamental line for me. Not only is the USG propping up its productive corporations - not great, but excusable, in my view - now it's propping up its worst, too. Why is it doing that? Who is in charge and who are they obeying? Uncomfortable questions all around. When the USD loses its reserve status - when, not if, and all the sooner given the fed's recent behaviour - we are going to see some serious shit.
- syshum 6y agoI have noticed a lot of young people do not understand economic systems nor how macro economies work... Anyone else seen this?
- grenoire 6y agoI am a recent finance graduate and I can attest to this statement: My friends who are not in finance are absolutely garbage in their understanding of savings, interest, wages, taxes, market dynamics (and other realities, like the fact that you're not going to make it big working at a random fashion retailer's corporate offices, earning only a 4% raise annually). In all fairness, there are just so many people without STEM degrees thinking that they will make 200k a year (in Europe). I'm not saying they can't, but it's honest to God very, very rare, and very, very difficult in their current understanding of labour markets, finance, and investment. However, I would like to say also that I don't think this is a new phenomenon. I also know an even greater amount of older adults who are fooling, instead of educating, themselves.
- syshum 6y agoI agree it is not new. I have long been a critic of of the public education system in the US for its failing to teach basic financial literacy in high school. I would be in a much better position today if I would not have screwed up my early 20's due to my ignorance on those topics. I guess I should have not isolated "young people" more said there is a generally lack of economic education in wider population. My parents who are just now retiring, bought into the US SocSec promise, so they had every little savings... Now me and my siblings are supporting them as we are more economically secure (and more economically successful).
- searchableguy 6y agoI think I am qualified to answer this. It's harder to fool people when you can look at metrics compared to before. Information is widely available so adults can't make up rainbows to make me wage away for something that has no clear chance of a healthy life. Expectations are different for younger generation precisely because human productivity increased many folds but yet we have to grind more or less the same amount of time + spend more time in institutions which are not funded well except for the rich folks. Overall, world is getting better but that doesn't mean it is getting better relative to the effort everyone has put in for majority. I support equal opportunity rather than bandids. The system is rigged and harm some people more than others. We need to find the core problems and fix them but I have no political power. By the time I do, I may become a grumpy old man who thinks people deserve what they got and it's their fault. Education system normalize this. Punishments are applied fairly but students are not equal and don't have the same situation at home or outside school. We need to stop punishing people in ways that only drag them behind. Be it students or petty criminals. Dragging people behind is never a good way to achieve progress and our society is riddled with it. Living is a zero-sum game for many.
- adammunich 6y agoI agree, social mobility is extremely important for the progress of a society. Talent is not necessarily distributed to those born with silver spoons.
- deleted 6y ago[deleted]
- scarface74 6y agoIf this is true (which I doubt) you should be able to find some statistic.
- deleted 6y ago[deleted]
- Smaug123 6y agoThis seems rather misleadingly stated to me. "Between March 18 and June 17, the total net worth of 643 American billionaires increased…". They've picked "the bottom of the FTSE 100" as their start point, and could well simply have captured "the stock market has rebounded". They'd have a much more compelling argument if they could say something similar starting from 1st Jan.
- barney54 6y agoI came to make this exact point. It is no surprise that billionaires, whose wealth is tied up in the companies they own large shares of, do worse when the stock market falls and better when the stock market rises than people who don't have has much wealth in the stock market. The worrying part to me of the overall economic situation is that the actions of the Federal Reserve seems to help the stock market much more than the real economy.
- igravious 6y ago"U.S. Billionaire Wealth Surged During the Pandemic" – Misleading? Let's define Pandemic. From the onset of the first official death. That was Feb. 29 according to news sources. So taking a starting point on or around Feb. 29 seems reasonable. Unfortunately deaths start occurring, lockdowns start being put into place, a lot of businesses grind to a halt, stock market begins tanking. Between the Fed and Congress they deliberately pumped money into the market favoring top-down rather than bottom-up and large corporations over small to medium. Result? Stock market surge while millions (> 40 million?) remain unemployed and lines for free food grow all around the country. Why? Because let's say even if a large amount of pension funds are tied to the stock market that's of no benefit to someone suffering today through no fault of their own. And given that the top 11% (isn't it?) of Americans own 80% of stocks and I presume the tippy top of the 11% own a huge chunk of that in turn then hey presto it all looks a bit too much like a deliberate wealth transfer – crony capitalism taking advantage of a crisis as exhaustively documented by Naomi Klein in Shock Doctrine. Far from being misleading, these statistics reveal what we all know. The US has turned into a virtual oligarchic kleptocracy.
- syshum 6y ago
- ixvvqktiwl 6y agoThis should surprise no one, the whole system is designed to move wealth away from poor people working for wages, into the hands of rich people who earn returns on capital. Surely this comment will get downvotes, but it's useful to learn about how the entire financial Rube Goldberg machine works in order to understand this in depth. Ray Dalio's talks (you can find many of them on YouTube) are a good place to start if you want a light introduction. IMO it's time to rethink the financial system (and I'm a strong proponent of UBI as a way to redistribute wealth). Just because it's been done a certain way for decades doesn't mean it should continue to operate that way. The financial system as we know it today was designed in an era where information did not flow freely, and we did not walk around with an internet connected computer in our pockets.
- blfr 6y agoThe financial system as we know it today wasn't really designed but rather evolved in an era of genuine technical growth. Since we can't deliver the inputs (real innovation), but desperately try to maintain the outputs (economic growth), it has become more and more unstable (bubble prone). There are people, like Warren Buffet, who do very well riding these waves. What I find weird is that some of them are revered on HN.
- ixvvqktiwl 6y agoThe HN community has always been about finding ways to get rich. The startup/VC culture is entirely about getting rich. Pretending it's not is a big lie that SV has always perpetuated. So, naturally, people admire those rags to riches stories. For the record, I'm not against people trying to get rich, but I really dislike the fact that so many people try and pretend it's about something other than getting money. Being a VC is not a charity, it's literally about growing an investment. Starting a company is not about charity, it's about generating revenue and ROI.
- blfr 6y agoThere's growth through technical innovation, which has pretty sweet positive externalities, and there's growth through through speculation, which is more like gambling really, looking for an edge in the game. I'm not opposed to the latter but I don't find it very impressive.
- xwdv 6y agoI’m not a billionaire but I saw my wealth surge shortly after March, so I could only imagine billionaires made even more. It is a shame that so many people are not financially educated enough to take advantage of moments like this in history. A financial crisis is a time when fortunes are made, and if you properly navigate each one throughout your life you can give yourself a major step up in networth.
- atentaten 6y agoWhat are some things you did to navigate this crisis thus increasing your net worth?
- jusiool 6y agoA lot of people don't possess the capital to, well, capitalise on these events. I tried day trading as early as march, but guess how far 100 dollars of starting investment got me? The shame is not that people don't have financial literacy.
- xwdv 6y ago100 dollars for day trading is shit. You should never risk more than 2% of your account in a trade, that means on average you’d have to be satisfied with making a couple bucks of profit per trade.
- Smaug123 6y agoI think that's the point the parent was making. If you simply don't have enough money to trade profitably with, then… you can't trade profitably.
- cj 6y ago> It is a shame that so many people are not financially educated enough to take advantage of moments like this in history For the vast majority of people the problem is lack of access to capital to invest, not education on how to invest. I know a lot of blue collar workers, restaurant workers, farmers, truck drivers... their concerns during the pandemic is “how am I going to pay my rent / mortgage / medical / credit card bills next month”... investing in the stock market is not on their radar: For the upper middle / upper class who do have extra cash to play with, it’s important to realize these specific market conditions are rare and unpredictable (it’s still possible for there to be another major sell off, just because we’re up doesn’t been we’ll stay up). It’s easy to look back and say “oh I could have made 40% in 3 months” after it happened. Yet many of the best money managers missed most of the upswing because no one was expecting a V shape recovery so quickly. To build wealth, don’t try to time markets or pull crazy stunts like outing cheap OTM options. Just invest a steady percent of your income in index funds every month over a long period of time.