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The government printed a ton of money and stuffed it into rich peoples’ pockets, so it’s not shocking for the value of luxury goods to sky rocket. We’re seein

The government printed a ton of money and stuffed it into rich peoples’ pockets, so it’s not shocking for the value of luxury goods to sky rocket. We’re seeing stock market inflation because that’s where rich people park their extra money and they were the injection point for all the money that got magicked into existence this last year. I’m sure it’s awesome for a lot of people in HN that have seen massive market gains in the last year, but it freaks me out. I worry about my parents who are very close to retirement since they’re the tail end of the last generation that had defined benefit pension plans. They’re not indexed at rates that can withstand a ton of inflation. Are wages going to increase when the inflation starts to trickle down to the goods and services the working class rely on?

chii 6y ago
> stuffed it into rich peoples’ pockets They did no such thing. Most money being "printed" is used as a swap for bonds held privately in banks, and that makes banks more willing to lend out money. So a lowered interest rate makes it more profitable to invest in stocks, and kept the financial system liquid enough to not collapse. Then the gov't borrowed a bunch of money to send to all the low income people (the $1200 stimulus cheque), which is the opposite of stuffing it into rich people's pockets. > Are wages going to increase when the inflation starts to trickle down to the goods and services it's more likely that wage increases would trigger said inflation, rather than the other way around.
- aphextron 6y ago
  >"and that makes banks more willing to lend out money" And who, exactly, do you think they're lending that zero interest money to? People and businesses with collateral, i.e. the wealthy.
- Guest42 6y ago
  I’m aware of a business owner that was given 200k and said that they easily could’ve gotten more. They had to ask for it quickly so it wasn’t quite “stuffed” into their pockets but the impression I get is that the larger businesses had an even easier time.
  - donmcronald 6y ago
    In Canada it’s similar. Businesses getting 10s or 100s of thousands of dollars in COVID relief when they weren’t really impacted. It’s just extra free money for some of them. Meanwhile many actual small businesses have gone bankrupt because $10-50k isn’t enough for anyone that saw their cash flow disappear.
- donmcronald 6y ago
  I thought the US printed something like 3 trillion dollars last year. How much do the $1200 cheques add up to? 200-400 billion? And the ultra rich gained 2 trillion in wealth over the same period. It sure seems like someone gave the rich a big bag of money to me.
  - f00zz 6y ago
    > the ultra rich gained 2 trillion in wealth I'm a bit suspicious of these stats. People seem to pick a period that starts at the bottom of the stock market.
  - cwhiz 6y ago
    $1,200 per person, and then $600 per person, and then $1,400 per person. Plus an additional $400-600 per week in unemployment benefits in addition to the amount states were already giving. Consider a hypothetical single person, living in Oregon, who lost his or her job during the pandemic, and is still looking for work. That person has received $3,200 in direct cash, and somewhere around $40-55,000 in unemployment checks. Plus other benefits such as food and medical. How much is enough?
    - donmcronald 6y ago
      I’m not American, but > So, under the new legislation, a typical worker could expect $985 a week for four months ($600 in extra relief plus state benefits), followed by up to 23 weeks of $385 a week in standard state benefits. Unemployment benefits are taxable. So their normal insurance (which they paid for) covers everything but 600x24 = $14,400 in federal benefits they’re not normally entitled to. Based on they above quote it sounds like $32.5k would be the upper end. Where do you get $55k? And remember they PAID into state level insurance programs for the majority of that and they’re entitled to everything but the extra $14.4K.
      - cwhiz 6y ago
        They amended the bills to continue paying $300 - $600 per week in additional unemployment on top of the state unemployment. Why would you subtract state unemployment? These people also paid federal taxes, so should we just subtract the federal unemployment, too? And again, that’s just the cash. There was also Medicaid for health insurance, numerous state and federal programs for food, programs for housing, internet, etc. How is this not enough?
- purple_ferret 6y ago
  >Then the gov't borrowed a bunch of money to send to all the low income people (the $1200 stimulus cheque The government gave all owners of labor up to $22,000 per employee. If you were a partner at a law firm making $500,000, you qualified for a $22,000 check right from the government because, as a partner, you're technically paying yourself. There were also tax changes in the 1st bill that benefited the wealthy.
- nprz 6y ago
  The stimulus checks could have come from taxing the wealthy, they did not. They came in the form of money printing which will eventually result in inflation, and will disproportionately effect the less well off who hold their money in cash and do not know how to protect their wealth from said inflation.
forgotmypw17 6y ago
This is how inflation takes effect, first investment instruments, then luxury goods, then basic goods, then rent, and finally, wages. Basically, from closest to the money source and spreading out.
- donmcronald 6y ago
  So for anyone who missed out on the investment side, is there any way to mitigate it? Do you borrow money at a fixed rate and invest it in markets that provide basic goods and supply constrained resources?
  - scsilver 6y ago
    Get a higher paying job, but wait to move to companies that are growing rapidly into new markets and absolutly need employees to deliver that new market product. Thats where you can take advantage of inflation to get a higher wage.
    - donmcronald 6y ago
      > Get a higher paying job Thanks. I hadn’t even considered “just make more money” as an option. Any tips and tricks for my 62 year old father?
      - scsilver 6y ago
        Are you mad at me or mad at the fed. I have a mid 60's father too who's trying to retire despite the macro economic situation. He's a retirement planner, maybe I could connect your father to him for some more specific advice.
  - forgotmypw17 6y ago
    Buy physical things which hold value.
- mbg721 6y ago
  Is it unusual for it to take this long to move through the chain after it's noticed?

chii 6y ago

> stuffed it into rich peoples’ pockets They did no such thing. Most money being "printed" is used as a swap for bonds held privately in banks, and that makes banks more willing to lend out money. So a lowered interest rate makes it more profitable to invest in stocks, and kept the financial system liquid enough to not collapse. Then the gov't borrowed a bunch of money to send to all the low income people (the $1200 stimulus cheque), which is the opposite of stuffing it into rich people's pockets. > Are wages going to increase when the inflation starts to trickle down to the goods and services it's more likely that wage increases would trigger said inflation, rather than the other way around.

aphextron 6y ago
>"and that makes banks more willing to lend out money" And who, exactly, do you think they're lending that zero interest money to? People and businesses with collateral, i.e. the wealthy.
Guest42 6y ago
I’m aware of a business owner that was given 200k and said that they easily could’ve gotten more. They had to ask for it quickly so it wasn’t quite “stuffed” into their pockets but the impression I get is that the larger businesses had an even easier time.
- donmcronald 6y ago
  In Canada it’s similar. Businesses getting 10s or 100s of thousands of dollars in COVID relief when they weren’t really impacted. It’s just extra free money for some of them. Meanwhile many actual small businesses have gone bankrupt because $10-50k isn’t enough for anyone that saw their cash flow disappear.
donmcronald 6y ago
I thought the US printed something like 3 trillion dollars last year. How much do the $1200 cheques add up to? 200-400 billion? And the ultra rich gained 2 trillion in wealth over the same period. It sure seems like someone gave the rich a big bag of money to me.
- f00zz 6y ago
  > the ultra rich gained 2 trillion in wealth I'm a bit suspicious of these stats. People seem to pick a period that starts at the bottom of the stock market.
- cwhiz 6y ago
  $1,200 per person, and then $600 per person, and then $1,400 per person. Plus an additional $400-600 per week in unemployment benefits in addition to the amount states were already giving. Consider a hypothetical single person, living in Oregon, who lost his or her job during the pandemic, and is still looking for work. That person has received $3,200 in direct cash, and somewhere around $40-55,000 in unemployment checks. Plus other benefits such as food and medical. How much is enough?
  - donmcronald 6y ago
    I’m not American, but > So, under the new legislation, a typical worker could expect $985 a week for four months ($600 in extra relief plus state benefits), followed by up to 23 weeks of $385 a week in standard state benefits. Unemployment benefits are taxable. So their normal insurance (which they paid for) covers everything but 600x24 = $14,400 in federal benefits they’re not normally entitled to. Based on they above quote it sounds like $32.5k would be the upper end. Where do you get $55k? And remember they PAID into state level insurance programs for the majority of that and they’re entitled to everything but the extra $14.4K.
    - cwhiz 6y ago
      They amended the bills to continue paying $300 - $600 per week in additional unemployment on top of the state unemployment. Why would you subtract state unemployment? These people also paid federal taxes, so should we just subtract the federal unemployment, too? And again, that’s just the cash. There was also Medicaid for health insurance, numerous state and federal programs for food, programs for housing, internet, etc. How is this not enough?
purple_ferret 6y ago
>Then the gov't borrowed a bunch of money to send to all the low income people (the $1200 stimulus cheque The government gave all owners of labor up to $22,000 per employee. If you were a partner at a law firm making $500,000, you qualified for a $22,000 check right from the government because, as a partner, you're technically paying yourself. There were also tax changes in the 1st bill that benefited the wealthy.
nprz 6y ago
The stimulus checks could have come from taxing the wealthy, they did not. They came in the form of money printing which will eventually result in inflation, and will disproportionately effect the less well off who hold their money in cash and do not know how to protect their wealth from said inflation.

forgotmypw17 6y ago

This is how inflation takes effect, first investment instruments, then luxury goods, then basic goods, then rent, and finally, wages. Basically, from closest to the money source and spreading out.

donmcronald 6y ago
So for anyone who missed out on the investment side, is there any way to mitigate it? Do you borrow money at a fixed rate and invest it in markets that provide basic goods and supply constrained resources?
- scsilver 6y ago
  Get a higher paying job, but wait to move to companies that are growing rapidly into new markets and absolutly need employees to deliver that new market product. Thats where you can take advantage of inflation to get a higher wage.
  - donmcronald 6y ago
    > Get a higher paying job Thanks. I hadn’t even considered “just make more money” as an option. Any tips and tricks for my 62 year old father?
    - scsilver 6y ago
      Are you mad at me or mad at the fed. I have a mid 60's father too who's trying to retire despite the macro economic situation. He's a retirement planner, maybe I could connect your father to him for some more specific advice.
- forgotmypw17 6y ago
  Buy physical things which hold value.
mbg721 6y ago
Is it unusual for it to take this long to move through the chain after it's noticed?