[quote=FlyerInHi]CAr, ignore the past financial crisis and bailouts for a minute. That’s coloring your views.
Right now, capital sitting idle is losing value. It takes “labor” and risk to make your money earn a return. Not quite favorable to capital.
You have advocated a higher interest rate environment where money sitting in savings would earn inflation or better (good for savers). That environment would be very favorable to capital.
Right now, there is high income inequality and the environment is favorable to those who own assets. But I don’t think capital (money) itself is favored. There is a difference.
Btw, Fed policies are not favoring capital. On the contrary, it takes labor to make money. We do have structural problems with income inequality and the types of labor that are well compensated. That’s a different issue.[/quote]
No, it doesn’t necessarily take labor to create a favorable environment for capital…under certain circumstances. When a group of capitalists own assets [edited to change capital to assets, for clarity] and the central banks are printing money, if that money is used for speculative, rather than productive, purposes (usually due to a lack of demand), then the prices of assets is driven up, making capital wealthier than labor and wealthier than the more recent entrants in the speculative Ponzi scheme.
There is no question that the Fed’s policies are making capitalists wealthy at the expense of everyone else.
Higher interest rates keep asset prices at stable or lower levels, providing an opportunity for lower and middle class folks to own a greater share of the economy. It reduces the wealth gap as a result. Higher rates help keep prices down, which helps J6 maintain purchasing power. They also give the average person the ability to enjoy a bit of “capitalism” themselves, as they earn a bit of money on their savings. It encourages saving, and discourages borrowing, which is always good for J6, IMO.
Most importantly, higher interest rates encourage more productive uses of money because money is dear. Speculation shrinks relative to productive investment, and this creates more jobs which creates more demand which creates more jobs…
The Federal Reserve policies of the past few years have absolutely been geared toward helping asset owners, first and foremost. Trickle-down economics does not work; never has, and never will. We need to reform our tax and trade policies so that they encourage productive growth in the U.S., and we need to force the Fed to stop manipulating markets in ways that make wealthy people even wealthier, while reducing the wealth and purchasing power of everybody else.
