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Thread: Top 1% Up $21 Trillion. Bottom 50% Down $900 Billion.

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    Loony Running The Asylum ZiprHead's Avatar
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    Top 1% Up $21 Trillion. Bottom 50% Down $900 Billion.

    Every quarter, the Federal Reserve puts out the Financial Accounts (aka “Z1” or “Flow of Funds”), which provide economy-wide aggregates for nearly every kind of asset and liability there is. Every three years, they put out the Survey of Consumer Finances (SCF), which is a household survey that records many of the same kinds of assets and liabilities that are in the Financial Accounts. In a perfect world, the assets and liabilities in the SCF would sum up to the aggregates in the Financial Accounts, but for various reasons they do not.

    Recently, the Federal Reserve released a new data series called the Distributive Financial Accounts, which combine the Financial Accounts and the SCF to provide quarterly estimates of the distribution of wealth in America that do sum to the aggregates in the Financial Accounts. The series goes back to 1989, the first year the modern SCF was administered and runs to the fourth quarter of 2018, the last quarter for which there is Financial Accounts data.

    The insights of this new data series are many, but for this post here I want to highlight a single eye-popping statistic. Between 1989 and 2018, the top 1 percent increased its total net worth by $21 trillion. The bottom 50 percent actually saw its net worth decrease by $900 billion over the same period.
    https://www.peoplespolicyproject.org...n-900-billion/
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    IMO this is a very serious problem that needs to be resolved if our political system is to survive.

    If some of you guys don't like Trump.....its only going to get more radical in the future. World wide populism is out of the bag now.

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    Veteran Member James Brown's Avatar
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    "If you don't feed the poor, they'll eat the rich."

    Seen on a bumper sticker.

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    I'm surprised that there isn't more outrage over the situation.

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    No war but class war.

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    Quote Originally Posted by DBT View Post
    I'm surprised that there isn't more outrage over the situation.
    The moneyed elite are good at 2 things: grifting; and convincing the middle class that their problems are the fault of the lower class.

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    Quote Originally Posted by RVonse View Post
    IMO this is a very serious problem that needs to be resolved if our political system is to survive.

    If some of you guys don't like Trump.....its only going to get more radical in the future. World wide populism is out of the bag now.
    Trump populism is making that problem worse and increasing wealth disparity while fueling white supremacy and xenophobia, b/c dangerously stupid morons believe the con told to them by the wealthy that their problems are the fault of people even poorer than themselves.

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    I'm so tired of this misleading nonsense. Look at the dates. 1989. How many of you (beside myself) were alive in the eighties? What we were doing? If you were like me, you were into punk and ska and "eat the rich" and generally railing against anything that even smelled of investing in a future. This scene (from Say Anything) pretty much sums up the entire eighties zeitgeist in this regard:



    We were convinced we'd all be killed in WWIII or otherwise not live beyond 27, the magical age. We certainly didn't do anything that our parents' generation did or instructed us to do, like saving money. I was never taught how to balance a checkbook and the idea of investing was something my Grandfather did and my father never talked about. The only advice my Grandfather ever gave me was to work hard and save ten cents of every dollar. Had I done just that, I would also be in that top 10% at the very least. We all would.

    But we didn't. We didn't save and we didn't invest, either because we couldn't afford to or just didn't know how. But it wasn't arcane or mysterious or hidden from us. We bought into debt. We smoked the credit card crack. We impulse bought all the shiny things we saw on TV and paid WAYYYYY too much money for sneakers. Fucking sneakers!

    Meanwhile, there were the other sides of that coin; the little masters of the universe in training, who did invest and save and geared everything toward one goal; being rich. To use another movie reference, you were either this guy:



    Or this guy:



    And in every movie ever, the top guy is the asshole character and Adam Sandler is the one you were supposed to be; the one who eschews seeking wealth and instead seeks love and the important, nobler things.

    Over and over and over again the popular culture in this country has been primarily cautionary tales against anything to do with money or investing or saving; it's ALL pure evil and you are to never want to rise up. And if you do rise up, you are instantly corrupted.

    It's Christianity lite. The pursuit of money is the root of all evil.

    So, gee, I wonder what's going to happen twenty, thirty years down the line then if person A invests in the magic of compound interest while person B chases after Drew Barrymore?

    Yes, I know, that's oversimplification and avoiding the serious issue of being poor in a rich country, but it's also the majority condition. You aren't as rich as your neighbor for one primary reason: you didn't save or invest when you had the ability to save or invest. For like 80% of us.

    Yes, for the other 20%, they couldn't or had serious hard ships, or a poor education, or got laid off from a job, etc. Absolutely, but, again, for the vast majority of Americans it was more about spending beyond their means that fucked them over and made this statistic what it is.

    Yes, I know, I know ALL OF THE COUNTER ARGUMENTS, but until we FIRST acknowledge that it's NOT 1% vs 50% like it's a war or "they" are the "other" (whichever "they" you come down on) and we are all somehow oppressed and it's all geared against us, or that there is a finite amount of "wealth" and we aren't being given our "fair" share of the finite wealth pie, none of this demonization will result in any kind of change.

    Right now, all this does is falsely give people an other to hate and blame for their troubles, but Bill Gates did not become a billionaire at YOUR expense. That's not how it works. You don't lose if he gains.

    Should people pay taxes? Of course. Should we close loopholes and make wealthier people pay proportionally more taxes? Absolutely. Should there be some sort of profit distribution requirements written into business organization articles as a matter of that's the price you pay to operate a business in America legislation, such that no employee can be paid more than, say, 100% of another employee or the like? I think that's a good avenue to debate, but I don't see it as something sustainable now that we have a global consciousness as a species, so maybe at the global level (though how that would be structured and enforced is still years away from being realized).

    But what's happening now is simply stoking blame and a desire to punish. It's their fault--just like it was in the eighties, ironically--and they are why you have the troubles that you have. If it weren't for the 1% taking all YOUR wealth away from you, hoarding it all for themselves and forcing you to live a life of poverty and just barely getting by!

    But, again, that's not how it works. There is nothing "they" are doing that you can't also do right now when it comes to investing (except for limited partnerships). Yes, you have to have money that you can invest and the discipline not to cash out. Yes, that means you're subject to circumstance. Everybody is subject to circumstance.

    But what's the alternative, other than the social programs we already have in place? Guaranteed income? That would be nice, but that's just taxes and still doesn't mean you're just magically fiscally responsible or know what to do with your money. Sending in the jackboots to just take the bonds the top 1% are invested in? How is that going to work?

    I've posted this so many times I should have it memorized by now, but the economists that first came up with this bumper sticker (or, rather, the ones Sanders used as the basis for first coming up with this bumper sticker) concluded their initial report with the following recommendations, which are nearly identical to what my Grandfather told me forty years ago (emphasis mine):

    Encouraging saving for the bottom 90% could also boost middle-class wealth by reducing the growing inequality in saving rates. The best policy to encourage middle-class saving depends on the reasons for the observed drop in the saving rate of bottom 90% families. Middle-class saving might have plummeted because of the lackluster growth in middle class incomes relative to top incomes, fueling demand for credit to maintain relative consumption (see e.g., Bertrand and Morse (2013)). In that case, policies to boost middle-class incomes would probably boost saving as well and powerfully affect the bottom 90% wealth share. Financial deregulation may have expanded borrowing opportunities (through consumer credit, home equity loans, subprime mortgages) and in some cases might have left consumers insufficiently protected against some forms of predatory lending. In that case, greater consumer protection and financial regulation could help increasing middle-class saving. Tuition increases may have increased student loans, in which case limits to university tuition fees may have a role to play.

    Yet the fall in the bottom 90% saving rate might also owe to growing behavioral biases in the saving decisions of middle-class households; many individuals, for instance, do not know how to invest optimally and end up spending too much on servicing short-run debt at high interest rates (see e.g. Thaler and Sunstein, 2008). To address these biases, recent work in behavioral economics shows that nudges are more effective than tax incentives (see e.g. Chetty et al., 2014a). A good model for building wealth among the bottom 90% might therefore have three components: (1) nudged long-run savings, (2) directed investment, (3) ability to borrow against oneself. First, a fraction of earnings (e.g., 3 or 4% of pay up to $100,000 of annual earnings) could be directed by default to individual tax-deferred savings accounts that can only be used for retirement, home purchase downpayment (to build housing wealth), and education expenses (to build human capital) as in the existing automatic IRAs proposals. Second, such accounts could be invested in a broad fund delivering a rate of return r close to the global return on capital, ensuring that even modest accounts earn substantial returns. Third, individuals would be allowed to borrow (up to some level) against their savings account for any expense at an interest rate above r, but interest payments would be credited back to the account so that individuals effectively borrow against themselves (Mullainathan and Shafir, 2013). Tax refunds (or extra tax withholding) could be used to ensure repayment and keep default to a minimum.
    Iow, the solution to the issues they discovered--and Sanders deliberately misconstrued and made into a bumper sticker--are, basically, forced ("nudged") savings/investment!

    It's strange how that part--the conclusion and recommendation of their findings--is always ignored.

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    Loony Running The Asylum ZiprHead's Avatar
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    When conservatives realize they cannot win democratically, they will not abandon conservatism. They will abandon democracy.

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    Quote Originally Posted by ronburgundy View Post
    Quote Originally Posted by RVonse View Post
    IMO this is a very serious problem that needs to be resolved if our political system is to survive.

    If some of you guys don't like Trump.....its only going to get more radical in the future. World wide populism is out of the bag now.
    Trump populism is making that problem worse and increasing wealth disparity while fueling white supremacy and xenophobia, b/c dangerously stupid morons believe the con told to them by the wealthy that their problems are the fault of people even poorer than themselves.
    You are at least partially wrong, see this article here: https://www.theatlantic.com/ideas/ar...gloomy/599491/ I thought this was being missed by everyone so I started another thread. And it appears I was right because that thread is so far going nowhere.

    The wealth disparity has not started to close yet, but the bottom wages ARE beginning to rise. If Trump could be successful with China trade negotiations many more high value jobs will also increase as supply chains move back to the US.

    It will take a long time because this problem took many years of bad government. But I think the light is at the end of the tunnel now.

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