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So a stock market and/or real estate crash can actually be good to reduce inequality . In fact I think its about the only way to dramatically reduce inequality.

So a stock market and/or real estate crash can actually be good to reduce inequality . In fact I think its about the only way to dramatically reduce inequality. Think about young people trying to buy their 1st home now, its becoming impossible.

29athrowaway 2y ago
They would get bailed out with something like Quantitative easing. Congress will not let the stock market crash because they are #1 insider traders.
- bdangubic 2y ago
  so short-sighted, they will either exit or short it before they let it crash. they make $ either way mate
  - anticensor 2y ago
    But then they'd lose some amount of control.
denkmoon 2y ago
The 2008 stock market crash famously reduced inequality. Definitely didn't increase inequality by leaving the average person (via government bailouts) holding the bag.
- swiftcoder 2y ago
  The 2008 crash was also famously centred around mortgages, rather than pure stocks
  - __loam 2y ago
    [flagged]
  - keernan 2y ago
    Mortgages that were packaged into mutual funds that traded on the stock exchanges. Meanwhile, the insiders who knew what was going on (that the packaged mortgages were super high risk) insured their risk through new financial products - specifically 'credit default swaps' marked by AIG. The gimmick there was that AIG designed the swaps in a way that avoided insurance reserve regulations - and thus AIG had no money set aside in the event of default. So when the shit hit the fan taxpayers coughed up close to 200 billion dollars to cover the 'swaps' sold by AIG that were backed by ... nothing. A fair number of billionaires rose out of the ashes of those shenanigans. None were ever charged. That's how 'capitalism' works in the gold old USA. Always has. Always will.
    - actionfromafar 2y ago
      The funny thing is, 200 billion seems like pocket change compared to what is about to happen with the Republican budget now.
- stuaxo 2y ago
  Indeed, the bailout if banks in multiple countries is the biggest transfer from the rest of us, to the rich there has ever been. Absolutely enormous amounts of money.
  - jajko 2y ago
    All major banks paid back all those loans with interest. That was actually net income for governments that lended those money. Who really lost money directly were all those speculators who had 10 mortgages on them and just kept taking more and more. Look, I am all for hatin' the big man when he deserves it and he often does, but lets be a bit smart and not just throw random angry spits without checking the facts, shall we? Do you even realize that during covid globally money lost some 20-30% of their purchasing power? That's real burning cash of regular folks right in front of you and everybody else.
    - timewizard 2y ago
      [flagged]
      - jajko 2y ago
        Not sure why the personal attacks, I believe you can and should do better. Also please stop incorrect claims about what I am doing. Also you switch goalposts, I've reacted to parent's claims and not ones you are making up as you go. And so on.
      - vkou 2y ago
        Whether they deserved the loans or not is irrelevant to whether the loans were paid back. Which they were, I'm not sure why people keep repeating the lie that they didn't.
    - pjmlp 2y ago
      No they didn't, some of them went bankrupt anyway, while others used that money in corruption schemes, which is why in Portugal many people nowadays avoid any kind of offers their bank advisors propose.
- lmpdev 2y ago
  Only in the US and some other countries I’m still “waiting” for the GFC to correct the Australian housing market…
- weatherlite 2y ago
  I'm assuming sarcasm here. The 2008 crash was immediately offset by huge rounds of QE that most of them went to bail out financial institutions and inadvertently further inflated the prices of most assets. It may have been necessary, I don't know, but the bottom line is the stock market (and all assets generally) was inflated with huge sums of new money.
  - raziel2p 2y ago
    so how does this align with your opinion/idea that a stock market crash today would reduce inequality? more likely the same thing would just happen again.
    - weatherlite 2y ago
      Its probably not easy but I think a policy that protects the workers instead of a policy that protects the corporations / shareholders. You can let corporations go bankrupt - thus causing shareholders to get wiped out, and compensate by protecting the workers and poorer people with government checks until they can find new employment. Banks are probably the only exception , I don't think you can let the banks fail without risking an economic collapse.
      - sharemywin 2y ago
        if the government had a sovereign wealth fund it could have bought all the failing companies and "divested" when the market recovered. instead of being massively in debt it could have probably come out on top. granted that incentivizes the government to cause market crashes but there no perfect system.
      - from-nibly 2y ago
        That would massively slow the economy and the people at the top will never do that.
        weatherlite 2y ago
        True , but inflating an endless assets and debt bubble in the hopes A.I will come to save us is also probably not sustainable.
- bawolff 2y ago
  Similarly, the great depression was not a great time to be poor. [Edit:to be clear income inequality did go down, but poor people got a lot poorer, which seems like a pretty bad outcome]
  - carlob 2y ago
    The great depression in itself wasn't, but the combined effect of WWI, GD and WW2 was. We razed Europe rather than redistribute.
    - insane_dreamer 2y ago
      Also ended up with all of Europe's gold by the end of WW2, making the dollar the global reserve currency
      - dredmorbius 2y ago
        Both facts may be true without the causal link being present. Establishing the US as the global reserve currency had little if anything to do with where gold was stored, and far more to do with US economic and military power generally in the post-war era.
        insane_dreamer 2y ago
        That’s incorrect. It had a lot to do with it because it represented the fact that Europe’s governments had little to no wealth after WW2 while the US had it all (thus economic and military dominance).
        dredmorbius 2y ago
        And wealth, as Mr. Smith says, is "the produce and labour of the nation", which is to say, economic activity, as noted in my GP comment.
        2y ago
- roenxi 2y ago
  In fairness; there is an ongoing strategy of printing money and distributing it to asset owners. That may also be contributing to asset owners accounting for most spending.
  - ty6853 2y ago
    This is basically what happened during the covid low interest mania. Not realizing what had happened, in three years I went from "almost enough to buy a house in the city in cash" to "have to buy vacant rural wasteland then develop it myself from scratch." The latter worked out, but cost me two years of my life of hard labor. Those two years of manual labor more or less represent what home owners took from non owners via the central bank.
    - willvarfar 2y ago
      Do you mean you developed vacant rural land from scratch? Ignoring the meta economy lessons etc, how was it? Do you love what you've done? How did you do it? Where is it? What was surprisingly hard and what was surprisingly easy? Etc etc etc, please tell all! Love this kind of stuff :D (An HNer just embarking on a house self-building project)
- vkou 2y ago
  The bailouts were paid back with interest. QE was not, but, you know, everyone who owns assets or had a job turned out to be a beneficiary of it.
OtomotO 2y ago
The rich stay rich no matter what. Hell, there are companies and families who supported the third Reich openly. They were rich before world war 2, they were rich after and they are still rich today. Not to mention none of them had to go to the Nuremberg trials... It's their system, it's their game.
- lnsru 2y ago
  It’s also worth mentioning, that these people/organizations hide very well. For broad society they don’t exist and if you mention this, you get a label “crazy conspiracy theory lover”. Funny thing, even law for such constructs exist and they’re real. Look at “Familienstiftung” (English family foundation or similarly). It’s absolutely their system, they law and their game. But I also want to get there!
- thworp 2y ago
  > Hell, there are companies and families who supported the third Reich openly. > They were rich before world war 2, they were rich after and they are still rich today. Yes, these families exist. But there is an equal amount of them that went to the poorhouse that you don't know about. Many German Nazis that got wealthy through stealing/grafting of Jewish businesses _did_ lose their assets. Others still stayed somewhat wealthy but are now just barely millionaires. It's very easy to get fooled by survivorship bias, since it's only the companies and people that are still wealthy that get heavily covered. I don't think a publisher would accept a book like Nazi Billionaires about all the people that are no longer relevant at all. edit: I have to say, I also think it's terrible that so many people could just go on like nothing happened. Doubly so for the bureaucracy, diplomats and judges -- both in Germany and the Axis collaborators. But this is how the world goes. The only people punished for the Cultural Revolution and Great Leap Forward or the Gulags were those caught up in internal purges. The new Syrian government threw a few of the worst people in Jail, but cannot dismiss everyone involved in the old system for practical reasons. The Architects and executors of British and Dutch "counter-insurgency" strategies to keep their colonies have Barracks named after them. I could go on with American examples but I think we all know.
kaptainscarlet 2y ago
It makes the rich poorer but keeps the poor in the same place.
- djantje 2y ago
  It makes the rich less rich, the poor more poor.
- geysersam 2y ago
  Not really. Stock value is just paper. Stocks going down just means they are valued less now relative to other stuff. Imagine if everyones socks were suddenly valued a million bucks, except yours. Would you "stay in the same place" or would you suddenly be too poor to afford to buy the labor of all the newly minted millionaires? I'd bet on the latter.
  - Gigachad 2y ago
    It’s hard to understand this scenario at all. If everyone’s socks suddenly became worth a million dollars but nothing else at all changed, the price would immediately crash back down when the first person tries to sell them and can’t because no one is going to pay a million dollars for socks.
    - suraci 2y ago
      [dead]
    - geysersam 2y ago
      If you want to make the example more intuitive you can imagine strain of fungi that has the potential to evolve to an incredibly potent medicine (prolonging life by 30 years) some day in the future. The fungi grows on everyones socks except your just by random chance. Suddenly everyone in the world owns a vial of potentially the elixir of life, except you. Can you still buy tomatoes when your neighborhood has sold their socks to Bezos and they suddenly each have a million bucks of cash in hand?
thunkingdeep 2y ago
This is astronomically incorrect it’s basically an info hazard. A market crash like that would result in extremely broad layoffs, major global supply chain instabilities, and a cataclysmic knock on effect of capital losses into nearly every walk of life on earth. Not to mention, as many already have, the federal govt would undoubtedly bail out the worst actors and leave the poor to fend for themselves. Just yesterday the Treasury Department announced they aren’t going to enforce a money laundering law. You think they’re going to New Deal a major crash’s now? No way.
- anovikov 2y ago
  Arguably even doing it the first time around was a mistake.
- itake 2y ago
  Also the rich have cash flow and can continuously invest during crashes. The top 10% aren’t losing their jobs in a crash, but the bottom 50% might. So while the top 10% keeps investing and will maximize the recovery, the bottom 50% will cash out at the bottom and won’t return to invest for years after their emergency fund has recovered.
  - JumpCrisscross 2y ago
    > the rich have cash flow and can continuously invest during crashes There are a lot of levered rich people. Musk would be screwed if he got margin called on Tesla.
    - actionfromafar 2y ago
      So you are telling me there is hope after all? (I mean, unless there's a federal ruling that it's unconstitutional to let a Musk and his money part ways.)
      - Jensson 2y ago
        Hope for what? Who would benefit?
renewiltord 2y ago
You guys are so obsessed with inequality because you're always looking in the other guy's cup. I don't care about inequality at all - only absolute living standards. The US has been an unequal place all its history and it's a tremendous country to live in. Here's a recipe for happiness: stop comparing yourself to others and stop trying to keep up with the Joneses. It's old advice, but it's clearly been forgotten.
- stuaxo 2y ago
  Even the most basic of primates have a sense of fairness and get unhappy if someone is hoarding.
  - renewiltord 2y ago
    I exhort you to rise above the most basic of primates. I have transcended the flinging of my faeces and it has brought me great joy.
    - xeonmc 2y ago
      > In this moment, I am euphoric. Not because of any phony God's blessing, but because, I am enlightened by my own intelligence.
      - renewiltord 2y ago
        Pearls before swine.
  - ty6853 2y ago
    Which is why we should be encouraging the kind of wealth generated by mutually beneficial transactions, and thanking God if such strategy lead to people generating 'hoards' of value.
- ramon156 2y ago
  These comments typically come from people who are doing well in life, im guilty of that as well. Instead we should be looking at the cups below us who can barely get by their salary
smgit 2y ago
I think its to recognize the role of Middle Men. With the tech (and globalization), Middle Men have been getting real fat. Lina Khan types need solid support and fire power to make a dent.
cbg0 2y ago
> So a stock market and/or real estate crash can actually be good to reduce inequality . In fact I think its about the only way to dramatically reduce inequality. This would assume rich people have all their money in stocks, which is not correct.
pjmlp 2y ago
It has not been possible for decades in Southern Europe countries for decades, that is why most people live with their parents and only leave home when married, and then get credits that last all the way until they retire, assuming they live that long in first place. Or eventually get the parents house from generation to generation.
- Earw0rm 2y ago
  And yet there's hundreds of entire villages in Mediterranean Europe that are empty apart from a few elderly people, lots of small rural towns with tracts of empty property. Usually because they're hours away from the nearest good jobs. What's happened is a massive shift from a small-scale agricultural economy to a mix of urban and large-scale agriculture, and the building of homes/apartments hasn't kept pace.
  - pjmlp 2y ago
    Yes, even those are out of reach for many pockets.
    - Earw0rm 2y ago
      The properties themselves are being effectively given away. Refurbishing them to a modern standard, of course, is quite a different story. Perhaps €100K EUR in a lot of cases.
      - pjmlp 2y ago
        Now try that on a 1 000€ salary, or 2 000€ assuming married and both working at a good enough place (minimum wage in Portugal is 870€ brutto), while having a family, paying credit on the car (as public transport sucks), various kinds of insurances, supermarket, electricity, water,... Even me with my seniority most likely won't pull more than 1 500€ netto at most places.
        Earw0rm 2y ago
suraci 2y ago
not always in the great depression, the crash did reduce inequality in the covid19, the crash increased inequality my opinion is that nowadays, fortune is highly financialized. during a crisis, for most(99.99%) ordinary people who are in the market, they suffer the real lose, and they have nothing to comeback, even have to sell their assets to pay their bills, all they can get from the goverment is something like food banks, or the best situation, get a job to sell their labor but for certain people either hold enough cash or can obtain enough cash from government relief programs, putting them in a position of advantage, this enables them to quickly reap a large amount of wealth during an economic crisis.
Almondsetat 2y ago
No, because the richer one is the more one can endure. In a market crash, the rich can just survive with their own stash of liquid money and when the time is ripe they can sweep in and buy for cheap the stocks of middle class investors trying to liquidate to make ends meet
- prasadjoglekar 2y ago
  Liquid money is only good if the bank stays solvent. Which SVB was not, and neither were many banks in 2008 until the federal govt stepped in and backstopped all deposits beyond the $250K limit.
  - Almondsetat 2y ago
    Rich people use different banks than the general population
    - scandox 2y ago
      Those banks are very far from being more trustworthy.
      - ceejayoz 2y ago
        That’s why they use more than one.
    - HenryBemis 2y ago
      This! I keep "my money" in a few different places. I keep a spreadsheet and every 1st of the month I 'do the rounds' and add the numbers of deposits, investments, '401k', etc. so I keep an eye on my 'net worth' on a monthly basis. When COVID happened and I saw that SP500 tanked, I bought more than my typical 'monthly purchase'. Now, I am a nobody and worth a little. Someone who had $50m in the bank, well connected, and with access to info, 'went in' for x1000 what I did, at a better timed entry and left at a better timed exit made big bucks. I am definitely part of the top 1% (8b people --> 80m)(considering that majority of the planet lives 'poor')(my definition of 'poor' was redefined when I visited the Philippines and saw a family of 4 live in a carton box from a fridge). "We" here in HN (most of us) are in that 10% of the global population, whether we like it or not. And it's not because "everyone living in the EU is rich", it's more like in so many countries for majority of the people their income is well below $upper-tripple-digits.
baobabKoodaa 2y ago
> Think about young people trying to buy their 1st home now, its becoming impossible. At least in Finland today it's much easier for young people to buy their 1st home now compared to 15 years ago. Interest rates are roughly where they were 15 years ago, but house prices in real terms have gone way down. There's also huge market asymmetry with large amount of vacant properties that nobody wants to buy, and relatively few buyers.
- actionfromafar 2y ago
  So, are young people buying their 1st home now? If not, is it actually easier for them to buy?
  - lifestyleguru 2y ago
    I'm not an expert on Finland but looking and economy and geopolitics young Finns might have a massive problem with the second secret ingredient to buying their 1st home - a job. Then looking at fertility ratio only people who can afford buying housing to their children decide to have children.
  - baobabKoodaa 2y ago
    > So, are young people buying their 1st home now? If not, is it actually easier for them to buy? No, young people are not buying their first home. Despite that, yes, it is actually easier for them to buy. What is stopping them? I would say mainly the expectation that housing prices will drop further as the economy is going further down the drain, leading to better buying opportunities at a later time.
    - actionfromafar 2y ago
      That sounds like buying a home not to live in and start a family in. Pretty sad if so.
      - baobabKoodaa 2y ago
        Things are not black and white. People who are starting a family and buying a house will typically contemplate a long time on when it's the right time to buy. It's natural that financial aspects play a part in that equation (expectation of having a job, expectation of housing market going up or down, etc.)
jajko 2y ago
How young is your 'young'? House is normally by far the biggest investment in couple's lives, and if starting from 0 (ignoring common US debt from studying) it should actually take a bit of time to progress in careers and amass some money aside required for such a move. I've never felt that I am entitled to any sort of property even when being software engineer to the core, even more a house, as a young person right after university. That was always a hard-won luxury, and I don't even mean some extremely well located place. Some folks here often mention similar stuff and refer to some period in 50s/60s in US specifically where 1 salary could have done it in some more rural areas. Nobody mentions how rest of the population looked like, hardly whole US population was buying new houses with wife being stay-at-home mum. When women started going to work too, suddenly such couples quickly outcompeted single earners from housing market. In Europe, this stay-at-home was never the thing in most places so we never even had such period, thus 0 such expectations. Properties, especially houses, were always a hard-won luxury.
markus_zhang 2y ago
No, they always win. A stock market crash could actually be a boon to them to grab free chips on the table. They are only scared of one thing.
AngryData 2y ago
Theoretically sure it could help. Realistically we know governments, who are largely controlled by the wealthy, will immediately start dumping money around when stock markets dip and doing everything possible to insulate the investor class from losing everything. But if something only hurts the lower classes, they will usually ignore it as much as possible.
danju 2y ago
[dead]
atoav 2y ago
Nope. In a crash the poor get thrown out of their houses, have to sell their land, etc. The rich can endure more, buy that stuff and after the crisis it is even worse.
deleted 2y ago
[deleted]
vladimirralev 2y ago
The Fed has a few papers on this issue. Their conclusion is basically that the young will eventually inherit the wealth and market forces will force a redistribution. Thus it solves itself eventually. I personally think that the Fed papers are just designed as an excuse to print money, but my point is the Fed is very far from seeing this as a problem and will never act to remedy it.
- ahaferburg 2y ago
  Trickle down economy is totally going to work. Just wait another couple decades! /s
- ric2b 2y ago
  How will market forces force a redistribution when they can just invest their wealth and keep growing it even more?
robjan 2y ago
The hardest hit would be the middle class whose retirement depends on funds which predominantly invest in equities.
schnitzelstoat 2y ago
A collapsing stock market wouldn't make it any easier for young people to buy their own home though. It would probably make it harder if it were anything like 2008. The issue with housing is that throughout the Western world we've made it incredibly difficult to get new housing built.
torginus 2y ago
Heck no. This would cause the rich to evacuate their wealth into real estate, pumping the market even further.
insane_dreamer 2y ago
A stock market crash mostly transfers wealth from the bottom rung of those who own stocks, who are forced to sell, to the top rung of stock owners, who have enough to be able to wait it out and then buy up the assets at low prices (and make a fortune when it goes back up). It also causes a lot of companies to go out of business or reduce their workforce because of reduced consumer spending, hurting the working class more.
nickjj 2y ago
As far as I know the stock market has winners and losers. If you're not rich but invested whatever you could over the course of your life and now the market tanks to where you've lost half (or more) of what you had then someone else is going to win that from you. A massively rich company can hold out a lot longer than a software developer who tucked away what they could over the years. If a real crash happens that software developer just got 30 years of their net worth mostly vaporized in a few months. How much of the population is in that category? It's the whole middle class basically. It's a crushing blow to most folks when the market crashes for a long period of time. It's even worse for folks who are already in a position of barely scraping by while putting a little bit aside whenever they can. That person is destroyed if a majority of that disappears because they may have to sell it off on the spot just to survive because if the market really crashes, you can be sure a ton of people are going to be out of work.
- ryandrake 2y ago
  In other words, if your retirement savings is $200K and you lose 50% of it, at best you're going to have to make major changes to your plans. At worst (depending on how much debt you have) you're in for some real pain. A billionaire with $200B in wealth could lose 99% of that and still have $2B, generational wealth that will perpetually fund an entire family tree down to great great grandchildren.
  - nickjj 2y ago
    Yep and losses are only losses when it's realized. A billionaire can just ride out the crash for 5, 10 or 15 years while investing more when the market is near the bottom. What they are investing in is buying the shares that the middle class has to sell off to pay their rent. I don't know what you want to label it as but being able to ride out a crash and having your unrealized losses go back to normal while still having capital to buy a ton when the market was near the bottom of a crash sounds like a lot like transferring wealth to me (from the middle to the top).

29athrowaway 2y ago

They would get bailed out with something like Quantitative easing. Congress will not let the stock market crash because they are #1 insider traders.

bdangubic 2y ago
so short-sighted, they will either exit or short it before they let it crash. they make $ either way mate
- anticensor 2y ago
  But then they'd lose some amount of control.

denkmoon 2y ago

The 2008 stock market crash famously reduced inequality. Definitely didn't increase inequality by leaving the average person (via government bailouts) holding the bag.

swiftcoder 2y ago
The 2008 crash was also famously centred around mortgages, rather than pure stocks
- __loam 2y ago
  [flagged]
- keernan 2y ago
  Mortgages that were packaged into mutual funds that traded on the stock exchanges. Meanwhile, the insiders who knew what was going on (that the packaged mortgages were super high risk) insured their risk through new financial products - specifically 'credit default swaps' marked by AIG. The gimmick there was that AIG designed the swaps in a way that avoided insurance reserve regulations - and thus AIG had no money set aside in the event of default. So when the shit hit the fan taxpayers coughed up close to 200 billion dollars to cover the 'swaps' sold by AIG that were backed by ... nothing. A fair number of billionaires rose out of the ashes of those shenanigans. None were ever charged. That's how 'capitalism' works in the gold old USA. Always has. Always will.
  - actionfromafar 2y ago
    The funny thing is, 200 billion seems like pocket change compared to what is about to happen with the Republican budget now.
stuaxo 2y ago
Indeed, the bailout if banks in multiple countries is the biggest transfer from the rest of us, to the rich there has ever been. Absolutely enormous amounts of money.
- jajko 2y ago
  All major banks paid back all those loans with interest. That was actually net income for governments that lended those money. Who really lost money directly were all those speculators who had 10 mortgages on them and just kept taking more and more. Look, I am all for hatin' the big man when he deserves it and he often does, but lets be a bit smart and not just throw random angry spits without checking the facts, shall we? Do you even realize that during covid globally money lost some 20-30% of their purchasing power? That's real burning cash of regular folks right in front of you and everybody else.
  - timewizard 2y ago
    [flagged]
    - jajko 2y ago
      Not sure why the personal attacks, I believe you can and should do better. Also please stop incorrect claims about what I am doing. Also you switch goalposts, I've reacted to parent's claims and not ones you are making up as you go. And so on.
    - vkou 2y ago
      Whether they deserved the loans or not is irrelevant to whether the loans were paid back. Which they were, I'm not sure why people keep repeating the lie that they didn't.
  - pjmlp 2y ago
    No they didn't, some of them went bankrupt anyway, while others used that money in corruption schemes, which is why in Portugal many people nowadays avoid any kind of offers their bank advisors propose.
lmpdev 2y ago
Only in the US and some other countries I’m still “waiting” for the GFC to correct the Australian housing market…
weatherlite 2y ago
I'm assuming sarcasm here. The 2008 crash was immediately offset by huge rounds of QE that most of them went to bail out financial institutions and inadvertently further inflated the prices of most assets. It may have been necessary, I don't know, but the bottom line is the stock market (and all assets generally) was inflated with huge sums of new money.
- raziel2p 2y ago
  so how does this align with your opinion/idea that a stock market crash today would reduce inequality? more likely the same thing would just happen again.
  - weatherlite 2y ago
    Its probably not easy but I think a policy that protects the workers instead of a policy that protects the corporations / shareholders. You can let corporations go bankrupt - thus causing shareholders to get wiped out, and compensate by protecting the workers and poorer people with government checks until they can find new employment. Banks are probably the only exception , I don't think you can let the banks fail without risking an economic collapse.
    - sharemywin 2y ago
      if the government had a sovereign wealth fund it could have bought all the failing companies and "divested" when the market recovered. instead of being massively in debt it could have probably come out on top. granted that incentivizes the government to cause market crashes but there no perfect system.
    - from-nibly 2y ago
      That would massively slow the economy and the people at the top will never do that.
      - weatherlite 2y ago
        True , but inflating an endless assets and debt bubble in the hopes A.I will come to save us is also probably not sustainable.
bawolff 2y ago
Similarly, the great depression was not a great time to be poor. [Edit:to be clear income inequality did go down, but poor people got a lot poorer, which seems like a pretty bad outcome]
- carlob 2y ago
  The great depression in itself wasn't, but the combined effect of WWI, GD and WW2 was. We razed Europe rather than redistribute.
  - insane_dreamer 2y ago
    Also ended up with all of Europe's gold by the end of WW2, making the dollar the global reserve currency
    - dredmorbius 2y ago
      Both facts may be true without the causal link being present. Establishing the US as the global reserve currency had little if anything to do with where gold was stored, and far more to do with US economic and military power generally in the post-war era.
      - insane_dreamer 2y ago
        That’s incorrect. It had a lot to do with it because it represented the fact that Europe’s governments had little to no wealth after WW2 while the US had it all (thus economic and military dominance).
        dredmorbius 2y ago
        And wealth, as Mr. Smith says, is "the produce and labour of the nation", which is to say, economic activity, as noted in my GP comment.
        2y ago
roenxi 2y ago
In fairness; there is an ongoing strategy of printing money and distributing it to asset owners. That may also be contributing to asset owners accounting for most spending.
- ty6853 2y ago
  This is basically what happened during the covid low interest mania. Not realizing what had happened, in three years I went from "almost enough to buy a house in the city in cash" to "have to buy vacant rural wasteland then develop it myself from scratch." The latter worked out, but cost me two years of my life of hard labor. Those two years of manual labor more or less represent what home owners took from non owners via the central bank.
  - willvarfar 2y ago
    Do you mean you developed vacant rural land from scratch? Ignoring the meta economy lessons etc, how was it? Do you love what you've done? How did you do it? Where is it? What was surprisingly hard and what was surprisingly easy? Etc etc etc, please tell all! Love this kind of stuff :D (An HNer just embarking on a house self-building project)
vkou 2y ago
The bailouts were paid back with interest. QE was not, but, you know, everyone who owns assets or had a job turned out to be a beneficiary of it.

OtomotO 2y ago

The rich stay rich no matter what. Hell, there are companies and families who supported the third Reich openly. They were rich before world war 2, they were rich after and they are still rich today. Not to mention none of them had to go to the Nuremberg trials... It's their system, it's their game.

lnsru 2y ago
It’s also worth mentioning, that these people/organizations hide very well. For broad society they don’t exist and if you mention this, you get a label “crazy conspiracy theory lover”. Funny thing, even law for such constructs exist and they’re real. Look at “Familienstiftung” (English family foundation or similarly). It’s absolutely their system, they law and their game. But I also want to get there!
thworp 2y ago
> Hell, there are companies and families who supported the third Reich openly. > They were rich before world war 2, they were rich after and they are still rich today. Yes, these families exist. But there is an equal amount of them that went to the poorhouse that you don't know about. Many German Nazis that got wealthy through stealing/grafting of Jewish businesses _did_ lose their assets. Others still stayed somewhat wealthy but are now just barely millionaires. It's very easy to get fooled by survivorship bias, since it's only the companies and people that are still wealthy that get heavily covered. I don't think a publisher would accept a book like Nazi Billionaires about all the people that are no longer relevant at all. edit: I have to say, I also think it's terrible that so many people could just go on like nothing happened. Doubly so for the bureaucracy, diplomats and judges -- both in Germany and the Axis collaborators. But this is how the world goes. The only people punished for the Cultural Revolution and Great Leap Forward or the Gulags were those caught up in internal purges. The new Syrian government threw a few of the worst people in Jail, but cannot dismiss everyone involved in the old system for practical reasons. The Architects and executors of British and Dutch "counter-insurgency" strategies to keep their colonies have Barracks named after them. I could go on with American examples but I think we all know.

kaptainscarlet 2y ago

It makes the rich poorer but keeps the poor in the same place.

djantje 2y ago
It makes the rich less rich, the poor more poor.
geysersam 2y ago
Not really. Stock value is just paper. Stocks going down just means they are valued less now relative to other stuff. Imagine if everyones socks were suddenly valued a million bucks, except yours. Would you "stay in the same place" or would you suddenly be too poor to afford to buy the labor of all the newly minted millionaires? I'd bet on the latter.
- Gigachad 2y ago
  It’s hard to understand this scenario at all. If everyone’s socks suddenly became worth a million dollars but nothing else at all changed, the price would immediately crash back down when the first person tries to sell them and can’t because no one is going to pay a million dollars for socks.
  - suraci 2y ago
    [dead]
  - geysersam 2y ago
    If you want to make the example more intuitive you can imagine strain of fungi that has the potential to evolve to an incredibly potent medicine (prolonging life by 30 years) some day in the future. The fungi grows on everyones socks except your just by random chance. Suddenly everyone in the world owns a vial of potentially the elixir of life, except you. Can you still buy tomatoes when your neighborhood has sold their socks to Bezos and they suddenly each have a million bucks of cash in hand?

thunkingdeep 2y ago

This is astronomically incorrect it’s basically an info hazard. A market crash like that would result in extremely broad layoffs, major global supply chain instabilities, and a cataclysmic knock on effect of capital losses into nearly every walk of life on earth. Not to mention, as many already have, the federal govt would undoubtedly bail out the worst actors and leave the poor to fend for themselves. Just yesterday the Treasury Department announced they aren’t going to enforce a money laundering law. You think they’re going to New Deal a major crash’s now? No way.

anovikov 2y ago
Arguably even doing it the first time around was a mistake.
itake 2y ago
Also the rich have cash flow and can continuously invest during crashes. The top 10% aren’t losing their jobs in a crash, but the bottom 50% might. So while the top 10% keeps investing and will maximize the recovery, the bottom 50% will cash out at the bottom and won’t return to invest for years after their emergency fund has recovered.
- JumpCrisscross 2y ago
  > the rich have cash flow and can continuously invest during crashes There are a lot of levered rich people. Musk would be screwed if he got margin called on Tesla.
  - actionfromafar 2y ago
    So you are telling me there is hope after all? (I mean, unless there's a federal ruling that it's unconstitutional to let a Musk and his money part ways.)
    - Jensson 2y ago
      Hope for what? Who would benefit?

renewiltord 2y ago

You guys are so obsessed with inequality because you're always looking in the other guy's cup. I don't care about inequality at all - only absolute living standards. The US has been an unequal place all its history and it's a tremendous country to live in. Here's a recipe for happiness: stop comparing yourself to others and stop trying to keep up with the Joneses. It's old advice, but it's clearly been forgotten.

stuaxo 2y ago
Even the most basic of primates have a sense of fairness and get unhappy if someone is hoarding.
- renewiltord 2y ago
  I exhort you to rise above the most basic of primates. I have transcended the flinging of my faeces and it has brought me great joy.
  - xeonmc 2y ago
    > In this moment, I am euphoric. Not because of any phony God's blessing, but because, I am enlightened by my own intelligence.
    - renewiltord 2y ago
      Pearls before swine.
- ty6853 2y ago
  Which is why we should be encouraging the kind of wealth generated by mutually beneficial transactions, and thanking God if such strategy lead to people generating 'hoards' of value.
ramon156 2y ago
These comments typically come from people who are doing well in life, im guilty of that as well. Instead we should be looking at the cups below us who can barely get by their salary

smgit 2y ago

I think its to recognize the role of Middle Men. With the tech (and globalization), Middle Men have been getting real fat. Lina Khan types need solid support and fire power to make a dent.

cbg0 2y ago

> So a stock market and/or real estate crash can actually be good to reduce inequality . In fact I think its about the only way to dramatically reduce inequality. This would assume rich people have all their money in stocks, which is not correct.

pjmlp 2y ago

It has not been possible for decades in Southern Europe countries for decades, that is why most people live with their parents and only leave home when married, and then get credits that last all the way until they retire, assuming they live that long in first place. Or eventually get the parents house from generation to generation.

Earw0rm 2y ago
And yet there's hundreds of entire villages in Mediterranean Europe that are empty apart from a few elderly people, lots of small rural towns with tracts of empty property. Usually because they're hours away from the nearest good jobs. What's happened is a massive shift from a small-scale agricultural economy to a mix of urban and large-scale agriculture, and the building of homes/apartments hasn't kept pace.
- pjmlp 2y ago
  Yes, even those are out of reach for many pockets.
  - Earw0rm 2y ago
    The properties themselves are being effectively given away. Refurbishing them to a modern standard, of course, is quite a different story. Perhaps €100K EUR in a lot of cases.
    - pjmlp 2y ago
      Now try that on a 1 000€ salary, or 2 000€ assuming married and both working at a good enough place (minimum wage in Portugal is 870€ brutto), while having a family, paying credit on the car (as public transport sucks), various kinds of insurances, supermarket, electricity, water,... Even me with my seniority most likely won't pull more than 1 500€ netto at most places.
      - Earw0rm 2y ago

suraci 2y ago

not always in the great depression, the crash did reduce inequality in the covid19, the crash increased inequality my opinion is that nowadays, fortune is highly financialized. during a crisis, for most(99.99%) ordinary people who are in the market, they suffer the real lose, and they have nothing to comeback, even have to sell their assets to pay their bills, all they can get from the goverment is something like food banks, or the best situation, get a job to sell their labor but for certain people either hold enough cash or can obtain enough cash from government relief programs, putting them in a position of advantage, this enables them to quickly reap a large amount of wealth during an economic crisis.

Almondsetat 2y ago

No, because the richer one is the more one can endure. In a market crash, the rich can just survive with their own stash of liquid money and when the time is ripe they can sweep in and buy for cheap the stocks of middle class investors trying to liquidate to make ends meet

prasadjoglekar 2y ago
Liquid money is only good if the bank stays solvent. Which SVB was not, and neither were many banks in 2008 until the federal govt stepped in and backstopped all deposits beyond the $250K limit.
- Almondsetat 2y ago
  Rich people use different banks than the general population
  - scandox 2y ago
    Those banks are very far from being more trustworthy.
    - ceejayoz 2y ago
      That’s why they use more than one.
  - HenryBemis 2y ago
    This! I keep "my money" in a few different places. I keep a spreadsheet and every 1st of the month I 'do the rounds' and add the numbers of deposits, investments, '401k', etc. so I keep an eye on my 'net worth' on a monthly basis. When COVID happened and I saw that SP500 tanked, I bought more than my typical 'monthly purchase'. Now, I am a nobody and worth a little. Someone who had $50m in the bank, well connected, and with access to info, 'went in' for x1000 what I did, at a better timed entry and left at a better timed exit made big bucks. I am definitely part of the top 1% (8b people --> 80m)(considering that majority of the planet lives 'poor')(my definition of 'poor' was redefined when I visited the Philippines and saw a family of 4 live in a carton box from a fridge). "We" here in HN (most of us) are in that 10% of the global population, whether we like it or not. And it's not because "everyone living in the EU is rich", it's more like in so many countries for majority of the people their income is well below $upper-tripple-digits.

baobabKoodaa 2y ago

> Think about young people trying to buy their 1st home now, its becoming impossible. At least in Finland today it's much easier for young people to buy their 1st home now compared to 15 years ago. Interest rates are roughly where they were 15 years ago, but house prices in real terms have gone way down. There's also huge market asymmetry with large amount of vacant properties that nobody wants to buy, and relatively few buyers.

actionfromafar 2y ago
So, are young people buying their 1st home now? If not, is it actually easier for them to buy?
- lifestyleguru 2y ago
  I'm not an expert on Finland but looking and economy and geopolitics young Finns might have a massive problem with the second secret ingredient to buying their 1st home - a job. Then looking at fertility ratio only people who can afford buying housing to their children decide to have children.
- baobabKoodaa 2y ago
  > So, are young people buying their 1st home now? If not, is it actually easier for them to buy? No, young people are not buying their first home. Despite that, yes, it is actually easier for them to buy. What is stopping them? I would say mainly the expectation that housing prices will drop further as the economy is going further down the drain, leading to better buying opportunities at a later time.
  - actionfromafar 2y ago
    That sounds like buying a home not to live in and start a family in. Pretty sad if so.
    - baobabKoodaa 2y ago
      Things are not black and white. People who are starting a family and buying a house will typically contemplate a long time on when it's the right time to buy. It's natural that financial aspects play a part in that equation (expectation of having a job, expectation of housing market going up or down, etc.)

jajko 2y ago

How young is your 'young'? House is normally by far the biggest investment in couple's lives, and if starting from 0 (ignoring common US debt from studying) it should actually take a bit of time to progress in careers and amass some money aside required for such a move. I've never felt that I am entitled to any sort of property even when being software engineer to the core, even more a house, as a young person right after university. That was always a hard-won luxury, and I don't even mean some extremely well located place. Some folks here often mention similar stuff and refer to some period in 50s/60s in US specifically where 1 salary could have done it in some more rural areas. Nobody mentions how rest of the population looked like, hardly whole US population was buying new houses with wife being stay-at-home mum. When women started going to work too, suddenly such couples quickly outcompeted single earners from housing market. In Europe, this stay-at-home was never the thing in most places so we never even had such period, thus 0 such expectations. Properties, especially houses, were always a hard-won luxury.

markus_zhang 2y ago

No, they always win. A stock market crash could actually be a boon to them to grab free chips on the table. They are only scared of one thing.

AngryData 2y ago

Theoretically sure it could help. Realistically we know governments, who are largely controlled by the wealthy, will immediately start dumping money around when stock markets dip and doing everything possible to insulate the investor class from losing everything. But if something only hurts the lower classes, they will usually ignore it as much as possible.

danju 2y ago

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atoav 2y ago

Nope. In a crash the poor get thrown out of their houses, have to sell their land, etc. The rich can endure more, buy that stuff and after the crisis it is even worse.

deleted 2y ago

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vladimirralev 2y ago

The Fed has a few papers on this issue. Their conclusion is basically that the young will eventually inherit the wealth and market forces will force a redistribution. Thus it solves itself eventually. I personally think that the Fed papers are just designed as an excuse to print money, but my point is the Fed is very far from seeing this as a problem and will never act to remedy it.

ahaferburg 2y ago
Trickle down economy is totally going to work. Just wait another couple decades! /s
ric2b 2y ago
How will market forces force a redistribution when they can just invest their wealth and keep growing it even more?

robjan 2y ago

The hardest hit would be the middle class whose retirement depends on funds which predominantly invest in equities.

schnitzelstoat 2y ago

A collapsing stock market wouldn't make it any easier for young people to buy their own home though. It would probably make it harder if it were anything like 2008. The issue with housing is that throughout the Western world we've made it incredibly difficult to get new housing built.

torginus 2y ago

Heck no. This would cause the rich to evacuate their wealth into real estate, pumping the market even further.

insane_dreamer 2y ago

A stock market crash mostly transfers wealth from the bottom rung of those who own stocks, who are forced to sell, to the top rung of stock owners, who have enough to be able to wait it out and then buy up the assets at low prices (and make a fortune when it goes back up). It also causes a lot of companies to go out of business or reduce their workforce because of reduced consumer spending, hurting the working class more.

nickjj 2y ago

As far as I know the stock market has winners and losers. If you're not rich but invested whatever you could over the course of your life and now the market tanks to where you've lost half (or more) of what you had then someone else is going to win that from you. A massively rich company can hold out a lot longer than a software developer who tucked away what they could over the years. If a real crash happens that software developer just got 30 years of their net worth mostly vaporized in a few months. How much of the population is in that category? It's the whole middle class basically. It's a crushing blow to most folks when the market crashes for a long period of time. It's even worse for folks who are already in a position of barely scraping by while putting a little bit aside whenever they can. That person is destroyed if a majority of that disappears because they may have to sell it off on the spot just to survive because if the market really crashes, you can be sure a ton of people are going to be out of work.

ryandrake 2y ago
In other words, if your retirement savings is $200K and you lose 50% of it, at best you're going to have to make major changes to your plans. At worst (depending on how much debt you have) you're in for some real pain. A billionaire with $200B in wealth could lose 99% of that and still have $2B, generational wealth that will perpetually fund an entire family tree down to great great grandchildren.
- nickjj 2y ago
  Yep and losses are only losses when it's realized. A billionaire can just ride out the crash for 5, 10 or 15 years while investing more when the market is near the bottom. What they are investing in is buying the shares that the middle class has to sell off to pay their rent. I don't know what you want to label it as but being able to ride out a crash and having your unrealized losses go back to normal while still having capital to buy a ton when the market was near the bottom of a crash sounds like a lot like transferring wealth to me (from the middle to the top).