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The reality of it shows up when you zoom in: overall during the pandemic richer people got richer and poorer people got poorer. The "world" doesn't owe the "wo

by cmehdy 6y ago

The reality of it shows up when you zoom in: overall during the pandemic richer people got richer and poorer people got poorer. The "world" doesn't owe the "world" that amount, it's people in already tight situations owing that to people in pretty comfortable ones. The ones borrowing to get by are paying more money than what they borrowed to people who already had money to lend out. What we'll see is yet another rise in inequality, yet another wave of the bigger businesses surviving over the smaller ones, and more debates within each government regarding how much intervention is wanted to try and save people from the consequences of those inequalities.

PragmaticPulp 6y ago
This headline number includes private sector debt, such as small business loans and mortgages. I can assure you that the comfortably rich are not getting richer by loaning money to the average person to buy houses and cars with 2.5% interest rates, while inflation is arguably significantly higher than that number. The rich get richer in this scenario because low interest rates increase the buying power for everyone, which means they can buy more expensive houses or pay less for the mortgage on the house they already own, which in turn means they can buy more things from Amazon, which means Amazon does more business, which means the stock price goes up, and so on. The populist narrative likes to simplify complex economic topics into rich versus poor narratives as if this was a zero-sum game, but it’s not. I’m not sure how your final points about inequality relate to increasing total global debt, but it’s obvious that this isn’t as simple as funneling money from the poor to the rich.
- cmehdy 6y ago
  You can call it populist if you want, it's just mechanically true. For money to be lent out it's coming from somewhere where the money is existing or the risk can be handled, and in both of those cases where money exists or risk can be handled you're typically looking at richer rather than poorer. If you're a shareholder, you are more able to afford risk than if you're just throwing your money at paying the bills. If you're in that situation and borrowing from a bank, the bank's shareholders mechanically are benefiting from your activity. You're borrowing to get by and people who have a better cushion are doing better for it, I don't see what's so shameful to point out. Your explanation doesn't explain anything away but to try and put some sort of weird blame on poorer people for borrowing, it's just as usual of a narrative as the populist thing to be infantilizing poorer people. There's however a pretty big difference between borrowing at your limit or sometimes beyond because you're trying to get through a pandemic or have a place to live, and borrowing at high risk because you're playing with huge sums and can in fact afford the loss. The latter as a group made more money during the pandemic from any possible source you could look at, the former as a group lost money and jobs. I won't insult you by throwing Oxfam reports at the situation, especially since you might be keen on calling it populist too and calling it a day.
  - diegoholiveira 6y ago
    > For money to be lent out it's coming from somewhere where the money is existing Not true. Governments around the world are just using money that doesn't exists, an example is the new economic rescue package. This kind of money, is great to made rich people richer.
    - cmehdy 6y ago
      That's the whole discussion around money itself, isn't it. As soon as you do something other than exchange an apple for a goat (and even then, really), you're potentially creating money in one person's eye and not in the others. While I understand your point about the money not existing, if you're making it happen in the system you're putting something of yourself in the system to convert to money. In governments' case it is their "reputation" and ability to operate in the world, as shown with the Greece situation in the recent past. Ultimately it just wasn't in bills but it was indeed paid in the government's loss of abilities (as well as the price to the population) and made money in other places where it was due. And that exactly what governments do when they deal with currency: any adjustment isn't creating energy out of nothingness, it's just that the layers of our system make it pretty hard to figure just where the debt is paid and it ultimately ends up being paid by those least able to see it coming & to avoid it. Not to hammer the point again, but those people tend to be again on the end of the spectrum that has "poorer" written on it.
    - sudosysgen 6y ago
      That just makes the actual value come from people that need to buy real assets or non-invested money. In both cases it mostly comes out of the common man and makes rich people richer. But it's not as bad as a total market failure. This system sucks.
  - PragmaticPulp 6y ago
    The economy isn’t a zero-sum game. We’re not simply distributing finite amounts of wealth among the population. Consider what happens with high interest rates: The people with money are incentivized to put it in the bank and sit on it, while the people without money are forced to pay exorbitant interest rates for the privilege of borrowing that money to start businesses, buy cars they need to get to work, and so on. Low interest rates are a forcing function to force the wealthy to deploy capital somewhere other than letting it sit in a bank. > The latter as a group made more money during the pandemic from any possible source you could look at Stock prices are up because we literally stimulated the economy by giving the average person free money to spend and subsidizing their jobs. The headlines comparing net worth of wealthy people at the lowest point of the pandemic to the highest point are outrage porn. They didn’t make money by funneling it out of the poor and into their bank accounts.
- dragonwriter 6y ago
  > 2.5% interest rates, while inflation is arguably significantly higher than that number. Inflation in the US isn't, even arguably, significantly higher than 2.5% per annum, and anyplace it is, interest rates are substantially higher. And don't “but asset price inflation”; that's not relevant, since that's just the rate at which people invested in assets can get richer, not a price deflator that helps gauge how rich someone with a given nominal $ amount of wealth is.
- paganel 6y ago
  A guy like Bezos basically doubled his net worth in a matter of just a couple of years for the simple reason that the US decided to flood the market with money, money which made its way into the stock-market, among other few places (like real estate or corporate bonds). Amazon does more business compared to a couple of years ago, but their share price wouldn’t have been the same without the US taking in more debt.
  - TuringNYC 6y ago
    This seems like an unfair take. There are thousands of publicly corporations but the flooded money didnt go equally to all of them. They didnt even end up equally on a cap-weighted basis. Instead, they ended up disproportionately into select industries and disproportionately into select companies? As you note, money printing is a big part the tide went up. But why did Amazon go up even more than the tide? I think it is more complex than just printed money. It is partly aligned incentives, incentivized workers, ruthless execution, focus, internal investment, and i'm sure you can think of some bad reasons also.
    - imtringued 6y ago
      Access to capital is the primary factor. Those specific companies had access to 2% or even 0% capital.
      - TuringNYC 6y ago
        But what about Exxon, CVS, Verizon, Goldman Sachs, and Allstate? All these companies had access to the same capital, yet not all did as well as Amazon, et al. Goldman Sachs, theoretically, even has access to the Fed Discount window (hence, access to even more capital than FAANG) At some point we do need to acknowledge better execution, more aligned incentives, etc. One particular thing to note, many of the non-FAANG companies treat their employees terribly, especially engineers. Comp is nothing compared to FAANG, and yet they expect cheery engineers and other "low level workers" who give it their all and bring success to the company. And perhaps the formula doesnt work, which is good, because all workers should share in the success of their efforts.
- ASalazarMX 6y ago
  > The rich get richer in this scenario because low interest rates increase the buying power for everyone, which means they can buy more expensive houses or pay less for the mortgage on the house they already own, which in turn means they can buy more things from Amazon, which means Amazon does more business, which means the stock price goes up, and so on. Oh, so everyone is getting richer! Whew, Thanks, I was worried for a second.
- adamhp 6y ago
  > which means they can buy more expensive houses or pay less for the mortgage on the house they already own, which in turn means they can buy more things from Amazon, which means Amazon does more business, which means the stock price goes up, and so on. Do they do this? I was under the impression that they stashed it offshore and sat on it. I'd like to see what "the rich" are actually spending their money on and how it drives any economic levers.
- ska 6y ago
  > The populist narrative likes to simplify complex economic topics into rich versus poor narratives as if this was a zero-sum game. There are multiple populist narratives. At least equally popular is simplifying into the narrative where the non-zero sum aspects make up for any number of other problems (cf Regan's trickle down stories). I guess it's hard to simplify complex things without losing important information.
- Pokepokalypse 6y ago
  Except very very little of our credit is 2.5% interest. Maybe home loans,and car loans. A huge proportion is 6-ish% student loans. A large proportion of credit out there is 25% or more, credit card debt.
- Technically 6y ago
  > I can assure you that the comfortably rich are not getting richer by loaning money to the average person to buy houses and cars Isn't this precisely the idea of securities backed by subprime loans? As long as you're not stuck holding the bag you can generate a lot of wealth. The interest rate just determines how quickly you'll need to cash out; conceivably you might even prefer a lower interest rate to avoid raising significant attention.
- rland 6y ago
  The comfortably rich are getting richer because they are closer to the money spigot. They get to spend the money right now, before the inevitable asset inflation that occurs when 2T gets printed. By the time you -- YOU, the regular person -- see the money that was pumped in 10 months ago, in the form of your salary, it is already too late. Your salary does not give you any actual increase in any concrete thing, because inflation has already occurred. If, somehow, that money that was printed goes into actually useful things, like RnD, infrastructure, or education, then perhaps your salary could buy more things because the economy would be more productive. But it can't because it's not... instead, dog walking apps are worth a billion dollars.
  - imtringued 6y ago
    I wish governments had put the damn money into useful things. It's absolutely shameful that this hasn't resulted in better internet connectivity in USA for example.
    - mrep 6y ago
      Well, in the case of the US government, the FED printed about 3 trillion dollars, 2/3 of which went to buying our own governments debt (US treasury securities), and the other 1/3 was basically all mortgage backed securities and the people selling those to the FED probably turned around and bought US treasuries. The federal governments deficit last year was about 4 trillion so the FED basically directly and indirectly financed 3/4 of our own federal governments deficit spending most of which went towards the CARES act which mainly gave cash to citizens directly through stimulus checks and increased unemployment payouts and indirectly by paying employee wages to keep people employed. It also helped fund state budgets, hospitals and operation warp speed which has speed up the moderna vaccine. Overall, I think the those were some pretty damn good investments for a pandemic induced recession.
patrickaljord 6y ago
> overall during the pandemic richer people got richer No, I can tell you lots of rich people lost a lot during the pandemic. Especially in the affected industries (events, airlines etc). Unless by rich you mean Jeff and Elon, this statement isn't generally true though it is true for some.
- cmehdy 6y ago
  There aren't just two rich people on earth, you know? https://theconversation.com/fact-check-us-did-some-americans-really-get-richer-during-the-pandemic-153584 https://theconversation.com/fact-check-us-did-some-americans... https://www.thestar.com/business/2020/08/15/as-the-pandemic-continues-the-rich-are-getting-richer-than-ever-before-and-economists-are-getting-concerned.html https://www.thestar.com/business/2020/08/15/as-the-pandemic-... https://www.npr.org/2020/04/22/840678984/small-business-rescue-earned-banks-10-billion-in-fees https://www.npr.org/2020/04/22/840678984/small-business-resc... https://www.cbsnews.com/news/billionaires-pandemic-1-trillion-wealth-gain/ https://www.cbsnews.com/news/billionaires-pandemic-1-trillio...
onlyrealcuzzo 6y ago
Poor people largely aren't in debt. It's that rich people use massive amounts of artificially cheap debt to their advantage - and people without debt and assets pay for the bill - because the Federal government keeps devaluing their earnings and savings to pay for the party.
- mistrial9 6y ago
  > Poor people largely aren't in debt. citations ?
  - onlyrealcuzzo 6y ago
    >68% of personal debt is mortgage debt. Another ~10% is auto loan debt [1]. Most home owners aren't considered poor. A (largely) disproportionate share of poor people don't own cars, don't have access to credit, and also didn't go to college. The idea that poor people could hold a large percentage of debt is - in itself - paradoxical / ridiculous. In order to have debt, you need something to service the debt with. Otherwise, you're bankrupt. The major caveat here is student debt - anyone can load up on student debt regardless of ability to service - and there's no way out of the debt. You can't file bankruptcy. [1] https://www.fool.com/the-ascent/research/average-american-household-debt/ https://www.fool.com/the-ascent/research/average-american-ho...
    - ClumsyPilot 6y ago
      "and there's no way out of the debt. You can't file bankruptcy." To me (not from us) this sounds like indentured servitude. It's like a concept from the days when we used to burn people at the stake and executions happened on a public holiday so everyone could watch.
      - imtringued 6y ago
        It basically is. If you give someone money to the point where they cant pay the debt back and you never discharge the debt then you were actually just buying the ability to enslave that person. After all, you aren't in it for the money, you're in it for the debt relationship.
dnautics 6y ago
> The "world" doesn't owe the "world" that amount, it's people in already tight situations owing that to people in pretty comfortable ones. This is wrong. Most people in tight situations around the world don't even have access to banking or debt. I imagine most of this is sovereign or corporate debt, and financialized debt, like obligations incurred by instruments such as shorts, or taken out to perform leveraged trading.
- cmehdy 6y ago
  https://blogs.imf.org/2019/01/02/new-data-on-global-debt/ https://blogs.imf.org/2019/01/02/new-data-on-global-debt/ "The private sector’s debt has tripled since 1950. This makes it the driving force behind global debt. Another change since the global financial crisis has been the rise in private debt in emerging markets, led by China, overtaking advanced economies. At the other end of the spectrum, private debt has remained very low in low-income developing countries. Global public debt, on the other hand, has experienced a reversal of sorts. After a steady decline up to the mid-1970s, public debt has gone up since, with advanced economies at the helm and, of late, followed by emerging and low-income developing countries." -> Debt owned in the private sector isn't just about stock market but about all the small businesses which in the US are 99.9% of them (see https://www.chamberofcommerce.org/small-business-statistics/ https://www.chamberofcommerce.org/small-business-statistics/ ) -> Public debt is debt that we all deal with, and it might come as a surprise to you but a majority of people aren't actually rich What I'm trying to say here is that you can play on the technicality of the amount of people under poverty thresholds not being in debt because they can't even access debt, but it's not really changing anything about the people who ARE in debt being in significant amounts people who might not have the shoulders to take it on but are trying to get by and doing so as a requirement to get by.
  - dnautics 6y ago
    No doubt that there is an increased burden on the lower-middle class, but when I phrase it that way, it should make clear why your take refers to an insignificant part of the equation. Nor am I suggesting that the lower class won't bear the brunt of this problem. They will eventually bear the brunt of the global debt issue in a different way - through prices that outpace pay increases.
wdn 6y ago
The problem is cause by the government. How do you think stock market so much past year? The US government and other governments printed so much money that no where to go (remember, we are still locked down). With internet at or near zero, do you think people put their money in the bank?
- ClumsyPilot 6y ago
  If only there were long term projects with real return on investment, and people in need of enployement. Why isn't the money printer funding wind turbines, bridge repairs, etc. Instead of inflating ezisting bubbles.
Thorentis 6y ago
The majority of this figure is not credit card and mortgage debt. It is government debt in the form of bonds, bought by central banks. Multiple first world countries have turned the money printer up to full throttle during pandemic, and that has caused the debt:GDP ratio to sky rocket.
dr_dshiv 6y ago
Does lending money to the poor increase or decrease inequality?
- Daho0n 6y ago
  Unless you pay 0% interest rates it clearly increase inequality as all it does is transfer money to the rich.
  - imtringued 6y ago
    It depends on whether that poor person is using the money to fund a business or whether financial insecurity is forcing that person's hand.
    - curryst 6y ago
      That's kind of the nature of poverty, isn't it? If financial insecurity isn't forcing their hand, are they actually poor?
csomar 6y ago
> The ones borrowing to get by are paying more money than what they borrowed to people who already had money to lend out. If you are in the Western hemisphere, the interest rates are low (or negative) and the outlook of inflation is bleak. So it's more like the other way around.
- coderintherye 6y ago
  By all means, please point us all to where we can get personal loans at negative interest rates.
  - hfsp 6y ago
    A select few cantillionaires can get loans at effectively 0% rates. You are not a cantiollionaire, neither are other HN users. The rules are different for you than for those closest to the money printer.
- jeofken 6y ago
  This is the logical conclusion of central planning in the currency market - where supply can be infinite and is controlled by monopoly, as opposed to currency bound to a real asset, or otherwise can’t be created from nothing such as bitcoin. Inflation hits those who have a salary, as their purchasing power sinks. The rich earn their income from owning capital, not from contracts where they trade hours per dollars.
julienb_sea 6y ago
For the most part people take on leverage because they think they can get more value out of the money than the interest they'll owe on the debt. That's not how people in poverty view or use debt. But we are talking about global debt holdings. When zoomed out to the global scale, the VAST majority of debt is owed by large scale entities and it is pretty incoherent to describe that as a transfer from the wealthy to the poor.
- imtringued 6y ago
  > For the most part people take on leverage because they think they can get more value out of the money than the interest they'll owe on the debt. Yes, the idea is that you expect to invest the money into something productive. At low interest rates the bar for "productive" is really, really low. Most companies just play around with stock buy backs.

by cmehdy 6y ago

PragmaticPulp 6y ago

This headline number includes private sector debt, such as small business loans and mortgages. I can assure you that the comfortably rich are not getting richer by loaning money to the average person to buy houses and cars with 2.5% interest rates, while inflation is arguably significantly higher than that number. The rich get richer in this scenario because low interest rates increase the buying power for everyone, which means they can buy more expensive houses or pay less for the mortgage on the house they already own, which in turn means they can buy more things from Amazon, which means Amazon does more business, which means the stock price goes up, and so on. The populist narrative likes to simplify complex economic topics into rich versus poor narratives as if this was a zero-sum game, but it’s not. I’m not sure how your final points about inequality relate to increasing total global debt, but it’s obvious that this isn’t as simple as funneling money from the poor to the rich.

cmehdy 6y ago
You can call it populist if you want, it's just mechanically true. For money to be lent out it's coming from somewhere where the money is existing or the risk can be handled, and in both of those cases where money exists or risk can be handled you're typically looking at richer rather than poorer. If you're a shareholder, you are more able to afford risk than if you're just throwing your money at paying the bills. If you're in that situation and borrowing from a bank, the bank's shareholders mechanically are benefiting from your activity. You're borrowing to get by and people who have a better cushion are doing better for it, I don't see what's so shameful to point out. Your explanation doesn't explain anything away but to try and put some sort of weird blame on poorer people for borrowing, it's just as usual of a narrative as the populist thing to be infantilizing poorer people. There's however a pretty big difference between borrowing at your limit or sometimes beyond because you're trying to get through a pandemic or have a place to live, and borrowing at high risk because you're playing with huge sums and can in fact afford the loss. The latter as a group made more money during the pandemic from any possible source you could look at, the former as a group lost money and jobs. I won't insult you by throwing Oxfam reports at the situation, especially since you might be keen on calling it populist too and calling it a day.
- diegoholiveira 6y ago
  > For money to be lent out it's coming from somewhere where the money is existing Not true. Governments around the world are just using money that doesn't exists, an example is the new economic rescue package. This kind of money, is great to made rich people richer.
  - cmehdy 6y ago
    That's the whole discussion around money itself, isn't it. As soon as you do something other than exchange an apple for a goat (and even then, really), you're potentially creating money in one person's eye and not in the others. While I understand your point about the money not existing, if you're making it happen in the system you're putting something of yourself in the system to convert to money. In governments' case it is their "reputation" and ability to operate in the world, as shown with the Greece situation in the recent past. Ultimately it just wasn't in bills but it was indeed paid in the government's loss of abilities (as well as the price to the population) and made money in other places where it was due. And that exactly what governments do when they deal with currency: any adjustment isn't creating energy out of nothingness, it's just that the layers of our system make it pretty hard to figure just where the debt is paid and it ultimately ends up being paid by those least able to see it coming & to avoid it. Not to hammer the point again, but those people tend to be again on the end of the spectrum that has "poorer" written on it.
  - sudosysgen 6y ago
    That just makes the actual value come from people that need to buy real assets or non-invested money. In both cases it mostly comes out of the common man and makes rich people richer. But it's not as bad as a total market failure. This system sucks.
- PragmaticPulp 6y ago
  The economy isn’t a zero-sum game. We’re not simply distributing finite amounts of wealth among the population. Consider what happens with high interest rates: The people with money are incentivized to put it in the bank and sit on it, while the people without money are forced to pay exorbitant interest rates for the privilege of borrowing that money to start businesses, buy cars they need to get to work, and so on. Low interest rates are a forcing function to force the wealthy to deploy capital somewhere other than letting it sit in a bank. > The latter as a group made more money during the pandemic from any possible source you could look at Stock prices are up because we literally stimulated the economy by giving the average person free money to spend and subsidizing their jobs. The headlines comparing net worth of wealthy people at the lowest point of the pandemic to the highest point are outrage porn. They didn’t make money by funneling it out of the poor and into their bank accounts.
dragonwriter 6y ago
> 2.5% interest rates, while inflation is arguably significantly higher than that number. Inflation in the US isn't, even arguably, significantly higher than 2.5% per annum, and anyplace it is, interest rates are substantially higher. And don't “but asset price inflation”; that's not relevant, since that's just the rate at which people invested in assets can get richer, not a price deflator that helps gauge how rich someone with a given nominal $ amount of wealth is.
paganel 6y ago
A guy like Bezos basically doubled his net worth in a matter of just a couple of years for the simple reason that the US decided to flood the market with money, money which made its way into the stock-market, among other few places (like real estate or corporate bonds). Amazon does more business compared to a couple of years ago, but their share price wouldn’t have been the same without the US taking in more debt.
- TuringNYC 6y ago
  This seems like an unfair take. There are thousands of publicly corporations but the flooded money didnt go equally to all of them. They didnt even end up equally on a cap-weighted basis. Instead, they ended up disproportionately into select industries and disproportionately into select companies? As you note, money printing is a big part the tide went up. But why did Amazon go up even more than the tide? I think it is more complex than just printed money. It is partly aligned incentives, incentivized workers, ruthless execution, focus, internal investment, and i'm sure you can think of some bad reasons also.
  - imtringued 6y ago
    Access to capital is the primary factor. Those specific companies had access to 2% or even 0% capital.
    - TuringNYC 6y ago
      But what about Exxon, CVS, Verizon, Goldman Sachs, and Allstate? All these companies had access to the same capital, yet not all did as well as Amazon, et al. Goldman Sachs, theoretically, even has access to the Fed Discount window (hence, access to even more capital than FAANG) At some point we do need to acknowledge better execution, more aligned incentives, etc. One particular thing to note, many of the non-FAANG companies treat their employees terribly, especially engineers. Comp is nothing compared to FAANG, and yet they expect cheery engineers and other "low level workers" who give it their all and bring success to the company. And perhaps the formula doesnt work, which is good, because all workers should share in the success of their efforts.
ASalazarMX 6y ago
> The rich get richer in this scenario because low interest rates increase the buying power for everyone, which means they can buy more expensive houses or pay less for the mortgage on the house they already own, which in turn means they can buy more things from Amazon, which means Amazon does more business, which means the stock price goes up, and so on. Oh, so everyone is getting richer! Whew, Thanks, I was worried for a second.
adamhp 6y ago
> which means they can buy more expensive houses or pay less for the mortgage on the house they already own, which in turn means they can buy more things from Amazon, which means Amazon does more business, which means the stock price goes up, and so on. Do they do this? I was under the impression that they stashed it offshore and sat on it. I'd like to see what "the rich" are actually spending their money on and how it drives any economic levers.
ska 6y ago
> The populist narrative likes to simplify complex economic topics into rich versus poor narratives as if this was a zero-sum game. There are multiple populist narratives. At least equally popular is simplifying into the narrative where the non-zero sum aspects make up for any number of other problems (cf Regan's trickle down stories). I guess it's hard to simplify complex things without losing important information.
Pokepokalypse 6y ago
Except very very little of our credit is 2.5% interest. Maybe home loans,and car loans. A huge proportion is 6-ish% student loans. A large proportion of credit out there is 25% or more, credit card debt.
Technically 6y ago
> I can assure you that the comfortably rich are not getting richer by loaning money to the average person to buy houses and cars Isn't this precisely the idea of securities backed by subprime loans? As long as you're not stuck holding the bag you can generate a lot of wealth. The interest rate just determines how quickly you'll need to cash out; conceivably you might even prefer a lower interest rate to avoid raising significant attention.
rland 6y ago
The comfortably rich are getting richer because they are closer to the money spigot. They get to spend the money right now, before the inevitable asset inflation that occurs when 2T gets printed. By the time you -- YOU, the regular person -- see the money that was pumped in 10 months ago, in the form of your salary, it is already too late. Your salary does not give you any actual increase in any concrete thing, because inflation has already occurred. If, somehow, that money that was printed goes into actually useful things, like RnD, infrastructure, or education, then perhaps your salary could buy more things because the economy would be more productive. But it can't because it's not... instead, dog walking apps are worth a billion dollars.
- imtringued 6y ago
  I wish governments had put the damn money into useful things. It's absolutely shameful that this hasn't resulted in better internet connectivity in USA for example.
  - mrep 6y ago
    Well, in the case of the US government, the FED printed about 3 trillion dollars, 2/3 of which went to buying our own governments debt (US treasury securities), and the other 1/3 was basically all mortgage backed securities and the people selling those to the FED probably turned around and bought US treasuries. The federal governments deficit last year was about 4 trillion so the FED basically directly and indirectly financed 3/4 of our own federal governments deficit spending most of which went towards the CARES act which mainly gave cash to citizens directly through stimulus checks and increased unemployment payouts and indirectly by paying employee wages to keep people employed. It also helped fund state budgets, hospitals and operation warp speed which has speed up the moderna vaccine. Overall, I think the those were some pretty damn good investments for a pandemic induced recession.

patrickaljord 6y ago

> overall during the pandemic richer people got richer No, I can tell you lots of rich people lost a lot during the pandemic. Especially in the affected industries (events, airlines etc). Unless by rich you mean Jeff and Elon, this statement isn't generally true though it is true for some.

cmehdy 6y ago
There aren't just two rich people on earth, you know? https://theconversation.com/fact-check-us-did-some-americans-really-get-richer-during-the-pandemic-153584 https://theconversation.com/fact-check-us-did-some-americans... https://www.thestar.com/business/2020/08/15/as-the-pandemic-continues-the-rich-are-getting-richer-than-ever-before-and-economists-are-getting-concerned.html https://www.thestar.com/business/2020/08/15/as-the-pandemic-... https://www.npr.org/2020/04/22/840678984/small-business-rescue-earned-banks-10-billion-in-fees https://www.npr.org/2020/04/22/840678984/small-business-resc... https://www.cbsnews.com/news/billionaires-pandemic-1-trillion-wealth-gain/ https://www.cbsnews.com/news/billionaires-pandemic-1-trillio...

onlyrealcuzzo 6y ago

Poor people largely aren't in debt. It's that rich people use massive amounts of artificially cheap debt to their advantage - and people without debt and assets pay for the bill - because the Federal government keeps devaluing their earnings and savings to pay for the party.

mistrial9 6y ago
> Poor people largely aren't in debt. citations ?
- onlyrealcuzzo 6y ago
  >68% of personal debt is mortgage debt. Another ~10% is auto loan debt [1]. Most home owners aren't considered poor. A (largely) disproportionate share of poor people don't own cars, don't have access to credit, and also didn't go to college. The idea that poor people could hold a large percentage of debt is - in itself - paradoxical / ridiculous. In order to have debt, you need something to service the debt with. Otherwise, you're bankrupt. The major caveat here is student debt - anyone can load up on student debt regardless of ability to service - and there's no way out of the debt. You can't file bankruptcy. [1] https://www.fool.com/the-ascent/research/average-american-household-debt/ https://www.fool.com/the-ascent/research/average-american-ho...
  - ClumsyPilot 6y ago
    "and there's no way out of the debt. You can't file bankruptcy." To me (not from us) this sounds like indentured servitude. It's like a concept from the days when we used to burn people at the stake and executions happened on a public holiday so everyone could watch.
    - imtringued 6y ago
      It basically is. If you give someone money to the point where they cant pay the debt back and you never discharge the debt then you were actually just buying the ability to enslave that person. After all, you aren't in it for the money, you're in it for the debt relationship.

dnautics 6y ago

> The "world" doesn't owe the "world" that amount, it's people in already tight situations owing that to people in pretty comfortable ones. This is wrong. Most people in tight situations around the world don't even have access to banking or debt. I imagine most of this is sovereign or corporate debt, and financialized debt, like obligations incurred by instruments such as shorts, or taken out to perform leveraged trading.

cmehdy 6y ago
https://blogs.imf.org/2019/01/02/new-data-on-global-debt/ https://blogs.imf.org/2019/01/02/new-data-on-global-debt/ "The private sector’s debt has tripled since 1950. This makes it the driving force behind global debt. Another change since the global financial crisis has been the rise in private debt in emerging markets, led by China, overtaking advanced economies. At the other end of the spectrum, private debt has remained very low in low-income developing countries. Global public debt, on the other hand, has experienced a reversal of sorts. After a steady decline up to the mid-1970s, public debt has gone up since, with advanced economies at the helm and, of late, followed by emerging and low-income developing countries." -> Debt owned in the private sector isn't just about stock market but about all the small businesses which in the US are 99.9% of them (see https://www.chamberofcommerce.org/small-business-statistics/ https://www.chamberofcommerce.org/small-business-statistics/ ) -> Public debt is debt that we all deal with, and it might come as a surprise to you but a majority of people aren't actually rich What I'm trying to say here is that you can play on the technicality of the amount of people under poverty thresholds not being in debt because they can't even access debt, but it's not really changing anything about the people who ARE in debt being in significant amounts people who might not have the shoulders to take it on but are trying to get by and doing so as a requirement to get by.
- dnautics 6y ago
  No doubt that there is an increased burden on the lower-middle class, but when I phrase it that way, it should make clear why your take refers to an insignificant part of the equation. Nor am I suggesting that the lower class won't bear the brunt of this problem. They will eventually bear the brunt of the global debt issue in a different way - through prices that outpace pay increases.

wdn 6y ago

The problem is cause by the government. How do you think stock market so much past year? The US government and other governments printed so much money that no where to go (remember, we are still locked down). With internet at or near zero, do you think people put their money in the bank?

ClumsyPilot 6y ago
If only there were long term projects with real return on investment, and people in need of enployement. Why isn't the money printer funding wind turbines, bridge repairs, etc. Instead of inflating ezisting bubbles.

Thorentis 6y ago

The majority of this figure is not credit card and mortgage debt. It is government debt in the form of bonds, bought by central banks. Multiple first world countries have turned the money printer up to full throttle during pandemic, and that has caused the debt:GDP ratio to sky rocket.

dr_dshiv 6y ago

Does lending money to the poor increase or decrease inequality?

Daho0n 6y ago
Unless you pay 0% interest rates it clearly increase inequality as all it does is transfer money to the rich.
- imtringued 6y ago
  It depends on whether that poor person is using the money to fund a business or whether financial insecurity is forcing that person's hand.
  - curryst 6y ago
    That's kind of the nature of poverty, isn't it? If financial insecurity isn't forcing their hand, are they actually poor?

csomar 6y ago

> The ones borrowing to get by are paying more money than what they borrowed to people who already had money to lend out. If you are in the Western hemisphere, the interest rates are low (or negative) and the outlook of inflation is bleak. So it's more like the other way around.

coderintherye 6y ago
By all means, please point us all to where we can get personal loans at negative interest rates.
- hfsp 6y ago
  A select few cantillionaires can get loans at effectively 0% rates. You are not a cantiollionaire, neither are other HN users. The rules are different for you than for those closest to the money printer.
jeofken 6y ago
This is the logical conclusion of central planning in the currency market - where supply can be infinite and is controlled by monopoly, as opposed to currency bound to a real asset, or otherwise can’t be created from nothing such as bitcoin. Inflation hits those who have a salary, as their purchasing power sinks. The rich earn their income from owning capital, not from contracts where they trade hours per dollars.

julienb_sea 6y ago

For the most part people take on leverage because they think they can get more value out of the money than the interest they'll owe on the debt. That's not how people in poverty view or use debt. But we are talking about global debt holdings. When zoomed out to the global scale, the VAST majority of debt is owed by large scale entities and it is pretty incoherent to describe that as a transfer from the wealthy to the poor.

imtringued 6y ago
> For the most part people take on leverage because they think they can get more value out of the money than the interest they'll owe on the debt. Yes, the idea is that you expect to invest the money into something productive. At low interest rates the bar for "productive" is really, really low. Most companies just play around with stock buy backs.