6 ms·

As an above average income earner, there is zero reason to feel any guilt, and any attempt to gin up guilt in people who make between 250-750k a year is complet

As an above average income earner, there is zero reason to feel any guilt, and any attempt to gin up guilt in people who make between 250-750k a year is completely misguided. The extreme wealth inequality does not come from the professional class, it is a result of the federal government and their monetary policy. When they print money, financial assets go through the roof making everyone who does not hold assets poor. This is not the fault of middle upper class Americans, and the idea that it is needs to stop.

efrank02 6y ago
How does printing money benefit the wealthy? It should devalue the money that they already have, benefitting the poor
- st1x7 6y ago
  That's not always the case. In the last couple of big printing cycles, the newly created money ended up in financial assets (like stocks) that are predominantly owned by people on the top end of the wealth distribution.
- logicslave 6y ago
  The wealthy almost never have their money in cash. They have it in assets. Real estate, stocks, bonds, derivatives, etc. It's poor people who have their money in cash
  - NetOpWibby 6y ago
    This just blew my mind.
    - tempmakesalot 6y ago
      It's much worse. Poor people have their money financed in depreciating assets.
      - jklein11 6y ago
        Wouldn't inflation help these people? The depreciating assets may lose value less slowly. Sure, high inflation usually means higher interest rates, but that certainly hasn't been the case in the current environment. Also, you will be paying off the debt with the inflated salary.
        AnimalMuppet 6y ago
        In theory yes, in practice no. The problem is that, for these people, inflation comes first to their costs, and only second to their wages. Sure they get to pay back their car loan with cheaper money. But they also have to buy groceries, and the groceries went up. Meanwhile, the number of dollars they owe on their car didn't go down. Sometime later their wages will go up, but until then, they're hurting.
- zanny 6y ago
  When the federal reserve prints money you, as a commoner, don't see a dime of it. The federal reserve only transacts new capital (because its not just raw bank notes, its financial securities in general) into a select cartel of national banks. Those banks, being private enterprise, are owned largely by the same class that owns everything else. If you own shares of the S&P 500 you own pieces of about ~two dozen banks. These are largely the banks that get treasury money which they then loan out at rates often fixed by the federal reserve in exchange for basically free money. And the trick with that money is that the bank isn't lending philanthropically, its lending to make a profit. So using the current environment as an example you aren't getting favorable bailout loan conditions from Bank of America just because the treasury gave them a hundred billion dollars to doll out, major corporations that want to use that nigh-free money to buy back stock or buy out competition get it. There are several branches on this tree of money flows but the economics of the last 50 years and particularly this depression from the botched COVID response only point towards the disconnect between the economy of the working poor and the economy of the owner class that gets to see the stock market hit all time record highs while the fed finally agrees to $600 stimulus checks when 50 million people are 6 months behind on rent. And if you want to see this mechanism in action in simplest terms, the fed bought 3 trillion in securities and the stock market recovered at about 30% rates to hit all time highs again after crashing in March. That kind of recovery is unprecedented and unheard of, but because of direct constant cash flow out of the fed all the investment panic dried up because free capital was flooding investors coffers to keep buying back in with. The dozen richest men all collectively became upwards of 50% richer this year as a direct consequence. Inflation won't come close to those gains.
  - reducesuffering 6y ago
    Source on 50 million 6 months behind on rent? A quick search didn't find 50, but only 18 million behind on rent by an untold amount of months[0]. [0]https://www.businessinsider.com/millions-of-americans-face-eviction-foreclosure-in-early-2021-2020-12 https://www.businessinsider.com/millions-of-americans-face-e...
    - cosmodisk 6y ago
- Foober223 6y ago
  Most richer people diversify their wealth. You may be hard pressed to find a billionaire who actually has $1 billion in cash. Cash would most likely be the minority of their wealth. As inflation occurs, they do take a hit on their cash holdings. But their land, stocks, apartment complexes, etc may increase in value. > It should devalue the money that they already have, benefitting the poor Even if all people both rich and poor held all their wealth in the form of cash, that would certainly hurt the poor too. Say a poor person works 8 hours a day. His 8 hours of work grant him buying power of 3 meals. After inflation his 8 hours of work grant him buying power for only 2 meals. This is not just a theoretical, look at McDonalds meal prices, you can't get a sandwich for a $1 anymore. There are some benefits to inflation. It's cheaper to employ poor people willing to work the now cheaper paper. So it may create some new jobs that otherwise may never have been created.
- deleted 6y ago
  [deleted]
- hansvm 6y ago
  Lots of other factors too, but look closely at your word choices -- "wealth" vs "money." Wealth is mostly tied up in non-money assets (not that it necessarily has to be, but that's the state of things), whereas poor people have some small amount of cash, wages which don't track with inflation, and rent and expenses which do. As money is devalued, non-money assets continue to hold their value (increasing when denominated in dollars), and every financial instrument used by anyone at or below the low/middle middle class is royally shafted in comparison.
- jklein11 6y ago
  I don't think the wealthy benefit from printing money. I just think they get hurt less than the poor. This article is a pretty interesting analysis of the effects of inflation.[1] 1.https://www.econstor.eu/bitstream/10419/70422/1/332991377.pdf https://www.econstor.eu/bitstream/10419/70422/1/332991377.pd...
zanny 6y ago
The idea won't stop so long as its a useful scapegoat to distract from the exact mechanism you described that creates the real inequality. Though its worth adding that in a stateless system capital would concentrate and accumulate because ownership is an inherent advantage in every transaction. So its not like having a government makes inequality, inequality is inherent to capitalism and its up to your society how much it wants to mitigate that effect, if at all, or to just make it worse the way the US regularly does via its monetary policy.
jklein11 6y ago
The idea that government intervention is what causes inequality really resonates with me, however, I'm not sure I buy it. In the last 15-20 years inflation has been historically low.
- leereeves 6y ago
  I'd argue that the reported inflation rate (usually measured by the CPI) doesn't reflect the real cost of living. In the last ten years, rents in my city have doubled. In just the last five years, my average grocery bill has doubled. In just the last year, the average price of a used car has risen over 8%.[1] Meanwhile, the CPI has held remarkably steady at about 2% for 40 years. According to the CPI, the cost of living has only increased by 20% over the last ten years, which is just not believable. 1: https://www.cargurus.com/Cars/price-trends/ https://www.cargurus.com/Cars/price-trends/
  - Tycho 6y ago
    I suspect the recent spike in car prices is due to the pandemic. Over ten years the cost seems pretty much flat (even as cars have become more advanced). Also, cities that are booming will outpace the rest of the country for rent (and therefore grocery) costs. I think you need to look across many cities to get a reliable picture.
- logicslave 6y ago
  Its financial asset inflation, not consumer product inflation.
  - jklein11 6y ago
    So is wealth inequality a financial asset issue and not a consumer product issue? Can you elaborate on the distinction?
    - AnimalMuppet 6y ago
      The government (and/or Fed) creates money. Stocks go up; bread doesn't. If I have to buy bread, I'm not instantly worse off. But if I own stocks, I'm instantly better off. Why do stocks go up? Because the money gets pumped into financial institutions, and from there into financial instruments. Why doesn't bread go up? Because the number of people who own large amounts of financial instruments, and who don't already buy as much bread as they want, is zero. But this situation - they're suddenly magically richer, and I'm not - magnifies existing wealth inequality.
matt_s 6y ago
Empathy is not guilt. I don't feel guilty because I've lucked into a career I enjoy and pays well. Luck in the sense that I picked a CS major in the 90's before "Tech" companies existed and CS was an offshoot of Math departments. I picked it because I liked computers and played computer games. I am fine and I recognize there are others that are not doing fine. My empathy means I do things within my means to help those, donate money, food, etc. Regarding the US Federal government, tax dollars going to bailout corporations or tax cuts for corporations doesn't help those who aren't doing fine. Corporations always choose self-preservation (stock buy backs, debt pay down, etc.) vs. helping their employees. I read something a while ago that said for a corporation it makes economic sense to do those things.

efrank02 6y ago

How does printing money benefit the wealthy? It should devalue the money that they already have, benefitting the poor

st1x7 6y ago
That's not always the case. In the last couple of big printing cycles, the newly created money ended up in financial assets (like stocks) that are predominantly owned by people on the top end of the wealth distribution.
logicslave 6y ago
The wealthy almost never have their money in cash. They have it in assets. Real estate, stocks, bonds, derivatives, etc. It's poor people who have their money in cash
- NetOpWibby 6y ago
  This just blew my mind.
  - tempmakesalot 6y ago
    It's much worse. Poor people have their money financed in depreciating assets.
    - jklein11 6y ago
      Wouldn't inflation help these people? The depreciating assets may lose value less slowly. Sure, high inflation usually means higher interest rates, but that certainly hasn't been the case in the current environment. Also, you will be paying off the debt with the inflated salary.
      - AnimalMuppet 6y ago
        In theory yes, in practice no. The problem is that, for these people, inflation comes first to their costs, and only second to their wages. Sure they get to pay back their car loan with cheaper money. But they also have to buy groceries, and the groceries went up. Meanwhile, the number of dollars they owe on their car didn't go down. Sometime later their wages will go up, but until then, they're hurting.
zanny 6y ago
When the federal reserve prints money you, as a commoner, don't see a dime of it. The federal reserve only transacts new capital (because its not just raw bank notes, its financial securities in general) into a select cartel of national banks. Those banks, being private enterprise, are owned largely by the same class that owns everything else. If you own shares of the S&P 500 you own pieces of about ~two dozen banks. These are largely the banks that get treasury money which they then loan out at rates often fixed by the federal reserve in exchange for basically free money. And the trick with that money is that the bank isn't lending philanthropically, its lending to make a profit. So using the current environment as an example you aren't getting favorable bailout loan conditions from Bank of America just because the treasury gave them a hundred billion dollars to doll out, major corporations that want to use that nigh-free money to buy back stock or buy out competition get it. There are several branches on this tree of money flows but the economics of the last 50 years and particularly this depression from the botched COVID response only point towards the disconnect between the economy of the working poor and the economy of the owner class that gets to see the stock market hit all time record highs while the fed finally agrees to $600 stimulus checks when 50 million people are 6 months behind on rent. And if you want to see this mechanism in action in simplest terms, the fed bought 3 trillion in securities and the stock market recovered at about 30% rates to hit all time highs again after crashing in March. That kind of recovery is unprecedented and unheard of, but because of direct constant cash flow out of the fed all the investment panic dried up because free capital was flooding investors coffers to keep buying back in with. The dozen richest men all collectively became upwards of 50% richer this year as a direct consequence. Inflation won't come close to those gains.
- reducesuffering 6y ago
  Source on 50 million 6 months behind on rent? A quick search didn't find 50, but only 18 million behind on rent by an untold amount of months[0]. [0]https://www.businessinsider.com/millions-of-americans-face-eviction-foreclosure-in-early-2021-2020-12 https://www.businessinsider.com/millions-of-americans-face-e...
  - cosmodisk 6y ago
Foober223 6y ago
Most richer people diversify their wealth. You may be hard pressed to find a billionaire who actually has $1 billion in cash. Cash would most likely be the minority of their wealth. As inflation occurs, they do take a hit on their cash holdings. But their land, stocks, apartment complexes, etc may increase in value. > It should devalue the money that they already have, benefitting the poor Even if all people both rich and poor held all their wealth in the form of cash, that would certainly hurt the poor too. Say a poor person works 8 hours a day. His 8 hours of work grant him buying power of 3 meals. After inflation his 8 hours of work grant him buying power for only 2 meals. This is not just a theoretical, look at McDonalds meal prices, you can't get a sandwich for a $1 anymore. There are some benefits to inflation. It's cheaper to employ poor people willing to work the now cheaper paper. So it may create some new jobs that otherwise may never have been created.
deleted 6y ago
[deleted]
hansvm 6y ago
Lots of other factors too, but look closely at your word choices -- "wealth" vs "money." Wealth is mostly tied up in non-money assets (not that it necessarily has to be, but that's the state of things), whereas poor people have some small amount of cash, wages which don't track with inflation, and rent and expenses which do. As money is devalued, non-money assets continue to hold their value (increasing when denominated in dollars), and every financial instrument used by anyone at or below the low/middle middle class is royally shafted in comparison.
jklein11 6y ago
I don't think the wealthy benefit from printing money. I just think they get hurt less than the poor. This article is a pretty interesting analysis of the effects of inflation.[1] 1.https://www.econstor.eu/bitstream/10419/70422/1/332991377.pdf https://www.econstor.eu/bitstream/10419/70422/1/332991377.pd...

zanny 6y ago

The idea won't stop so long as its a useful scapegoat to distract from the exact mechanism you described that creates the real inequality. Though its worth adding that in a stateless system capital would concentrate and accumulate because ownership is an inherent advantage in every transaction. So its not like having a government makes inequality, inequality is inherent to capitalism and its up to your society how much it wants to mitigate that effect, if at all, or to just make it worse the way the US regularly does via its monetary policy.

jklein11 6y ago

The idea that government intervention is what causes inequality really resonates with me, however, I'm not sure I buy it. In the last 15-20 years inflation has been historically low.

leereeves 6y ago
I'd argue that the reported inflation rate (usually measured by the CPI) doesn't reflect the real cost of living. In the last ten years, rents in my city have doubled. In just the last five years, my average grocery bill has doubled. In just the last year, the average price of a used car has risen over 8%.[1] Meanwhile, the CPI has held remarkably steady at about 2% for 40 years. According to the CPI, the cost of living has only increased by 20% over the last ten years, which is just not believable. 1: https://www.cargurus.com/Cars/price-trends/ https://www.cargurus.com/Cars/price-trends/
- Tycho 6y ago
  I suspect the recent spike in car prices is due to the pandemic. Over ten years the cost seems pretty much flat (even as cars have become more advanced). Also, cities that are booming will outpace the rest of the country for rent (and therefore grocery) costs. I think you need to look across many cities to get a reliable picture.
logicslave 6y ago
Its financial asset inflation, not consumer product inflation.
- jklein11 6y ago
  So is wealth inequality a financial asset issue and not a consumer product issue? Can you elaborate on the distinction?
  - AnimalMuppet 6y ago
    The government (and/or Fed) creates money. Stocks go up; bread doesn't. If I have to buy bread, I'm not instantly worse off. But if I own stocks, I'm instantly better off. Why do stocks go up? Because the money gets pumped into financial institutions, and from there into financial instruments. Why doesn't bread go up? Because the number of people who own large amounts of financial instruments, and who don't already buy as much bread as they want, is zero. But this situation - they're suddenly magically richer, and I'm not - magnifies existing wealth inequality.

matt_s 6y ago

Empathy is not guilt. I don't feel guilty because I've lucked into a career I enjoy and pays well. Luck in the sense that I picked a CS major in the 90's before "Tech" companies existed and CS was an offshoot of Math departments. I picked it because I liked computers and played computer games. I am fine and I recognize there are others that are not doing fine. My empathy means I do things within my means to help those, donate money, food, etc. Regarding the US Federal government, tax dollars going to bailout corporations or tax cuts for corporations doesn't help those who aren't doing fine. Corporations always choose self-preservation (stock buy backs, debt pay down, etc.) vs. helping their employees. I read something a while ago that said for a corporation it makes economic sense to do those things.