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The alturnative is letting things fail. It causes a lot of pain in the short term with people losing their jobs and general economic fallout. This causes a lot

The alturnative is letting things fail. It causes a lot of pain in the short term with people losing their jobs and general economic fallout. This causes a lot of suffering. But on the other hand, the rich will lose more, and during the rebuilding a different set of people will gain the upper hand and end up on top. It's hard to get the political will to actually allow what needs to happen to fix wealth inequality.

kristopolous 6y ago
When it's been done lots more than that happens! Currency collapses, bank defaults, asset freeze-ups, international trade stoppage because of debt/credit changes, strikes and work stoppages, demand collapses. Sometimes do nothing is fine, like the video game crash of 1983. But when it's systemic and big, that strategy has collapsed entire countries
127 6y ago
Inflation is wealth transfer from those who hold government fiat (the poor and the middle class) to those who hold assets (the rich). Deflation is the same thing in reverse. Makes it pretty clear why the government is fighting deflation so hard.
- gher-shyu3i 6y ago
  Don't forget that the government on purpose disconnected the currency from precious metals (gold, etc.) in order to facilitate usurious lending, which allows the government to print money at will to pay off its debts, inflating the currency at the cost of the hard work of the citizens.
- imtringued 6y ago
  > Inflation is wealth transfer from those who hold government fiat (the poor and the middle class) to those who hold assets (the rich). Nope, it's a wealth transfer from those who refuse to invest to those who invest and if you fail to invest you deserve it because you are not creating jobs and therefore make the lives of the poor and middle class worse. >Deflation is the same thing in reverse. No, since you are not investing your savings you are not creating jobs, you are directly responsible for causing unemployment. Please tell me, if you put cash under your mattress how is that cash supposed to employ anyone? >Makes it pretty clear why the government is fighting deflation so hard. The government is fighting deflation because it doesn't want unemployment because it doesn't want the economy to shrink because that requires the population to shrink. Do we just "cull" those useless people by killing them or sending them to Australia? Now, lets talk about the real damaging wealth transfer. Low interest rates are a wealth transfer from people who invest into safe investments (bank accounts) to people who invest into risky investments (stocks and housing). Interest rates are a function of inflation. Low inflation means low interest rates and therefore a higher wealth transfer from the poor to the rich.
TeMPOraL 6y ago
> But on the other hand, the rich will lose more Will they, though? Going by absolute value, perhaps, but that's nowhere near the whole story. Yes, if owners of a megacorp lose $100M, they've lost more than all their employees combined - but they still have a $1B between them in other assets, offshore bank accounts, whatnot, so they stay rich, while their employees suddenly find themselves in a life-threatening emergency. I can't think of a single market crisis that kicked down the richest people to the level of the poor. Wars and revolutions, yes, but not a market crisis. The more money you have, the easier it is to protect it - and marginal value of money grows sublinearly, so losing even 50% of your wealth hurts less the bigger that amount is. On top of that, connections and networks don't go away in a crisis. Which brings me to: > during the rebuilding a different set of people will gain the upper hand and end up on top One way for a competing upstart to get ahead of the other upstarts would be... to hire some of the "old guard" in advisory roles. After all, the crisis doesn't suddenly invalidate the ex-top people's knowledge experience. On the contrary, not only they still have relevant experience that an upstart doesn't, they also have benefit of hindsight and connections. So while the names of the companies and their CEOs may change, I'm pretty sure many of the old players - ones that didn't choose to retire and enjoy their riches - will quickly find their way back into the game. As for their employees, maybe they'll find their way back to their original positions too. Some day. After they dig themselves up of debt. That is, if the experience of having to give their kids heated ketchup packets for dinner didn't completely break them. -- EDIT: To be clear: revolutions and wars aren't the answer either. A big enough wave of death and destruction will be enough to grind down the richest too, but that's only a way to re-roll the dice on who's the rich and who's the poor in the next round. And the poor, again, suffer disproportionately here. For some reason this is seen as controversial these days, but I honestly believe that stability is something that works in favor the poor, not against them. It limits what they can do (the dreaded "status quo"), but it also puts a limit on losses. As long as the society is stable, we can try to make steady adjustments, even if it's a grind. If it starts to collapse, everyone enters survival mode, and everyone is much worse off. Even those who survive the chaos and chance their way into the top will have to live in the smoldering remains of their previous civilization, which is almost surely worse than what they had before. (Worth remembering we all have more to lose now. 1000 years ago, life before and after war wasn't much different. 70 years ago, the difference was stark. Today, it would be greater still. All the quality of life we enjoy today is very far from "ground state" of humanity, very quick to undo, and very hard to restore.)

kristopolous 6y ago

When it's been done lots more than that happens! Currency collapses, bank defaults, asset freeze-ups, international trade stoppage because of debt/credit changes, strikes and work stoppages, demand collapses. Sometimes do nothing is fine, like the video game crash of 1983. But when it's systemic and big, that strategy has collapsed entire countries

127 6y ago

Inflation is wealth transfer from those who hold government fiat (the poor and the middle class) to those who hold assets (the rich). Deflation is the same thing in reverse. Makes it pretty clear why the government is fighting deflation so hard.

gher-shyu3i 6y ago
Don't forget that the government on purpose disconnected the currency from precious metals (gold, etc.) in order to facilitate usurious lending, which allows the government to print money at will to pay off its debts, inflating the currency at the cost of the hard work of the citizens.
imtringued 6y ago
> Inflation is wealth transfer from those who hold government fiat (the poor and the middle class) to those who hold assets (the rich). Nope, it's a wealth transfer from those who refuse to invest to those who invest and if you fail to invest you deserve it because you are not creating jobs and therefore make the lives of the poor and middle class worse. >Deflation is the same thing in reverse. No, since you are not investing your savings you are not creating jobs, you are directly responsible for causing unemployment. Please tell me, if you put cash under your mattress how is that cash supposed to employ anyone? >Makes it pretty clear why the government is fighting deflation so hard. The government is fighting deflation because it doesn't want unemployment because it doesn't want the economy to shrink because that requires the population to shrink. Do we just "cull" those useless people by killing them or sending them to Australia? Now, lets talk about the real damaging wealth transfer. Low interest rates are a wealth transfer from people who invest into safe investments (bank accounts) to people who invest into risky investments (stocks and housing). Interest rates are a function of inflation. Low inflation means low interest rates and therefore a higher wealth transfer from the poor to the rich.

TeMPOraL 6y ago

> But on the other hand, the rich will lose more Will they, though? Going by absolute value, perhaps, but that's nowhere near the whole story. Yes, if owners of a megacorp lose $100M, they've lost more than all their employees combined - but they still have a $1B between them in other assets, offshore bank accounts, whatnot, so they stay rich, while their employees suddenly find themselves in a life-threatening emergency. I can't think of a single market crisis that kicked down the richest people to the level of the poor. Wars and revolutions, yes, but not a market crisis. The more money you have, the easier it is to protect it - and marginal value of money grows sublinearly, so losing even 50% of your wealth hurts less the bigger that amount is. On top of that, connections and networks don't go away in a crisis. Which brings me to: > during the rebuilding a different set of people will gain the upper hand and end up on top One way for a competing upstart to get ahead of the other upstarts would be... to hire some of the "old guard" in advisory roles. After all, the crisis doesn't suddenly invalidate the ex-top people's knowledge experience. On the contrary, not only they still have relevant experience that an upstart doesn't, they also have benefit of hindsight and connections. So while the names of the companies and their CEOs may change, I'm pretty sure many of the old players - ones that didn't choose to retire and enjoy their riches - will quickly find their way back into the game. As for their employees, maybe they'll find their way back to their original positions too. Some day. After they dig themselves up of debt. That is, if the experience of having to give their kids heated ketchup packets for dinner didn't completely break them. -- EDIT: To be clear: revolutions and wars aren't the answer either. A big enough wave of death and destruction will be enough to grind down the richest too, but that's only a way to re-roll the dice on who's the rich and who's the poor in the next round. And the poor, again, suffer disproportionately here. For some reason this is seen as controversial these days, but I honestly believe that stability is something that works in favor the poor, not against them. It limits what they can do (the dreaded "status quo"), but it also puts a limit on losses. As long as the society is stable, we can try to make steady adjustments, even if it's a grind. If it starts to collapse, everyone enters survival mode, and everyone is much worse off. Even those who survive the chaos and chance their way into the top will have to live in the smoldering remains of their previous civilization, which is almost surely worse than what they had before. (Worth remembering we all have more to lose now. 1000 years ago, life before and after war wasn't much different. 70 years ago, the difference was stark. Today, it would be greater still. All the quality of life we enjoy today is very far from "ground state" of humanity, very quick to undo, and very hard to restore.)