10 ms·

https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ I realize some of these graphs may be coincidences but it makes a compelling case for me in under

https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ I realize some of these graphs may be coincidences but it makes a compelling case for me in understanding our current wealth inequality. When you can create money backed by nothing, those closest to the printer will know best how to funnel it into their pockets.

api 6y ago
When you have money backed by gold, those who have it benefit from its appreciation. Same is true of any deflationary currency. Wealth tends to flow uphill. Even in Communism the politically connected realized that wealth in that system was political capital and learned to position themselves to accumulate it. There is a reason the USSR collapsed and gave way to one of the most aristocratic states in the world. I don’t discount that site though. A lot more happened in or around the early 70s than just the collapse of Bretton Woods. I also don’t dismiss your comment as untrue. A fair inflationary currency would almost literally drop money from helicopters, not issue it to banks and governments. Still I imagine over time people would learn how to chase the helicopters. All systems will be gamed. No exceptions.
- jkhdigital 6y ago
  Indeed. There is a reason why the ancient Hebrew laws dictated that every 50 years all debts are wiped away and all assets returned to their hereditary owners.
simonh 6y ago
All money is backed by nothing. The idea that the gold standard was pegged to some eternal constant of nature is a fantasy.
- hkt 6y ago
  Actually, all money is backed by the available goods and services in an economy. It is a plate that spins itself.
  - lotsofpulp 6y ago
    No one is forced to give up their goods and services for any specific money. Money is “backed” by the trust that someone else will be willing to accept it at a later date for goods and services.
    - hyko 6y ago
      Well, you’re forced to pay your taxes in specific money, so that’s one thing.
- symlinkk 6y ago
  Isn’t the point that gold is finite?
  - UncleMeat 6y ago
    We pull gold out of the ground all the time. It is finite only in theory.
    - gher-shyu3i 6y ago
      It's infinitely easier to print money at will, which is what keeps happening. Gold has intrinsic value for practically all of human existence.
      - gruez 6y ago
        >Gold has intrinsic value for practically all of human existence. The intrinsic value argument hardly makes any sense because it's almost always lower than the actual value. Someone interested in intrinsic value would be buying copper, not gold.
      - tudorconstantin 6y ago
        Nothing has intrinsic value
        hyko 6y ago
        Obviously a statement like that requires some explanatory notes? When talking about money, the term intrinsic value means the market value of the commodity the money is made from, versus the face value of the money. This is very real and has been exploited in the past, with people effectively melting down large quantities of money and selling it as a commodity.
      - rpz 6y ago
        Coming from a gold bug: you can still create an infinite number of IOUs on gold. Thats what the dollar was before Nixon closed the gold window. The fed was running a fractional reserve on their gold. Believe it or not they still are today, despite folks and major nations no longer have the ability to trade their dollars for some amount of the US treasury gold. Look into the market value of the gold certificates that the fed has on its books. The fed hasn't marked their gold position to the market since the 70s. Very peculiar if you ask me. Also consider why each of the federal reserve banks trade these certificates amongst one another. On top of that you can read the treasury's website and find that the policy states that the treasury gold plays an important role as collateral on the dollar https://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx https://www.treasury.gov/resource-center/faqs/Currency/Pages... "Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (liabilities). This would meet the requirements of Section 411, but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them."
- jkhdigital 6y ago
  The idea that proponents of the gold standard assert that its value is tied to some eternal constant of nature is also a fantasy.
  - simonh 6y ago
    It might be a bit of an exaggeration, but not by a lot. I think there is a heavy dose of magical thinking in it, and plenty gold bugs really, actually do seem to think there is something special about gold. I even once got into a discussion with someone on a science fiction forum who's belief in gold was so absolute that he thought it would inevitably be the foundation of all interstellar commerce, even with alien species because gold is so unique it's one thing everyone would inevitably agree on being a universal store of value.
- imtringued 6y ago
  Fiat currency is backed by the existence of an economy that exchanges fiat currency for goods and services. If that economy disappears you get hyperinflation. See Zimbabwe and Argentina as examples of countries that destroyed their economies and suffer from hyperinflation as a result of massively reducing the ability to exchange money for food. Think about it this way. You play a video game with micro transactions. You receive 1000 units of premium currency. Why is that currency valuable? It's valuable because you can exchange it for cash shop items. Imagine if the cash shop shuts down but the game keeps running. Your currency would be worthless because you lost the ability to exchange it.
chii 6y ago
The alternative possible explanation, which is never mentioned, is the advent of electronic automation, and out-sourcing of labour.
- deleted 6y ago
  [deleted]
- BurningFrog 6y ago
  Labor has been constantly automated away since the start of the Industrial Revolution, ~250 years ago. It is how we all got immeasurably richer since then, while constantly fearing that all jobs will be automated away soon.
judofyr 6y ago
I don't get why people keep linking this page. How can you "understand" anything from a page which provides no analysis and presents numbers with no caveats? How can I trust that these charts aren't cherry picked?
- read_if_gay_ 6y ago
  This criticism applies to anything that isn’t formal mathematical proof.
  - judofyr 6y ago
    I asked for analysis and source assessment, none of which is part of a formal mathematical proof.
    - read_if_gay_ 6y ago
      Analysis can be misleading too.
- chmod775 6y ago
  I can understand being critical of this particular page, but more generally: > How can you "understand" anything from a page which provides no analysis and presents numbers with no caveats? Presumably because one is able to do one's own analysis and think for themselves. Everything starts out as raw numbers. > How can I trust that these charts aren't cherry picked? Can you ever?
  - judofyr 6y ago
    > Can you ever? If we're talking "generally": Yes, we can trust that charts aren't cherry picked by reading the analysis. A proper analysis would include argumentation for why this metric is critical and why this chart is interesting.
- stevenwoo 6y ago
  What do you think of Capital and Ideology? Piketty posits some theories/hypothesis with caveats throughout and has a lot of data for certain countries and time periods, 75% of the book is history through the lens he is examining.
refenestrator 6y ago
The New Deal political coalition was shattered in 1968 and we've had neoliberal politics since then which are indifferent to economic inequality. Inequality has unsurprisingly gone up. Blaming it on magic paper vs gold money to the exclusion of everything else seems like a red herring.
- donovanian 6y ago
  > The New Deal political coalition I have a hard time seeing the discontinuity between the New Deal people you're referencing and the 1960s Great Society ones that pretty much iterated on the same themes of the scientific management of society through monolithic institutions with expansive powers. It's pretty much relentless hubris with little to show and much to answer for.
  - xxpor 6y ago
    Given china's rise, it would seem the argument is that scientific management with expansive powers in the western world didn't actually go far enough.
    - dnautics 6y ago
      So if china suddenly collapses in the next couple of years will you retract your hypothesis?
      - pessimizer 6y ago
        If china suddenly grew legs and walked away, I'd rethink what I knew about animal life - but why deal in this particular counterfactual?
        dnautics 6y ago
        it's not. China is looking at a demographic collapse in the next few years that upends their running economic model and makes any future projections based on past history suspect. One of the ways out of demographic collapse is immigration, but somehow I don't see China's equivalent of US's Mexico/LatAM coming out of the global geopolitical woodwork. Immigration is simply not in China's DNA. Outside of immigration, no amount of "scientific management" or "good policy" will make 18-30 year-olds appear magically over the course of 5-10 years. Unless my understanding of biology is wrong and dolphins could sprout legs and walk on land, usually it takes 18-30 years. I'm willing to change my mind. What sort of an ace in its hole does china have to change this situation?
marcosdumay 6y ago
What is the arrow supposed to represent there? Nothing interesting seems to change at the arrow point, except for inflation.
- symlinkk 6y ago
  Obviously it represents the point where productivity increased but real wages remained stagnant. I think you’re purposely pretending not to understand it though.
  - colanderman 6y ago
    On half those graphs the arrow points to an arbitrary "knee" on an exponential function. It's a graphical version of the Gish Gallop [1] and conspiracy-theory "it makes you think!" arguments. Explanation is definitely warranted. [1] https://rationalwiki.org/wiki/Gish_Gallop https://rationalwiki.org/wiki/Gish_Gallop
  - marcosdumay 6y ago
    It's some 2 to 4 years off the end of the correlation on that first graph.
  - spiralx 6y ago
    Except there are numerous flaws with the construction of that graph: https://economicsfromthetopdown.com/2020/01/17/debunking-the-productivity-pay-gap/ https://economicsfromthetopdown.com/2020/01/17/debunking-the...
colanderman 6y ago
Or... switching to a fiat system enabled the economy to expand faster than labor policy (minimum wage, maximum work week) has been able to keep up, enabling those at the top to exploit the gains. Ignoring that half those graphs are just arrows pointing to arbitrary knees in exponential functions, I couldn't find this one which, unlike most on that page, directly graphs an ongoing policy choice, minimum wage vs. productivity: https://i0.wp.com/chicagopolicyreview.org/wp-content/uploads/2020/08/MW-Productivity-copy-1.jpg https://i0.wp.com/chicagopolicyreview.org/wp-content/uploads...
- spiralx 6y ago
  If you want a long debunking of that graph then read this: https://economicsfromthetopdown.com/2020/01/17/debunking-the-productivity-pay-gap/ https://economicsfromthetopdown.com/2020/01/17/debunking-the...
Aunche 6y ago
The current wealth inequality is caused by the productivity gains being concentrated on a smaller population. One Amazon can provide goods far more efficiently than thousands small businesses.
- jkhdigital 6y ago
  I’d say this explains the 90/10 wealth gap. The 99.9/0.1 wealth gap stems from financialization and central bank-supported moral hazard.
simo7 6y ago
> When you can create money backed by nothing Isn't that what money really is about? Debt and money go together. When you take on debt your creditor can decide to sell his credit to somebody else, de facto using your promise to repay your debt as a currency. Isn't your promise...just a promise? Yet you can buy stuff with it?
- jkhdigital 6y ago
  Fungible debt is a money substitute. The strictest definition of money would require that it has no counterparty.
BEEdwards 6y ago
Know what happened earlier? Congress lost secret voting, https://www.congressionalresearch.org/Jumbotrons.html https://www.congressionalresearch.org/Jumbotrons.html I'm more of the opinion that our problem is hyper targeted lobbyist money...

api 6y ago

When you have money backed by gold, those who have it benefit from its appreciation. Same is true of any deflationary currency. Wealth tends to flow uphill. Even in Communism the politically connected realized that wealth in that system was political capital and learned to position themselves to accumulate it. There is a reason the USSR collapsed and gave way to one of the most aristocratic states in the world. I don’t discount that site though. A lot more happened in or around the early 70s than just the collapse of Bretton Woods. I also don’t dismiss your comment as untrue. A fair inflationary currency would almost literally drop money from helicopters, not issue it to banks and governments. Still I imagine over time people would learn how to chase the helicopters. All systems will be gamed. No exceptions.

jkhdigital 6y ago
Indeed. There is a reason why the ancient Hebrew laws dictated that every 50 years all debts are wiped away and all assets returned to their hereditary owners.

simonh 6y ago

All money is backed by nothing. The idea that the gold standard was pegged to some eternal constant of nature is a fantasy.

hkt 6y ago
Actually, all money is backed by the available goods and services in an economy. It is a plate that spins itself.
- lotsofpulp 6y ago
  No one is forced to give up their goods and services for any specific money. Money is “backed” by the trust that someone else will be willing to accept it at a later date for goods and services.
  - hyko 6y ago
    Well, you’re forced to pay your taxes in specific money, so that’s one thing.
symlinkk 6y ago
Isn’t the point that gold is finite?
- UncleMeat 6y ago
  We pull gold out of the ground all the time. It is finite only in theory.
  - gher-shyu3i 6y ago
    It's infinitely easier to print money at will, which is what keeps happening. Gold has intrinsic value for practically all of human existence.
    - gruez 6y ago
      >Gold has intrinsic value for practically all of human existence. The intrinsic value argument hardly makes any sense because it's almost always lower than the actual value. Someone interested in intrinsic value would be buying copper, not gold.
    - tudorconstantin 6y ago
      Nothing has intrinsic value
      - hyko 6y ago
        Obviously a statement like that requires some explanatory notes? When talking about money, the term intrinsic value means the market value of the commodity the money is made from, versus the face value of the money. This is very real and has been exploited in the past, with people effectively melting down large quantities of money and selling it as a commodity.
    - rpz 6y ago
      Coming from a gold bug: you can still create an infinite number of IOUs on gold. Thats what the dollar was before Nixon closed the gold window. The fed was running a fractional reserve on their gold. Believe it or not they still are today, despite folks and major nations no longer have the ability to trade their dollars for some amount of the US treasury gold. Look into the market value of the gold certificates that the fed has on its books. The fed hasn't marked their gold position to the market since the 70s. Very peculiar if you ask me. Also consider why each of the federal reserve banks trade these certificates amongst one another. On top of that you can read the treasury's website and find that the policy states that the treasury gold plays an important role as collateral on the dollar https://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx https://www.treasury.gov/resource-center/faqs/Currency/Pages... "Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (liabilities). This would meet the requirements of Section 411, but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them."
jkhdigital 6y ago
The idea that proponents of the gold standard assert that its value is tied to some eternal constant of nature is also a fantasy.
- simonh 6y ago
  It might be a bit of an exaggeration, but not by a lot. I think there is a heavy dose of magical thinking in it, and plenty gold bugs really, actually do seem to think there is something special about gold. I even once got into a discussion with someone on a science fiction forum who's belief in gold was so absolute that he thought it would inevitably be the foundation of all interstellar commerce, even with alien species because gold is so unique it's one thing everyone would inevitably agree on being a universal store of value.
imtringued 6y ago
Fiat currency is backed by the existence of an economy that exchanges fiat currency for goods and services. If that economy disappears you get hyperinflation. See Zimbabwe and Argentina as examples of countries that destroyed their economies and suffer from hyperinflation as a result of massively reducing the ability to exchange money for food. Think about it this way. You play a video game with micro transactions. You receive 1000 units of premium currency. Why is that currency valuable? It's valuable because you can exchange it for cash shop items. Imagine if the cash shop shuts down but the game keeps running. Your currency would be worthless because you lost the ability to exchange it.

chii 6y ago

The alternative possible explanation, which is never mentioned, is the advent of electronic automation, and out-sourcing of labour.

deleted 6y ago
[deleted]
BurningFrog 6y ago
Labor has been constantly automated away since the start of the Industrial Revolution, ~250 years ago. It is how we all got immeasurably richer since then, while constantly fearing that all jobs will be automated away soon.

judofyr 6y ago

I don't get why people keep linking this page. How can you "understand" anything from a page which provides no analysis and presents numbers with no caveats? How can I trust that these charts aren't cherry picked?

read_if_gay_ 6y ago
This criticism applies to anything that isn’t formal mathematical proof.
- judofyr 6y ago
  I asked for analysis and source assessment, none of which is part of a formal mathematical proof.
  - read_if_gay_ 6y ago
    Analysis can be misleading too.
chmod775 6y ago
I can understand being critical of this particular page, but more generally: > How can you "understand" anything from a page which provides no analysis and presents numbers with no caveats? Presumably because one is able to do one's own analysis and think for themselves. Everything starts out as raw numbers. > How can I trust that these charts aren't cherry picked? Can you ever?
- judofyr 6y ago
  > Can you ever? If we're talking "generally": Yes, we can trust that charts aren't cherry picked by reading the analysis. A proper analysis would include argumentation for why this metric is critical and why this chart is interesting.
stevenwoo 6y ago
What do you think of Capital and Ideology? Piketty posits some theories/hypothesis with caveats throughout and has a lot of data for certain countries and time periods, 75% of the book is history through the lens he is examining.

refenestrator 6y ago

The New Deal political coalition was shattered in 1968 and we've had neoliberal politics since then which are indifferent to economic inequality. Inequality has unsurprisingly gone up. Blaming it on magic paper vs gold money to the exclusion of everything else seems like a red herring.

donovanian 6y ago
> The New Deal political coalition I have a hard time seeing the discontinuity between the New Deal people you're referencing and the 1960s Great Society ones that pretty much iterated on the same themes of the scientific management of society through monolithic institutions with expansive powers. It's pretty much relentless hubris with little to show and much to answer for.
- xxpor 6y ago
  Given china's rise, it would seem the argument is that scientific management with expansive powers in the western world didn't actually go far enough.
  - dnautics 6y ago
    So if china suddenly collapses in the next couple of years will you retract your hypothesis?
    - pessimizer 6y ago
      If china suddenly grew legs and walked away, I'd rethink what I knew about animal life - but why deal in this particular counterfactual?
      - dnautics 6y ago
        it's not. China is looking at a demographic collapse in the next few years that upends their running economic model and makes any future projections based on past history suspect. One of the ways out of demographic collapse is immigration, but somehow I don't see China's equivalent of US's Mexico/LatAM coming out of the global geopolitical woodwork. Immigration is simply not in China's DNA. Outside of immigration, no amount of "scientific management" or "good policy" will make 18-30 year-olds appear magically over the course of 5-10 years. Unless my understanding of biology is wrong and dolphins could sprout legs and walk on land, usually it takes 18-30 years. I'm willing to change my mind. What sort of an ace in its hole does china have to change this situation?

marcosdumay 6y ago

What is the arrow supposed to represent there? Nothing interesting seems to change at the arrow point, except for inflation.

symlinkk 6y ago
Obviously it represents the point where productivity increased but real wages remained stagnant. I think you’re purposely pretending not to understand it though.
- colanderman 6y ago
  On half those graphs the arrow points to an arbitrary "knee" on an exponential function. It's a graphical version of the Gish Gallop [1] and conspiracy-theory "it makes you think!" arguments. Explanation is definitely warranted. [1] https://rationalwiki.org/wiki/Gish_Gallop https://rationalwiki.org/wiki/Gish_Gallop
- marcosdumay 6y ago
  It's some 2 to 4 years off the end of the correlation on that first graph.
- spiralx 6y ago
  Except there are numerous flaws with the construction of that graph: https://economicsfromthetopdown.com/2020/01/17/debunking-the-productivity-pay-gap/ https://economicsfromthetopdown.com/2020/01/17/debunking-the...

colanderman 6y ago

Or... switching to a fiat system enabled the economy to expand faster than labor policy (minimum wage, maximum work week) has been able to keep up, enabling those at the top to exploit the gains. Ignoring that half those graphs are just arrows pointing to arbitrary knees in exponential functions, I couldn't find this one which, unlike most on that page, directly graphs an ongoing policy choice, minimum wage vs. productivity: https://i0.wp.com/chicagopolicyreview.org/wp-content/uploads/2020/08/MW-Productivity-copy-1.jpg https://i0.wp.com/chicagopolicyreview.org/wp-content/uploads...

spiralx 6y ago
If you want a long debunking of that graph then read this: https://economicsfromthetopdown.com/2020/01/17/debunking-the-productivity-pay-gap/ https://economicsfromthetopdown.com/2020/01/17/debunking-the...

Aunche 6y ago

The current wealth inequality is caused by the productivity gains being concentrated on a smaller population. One Amazon can provide goods far more efficiently than thousands small businesses.

jkhdigital 6y ago
I’d say this explains the 90/10 wealth gap. The 99.9/0.1 wealth gap stems from financialization and central bank-supported moral hazard.

simo7 6y ago

> When you can create money backed by nothing Isn't that what money really is about? Debt and money go together. When you take on debt your creditor can decide to sell his credit to somebody else, de facto using your promise to repay your debt as a currency. Isn't your promise...just a promise? Yet you can buy stuff with it?

jkhdigital 6y ago
Fungible debt is a money substitute. The strictest definition of money would require that it has no counterparty.

BEEdwards 6y ago

Know what happened earlier? Congress lost secret voting, https://www.congressionalresearch.org/Jumbotrons.html https://www.congressionalresearch.org/Jumbotrons.html I'm more of the opinion that our problem is hyper targeted lobbyist money...