7 ms·

>it is a transfer from everyone who is not a financial institution, to financial institutions I don't understand what this means. Aren't the victims you are im

>it is a transfer from everyone who is not a financial institution, to financial institutions I don't understand what this means. Aren't the victims you are imagining the hypothetical people who have large amounts of money in checking, savings, or literally under their mattress? And maybe this is ignorant, but I really didn't think that was a significant segment of the population. I've read comments like yours a million times before, so I know your take isn't unique or novel, I just have never understood it at all. I guess I can interpret you as talking about say inflation in the 1970s, but at this point that seems like ancient history and moot.

pdonis 6y ago
> I don't understand what this means Suppose you have ten people and the money supply is a hundred dollars, of which each person has ten. And then suppose you print ten more dollars and give them all to person #10, so that person now has 20 dollars. That is equivalent, economically, to keeping the money supply the same but taking 91 cents from each of the other 9 people and giving it to person #10: in both cases, person #10 now has 2/11 of the total money supply, and persons #1 through #9 each have 1/11. And that means their respective fractions of the total buying power have changed the same way, since the buying power of money is the fraction of the total money supply that that money is equal to. So person #10 can now buy more of the things he wants, and everyone else can buy less. In the case of the Federal Reserve printing money under normal circumstances, person #10 is financial institutions and persons #1 through #9 are everybody else. > Aren't the victims you are imagining the hypothetical people who have large amounts of money in checking, savings, or literally under their mattress? The "victims" are everybody who isn't getting some of the printed money. The fact that they already have other money doesn't change the fact that they lose buying power. Nor does it matter where their other money is stored. It could even be in assets like a 401k; as long as the assets are denominated in money (your 401k balance is in dollars), the buying power they represent is affected. > I really didn't think that was a significant segment of the population. Everybody who doesn't get new money the Federal Reserve prints under normal circumstances is almost all of the population.
- perl4ever 6y ago
  >as long as the assets are denominated in money (your 401k balance is in dollars) This seems to me like saying that if the size of an inch shrinks, things measured in inches will too. I mean, for the sake of argument, maybe they will shrink and maybe they won't, but the choice of inches vs. cm can't affect that; it's extrinsic. This sounds very much like something I've read for decades, that it matters greatly if oil is denominated in dollars, and it's made no sense to me in all that time. >Everybody who doesn't get new money the Federal Reserve prints under normal circumstances is almost all of the population People complain about stagnating real wages, but I'm unaware of exponentially declining real wages, let alone the same happening to investments, as you mention, like 401(k)s. I don't see how the details matter; if there was significant wealth transfer from almost everybody, then it would be obvious. I think you are saying that somehow, in emotional terms, the banks are a vampiric drain on the economy. But how are they doing that? If they somehow make money vanish, then doesn't that mean it isn't circulating and causing buying power and inflation? In which case how can it matter? If all the excess money is being hoarded by a tiny number of people who are not spending it, isn't that protecting us from the ravages of inflation? If I have a trillion dollar coin, regardless of where I got it, it's nothing, unless someone takes it seriously when I say "please make me 10 aircraft carriers". The idea that financial institutions possess all wealth is so weird I'm not sure I can believe anyone believes it. You can look up how much they are worth, would you say that the published figures are misleading, or do you think that regular public financial companies and banks are vastly outweighed by other entities?
  - pdonis 6y ago
    > This seems to me like saying that if the size of an inch shrinks, things measured in inches will too. No. Read my example of the ten people again, carefully. I don't think you have grasped it yet. > People complain about stagnating real wages, but I'm unaware of exponentially declining real wages I have said no such thing. I have no idea where you are getting this from. I have said nothing whatever about wages. > if there was significant wealth transfer from almost everybody, then it would be obvious It is obvious. See further comments below about McMansions, etc. > I think you are saying that somehow, in emotional terms, the banks are a vampiric drain on the economy. No. I am saying that the government is favoring financial institutions over everyone else by printing money and giving it to them. That does not mean financial institutions in themselves are not necessary. It just means they are being favored by the government, and this has negative effects and should be stopped. See my post in response to qnt upthread about misallocation of resources. > If they somehow make money vanish I have said no such thing. Where are you getting this from? > If all the excess money is being hoarded by a tiny number of people I have said no such thing. You are reading a lot of things into my post that are not there. The financial institutions are not hoarding the money the Fed prints and gives to them. They are using it to make mortgage and commercial real estate loans, because that is what they are allowed to use it for under current policies. Which in turn means more economic incentive for people to produce things that can be bought with those loans: McMansions and commercial real estate, well beyond the amount that would actually be bought in a free market with no government interference. And, as a result, we have, as I said, McMansions galore and empty commercial real estate all over, while other things that people need or want more are unnecessarily scarce, because the economic demand that would have motivated people to produce them has been taken away and transferred to financial institutions. > The idea that financial institutions possess all wealth I have said no such thing. I have only said that when the Fed prints money and gives it to financial institutions, that is economically equivalent to transferring some wealth to them from everyone else. I have never said it transfers all wealth to them. I have not even said it transfers most wealth to them.
baconandeggs 6y ago
> I don't understand what this means. Aren't the victims you are imagining the hypothetical people who have large amounts of money in checking, savings, or literally under their mattress? And maybe this is ignorant, but I really didn't think that was a significant segment of the population. Yes, they are the victims. They are not a significant segment of the population any more because of the current monetary policy focused on perpetuating artificial demand. Interest rates near 0, constant inflation, and maybe even assets hyperinflation have contributed to decimate not only savings but savers. Now you are a fool if you keep any considerable amount of money in the bank beyond living expenses. This did not use to be the case.

pdonis 6y ago

> I don't understand what this means Suppose you have ten people and the money supply is a hundred dollars, of which each person has ten. And then suppose you print ten more dollars and give them all to person #10, so that person now has 20 dollars. That is equivalent, economically, to keeping the money supply the same but taking 91 cents from each of the other 9 people and giving it to person #10: in both cases, person #10 now has 2/11 of the total money supply, and persons #1 through #9 each have 1/11. And that means their respective fractions of the total buying power have changed the same way, since the buying power of money is the fraction of the total money supply that that money is equal to. So person #10 can now buy more of the things he wants, and everyone else can buy less. In the case of the Federal Reserve printing money under normal circumstances, person #10 is financial institutions and persons #1 through #9 are everybody else. > Aren't the victims you are imagining the hypothetical people who have large amounts of money in checking, savings, or literally under their mattress? The "victims" are everybody who isn't getting some of the printed money. The fact that they already have other money doesn't change the fact that they lose buying power. Nor does it matter where their other money is stored. It could even be in assets like a 401k; as long as the assets are denominated in money (your 401k balance is in dollars), the buying power they represent is affected. > I really didn't think that was a significant segment of the population. Everybody who doesn't get new money the Federal Reserve prints under normal circumstances is almost all of the population.

perl4ever 6y ago
>as long as the assets are denominated in money (your 401k balance is in dollars) This seems to me like saying that if the size of an inch shrinks, things measured in inches will too. I mean, for the sake of argument, maybe they will shrink and maybe they won't, but the choice of inches vs. cm can't affect that; it's extrinsic. This sounds very much like something I've read for decades, that it matters greatly if oil is denominated in dollars, and it's made no sense to me in all that time. >Everybody who doesn't get new money the Federal Reserve prints under normal circumstances is almost all of the population People complain about stagnating real wages, but I'm unaware of exponentially declining real wages, let alone the same happening to investments, as you mention, like 401(k)s. I don't see how the details matter; if there was significant wealth transfer from almost everybody, then it would be obvious. I think you are saying that somehow, in emotional terms, the banks are a vampiric drain on the economy. But how are they doing that? If they somehow make money vanish, then doesn't that mean it isn't circulating and causing buying power and inflation? In which case how can it matter? If all the excess money is being hoarded by a tiny number of people who are not spending it, isn't that protecting us from the ravages of inflation? If I have a trillion dollar coin, regardless of where I got it, it's nothing, unless someone takes it seriously when I say "please make me 10 aircraft carriers". The idea that financial institutions possess all wealth is so weird I'm not sure I can believe anyone believes it. You can look up how much they are worth, would you say that the published figures are misleading, or do you think that regular public financial companies and banks are vastly outweighed by other entities?
- pdonis 6y ago
  > This seems to me like saying that if the size of an inch shrinks, things measured in inches will too. No. Read my example of the ten people again, carefully. I don't think you have grasped it yet. > People complain about stagnating real wages, but I'm unaware of exponentially declining real wages I have said no such thing. I have no idea where you are getting this from. I have said nothing whatever about wages. > if there was significant wealth transfer from almost everybody, then it would be obvious It is obvious. See further comments below about McMansions, etc. > I think you are saying that somehow, in emotional terms, the banks are a vampiric drain on the economy. No. I am saying that the government is favoring financial institutions over everyone else by printing money and giving it to them. That does not mean financial institutions in themselves are not necessary. It just means they are being favored by the government, and this has negative effects and should be stopped. See my post in response to qnt upthread about misallocation of resources. > If they somehow make money vanish I have said no such thing. Where are you getting this from? > If all the excess money is being hoarded by a tiny number of people I have said no such thing. You are reading a lot of things into my post that are not there. The financial institutions are not hoarding the money the Fed prints and gives to them. They are using it to make mortgage and commercial real estate loans, because that is what they are allowed to use it for under current policies. Which in turn means more economic incentive for people to produce things that can be bought with those loans: McMansions and commercial real estate, well beyond the amount that would actually be bought in a free market with no government interference. And, as a result, we have, as I said, McMansions galore and empty commercial real estate all over, while other things that people need or want more are unnecessarily scarce, because the economic demand that would have motivated people to produce them has been taken away and transferred to financial institutions. > The idea that financial institutions possess all wealth I have said no such thing. I have only said that when the Fed prints money and gives it to financial institutions, that is economically equivalent to transferring some wealth to them from everyone else. I have never said it transfers all wealth to them. I have not even said it transfers most wealth to them.

baconandeggs 6y ago

> I don't understand what this means. Aren't the victims you are imagining the hypothetical people who have large amounts of money in checking, savings, or literally under their mattress? And maybe this is ignorant, but I really didn't think that was a significant segment of the population. Yes, they are the victims. They are not a significant segment of the population any more because of the current monetary policy focused on perpetuating artificial demand. Interest rates near 0, constant inflation, and maybe even assets hyperinflation have contributed to decimate not only savings but savers. Now you are a fool if you keep any considerable amount of money in the bank beyond living expenses. This did not use to be the case.