24 ms·

Correction: The Fed's policies have taken $50T of wealth from the Bottom 90%. When you bail out irresponsibly over-leveraged and nearly bankrupted banks and co

Correction: The Fed's policies have taken $50T of wealth from the Bottom 90%. When you bail out irresponsibly over-leveraged and nearly bankrupted banks and corporations, and pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. Most importantly, when the Fed decides to print money ad nauseam, they create massive asset inflation, which steals from the poor and gives to the rich. This is because those dollars that are printed go directly into bonds, equities, and assets that only a small amount of the population owns a significant amount of. When money is "printed" the Fed actually injects money into financial markets through buying assets. This asset inflation caused by money printing gives more money to the rich to buy more assets, thus driving up the prices of financial products, real estate, and all other valued assets in society. Thus, cost of living skyrockets, but only the rich are actually increasing their net worth (which is increasing exponentially). All of this happens while minimum wage, and most wages, are stagnant. Wealth inequality and social unrest in America is DIRECTLY related to corrupt and/or incompetent (you choose) Fed policies. It amazes me why most people do not grasp this. I think it is lack of education.

silexia 6y ago
The bailouts are tragic as it undermines the natural garbage collection in democracy - bankruptcy. Bankruptcy is an incredible positive because it allows for the safe and sane dismantling of bad organizations. The question is - how do we apply a mechanism like bankruptcy to government organizations?
- natenthe 6y ago
  Exactly. Bankruptcy and insolvency is an immune response to financial illness in markets. However, instead of removing cancerous growths, we bail them out and thus they metastasize and become much larger and more lethal. This inevitably leads to the death of the host.
  - seppin 6y ago
    One bank (lehman brothers) went bankrupt and the global economy was instantly in a death spiral. If many did, it would have been multiple factors worse.
  - fuzzfactor 6y ago
    The host is already beyond recovery for the US dollar to ever again function as designed. Thos. Jefferson's quote continues: > I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people to whom it properly belongs.” Remember the purpose of the US Mint was to convert the silver & gold of any citizen into legal tender for a reasonable fee and return it to them as coins. Printing of bank notes was not on the agenda until politicians having a more predatory agenda got their way.
- TuringNYC 6y ago
  >> The question is - how do we apply a mechanism like bankruptcy to government organizations? Not sure if this is an answer for every government org, but hundreds of municipalities and possibly even states are going to go bankrupt due to obscene pension liabilities. The very difficult "solution" is to let them to bankrupt, and allow them to re-negotiate liabilities. Unfortunately many municipalities have promised the world to retirees, often with inflation adjustments and often starting at 20yrs of service (that is, age 41 until death). Add in tricks like matching final year salary (which is often packed with overtime) and you have unbearable pension obligations. It isnt the worker's fault. But the local leaders and pension managers are at fault, and citizens are on the hook. Unfortunately the decisions were made by leaders 10 or 20yrs ago, so it may not even be the current leadership. If the municipalities are bailed out, then it gives a signal to every other municipality to overpay massively because either the state or uncle sam or PBGC will come in and bail everyone out. It is going to be a mess.
  - fuzzfactor 6y ago
    >obscene pension liabilities What seems that way to you has turned out to not even be as much prosperity as it should have been for those having the most effective inflation-calibrated plans. There was no other way to even come close to what employers had intended for their people when they granted these benefits in lieu of full market pay. That's how destructive inflation was. And of course for the vast majority of retirees it has always fallen far short of what could have been since inflation has been calibrated over the years to continually bring the buying power of gains downward the more that accrue regardless.
RIMR 6y ago
Lack of education is the #1 issue here. America's education system emphasizes nationalism and obedience. It doesn't encourage critical thinking or alternative worldviews. We're so deeply entrenched in the "American Dream" (Capitalism & Trickle Down Economics) that we're unable to challenge the current status quo. Worse yet, this is driving us towards the defunding of public education, and the further worsening of our problems. Our collective ignorance manifests itself in a number of ways, from wealthy mainstream journalists blaming economic problems on the poor to their audience of middle-class Americans, to mass-delusions regarding conspiracy theories intended to divide people.
- DamnYuppie 6y ago
  I agree with your assessment of our education system. I would go further and say we intentionally do not teach money management skills as it makes people harder to fleece. We have indoctrinated a whole country that debt is good, rampant consumerism is good, all of which leads to really bad money management. I am of the opinion that these habits and the ideology that supports it is the biggest reason people who are in the lower income brackets continually stay there. The best path to wealth is to convert your work into capital. If you spend everything you make and more there is no excess to re-invest.
  - jmcqk6 6y ago
    >intentionally do not teach money management skills as it makes people harder to fleece. Yeah, this is a perfect example of "don't attribute to malice what is equally explainable by incompetence." I'm not talking about the incompetence of teachers. I'm talking about the incompetence of the system, and it's inflexibility towards change. This is not caused by malice. It's caused by is being completely unable to effectively handle the millions of different perspectives of "what education should be." You talk about indoctrination of a country, but I don't think it's indoctrination at all. It's people clinging to their views and being completely hostile to the idea that they might not understand important parts of the system. It's people turning to ideology instead of engaging with the actual complexity of the world.
ksec 6y ago
>It amazes me why most people do not grasp this. I think it is lack of education. I dont think that is the case at all. The concept is simple and easy enough to understand. Most people just dont care and want a single target to blame. And someone decide that target will not be government or Feds.
- natenthe 6y ago
  Bingo. I was being politically correct but actually agree wholeheartedly. Didn't want to get too conspiratorial on this forum.
  - ksec 6y ago
    Well now even the whole submission is flagged for some reason.... Edit: And it is now unflagged.
nickpp 6y ago
Naval had an extremely pertinent tweet [1]: The road to socialism via inflation: • Print money, crash the reserve currency, destroy savers, and force them into inflated assets. • Asset inflation leads to inequality. Demonize asset holders and tax the nominal gains, thereby confiscating the real value of the assets. [1] https://twitter.com/naval/status/1359650086221930496?s=21 https://twitter.com/naval/status/1359650086221930496?s=21
- natenthe 6y ago
  Naval is a smart man. Couldn't agree with this more. We are nearing the end of the road to socialism via inflation.
  - seppin 6y ago
    All countries print money and discourage saving. Taxing capital gains at a fraction of the rate you tax labor ensures increasing inequality, and is not the source of "confiscating" or theft of wealth. Naval is a fortune cookie philosopher at best, and seems to repackage college libertarian ideas of protecting the wealthy from adequately funding the country they reside in.
- lefrenchy 6y ago
  This entire take is predicated on the idea that the people in power have something to gain from doing this, since it requires the ruling class to do all of these things. It falls completely flat if you think about the logic beyond trying to make it fit your ideological narrative. Why would the ruling class (which his tweet presupposes is corrupt), who benefit from this status quo, purposefully destroy the systems that make them rich? It just doesn't make sense, the logic implies that a corrupt ruling class would purposefully destroy the systems that allow them to be corrupt in order to achieve "socialism" (which Naval clearly implies is somehow innately corrupt here). Why would they destroy what they benefit from on purpose? Ruling classes benefit from stability, if people are not starving and live generally decent/free lives they won't search above for answers or be inclined to upheaval. > destroy savers, and force them into inflated assets. I don't understand this part, isn't it a broad consensus in the US that savings should not be in cash but instead in a diverse set of assets and bonds? How does inflating assets destroy savers in this case? Every time I hear advice on saving in the US it's basically (take anything above emergency fund savings and invest it in ETFs/index funds/bonds)
lm28469 6y ago
> It amazes me why most people do not grasp this. I think it is lack of education. We should be careful about wording here. The lack of education is a direct consequence of the top "1%" politics and very well thought decisions. They have everything to gain from us plebeians not thinking about these issues. > (you choose) It's much more complex than that, especially in America. If you can choose between A and B but the right answer is C you have everything but a choice. Even worse than that, if the entire culture and education of your country is built on making you think only A and B exists, C being the right answer will never even materialise. We're past the time of blaming "the people", when the entire system is corrupt to the bone we should stop blaming eachother and look up, when all the parties converge to the same point you know you're being played
JamesLeonis 6y ago
Except this wasn't the federal bailouts. Those are an entirely different beast. It's talking strictly about income stagnation. The study shows that if wages kept up with productivity (as was the case in the immediate post-WW2 era) the bottom 90% would earn $2.5 trillion per year more. > We document the cumulative effect of four decades of income growth below the growth of per capita gross national income and estimate that aggregate income for the population below the 90th percentile over this time period would have been $2.5 trillion (67 percent) higher in 2018 had income growth since 1975 remained as equitable as it was in the first two post-War decades. From 1975 to 2018, the difference between the aggregate taxable income for those below the 90th percentile and the equitable growth counterfactual totals $47 trillion. https://www.rand.org/pubs/working_papers/WRA516-1.html https://www.rand.org/pubs/working_papers/WRA516-1.html
- treis 6y ago
  >Except this wasn't the federal bailouts. Those are an entirely different beast. It's talking strictly about income stagnation. Which rests on the fundamentally incorrect assumption that a dollar a rich person gets means that a poor person is a dollar poorer.
  - fuzzfactor 6y ago
    did not downvote, but More accurate to calculate how it still regularly costs a million poor people a dollar each to make one person a new millionaire. But we all know a $Million doesn't buy what it was supposed to any more, so all million-and-one of them are screwed anyway. And poor people actually used to be able to afford this kind of spending.
- Seanambers 6y ago
  Some nice graphs to go along; https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
  - tylerhou 6y ago
    A bunch of these graphs are misleading, especially the ones from the EPI. /r/badecon can explain better than I can: https://www.reddit.com/r/badeconomics/comments/6rtoh4/productivity_pay_gap_in_epi_we_trust/ https://www.reddit.com/r/badeconomics/comments/6rtoh4/produc... TL;DR: 1. The pay line is for the bottom ~80% of workers, while the productivity line is for all workers. If you graph all workers wages vs all workers productivity, then the gap shrinks quite a bit. (Of course, maybe we should redistribute wealth from top workers to all workers, but that's another discussion.) 2. Average hourly wages doesn't take into account workers' increase in benefits. 3. The lines aren't adjusted for inflation in the same way, which makes the gap look worse.
pmiller2 6y ago
Potato, potatoe. Who do you think controls "the Fed?" Cui bono? Your comment would also imply that before there was such a thing as a Federal Reserve, income and wealth inequality didn't exist. This is false.
- stickyricky 6y ago
  It does not imply "wealth inequality is the result of federal policies". It implies that the current transfer of wealth is a result of federal policy.
  - seppin 6y ago
    All they do is regulate the flow of new money, they aren't responsible for tax codes that ensure a widening gap of wealth via the return on capital vs the return on labor. https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
    - TearsInTheRain 6y ago
      They affect the inflation rate and inflation should be thought of as a tax. And its a tax that primarily affects middle class people that keep their wealth in cash rather than assets. They also implicitly affect asset prices which is probably one of the primary causes of wealth inequality.
      - seppin 6y ago
        It's a hidden tax for sure, but it's marginal compared to the returns seen on capital vs labor, and the taxes collected of both forms of income.
  - pmiller2 6y ago
    Well, considering how the comment literally says "Wealth inequality and social unrest in America is DIRECTLY related to corrupt and/or incompetent (you choose) Fed policies," you'll forgive me for disagreeing.
tobmlt 6y ago
Yep. The fed is an engine, whose purpose is to move wealth silently from the masses to the powerful monied few, via time-asymmetric inflation. (Mostly Inflation of assets presently) The resulting data looks like corporations have used their power to directly disenfranchise/disempower workers, and so the mass clamber for protective laws. More laws will be enacted by those in power. The time is certainly right for it. The laws will be constructed such that they will entrench the existing power structures, and meanwhile the fed will motor on, unaffected. Nothing changes for the good while this engine continues to run. And it will run at ever increasing rates, because it has to, in order to continue to do its work of supercharging the economy from the top down. Get on the train (Ride the coat-tails of the great and powerful as best you can by investing) or be left behind in a wake of generally stagnant wages (stagnant for lots of reasons), and mildly rising prices. Meanwhile housing prices (housing costs to you) and stocks are off on a rocket-ship to the stars.
- 3327 6y ago
  Crypto, decentralized, the fed is done and done should they be foe good reason.
- tylerhou 6y ago
  The Fed is stabilizing the price of the USD because of the coronavirus pandemic. If it were not printing money, then there would likely be a deflationary spiral that would cause a depression. That's one of the reasons why the Great Depression was so bad: the US was on the gold standard at the beginning. The US can't create gold out of thin air, so the USD started deflating, people stopped spending, and capital stopped flowing. Companies went bankrupt, people lost jobs — all because much needed dollars were stuffed in people's mattresses instead of being spent. The Fed is increasing the money supply by purchasing bonds because corporations need cheaper capital to pay their workers and their bills. When the pandemic is over, it will sell back these bonds the banks it bought them from. Without the Fed's intervention, this recession and pandemic would have been far, far worse. Of course, helping corporations also helps the people who own the corporations: the rich. That's a distributional issue, and the main solution is tax policy. We need to raise income and estate taxes on the rich, increase the tax on capital gains, and institute a wealth tax. The Fed is like an engine. But engines are a tool. Tools can cause good things and bad things. Right now, the Fed is causing good things by providing liquidity, which has the side effect of causing bad things because it lets the rich accumulate wealth. If the Fed is like an engine, then it serves to move a train — the economy. If the train is runaway — if the economy benefits the rich far more than normal people — that doesn't mean engines are bad. It means we need to stop the train, fix it, and start the engine again. If we restructure our economy, the Fed will still continue to do good things, with fewer negative side effects. That would be, on net, good. So the problem isn't with the Fed, it's with the economy. And claiming that the Fed is the root of all our problems misses the bigger picture.
jrsj 6y ago
The Federal Reserve is just one tool used to achieve this. One of the most important ones sure, but to put too much emphasis on it is missing the forest for the trees.
- tachyonbeam 6y ago
  The real problem is money in politics, legalized bribery. The government is not really working for the people.
nknealk 6y ago
It’s worth noting that, while this is true, the reason the fed exists is because if they didn’t do that, we’d have bread lines. I’d argue that recent fed actions are the reason supermarket shelves aren’t barren which is in the interest of all Americans.
draw_down 6y ago
Come on, who do you think runs the Fed? Plumbers?
gwbas1c 6y ago
The reason for the bailouts was to avoid mass unemployment and mass foreclosures. These would have happened had major automakers or major banks went bankrupt.
- gowld 6y ago
  Giving the money to the employees in a much cheaper way to avoid unemployment. Temporarily banning foreclosure is an easier way to avoid foreclosures.
BlueTie 6y ago
In David Graeber's book on money, one detail that I always remember when I read a comment like this is how coinage was created so many times throughout history as a way to support an Army. King makes money -> gives it to the army -> collects money as a tax from all citizens. It creates a system where all the people in the kingdom have to contribute to the army in some way. Now The Fed creates money -> gives it to bankers -> gov't collects taxes in that coin. So we've created a system where your ability to buy things is a derivative of how much you support banking. It's no wonder why everyone is overleveraged and fragile and needs bailouts all the time.
adam_arthur 6y ago
Especially when coupled with the excessive fiscal stimulus. We should absolutely help those most impacted by the pandemic, but the amount of money being injected amounts to gross negligence. Why were people who made 6 figures and still employed being given checks, for example? The stock market is on fire, and many businesses are smashing earnings expectations, yet we inject another $2 trillion? I've got a sizable portfolio, but the government response frankly saddens me. The green we see every day just represents inflation (of assets). Big gains in stonks, but now we have to pay 2 million dollars for a house in a nice part of town. Really unfortunate for those without significant assets that ever hoped to own a home.
- mindslight 6y ago
  > Why were people who made 6 figures and still employed being given checks, for example? Because it's easier to do this than to gauge need, and with the paltry amounts handed out it doesn't add up to much compared to the big picture. The real question is why this has become a political talking point, and the answer is to distract from that much larger rapidly-implemented scam of bailing out the bond market that you rightly point out is "Really unfortunate for those without significant assets that ever hoped to own a home". Hiding the large scale theft is much easier when you can distract people into bickering about their financial neighbors.
  - adam_arthur 6y ago
    It doesn't have to be one or the other. 100% agreed that fed action via bond buying has been excessive as well. In a healthy economic system, there need to be "down" cycles where overleveraged or poorly run businesses fail. If the government will backstop all investments, then why not leverage up as much as possible and take on excessive risk? Those that have been financially prudent have been punished consistently. I wonder how much of the fiscal/monetary response is really driven by personal bias towards protecting their own portfolios. Helicopter money is certainly good optics in the short-term, but terrible governance on a longer timescale.
  - deleted 6y ago
    [deleted]
throw0101a 6y ago
> When you bail out irresponsibly over-leveraged and nearly bankrupted banks and corporations, and pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. Or, you know, the Fed is not authorized to deal directly with individuals via the Federal Reserve Act. The Fed's job is monetary and financial stability through credit markets. That's the tools that it has, and it uses them when needed. If you want to help individuals through taxes/redistribution, social programs, etc, then that's government spending which is controlled by Congress. It's not the Fed's fault that politicians in the House of Representatives and/or Senate do not wish to pass legislation that authorizes these types of things.
- paulpan 6y ago
  > Or, you know, the Fed is not authorized to deal directly with individuals via the Federal Reserve Act. The Fed's job is monetary and financial stability through credit markets. That's the tools that it has, and it uses them when needed. Is this really true anymore? At least the past year, the Fed has taken an unprecedented powers to counter the effects of the pandemic. We've all heard of quantitative easing but there's a handful of programs such as SMCCF that allows the Fed to buy debt directly from large corporations. Corporations aren't people but they're owned by shareholders and controlled largely by the 1%. The amount of money the Fed has directly or indirectly injected into global economy is absurd and surely, if there's a reckoning, the blunt will be taken on by the bottom 90%. I thought this was a good overview of all the Fed's programs and initiatives since last year. https://www.americanactionforum.org/insight/timeline-the-federal-reserve-responds-to-the-threat-of-coronavirus/ https://www.americanactionforum.org/insight/timeline-the-fed...
  - Aunche 6y ago
    > We've all heard of quantitative easing but there's a handful of programs such as SMCCF that allows the Fed to buy debt directly from large corporations. I agree that this was questionable. The problem is that elected politicians are becoming increasingly dependent on the Fed to solve mistakes that they caused themselves. It's like a morbidly obese patient giving a surgeon to permission to do more and more invasive surgery. The surgery itself will only ensure that their body will stabilize, but it's up to the patient to actually get healthier.
sfblah 6y ago
Very well put, and I hope at least some people read this and think about it.
snarf21 6y ago
I agree that the FED is a major contributor, but the SEC and FTC have failed us in the 21st century. Also, given the way PACs and lobbying work, people don't truly grasp that we live in an ever increasing plutocracy. The greatest trick the elite have pulled is to convince the common man that the enemy is your neighbor who isn't red/blue like you. They rob us blind while we stream Netflix and chill. However, our life is still way too good to care. Only people with nothing to lose rise up.
bartimus 6y ago
Not to mention the low interest rates that caused the housing prices to sky-rocket. Also not to mention this new trend where younger generations prefer to spend their paychecks on vacations, smartphones, fashion as opposed to long-terms investments like a home.
- adamcstephens 6y ago
  A home isn’t an investment, at best it’s a low interest savings account. That people consider it to be one is part of the reason house prices continue to outpace inflation. Buy a home to live in it, but don’t expect that you’ll make money from it.
  - bartimus 6y ago
    Depends how you look at it. If you manage to attain mortgage free home ownership, you'll be free from rent or mortgage expenses.
    - fuzzfactor 6y ago
      If you're in a neighborhood where this is common, property tax increases will rise to compensate.
loudmax 6y ago
Who do you think appoints the people who run fed Fed? If you're looking to cast blame on bad policies, then blame those ultimately responsible: the politicians and the voters who put them there. Ideally, the United States would have a mechanism that would allow voters to choose politicians with the best policies. What we have instead is a system where voters have to chose between the least worst of two possible options. Both parties are beholden to the top 1%, but the are not equally so. What I find amazing is the lengths people will go to to blame government bureaucrats while reelecting the people who appointed them in the first place.
- mywittyname 6y ago
  > reelecting the people who appointed them in the first place. Everyone loves their Congresspeople. It's the other 433 who are screwing everything up.
  - bryanrasmussen 6y ago
    I'm pretty sure everyone hates their congresspeople, if they are of the opposing party.
    - tt433 6y ago
      Not really, ticket splitting is a thing for many americans -- it's decreasing though
- tastyfreeze 6y ago
  > What we have instead is a system where voters have to chose between the least worst of two possible options. Its worse than that. We have a system where people vote for their team color regardless of changes to the team's positions. 2020 seemed to be a year that more people realized that the party they had been faithful to no longer represented them. The number of "why I'm leaving (republican|democrat) party" posts and videos last year was something I had never seen before. I'm hoping this is a trend that continues. Red or Blue, they don't work for you.
hn_asker 6y ago
So this must be why Bitcoin has no inflation.
- PragmaticPulp 6y ago
  Not really. You could invest in real estate or stocks or gold or just about anything other than cash and also dodge the effects of currency inflation. Remember: Inflation is defined as rising price. If you hold cash, that's a problem. If you hold inflating assets, then it's largely neutral. If you have taken out cash-denominated loans to purchase inflating assets (e.g. a mortgage for a house), you actually benefit from inflation as your assets increase in value relative to your loan amount. (Over-simplified version) Bitcoin is explicitly deflationary by design, which is different than 0% inflation. If you have the same fixed supply and an ever-increasing demand (new population, new Bitcoin owners) then the currency is deflationary. If your economy is deflationary, you will enter a deflationary spiral which discourages anyone from doing anything other than hoarding the currency. It's no coincidence that HODL is the unofficial motto of Bitcoin proponents. This creates a different set of problems. If you thought wealth inequality is bad now, just imagine how bad wealth inequality would be if everyone had to buy into Bitcoin, making early adopters orders of magnitude richer. The inequality between early and late adopters would be insane. Early adopters love this idea, of course, because they're at the top of the pyramid. Doesn't work out so well for the late arrivals, though.
  - Geee 6y ago
    Deflation doesn't lead to hoarding. It leads to using your money wisely. You only buy what you need, and you buy things that last a long time.
    - PragmaticPulp 6y ago
      > You only buy what you need If you only spend when it's absolutely necessary because you want to keep as much currency as possible, that's the definition of hoarding. What would you define as hoarding? Spending so little that you starve to death? Keep in mind that spending includes things like investing in businesses. If currency itself provides the highest return because it's a race to hoard more than anyone else, investing in businesses becomes less attractive. Currency should facilitate the economy, not be the economy.
deleted 6y ago
[deleted]
pessimizer 6y ago
A lot of magic is happening in your second paragraph. Inflation reduces debt and wealth at the same time. Wages at the low end rise with the cost of living. Debt and wealth are denominated nominally. The cost of a new car may go up, but the cost of the car you're currently driving (and haven't paid off) is going down. Printing money doesn't steal from the poor. Printing money and giving it to the rich steals from the poor. Speculation on assets comes with low inflation, not high inflation, because with low inflation comes low interest rates. The only reason this is bad is because when this speculation crashes the economy, the rich will be saved by direct payments from the government. Nominal asset appreciation due to a rise in the money supply isn't a rise in value, and the poor aren't competing with the rich for assets. It seems like that in housing because it is an extraordinarily safe asset to drive up in value (when interest rates are low) based of the history of the US government bailing out losses in real estate. Wealth inequality in America is due to direct payments to the wealthy, and the government consistently stepping in as the silent guarantor of last resort behind every asset bubble. If the government were instead the asset buyer of last resort (not at par like after the mortgage crisis, but at market value), crashes of asset bubbles would be a boon for the public, not a boon for the people who participated most in the bubble. edit: The problem with the Fed is that it focuses on a goal of holding down inflation while not considering employment in enough detail. The quality of jobs, whether jobs are in bubble (or fragile) industries, rate of rise in wages, and the quit rate are ignored in favor of a simple percentage of unemployed, and administrations even narrow that down to the proportion of people currently collecting unemployment instead of the prime-age (25-54) employment rate as would make sense.
- mixmastamyk 6y ago
  When you own things, i.e. assets, inflation is not really an issue. Of the rich, only lenders are affected by inflation. Also wages have not been rising enough to counter trends.
- lazerpants 6y ago
  Great points! I disagree with you on this: Wages at the low end rise with the cost of living. I think this is really an elasticity issue and that we have far too much low skill labor available in the USA (in part because we can import it easily). This means that low end wages have no reason to rise.
hedora 6y ago
There's a hole in your argument: It takes $500 to build a well-diversified portfolio with a roboadvisor, and that portfolio will behave comparably to a larger one (it'll be a bit worse, but also taxed at a lower rate). So, if everyone invested their savings rationally, then when the Fed propped up stock prices, it wouldn't change the distribution of savings across the population. The real issue is that a larger percentage of the poor's assets are in items that depreciate. In the '08 crash, a the percentage of people in the US that owned a home dropped from 69% to 63.5%, and is only starting to recover: https://www.statista.com/statistics/184902/homeownership-rate-in-the-us-since-2003/ https://www.statista.com/statistics/184902/homeownership-rat... The Fed has been keeping mortgage rates low, and that has certainly helped home ownership rebound. So, it's more nuanced than "the fed steals poor people's money". (Don't get me wrong; the system is rigged to transfer wealth to the rich. I'm just saying there is more than one mechanism at play.)
- adam_arthur 6y ago
  Except high income earners can choose to invest a much higher percentage of their income. I can invest 80% or more of my take home pay if I choose to live frugally. Somebody close to minimum wage can probably get somewhere closer to 10%, which would come at greater personal sacrifice. Agreed that more people should participate in investing and there's an educational/behavioral component, but recent government interventions have been excessive and basically amount to inflation of asset prices. Dropping interest rates helps people purchase a home "today", but home prices quickly appreciate such that the carrying cost of the home is exactly the same as before, just priced higher and weighted more towards principal payments.
- socialist_coder 6y ago
  Most Americans don't have disposable income to invest in the stock market.... there is no amount of investing that will turn their "barely making ends meet" wages into a living wage.
  - jandrewrogers 6y ago
    The median US household has ~$1000/month in investable cash left over after all ordinary expenses. Per the Bureau of Labor and Statistics (BLS) which tracks in detail how much people actually spend on myriad things in each income decile. Americans are notoriously poor at actually saving or investing that money compared to their counterparts in other developed countries, but $12,000/year is quite a lot to invest in the stock market. If you saved even half of that you'd have a comfortable retirement.
stjohnswarts 6y ago
Correction: The 1% have manipulated the government to have obviously unfair political policies. They control advertising, media, and the government. I do blaim the rich, and it's from first principles. The only thing that ever puts a dent in it is grass roots efforts like BLM, unions, etc. We tried the gold standard, it is also a failure.
- Dma54rhs 6y ago
  BLM was far from grassroots, Mueller investigation revealed us how it was propped up by Russian trolls. Heck they ran their biggest social media pages.
  - dane-pgp 6y ago
    If you believe that Russian interference had a material effect on the amount of support for BLM[0], then presumably you would agree that Russian interference was also enough to change the 2016 election results by 80,000 votes.[1] [0] https://www.nytimes.com/interactive/2020/07/03/us/george-floyd-protests-crowd-size.html https://www.nytimes.com/interactive/2020/07/03/us/george-flo... [1] https://www.axios.com/hillary-clinton-2016-election-votes-supreme-court-liberal-justice-1b4bc4fc-9fad-44b4-ab54-9ef86aa9c1f1.html https://www.axios.com/hillary-clinton-2016-election-votes-su...
  - lasagnaphil 6y ago
    From what I’ve seen over various parts of the Internet, BLM’s pretty complicated. I’ve come to the conclusion that it’s a combination of actual people fed up with their neighborhood’s policing and wrecking shit up, along with some progressives who wanted the protest to be peaceful and instead hoped for policy-wide changes (through electorialism) from this, along with neoliberal shills (corporations and mainstream politicians) who wanted to co-opt it as a peaceful liberal protest and gain social prestige/status/clout without doing anything substantial. And maybe some Russians thought this was quite hilarious and tried to make the tensions a bit higher (by the way, can you provide a reliable link/source for the BLM Russian involvement thing, since it seems a bit dubious and the liberal establishment has developed a bad habit of blaming everything at Russia?)
burntbridge 6y ago
The Fed just implements the monetary policy of the Government in power. The board of governors are appointed by the president. The problem lies with Government and the failed economic policies they stick with through thick and thin i.e. Neo-liberalism.
OscarCunningham 6y ago
Do you think the Fed should have not done this and allowed inflation to run below their 2% target (perhaps negative)? Or do you have an alternative suggestion for how to keep inflation steady without printing money?
- adam_arthur 6y ago
  The fed should use a more comprehensive bundle of goods to measure inflation. Home prices, is a good example. Once they do that, inflation numbers will read much higher. By some accounts, home prices have increased by over 10% since this time last year. A healthy society needs room for social/fiscal mobility, which becomes increasingly difficult when asset prices are inflated relative to median income.
- PragmaticPulp 6y ago
  The challenge is that the fed isn't the only factor that determines inflation. It also varies based on supply and demand factors, among other things. Housing prices, college tuition, and medical care dominate inflation measures. All three of those categories have significant government influence well beyond the fed. If we stopped using federal funds to subsidize college and home loans, tuition prices and housing costs would magically stabilize in no time. Trying to tame tuition or housing inflation from the fed won't work if the other parts of the government are going to great lengths to subsidize those areas.
cromwellian 6y ago
Blaming the fed is a common libertarian tactic to avoid blaming the capitalists. Oh yes, in a pure anarchocapitalist Austrian utopia, you'd never have capitalists paying workers shit wages, employing child labor, forcing workers into unsafe firetrap buildings, etc It's a way of averting ye eyes from the real problems with the negative externalities and market failures, and the hard work to come up with policy solutions that patch the holes in capitalism. The analysis of the OP also ignores the decreasing returns to labor investment and increasing returns to capex because of automation which almost guarantee that the bulk of ROI will accrue to capitalists in the future. Hire some (temporary) middle class workers to build your robot factory or automated logistics warehouse, fire most of the workers in your old factories/warehouses, and watch as more net income is transferred.
- throwaway9870 6y ago
  As opposed to having the government do what? Have a great COVID response? Have a coherent industrial policy? Have great fiscal management? Have financial integrity? Grant monopolies to service provides (ahem Comcast) instead of building proper infrastructure? Not building sufficient electrical infrastructure? Enticing poor young people to make terrible money decisions relative to school and then saddling them with non-dischargable loans? Spending money to fight endless wars? In the middle of a pandemic pass a bill that sends millions overseas while Americans can't pay their medical, food or housing bills? I will take the capitalist over these government clowns any day of the week. Moderna created a vaccine in less than a day. Even with a year to think about it, my state and county still can't decide where the mass vaccination site should be located. Our government has coasted for too long and is incompetent. When the world decides to quit paying the dollar tax imposed via Fed printing, it will be a rude awaking for all Americans.
  - cromwellian 6y ago
    > Moderna created a vaccine in less than a day. Moderna benefited immensely from decades of publicly funded research as does most of Pharma, as well as direct aid from Emory University, NIAID, etc Look, if you believe the market works as the best mechanism for allocating goods and services, then you've also got to believe it won't work properly if prices are distorted, otherwise Garbage In, Garbage Out. If a firm is able to pass off costs onto others, it is a hidden subsidy, a form of market distortion. For example, if I just throw all of my trash and waste into the local lake and hope no one notices, I don't pay the costs for my waste, ergo, my prices and my profits do not reflect the true marginal cost. "But but but...tort! You can sue if injured by dumping!" Get real, this is a libertarian fantasy and not at all how diffuse stochastic waste works. The same people who tell me that what makes a poison, poison, is the dosage, not the molecule. Well, if you dump an insignificant fraction of pollutant, by itself, it is not harmful, but if 1000 firms dump the same amount, then it can be harmful. Who do you sue? Property rights only work if you can draw a border around something. There are no property rights to the atmosphere or oceans and hence civil lawsuits can't really be a solution to tracking down and punishing individual violators after they've done the damage, the government must force firms to PRICE IN the costs of pollution, either via an upfront regulation, or an upfront tax. The same is true for negative social externalities. If a firm, or a new technology, is having a large scale negative effect on society, making people less unhappy, more depressed, more prone to crime or violence, more impoverished, it becomes a cost that is passed off on everyone else. Who pays the costs? We all do. We pay it at the hospital. We pay for it to the tune of $44,000/yr to house prison inmates. We pay for it in more police and criminal justice, more fear, more suicides. If your company movies into a small town, puts all of the local shops out of business, and then refuses to raise wages or benefits, what ends up happening is, the other citizens end up paying for the healthcare, retirement, or other benefits that the Walmart, et al, aren't paying. Acting like we don't live in an interconnected system where negative costs get transferred, or that every deal is win-win-win, is a fantasy. If you don't pay for your neighbor's kids nutrition, early education, or healthcare, you'll pay for police to lock up their kids when they try to rob you. I'd much rather live in a society where I am "forced" to pay for educated, civilized, happy people to be around, then to live inside of a Fortress, "forced" paying for a bunch of private prisons in a police state, just so I can view the misery of the world from my tower windows. So if you really believe capitalism is the best system for allocating resources, you should be in favor of correcting market distortions where firms can cost-shift their damages onto others, especially when it comes to diffuse-in-time-and-space mechanisms where there is no easily visible negative feedback mechanism to correct the firm's behavior.
coliveira 6y ago
You're trying to convict a gun for the murder, instead of the person who pulled the trigger. The Fed is just a tool in the hands of the <1% who control the economy. If it was against their interests, the Fed would not even exist in the first place. The Fed policies are directed at stealing from the poor/middle class and syphoning the profits to the very upper echelons of capital owners.
matwood 6y ago
> you steal from the poor and give to the rich At this point it's really future generations who are being stolen from. I'm older, own a house, and paid for multiple degrees years ago. Inflation is good for me personally, but destroys young people. Salaries just can't keep up with how fast housing and education (and healthcare) costs have risen. I do not think the fed is solely to blame though.
- PragmaticPulp 6y ago
  > I do not think the fed is solely to blame though. This doesn't get repeated often enough. People like to blame the fed for everything, but much of the inflation in categories like tuition has been driven by misguided efforts to increase college loans to young people and encourage everyone to attend the most prestigious college they can get into. Colleges have been more than happy to soak up the increased demand with ever-rising tuition costs. The fastest way to reduce college tuition would be to put an upper limit on federal subsidies and bankruptcy protection for college loans. College tuition would magically drop to match that amount, almost overnight. Likewise, we need to stop going to such lengths to incentivize everyone to own a home. It started with good intentions, but it turned into an unsustainable arms race. Slow down the federal backing of home loans and let the market sort it out. Renting isn't nearly as bad of a financial choice as many young people think.
eznzt 6y ago
With so many mentions of the Fed, I find this comment to be extremely antisemitic.
- MrMan 6y ago
  Yes this scares me
john_moscow 6y ago
>It amazes me why most people do not grasp this. Because the people who figured that out also figured out the divide-and-conquer strategy. So first you quietly take X% out of everyone's pocket, and then you do massive PR campaign splitting them into identity groups and forcing them to fight over who should be more entitled to a 0.1X% bonus in the name of equity and justice. And you turn a blind eye, and even somewhat encourage people burning each other's businesses and getting each other fired over made-up differences. And it works, it just works. All the recent equity activism is about raiding the upper middle class and giving to those who openly oppose economic independence and self-reliance. Completely ignoring the fact that it's the corporations and the people controlling them, who are actually behind the economic degradation of the rank-and-file stratum. And calling it out publicly can now cost you your job [0]. So, endless equity fights for the bottom 99% and an unprecedented increase of power for the top 1%. Congratulations, people. [0] https://www.dailymail.co.uk/news/article-9248331/amp/Mandalorian-star-Gina-Carano-fired-series-Instagram-post.html https://www.dailymail.co.uk/news/article-9248331/amp/Mandalo...
- babesh 6y ago
  https://waitbutwhy.com/2019/09/stories.html https://waitbutwhy.com/2019/09/stories.html
StreamBright 6y ago
Somehow most of the time when there is something bad systematically happening in the US it is almost always associated with government legislation. In my opinion it is largely because of intention based policies as opposed to outcome based policies. We rarely investigate what was the outcome of a policy and just doubling down on failed ones.
onlyrealcuzzo 6y ago
Pedantic - but QE does not "print money" - which is why we didn't see significant inflation (as measured by CPI) for most of the QE timeline. If the Federal Government isn't putting out massive amounts of debt (like it is now) then The Federal Reserve buys bonds from banks & pension funds to lower yields. This is what happened in QE2 & 3 and why we didn't see inflation then (as measured by CPI). This time, though, the Federal Reserve is almost literally printing money. The Federal Government's massive debt is mostly because it's giving helicopter money to the bottom 50%. This is only possible because the Federal Reserve is "buying" that debt from the Federal Government. The money is coming from nowhere and being handed directly to people. This IS printing money. But it wasn't the case in the past. That being said - it's hard to argue this is a massive handout for the .1% at the expense or the bottom 90%. The bottom 50% are getting free money! In percentage terms - they're doing the best. If we must treat this as a zero sum game and go with the pie analogy - then the people with incomes too high to get free money and no assets to get inflated are the ones who got less pie. It's not a zero sum game, though! We all MASSIVELY benefited by not going through a 2nd great depression. It's interesting to me, though, that the vast majority of Americans think the way it's working out is fair - that people with high incomes who could keep their jobs should be the ones footing the bill - not people with massive amounts of wealth (especially massive since it was pumped up by The Federal Reserve).
belval 6y ago
Much better than that actually, those massive investments of money in the stock market is benefitting people outside the US as well. A lot of foreign interests are heavily invested in the US market because it shows stronger growth than domestic stocks. I am Canadian with a strong exposure to the US market and all these injection of moneys to keep the market high made for nice returns in 2020.
musicale 6y ago
> Most importantly, when the Fed decides to print money ad nauseam, they create massive asset inflation, which steals from the poor and gives to the rich Presumably debtors benefit from inflation since they can pay off their debts with inflated dollars. Presumably people with cash savings are harmed by inflation since cash loses value.
dataflow 6y ago
> When you [...] pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. Weren't these repaid (with interest, I heard)? Or are you referring to some that weren't?
deleted 6y ago
[deleted]
wilsocr88 6y ago
Addendum: "The Fed" that you rightly mention and the headline's "America's 1%" are, for all intents and purposes, identical.
u678u 6y ago
I dont like the Fed's easy money, but it looks like you didn't read the article.
parasubvert 6y ago
This narrative is completely contrary to what any economics course or textbook teaches. It is a popular Internet narrative, but it is also completely false. The Fed’s policies have directly helped the US at being one of the least impacted countries from the Great Recession. Also, asset inflation isn’t actually a thing.
rdevsrex 6y ago
Don't get me started on how the Fed (not to mention the income tax) was originated in secrecy by the rich.
- fuzzfactor 6y ago
  No reason to finish so soon . . .
nexthash 6y ago
I wouldn't say that the Fed is corrupt or incompetent by intention, rather it is part of a set of policies giving lenience to the financial system written by a generation that doesn't understand the need for strong regulation. Such generations come and go, usually in 50-year cycles as the older policymakers with memories of financial crises like the Great Depression die off. This lack of regulation is part of the inequality issue. Other factors include a potentially flooded labor market driving down wages, allowing people in control of economic resources to reap more work for the same price. However, some skilled people in labor also use this as an opportunity to move up the ladder. It's complex, ever-changing system with multiple variables and outputs. Read more here: https://aeon.co/essays/history-tells-us-where-the-wealth-gap-leads https://aeon.co/essays/history-tells-us-where-the-wealth-gap...
markdown 6y ago
> Correction: The Fed's policies have taken $50T of wealth from the Bottom 90%. What do you think the Fed is? The Fed is made up of the top banks, which means it's controlled by... the 1%. EDIT for the downvoters: > The Federal Reserve is "Controlled by member private banks" - https://en.wikipedia.org/wiki/Federal_Reserve https://en.wikipedia.org/wiki/Federal_Reserve
onethought 6y ago
When you say: The Fed Policies... who do you think influenced them? The same 1% the article is referring to. You are violently agreeing with the article with the pretence of disagreement
KorematsuFred 6y ago
> I think it is lack of education. I do not think you mean education as in formal education but rather people have not systematically thought about these things. And, I think people will never be educated enough on this topic. Inflation and Climate change in some sense are pretty much alike. Both are some serious market externalities as a consequence of which they do not benefit from market signals (the biggest teacher of them all). For issues like this the biggest teacher is the market and not books. A lot of climate change deniers have invested in Tesla and Solar companies and a lot of climate change maniacs have purchased Bitcoins and oil stocks. Some of the biggest proponents of climate change hysteria own private jets and ocean front properties. A lot of people call this hypocrisy and assign motives of fraud to these people but I do not think so. When it comes to climate change the market signals are clear that we need to look for an alternatives to our current energy sources and these sources will be more popular while completely rejecting alarmist claims. One might argue that market signals are not correct. But that is irrelevant. The point is people react to market signals FAR FAR better than anything that gets pushed by intellectuals, even those intellectuals who share their own political biases. Markets signals around bailouts or inflation are missing. As someone like Milton Friedman pointed out, there is simply nothing that an average American can do to prevent government from printing money. If nothing you do will have an impact people wont do anything. The market signals are missing because there is no competition where you can see what works and what does not. Instead of taking strong ideological positions I think we should work on making market forces operate more freely in this space. Bitcoin is already challenging the dollar in this space. It is a David (USD) vs Goliath right now but at some point people will figure out that a constant inflation for USD would mean higher price for Bitcoin over time. For bailouts I think we need ot come up with solution that is more market like. Perhaps increase of creating ad-hoc bailouts for large corporations, pass a clear law that describes the terms of bailout well in advance and provide different options to chose from for the corporations and then stick to it. You will be surprised how quickly people will vote in favor of better bailout policies.
mgfist 6y ago
> Wealth inequality and social unrest in America is DIRECTLY related to corrupt and/or incompetent (you choose) Fed policies. It amazes me why most people do not grasp this. I think it is lack of education. Who do you think is behind this. Jerome ain't going to lunch with you or me.
holografix 6y ago
The complete collapse of the financial markets would not have been good for anyone. Why the perpetrators are not in jail is what on my opinion is the true betrayal of the common person. I strongly believe the rise of the alt/far right is a direct byproduct of the complete disintegration of trust in the established political class. All over the world atypical politicians rose in popularity, even when they weren’t populist right wingers.
- MrMan 6y ago
  I think it is due to effective marketing techniques employed by big money interests who benefit from mass acceptance of libertarian narratives, and those like the social media who benefit from volatility / uncertainty in the information network.
  - fuzzfactor 6y ago
    >big money interests who benefit from mass acceptance of libertarian narratives I would say it's every interest who benefits from mass acceptance of completely stupid & misguided narratives from almost all Democrats & Republicans. Libertarians, especially non-Party members, are the least of my worries. Besides the fact that what now passes for leadership ability can not even rise high enough to polish the shoes of Dwight Eisenhower or JFK and they weren't good enough either compared to the Founding Fathers. Corporations worldwide have modeled themselves on this American trend of precipitiously declining competence at or near the top, plenty of money can always be made by Bozos after true leaders have built the money-making machines. By the time Reagan & Clinton came along it was far too late. Clinton knew it so well that's why one of his earliest (naturally unfulfilled) campaign promises in 1991 was to give every citizen $5000 if they wanted to start their own business. At the time nothing else could be seen that would allow wage-earners to escape to the prosperity their forefathers had worked for and truly earned up to that point in the 20th century.
konjin 6y ago
>Wealth inequality and social unrest in America is DIRECTLY related to corrupt and/or incompetent (you choose) Fed policies. It amazes me why most people do not grasp this. I think it is lack of education. I'd say it is the intended result of education. Why would you expect a school named after a billionaire to teach you how she is stealing from you any more than a school named after Karl Marx to talk about the problems of socialism.
dragonwriter 6y ago
> The Fed's policies have taken $50T of wealth from the Bottom 90%. When you bail out irresponsibly over-leveraged and nearly bankrupted banks and corporations, and pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. But...the Fed doesn't do that. Taxpayer funded [0] bailouts come from Congress’ executed by the Treasury, not the Fed. Fed operations don't come out of tax funds except in the sense that anyone holding government securities is spending taxpayer money when they spend the proceeds. [0] to the extent fiscal spending is accurately describes that way, which is less than one might think.
- runT1ME 6y ago
  I think he means that the Fed can directly and indirectly increase the money supply, which disproportionately benefits people and corporations leveraged into assets. Hence, increasing the money supply makes the rich even richer.
deleted 6y ago
[deleted]
ezconnect 6y ago
The FED are the rich people, it's a private entity.
Triv888 6y ago
Thanks, Bush, Obama and Trump... they are all the same (Biden too, probably).
norswap 6y ago
I don't wish it on you, but imagine that the fed stops propping up the financial markets though QE. "Irresponsibly over-leveraged and nearly bankrupted banks and corporations", allowed to crash and burn. If this happens, everybody will be worse off - rich & poor alike, but the poor will pay the brunt of the cost. Except this time it won't be just "taxpayer money" that is on the line. Consider it is possible for the fed's policy to be unfair AND the right thing to do at the same time. There is no doubt that financial collapse leads to economic collapse. I find it difficult to claim both to be in favour of the common people, and to argue for a course of action that would set the whole world aflame.
- throwaway789394 6y ago
  “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around(these banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.” Thomas Jefferson Maybe the system is working exactly as intended. This is a feature not a bug
lumost 6y ago
I've begun to wonder whether short-term economic depression in '08 and maybe '20 would have been preferable to the slow march to endemic corruption and aristocracy that the US is on. If the trend continues one would eventually expect long-term disruption to the US's ability to maintain cohesion.
- fuzzfactor 6y ago
  I would hope for a Constitutional Convention rather than continuing the trend with no end in sight.
deleted 6y ago
[deleted]
8note 6y ago
The fed is run by people in the top 1%, and not from the bottom 90%, so is there a meaningful difference?
rufus_foreman 6y ago
> Correction: The Fed's policies have taken $50T of wealth from the Bottom 90% That's QAnon level stuff.
deleted 6y ago
[deleted]
dkdk8283 6y ago
> Most importantly, when the Fed decides to print money ad nauseam Which is why we shouldn’t give stimulus bailout and let businesses run.
ThinkingAgain 6y ago
I have been thinking what is the best way to solve inequality. There are two problems one is wealth creation and other is wealth distribution. - Communism doesn't do a good job of wealth creation. - Capitalism doesn't do a good job of wealth distribution and causes inequality. -Increasing the taxes, only gives money to the government and my impression is they are not efficient in using money so overall the wealth of the society doesn't increase. If we limit how much a rich person can hold in large companies as stock, will it force the rich people to invest in small companies? Now we will have a mechanism of spreading the wealth by the rich person who knows how to use money efficiently. However the rich person will still become richer, not sure yet how to solve it completely. Maybe inheritance law should be changed so that once the person dies all his wealth goes to the employees in some fashion.
darig 6y ago
Money is an illusion. It amazes me why most people do not grasp this. I think it is lack of education.

silexia 6y ago

The bailouts are tragic as it undermines the natural garbage collection in democracy - bankruptcy. Bankruptcy is an incredible positive because it allows for the safe and sane dismantling of bad organizations. The question is - how do we apply a mechanism like bankruptcy to government organizations?

natenthe 6y ago
Exactly. Bankruptcy and insolvency is an immune response to financial illness in markets. However, instead of removing cancerous growths, we bail them out and thus they metastasize and become much larger and more lethal. This inevitably leads to the death of the host.
- seppin 6y ago
  One bank (lehman brothers) went bankrupt and the global economy was instantly in a death spiral. If many did, it would have been multiple factors worse.
- fuzzfactor 6y ago
  The host is already beyond recovery for the US dollar to ever again function as designed. Thos. Jefferson's quote continues: > I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people to whom it properly belongs.” Remember the purpose of the US Mint was to convert the silver & gold of any citizen into legal tender for a reasonable fee and return it to them as coins. Printing of bank notes was not on the agenda until politicians having a more predatory agenda got their way.
TuringNYC 6y ago
>> The question is - how do we apply a mechanism like bankruptcy to government organizations? Not sure if this is an answer for every government org, but hundreds of municipalities and possibly even states are going to go bankrupt due to obscene pension liabilities. The very difficult "solution" is to let them to bankrupt, and allow them to re-negotiate liabilities. Unfortunately many municipalities have promised the world to retirees, often with inflation adjustments and often starting at 20yrs of service (that is, age 41 until death). Add in tricks like matching final year salary (which is often packed with overtime) and you have unbearable pension obligations. It isnt the worker's fault. But the local leaders and pension managers are at fault, and citizens are on the hook. Unfortunately the decisions were made by leaders 10 or 20yrs ago, so it may not even be the current leadership. If the municipalities are bailed out, then it gives a signal to every other municipality to overpay massively because either the state or uncle sam or PBGC will come in and bail everyone out. It is going to be a mess.
- fuzzfactor 6y ago
  >obscene pension liabilities What seems that way to you has turned out to not even be as much prosperity as it should have been for those having the most effective inflation-calibrated plans. There was no other way to even come close to what employers had intended for their people when they granted these benefits in lieu of full market pay. That's how destructive inflation was. And of course for the vast majority of retirees it has always fallen far short of what could have been since inflation has been calibrated over the years to continually bring the buying power of gains downward the more that accrue regardless.

RIMR 6y ago

Lack of education is the #1 issue here. America's education system emphasizes nationalism and obedience. It doesn't encourage critical thinking or alternative worldviews. We're so deeply entrenched in the "American Dream" (Capitalism & Trickle Down Economics) that we're unable to challenge the current status quo. Worse yet, this is driving us towards the defunding of public education, and the further worsening of our problems. Our collective ignorance manifests itself in a number of ways, from wealthy mainstream journalists blaming economic problems on the poor to their audience of middle-class Americans, to mass-delusions regarding conspiracy theories intended to divide people.

DamnYuppie 6y ago
I agree with your assessment of our education system. I would go further and say we intentionally do not teach money management skills as it makes people harder to fleece. We have indoctrinated a whole country that debt is good, rampant consumerism is good, all of which leads to really bad money management. I am of the opinion that these habits and the ideology that supports it is the biggest reason people who are in the lower income brackets continually stay there. The best path to wealth is to convert your work into capital. If you spend everything you make and more there is no excess to re-invest.
- jmcqk6 6y ago
  >intentionally do not teach money management skills as it makes people harder to fleece. Yeah, this is a perfect example of "don't attribute to malice what is equally explainable by incompetence." I'm not talking about the incompetence of teachers. I'm talking about the incompetence of the system, and it's inflexibility towards change. This is not caused by malice. It's caused by is being completely unable to effectively handle the millions of different perspectives of "what education should be." You talk about indoctrination of a country, but I don't think it's indoctrination at all. It's people clinging to their views and being completely hostile to the idea that they might not understand important parts of the system. It's people turning to ideology instead of engaging with the actual complexity of the world.

ksec 6y ago

>It amazes me why most people do not grasp this. I think it is lack of education. I dont think that is the case at all. The concept is simple and easy enough to understand. Most people just dont care and want a single target to blame. And someone decide that target will not be government or Feds.

natenthe 6y ago
Bingo. I was being politically correct but actually agree wholeheartedly. Didn't want to get too conspiratorial on this forum.
- ksec 6y ago
  Well now even the whole submission is flagged for some reason.... Edit: And it is now unflagged.

nickpp 6y ago

Naval had an extremely pertinent tweet [1]: The road to socialism via inflation: • Print money, crash the reserve currency, destroy savers, and force them into inflated assets. • Asset inflation leads to inequality. Demonize asset holders and tax the nominal gains, thereby confiscating the real value of the assets. [1] https://twitter.com/naval/status/1359650086221930496?s=21 https://twitter.com/naval/status/1359650086221930496?s=21

natenthe 6y ago
Naval is a smart man. Couldn't agree with this more. We are nearing the end of the road to socialism via inflation.
- seppin 6y ago
  All countries print money and discourage saving. Taxing capital gains at a fraction of the rate you tax labor ensures increasing inequality, and is not the source of "confiscating" or theft of wealth. Naval is a fortune cookie philosopher at best, and seems to repackage college libertarian ideas of protecting the wealthy from adequately funding the country they reside in.
lefrenchy 6y ago
This entire take is predicated on the idea that the people in power have something to gain from doing this, since it requires the ruling class to do all of these things. It falls completely flat if you think about the logic beyond trying to make it fit your ideological narrative. Why would the ruling class (which his tweet presupposes is corrupt), who benefit from this status quo, purposefully destroy the systems that make them rich? It just doesn't make sense, the logic implies that a corrupt ruling class would purposefully destroy the systems that allow them to be corrupt in order to achieve "socialism" (which Naval clearly implies is somehow innately corrupt here). Why would they destroy what they benefit from on purpose? Ruling classes benefit from stability, if people are not starving and live generally decent/free lives they won't search above for answers or be inclined to upheaval. > destroy savers, and force them into inflated assets. I don't understand this part, isn't it a broad consensus in the US that savings should not be in cash but instead in a diverse set of assets and bonds? How does inflating assets destroy savers in this case? Every time I hear advice on saving in the US it's basically (take anything above emergency fund savings and invest it in ETFs/index funds/bonds)

lm28469 6y ago

> It amazes me why most people do not grasp this. I think it is lack of education. We should be careful about wording here. The lack of education is a direct consequence of the top "1%" politics and very well thought decisions. They have everything to gain from us plebeians not thinking about these issues. > (you choose) It's much more complex than that, especially in America. If you can choose between A and B but the right answer is C you have everything but a choice. Even worse than that, if the entire culture and education of your country is built on making you think only A and B exists, C being the right answer will never even materialise. We're past the time of blaming "the people", when the entire system is corrupt to the bone we should stop blaming eachother and look up, when all the parties converge to the same point you know you're being played

JamesLeonis 6y ago

Except this wasn't the federal bailouts. Those are an entirely different beast. It's talking strictly about income stagnation. The study shows that if wages kept up with productivity (as was the case in the immediate post-WW2 era) the bottom 90% would earn $2.5 trillion per year more. > We document the cumulative effect of four decades of income growth below the growth of per capita gross national income and estimate that aggregate income for the population below the 90th percentile over this time period would have been $2.5 trillion (67 percent) higher in 2018 had income growth since 1975 remained as equitable as it was in the first two post-War decades. From 1975 to 2018, the difference between the aggregate taxable income for those below the 90th percentile and the equitable growth counterfactual totals $47 trillion. https://www.rand.org/pubs/working_papers/WRA516-1.html https://www.rand.org/pubs/working_papers/WRA516-1.html

treis 6y ago
>Except this wasn't the federal bailouts. Those are an entirely different beast. It's talking strictly about income stagnation. Which rests on the fundamentally incorrect assumption that a dollar a rich person gets means that a poor person is a dollar poorer.
- fuzzfactor 6y ago
  did not downvote, but More accurate to calculate how it still regularly costs a million poor people a dollar each to make one person a new millionaire. But we all know a $Million doesn't buy what it was supposed to any more, so all million-and-one of them are screwed anyway. And poor people actually used to be able to afford this kind of spending.
Seanambers 6y ago
Some nice graphs to go along; https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- tylerhou 6y ago
  A bunch of these graphs are misleading, especially the ones from the EPI. /r/badecon can explain better than I can: https://www.reddit.com/r/badeconomics/comments/6rtoh4/productivity_pay_gap_in_epi_we_trust/ https://www.reddit.com/r/badeconomics/comments/6rtoh4/produc... TL;DR: 1. The pay line is for the bottom ~80% of workers, while the productivity line is for all workers. If you graph all workers wages vs all workers productivity, then the gap shrinks quite a bit. (Of course, maybe we should redistribute wealth from top workers to all workers, but that's another discussion.) 2. Average hourly wages doesn't take into account workers' increase in benefits. 3. The lines aren't adjusted for inflation in the same way, which makes the gap look worse.

pmiller2 6y ago

Potato, potatoe. Who do you think controls "the Fed?" Cui bono? Your comment would also imply that before there was such a thing as a Federal Reserve, income and wealth inequality didn't exist. This is false.

stickyricky 6y ago
It does not imply "wealth inequality is the result of federal policies". It implies that the current transfer of wealth is a result of federal policy.
- seppin 6y ago
  All they do is regulate the flow of new money, they aren't responsible for tax codes that ensure a widening gap of wealth via the return on capital vs the return on labor. https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
  - TearsInTheRain 6y ago
    They affect the inflation rate and inflation should be thought of as a tax. And its a tax that primarily affects middle class people that keep their wealth in cash rather than assets. They also implicitly affect asset prices which is probably one of the primary causes of wealth inequality.
    - seppin 6y ago
      It's a hidden tax for sure, but it's marginal compared to the returns seen on capital vs labor, and the taxes collected of both forms of income.
- pmiller2 6y ago
  Well, considering how the comment literally says "Wealth inequality and social unrest in America is DIRECTLY related to corrupt and/or incompetent (you choose) Fed policies," you'll forgive me for disagreeing.

tobmlt 6y ago

Yep. The fed is an engine, whose purpose is to move wealth silently from the masses to the powerful monied few, via time-asymmetric inflation. (Mostly Inflation of assets presently) The resulting data looks like corporations have used their power to directly disenfranchise/disempower workers, and so the mass clamber for protective laws. More laws will be enacted by those in power. The time is certainly right for it. The laws will be constructed such that they will entrench the existing power structures, and meanwhile the fed will motor on, unaffected. Nothing changes for the good while this engine continues to run. And it will run at ever increasing rates, because it has to, in order to continue to do its work of supercharging the economy from the top down. Get on the train (Ride the coat-tails of the great and powerful as best you can by investing) or be left behind in a wake of generally stagnant wages (stagnant for lots of reasons), and mildly rising prices. Meanwhile housing prices (housing costs to you) and stocks are off on a rocket-ship to the stars.

3327 6y ago
Crypto, decentralized, the fed is done and done should they be foe good reason.
tylerhou 6y ago
The Fed is stabilizing the price of the USD because of the coronavirus pandemic. If it were not printing money, then there would likely be a deflationary spiral that would cause a depression. That's one of the reasons why the Great Depression was so bad: the US was on the gold standard at the beginning. The US can't create gold out of thin air, so the USD started deflating, people stopped spending, and capital stopped flowing. Companies went bankrupt, people lost jobs — all because much needed dollars were stuffed in people's mattresses instead of being spent. The Fed is increasing the money supply by purchasing bonds because corporations need cheaper capital to pay their workers and their bills. When the pandemic is over, it will sell back these bonds the banks it bought them from. Without the Fed's intervention, this recession and pandemic would have been far, far worse. Of course, helping corporations also helps the people who own the corporations: the rich. That's a distributional issue, and the main solution is tax policy. We need to raise income and estate taxes on the rich, increase the tax on capital gains, and institute a wealth tax. The Fed is like an engine. But engines are a tool. Tools can cause good things and bad things. Right now, the Fed is causing good things by providing liquidity, which has the side effect of causing bad things because it lets the rich accumulate wealth. If the Fed is like an engine, then it serves to move a train — the economy. If the train is runaway — if the economy benefits the rich far more than normal people — that doesn't mean engines are bad. It means we need to stop the train, fix it, and start the engine again. If we restructure our economy, the Fed will still continue to do good things, with fewer negative side effects. That would be, on net, good. So the problem isn't with the Fed, it's with the economy. And claiming that the Fed is the root of all our problems misses the bigger picture.

jrsj 6y ago

The Federal Reserve is just one tool used to achieve this. One of the most important ones sure, but to put too much emphasis on it is missing the forest for the trees.

tachyonbeam 6y ago
The real problem is money in politics, legalized bribery. The government is not really working for the people.

nknealk 6y ago

It’s worth noting that, while this is true, the reason the fed exists is because if they didn’t do that, we’d have bread lines. I’d argue that recent fed actions are the reason supermarket shelves aren’t barren which is in the interest of all Americans.

draw_down 6y ago

Come on, who do you think runs the Fed? Plumbers?

gwbas1c 6y ago

The reason for the bailouts was to avoid mass unemployment and mass foreclosures. These would have happened had major automakers or major banks went bankrupt.

gowld 6y ago
Giving the money to the employees in a much cheaper way to avoid unemployment. Temporarily banning foreclosure is an easier way to avoid foreclosures.

BlueTie 6y ago

In David Graeber's book on money, one detail that I always remember when I read a comment like this is how coinage was created so many times throughout history as a way to support an Army. King makes money -> gives it to the army -> collects money as a tax from all citizens. It creates a system where all the people in the kingdom have to contribute to the army in some way. Now The Fed creates money -> gives it to bankers -> gov't collects taxes in that coin. So we've created a system where your ability to buy things is a derivative of how much you support banking. It's no wonder why everyone is overleveraged and fragile and needs bailouts all the time.

adam_arthur 6y ago

Especially when coupled with the excessive fiscal stimulus. We should absolutely help those most impacted by the pandemic, but the amount of money being injected amounts to gross negligence. Why were people who made 6 figures and still employed being given checks, for example? The stock market is on fire, and many businesses are smashing earnings expectations, yet we inject another $2 trillion? I've got a sizable portfolio, but the government response frankly saddens me. The green we see every day just represents inflation (of assets). Big gains in stonks, but now we have to pay 2 million dollars for a house in a nice part of town. Really unfortunate for those without significant assets that ever hoped to own a home.

mindslight 6y ago
> Why were people who made 6 figures and still employed being given checks, for example? Because it's easier to do this than to gauge need, and with the paltry amounts handed out it doesn't add up to much compared to the big picture. The real question is why this has become a political talking point, and the answer is to distract from that much larger rapidly-implemented scam of bailing out the bond market that you rightly point out is "Really unfortunate for those without significant assets that ever hoped to own a home". Hiding the large scale theft is much easier when you can distract people into bickering about their financial neighbors.
- adam_arthur 6y ago
  It doesn't have to be one or the other. 100% agreed that fed action via bond buying has been excessive as well. In a healthy economic system, there need to be "down" cycles where overleveraged or poorly run businesses fail. If the government will backstop all investments, then why not leverage up as much as possible and take on excessive risk? Those that have been financially prudent have been punished consistently. I wonder how much of the fiscal/monetary response is really driven by personal bias towards protecting their own portfolios. Helicopter money is certainly good optics in the short-term, but terrible governance on a longer timescale.
- deleted 6y ago
  [deleted]

throw0101a 6y ago

> When you bail out irresponsibly over-leveraged and nearly bankrupted banks and corporations, and pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. Or, you know, the Fed is not authorized to deal directly with individuals via the Federal Reserve Act. The Fed's job is monetary and financial stability through credit markets. That's the tools that it has, and it uses them when needed. If you want to help individuals through taxes/redistribution, social programs, etc, then that's government spending which is controlled by Congress. It's not the Fed's fault that politicians in the House of Representatives and/or Senate do not wish to pass legislation that authorizes these types of things.

paulpan 6y ago
> Or, you know, the Fed is not authorized to deal directly with individuals via the Federal Reserve Act. The Fed's job is monetary and financial stability through credit markets. That's the tools that it has, and it uses them when needed. Is this really true anymore? At least the past year, the Fed has taken an unprecedented powers to counter the effects of the pandemic. We've all heard of quantitative easing but there's a handful of programs such as SMCCF that allows the Fed to buy debt directly from large corporations. Corporations aren't people but they're owned by shareholders and controlled largely by the 1%. The amount of money the Fed has directly or indirectly injected into global economy is absurd and surely, if there's a reckoning, the blunt will be taken on by the bottom 90%. I thought this was a good overview of all the Fed's programs and initiatives since last year. https://www.americanactionforum.org/insight/timeline-the-federal-reserve-responds-to-the-threat-of-coronavirus/ https://www.americanactionforum.org/insight/timeline-the-fed...
- Aunche 6y ago
  > We've all heard of quantitative easing but there's a handful of programs such as SMCCF that allows the Fed to buy debt directly from large corporations. I agree that this was questionable. The problem is that elected politicians are becoming increasingly dependent on the Fed to solve mistakes that they caused themselves. It's like a morbidly obese patient giving a surgeon to permission to do more and more invasive surgery. The surgery itself will only ensure that their body will stabilize, but it's up to the patient to actually get healthier.

sfblah 6y ago

Very well put, and I hope at least some people read this and think about it.

snarf21 6y ago

I agree that the FED is a major contributor, but the SEC and FTC have failed us in the 21st century. Also, given the way PACs and lobbying work, people don't truly grasp that we live in an ever increasing plutocracy. The greatest trick the elite have pulled is to convince the common man that the enemy is your neighbor who isn't red/blue like you. They rob us blind while we stream Netflix and chill. However, our life is still way too good to care. Only people with nothing to lose rise up.

bartimus 6y ago

Not to mention the low interest rates that caused the housing prices to sky-rocket. Also not to mention this new trend where younger generations prefer to spend their paychecks on vacations, smartphones, fashion as opposed to long-terms investments like a home.

adamcstephens 6y ago
A home isn’t an investment, at best it’s a low interest savings account. That people consider it to be one is part of the reason house prices continue to outpace inflation. Buy a home to live in it, but don’t expect that you’ll make money from it.
- bartimus 6y ago
  Depends how you look at it. If you manage to attain mortgage free home ownership, you'll be free from rent or mortgage expenses.
  - fuzzfactor 6y ago
    If you're in a neighborhood where this is common, property tax increases will rise to compensate.

loudmax 6y ago

Who do you think appoints the people who run fed Fed? If you're looking to cast blame on bad policies, then blame those ultimately responsible: the politicians and the voters who put them there. Ideally, the United States would have a mechanism that would allow voters to choose politicians with the best policies. What we have instead is a system where voters have to chose between the least worst of two possible options. Both parties are beholden to the top 1%, but the are not equally so. What I find amazing is the lengths people will go to to blame government bureaucrats while reelecting the people who appointed them in the first place.

mywittyname 6y ago
> reelecting the people who appointed them in the first place. Everyone loves their Congresspeople. It's the other 433 who are screwing everything up.
- bryanrasmussen 6y ago
  I'm pretty sure everyone hates their congresspeople, if they are of the opposing party.
  - tt433 6y ago
    Not really, ticket splitting is a thing for many americans -- it's decreasing though
tastyfreeze 6y ago
> What we have instead is a system where voters have to chose between the least worst of two possible options. Its worse than that. We have a system where people vote for their team color regardless of changes to the team's positions. 2020 seemed to be a year that more people realized that the party they had been faithful to no longer represented them. The number of "why I'm leaving (republican|democrat) party" posts and videos last year was something I had never seen before. I'm hoping this is a trend that continues. Red or Blue, they don't work for you.

hn_asker 6y ago

So this must be why Bitcoin has no inflation.

PragmaticPulp 6y ago
Not really. You could invest in real estate or stocks or gold or just about anything other than cash and also dodge the effects of currency inflation. Remember: Inflation is defined as rising price. If you hold cash, that's a problem. If you hold inflating assets, then it's largely neutral. If you have taken out cash-denominated loans to purchase inflating assets (e.g. a mortgage for a house), you actually benefit from inflation as your assets increase in value relative to your loan amount. (Over-simplified version) Bitcoin is explicitly deflationary by design, which is different than 0% inflation. If you have the same fixed supply and an ever-increasing demand (new population, new Bitcoin owners) then the currency is deflationary. If your economy is deflationary, you will enter a deflationary spiral which discourages anyone from doing anything other than hoarding the currency. It's no coincidence that HODL is the unofficial motto of Bitcoin proponents. This creates a different set of problems. If you thought wealth inequality is bad now, just imagine how bad wealth inequality would be if everyone had to buy into Bitcoin, making early adopters orders of magnitude richer. The inequality between early and late adopters would be insane. Early adopters love this idea, of course, because they're at the top of the pyramid. Doesn't work out so well for the late arrivals, though.
- Geee 6y ago
  Deflation doesn't lead to hoarding. It leads to using your money wisely. You only buy what you need, and you buy things that last a long time.
  - PragmaticPulp 6y ago
    > You only buy what you need If you only spend when it's absolutely necessary because you want to keep as much currency as possible, that's the definition of hoarding. What would you define as hoarding? Spending so little that you starve to death? Keep in mind that spending includes things like investing in businesses. If currency itself provides the highest return because it's a race to hoard more than anyone else, investing in businesses becomes less attractive. Currency should facilitate the economy, not be the economy.

deleted 6y ago

[deleted]

pessimizer 6y ago

A lot of magic is happening in your second paragraph. Inflation reduces debt and wealth at the same time. Wages at the low end rise with the cost of living. Debt and wealth are denominated nominally. The cost of a new car may go up, but the cost of the car you're currently driving (and haven't paid off) is going down. Printing money doesn't steal from the poor. Printing money and giving it to the rich steals from the poor. Speculation on assets comes with low inflation, not high inflation, because with low inflation comes low interest rates. The only reason this is bad is because when this speculation crashes the economy, the rich will be saved by direct payments from the government. Nominal asset appreciation due to a rise in the money supply isn't a rise in value, and the poor aren't competing with the rich for assets. It seems like that in housing because it is an extraordinarily safe asset to drive up in value (when interest rates are low) based of the history of the US government bailing out losses in real estate. Wealth inequality in America is due to direct payments to the wealthy, and the government consistently stepping in as the silent guarantor of last resort behind every asset bubble. If the government were instead the asset buyer of last resort (not at par like after the mortgage crisis, but at market value), crashes of asset bubbles would be a boon for the public, not a boon for the people who participated most in the bubble. edit: The problem with the Fed is that it focuses on a goal of holding down inflation while not considering employment in enough detail. The quality of jobs, whether jobs are in bubble (or fragile) industries, rate of rise in wages, and the quit rate are ignored in favor of a simple percentage of unemployed, and administrations even narrow that down to the proportion of people currently collecting unemployment instead of the prime-age (25-54) employment rate as would make sense.

mixmastamyk 6y ago
When you own things, i.e. assets, inflation is not really an issue. Of the rich, only lenders are affected by inflation. Also wages have not been rising enough to counter trends.
lazerpants 6y ago
Great points! I disagree with you on this: Wages at the low end rise with the cost of living. I think this is really an elasticity issue and that we have far too much low skill labor available in the USA (in part because we can import it easily). This means that low end wages have no reason to rise.

hedora 6y ago

There's a hole in your argument: It takes $500 to build a well-diversified portfolio with a roboadvisor, and that portfolio will behave comparably to a larger one (it'll be a bit worse, but also taxed at a lower rate). So, if everyone invested their savings rationally, then when the Fed propped up stock prices, it wouldn't change the distribution of savings across the population. The real issue is that a larger percentage of the poor's assets are in items that depreciate. In the '08 crash, a the percentage of people in the US that owned a home dropped from 69% to 63.5%, and is only starting to recover: https://www.statista.com/statistics/184902/homeownership-rate-in-the-us-since-2003/ https://www.statista.com/statistics/184902/homeownership-rat... The Fed has been keeping mortgage rates low, and that has certainly helped home ownership rebound. So, it's more nuanced than "the fed steals poor people's money". (Don't get me wrong; the system is rigged to transfer wealth to the rich. I'm just saying there is more than one mechanism at play.)

adam_arthur 6y ago
Except high income earners can choose to invest a much higher percentage of their income. I can invest 80% or more of my take home pay if I choose to live frugally. Somebody close to minimum wage can probably get somewhere closer to 10%, which would come at greater personal sacrifice. Agreed that more people should participate in investing and there's an educational/behavioral component, but recent government interventions have been excessive and basically amount to inflation of asset prices. Dropping interest rates helps people purchase a home "today", but home prices quickly appreciate such that the carrying cost of the home is exactly the same as before, just priced higher and weighted more towards principal payments.
socialist_coder 6y ago
Most Americans don't have disposable income to invest in the stock market.... there is no amount of investing that will turn their "barely making ends meet" wages into a living wage.
- jandrewrogers 6y ago
  The median US household has ~$1000/month in investable cash left over after all ordinary expenses. Per the Bureau of Labor and Statistics (BLS) which tracks in detail how much people actually spend on myriad things in each income decile. Americans are notoriously poor at actually saving or investing that money compared to their counterparts in other developed countries, but $12,000/year is quite a lot to invest in the stock market. If you saved even half of that you'd have a comfortable retirement.

stjohnswarts 6y ago

Correction: The 1% have manipulated the government to have obviously unfair political policies. They control advertising, media, and the government. I do blaim the rich, and it's from first principles. The only thing that ever puts a dent in it is grass roots efforts like BLM, unions, etc. We tried the gold standard, it is also a failure.

Dma54rhs 6y ago
BLM was far from grassroots, Mueller investigation revealed us how it was propped up by Russian trolls. Heck they ran their biggest social media pages.
- dane-pgp 6y ago
  If you believe that Russian interference had a material effect on the amount of support for BLM[0], then presumably you would agree that Russian interference was also enough to change the 2016 election results by 80,000 votes.[1] [0] https://www.nytimes.com/interactive/2020/07/03/us/george-floyd-protests-crowd-size.html https://www.nytimes.com/interactive/2020/07/03/us/george-flo... [1] https://www.axios.com/hillary-clinton-2016-election-votes-supreme-court-liberal-justice-1b4bc4fc-9fad-44b4-ab54-9ef86aa9c1f1.html https://www.axios.com/hillary-clinton-2016-election-votes-su...
- lasagnaphil 6y ago
  From what I’ve seen over various parts of the Internet, BLM’s pretty complicated. I’ve come to the conclusion that it’s a combination of actual people fed up with their neighborhood’s policing and wrecking shit up, along with some progressives who wanted the protest to be peaceful and instead hoped for policy-wide changes (through electorialism) from this, along with neoliberal shills (corporations and mainstream politicians) who wanted to co-opt it as a peaceful liberal protest and gain social prestige/status/clout without doing anything substantial. And maybe some Russians thought this was quite hilarious and tried to make the tensions a bit higher (by the way, can you provide a reliable link/source for the BLM Russian involvement thing, since it seems a bit dubious and the liberal establishment has developed a bad habit of blaming everything at Russia?)

burntbridge 6y ago

The Fed just implements the monetary policy of the Government in power. The board of governors are appointed by the president. The problem lies with Government and the failed economic policies they stick with through thick and thin i.e. Neo-liberalism.

OscarCunningham 6y ago

Do you think the Fed should have not done this and allowed inflation to run below their 2% target (perhaps negative)? Or do you have an alternative suggestion for how to keep inflation steady without printing money?

adam_arthur 6y ago
The fed should use a more comprehensive bundle of goods to measure inflation. Home prices, is a good example. Once they do that, inflation numbers will read much higher. By some accounts, home prices have increased by over 10% since this time last year. A healthy society needs room for social/fiscal mobility, which becomes increasingly difficult when asset prices are inflated relative to median income.
PragmaticPulp 6y ago
The challenge is that the fed isn't the only factor that determines inflation. It also varies based on supply and demand factors, among other things. Housing prices, college tuition, and medical care dominate inflation measures. All three of those categories have significant government influence well beyond the fed. If we stopped using federal funds to subsidize college and home loans, tuition prices and housing costs would magically stabilize in no time. Trying to tame tuition or housing inflation from the fed won't work if the other parts of the government are going to great lengths to subsidize those areas.

cromwellian 6y ago

Blaming the fed is a common libertarian tactic to avoid blaming the capitalists. Oh yes, in a pure anarchocapitalist Austrian utopia, you'd never have capitalists paying workers shit wages, employing child labor, forcing workers into unsafe firetrap buildings, etc It's a way of averting ye eyes from the real problems with the negative externalities and market failures, and the hard work to come up with policy solutions that patch the holes in capitalism. The analysis of the OP also ignores the decreasing returns to labor investment and increasing returns to capex because of automation which almost guarantee that the bulk of ROI will accrue to capitalists in the future. Hire some (temporary) middle class workers to build your robot factory or automated logistics warehouse, fire most of the workers in your old factories/warehouses, and watch as more net income is transferred.

throwaway9870 6y ago
As opposed to having the government do what? Have a great COVID response? Have a coherent industrial policy? Have great fiscal management? Have financial integrity? Grant monopolies to service provides (ahem Comcast) instead of building proper infrastructure? Not building sufficient electrical infrastructure? Enticing poor young people to make terrible money decisions relative to school and then saddling them with non-dischargable loans? Spending money to fight endless wars? In the middle of a pandemic pass a bill that sends millions overseas while Americans can't pay their medical, food or housing bills? I will take the capitalist over these government clowns any day of the week. Moderna created a vaccine in less than a day. Even with a year to think about it, my state and county still can't decide where the mass vaccination site should be located. Our government has coasted for too long and is incompetent. When the world decides to quit paying the dollar tax imposed via Fed printing, it will be a rude awaking for all Americans.
- cromwellian 6y ago
  > Moderna created a vaccine in less than a day. Moderna benefited immensely from decades of publicly funded research as does most of Pharma, as well as direct aid from Emory University, NIAID, etc Look, if you believe the market works as the best mechanism for allocating goods and services, then you've also got to believe it won't work properly if prices are distorted, otherwise Garbage In, Garbage Out. If a firm is able to pass off costs onto others, it is a hidden subsidy, a form of market distortion. For example, if I just throw all of my trash and waste into the local lake and hope no one notices, I don't pay the costs for my waste, ergo, my prices and my profits do not reflect the true marginal cost. "But but but...tort! You can sue if injured by dumping!" Get real, this is a libertarian fantasy and not at all how diffuse stochastic waste works. The same people who tell me that what makes a poison, poison, is the dosage, not the molecule. Well, if you dump an insignificant fraction of pollutant, by itself, it is not harmful, but if 1000 firms dump the same amount, then it can be harmful. Who do you sue? Property rights only work if you can draw a border around something. There are no property rights to the atmosphere or oceans and hence civil lawsuits can't really be a solution to tracking down and punishing individual violators after they've done the damage, the government must force firms to PRICE IN the costs of pollution, either via an upfront regulation, or an upfront tax. The same is true for negative social externalities. If a firm, or a new technology, is having a large scale negative effect on society, making people less unhappy, more depressed, more prone to crime or violence, more impoverished, it becomes a cost that is passed off on everyone else. Who pays the costs? We all do. We pay it at the hospital. We pay for it to the tune of $44,000/yr to house prison inmates. We pay for it in more police and criminal justice, more fear, more suicides. If your company movies into a small town, puts all of the local shops out of business, and then refuses to raise wages or benefits, what ends up happening is, the other citizens end up paying for the healthcare, retirement, or other benefits that the Walmart, et al, aren't paying. Acting like we don't live in an interconnected system where negative costs get transferred, or that every deal is win-win-win, is a fantasy. If you don't pay for your neighbor's kids nutrition, early education, or healthcare, you'll pay for police to lock up their kids when they try to rob you. I'd much rather live in a society where I am "forced" to pay for educated, civilized, happy people to be around, then to live inside of a Fortress, "forced" paying for a bunch of private prisons in a police state, just so I can view the misery of the world from my tower windows. So if you really believe capitalism is the best system for allocating resources, you should be in favor of correcting market distortions where firms can cost-shift their damages onto others, especially when it comes to diffuse-in-time-and-space mechanisms where there is no easily visible negative feedback mechanism to correct the firm's behavior.

coliveira 6y ago

You're trying to convict a gun for the murder, instead of the person who pulled the trigger. The Fed is just a tool in the hands of the <1% who control the economy. If it was against their interests, the Fed would not even exist in the first place. The Fed policies are directed at stealing from the poor/middle class and syphoning the profits to the very upper echelons of capital owners.

matwood 6y ago

> you steal from the poor and give to the rich At this point it's really future generations who are being stolen from. I'm older, own a house, and paid for multiple degrees years ago. Inflation is good for me personally, but destroys young people. Salaries just can't keep up with how fast housing and education (and healthcare) costs have risen. I do not think the fed is solely to blame though.

PragmaticPulp 6y ago
> I do not think the fed is solely to blame though. This doesn't get repeated often enough. People like to blame the fed for everything, but much of the inflation in categories like tuition has been driven by misguided efforts to increase college loans to young people and encourage everyone to attend the most prestigious college they can get into. Colleges have been more than happy to soak up the increased demand with ever-rising tuition costs. The fastest way to reduce college tuition would be to put an upper limit on federal subsidies and bankruptcy protection for college loans. College tuition would magically drop to match that amount, almost overnight. Likewise, we need to stop going to such lengths to incentivize everyone to own a home. It started with good intentions, but it turned into an unsustainable arms race. Slow down the federal backing of home loans and let the market sort it out. Renting isn't nearly as bad of a financial choice as many young people think.

eznzt 6y ago

With so many mentions of the Fed, I find this comment to be extremely antisemitic.

MrMan 6y ago
Yes this scares me

john_moscow 6y ago

>It amazes me why most people do not grasp this. Because the people who figured that out also figured out the divide-and-conquer strategy. So first you quietly take X% out of everyone's pocket, and then you do massive PR campaign splitting them into identity groups and forcing them to fight over who should be more entitled to a 0.1X% bonus in the name of equity and justice. And you turn a blind eye, and even somewhat encourage people burning each other's businesses and getting each other fired over made-up differences. And it works, it just works. All the recent equity activism is about raiding the upper middle class and giving to those who openly oppose economic independence and self-reliance. Completely ignoring the fact that it's the corporations and the people controlling them, who are actually behind the economic degradation of the rank-and-file stratum. And calling it out publicly can now cost you your job [0]. So, endless equity fights for the bottom 99% and an unprecedented increase of power for the top 1%. Congratulations, people. [0] https://www.dailymail.co.uk/news/article-9248331/amp/Mandalorian-star-Gina-Carano-fired-series-Instagram-post.html https://www.dailymail.co.uk/news/article-9248331/amp/Mandalo...

babesh 6y ago
https://waitbutwhy.com/2019/09/stories.html https://waitbutwhy.com/2019/09/stories.html

StreamBright 6y ago

Somehow most of the time when there is something bad systematically happening in the US it is almost always associated with government legislation. In my opinion it is largely because of intention based policies as opposed to outcome based policies. We rarely investigate what was the outcome of a policy and just doubling down on failed ones.

onlyrealcuzzo 6y ago

Pedantic - but QE does not "print money" - which is why we didn't see significant inflation (as measured by CPI) for most of the QE timeline. If the Federal Government isn't putting out massive amounts of debt (like it is now) then The Federal Reserve buys bonds from banks & pension funds to lower yields. This is what happened in QE2 & 3 and why we didn't see inflation then (as measured by CPI). This time, though, the Federal Reserve is almost literally printing money. The Federal Government's massive debt is mostly because it's giving helicopter money to the bottom 50%. This is only possible because the Federal Reserve is "buying" that debt from the Federal Government. The money is coming from nowhere and being handed directly to people. This IS printing money. But it wasn't the case in the past. That being said - it's hard to argue this is a massive handout for the .1% at the expense or the bottom 90%. The bottom 50% are getting free money! In percentage terms - they're doing the best. If we must treat this as a zero sum game and go with the pie analogy - then the people with incomes too high to get free money and no assets to get inflated are the ones who got less pie. It's not a zero sum game, though! We all MASSIVELY benefited by not going through a 2nd great depression. It's interesting to me, though, that the vast majority of Americans think the way it's working out is fair - that people with high incomes who could keep their jobs should be the ones footing the bill - not people with massive amounts of wealth (especially massive since it was pumped up by The Federal Reserve).

belval 6y ago

Much better than that actually, those massive investments of money in the stock market is benefitting people outside the US as well. A lot of foreign interests are heavily invested in the US market because it shows stronger growth than domestic stocks. I am Canadian with a strong exposure to the US market and all these injection of moneys to keep the market high made for nice returns in 2020.

musicale 6y ago

> Most importantly, when the Fed decides to print money ad nauseam, they create massive asset inflation, which steals from the poor and gives to the rich Presumably debtors benefit from inflation since they can pay off their debts with inflated dollars. Presumably people with cash savings are harmed by inflation since cash loses value.

dataflow 6y ago

> When you [...] pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. Weren't these repaid (with interest, I heard)? Or are you referring to some that weren't?

deleted 6y ago

[deleted]

wilsocr88 6y ago

Addendum: "The Fed" that you rightly mention and the headline's "America's 1%" are, for all intents and purposes, identical.

u678u 6y ago

I dont like the Fed's easy money, but it looks like you didn't read the article.

parasubvert 6y ago

This narrative is completely contrary to what any economics course or textbook teaches. It is a popular Internet narrative, but it is also completely false. The Fed’s policies have directly helped the US at being one of the least impacted countries from the Great Recession. Also, asset inflation isn’t actually a thing.

rdevsrex 6y ago

Don't get me started on how the Fed (not to mention the income tax) was originated in secrecy by the rich.

fuzzfactor 6y ago
No reason to finish so soon . . .

nexthash 6y ago

I wouldn't say that the Fed is corrupt or incompetent by intention, rather it is part of a set of policies giving lenience to the financial system written by a generation that doesn't understand the need for strong regulation. Such generations come and go, usually in 50-year cycles as the older policymakers with memories of financial crises like the Great Depression die off. This lack of regulation is part of the inequality issue. Other factors include a potentially flooded labor market driving down wages, allowing people in control of economic resources to reap more work for the same price. However, some skilled people in labor also use this as an opportunity to move up the ladder. It's complex, ever-changing system with multiple variables and outputs. Read more here: https://aeon.co/essays/history-tells-us-where-the-wealth-gap-leads https://aeon.co/essays/history-tells-us-where-the-wealth-gap...

markdown 6y ago

> Correction: The Fed's policies have taken $50T of wealth from the Bottom 90%. What do you think the Fed is? The Fed is made up of the top banks, which means it's controlled by... the 1%. EDIT for the downvoters: > The Federal Reserve is "Controlled by member private banks" - https://en.wikipedia.org/wiki/Federal_Reserve https://en.wikipedia.org/wiki/Federal_Reserve

onethought 6y ago

When you say: The Fed Policies... who do you think influenced them? The same 1% the article is referring to. You are violently agreeing with the article with the pretence of disagreement

KorematsuFred 6y ago

> I think it is lack of education. I do not think you mean education as in formal education but rather people have not systematically thought about these things. And, I think people will never be educated enough on this topic. Inflation and Climate change in some sense are pretty much alike. Both are some serious market externalities as a consequence of which they do not benefit from market signals (the biggest teacher of them all). For issues like this the biggest teacher is the market and not books. A lot of climate change deniers have invested in Tesla and Solar companies and a lot of climate change maniacs have purchased Bitcoins and oil stocks. Some of the biggest proponents of climate change hysteria own private jets and ocean front properties. A lot of people call this hypocrisy and assign motives of fraud to these people but I do not think so. When it comes to climate change the market signals are clear that we need to look for an alternatives to our current energy sources and these sources will be more popular while completely rejecting alarmist claims. One might argue that market signals are not correct. But that is irrelevant. The point is people react to market signals FAR FAR better than anything that gets pushed by intellectuals, even those intellectuals who share their own political biases. Markets signals around bailouts or inflation are missing. As someone like Milton Friedman pointed out, there is simply nothing that an average American can do to prevent government from printing money. If nothing you do will have an impact people wont do anything. The market signals are missing because there is no competition where you can see what works and what does not. Instead of taking strong ideological positions I think we should work on making market forces operate more freely in this space. Bitcoin is already challenging the dollar in this space. It is a David (USD) vs Goliath right now but at some point people will figure out that a constant inflation for USD would mean higher price for Bitcoin over time. For bailouts I think we need ot come up with solution that is more market like. Perhaps increase of creating ad-hoc bailouts for large corporations, pass a clear law that describes the terms of bailout well in advance and provide different options to chose from for the corporations and then stick to it. You will be surprised how quickly people will vote in favor of better bailout policies.

mgfist 6y ago

holografix 6y ago

The complete collapse of the financial markets would not have been good for anyone. Why the perpetrators are not in jail is what on my opinion is the true betrayal of the common person. I strongly believe the rise of the alt/far right is a direct byproduct of the complete disintegration of trust in the established political class. All over the world atypical politicians rose in popularity, even when they weren’t populist right wingers.

MrMan 6y ago
I think it is due to effective marketing techniques employed by big money interests who benefit from mass acceptance of libertarian narratives, and those like the social media who benefit from volatility / uncertainty in the information network.
- fuzzfactor 6y ago
  >big money interests who benefit from mass acceptance of libertarian narratives I would say it's every interest who benefits from mass acceptance of completely stupid & misguided narratives from almost all Democrats & Republicans. Libertarians, especially non-Party members, are the least of my worries. Besides the fact that what now passes for leadership ability can not even rise high enough to polish the shoes of Dwight Eisenhower or JFK and they weren't good enough either compared to the Founding Fathers. Corporations worldwide have modeled themselves on this American trend of precipitiously declining competence at or near the top, plenty of money can always be made by Bozos after true leaders have built the money-making machines. By the time Reagan & Clinton came along it was far too late. Clinton knew it so well that's why one of his earliest (naturally unfulfilled) campaign promises in 1991 was to give every citizen $5000 if they wanted to start their own business. At the time nothing else could be seen that would allow wage-earners to escape to the prosperity their forefathers had worked for and truly earned up to that point in the 20th century.

konjin 6y ago

>Wealth inequality and social unrest in America is DIRECTLY related to corrupt and/or incompetent (you choose) Fed policies. It amazes me why most people do not grasp this. I think it is lack of education. I'd say it is the intended result of education. Why would you expect a school named after a billionaire to teach you how she is stealing from you any more than a school named after Karl Marx to talk about the problems of socialism.

dragonwriter 6y ago

> The Fed's policies have taken $50T of wealth from the Bottom 90%. When you bail out irresponsibly over-leveraged and nearly bankrupted banks and corporations, and pay for those bailouts with tax-payer money, you steal from the poor and give to the rich. But...the Fed doesn't do that. Taxpayer funded [0] bailouts come from Congress’ executed by the Treasury, not the Fed. Fed operations don't come out of tax funds except in the sense that anyone holding government securities is spending taxpayer money when they spend the proceeds. [0] to the extent fiscal spending is accurately describes that way, which is less than one might think.

runT1ME 6y ago
I think he means that the Fed can directly and indirectly increase the money supply, which disproportionately benefits people and corporations leveraged into assets. Hence, increasing the money supply makes the rich even richer.

deleted 6y ago

[deleted]

ezconnect 6y ago

The FED are the rich people, it's a private entity.

Triv888 6y ago

Thanks, Bush, Obama and Trump... they are all the same (Biden too, probably).

norswap 6y ago

I don't wish it on you, but imagine that the fed stops propping up the financial markets though QE. "Irresponsibly over-leveraged and nearly bankrupted banks and corporations", allowed to crash and burn. If this happens, everybody will be worse off - rich & poor alike, but the poor will pay the brunt of the cost. Except this time it won't be just "taxpayer money" that is on the line. Consider it is possible for the fed's policy to be unfair AND the right thing to do at the same time. There is no doubt that financial collapse leads to economic collapse. I find it difficult to claim both to be in favour of the common people, and to argue for a course of action that would set the whole world aflame.

throwaway789394 6y ago
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around(these banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.” Thomas Jefferson Maybe the system is working exactly as intended. This is a feature not a bug

lumost 6y ago

I've begun to wonder whether short-term economic depression in '08 and maybe '20 would have been preferable to the slow march to endemic corruption and aristocracy that the US is on. If the trend continues one would eventually expect long-term disruption to the US's ability to maintain cohesion.

fuzzfactor 6y ago
I would hope for a Constitutional Convention rather than continuing the trend with no end in sight.

deleted 6y ago

[deleted]

8note 6y ago

The fed is run by people in the top 1%, and not from the bottom 90%, so is there a meaningful difference?

rufus_foreman 6y ago

> Correction: The Fed's policies have taken $50T of wealth from the Bottom 90% That's QAnon level stuff.

deleted 6y ago

[deleted]

dkdk8283 6y ago

> Most importantly, when the Fed decides to print money ad nauseam Which is why we shouldn’t give stimulus bailout and let businesses run.

ThinkingAgain 6y ago

I have been thinking what is the best way to solve inequality. There are two problems one is wealth creation and other is wealth distribution. - Communism doesn't do a good job of wealth creation. - Capitalism doesn't do a good job of wealth distribution and causes inequality. -Increasing the taxes, only gives money to the government and my impression is they are not efficient in using money so overall the wealth of the society doesn't increase. If we limit how much a rich person can hold in large companies as stock, will it force the rich people to invest in small companies? Now we will have a mechanism of spreading the wealth by the rich person who knows how to use money efficiently. However the rich person will still become richer, not sure yet how to solve it completely. Maybe inheritance law should be changed so that once the person dies all his wealth goes to the employees in some fashion.

darig 6y ago

Money is an illusion. It amazes me why most people do not grasp this. I think it is lack of education.