Banks as collateral damage in a class war(annpettifor.substack.com)
annpettifor.substack.com
Banks as collateral damage in a class war
https://annpettifor.substack.com/p/banks-as-collateral-damage-in-a-class
162 comments
> everyone gets the same nominal payout, debtors must use the payout to pay off debt, non-debtors may keep the money and do what they please with it
Wouldn't this be very inflationary? It's approximately equivalent to "give everyone $X". I don't see any discussion at the link about how people would react to the dollar (and any dollar-denominated savings, wages, etc) suddenly being worth far less?
Wouldn't this be very inflationary? It's approximately equivalent to "give everyone $X". I don't see any discussion at the link about how people would react to the dollar (and any dollar-denominated savings, wages, etc) suddenly being worth far less?
Ideally, not in real terms: debt will be extinguished, but that debt has already been spent into the economy. The underlying asset equity (say, a house) will be transferred to the debtor. Some non-debtors (not many, in todays economy) will get a big immediate cash influx, but most of them are wealthy and will save, rather than spend that cash.
Relatively, the wealth of the poor will increase more because, say, 100k, is life changing for a poor person but not as big a deal for a rich person.
The important part is reducing the total debt load and the exponent sitting on top of it.
Would it be perfect? Of course not, nothing is. But it's the fairest way I have heard of to broadly reduce the debt load in a manner that addresses the underlying issue of too much debt.
Relatively, the wealth of the poor will increase more because, say, 100k, is life changing for a poor person but not as big a deal for a rich person.
The important part is reducing the total debt load and the exponent sitting on top of it.
Would it be perfect? Of course not, nothing is. But it's the fairest way I have heard of to broadly reduce the debt load in a manner that addresses the underlying issue of too much debt.
While many people have debt, most people with debt don't have that much. A large enough payment that, say, brings the 90th percentile debtor to debt-free would much more than pay off the debt of the 50th. Leaving most current debtors with large piles of cash that they would be enthusiastic to spend.
Additionally people would take on more debt, after freed from their current monthly payments, so you would predict consumption would rise even if the only effect were debt cancellation.
Additionally people would take on more debt, after freed from their current monthly payments, so you would predict consumption would rise even if the only effect were debt cancellation.
I don't think people would take on more debt after being freed from current debt. Usually, the debt that is the most crushing is student, medical, mortgage debt-- it's unlikely people just go on to sign themselves up for more of that.
I agree that most people aren't going to voluntarily go out and pick up some medical debt, but freed of their monthly payments they might decide to go back to school (student debt) or buy a larger house (mortgage debt). Or they might buy a new car on credit. For the same reasons that people today with no debt often choose to go into debt to fund a purchase, if we wiped out existing debt and didn't change anything else about the financial system I'd expect many people who'd just had their debts erased would also make purchases with new debt.
Hmm wait, what do you mean by “real terms” because that usually means inflation-adjusted.
It would be inflationary to anyone who doesn't get a payout, I think. That means, any country which does not get that payout and then distribute it.
It's inflationary even just among people who do get the payout. Imagine the income and net worths of a silly model society are:
income net worth
-------- -----------
A: $20,000 $0
B: $30,000 $1,000
C: $50,000 -$80,000
D: $100,000 $300,000
E: $500,000 $10,000,000
income net worth
-------- -----------
A: $20,000 $100,000
B: $30,000 $101,000
C: $50,000 $20,000
D: $100,000 $400,000
E: $500,000 $10,100,000
Again, the vast majority of people are debtors, and would be forced to pay down their debt. It isn't free and clear money for everyone: only non-debtors would get that and they are few in number and relatively wealthy, so the additional money would most likely end up saved rather than spent, and be relatively small compared to the extinguishing of debt.
Do you expect that when people are no longer in debt that they will just keep their spending down? Or is it possible that they now have a “wealth effect” and feel like they can spend more? What keeps them from racking up debt again to previous levels?
This idea seems wildly inflationary to me, but I would love to hear why I am wrong. We have to remember that someone’s expense is someone else’s income. In other words, if all debt is paid off, then lendors will get a huge payday and have excess income to spend. In the end, this is exactly like injecting money directly into the economy like we did with covid stimulus.
This idea seems wildly inflationary to me, but I would love to hear why I am wrong. We have to remember that someone’s expense is someone else’s income. In other words, if all debt is paid off, then lendors will get a huge payday and have excess income to spend. In the end, this is exactly like injecting money directly into the economy like we did with covid stimulus.
Obviously the debt jubilee needs to be paired with higher (that is, non-negative) real interest rates. Keen talks about what a sustainable interest rate regime looks like in a fiat system, and has computer models to argue his case.
A debt jubilee is an emergency surgery to deal with a critical situation. Convincing the patient to eat healthy is also important, but needs to happen afterwards.
A debt jubilee is an emergency surgery to deal with a critical situation. Convincing the patient to eat healthy is also important, but needs to happen afterwards.
> emergency surgery to deal with a critical situation.
"A nation of thirty millions of people, had been for ten years agitated by the most terrible convulsions... Conflagrations had laid the palaces of the wealthy in ruins, and the green lawns where their children had played, had been crimsoned with the blood of fathers and sons, mothers and daughters.
A gigantic system of robbery had seized upon houses and lands and every species of property and had turned thousands of the opulent out into destitution, beggary, and death. Pollution had been legalized by the voice of God-defying lust, and France, la belle France, had been converted into a disgusting warehouse of infamy. Law, with suicidal hand, had destroyed itself, and the decisions of the legislature swayed to and fro, in accordance with the hideous clamors of the mob. The guillotine, with gutters ever clotted with human gore, was the only argument which anarchy condescended to use. Effectually it silenced every remonstrating tongue.
Constitution after constitution had risen, like mushrooms, in a night, and like mushrooms had perished in a day. Civil war was raging with bloodhound fury in France, Monarchists and Jacobins grappling each other infuriate with despair. The allied kings of Europe, who by their alliance had fanned these flames of rage and ruin, were gazing with terror upon the portentous prodigy, and were surrounding France with their navies and their armies. The people had been enslaved for centuries by the king and the nobles. Their oppression had been execrable, and it had become absolutely unendurable. 'We, the millions,' they exclaimed in their rage, 'will no longer minister to your voluptuousness, and pride, and lust.'
'You shall, you insolent dogs,' exclaimed kings and nobles, 'we heed not your barking.'
'You shall,' reiterated the Pope, in the portentous thunderings of the Vatican. 'You shall', came echoed back from the palaces of Vienna, from the dome of the Kremlin, from the seraglio of the Turk, and, in tones deeper, stronger, more resolute, from constitutional, liberty-loving, happy England.
Then was France a volcano, and its lava-streams deluged Europe. The people were desperate. In the blind fury of their frenzied self-defense they lost all consideration. The castles of the nobles were but the monuments of past taxation and servitude. With yells of hatred the infuriated populace razed them to the ground. The palaces of the kings, where, for uncounted centuries, dissolute monarchs had reveled in enervating and heaven-forbidden pleasures, were but national badges of the bondage of the people... At one bound France had passed from despotism to anarchy. The kingly tyrant, with golden crown and iron sceptre, surrounded by wealthy nobles and dissolute beauties, had disappeared, and a many-headed monster, rapacious and blood-thirsty, vulgar and revolting, had emerged from mines and workshops and the cellars of vice and penury, like one of the spectres of fairy tales to fill his place. France had passed from Monarchy, not to healthy Republicanism, but to Jacobinism, to the reign of the mob. Napoleon utterly abhorred the tyranny of the king. He also utterly abhorred the despotism of vulgar, violent, sanguinary Jacobin misrule. The latter he regarded with even deeper repugnance than the former.
'I frankly confess,' said Napoleon, again and again, "that I must choose between Bourbon oppression, and mob violence, I infinitely prefer the former.'
... He had two foes to encounter, each formidable, the royalists of combined Europe and the mob of Paris. The quiet and undoubting self-confidence with which he entered upon this enterprise, is one of the most remarkable events in the whole of his extraordinary career. He took with him no armies to hew down opposition. He engaged in no deep-laid and wide-spread conspiracy. Relying upon the energies of his own mind, and upon the sympathies of the great mass of the people, he went alone, with but one or two companions, to whom he revealed not his thoughts, to gather into his hands the scattered reins of power. Never did he encounter more fearful peril. The cruisers of England, Russia, Turkey, of allied Europe in arms against France, thronged the Mediterranean. How could he hope to escape them? The guillotine was red with blood. Every one who had dared to oppose the mob had perished upon it. How could Napoleon venture, single-handed, to beard this terrible lion in his den?"
- John Stevens Cabot Abbott, "Napoleon Bonaparte" (1855)
"A nation of thirty millions of people, had been for ten years agitated by the most terrible convulsions... Conflagrations had laid the palaces of the wealthy in ruins, and the green lawns where their children had played, had been crimsoned with the blood of fathers and sons, mothers and daughters.
A gigantic system of robbery had seized upon houses and lands and every species of property and had turned thousands of the opulent out into destitution, beggary, and death. Pollution had been legalized by the voice of God-defying lust, and France, la belle France, had been converted into a disgusting warehouse of infamy. Law, with suicidal hand, had destroyed itself, and the decisions of the legislature swayed to and fro, in accordance with the hideous clamors of the mob. The guillotine, with gutters ever clotted with human gore, was the only argument which anarchy condescended to use. Effectually it silenced every remonstrating tongue.
Constitution after constitution had risen, like mushrooms, in a night, and like mushrooms had perished in a day. Civil war was raging with bloodhound fury in France, Monarchists and Jacobins grappling each other infuriate with despair. The allied kings of Europe, who by their alliance had fanned these flames of rage and ruin, were gazing with terror upon the portentous prodigy, and were surrounding France with their navies and their armies. The people had been enslaved for centuries by the king and the nobles. Their oppression had been execrable, and it had become absolutely unendurable. 'We, the millions,' they exclaimed in their rage, 'will no longer minister to your voluptuousness, and pride, and lust.'
'You shall, you insolent dogs,' exclaimed kings and nobles, 'we heed not your barking.'
'You shall,' reiterated the Pope, in the portentous thunderings of the Vatican. 'You shall', came echoed back from the palaces of Vienna, from the dome of the Kremlin, from the seraglio of the Turk, and, in tones deeper, stronger, more resolute, from constitutional, liberty-loving, happy England.
Then was France a volcano, and its lava-streams deluged Europe. The people were desperate. In the blind fury of their frenzied self-defense they lost all consideration. The castles of the nobles were but the monuments of past taxation and servitude. With yells of hatred the infuriated populace razed them to the ground. The palaces of the kings, where, for uncounted centuries, dissolute monarchs had reveled in enervating and heaven-forbidden pleasures, were but national badges of the bondage of the people... At one bound France had passed from despotism to anarchy. The kingly tyrant, with golden crown and iron sceptre, surrounded by wealthy nobles and dissolute beauties, had disappeared, and a many-headed monster, rapacious and blood-thirsty, vulgar and revolting, had emerged from mines and workshops and the cellars of vice and penury, like one of the spectres of fairy tales to fill his place. France had passed from Monarchy, not to healthy Republicanism, but to Jacobinism, to the reign of the mob. Napoleon utterly abhorred the tyranny of the king. He also utterly abhorred the despotism of vulgar, violent, sanguinary Jacobin misrule. The latter he regarded with even deeper repugnance than the former.
'I frankly confess,' said Napoleon, again and again, "that I must choose between Bourbon oppression, and mob violence, I infinitely prefer the former.'
... He had two foes to encounter, each formidable, the royalists of combined Europe and the mob of Paris. The quiet and undoubting self-confidence with which he entered upon this enterprise, is one of the most remarkable events in the whole of his extraordinary career. He took with him no armies to hew down opposition. He engaged in no deep-laid and wide-spread conspiracy. Relying upon the energies of his own mind, and upon the sympathies of the great mass of the people, he went alone, with but one or two companions, to whom he revealed not his thoughts, to gather into his hands the scattered reins of power. Never did he encounter more fearful peril. The cruisers of England, Russia, Turkey, of allied Europe in arms against France, thronged the Mediterranean. How could he hope to escape them? The guillotine was red with blood. Every one who had dared to oppose the mob had perished upon it. How could Napoleon venture, single-handed, to beard this terrible lion in his den?"
- John Stevens Cabot Abbott, "Napoleon Bonaparte" (1855)
I'm actually very lost in terms of what inflation means anymore. As far as I've been aware, inflation comes from the cost/benefit relationship that is supply and demand.
For instance, housing inflation has to do with people who have long-running cheap mortgages who don't want to sell their asset just to pay a higher monthly premium while the market is in low supply. So shouldn't your calculation also take into account supply and demand?
For instance, housing inflation has to do with people who have long-running cheap mortgages who don't want to sell their asset just to pay a higher monthly premium while the market is in low supply. So shouldn't your calculation also take into account supply and demand?
Their post does take into account supply and demand. Giving people a big payout will leave them with a lot more money to spend on stuff, ie, the supply of money will increase massively. Unless there is a similarly massive increase in demand for money (ie, people selling new goods or services), then the relationship between supply and demand will lead to a significant devaluing of money, aka inflation.
It would be inflationary to the currency. I don't think "inflation" applies to individuals, it's about the exchange rate of one unit of currency to goods and services. I think you might be conflating "inflationary" and "making poorer"
In this case the currency would br hugely inflated, but it would only harm people who didn't get the payment. This might lead to everyone getting a million dollar. Now a carrot might cost $50 which doesn't matter, because you got a lot more dollars.
Inflation is a problem when the costs of different things, especially wages, don't increase at the same rate or you have a lot of savings in cash.
In this case the currency would br hugely inflated, but it would only harm people who didn't get the payment. This might lead to everyone getting a million dollar. Now a carrot might cost $50 which doesn't matter, because you got a lot more dollars.
Inflation is a problem when the costs of different things, especially wages, don't increase at the same rate or you have a lot of savings in cash.
I didn't see your reply until today, but I believe you're spot on with my understanding. Thanks for the breakdown.
You mean more inflationary than an economy based on extraction and profiteering which has increasingly impoverished more and more of the population?
What's the difference between money suddenly being worth far less [1] and real income dropping so individuals have much less spending power - which is something that has been happening for most of the population since the late 70s?
[1] Assuming inflation would be the result, which is debatable.
What's the difference between money suddenly being worth far less [1] and real income dropping so individuals have much less spending power - which is something that has been happening for most of the population since the late 70s?
[1] Assuming inflation would be the result, which is debatable.
> real income dropping so individuals have much less spending power - which is something that has been happening for most of the population since the late 70s?
This isn't true, though, even if you restrict to the US? Here's inflation-adjusted median individual income: https://fred.stlouisfed.org/series/MEPAINUSA672N It's up 40% since the late 70s.
This isn't true, though, even if you restrict to the US? Here's inflation-adjusted median individual income: https://fred.stlouisfed.org/series/MEPAINUSA672N It's up 40% since the late 70s.
The problem with the Fred reports is that CPI is grossly undercalculated.
How much do think, say, a 1978 dollar is worth in 2021 dollars? Why?
> You mean more inflationary than an economy based on extraction and profiteering which has increasingly impoverished more and more of the population?
Yes?
I mean that’s sort of what happened during Covid (savings rates increased dramatically in the short term)…
Yes?
I mean that’s sort of what happened during Covid (savings rates increased dramatically in the short term)…
>which is something that has been happening for most of the population since the late 70s
This started happening as soon as the US dollar was completely unpegged from gold, allowing unlimited seigniorage to banks (the first spenders of newly printed money) via the Cantillon effect.
This started happening as soon as the US dollar was completely unpegged from gold, allowing unlimited seigniorage to banks (the first spenders of newly printed money) via the Cantillon effect.
[deleted]
I never understood why Christian doctrine took issue with usury until I got older. I get it now. Over time, it compounds, and that compounding ends up magnifying and consolidating power, warping things in the process. Plus, the brunt of the pain is borne by those less fortunate.
It is unsustainable.
It is unsustainable.
You have to bear in mind that usury prohibitions quickly became entangled with power structures. Owing money to powerful people is a problem for noble or royal debtors. Owing money to people you can exile or murder as you see fit is convenient and provides multiple ways to resolve the issue.
https://en.wikipedia.org/wiki/Expulsion_of_Jews_from_Spain
> They also had serious difficulties in recovering money lent to Christians because either the repayment term was after August 10, the deadline for their departure, or many of the debtors claimed "usury fraud," knowing that the Jews would not have time for the courts to rule in their favor.
> They also had serious difficulties in recovering money lent to Christians because either the repayment term was after August 10, the deadline for their departure, or many of the debtors claimed "usury fraud," knowing that the Jews would not have time for the courts to rule in their favor.
Yes, the powerful created their own “debt jubilee” at times:
“Due to the precarious position of Jews, some nobles could ignore their debts. If the sponsoring noble died, his Jewish financier could face exile or execution.”
https://en.m.wikipedia.org/wiki/Court_Jew
“Due to the precarious position of Jews, some nobles could ignore their debts. If the sponsoring noble died, his Jewish financier could face exile or execution.”
https://en.m.wikipedia.org/wiki/Court_Jew
Actually, Michael Hudson argued that even Sumerians knew that, so they had a debt jubilee everytime a king has died (and from that comes the phrase "clean slate"). Despite all the technology, we are not really much smarter today.
I would assume that most of the early Mesopotamian societies were the same. IOUs were the first form of currency, used for trade and bookkeeping. But after a while you'd see consolidation of wealth in the hands of a few, which would have been antithetical to the everything they knew at the time (group > individual).
I imagine that a spasm of anxiety went through every lender’s gut whenever a king so much as sneezed.
So I would only get a mortgage when the king is young? I assume interest rates would go up with the age of the king?
Prohibitions on usury date from a time before modern bankruptcy laws; there used to be debtor's prisons. If debt is truly inescapable (and in some places and times hereditary!), and can lead to the lender inflicting that level of consequence, usury looks a lot more scary.
This is reflected in the relative wealth of Christian vs Islamic communities, as Islamic communities religiously reject usury
Usury is not why Christian nations are wealthier. Usury crushed the roman empire, which is why the Christian church, which took over administration when it fell apart, banned it.
A lack of tribalism and a high-trust society, heavily influenced by the Church's ban on cousin marriage, is why the west was able to become so wealthy.
A lack of tribalism and a high-trust society, heavily influenced by the Church's ban on cousin marriage, is why the west was able to become so wealthy.
The idea of dischargeable debt (bankruptcy) probably helped too. People may be a lot more willing to take risks that require capital but increase economic welfare if they don’t face prison for themselves and complete ruin for their family if the risk doesn’t pay off.
Maybe we'd have better businesses if you couldn't run them right to the wall and safely declare bankruptcy while keeping your profits.
There's a theory that the faster things happen, the better - where we forgive outright fraud because it's theoretically driving commerce. In my experience, badly run (or intentionally fraudulent) businesses actually kill an entire area of commerce - by cheating and often going bankrupt on suppliers who then go out of business themselves rather than being able to provide their product to actually competitive companies who would remain in business.
There's a theory that the faster things happen, the better - where we forgive outright fraud because it's theoretically driving commerce. In my experience, badly run (or intentionally fraudulent) businesses actually kill an entire area of commerce - by cheating and often going bankrupt on suppliers who then go out of business themselves rather than being able to provide their product to actually competitive companies who would remain in business.
There are some countering or counterbalancing factors here when looking at it through the lens of faster/slower.
Slower capital might mean more care and less fraud, but not implicitly. On the other hand, the velocity of capital through a system is at least one measure of its health and prosperity, and a system that deliberately tolerates a moderate amount of risk to min/max fraud/velocity is probably going to be healthier than one that errs too much on their side of either factor (at least in a very simplistic manner— of course there are many more factors and considerations as well)
Slower capital might mean more care and less fraud, but not implicitly. On the other hand, the velocity of capital through a system is at least one measure of its health and prosperity, and a system that deliberately tolerates a moderate amount of risk to min/max fraud/velocity is probably going to be healthier than one that errs too much on their side of either factor (at least in a very simplistic manner— of course there are many more factors and considerations as well)
Sure, like all risk analysis you weigh benefits against costs. In a general sense I don't think we're far off a decent balance.
The problem is that we seem to have entirely ignored the moral risk where some people (criminals in all but name) continually abuse the same issues. Companies intentionally go bankrupt with a ton of debt rather than trying to minimize debt when it implodes. I've seen companies buy big pieces of equipment just before bankruptcy which were then sold to pay general debts, only a small portion of which went to the seller. Management knew they were likely caput but they didn't act like it.
Mistakes can happen, but in this case it wasn't a mistake and it was incentivized - not just allowed - by our system. At this point it's not a tradeoff, it's a trap that we're stuck in while its being exploited.
If I borrowed your car and my garage burned down with it inside you wouldn't hold a grudge, but if I knowingly parked it in a burning garage you would.
The problem is that we seem to have entirely ignored the moral risk where some people (criminals in all but name) continually abuse the same issues. Companies intentionally go bankrupt with a ton of debt rather than trying to minimize debt when it implodes. I've seen companies buy big pieces of equipment just before bankruptcy which were then sold to pay general debts, only a small portion of which went to the seller. Management knew they were likely caput but they didn't act like it.
Mistakes can happen, but in this case it wasn't a mistake and it was incentivized - not just allowed - by our system. At this point it's not a tradeoff, it's a trap that we're stuck in while its being exploited.
If I borrowed your car and my garage burned down with it inside you wouldn't hold a grudge, but if I knowingly parked it in a burning garage you would.
Where can I read about the second sentence?
The Protestant Ethic and the Spirit of Capitalism By Max Weber
OK fine, it's a slightly different thesis but it's the correct one ;)
OK fine, it's a slightly different thesis but it's the correct one ;)
Its weird to say but that title sounds fascinating! :D
Humanity did not deserve the Frankfurt School.
They also function in a tribal manner where judeo christians do not, jewish and islamic communities help each other they don't have as many factions and in fighting as christians do. when a muslim or a jew opens a business they hire family and friends and people from their religious community, christians will hire anyone because that's what the christian religion is about, helping people regardless of who they are. it's very noble but in a capitalistic economic system it doesn't give christians any advantage.
matt1555(1)
christians will hire anyone because that's what the christian religion is about
I get the feeling you've never lived around Evangelicals or Mormons.
Joining the right church is a long-standing method of business/career networking.
I get the feeling you've never lived around Evangelicals or Mormons.
Joining the right church is a long-standing method of business/career networking.
only my whole life. evangelicals that is. i don't know much about mormons. but the evangelicals around my era are very multicultural and allow anyone in their church regardless of who they are and they will hire anyone at the businesses they own.
and they will hire anyone at the businesses they own.
I don't think you realize the business opportunities you're missing out on.
They aren't exclusively hiring their own, but it's human nature to trust those closer to you. I've seen this heavily reflected in the evangelical and Mormon communities, but you'd never know unless you had insight via friends or family.
I don't think you realize the business opportunities you're missing out on.
They aren't exclusively hiring their own, but it's human nature to trust those closer to you. I've seen this heavily reflected in the evangelical and Mormon communities, but you'd never know unless you had insight via friends or family.
>The problem is too much debt, full stop. The fair way to address this is a modern debt jubilee: everyone gets the same nominal payout, debtors must use the payout to pay off debt, non-debtors may keep the money and do what they please with it.
Doesn't this fuck over savers who have their money parked in fixed income securities, while giving a huge boon to anyone owning equity in indebted companies? On a comparative basis, it also hugely benefits people in their late twenties/thirties who were able to take out massive loans (ie. mortgage) while not doing much for everyone else.
Doesn't this fuck over savers who have their money parked in fixed income securities, while giving a huge boon to anyone owning equity in indebted companies? On a comparative basis, it also hugely benefits people in their late twenties/thirties who were able to take out massive loans (ie. mortgage) while not doing much for everyone else.
Individuals (not corporations) get the same payout, rich, poor, everyone. If you don't have debt, you get that money free and clear.
It does dig younger people out of crushing debt, yes. That's the point: they can start a life without exponentially increasing debt grinding them to dust. This lets them participate in the wealth of the nation and incentivizes them to work and build families, thus producing more real wealth, rather than checking out and making just enough to pay the interest and monthly subscriptions.
There is no way out of this that doesn't involve helping young people throw off the yoke of crushing usury. A modern debt jubilee is the fairest way to do that: it rewards savers to an extent with free and clear money while paying off the debt of debtors.
It does dig younger people out of crushing debt, yes. That's the point: they can start a life without exponentially increasing debt grinding them to dust. This lets them participate in the wealth of the nation and incentivizes them to work and build families, thus producing more real wealth, rather than checking out and making just enough to pay the interest and monthly subscriptions.
There is no way out of this that doesn't involve helping young people throw off the yoke of crushing usury. A modern debt jubilee is the fairest way to do that: it rewards savers to an extent with free and clear money while paying off the debt of debtors.
So debt has nothing to do with it, it’s a one-time universal payout?
Yes. Everyone gets the payment.
The catch is that debtors must use the payment to extinguish their debt. Non-debtors get the money free and clear.
This is as fair a mechanic as I have ever heard for a debt jubilee. Steve Keen is a genius.
The catch is that debtors must use the payment to extinguish their debt. Non-debtors get the money free and clear.
This is as fair a mechanic as I have ever heard for a debt jubilee. Steve Keen is a genius.
I think I can follow that logic. But what do we do about the inflation that this brings?
If all of a sudden there is a huge amount of extra cash in teh system, then prices go up alot. Lets say everything goes up 20%.
Now the poor who had debt no longer have debt but the price of life has gone way up for them.
The rich just pocket the money and the inflation doesn't affect their day to day life very much. Infact they are better off as assets have now inflated due to this new money.
Thinking about this more, this like the poorer you are the worse off you'd now be in this situation.
Unless the solution is to close your eyes and pretend like inflation would never happen, which the last year has shown us is not a reasonable belief to hold.
If all of a sudden there is a huge amount of extra cash in teh system, then prices go up alot. Lets say everything goes up 20%.
Now the poor who had debt no longer have debt but the price of life has gone way up for them.
The rich just pocket the money and the inflation doesn't affect their day to day life very much. Infact they are better off as assets have now inflated due to this new money.
Thinking about this more, this like the poorer you are the worse off you'd now be in this situation.
Unless the solution is to close your eyes and pretend like inflation would never happen, which the last year has shown us is not a reasonable belief to hold.
I guess what is proposed is a one-off inflationary expansion... much like the Covid stimulus bills (it all created how many trillions of dollars?).
But the net result was (AFAIK) a significant drop in indebtedness and poverty.
But then again, the inflation was picked up by companies as an excuse to profiteer, and initiate a spiral, which is why we find the Fed today kicking the economy in the groin.
But the net result was (AFAIK) a significant drop in indebtedness and poverty.
But then again, the inflation was picked up by companies as an excuse to profiteer, and initiate a spiral, which is why we find the Fed today kicking the economy in the groin.
How is this a fair mechanic for a debt jubilee? People without debt get free extra money to invest. People deep in debt have to give the money they receive to the first group (ie the people they were indebted to), so those can then invest even more. The end result is that the people in debt are even further behind.
I think you’re letting good be the enemy of great here though. Even if the debtor has to use all of the cash to pay to the lenders (who also got money), it “removes the yoke” of compounding crushing debt they’re currently unable to get out from under.
That same compounding effect also works for the additional investments of the lenders. After all is said and done, the lending group will be able to use its newfound cash flow to purchase ever more investments at prices that the newly debt-free won't be able to match. Soon, the newly debt-free group will be "forced" back into debt because there is no other way to afford (say) a house. An exception would be if the interest on the debt is wildly higher than the interest gained by the investments, but even then the real problem is the high interest rates. There are better ways to regulate those than giving even more economic power to those already wealthy.
You can't get away from wealth disparity by giving to everyone, eventually you have to take from some group to give to the other. The group being taken from will generally not like that.
You can't get away from wealth disparity by giving to everyone, eventually you have to take from some group to give to the other. The group being taken from will generally not like that.
This is simply a wealth transfer to institutions who lent money at low rates prior to the rate increases.
It is not simply that, although it does ensure that the money that those institutions lent is paid back, rather than defaulted on. But let's be honest: what's really going to happen in the case of defaults is that the banks will seize the real underlying assets and sell them at fire-sale prices to other rich people.
The important part is that the borrower is now out from under exponential debt and can get on with their lives, and total debt in the economy is brought down to a sustainable level. Non-debtors get something too: free and clear cash.
Is it perfect? No, of course not. Nothing this simple could be perfectly fair. But it is simple, hard to game, addresses the core problem (too much debt) and is probably as fair as it will get, practically.
Certainly the elites would scream bloody murder if someone important legitimately proposed it. Keen has been ignored and mocked for years. That's evidence enough for me.
The important part is that the borrower is now out from under exponential debt and can get on with their lives, and total debt in the economy is brought down to a sustainable level. Non-debtors get something too: free and clear cash.
Is it perfect? No, of course not. Nothing this simple could be perfectly fair. But it is simple, hard to game, addresses the core problem (too much debt) and is probably as fair as it will get, practically.
Certainly the elites would scream bloody murder if someone important legitimately proposed it. Keen has been ignored and mocked for years. That's evidence enough for me.
It also impossible to enforce.
And is basically equivalent to “why don’t we just print more money and give it everyone?”.
And anyway a terrible idea.. why do you want to penalize people who have low interest rate mortgages for instance? Anything they’d gain would be offset by inflation…
And is basically equivalent to “why don’t we just print more money and give it everyone?”.
And anyway a terrible idea.. why do you want to penalize people who have low interest rate mortgages for instance? Anything they’d gain would be offset by inflation…
Good point ... paying down my mortgage faster is a fairly poor use of the funds. However, if it can be used for regular payments or prepayments over a period of time, it's not a bad deal.
I'd hope they'd also make exceptions for any loans under the current rate of inflation, but good luck getting that passed. Having to immediately pay off a 0% loan (if anyone still offers those) clearly is far from the optimal use of the money.
I'd hope they'd also make exceptions for any loans under the current rate of inflation, but good luck getting that passed. Having to immediately pay off a 0% loan (if anyone still offers those) clearly is far from the optimal use of the money.
People will be incentivized (and possibly required) to pay off high-interest debt first, which is the right thing.
Beyond that, a modern debt jubilee isn't about you optimizing your individual financial situation.
Rather, it is about:
- keeping it as simple and hard to game as possible
- reducing total debt in the economy to a sustainable level
If you have to pay down or pay off your mortgage, sorry. On the other hand, you would own a house free and clear. So life wouldn't be all bad.
Beyond that, a modern debt jubilee isn't about you optimizing your individual financial situation.
Rather, it is about:
- keeping it as simple and hard to game as possible
- reducing total debt in the economy to a sustainable level
If you have to pay down or pay off your mortgage, sorry. On the other hand, you would own a house free and clear. So life wouldn't be all bad.
I'd imagine using it on your next monthly payment would be allowed. Agreed - not a bad deal.
> This is as fair a mechanic as I have ever heard for a debt jubilee.
Also not practically possible at least in the real world. Which is possibly why it sounds so great…
Also not practically possible at least in the real world. Which is possibly why it sounds so great…
I haven't read the proposal directly, but by your description of it I don't know how it could possibly work.
Even if debtors pay off a chunk of their debt, companies will be lining up to offer them new debt, especially as the chance of default goes down with the new precedent.
The way a real debt jubilee has to work is that debt is repudiated, with the creditor left holding the bag - not made good on.
Even if debtors pay off a chunk of their debt, companies will be lining up to offer them new debt, especially as the chance of default goes down with the new precedent.
The way a real debt jubilee has to work is that debt is repudiated, with the creditor left holding the bag - not made good on.
The modern debt jubilee is inflation, which, as a sibling comment points out, is what your comment is suggesting and also what the government is likely to do. Give everybody lots of money, some debtors will use it to pay off debts, others will buy shit with it, regardless it all goes into the economy and raises the price level, and then everybody's nominal debts are worth less in real terms.
Maybe, but if you've seen the politics around even the relatively moderate side of student loan forgiveness you can imagine how badly this is going to go.
> debtors must use the payout to pay off debt, non-debtors may keep the money and do what they please with it.
First of all, this isn't what your article says. It says that savers must buy newly issued corporate shares and the funds raised by these new shares must be used to pay corporate debt.
Second of all, this basically requires the government to perfectly micromanage billions of transactions, which is impossible. What's to prevent a debtor from immediately opening a new line of credit?
First of all, this isn't what your article says. It says that savers must buy newly issued corporate shares and the funds raised by these new shares must be used to pay corporate debt.
Second of all, this basically requires the government to perfectly micromanage billions of transactions, which is impossible. What's to prevent a debtor from immediately opening a new line of credit?
It's pretty terrible that we've moved to a model where it's expected you'll transact via insurance, debt, and litigation in the US. Even your microwave purchase uses a payments loan and has purchase protection insurance.
Still, it's not that hopeless. I've seen a lot of people get out of debt. You don't have to go into debt for things and you sure don't have to remain in debt.
People aren't as helpless as you think.
Still, it's not that hopeless. I've seen a lot of people get out of debt. You don't have to go into debt for things and you sure don't have to remain in debt.
People aren't as helpless as you think.
I have zero debt. I am aware that it is possible to live life without debt. A modern debt jubilee would hurt me more than nearly anyone else on this site, in relative terms and in the short run.
On the other hand, I recognize that the majority of people, and, importantly, young people have either been lured or forced into crushing debt for things like education, housing, medical care, trinkets and so forth. It is at the point now that, regardless of how you feel about the individual morality of a given debtor, it is threatening the whole economy.
We need to reduce total debt in the economy. A modern debt jubilee is the fairest way to do it.
Instead, we'll raise rates, crush the middle and working classes, and bail out the rich.
On the other hand, I recognize that the majority of people, and, importantly, young people have either been lured or forced into crushing debt for things like education, housing, medical care, trinkets and so forth. It is at the point now that, regardless of how you feel about the individual morality of a given debtor, it is threatening the whole economy.
We need to reduce total debt in the economy. A modern debt jubilee is the fairest way to do it.
Instead, we'll raise rates, crush the middle and working classes, and bail out the rich.
If you have lived your entire life without any debt then either you make incredibly more than most people so you can buy everything outright, or you are living a very spartan existence where don't own much and will never own a house, for instance.
If it's just that you currently don't have debt because you've paid off your student loans and your mortgage, then congrats I guess?
We are living in a silly debt fueled age where many people can't even afford to go into debt for a house these days. But banks are happy to give them credit for consumer shit like phones.
If it's just that you currently don't have debt because you've paid off your student loans and your mortgage, then congrats I guess?
We are living in a silly debt fueled age where many people can't even afford to go into debt for a house these days. But banks are happy to give them credit for consumer shit like phones.
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Appreciate your thoughts on this. Most people in your situation are like the poster you responded to... "I didn't go into debt." Or "I got myself out of debt, anyone can do it..." Unfortunately, that mindset will only continue this spiral we are in where the less thans look down on the more less thans. One health/medical scenario or another could change any of our financial fate tomorrow. Just because we are currently in the no debt, healthy category, there are no guarantees that's where we will stay.
I'm sure there are more than enough people that carelessly got themselves into debt... They bought into the consumerist world we live in. It's hard to resist. But there are also many that are stuck in generational economic turmoil, that don't have the tools to dig themselves out.
I'm sure there are more than enough people that carelessly got themselves into debt... They bought into the consumerist world we live in. It's hard to resist. But there are also many that are stuck in generational economic turmoil, that don't have the tools to dig themselves out.
> A modern debt jubilee would hurt me more than nearly anyone else on this site, in relative terms and in the short run.
It wouldn't hurt you, it just wouldn't help. You wouldn't be hurting. I think that is a distinction. You don't get the help, because you don't need it. They do say "Fair isn't everyone gets the same thing, fair is where everyone gets what they need."
It wouldn't hurt you, it just wouldn't help. You wouldn't be hurting. I think that is a distinction. You don't get the help, because you don't need it. They do say "Fair isn't everyone gets the same thing, fair is where everyone gets what they need."
You paid for your home with cash?
What you’re suggesting doesn’t make much sense from a practical perspective?
What is debt anyway? Let say I hold 100k in leveraged derivatives which are the equivalent of someone holding 400k worth of the underlying asset (they put down 100k and borrowed 300k).
What happens under this scheme if everyone gets 100k? I buy another 100k of derivatives and the other guy has to spend it paying down debt…
This is just a massive miss-allocated stimulus program (financed through.. you guessed it.. more debt) if that’s what Keen is suggesting maybe it’s one of the main reasons nobody takes him seriously?
What is debt anyway? Let say I hold 100k in leveraged derivatives which are the equivalent of someone holding 400k worth of the underlying asset (they put down 100k and borrowed 300k).
What happens under this scheme if everyone gets 100k? I buy another 100k of derivatives and the other guy has to spend it paying down debt…
This is just a massive miss-allocated stimulus program (financed through.. you guessed it.. more debt) if that’s what Keen is suggesting maybe it’s one of the main reasons nobody takes him seriously?
I listened to a 3 hr long interview between Steve Keen and Lex Fridman while on a road trip and he instantly became my new favorite economist. The man is absolutely brilliant. I don't remember him talking about a debt jubilee during that interview but I'm curious to go back and see.
Thank you for adding this link.
Thank you for adding this link.
"too much debt" for Person A is "using leverage wisely" for Person B.
With rates approaching zero it was rational to load up on second mortgages, driving up the totality of the debt. If you managed to lock in a sub-3% loan few years back, it's irrational to accelerate repayment.
With rates approaching zero it was rational to load up on second mortgages, driving up the totality of the debt. If you managed to lock in a sub-3% loan few years back, it's irrational to accelerate repayment.
> everyone gets the same nominal payout, debtors must use the payout to pay off debt
I'm generally supportive of these types of measures especially in a financial crisis, but keep in mind that economically, this isn't too different from a bank bailout. The primary net effect of giving people money to pay off their loans is making lenders whole.
I'm generally supportive of these types of measures especially in a financial crisis, but keep in mind that economically, this isn't too different from a bank bailout. The primary net effect of giving people money to pay off their loans is making lenders whole.
> The primary net effect of giving people money to pay off their loans is making lenders whole.
Well no, that's the net effect if you give insolvent people money to pay their loans; but if you erase the debt of people who would keep on paying that money for decades, then this has the immediate impact of freeing up a big part of their next paycheck - which otherwise would go to that loan payment - to be spent or invested elsewhere, and this doesn't happen if you just make a bank bailout.
Well no, that's the net effect if you give insolvent people money to pay their loans; but if you erase the debt of people who would keep on paying that money for decades, then this has the immediate impact of freeing up a big part of their next paycheck - which otherwise would go to that loan payment - to be spent or invested elsewhere, and this doesn't happen if you just make a bank bailout.
Banks don't know which of their borrowers are insolvent - in a credit crisis, the problem isn't merely that the banks aren't paid what they are owed, but that there's a systematic increase in the perceived default risk of their borrowers on average. Giving money to everyone substantially lessens the overall risk of their loan portfolio. This encourages, of course, more lending.
The rest of what you're talking about is fairly standard economic stimulus and it's not that controversial or unprecedented and has little to do with debt jubilee.
I'm not necessarily against any of this - the point is more that the mechanism proposed (giving money to everyone with the intent of helping people pay off their loans) does not match the rhetoric (GP decrying too much debt and socialism for the rich).
The rest of what you're talking about is fairly standard economic stimulus and it's not that controversial or unprecedented and has little to do with debt jubilee.
I'm not necessarily against any of this - the point is more that the mechanism proposed (giving money to everyone with the intent of helping people pay off their loans) does not match the rhetoric (GP decrying too much debt and socialism for the rich).
This would be possible if we had functioning democratic institutions. But while witch hunts and vendettas are carried out on both sides, we are left with nothing but the fed (an unelected group of bureaucrats) to decide the most fundamental operations of our economy. Our society is sick and unable to care for itself.
> Raising nominal interest rates hurts everyone
Not really. It helps savers and punishes those who took undue amounts of risk.
Not really. It helps savers and punishes those who took undue amounts of risk.
This paragraph summarized the piece fairly well. It describes the ideology that the author thinks central bankers have:
> The answer may be down to the grip of an economic ideology espoused by tenured Harvard Professors like Larry Summers and Ken Rogoff. Both appear to believe that inflation exceeds in its power all other threats. And that inflation is largely caused by rising wages (even as real wages are falling) - or even the expectation that wages might rise. That to suppress wages and therefore inflation, central bankers are required to continue hiking aggressively even if this does depress demand, raise unemployment and slash wages further.
I don’t think that’s true though. The most mainline Keynesian would say that inflation has many more causes that just wage growth. And since one of the charter goals of the Fed is to reach maximum employment, I would imagine that rate hikes are trying to minimize impact on workers while still keeping inflation down (their real wages intact).
The author, in my mind, has tunnel vision for workers’ rights and wages, and won’t see the impacts of 6% inflation on the lives of that same working class. The rhetoric makes me think that they’re boiling the frog for a more commanded economy.
> The answer may be down to the grip of an economic ideology espoused by tenured Harvard Professors like Larry Summers and Ken Rogoff. Both appear to believe that inflation exceeds in its power all other threats. And that inflation is largely caused by rising wages (even as real wages are falling) - or even the expectation that wages might rise. That to suppress wages and therefore inflation, central bankers are required to continue hiking aggressively even if this does depress demand, raise unemployment and slash wages further.
I don’t think that’s true though. The most mainline Keynesian would say that inflation has many more causes that just wage growth. And since one of the charter goals of the Fed is to reach maximum employment, I would imagine that rate hikes are trying to minimize impact on workers while still keeping inflation down (their real wages intact).
The author, in my mind, has tunnel vision for workers’ rights and wages, and won’t see the impacts of 6% inflation on the lives of that same working class. The rhetoric makes me think that they’re boiling the frog for a more commanded economy.
> The author, in my mind, has tunnel vision for workers’ rights and wages, and won’t see the impacts of 6% inflation on the lives of that same working class.
The very next paragraph after the one you quoted:
"today’s inflation is caused by commodity market speculation, not wages. And if workers demand higher wages to deal with the inflationary impact of higher energy and other commodity prices - that is a consequence, not a cause of commodity price inflation"
The very next paragraph after the one you quoted:
"today’s inflation is caused by commodity market speculation, not wages. And if workers demand higher wages to deal with the inflationary impact of higher energy and other commodity prices - that is a consequence, not a cause of commodity price inflation"
So, absolutely nothing to do with the money supply? I mean, if it had to do with the money supply, then the fed is acting well to reduce it, right?
https://d3fy651gv2fhd3.cloudfront.net/embed/?s=unitedstamons...
> has tunnel vision for workers’ rights
Seems correct to me
https://d3fy651gv2fhd3.cloudfront.net/embed/?s=unitedstamons...
> has tunnel vision for workers’ rights
Seems correct to me
Something can be both a consequence and a cause. That's how feedback loops work, and inflation is distinctly prone to feedback loops.
Insisting that something is a consequence and therefore not a cause smells like politics being placed over rigor.
Insisting that something is a consequence and therefore not a cause smells like politics being placed over rigor.
The author has analyzed this elsewhere, for example: https://annpettifor.substack.com/p/grain-inflation-starve-th...
[deleted]
Commodity market speculation is also caused by too much cheap money sloshing around with nothing productive to do, and the solution is still to increase interest rates. By the time central banks decided to raise interest rates, wage growth had already lagged behind inflation, so workers demanding higher wages is not enough to offset inflation.
> Commodity market speculation is also caused by too much cheap money sloshing around with nothing productive to do, and the solution is still to increase interest rates. By the time central banks decided to raise interest rates
That's a fair statement, but the timing is crucial, as you seem to note above, and the timing of the interest rate hikes is what the author is criticizing:
"But as importantly, through lack of analysis, regulation, oversight and foresight - central bankers have shown this last week they were prepared to use high rates to risk and even precipitate bank failures and global financial instability. They have done so, and continue to do so by deliberately tightening monetary policy into heavily indebted economies, with falling real incomes. Economies that have still not fully recovered from both the GFC and the pandemic."
"In other words, their effective preference is for class war over financial stability."
"The big question central bankers must address is this: why did speculators and venture capitalists notice these imbalances while they and financial regulators did not?"
> wage growth had already lagged behind inflation
Wage growth almost always lags behind inflation, because it's much easier and quicker to raise the price of goods than for workers in general to demand and receive wage increases.
That's a fair statement, but the timing is crucial, as you seem to note above, and the timing of the interest rate hikes is what the author is criticizing:
"But as importantly, through lack of analysis, regulation, oversight and foresight - central bankers have shown this last week they were prepared to use high rates to risk and even precipitate bank failures and global financial instability. They have done so, and continue to do so by deliberately tightening monetary policy into heavily indebted economies, with falling real incomes. Economies that have still not fully recovered from both the GFC and the pandemic."
"In other words, their effective preference is for class war over financial stability."
"The big question central bankers must address is this: why did speculators and venture capitalists notice these imbalances while they and financial regulators did not?"
> wage growth had already lagged behind inflation
Wage growth almost always lags behind inflation, because it's much easier and quicker to raise the price of goods than for workers in general to demand and receive wage increases.
A lot of the money sloshing around started in 2017 with tax cuts and increased spending on DOD
>The most mainline Keynesian would say that inflation has many more causes that just wage growth.
Yeah, but I don't think Summers and Rogoff are mainline Keynesians. They're Chicago School neoliberals, IIRC, and their training and career experience really has been within the ideology that inflation is a function of the bargaining power of labor and you purchase low inflation by wage repression.
Yeah, but I don't think Summers and Rogoff are mainline Keynesians. They're Chicago School neoliberals, IIRC, and their training and career experience really has been within the ideology that inflation is a function of the bargaining power of labor and you purchase low inflation by wage repression.
If anything, the class warfare was the low rates of the past two decades. There were a bunch of different reasons for the widening inequality gap of this millennium, but ultra low rates were a giant part of it. Low rates increase the value of assets (stocks, homes), and assets are, generally, owned by rich people. Meanwhile, poorer people, retirees, etc. basically earn nothing on their (meager) bank deposits and were often forced (please don't get into a semantic discussion about what "forced" means, have had that unhelpful conversation before...) to speculate in markets where they were least prepared and where they often lost.
> If anything, the class warfare was the low rates of the past two decades. There were a bunch of different reasons for the widening inequality gap of this millennium, but ultra low rates were a giant part of it.
This can be true, while at the same time it can also be true that it's irresponsible to suddenly jack up interest rates in the post-pandemic economy. Indeed, it's a kind of consistent class warfare to keep the rates artificially low unless and until wages start to suddenly grow.
This can be true, while at the same time it can also be true that it's irresponsible to suddenly jack up interest rates in the post-pandemic economy. Indeed, it's a kind of consistent class warfare to keep the rates artificially low unless and until wages start to suddenly grow.
Wholeheartedly agree nothing did more over the last 12 years to worsen wealth inequality than ZIRP. A close second was quantitative easy. It was helicopter money for the plutocrats.
Arguably, money printing in the fallout of the 2008 crisis didn't create inflation because it went to the wealthy. They bid up prices on houses and stocks—which aren't included in most laymen's definitions of inflation. The 2020+21 stimulus went to normal people who bid up the prices on normal people goods, thus inflation.
Both and neither.
If you're rich, and you're doing class warfare (in the form of economically exploiting the less-well-off), and rates are low, you'll find a way to use that for class warfare. If rates go up, you'll find a way to use that for class warfare. All policies can lead to class warfare, but it isn't the fault of the policies.
If you're rich, and you're doing class warfare (in the form of economically exploiting the less-well-off), and rates are low, you'll find a way to use that for class warfare. If rates go up, you'll find a way to use that for class warfare. All policies can lead to class warfare, but it isn't the fault of the policies.
It makes sense for the Fed to raise rates to something closer to historical averages. But the speed at which they've chosen to hike rates shows they were asleep at the wheel for the past two years and are now slamming the breaks - there will be more collateral damage.
> I disagree and have argued elsewhere that today’s inflation is caused by commodity market speculation, not wages. And if workers demand higher wages to deal with the inflationary impact of higher energy and other commodity prices - that is a consequence, not a cause of commodity price inflation
It should be noted that the author takes a very heterodox view of economics. Expert consensus does not agree with her perspective.
It should be noted that the author takes a very heterodox view of economics. Expert consensus does not agree with her perspective.
> It should be noted that the author takes a very heterodox view of economics.
Of course. The author has been writing about economics for a long time, for example: https://www.amazon.com/Coming-First-World-Debt-Crisis/dp/023...
> Expert consensus does not agree with her perspective.
The author is an expert, but in any case, the consensus can't exactly take victory lap at this moment in time.
Of course. The author has been writing about economics for a long time, for example: https://www.amazon.com/Coming-First-World-Debt-Crisis/dp/023...
> Expert consensus does not agree with her perspective.
The author is an expert, but in any case, the consensus can't exactly take victory lap at this moment in time.
Nor do I. General inflation is just too much money chasing too few good and services.
“Inflation” in specific sectors of the economy is just the overall market adjusting to new conditions. Discussing commodity inflation is useless.
For example, if real worker’s wages decline, that indicates that the diminished utility of individual workers has outstripped their productivity increases. In other words, automation is replacing the workers themselves, instead of just assisting them.
“Inflation” in specific sectors of the economy is just the overall market adjusting to new conditions. Discussing commodity inflation is useless.
For example, if real worker’s wages decline, that indicates that the diminished utility of individual workers has outstripped their productivity increases. In other words, automation is replacing the workers themselves, instead of just assisting them.
A debt jubilee was my argument when student loan forgiveness was all the rage. We're making carte blanche value judgments on the debt that people hold as if getting a degree in Computer Science is a more noble use of money than bridging the gap between paychecks when life comes at you unexpectedly.
Nobody should be stuck paying 30% interest year over year. Those rates should be categorically illegal, and if anyone thinks they're truly necessary, then we need to re-examine our society as a whole. Debt repayment needs to be capped at the original sum plus an additional total value.
Nobody should be stuck paying 30% interest year over year. Those rates should be categorically illegal, and if anyone thinks they're truly necessary, then we need to re-examine our society as a whole. Debt repayment needs to be capped at the original sum plus an additional total value.
student loan forgiveness was floated to buy votes, that's all. Everyone knew it would get struck down by the supreme court but, hey, empty promises never stopped a politician before.
This is a wildly ideological hottake on the role of the central banks. Right at the outset you've got this:
> After tightening Bank of England monetary policy and raising rates in February, 2022, the £575,000-a-year BoE governor, Andrew Bailey, was asked whether he wanted to inflict more pain on workers? His answer was direct:
>> "Broadly, yes - in the sense of saying: we do need to see a moderation of wage rises. That's painful - I don't want to in any sense sugar that message, it is painful."
Powell said more or less the same thing. This is misleading because:
1) What does his salary have to do with anything? If he was paid $1 would that change the meaning of his words?
2) It leaves out the key point of the rate hikes, which is that this is a necessary pain to prevent inflation from rising out of control. What does the author propose: printing money forever? Let inflation keep rising? Apparently yes, since she brags about eliminating $100B of debt in her bio some 20 years ago.
3) It maliciously assigns the primary reason for the hike to "hurting workers", as if Andrew Bailey gets his rocks off at night based on how much pain he causes the working class, and not to crushing inflation back to normal levels.
Nothing after this is worth your time reading.
> After tightening Bank of England monetary policy and raising rates in February, 2022, the £575,000-a-year BoE governor, Andrew Bailey, was asked whether he wanted to inflict more pain on workers? His answer was direct:
>> "Broadly, yes - in the sense of saying: we do need to see a moderation of wage rises. That's painful - I don't want to in any sense sugar that message, it is painful."
Powell said more or less the same thing. This is misleading because:
1) What does his salary have to do with anything? If he was paid $1 would that change the meaning of his words?
2) It leaves out the key point of the rate hikes, which is that this is a necessary pain to prevent inflation from rising out of control. What does the author propose: printing money forever? Let inflation keep rising? Apparently yes, since she brags about eliminating $100B of debt in her bio some 20 years ago.
3) It maliciously assigns the primary reason for the hike to "hurting workers", as if Andrew Bailey gets his rocks off at night based on how much pain he causes the working class, and not to crushing inflation back to normal levels.
Nothing after this is worth your time reading.
...a £million every two years and £75k spending money each year.
>1) What does his salary have to do with anything? If he was paid $1 would that change the meaning of his words?
Yes.
>1) What does his salary have to do with anything? If he was paid $1 would that change the meaning of his words?
Yes.
Your comment is pretty clearly against the community guidelines but ok. Donald Trump donated his entire salary every year he was in office, effectively zeroing it. Do you like him more now?
source: https://www.usatoday.com/story/news/factcheck/2023/02/02/fac...
source: https://www.usatoday.com/story/news/factcheck/2023/02/02/fac...
And then paid himself handsomely by golfing every possible opportunity at his own resorts. Save me the theatrics on salary.
Dear god. The specifics don't fucking matter. The point is that the meaning of words doesn't change depending on the salary/compensation/whatever of the person saying them. Elon Musk can be completely wrong about things, a beggar can be right. Evaluate words on their own merit.
I agree, the article is definitely a hot take. I was with you until:
>Nothing after this is worth your time reading.
I found it to be an interesting viewpoint even if I don't agree.
>Nothing after this is worth your time reading.
I found it to be an interesting viewpoint even if I don't agree.
If someone is obviously trying to manipulate me in the first few sentences of the article, the rest isn't worth my time. But you do you.
Interesting take, lapcat. I'm curious and I'm sure someone has an answer. It baffles me that Wall Street investors were shorting SVB in January and the FDIC did not step in until the bank run made it necessary two weeks ago.
Especially in the U.S., why doesn't a regulatory body like the FDIC not have a dashboard that would monitor items like the debt exposure SVB had so they could get involved before a takeover had to happen?
Especially in the U.S., why doesn't a regulatory body like the FDIC not have a dashboard that would monitor items like the debt exposure SVB had so they could get involved before a takeover had to happen?
>what central bankers are doing, not just by raising rates, suppressing demand, and lowering wages
I'm not a finance expert by any stretch, but I thought inflation was lowering wages, and raising the rates is done to combat inflation, i.e. reduce devaluation of wages (and savings, and other stuff)?
I'm not a finance expert by any stretch, but I thought inflation was lowering wages, and raising the rates is done to combat inflation, i.e. reduce devaluation of wages (and savings, and other stuff)?
If you have savings in a current or savings bank account, then inflation erodes the value of those savings. But inflation was doing that before at a 2 % rate anyway, bank interest on savings is well below inflation rate. So most people actually have their savings in index funds or stocks, and as long as the economy is growing, so are their savings.
On the other hand, debts are denominated on "the coin of the day", so inflation erodes the value of debts. Say, in the last year, I "paid" 10% of my mortgage because of inflation, even if my real income decreased 10%. I can go to my employer and threaten them with getting a new job if they don't increase my salary, or get a new job period. But the central bank doesn't want me to do that; instead they want those at the bottom to absorb the shock while those at the top adjust themselves for inflation freely.
Time will tell. In some parts of Europe, workers are highly unionized, and collective bargaining is a thing. Then it's a matter of ideological warfare: workers need to believe they are being affected and press the unions to press their employers and ultimately the government.
On the other hand, debts are denominated on "the coin of the day", so inflation erodes the value of debts. Say, in the last year, I "paid" 10% of my mortgage because of inflation, even if my real income decreased 10%. I can go to my employer and threaten them with getting a new job if they don't increase my salary, or get a new job period. But the central bank doesn't want me to do that; instead they want those at the bottom to absorb the shock while those at the top adjust themselves for inflation freely.
Time will tell. In some parts of Europe, workers are highly unionized, and collective bargaining is a thing. Then it's a matter of ideological warfare: workers need to believe they are being affected and press the unions to press their employers and ultimately the government.
... and in Europe employers leave for cheaper countries with less unionification. With governments happily supporting that with free trade agreements.
That is if you follow the theory that wage costs are the dominant part of the cost of goods that make up the product baskets used to track inflation.
Sounds like a good idea in theory, but completely ignores the real-world consequences of such shortsightedness: billionaires getting richer and richer without anyone caring is bad enough, but COVID and then the consequences of the Russian invasion forcibly exposed the worst issue that had been swept under the rug: low wages kill resiliency. When two thirds of the population barely keep up living paycheck to paycheck, even the tiniest disruption wipes them out financially and forces them into debt.
And for what it's worth, we're seeing it right now where all the inflation ends up: in the pockets of the rich. Corporate profits are at record levels, even though economies just got out of the devastation that was COVID and we're having a full blown war at the European borders - one might expect the opposite, massive economical problems after all this chaos. It is high time that minimum wage rises and employee direct action (i.e. strikes) end up redistributing these indecent profits to the pockets of the people.
Sounds like a good idea in theory, but completely ignores the real-world consequences of such shortsightedness: billionaires getting richer and richer without anyone caring is bad enough, but COVID and then the consequences of the Russian invasion forcibly exposed the worst issue that had been swept under the rug: low wages kill resiliency. When two thirds of the population barely keep up living paycheck to paycheck, even the tiniest disruption wipes them out financially and forces them into debt.
And for what it's worth, we're seeing it right now where all the inflation ends up: in the pockets of the rich. Corporate profits are at record levels, even though economies just got out of the devastation that was COVID and we're having a full blown war at the European borders - one might expect the opposite, massive economical problems after all this chaos. It is high time that minimum wage rises and employee direct action (i.e. strikes) end up redistributing these indecent profits to the pockets of the people.
It also ignores that we have been having massive supply chain issues that had nothing to do with the cost of labor but a pandemic that even until recently saw lockdowns in some very major manufacturing locations. Thanks to three bull whip effect the effects will take a while after the incident to iron out.
Inflation can reduce my purchasing power for things experiencing inflation. Unemployment can reduce my income by 100% making my purchasing power equal to zero. Further, underemployment and lagging wage growth will be far worse for workers than 5% inflation.
The fed is a mechanical device designed to combat inflation by destroying productivity and growth and inducing economic contraction by spurring savings and making expansion more expensive and making businesses that operate on revolving credit lines impossible to run.
Not everything is inflating, and even if inflation eats away wage growth, at least people have jobs. Over time inflation drives investment - as there are more dollars the ability to capture them increases if you can increase your productivity and reduce the prices you charge. It’s perhaps counter intuitive but inflation induces a decrease in prices over time so long as you don’t make borrowing more expensive. the typical response to inflation is to raise borrowing which inhibits price competition.
Inflation is an excess of demand for supply. Supply increases to meet demand over time. It is true if you print money you see inflation. But when you stop printing money supply grows to meet demand. We stopped printing money already. If we left borrowing cheap, supply would meet demand and inflation would stop and we would probably see a growth based deflationary period.
The fed is a mechanical device designed to combat inflation by destroying productivity and growth and inducing economic contraction by spurring savings and making expansion more expensive and making businesses that operate on revolving credit lines impossible to run.
Not everything is inflating, and even if inflation eats away wage growth, at least people have jobs. Over time inflation drives investment - as there are more dollars the ability to capture them increases if you can increase your productivity and reduce the prices you charge. It’s perhaps counter intuitive but inflation induces a decrease in prices over time so long as you don’t make borrowing more expensive. the typical response to inflation is to raise borrowing which inhibits price competition.
Inflation is an excess of demand for supply. Supply increases to meet demand over time. It is true if you print money you see inflation. But when you stop printing money supply grows to meet demand. We stopped printing money already. If we left borrowing cheap, supply would meet demand and inflation would stop and we would probably see a growth based deflationary period.
Jon Stewart / Larry Summers (ex secretary of the treasury) interview excerpts that the article is partially alluding to: https://www.youtube.com/watch?v=MV7d6PaXkcM
Everyone knows raising interest rates deflates the economy by depressing wages via job losses--that's the mechanism. Combine that with record corporate profits, and you've got a classic capital vs labor conflict. Incredible to watch Stewart wade through the swamp of Summers' terrible misdirects and bad arguments to make him admit this simple fact. I can't imagine what it's like to work with Summers, or idk, interact with him even a little.
Is there any other way to control inflation? I guess you could try to have some kind of price controls to limit corporate profits. Break up monopolies since they have too much pricing power.
My understanding of economics is that median wage is everything- it's the basic unit of wealth. The wealth of rich people is measured as a multiple of this value. So if median wage goes up, the wealthy are less so. Thus upper classes care very much about this. What is wealth other than the power to control a bunch of workers?
My understanding of economics is that median wage is everything- it's the basic unit of wealth. The wealth of rich people is measured as a multiple of this value. So if median wage goes up, the wealthy are less so. Thus upper classes care very much about this. What is wealth other than the power to control a bunch of workers?
> guess you could try to have some kind of price controls to limit corporate profits.
That just creates shortages, and then you still have inflation, in fact you make it worse, because people still want the stuff, but then getting that stuff just involves off the book transactions, insider deals, and other nefarious and illicit actions to get the stuff.
I mean look at the USSR, being rich wasn't important, there were no rich. Yet there was still an exploitative parasitic upper class that dined on caviar and fine wine everyday while most of the population was waiting for hours in the cold to get bread. The only difference was, now it was based on who you knew and being connected instead of the amount of money you had.
That just creates shortages, and then you still have inflation, in fact you make it worse, because people still want the stuff, but then getting that stuff just involves off the book transactions, insider deals, and other nefarious and illicit actions to get the stuff.
I mean look at the USSR, being rich wasn't important, there were no rich. Yet there was still an exploitative parasitic upper class that dined on caviar and fine wine everyday while most of the population was waiting for hours in the cold to get bread. The only difference was, now it was based on who you knew and being connected instead of the amount of money you had.
Another way: collective purchasing- the high quantity gives them more negotiating power. I think that was the original idea of buyer's clubs.
A good example of this is my parent's internet fee. It is way less than mine since their gated community is buying it for everyone in the community.
A good example of this is my parent's internet fee. It is way less than mine since their gated community is buying it for everyone in the community.
You can analyze it considering “time required to acquire a good” as a currency. A shortage is inflation in the time dimension to compensate for lack of inflation in the “dollars & cents” dimension.
Why should controlling inflation be used to transfer wealth from individuals to a for-profit third party (banks)?
Also, it doesn’t target the entire population fairly - surely there is a better way?
I found this a thought provoking starting place: https://podcasts.apple.com/ca/podcast/abc-news-daily/id13495...
Also, it doesn’t target the entire population fairly - surely there is a better way?
I found this a thought provoking starting place: https://podcasts.apple.com/ca/podcast/abc-news-daily/id13495...
The short answer is that the standard inflation control model can be done through either monetary or fiscal policy, but monetary policy is depoliticised enough that it's easier to do it there. Doing it through fiscal policy by raising taxes, especially at the top end, is just too politically infeasible.
(also, this process does not in and of itself transfer profit to banks! the bank's margin is generally a fixed number on top of the floating central bank rate)
(also, this process does not in and of itself transfer profit to banks! the bank's margin is generally a fixed number on top of the floating central bank rate)
"Never let a good crisis go to waste"
It is awkward for the author that wages have not been keeping pace with inflation.
If the rich and powerful are winning a "class war" it's because they actually bother to try to understand complicated issues like monetary policy, or at least can hire people that do. Meanwhile, they can spread populist disinformation campaigns that their base is completely oblivious of.
The premise that central bankers who work modest public sector wages are obsessed with suppressing workers to serve their former classmates who got ultrarich doing similar work in the private sector is absurd and lacks a single thread of corroborating empirical evidence. 15 years of cheap money didn't spark a mass uplifting of the proletariat, and it won't anytime in the future either. Indeed, by the time Federal Reserve raised interest rates, inflation was already outpacing wage growth. The only people who want to keep low interest rates are stakeholders of failing institutions like SVB and far leftist politicians who want to ensure that they don't get the blame for the upcoming recession.
The premise that central bankers who work modest public sector wages are obsessed with suppressing workers to serve their former classmates who got ultrarich doing similar work in the private sector is absurd and lacks a single thread of corroborating empirical evidence. 15 years of cheap money didn't spark a mass uplifting of the proletariat, and it won't anytime in the future either. Indeed, by the time Federal Reserve raised interest rates, inflation was already outpacing wage growth. The only people who want to keep low interest rates are stakeholders of failing institutions like SVB and far leftist politicians who want to ensure that they don't get the blame for the upcoming recession.
I'm glad people are starting to actually be honest about the class warfare situation finally but we need to acknowledge that the "wannabe capital class" is the key enabler of all of this.
The class of people who clearly fall into the "labor" class, behaving as though they will one day be the "capital" class, is probably the majority of the posters on HN (this used to be me too).
How do you know if you're in the labor class? Here's a quick test:
- Do you have or represent the voting position of a controlling or influential number of shares in a for-profit stock organization?
- Could you choose at any point, not to be employed for a wage, and maintain your current consumption pattern or grow your consumption indefinitely?
If not, then you're firmly "labor" and unless you're on the trajectory to be one of these then you won't become it no matter how much money you put in your bank from your salary.
As "labor" you have basically zero control of your working destiny compared to oligarchs. Which of course is why so many people want to get out of this class! In the best case however, people will get to "wannabe capital" status - which is kind of the worst place to be, I know cause I've been there.
This class - also known as the petite-bougeoise - is typically just down the line management through SVP in most large corporations, and are the ground troops for Capital, with the promise of power just dangling out of reach.
People in this class in my experience fall into two categories: Think that someday they will rule the world with their genius and magnanimous ideas, or they just don't care and "fuck you got mine" to buy an island. They'll retire with up to - lets say $10 or $20M in the bank - put their kids through college, do some angel investing, donate to some charitable things and get your name on the wall at your kids school for donating a new basketball hoop. They might be a local micro-celebrity in their community - but otherwise don't really control or have any say over how major things in the world run.
Most importantly though, they ensure that people below them never get the power. They will do whatever it takes to ensure that they do not support anything that could possibly get in their way of future riches and power (which most will never even get close to). They will fight Unions and cooperatives and anything that might reduce their total overall earning capacity - you see these arguments CONSTANTLY on HN.
So until we end that striving and people trying to get into the capital class, then there will always have a forever group of psychopaths willing to step up and crush labor for the promise (that never comes) of riches and power.
The class of people who clearly fall into the "labor" class, behaving as though they will one day be the "capital" class, is probably the majority of the posters on HN (this used to be me too).
How do you know if you're in the labor class? Here's a quick test:
- Do you have or represent the voting position of a controlling or influential number of shares in a for-profit stock organization?
- Could you choose at any point, not to be employed for a wage, and maintain your current consumption pattern or grow your consumption indefinitely?
If not, then you're firmly "labor" and unless you're on the trajectory to be one of these then you won't become it no matter how much money you put in your bank from your salary.
As "labor" you have basically zero control of your working destiny compared to oligarchs. Which of course is why so many people want to get out of this class! In the best case however, people will get to "wannabe capital" status - which is kind of the worst place to be, I know cause I've been there.
This class - also known as the petite-bougeoise - is typically just down the line management through SVP in most large corporations, and are the ground troops for Capital, with the promise of power just dangling out of reach.
People in this class in my experience fall into two categories: Think that someday they will rule the world with their genius and magnanimous ideas, or they just don't care and "fuck you got mine" to buy an island. They'll retire with up to - lets say $10 or $20M in the bank - put their kids through college, do some angel investing, donate to some charitable things and get your name on the wall at your kids school for donating a new basketball hoop. They might be a local micro-celebrity in their community - but otherwise don't really control or have any say over how major things in the world run.
Most importantly though, they ensure that people below them never get the power. They will do whatever it takes to ensure that they do not support anything that could possibly get in their way of future riches and power (which most will never even get close to). They will fight Unions and cooperatives and anything that might reduce their total overall earning capacity - you see these arguments CONSTANTLY on HN.
So until we end that striving and people trying to get into the capital class, then there will always have a forever group of psychopaths willing to step up and crush labor for the promise (that never comes) of riches and power.
Only on hacker news is someone who will "retire with up to - lets say $10 or $20M in the bank" not rich and seen as someone who couldn't " choose at any point, not to be employed for a wage, and maintain your current consumption pattern or grow your consumption indefinitely".
Yeah, if I had $4M in the bank today, I could retire indefinitely at my current level of consumption. If I were 62 and had $10M in the bank (in 2023 dollars), I would definitely 100% be set for the rest of my life.
But notably you wouldn't be an oligarch or what would be considered powerful as "Capital"
You still spent 62 years tied to someone else's money, instincts, whims etc...making sure a labor class doesn't form by not supporting Unions, not forgoing bonuses or quitting companies that are unethical.
So it's in many way's worse than being Capital, cause it's enforcing the never ending push from capital to alienate, ripoff and deprive workers basic human rights.
My favorite rejoinder to this is "yeah that's real life" or some other cynical platitude that simply accepts wage slavery, and the wage slavemasters as an acceptable state of affairs.
You still spent 62 years tied to someone else's money, instincts, whims etc...making sure a labor class doesn't form by not supporting Unions, not forgoing bonuses or quitting companies that are unethical.
So it's in many way's worse than being Capital, cause it's enforcing the never ending push from capital to alienate, ripoff and deprive workers basic human rights.
My favorite rejoinder to this is "yeah that's real life" or some other cynical platitude that simply accepts wage slavery, and the wage slavemasters as an acceptable state of affairs.
The entire point is that this is the UPPER limit of someone who is not in the capital class - I've seen people with 10M consume it all because their greed takes over and they never make it to the promised land of "generational wealth" again just more example.
"The Rich" aka "petit-bougeoise" aka the "wannabe capital class" aka the "fuck-you-money" is precisely what I'm describing as the problem
You're simply telling me that you want to be in that class
"The Rich" aka "petit-bougeoise" aka the "wannabe capital class" aka the "fuck-you-money" is precisely what I'm describing as the problem
You're simply telling me that you want to be in that class
This is a way rich people delude themselves into thinking they’re not rich. Basically every CEO falls into labor under your definition, there is always some way to dramatically boost your consumption.
"Basically every" is softly describing the reality. The vast majority of CEOs are not rich. This is obvious by going to small business conventions, where everyone is CEO of their own company.
>Basically every CEO falls into labor under your definition
Correct. The CEO is the core and primary tool for which capital applies pressure to labor
The Board appoints the CEO and determines their wage/compensation in 99% of cases. The larger the wage the more the CEO is "pwned" by investors. Go ask a Board of Directors who runs a company and see what they say.
There are two exceptions to this:
Founder/CEOs that successfully make the gap/transition to capital by having a large share of control of their own company (extremely rare). You can see the peacocking display of "$1 wage" to signal that they are not in the same game as labor anymore (it's taxed like paupers), their worth is determined by the stockholders whom they serve above all and it's kind of the ultimate "see ya suckers."
This is the wet dream of pretty much everyone who is in business or wants to be in business.
Or it's a mom and pop place not trying to be hyperscale/exascale and the "CEO" really just means, "guy who controls everything cause he started it"
Correct. The CEO is the core and primary tool for which capital applies pressure to labor
The Board appoints the CEO and determines their wage/compensation in 99% of cases. The larger the wage the more the CEO is "pwned" by investors. Go ask a Board of Directors who runs a company and see what they say.
There are two exceptions to this:
Founder/CEOs that successfully make the gap/transition to capital by having a large share of control of their own company (extremely rare). You can see the peacocking display of "$1 wage" to signal that they are not in the same game as labor anymore (it's taxed like paupers), their worth is determined by the stockholders whom they serve above all and it's kind of the ultimate "see ya suckers."
This is the wet dream of pretty much everyone who is in business or wants to be in business.
Or it's a mom and pop place not trying to be hyperscale/exascale and the "CEO" really just means, "guy who controls everything cause he started it"
This is a definite phenomena. It is also characterized by comments like “the economy is not a zero-sum game”, “no one wants to work those jobs; we can design everything here and do the menial work in low cost countries”, “learn to code”, “all you have to do is buy this self-help book and …”, “the world is going to end if these people don’t stop using internal combustible engines”, “low interest rates are for the good of the common man so they can afford to go into debt and buy a house at an inflated price”, “allowing student debt to be cancelled (in or out of bankruptcy) is unfair to the working class”, the classic “low taxes help businesses prosper and hire more workers”, or the latest one “we can’t let depositors with 250k+ lose their money because they won’t meet their payroll for the little people”.
I kinda agree with your take but there's a huge cultural distinction between "petite bourgeois and above" and "everybody else" that I think needs to be explored. There's a ton of punching down and self serving pity moving across that line in a way that is reminiscent of the racism of prior generations. People seem to need to feel better than somebody. I see a heck of a lot of people advocating for policy that professes to be extending a hand to pull up the lower classes but really it's just "you will not be allowed to advance unless you act like me" in disguise.
It seems to me like there are three distinct groups:
1. Working class with no desire to be capital/power
2. Working class striving to be capital/power
3. Capital class
We could certainly argue about what percentage of the population falls into what bucket or why, but I think these are the real class distinctions we should be looking at.
1. Working class with no desire to be capital/power
2. Working class striving to be capital/power
3. Capital class
We could certainly argue about what percentage of the population falls into what bucket or why, but I think these are the real class distinctions we should be looking at.
My personal benchmark of "rich" has long been to have enough money to quit working. However, it's clear that this is all relative. To my mom, making $50k in a single year was a life-long milestone that she only passed towards the end of her career. She would certainly have seen someone who made $300k/yr and had $1M in the bank as "rich", even if that would not meet my benchmark.
I don't even use the word Rich in my post. That is precisely the point.
"The Rich" is not a fixed amount of wealth, it's simply the class striving to NOT BE LABOR
"have enough money to quit working" is the desire to be a landlord, making money with no work input. That's the class I am describing as the problem.
"The Rich" is not a fixed amount of wealth, it's simply the class striving to NOT BE LABOR
"have enough money to quit working" is the desire to be a landlord, making money with no work input. That's the class I am describing as the problem.
Not sure why people are downvoting. This is pretty accurate.
I wouldn't call this "class war". It's more accurate to say "neofeudalism".
Real wages have been relatively stagnant for 40+ years while we've seen a massive concentration of wealth at the top. Trickle-down economics and deregulation have repeatedly shown themselves to be nothing more than tools for increasing income and wealth inequality.
Every aspect of your life is increasingly financialized. College, once free or cheap, now saddles you with lifelong debt. Mortgage debt and rent as a ratio to income have massively increased. Medical debt can wipe you out in the blink of an eye. All of this is by design. It's an inevitable consequence of hyper-capitalist neoliberalism.
All of this debt without a real increase in wages is designed to keep you a compliant worker. After all, with any kind of real freedom or financial independence, you're absolutely showing up for work tomorrow.
Additionally, inflation could be tackled way more effectively with a windfall profits tax without indiscriminately hitting all businesses as well as individual borrowers. Even if it did it would fill government coffers so the most in need could be helped.
You get the same sentiments as the Bank of England governor from Larry Summers [1]. All of this is built on the lie that wages are the real threat to inflation rather than boundles corporate greed and profiteering.
[1]: https://www.youtube.com/watch?v=tU3rGFyN5uQ
Real wages have been relatively stagnant for 40+ years while we've seen a massive concentration of wealth at the top. Trickle-down economics and deregulation have repeatedly shown themselves to be nothing more than tools for increasing income and wealth inequality.
Every aspect of your life is increasingly financialized. College, once free or cheap, now saddles you with lifelong debt. Mortgage debt and rent as a ratio to income have massively increased. Medical debt can wipe you out in the blink of an eye. All of this is by design. It's an inevitable consequence of hyper-capitalist neoliberalism.
All of this debt without a real increase in wages is designed to keep you a compliant worker. After all, with any kind of real freedom or financial independence, you're absolutely showing up for work tomorrow.
Additionally, inflation could be tackled way more effectively with a windfall profits tax without indiscriminately hitting all businesses as well as individual borrowers. Even if it did it would fill government coffers so the most in need could be helped.
You get the same sentiments as the Bank of England governor from Larry Summers [1]. All of this is built on the lie that wages are the real threat to inflation rather than boundles corporate greed and profiteering.
[1]: https://www.youtube.com/watch?v=tU3rGFyN5uQ
> Real wages have been relatively stagnant for 40+ years
This is FUD. The only way to argue that this is the case is to lean heavily on a specious focus on "wages" while excluding other forms of compensation.[0] When looking at the whole picture, it's clear that real median personal income has been rising for past 50 years.[1]
[0]https://fee.org/articles/the-myth-of-the-pay-productivity-ga... [1]https://fred.stlouisfed.org/series/MEPAINUSA672N
This is FUD. The only way to argue that this is the case is to lean heavily on a specious focus on "wages" while excluding other forms of compensation.[0] When looking at the whole picture, it's clear that real median personal income has been rising for past 50 years.[1]
[0]https://fee.org/articles/the-myth-of-the-pay-productivity-ga... [1]https://fred.stlouisfed.org/series/MEPAINUSA672N
FEE is, by their own admission, a conservative think tank whose alumni includes Charles Koch [1]. Their claimed influences include Ronald Reagan and Rand Paul [2].
Come on. Show some media literacy.
[1]: https://en.wikipedia.org/wiki/Foundation_for_Economic_Educat...
[2]: https://fee.org/media/41248/fees-2021-annual-report.pdf
Come on. Show some media literacy.
[1]: https://en.wikipedia.org/wiki/Foundation_for_Economic_Educat...
[2]: https://fee.org/media/41248/fees-2021-annual-report.pdf
I made an argument. I provided two sources. You neglected to address my argument. You did not address the data within either source. You instead chose to attack the organization which produced one of the cited articles. This is plain old ad hominem and a poor substitute for actual engagement.
Defending lies in bad faith and in a haughty tone? Yeesh.
Defending lies in bad faith and in a haughty tone? Yeesh.
These are tectonic plates bigger than deregulation or whatever. The surplus of the post war years was possible because the US was 50% of the global GDP as the only industrialized area in the world that hadn't been bombed to ash. Since then, the world has rapidly become more competitive. Where we are now is actually great historically speaking, the post war perfection was a blip and generational aberration, and for nearly all human history life has been a struggle.
Enjoy it while it lasts.
Enjoy it while it lasts.
Keeping nominal interest rates low will just continue the malinvestment and speculative ridiculousness of the last decade (or three) and risk serious inflation and political instability. Raising nominal interest rates hurts everyone and, as always, the primary burden will fall on the now heavily-indebted working and middle classes (capitalism, red in tooth and claw, for the masses, socialism for the rich).
The problem is too much debt, full stop. The fair way to address this is a modern debt jubilee: everyone gets the same nominal payout, debtors must use the payout to pay off debt, non-debtors may keep the money and do what they please with it.
https://think-beyondtheobvious.com/reducing-debt-via-a-moder...
Of course, Keen is completely ignored by modern economists becase "debt doesn't matter" and "we owe it to ourselves." Meanwhile, in the real world, the who are whomsting the whom, good and hard, and paying court economists a tidy speakers fee to not notice.
So it goes.
At the end of the day, we get what we deserve.