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livinincali.
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February 6, 2014 at 4:53 AM #770589February 6, 2014 at 1:25 PM #770602
FlyerInHi
GuestCAr, 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.
February 7, 2014 at 12:20 AM #770605CA renter
Participant[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.
http://reason.com/archives/2012/09/13/occupy-the-fed
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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.
February 7, 2014 at 9:33 AM #770624GuestCAr, many of the issues you raise are incidental to Fed policy.
The Fed is currently making money lose value when it sits idle. It takes work/labor to place capital to earn a return.
The flip side of that is when money is dear (high interest rates) money itself is an investment.
Concentration of wealth is not something the Federal Reserve can deal with. So blaming the Fed is unfair.
Btw, wealth belongs to pension funds, institutions, wealthy families, pools of savers, etc… The money managers are actually “laborers”. It just turns out that they are more highly compensated than other laborers. Not something the Fed can control.
Back to the original point about tht benefit of saving money. It only works out if there are borrowers who want to pay you interest for it. If everyone stayed out of debt, savings would be worth a lot less.
February 7, 2014 at 10:26 AM #770626spdrun
Participant^^^
The social safety net of this country sucks painfully. Therefore, people should be encouraged so have at least 6 months to a year in savings, since they can’t count on assistance from other sources. This isn’t happening. If money becomes more of an investment, I’d say GOOD!
Secondly — savings can always be invested in a business venture or spent outright. Investing in debt isn’t the only way to make money.
Lack of debt would actually improve returns on property, since purchase prices would go down if people buy without leverage.
February 7, 2014 at 10:48 AM #770627ParticipantAs to what I believe in? How about: buying when investors in a given asset are self-defenestrating, all the while screaming “JUMP! JUMP!” like a demonic 80s pop star.
February 7, 2014 at 12:05 PM #770630Guestwhen money itself is an investment rather than just a tool to facilitate trade, then that’s favoring capital. Not saying if that’s good or bad, but it just isn’t the case right now.
Investing in a business involves more risks and work to identify and manage the investment. That creates economic activity which is exactly what the Federal Reserve wants. They just can’t control who has access to cash and where the cash is invested.
Ideally mature people and economies should have savings invested in younger consumers and producers so they can sit back and do nothing.
But come to think of it…. The legal incentives are for old folks to get into unsecured debt because debts are extinguished upon death. Combine that with euthanasia and we maximize the utility of money.
Overall lack of debt would retard economic growth by generations. It just seems stupid to slow economic activity, nor for the lack of productivity and ingenuity, but for lack of liquidity.
Debts are savings. when you having savings you own someone else’s debts.
February 7, 2014 at 1:51 PM #770637ParticipantAmericans work too much as it is. Ideal situation would allow the average American to kick the fuck back and work 30-40 hours a week while being comfortable. This would of course require a bit of deflation.
Why is “productivity” vs enjoyment of what you have the be-all and end-all of society anyway? What’s wrong with a country of happy lotus-eaters?
Life in this country is already too risky and stressful for the average person with no safety net to speak of! Why make this situation worse?
February 8, 2014 at 3:35 AM #770667Participant[quote=FlyerInHi]CAr, many of the issues you raise are incidental to Fed policy.
The Fed is currently making money lose value when it sits idle. It takes work/labor to place capital to earn a return.
The flip side of that is when money is dear (high interest rates) money itself is an investment.
Concentration of wealth is not something the Federal Reserve can deal with. So blaming the Fed is unfair.
Btw, wealth belongs to pension funds, institutions, wealthy families, pools of savers, etc… The money managers are actually “laborers”. It just turns out that they are more highly compensated than other laborers. Not something the Fed can control.
Back to the original point about tht benefit of saving money. It only works out if there are borrowers who want to pay you interest for it. If everyone stayed out of debt, savings would be worth a lot less.[/quote]
These issues are not incidental to Fed policy; they ARE Fed policy. Note how the Federal Reserve leans toward inflation, rather than deflation — they have an **inflation** target, not a deflation target. Cost/asset price inflation (absent wage inflation) destroys the purchasing power of workers and people on fixed incomes, while increasing the wealth and purchasing power of asset owners. When you read or listen to the Fed governors, you’ll note that the only kind of inflation that really scares them is wage inflation. Inflation favors the rich, while deflation favors the poor. This is neither accidental nor coincidental. The income and wealth gaps shrink during deflationary periods, and that is a good thing.
As for holding cash, the rich hold less cash, as a percentage of wealth/income, than most working people do. The rich own assets. They are the primary beneficiaries of the Federal Reserve’s policies.
There will always be borrowers who want to borrow for productive purposes (like starting or expanding a company), or who need to borrow for unexpected expenses, like medical care, or who want to borrow for more durable assets like houses or cars that can be paid off over time. People should not be encouraged to borrow for everyday consumption nor should they borrow to speculate, but that’s exactly what is being pushed on the gullible public, today.
We need less borrowing and less debt. While that will temporarily slow the economy, it will lead to a more productive, sustainable economy over the long run.
February 10, 2014 at 12:37 PM #770755Guest[quote=spdrun]Americans work too much as it is. Ideal situation would allow the average American to kick the fuck back and work 30-40 hours a week while being comfortable. This would of course require a bit of deflation.
Why is “productivity” vs enjoyment of what you have the be-all and end-all of society anyway? What’s wrong with a country of happy lotus-eaters?
Life in this country is already too risky and stressful for the average person with no safety net to speak of! Why make this situation worse?[/quote]
Because we are Americans. We believe in operating at 100% just because we can. Do you want to run a factory at 60% capacity? Good economics requires running at full throttle
Standard of living is relative to what other people have. People are never content to say that enough is enough, let’s rest and enjoy. We are dragging the world along with us. I meet lots of Europeans who are jealous of what we have — big houses, 2, 3 cars per household, motorbikes, big TVs etc…
You can make the personal decision to work less. But it’s not how the system as a whole works.
I find that people who decide to work less are already fairly well off. Soccer moms are solidly middle to upper middle. Poor people have to work otherwise they are left behind.
February 10, 2014 at 4:34 PM #770759ParticipantThe definition of 100% capacity is arbitrary — no reason why it should stand at a 40-50 hour week. Actually, American society is more like an V8 with two dead spark plugs running at full throttle with nitrous injection. It may provide its rated HP output, but it’s liable to break the crankshaft or drop an exhaust valve soon enough.
Secondly, if you think about it, the current situation is unprecedented. 40 years ago, people married younger and the average family only had one working parent. Commutes were also shorter.
Assuming a 45-hour week including commuting for one parent, the average hours “worked” per parent were:
(45 + $housework) / 2Now, assuming a 50-hour week including commuting for BOTH parents, we’re talking about…
(50 + 50 + $housework) / 2
$housework may be marginally less due to after-school day care in the second case, but not significantly less.A 30-hour or 35-hour week per employee would more closely approximate the norm that prevailed from the 1910s through the mid 1970s while not locking one parent or the other out of having a career outside the home.
February 10, 2014 at 5:38 PM #770760The-Shoveler
ParticipantBoth my parents worked through the 60’s and 70’s (we were not rich).
it actually got a lot easier in the late 70’s 78-80 due to inflation made the house payment less than a car payment, that is when my mother quit working.
But everyone would tell you that is just not possible, (it was).
February 10, 2014 at 5:48 PM #770761Participant“Both my parents worked through the 60’s and 70’s (we were not rich).”
Sure, but this wasn’t the norm, nor were people shamed for having a single-working-parent family (zOMFeministG-d, how can you throw away a career!?!?). Also, working hours and commuting times were shorter on average then vs today.
The ideal situation would be for average per-capita working hours today to approximate those of the 60s.
February 10, 2014 at 5:52 PM #770762ParticipantMy Father worked 6 days a week, My mother a little less, but sometimes she work two job’s.
You must have not been around in the 60’s and early 70’s
February 10, 2014 at 5:56 PM #770763ParticipantThat wasn’t the statistical average — don’t compare your experience to the norm.
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