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Why the rich have got richer even during global crises
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https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments." | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments.""For me it's as a result in shares in companies like Amozon, Ebay and Evri all made door money during lockdown. | |||
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"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments." You haven't expressed an opinion in your original post, but I'm guessing that you think that the rich getting richer is a bad thing. Presumably you think that governments shouldn't give tax breaks and financial incentives to help boost the economy. They should instead maintain their fiscal policies and wait for the economy to recover on it's own. I'm guessing that you feel that governments shouldn't flood the economy with money to make it easier for the less well off to lend and spend. They should instead just wait for the recovery, and ignore other countries that seem to have stronger economies from giving everybody money. I have to guess all of this because you've not given us any clues as to what would be a better way for governments to handle a crisis. | |||
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"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments. You haven't expressed an opinion in your original post, but I'm guessing that you think that the rich getting richer is a bad thing. Presumably you think that governments shouldn't give tax breaks and financial incentives to help boost the economy. They should instead maintain their fiscal policies and wait for the economy to recover on it's own. I'm guessing that you feel that governments shouldn't flood the economy with money to make it easier for the less well off to lend and spend. They should instead just wait for the recovery, and ignore other countries that seem to have stronger economies from giving everybody money. I have to guess all of this because you've not given us any clues as to what would be a better way for governments to handle a crisis." Flooding the economy with money is one of the main contributors to inflation. Which effects the less well of worse. Also increases asset prices, which benefits the well off. | |||
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"Flooding the economy with money is one of the main contributors to inflation. Which effects the less well of worse. Also increases asset prices, which benefits the well off." OK. Let's take that statement as our baseline. What should the government have done to get us over the crisis? What measures could they have employed that would have helped the poor, but not helped the rich? | |||
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"For me rased the lower tax threshold from £12,500 to £18,500 NI the same then to make up the difference add 2% to each tax band of income-tax and dividend tax." That would aid the poor and sting the rich, but it doesn't help to stimulate the economy. This thread is about economic stimulus helping the rich more than the poor. How would you get the economy moving faster, without handing an advantage to rich people? | |||
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"If you have money then you'll make money." That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it? | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."
For me it's as a result in shares in companies like Amozon, Ebay and Evri all made door money during lockdown."That sounds like an oversimplification. Do you know this, or is it an assumption or just a part of the picture? Is it okay that as the majority suffer, benefits accrue to the wealthy? | |||
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"Great news. No complaint from here. "Not a thoughtful or interesting contribution except for understanding more about who you are. | |||
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"Did everyone who has commented on this thread actually read the article through or are they just responding to the title and the summary?" Every time. If someone comes up with an opinion you don't like, you assume that they haven't read the article properly. It is possible for 2 people to read the same facts, and to come to different conclusions on how fair things are. | |||
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"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments. You haven't expressed an opinion in your original post, but I'm guessing that you think that the rich getting richer is a bad thing. Presumably you think that governments shouldn't give tax breaks and financial incentives to help boost the economy. They should instead maintain their fiscal policies and wait for the economy to recover on it's own. I'm guessing that you feel that governments shouldn't flood the economy with money to make it easier for the less well off to lend and spend. They should instead just wait for the recovery, and ignore other countries that seem to have stronger economies from giving everybody money. I have to guess all of this because you've not given us any clues as to what would be a better way for governments to handle a crisis." Lots of assumptions. You didn't have to make any of them. You could have presented your own thoughts on the matter having read the article. You haven't though. Do you have an opinion to express or do you just want to know what I think so that you can argue against it? | |||
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"OP reading your profile and living in West London working from home, in Guessing your not on the poor end of life so would guess you doing OK. You come across as well educated and for some reason looking at company accounts on company's house so you have the resource to do what you like. So why don't you ?? " What point are you making? Why don't I do what? | |||
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"If you have money then you'll make money." "That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it?" So how would you arrange society such that poor people have more opportunities to make money, and richer people have fewer options? | |||
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"If you have money then you'll make money. That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it? So how would you arrange society such that poor people have more opportunities to make money, and richer people have fewer options?" What is your opinion? Put something out there to discuss. | |||
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"If you have money then you'll make money. That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it?" Equality? Nah! You can keep it. Equality is just a slow steady drive to the bottom. We've got more than some and there are plenty with more than us. Long may it carry on. If people with money didn't invest it to make more money then there is no economy. Government investment you may say. Never has worked and never will. You either get dictatorship (5 year plans and all that shit) or in a democracy the politicians always have one eye on the next election. Governments (of all colours) couldn't run the proverbial piss up in a brewery. | |||
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"Did everyone who has commented on this thread actually read the article through or are they just responding to the title and the summary? Every time. If someone comes up with an opinion you don't like, you assume that they haven't read the article properly. It is possible for 2 people to read the same facts, and to come to different conclusions on how fair things are." If someone simply repeats a trope without referencing it to any counterargument in the article, then yes, I will take it that they have not read the article. Similarly if they selectively or incorrectly quote other articles or legislation I will take that to be motivated thinking. Especially when they repeat or ignore any points or questions that do not help their position. | |||
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"You could have presented your own thoughts on the matter having read the article." I could have, but I didn't think I had anything useful to say about it. The article basically says that people that invest money, will make money, and that people who invest more, make more. That's hardly a ground-breaking revelation. It also does the standard trick of comparing 'wealth' at the top, with liquid assets at the bottom. When an article starts using that trick, it's clearly not interested in presenting a fair overview of the situation. | |||
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"If you have money then you'll make money. That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it? Equality? Nah! You can keep it. Equality is just a slow steady drive to the bottom. We've got more than some and there are plenty with more than us. Long may it carry on. If people with money didn't invest it to make more money then there is no economy. Government investment you may say. Never has worked and never will. You either get dictatorship (5 year plans and all that shit) or in a democracy the politicians always have one eye on the next election. Governments (of all colours) couldn't run the proverbial piss up in a brewery." More interesting but a strange place to start. Who said that "equality" should be the goal? There is nothing about that in the OP or the article. Who wants to prevent private investment? Again no indication of that being something desirable, so why bring it up? State investment "Never has worked and never will." Really? Military weapons systems and all of their spin-offs? The space race? Nuclear energy? National road, power, gas and water networks? Integrated rail and air networks? Education, health? Scientific research. Funding for arts and culture? All failed everywhere? | |||
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"What is your opinion? Put something out there to discuss. " Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."
For me it's as a result in shares in companies like Amozon, Ebay and Evri all made door money during lockdown.
That sounds like an oversimplification.
Do you know this, or is it an assumption or just a part of the picture?
Is it okay that as the majority suffer, benefits accrue to the wealthy?"My portfolio is doing better then predicted as was on holiday in India feb 2019 and moved more in to Amozon and ebay Hemis as it was then and yes a good gamble Amazon purchase around $84 sold at $170 beginning of this year was a bit bumpy and should have sold sooner | |||
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"Flooding the economy with money is one of the main contributors to inflation. Which effects the less well of worse. Also increases asset prices, which benefits the well off. OK. Let's take that statement as our baseline. What should the government have done to get us over the crisis? What measures could they have employed that would have helped the poor, but not helped the rich?" There's nothing directly that would help all poor without helping the rich except tax rates. But they could have invested heavily in infrastructure creating jobs for people and therefore inputting money into the lower economy, but also producing something with it. | |||
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"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory." I don't begrudge anyone making lots of money and certainly not those who take risks with investments. I also have no problem with the wealthiest getting wealthier if done by legitimate means and if they pay there taxes that are due | |||
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"Copied from your link 131 billionaires more than doubled their net worth during the pandemic. The world’s richest person, Louis Vuitton chief Bernard Arnault, was worth $159bn on December 27, 2022, up by around $60bn Don't now how there maths works but $60bn is not doubled just above a third. But $60bn over 2 years is a good return I am 4 6% above inflation small amounts " so went from 100bn to 160bn. That's a 60pc increase. Neither a third nor a doubling. Also suspect others saw bigger increases. Now to read the article  | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments.""I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done. QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more. Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes. | |||
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"If you have money then you'll make money. That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it?" Say what! I have lost your thought process here... You said it was a truism, so you agree it it is a true statement, you agree money makes money. Moving on to the last part of your post, "Why should opportunities to make money be biased towards those who already have it". You have agreed money makes money, can you expand on your thoughts around the types of opportunities that those without money could be taking to help them make money? | |||
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"You could have presented your own thoughts on the matter having read the article. I could have, but I didn't think I had anything useful to say about it. The article basically says that people that invest money, will make money, and that people who invest more, make more. That's hardly a ground-breaking revelation. It also does the standard trick of comparing 'wealth' at the top, with liquid assets at the bottom. When an article starts using that trick, it's clearly not interested in presenting a fair overview of the situation." Strange, because you have already asked questions that indicate that you understood something far more nuanced from the article. However you have now chosen to simplify it in order to dismiss it. The article does not "basically" say that people who invest money will make money The article asks why when a country is in financial difficulty governments decide that that the best solution is through schemes that make the rich wealthier but do not improve the lot of those suffering the most. It isn't a "trick" to compare wealth which gives you security and options to income which gives you the means to pay day to day costs. "Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery" | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."
For me it's as a result in shares in companies like Amozon, Ebay and Evri all made door money during lockdown.
That sounds like an oversimplification.
Do you know this, or is it an assumption or just a part of the picture?
Is it okay that as the majority suffer, benefits accrue to the wealthy?
My portfolio is doing better then predicted as was on holiday in India feb 2019 and moved more in to Amozon and ebay Hemis as it was then and yes a good gamble Amazon purchase around $84 sold at $170 beginning of this year was a bit bumpy and should have sold sooner "So you are only talking about your own, personal, experience. Have you looked wider? Have those who do not have money to invest in portfolios benefitted from the Government largesse that has lead to increased equity valuations? | |||
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"Flooding the economy with money is one of the main contributors to inflation. Which effects the less well of worse. Also increases asset prices, which benefits the well off. OK. Let's take that statement as our baseline. What should the government have done to get us over the crisis? What measures could they have employed that would have helped the poor, but not helped the rich? There's nothing directly that would help all poor without helping the rich except tax rates. But they could have invested heavily in infrastructure creating jobs for people and therefore inputting money into the lower economy, but also producing something with it." I agree. Money genuinely invested in physical "stuff" with a long term payback to individuals, society at large and companies. Also investment on intangibles like education. Not just science and technology, but arts and sports so that talent finds its path. | |||
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"Copied from your link 131 billionaires more than doubled their net worth during the pandemic. The world’s richest person, Louis Vuitton chief Bernard Arnault, was worth $159bn on December 27, 2022, up by around $60bn Don't now how there maths works but $60bn is not doubled just above a third. But $60bn over 2 years is a good return I am 4 6% above inflation small amounts " I don't know what point you're making. Is Arnauld amongst the 131 referred to? Does it matter? How much did poorer people benefit from the spending by governments that provided the conditions for these gains to the already rich? | |||
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"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. I don't begrudge anyone making lots of money and certainly not those who take risks with investments. I also have no problem with the wealthiest getting wealthier if done by legitimate means and if they pay there taxes that are due" Is it okay that Government spending in times of economic stress helps the wealthier get wealthier whilst the wider population benefits far less or becomes poorer? You are answering a question that wasn't asked. | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes. "I agree. On large part this is QE. Billions if not trillions of Government spending globally. The bighest direct beneficiaries were the already very rich. I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances. The previous comments about money making money is true. However, that's not from being clever. The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest. | |||
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"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory." No. It doesn't. The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? "Everyone" is not on an upward trajectory. That is the point. When one group benefit disproportionately through no skill or talent or risk other than having more to start with, is that what Government should be spending money on? Is it better or worse for the poorer to become better off at a faster rate than those who already have more money than they need? Investing in equities does not benefit companies or those delivering value except at the very margin. It's speculation and gambling. | |||
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"If you have money then you'll make money. That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it? Say what! I have lost your thought process here... You said it was a truism, so you agree it it is a true statement, you agree money makes money. Moving on to the last part of your post, "Why should opportunities to make money be biased towards those who already have it". You have agreed money makes money, can you expand on your thoughts around the types of opportunities that those without money could be taking to help them make money? " Yes. Money makes money. Why does that suprise you? You will have to read the OP, the summary, the article and my comments to make more sense of it What don't you understand about this thread? | |||
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"Did everyone who has commented on this thread actually read the article through or are they just responding to the title and the summary? A discussion with some depth is interesting. An argument over an obetsimplified soundbite or headline, not so much. It does happen a lot on here and there are a few comments that already indicate the latter although others the former..." . However these forums are simply a media on which you can express an opinion . I just like to read people's opinions and do not needd any backing detail . That only becomes necessary in real life . We do not need to worry about the so called rich. They are irrelevant. What matters is how we treat the less well off. No one is starving. We have half a million vehicles on the mobility scheme. Anyone in receipt of PIP has a new car every three years should they surrender the mobility element of their PIP. They only need to put petrol in the vehicle. If you are in rented accommodation and are unemployed your rent will be paid for by the government. We also currently have a very generous energy support package which helps every single person with an energy bill in rheur name . Some people will receive £1300 pee annum as part of this support. No need to worry about the rich . Are we looking after the less well off ? The answer appears to be yes . There will always be isolate exceptions . | |||
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"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. No. It doesn't. The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? "Everyone" is not on an upward trajectory. That is the point. When one group benefit disproportionately through no skill or talent or risk other than having more to start with, is that what Government should be spending money on? Is it better or worse for the poorer to become better off at a faster rate than those who already have more money than they need? Investing in equities does not benefit companies or those delivering value except at the very margin. It's speculation and gambling." . I do not think that the various Financisl regulators would agree that investing in a pension fund or equities is gambling. Your statement is far removed from reality. | |||
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"Did everyone who has commented on this thread actually read the article through or are they just responding to the title and the summary? A discussion with some depth is interesting. An argument over an obetsimplified soundbite or headline, not so much. It does happen a lot on here and there are a few comments that already indicate the latter although others the former.... However these forums are simply a media on which you can express an opinion . I just like to read people's opinions and do not needd any backing detail . That only becomes necessary in real life . We do not need to worry about the so called rich. They are irrelevant. What matters is how we treat the less well off. No one is starving. We have half a million vehicles on the mobility scheme. Anyone in receipt of PIP has a new car every three years should they surrender the mobility element of their PIP. They only need to put petrol in the vehicle. If you are in rented accommodation and are unemployed your rent will be paid for by the government. We also currently have a very generous energy support package which helps every single person with an energy bill in rheur name . Some people will receive £1300 pee annum as part of this support. No need to worry about the rich . Are we looking after the less well off ? The answer appears to be yes . There will always be isolate exceptions . " Several of the points that you have made are factually incorrect. As usual. You have also not, actually addressed the OP. Also, unsurprising. I have rarely encountered someone so lacking in empathy. That could be a personal or who you really are. Impossible to know, but it is still ugly to see. Why do you post on here at all , Pat, and why do you keep respawning under different names? | |||
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"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. No. It doesn't. The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? "Everyone" is not on an upward trajectory. That is the point. When one group benefit disproportionately through no skill or talent or risk other than having more to start with, is that what Government should be spending money on? Is it better or worse for the poorer to become better off at a faster rate than those who already have more money than they need? Investing in equities does not benefit companies or those delivering value except at the very margin. It's speculation and gambling.. I do not think that the various Financisl regulators would agree that investing in a pension fund or equities is gambling. Your statement is far removed from reality. " Really? Can you enumerate the number of global factors that you do not have control over that will affect the value of your investments. Just name a few. You can then compare that to the factors that influence someone's success, or otherwise, in poker. | |||
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"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. No. It doesn't. The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? "Everyone" is not on an upward trajectory. That is the point. When one group benefit disproportionately through no skill or talent or risk other than having more to start with, is that what Government should be spending money on? Is it better or worse for the poorer to become better off at a faster rate than those who already have more money than they need? Investing in equities does not benefit companies or those delivering value except at the very margin. It's speculation and gambling.. I do not think that the various Financisl regulators would agree that investing in a pension fund or equities is gambling. Your statement is far removed from reality. Really? Can you enumerate the number of global factors that you do not have control over that will affect the value of your investments. Just name a few. You can then compare that to the factors that influence someone's success, or otherwise, in poker." . Why would anyone want to evaluate any of the global factors. ? They are already factored in . It is basically impossible to lose any money long term on stocks and shares provided d you have spread your risk correctly. The performance of shares in companies such as Mac Donald's and the Deere Corporation should be good enough for anyone. Two outstanding USA success stories. | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments.""So what do you think the answer is ?? To be honest I work hard and worry about me and my family. 20 years ago I lost it all well almost for the second time but it makes you work harder. To meany of the poor are in a poor cycle mum and dad on benefits in social housing and if you saw how they live. Working in social housing I see it all.. | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."
So what do you think the answer is ??
To be honest I work hard and worry about me and my family. 20 years ago I lost it all well almost for the second time but it makes you work harder.
To meany of the poor are in a poor cycle mum and dad on benefits in social housing and if you saw how they live.
Working in social housing I see it all.."Have a scroll through and you can see at least some of my thoughts. I have a position on it though which is that governments should not be be spending public funds on policies that benefit the rich over the poor or even the wider population. That widening the gap between the rich and the poor is not, inherently, a good thing. | |||
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"Did everyone who has commented on this thread actually read the article through or are they just responding to the title and the summary? A discussion with some depth is interesting. An argument over an obetsimplified soundbite or headline, not so much. It does happen a lot on here and there are a few comments that already indicate the latter although others the former.... However these forums are simply a media on which you can express an opinion . I just like to read people's opinions and do not needd any backing detail . That only becomes necessary in real life . We do not need to worry about the so called rich. They are irrelevant. What matters is how we treat the less well off. No one is starving. We have half a million vehicles on the mobility scheme. Anyone in receipt of PIP has a new car every three years should they surrender the mobility element of their PIP. They only need to put petrol in the vehicle. If you are in rented accommodation and are unemployed your rent will be paid for by the government. We also currently have a very generous energy support package which helps every single person with an energy bill in rheur name . Some people will receive £1300 pee annum as part of this support. No need to worry about the rich . Are we looking after the less well off ? The answer appears to be yes . There will always be isolate exceptions . " Who are the rich? The top 1% the top 10%? Are they looking after the poor or are the middle and working class looking after the rich. Who benefits from the benefits you speak of. The poor or the people the poor give their benefits to? Who gets the 30 billion a year in housing benefit? The rich landlords maybe??? Who benefits from the in work benefits? The employers that it enables to pay bellow subsistence wages maybe?? Don't even get me started on the energy companies or the bailed out banks!!! Who pays the taxes but gets none of it back in benefits??? The working and middle classes that's who! | |||
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"Did everyone who has commented on this thread actually read the article through or are they just responding to the title and the summary? A discussion with some depth is interesting. An argument over an obetsimplified soundbite or headline, not so much. It does happen a lot on here and there are a few comments that already indicate the latter although others the former.... However these forums are simply a media on which you can express an opinion . I just like to read people's opinions and do not needd any backing detail . That only becomes necessary in real life . We do not need to worry about the so called rich. They are irrelevant. What matters is how we treat the less well off. No one is starving. We have half a million vehicles on the mobility scheme. Anyone in receipt of PIP has a new car every three years should they surrender the mobility element of their PIP. They only need to put petrol in the vehicle. If you are in rented accommodation and are unemployed your rent will be paid for by the government. We also currently have a very generous energy support package which helps every single person with an energy bill in rheur name . Some people will receive £1300 pee annum as part of this support. No need to worry about the rich . Are we looking after the less well off ? The answer appears to be yes . There will always be isolate exceptions . Who are the rich? The top 1% the top 10%? Are they looking after the poor or are the middle and working class looking after the rich. Who benefits from the benefits you speak of. The poor or the people the poor give their benefits to? Who gets the 30 billion a year in housing benefit? The rich landlords maybe??? Who benefits from the in work benefits? The employers that it enables to pay bellow subsistence wages maybe?? Don't even get me started on the energy companies or the bailed out banks!!! Who pays the taxes but gets none of it back in benefits??? The working and middle classes that's who! " I think this is rather more where the thrust of this discussion sits. However, it seems to often get returned to an "argument" about "punishing the rich" or having something against wealth or investment or risk. It's not that at all. It's about public policy benefitting the wealthy more than those in need. It's not obvious or simple, but could do with rather more thought. | |||
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"The top 1% pay less then any one in my experience have see how hole estates ate gifted at a young age to avoid inheritance tax sums of money left in trusts etc." Is that OK? Does society or a country benefit from this? | |||
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"The top 1% pay less then any one in my experience have see how hole estates ate gifted at a young age to avoid inheritance tax sums of money left in trusts etc. Is that OK? Does society or a country benefit from this?" No but the law allows it you an educated man how much wealth did the Queen have and how much inheritance tax will be payed. Sir Jacky Stuart non dom close to the Royal family avoids tax as a non domestic living in Switzerland. Is it fair No Is life fair No You just have to run with it.. | |||
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"The top 1% pay less then any one in my experience have see how hole estates ate gifted at a young age to avoid inheritance tax sums of money left in trusts etc. Is that OK? Does society or a country benefit from this? No but the law allows it you an educated man how much wealth did the Queen have and how much inheritance tax will be payed. Sir Jacky Stuart non dom close to the Royal family avoids tax as a non domestic living in Switzerland. Is it fair No Is life fair No You just have to run with it.." My intelligence, or otherwise, has no bearing on this. Why is it acceptable a country and an elected Government to arrange for this to be the case. Some aspects of life are not within anyone's control. Others are. You seem to be saying that legislated unfairness is fine and doesn't require changing. | |||
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"The top 1% pay less then any one in my experience have see how hole estates ate gifted at a young age to avoid inheritance tax sums of money left in trusts etc. Is that OK? Does society or a country benefit from this? No but the law allows it you an educated man how much wealth did the Queen have and how much inheritance tax will be payed. Sir Jacky Stuart non dom close to the Royal family avoids tax as a non domestic living in Switzerland. Is it fair No Is life fair No You just have to run with it.. My intelligence, or otherwise, has no bearing on this. Why is it acceptable a country and an elected Government to arrange for this to be the case. Some aspects of life are not within anyone's control. Others are. You seem to be saying that legislated unfairness is fine and doesn't require changing." I'd say your life starts has every bearing on this as I'm guessing your in the top 10% living in West London not a cheap area | |||
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"The top 1% pay less then any one in my experience have see how hole estates ate gifted at a young age to avoid inheritance tax sums of money left in trusts etc. Is that OK? Does society or a country benefit from this? No but the law allows it you an educated man how much wealth did the Queen have and how much inheritance tax will be payed. Sir Jacky Stuart non dom close to the Royal family avoids tax as a non domestic living in Switzerland. Is it fair No Is life fair No You just have to run with it.. My intelligence, or otherwise, has no bearing on this. Why is it acceptable a country and an elected Government to arrange for this to be the case. Some aspects of life are not within anyone's control. Others are. You seem to be saying that legislated unfairness is fine and doesn't require changing. I'd say your life starts has every bearing on this as I'm guessing your in the top 10% living in West London not a cheap area " Why argue its moot we some people. Just click on the green arrow next to their name. It speaks volumes on what they are here for its undeniable. | |||
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"The top 1% pay less then any one in my experience have see how hole estates ate gifted at a young age to avoid inheritance tax sums of money left in trusts etc. Is that OK? Does society or a country benefit from this? No but the law allows it you an educated man how much wealth did the Queen have and how much inheritance tax will be payed. Sir Jacky Stuart non dom close to the Royal family avoids tax as a non domestic living in Switzerland. Is it fair No Is life fair No You just have to run with it.. My intelligence, or otherwise, has no bearing on this. Why is it acceptable a country and an elected Government to arrange for this to be the case. Some aspects of life are not within anyone's control. Others are. You seem to be saying that legislated unfairness is fine and doesn't require changing. I'd say your life starts has every bearing on this as I'm guessing your in the top 10% living in West London not a cheap area " Again, why are you continuing to personalise this about me, and what is the relevance to the thread? You keep trying to imply something, but you won't say what it is. Are you saying that if your parents give you a good start in life, your prospects will be better? In that case, should this gap in opportunity be made bigger by Government policy? | |||
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"The top 1% pay less then any one in my experience have see how hole estates ate gifted at a young age to avoid inheritance tax sums of money left in trusts etc. Is that OK? Does society or a country benefit from this? No but the law allows it you an educated man how much wealth did the Queen have and how much inheritance tax will be payed. Sir Jacky Stuart non dom close to the Royal family avoids tax as a non domestic living in Switzerland. Is it fair No Is life fair No You just have to run with it.. My intelligence, or otherwise, has no bearing on this. Why is it acceptable a country and an elected Government to arrange for this to be the case. Some aspects of life are not within anyone's control. Others are. You seem to be saying that legislated unfairness is fine and doesn't require changing. I'd say your life starts has every bearing on this as I'm guessing your in the top 10% living in West London not a cheap area Why argue its moot we some people. Just click on the green arrow next to their name. It speaks volumes on what they are here for its undeniable. "Again, I have no clue what you mean with most of your "contributions". Does it have any relevance to the topic of the thread or are you just making a personal criticism? Please just write the words that communicate what you mean. Why is that so hard? | |||
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"So is the cash economy fair no tax on income. But it's out there all the time do the government look at it no. " The Government have been able to do little about it, but are trying to move as much banking as possible to a cashless economy so that all transactions can be traced. You are, of course, aware of this. | |||
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"If you have money then you'll make money. That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it? Equality? Nah! You can keep it. Equality is just a slow steady drive to the bottom. We've got more than some and there are plenty with more than us. Long may it carry on. If people with money didn't invest it to make more money then there is no economy. Government investment you may say. Never has worked and never will. You either get dictatorship (5 year plans and all that shit) or in a democracy the politicians always have one eye on the next election. Governments (of all colours) couldn't run the proverbial piss up in a brewery. More interesting but a strange place to start. Who said that "equality" should be the goal? There is nothing about that in the OP or the article. Who wants to prevent private investment? Again no indication of that being something desirable, so why bring it up? State investment "Never has worked and never will." Really? Military weapons systems and all of their spin-offs? The space race? Nuclear energy? National road, power, gas and water networks? Integrated rail and air networks? Education, health? Scientific research. Funding for arts and culture? All failed everywhere?" Factor the eye watering waste into all of those examples and I rest my case. As for the equality bit. You mentioned it first. "It is also accepting increasing inequality." Your words not mine. | |||
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"If you have money then you'll make money. That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it? Equality? Nah! You can keep it. Equality is just a slow steady drive to the bottom. We've got more than some and there are plenty with more than us. Long may it carry on. If people with money didn't invest it to make more money then there is no economy. Government investment you may say. Never has worked and never will. You either get dictatorship (5 year plans and all that shit) or in a democracy the politicians always have one eye on the next election. Governments (of all colours) couldn't run the proverbial piss up in a brewery. More interesting but a strange place to start. Who said that "equality" should be the goal? There is nothing about that in the OP or the article. Who wants to prevent private investment? Again no indication of that being something desirable, so why bring it up? State investment "Never has worked and never will." Really? Military weapons systems and all of their spin-offs? The space race? Nuclear energy? National road, power, gas and water networks? Integrated rail and air networks? Education, health? Scientific research. Funding for arts and culture? All failed everywhere? Factor the eye watering waste into all of those examples and I rest my case. As for the equality bit. You mentioned it first. "It is also accepting increasing inequality." Your words not mine." Do provide the data on that and compare it to the eye watering failures and state subsidies and Government bailouts paid to private companies. Finding increased inequality undesirable is not the same as aiming for equality. You do understand that, don't you? | |||
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"So is the cash economy fair no tax on income. But it's out there all the time do the government look at it no. The Government have been able to do little about it, but are trying to move as much banking as possible to a cashless economy so that all transactions can be traced. You are, of course, aware of this." But I know lots are now just doing the same with cash less. I know 2 taxi drivers how have pdq for company and apple pay for other customers it's tracsable but not being done. And we bid cash for some work on the house as it was cheaper. It will never stop | |||
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"So is the cash economy fair no tax on income. But it's out there all the time do the government look at it no. The Government have been able to do little about it, but are trying to move as much banking as possible to a cashless economy so that all transactions can be traced. You are, of course, aware of this. But I know lots are now just doing the same with cash less. I know 2 taxi drivers how have pdq for company and apple pay for other customers it's tracsable but not being done. And we bid cash for some work on the house as it was cheaper. It will never stop " What has this to do with Government policy and money benefitting the wealthy more than the poor? Is it desirable? Are you saying that the rich make a lot of cash transactions or that the less affluent do so by "turning a blind eye" the Government are helping them in a similar way? | |||
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"If you have money then you'll make money. That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it? Equality? Nah! You can keep it. Equality is just a slow steady drive to the bottom. We've got more than some and there are plenty with more than us. Long may it carry on. If people with money didn't invest it to make more money then there is no economy. Government investment you may say. Never has worked and never will. You either get dictatorship (5 year plans and all that shit) or in a democracy the politicians always have one eye on the next election. Governments (of all colours) couldn't run the proverbial piss up in a brewery. More interesting but a strange place to start. Who said that "equality" should be the goal? There is nothing about that in the OP or the article. Who wants to prevent private investment? Again no indication of that being something desirable, so why bring it up? State investment "Never has worked and never will." Really? Military weapons systems and all of their spin-offs? The space race? Nuclear energy? National road, power, gas and water networks? Integrated rail and air networks? Education, health? Scientific research. Funding for arts and culture? All failed everywhere? Factor the eye watering waste into all of those examples and I rest my case. As for the equality bit. You mentioned it first. "It is also accepting increasing inequality." Your words not mine. Do provide the data on that and compare it to the eye watering failures and state subsidies and Government bailouts paid to private companies. Finding increased inequality undesirable is not the same as aiming for equality. You do understand that, don't you?" Yeah! Right! Whatever! I'm off to look at some of the swinger threads on here. This is a swinger site, remember? Enjoy your echo chamber. | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest."The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts. I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out. I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor. | |||
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"If you have money then you'll make money. That's simply a truism. It is also accepting increasing inequality. Why should opportunities to make money be biased towards those who already have it? Equality? Nah! You can keep it. Equality is just a slow steady drive to the bottom. We've got more than some and there are plenty with more than us. Long may it carry on. If people with money didn't invest it to make more money then there is no economy. Government investment you may say. Never has worked and never will. You either get dictatorship (5 year plans and all that shit) or in a democracy the politicians always have one eye on the next election. Governments (of all colours) couldn't run the proverbial piss up in a brewery. More interesting but a strange place to start. Who said that "equality" should be the goal? There is nothing about that in the OP or the article. Who wants to prevent private investment? Again no indication of that being something desirable, so why bring it up? State investment "Never has worked and never will." Really? Military weapons systems and all of their spin-offs? The space race? Nuclear energy? National road, power, gas and water networks? Integrated rail and air networks? Education, health? Scientific research. Funding for arts and culture? All failed everywhere? Factor the eye watering waste into all of those examples and I rest my case. As for the equality bit. You mentioned it first. "It is also accepting increasing inequality." Your words not mine. Do provide the data on that and compare it to the eye watering failures and state subsidies and Government bailouts paid to private companies. Finding increased inequality undesirable is not the same as aiming for equality. You do understand that, don't you? Yeah! Right! Whatever! I'm off to look at some of the swinger threads on here. This is a swinger site, remember? Enjoy your echo chamber." Sure. You run along. Thanks for the useful information that you provided. | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor. "Increase in their wealth is not exclusively from their own businesses, but in large part yes. They are only examples. The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny. The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way. All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it. Is that what we should be aspiring to for Government policy to achieve? Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure? Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy? | |||
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"The article asks why when a country is in financial difficulty governments decide that that the best solution is through schemes that make the rich wealthier but do not improve the lot of those suffering the most." If we want to know why they choose that option, we should examine the alternatives to see what would be better. What are the other options that would boost the economy, but not unfairly enrich the wealthy? "It isn't a "trick" to compare wealth which gives you security and options to income which gives you the means to pay day to day costs." Yes it is. Elon Musk is regularly quoted as having an obscene amount of wealth, but almost all of it is in the shares that he owns in the companies he's founded. If he attempted to sell those shares, the markets would panic, the price would plummet, and he'd end up with nothing. That's why whenever he needs some liquid cash, he has to announce his intention to sell a small chunk of shares several months in advance, so that the markets have time to react before the sale. At the moment Elon Musk is quoted as being worth $139bn. If he announced that he was retiring, selling all his shares, and going to live on the moon, I doubt that he would be able to realise even $10bn. That's still a lot of money, but it shows that the wealth figures that get quoted are just fantasy. | |||
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"The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money?" My opinion is that, yes, that is the best way to spend public money in a crisis. Perhaps you'd like to explain what better ways you know of that will stimulate the economy, and benefit poorer people more than rich folk. | |||
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"The article asks why when a country is in financial difficulty governments decide that that the best solution is through schemes that make the rich wealthier but do not improve the lot of those suffering the most. If we want to know why they choose that option, we should examine the alternatives to see what would be better. What are the other options that would boost the economy, but not unfairly enrich the wealthy? It isn't a "trick" to compare wealth which gives you security and options to income which gives you the means to pay day to day costs. Yes it is. Elon Musk is regularly quoted as having an obscene amount of wealth, but almost all of it is in the shares that he owns in the companies he's founded. If he attempted to sell those shares, the markets would panic, the price would plummet, and he'd end up with nothing. That's why whenever he needs some liquid cash, he has to announce his intention to sell a small chunk of shares several months in advance, so that the markets have time to react before the sale. At the moment Elon Musk is quoted as being worth $139bn. If he announced that he was retiring, selling all his shares, and going to live on the moon, I doubt that he would be able to realise even $10bn. That's still a lot of money, but it shows that the wealth figures that get quoted are just fantasy." Several other options have been posted in this thread and have been enacted historically. You have no thoughts of your own for alternatives? Musk selling a large proportion of his shares has no bearing on Government policy supporting wealth other than what tax he actually pays on them when sold. In fact, he did sell a lot of shares to purchase Twitter. Still of no interest other than your premise does not hold true anyway. | |||
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"The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? My opinion is that, yes, that is the best way to spend public money in a crisis. Perhaps you'd like to explain what better ways you know of that will stimulate the economy, and benefit poorer people more than rich folk." Understood. In your opinion public money should be used to increase the wealth gap in times of economic crisis. Again. Read a bit more widely, even within this thread or the article. | |||
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"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. I don't begrudge anyone making lots of money and certainly not those who take risks with investments. I also have no problem with the wealthiest getting wealthier if done by legitimate means and if they pay there taxes that are due Is it okay that Government spending in times of economic stress helps the wealthier get wealthier whilst the wider population benefits far less or becomes poorer? You are answering a question that wasn't asked." I was not answering a question. I was making a comment on the post I quoted. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?"they are only examples. But they are the examples in the article. I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price. How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions. "Why not direct tax and spend? Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity. Seems to have worked very well in the past. Why not now? | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions. "FYI Musk did access a lot of his wealth at that price. | |||
Reply privately (closed, thread got too big) | |||
"The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? My opinion is that, yes, that is the best way to spend public money in a crisis. Perhaps you'd like to explain what better ways you know of that will stimulate the economy, and benefit poorer people more than rich folk. Understood. In your opinion public money should be used to increase the wealth gap in times of economic crisis. Again. Read a bit more widely, even within this thread or the article." Sorry how is in an economic crisis you or the government. | |||
Reply privately (closed, thread got too big) | |||
"So is the cash economy fair no tax on income. But it's out there all the time do the government look at it no. The Government have been able to do little about it, but are trying to move as much banking as possible to a cashless economy so that all transactions can be traced. You are, of course, aware of this. But I know lots are now just doing the same with cash less. I know 2 taxi drivers how have pdq for company and apple pay for other customers it's tracsable but not being done. And we bid cash for some work on the house as it was cheaper. It will never stop What has this to do with Government policy and money benefitting the wealthy more than the poor? Is it desirable? Are you saying that the rich make a lot of cash transactions or that the less affluent do so by "turning a blind eye" the Government are helping them in a similar way?" No I'm saying a large amount of tax is not being collected that could go in to public spending. | |||
Reply privately (closed, thread got too big) | |||
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Reply privately (closed, thread got too big) | |||
"So is the cash economy fair no tax on income. But it's out there all the time do the government look at it no. The Government have been able to do little about it, but are trying to move as much banking as possible to a cashless economy so that all transactions can be traced. You are, of course, aware of this. But I know lots are now just doing the same with cash less. I know 2 taxi drivers how have pdq for company and apple pay for other customers it's tracsable but not being done. And we bid cash for some work on the house as it was cheaper. It will never stop What has this to do with Government policy and money benefitting the wealthy more than the poor? Is it desirable? Are you saying that the rich make a lot of cash transactions or that the less affluent do so by "turning a blind eye" the Government are helping them in a similar way? No I'm saying a large amount of tax is not being collected that could go in to public spending. " How is that pertinent to public policy making the rich richer? Is that a good thing? General methods for improving tax collection is a large and rather different topic. You could start a thread on it to focus that discussion. | |||
Reply privately (closed, thread got too big) | |||
"The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? My opinion is that, yes, that is the best way to spend public money in a crisis. Perhaps you'd like to explain what better ways you know of that will stimulate the economy, and benefit poorer people more than rich folk. Understood. In your opinion public money should be used to increase the wealth gap in times of economic crisis. Again. Read a bit more widely, even within this thread or the article. Sorry how is in an economic crisis you or the government. " Don't understand what you are saying here. | |||
Reply privately (closed, thread got too big) | |||
"Top 10 uk billionaires wealth grew by 281% between 2009 and 2022. The economy grew by nowhere near a meagre fraction of that. The ultra rich are not creating wealth they are capturing it, thus keeping it from us. It's no small coincidence that the year on year increase in billionaires, coincides with the increase of food banks! It's a one way road to feudalism and poverty for the masses. Also a wrecking ball for the UK as a country. No country full of poor people will evef be a great country, no matter how patriotic one is. " Great post, took the words out of my mouth | |||
Reply privately (closed, thread got too big) | |||
"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. No. It doesn't. The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? "Everyone" is not on an upward trajectory. That is the point. When one group benefit disproportionately through no skill or talent or risk other than having more to start with, is that what Government should be spending money on? Is it better or worse for the poorer to become better off at a faster rate than those who already have more money than they need? Investing in equities does not benefit companies or those delivering value except at the very margin. It's speculation and gambling.. I do not think that the various Financisl regulators would agree that investing in a pension fund or equities is gambling. Your statement is far removed from reality. Really? Can you enumerate the number of global factors that you do not have control over that will affect the value of your investments. Just name a few. You can then compare that to the factors that influence someone's success, or otherwise, in poker.. Why would anyone want to evaluate any of the global factors. ? They are already factored in . It is basically impossible to lose any money long term on stocks and shares provided d you have spread your risk correctly. The performance of shares in companies such as Mac Donald's and the Deere Corporation should be good enough for anyone. Two outstanding USA success stories. " This is basically nonsense, but that has never stopped you from posting in the past. You believe that Government using public funds to increase the wealth of the richest whilst incomes of the majority fall behind is desirable. Understood. Easier if you just write what you mean. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?"taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions. | |||
Reply privately (closed, thread got too big) | |||
"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. No. It doesn't. The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? "Everyone" is not on an upward trajectory. That is the point. When one group benefit disproportionately through no skill or talent or risk other than having more to start with, is that what Government should be spending money on? Is it better or worse for the poorer to become better off at a faster rate than those who already have more money than they need? Investing in equities does not benefit companies or those delivering value except at the very margin. It's speculation and gambling.. I do not think that the various Financisl regulators would agree that investing in a pension fund or equities is gambling. Your statement is far removed from reality. Really? Can you enumerate the number of global factors that you do not have control over that will affect the value of your investments. Just name a few. You can then compare that to the factors that influence someone's success, or otherwise, in poker.. Why would anyone want to evaluate any of the global factors. ? They are already factored in . It is basically impossible to lose any money long term on stocks and shares provided d you have spread your risk correctly. The performance of shares in companies such as Mac Donald's and the Deere Corporation should be good enough for anyone. Two outstanding USA success stories. This is basically nonsense, but that has never stopped you from posting in the past. You believe that Government using public funds to increase the wealth of the richest whilst incomes of the majority fall behind is desirable. Understood. Easier if you just write what you mean." It may be nonsense to you but I cannot see ordinary people who have their pension funds invested either directly or indirectly in these stocks complaining. We should be encouraging people to manage their own destiny, not being reliant on taxpayers. I mix with ordinary working people every day of the week . They are not complaining about things, they simply get on with life . They concentrate on their families and work. It gives you a much better perspective of life than an Internet forum . As an aside I cannot see any complaining about Mac Donald's. They are an outstanding success story as is the Deere Corporatiion. Their tractor sales and share price movement are self explanatory. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions. "If you've managed to make them wealthier, why can't you tax what they earned? There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008. | |||
Reply privately (closed, thread got too big) | |||
"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. No. It doesn't. The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? "Everyone" is not on an upward trajectory. That is the point. When one group benefit disproportionately through no skill or talent or risk other than having more to start with, is that what Government should be spending money on? Is it better or worse for the poorer to become better off at a faster rate than those who already have more money than they need? Investing in equities does not benefit companies or those delivering value except at the very margin. It's speculation and gambling.. I do not think that the various Financisl regulators would agree that investing in a pension fund or equities is gambling. Your statement is far removed from reality. Really? Can you enumerate the number of global factors that you do not have control over that will affect the value of your investments. Just name a few. You can then compare that to the factors that influence someone's success, or otherwise, in poker.. Why would anyone want to evaluate any of the global factors. ? They are already factored in . It is basically impossible to lose any money long term on stocks and shares provided d you have spread your risk correctly. The performance of shares in companies such as Mac Donald's and the Deere Corporation should be good enough for anyone. Two outstanding USA success stories. This is basically nonsense, but that has never stopped you from posting in the past. You believe that Government using public funds to increase the wealth of the richest whilst incomes of the majority fall behind is desirable. Understood. Easier if you just write what you mean. It may be nonsense to you but I cannot see ordinary people who have their pension funds invested either directly or indirectly in these stocks complaining. We should be encouraging people to manage their own destiny, not being reliant on taxpayers. I mix with ordinary working people every day of the week . They are not complaining about things, they simply get on with life . They concentrate on their families and work. It gives you a much better perspective of life than an Internet forum . As an aside I cannot see any complaining about Mac Donald's. They are an outstanding success story as is the Deere Corporatiion. Their tractor sales and share price movement are self explanatory. " There is, evidently, a lot that you don't see, Pat. I doubt that the "ordinary" people that you deign to "mix" with are inclined to discuss their concerns with you. Most people do have to "get on with it" because they have no choice although there is nothing to stop Governments from helping them more tjan those who are already well off. I cannot see any pertinence to you're bizarre fixation on McDonald's and John Deere so I will let you continue rambling incoherently about them. | |||
Reply privately (closed, thread got too big) | |||
"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. No. It doesn't. The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? "Everyone" is not on an upward trajectory. That is the point. When one group benefit disproportionately through no skill or talent or risk other than having more to start with, is that what Government should be spending money on? Is it better or worse for the poorer to become better off at a faster rate than those who already have more money than they need? Investing in equities does not benefit companies or those delivering value except at the very margin. It's speculation and gambling.. I do not think that the various Financisl regulators would agree that investing in a pension fund or equities is gambling. Your statement is far removed from reality. Really? Can you enumerate the number of global factors that you do not have control over that will affect the value of your investments. Just name a few. You can then compare that to the factors that influence someone's success, or otherwise, in poker.. Why would anyone want to evaluate any of the global factors. ? They are already factored in . It is basically impossible to lose any money long term on stocks and shares provided d you have spread your risk correctly. The performance of shares in companies such as Mac Donald's and the Deere Corporation should be good enough for anyone. Two outstanding USA success stories. This is basically nonsense, but that has never stopped you from posting in the past. You believe that Government using public funds to increase the wealth of the richest whilst incomes of the majority fall behind is desirable. Understood. Easier if you just write what you mean. It may be nonsense to you but I cannot see ordinary people who have their pension funds invested either directly or indirectly in these stocks complaining. We should be encouraging people to manage their own destiny, not being reliant on taxpayers. I mix with ordinary working people every day of the week . They are not complaining about things, they simply get on with life . They concentrate on their families and work. It gives you a much better perspective of life than an Internet forum . As an aside I cannot see any complaining about Mac Donald's. They are an outstanding success story as is the Deere Corporatiion. Their tractor sales and share price movement are self explanatory. There is, evidently, a lot that you don't see, Pat. I doubt that the "ordinary" people that you deign to "mix" with are inclined to discuss their concerns with you. Most people do have to "get on with it" because they have no choice although there is nothing to stop Governments from helping them more tjan those who are already well off. I cannot see any pertinence to you're bizarre fixation on McDonald's and John Deere so I will let you continue rambling incoherently about them." . It sounds like you bitterly resent companies that help ordinary working people. Max Donald's have helped feed the masses. Maybe pay them a visit and see for yourself. Farmers who actually produce something will find all the technology built into a John Deere extremely usefully. In addition without food we would all die. I like to pay attention to the important things in life. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008."wealth isn't earnings. Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting. | |||
Reply privately (closed, thread got too big) | |||
"What is your opinion? Put something out there to discuss. Well, if I have to. The article basically says that those who invest wisely will see profits. It points to American billionaires that have huge wealth, and are making money rapidly because of economic conditions that favour those who have invested. I see this as a good thing. It shows that those who invest and stimulate the economy get rewarded for their efforts. It will encourage more people to invest more, so that they can make more. The widening gap between the richest and poorest in the world is not a bad thing. The rich are getting richer, but so are the poorest. Whether the gap widens or not is irrelevant as long as everyone is on an upward trajectory. No. It doesn't. The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? "Everyone" is not on an upward trajectory. That is the point. When one group benefit disproportionately through no skill or talent or risk other than having more to start with, is that what Government should be spending money on? Is it better or worse for the poorer to become better off at a faster rate than those who already have more money than they need? Investing in equities does not benefit companies or those delivering value except at the very margin. It's speculation and gambling.. I do not think that the various Financisl regulators would agree that investing in a pension fund or equities is gambling. Your statement is far removed from reality. Really? Can you enumerate the number of global factors that you do not have control over that will affect the value of your investments. Just name a few. You can then compare that to the factors that influence someone's success, or otherwise, in poker.. Why would anyone want to evaluate any of the global factors. ? They are already factored in . It is basically impossible to lose any money long term on stocks and shares provided d you have spread your risk correctly. The performance of shares in companies such as Mac Donald's and the Deere Corporation should be good enough for anyone. Two outstanding USA success stories. This is basically nonsense, but that has never stopped you from posting in the past. You believe that Government using public funds to increase the wealth of the richest whilst incomes of the majority fall behind is desirable. Understood. Easier if you just write what you mean. It may be nonsense to you but I cannot see ordinary people who have their pension funds invested either directly or indirectly in these stocks complaining. We should be encouraging people to manage their own destiny, not being reliant on taxpayers. I mix with ordinary working people every day of the week . They are not complaining about things, they simply get on with life . They concentrate on their families and work. It gives you a much better perspective of life than an Internet forum . As an aside I cannot see any complaining about Mac Donald's. They are an outstanding success story as is the Deere Corporatiion. Their tractor sales and share price movement are self explanatory. There is, evidently, a lot that you don't see, Pat. I doubt that the "ordinary" people that you deign to "mix" with are inclined to discuss their concerns with you. Most people do have to "get on with it" because they have no choice although there is nothing to stop Governments from helping them more tjan those who are already well off. I cannot see any pertinence to you're bizarre fixation on McDonald's and John Deere so I will let you continue rambling incoherently about them.. It sounds like you bitterly resent companies that help ordinary working people. Max Donald's have helped feed the masses. Maybe pay them a visit and see for yourself. Farmers who actually produce something will find all the technology built into a John Deere extremely usefully. In addition without food we would all die. I like to pay attention to the important things in life. " No, bit it does sound like you would like to change the topic of discussion. I understand that you would rather that Government is spent to make the wealthiest better off than help the majority of the population or those most in need. You can start another thread on how John Deere and McDonald's contribute selflessly to society if you wish. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting. "Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose. There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not? | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?"if course it doesn't. But this started about wealth and also you said about managing to make them wealthy. Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ? They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ? Would you also have a view on whether QT would depress asset values ? | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?"It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income. The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion. QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock. What have you heard? | |||
Reply privately (closed, thread got too big) | |||
"You have no thoughts of your own for alternatives?" There are no alternatives. If the economy is in the doldrums, you need to do something to stimulate it. If the economy improves, then those people who've put more into it will get more return than others. To make it clear, you can't provide economic stimulus without making shareholders richer. | |||
Reply privately (closed, thread got too big) | |||
"The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money?" "My opinion is that, yes, that is the best way to spend public money in a crisis. Perhaps you'd like to explain what better ways you know of that will stimulate the economy, and benefit poorer people more than rich folk." "Understood. In your opinion public money should be used to increase the wealth gap in times of economic crisis." Deliberately misunderstanding in order to win an argument? Surely not. No, in my opinion, stimulating the markets is the best use of public money. If that makes some rich people richer, I don't care, as long as it gets the economy going so that poor people don't have to suffer so much. "Again. Read a bit more widely, even within this thread or the article." I'm asking what you specifically think would be a better idea. More reading won't help me to find out what you think. | |||
Reply privately (closed, thread got too big) | |||
"It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income." How? If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket. How do you propose to limit my new wealth through income tax? | |||
Reply privately (closed, thread got too big) | |||
"You have no thoughts of your own for alternatives? There are no alternatives. If the economy is in the doldrums, you need to do something to stimulate it. If the economy improves, then those people who've put more into it will get more return than others. To make it clear, you can't provide economic stimulus without making shareholders richer. " You can provide the stimulus in a manner that benefits a wider group than just those who earn financial and physical assets. What happened after the Great Depression and the WWII? | |||
Reply privately (closed, thread got too big) | |||
"The article says that Government policy in times of economic crisis creates circumstances that benefit the wealthy more than those most on need. Is that the purpose of Government and the best way to spen public money? My opinion is that, yes, that is the best way to spend public money in a crisis. Perhaps you'd like to explain what better ways you know of that will stimulate the economy, and benefit poorer people more than rich folk. Understood. In your opinion public money should be used to increase the wealth gap in times of economic crisis. Deliberately misunderstanding in order to win an argument? Surely not. No, in my opinion, stimulating the markets is the best use of public money. If that makes some rich people richer, I don't care, as long as it gets the economy going so that poor people don't have to suffer so much. Again. Read a bit more widely, even within this thread or the article. I'm asking what you specifically think would be a better idea. More reading won't help me to find out what you think." The article indicates that the rich have got richer and the poor poorer. The benefits have not "filtered down". If you actually answered questions directly it would be much easier rather than having to surmise. You don't have the imagination or the desire to read more widely to consider alternatives to funnelling more funds to the wealthy then. OK. | |||
Reply privately (closed, thread got too big) | |||
"It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income. How? If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket. How do you propose to limit my new wealth through income tax?" What's the benefit to anybody in holding assets? To companies, nations or individuals? If these assets are never going to be realised they have just sucked funds out of the global economy. You have, effectively said that state funds have been spent to do nothing when they could have been spent on education or healthcare or scientific research or infrastructure. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?"bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for. I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated. "Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure. The start of QT has been predicted for some time, so it's hardly a suprise. The point remains that the real economy benefited from this by some tiny fraction. | |||
Reply privately (closed, thread got too big) | |||
"You have no thoughts of your own for There are no alternatives. If the economy is in the doldrums, you need to do something to stimulate it. If the economy improves, then those people who've put more into it will get more return than others. To make it clear, you can't provide economic stimulus without making shareholders richer." "You can provide the stimulus in a manner that benefits a wider group than just those who earn financial and physical assets." Good idea. How do we do that? | |||
Reply privately (closed, thread got too big) | |||
"It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income." "How? If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket. How do you propose to limit my new wealth through income tax?" "What's the benefit to anybody in holding assets? To companies, nations or individuals? If these assets are never going to be realised they have just sucked funds out of the global economy." So we've got to the point where you're not answering the question. Who is it that usually complains about people doing that? | |||
Reply privately (closed, thread got too big) | |||
"You have no thoughts of your own for There are no alternatives. If the economy is in the doldrums, you need to do something to stimulate it. If the economy improves, then those people who've put more into it will get more return than others. To make it clear, you can't provide economic stimulus without making shareholders richer. You can provide the stimulus in a manner that benefits a wider group than just those who earn financial and physical assets. Good idea. How do we do that?" I'm not going to package up a personal summary for you if you're too lazy. It's a thread. Feel free to read the conversation. Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. | |||
Reply privately (closed, thread got too big) | |||
"It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income. How? If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket. How do you propose to limit my new wealth through income tax? What's the benefit to anybody in holding assets? To companies, nations or individuals? If these assets are never going to be realised they have just sucked funds out of the global economy. So we've got to the point where you're not answering the question. Who is it that usually complains about people doing that?" What are you talking about? If you haven't been given vast amounts of money to "invest" in equities and assets there's not a problem to solve. Why is taxing assets the only thing you seem able to contemplate? Why is taxation the only way to benefit the wider population? How has providing further opportunities to grow the asset values of the rich helped the wider economy or the wider population? | |||
Reply privately (closed, thread got too big) | |||
"There are no alternatives. If the economy is in the doldrums, you need to do something to stimulate it. If the economy improves, then those people who've put more into it will get more return than others. To make it clear, you can't provide economic stimulus without making shareholders richer." "You can provide the stimulus in a manner that benefits a wider group than just those who earn financial and physical assets." "Good idea. How do we do that?" "I'm not going to package up a personal summary for you if you're too lazy. It's a thread. Feel free to read the conversation." So you don't know how to do it then. You just don't like the fact that some rich people got richer, and you wanted to whine about it. "Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way." I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid. | |||
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Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction."I don't follow that's the starting figure. I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me. I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap. I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add. Increased market values may mean some people draw down more and spend more. I'd need to see some analysis rather than just taken it as a given. | |||
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"Wasn't some of the money created via QE used for the furlough scheme. That certainly helped me and many like me. This QE seems to have been condemned and not just in the UK but across the world, QE was used. The EU used it extensively. Seems they all got it wrong but am yet to know a viable alternative" This use of QE is an example of directly benefitting the wider population (fraud excepted). However, the majority was not used for this purpose. | |||
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"There are no alternatives. If the economy is in the doldrums, you need to do something to stimulate it. If the economy improves, then those people who've put more into it will get more return than others. To make it clear, you can't provide economic stimulus without making shareholders richer. You can provide the stimulus in a manner that benefits a wider group than just those who earn financial and physical assets. Good idea. How do we do that? I'm not going to package up a personal summary for you if you're too lazy. It's a thread. Feel free to read the conversation. So you don't know how to do it then. You just don't like the fact that some rich people got richer, and you wanted to whine about it. Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid." Again, as you seem unwilling or unable to read beyond what gives you the answers that you want, I'm not going to take you by the hand and lead you. I absolutely do not like Government money being used to make rich people richer. If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction.I don't follow that's the starting figure.
I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me.
I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap.
I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add.
Increased market values may mean some people draw down more and spend more.
I'd need to see some analysis rather than just taken it as a given.
"You can start here: https://lordslibrary.parliament.uk/quantitative-easing/ There have been lots of reports by central bank's, banks and consultancies. The consensus seems to be similar to what is presented here, but pretty hard to calculate an exact figure. Unsurprisingly. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction.I don't follow that's the starting figure.
I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me.
I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap.
I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add.
Increased market values may mean some people draw down more and spend more.
I'd need to see some analysis rather than just taken it as a given.
"You can also see a number of charts on stock prices vs QE spending (balance sheet) and GDP vs QE spending. https://www.forbes.com/sites/simonmoore/2021/01/25/results-of-qe-benefit-stock-prices-more-than-economy-study-finds/ Is any of this conclusive, no. However it doesn't require any mental gymnastics either. | |||
Reply privately (closed, thread got too big) | |||
"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way." "I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid." "If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words." Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that? | |||
Reply privately (closed, thread got too big) | |||
"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid. If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words. Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that?" "If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." Government QE spent on shares that have increased in value but, according to you, providing no benefit to the wider economy. | |||
Reply privately (closed, thread got too big) | |||
"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid. If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words. Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that? "If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." Government QE spent on shares that have increased in value but, according to you, providing no benefit to the wider economy." . However that is not true. You will have dividend income generated by the shares in your pocket. ( approx £35000 per annum on a million ) | |||
Reply privately (closed, thread got too big) | |||
"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid. If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words. Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that? "If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." Government QE spent on shares that have increased in value but, according to you, providing no benefit to the wider economy.. However that is not true. You will have dividend income generated by the shares in your pocket. ( approx £35000 per annum on a million ) " this assumes the company has 1000x it's dividends. If it's a market bubble they may struggle. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction.I don't follow that's the starting figure.
I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me.
I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap.
I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add.
Increased market values may mean some people draw down more and spend more.
I'd need to see some analysis rather than just taken it as a given.
You can start here:
https://lordslibrary.parliament.uk/quantitative-easing/
There have been lots of reports by central bank's, banks and consultancies. The consensus seems to be similar to what is presented here, but pretty hard to calculate an exact figure. Unsurprisingly."
I will look at their sources yo see if there's an estimate for extra wealth creation too.
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Reply privately (closed, thread got too big) | |||
"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid. If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words. Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that? "If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." Government QE spent on shares that have increased in value but, according to you, providing no benefit to the wider economy.. However that is not true. You will have dividend income generated by the shares in your pocket. ( approx £35000 per annum on a million ) " That totally depends on the company you hold shares in and the level of dividends they decide to pay out. | |||
Reply privately (closed, thread got too big) | |||
"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid. If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words. Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that? "If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." Government QE spent on shares that have increased in value but, according to you, providing no benefit to the wider economy.. However that is not true. You will have dividend income generated by the shares in your pocket. ( approx £35000 per annum on a million ) this assumes the company has 1000x it's dividends. If it's a market bubble they may struggle. " That's indeed the point. If asset values are over-inflated relative to their underlying value and ability to generate revenue (Tesla as an example) then dividends may be tiny compared to asset value. Dividends are, also, frequently reinvented so as not to be taxed... However, this is Pat, so he will just write whatever he can copy and paste without thought. | |||
Reply privately (closed, thread got too big) | |||
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Reply privately (closed, thread got too big) | |||
"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid. If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words. Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that? "If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." Government QE spent on shares that have increased in value but, according to you, providing no benefit to the wider economy.. However that is not true. You will have dividend income generated by the shares in your pocket. ( approx £35000 per annum on a million ) this assumes the company has 1000x it's dividends. If it's a market bubble they may struggle. That's indeed the point. If asset values are over-inflated relative to their underlying value and ability to generate revenue (Tesla as an example) then dividends may be tiny compared to asset value. Dividends are, also, frequently reinvented so as not to be taxed... However, this is Pat, so he will just write whatever he can copy and paste without thought." . You example is a long way removed from reality and the real world. Hardly any shares will jump in value from £10°0 to £1 million. It might be better to use a more realistic real life example. | |||
Reply privately (closed, thread got too big) | |||
"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way." "I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid." "If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words." "Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that?" " "If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." Government QE spent on shares that have increased in value but, according to you, providing no benefit to the wider economy." I don't know where you get the idea that government QE was spent on shares. What I said was an example to illustrate the fallacy in your poorly thought through idea of limiting wealth with "more efficient taxation on income". I don't know how you thought that I was suggesting that's what the government did with all that QE money. | |||
Reply privately (closed, thread got too big) | |||
"If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." "However that is not true. You will have dividend income generated by the shares in your pocket. ( approx £35000 per annum on a million ) " I might get dividends, I might not. Either way that dividend income will be taxed, as is proper. The post that you quoted was my response to someone that said that rich people's money "accrues over time as wealth but can be limited with more efficient taxation on income". My point was that you can't control wealth with income taxes. | |||
Reply privately (closed, thread got too big) | |||
"If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." "You example is a long way removed from reality and the real world. Hardly any shares will jump in value from £10°0 to £1 million. It might be better to use a more realistic real life example. " Is Amazon sufficiently realistic? Their shares are up 127,000% since they floated. If I'd put £1000 into Amazon shares back in 1997, I'd now have shares worth £1,270,000. | |||
Reply privately (closed, thread got too big) | |||
"If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket. You example is a long way removed from reality and the real world. Hardly any shares will jump in value from £10°0 to £1 million. It might be better to use a more realistic real life example. Is Amazon sufficiently realistic? Their shares are up 127,000% since they floated. If I'd put £1000 into Amazon shares back in 1997, I'd now have shares worth £1,270,000." . However that is one isolated example which was totally un predictable. You would need to take the average growth of at least 20 shares to get a true picture. | |||
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"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid. If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words. Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that? "If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." Government QE spent on shares that have increased in value but, according to you, providing no benefit to the wider economy.. However that is not true. You will have dividend income generated by the shares in your pocket. ( approx £35000 per annum on a million ) this assumes the company has 1000x it's dividends. If it's a market bubble they may struggle. That's indeed the point. If asset values are over-inflated relative to their underlying value and ability to generate revenue (Tesla as an example) then dividends may be tiny compared to asset value. Dividends are, also, frequently reinvented so as not to be taxed... However, this is Pat, so he will just write whatever he can copy and paste without thought.. You example is a long way removed from reality and the real world. Hardly any shares will jump in value from £10°0 to £1 million. It might be better to use a more realistic real life example. " Not my example  | |||
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"Aljazeera is nothing more than a propaganda outlet for the Qatari state." It expresses a point that is extensively reported in many other publications so in this case the source does not influence the message. | |||
Reply privately (closed, thread got too big) | |||
"Interesting that you ignored the fact that you stated that your chosen method of stimulus does not help the real economy in any way. I did? Why don't you re-post the words I used when I said that. That'll make me look really stupid. If you ignored something, then you didn't respond, so there are no words. Consequently, your challenge does make you "look really stupid". Your words. Well obviously, you can't quote me ignoring something. But that wasn't what I was asking. You said that I "stated that [my] chosen method of stimulus does not help the real economy in any way". Where did I say that? "If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket." Government QE spent on shares that have increased in value but, according to you, providing no benefit to the wider economy. I don't know where you get the idea that government QE was spent on shares. What I said was an example to illustrate the fallacy in your poorly thought through idea of limiting wealth with "more efficient taxation on income". I don't know how you thought that I was suggesting that's what the government did with all that QE money." You literally write the words that I responded to. .you can also go away and loom at the House of Lords report on QE and find the charts on how QE tracks share prices and GDP. Stop arguing just to win and start looking. | |||
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"If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket. However that is not true. You will have dividend income generated by the shares in your pocket. ( approx £35000 per annum on a million ) I might get dividends, I might not. Either way that dividend income will be taxed, as is proper. The post that you quoted was my response to someone that said that rich people's money "accrues over time as wealth but can be limited with more efficient taxation on income". My point was that you can't control wealth with income taxes." If the income is taxed before it can become wealth and unearned inheritance then you reduce the gap. It's a prophelactic. Your point missed the point. | |||
Reply privately (closed, thread got too big) | |||
"If I spend my last £1,000 on shares, and government action makes those shares increase until they're worth £1,000,000, then I've become hugely more wealthy, but I still don't have any extra money in my pocket. You example is a long way removed from reality and the real world. Hardly any shares will jump in value from £10°0 to £1 million. It might be better to use a more realistic real life example. Is Amazon sufficiently realistic? Their shares are up 127,000% since they floated. If I'd put £1000 into Amazon shares back in 1997, I'd now have shares worth £1,270,000.. However that is one isolated example which was totally un predictable. You would need to take the average growth of at least 20 shares to get a true picture. " Tesla If you'd invested 1,000 in Tesla Motors, Inc. (TSLA) on March 7, 2011, in 2021 that investment would be worth $119,829.66 | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction.I don't follow that's the starting figure.
I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me.
I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap.
I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add.
Increased market values may mean some people draw down more and spend more.
I'd need to see some analysis rather than just taken it as a given.
You can start here:
https://lordslibrary.parliament.uk/quantitative-easing/
There have been lots of reports by central bank's, banks and consultancies. The consensus seems to be similar to what is presented here, but pretty hard to calculate an exact figure. Unsurprisingly."Wow you do have a lot of free time I don't have the time to find reports like this spend 16h a day working. Then looking after the house and banking / shears not much time left.. | |||
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"The post that you quoted was my response to someone that said that rich people's money "accrues over time as wealth but can be limited with more efficient taxation on income". My point was that you can't control wealth with income taxes." "If the income is taxed before it can become wealth and unearned inheritance then you reduce the gap." So we're back where we started. I'll try again. Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax? | |||
Reply privately (closed, thread got too big) | |||
"The post that you quoted was my response to someone that said that rich people's money "accrues over time as wealth but can be limited with more efficient taxation on income". My point was that you can't control wealth with income taxes. If the income is taxed before it can become wealth and unearned inheritance then you reduce the gap. So we're back where we started. I'll try again. Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax?" You would not and good on that person. Some will want to tax lotto winters next. | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction.I don't follow that's the starting figure.
I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me.
I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap.
I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add.
Increased market values may mean some people draw down more and spend more.
I'd need to see some analysis rather than just taken it as a given.
You can start here:
https://lordslibrary.parliament.uk/quantitative-easing/
There have been lots of reports by central bank's, banks and consultancies. The consensus seems to be similar to what is presented here, but pretty hard to calculate an exact figure. Unsurprisingly.
Wow you do have a lot of free time I don't have the time to find reports like this spend 16h a day working. Then looking after the house and banking / shears not much time left.."I doesn't take me very long at all to find this information. Again, what relevance do my personal circumstances or abilities or lack thereof have to do with the topic at hand? What point are you trying to make? | |||
Reply privately (closed, thread got too big) | |||
"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction.I don't follow that's the starting figure.
I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me.
I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap.
I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add.
Increased market values may mean some people draw down more and spend more.
I'd need to see some analysis rather than just taken it as a given.
You can start here:
https://lordslibrary.parliament.uk/quantitative-easing/
There have been lots of reports by central bank's, banks and consultancies. The consensus seems to be similar to what is presented here, but pretty hard to calculate an exact figure. Unsurprisingly.
Wow you do have a lot of free time I don't have the time to find reports like this spend 16h a day working. Then looking after the house and banking / shears not much time left..
I doesn't take me very long at all to find this information.
Again, what relevance do my personal circumstances or abilities or lack thereof have to do with the topic at hand?
What point are you trying to make?"It depends on your position in life on how you see things. But I guess you don't see that as a private school educated uni grad. Probably in banking earning 200k a year paying top Tax. You see a trade person how has built up a business form nothing to employing 50 to 60. As new money and as you said corporation tax is an over head. Do you not remember when diverdens where not taxed as it was deemed the tax had all ready be suffered. | |||
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"The post that you quoted was my response to someone that said that rich people's money "accrues over time as wealth but can be limited with more efficient taxation on income". My point was that you can't control wealth with income taxes. If the income is taxed before it can become wealth and unearned inheritance then you reduce the gap. So we're back where we started. I'll try again. Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax?" The topic is about Government policy encouraging exactly this situation from occurring. Something that you seem happy about. The accumulation of unearned wealth. Not through work but through ownership so that the rich getting richer because they are already rich. As previously stated, if asset values rise and not realised and spent in the real economy then how has QE helped most people? Still no answer? Capital gains tax should recover some value to the state, but the system is games and quite frankly I see no reason why it shouldn't be taxed as income. If you want those with money "earning" through subsidised capital more than rewarding those getting up and working every day then that's your right. Please do not bleat about twisting your words or any such nonesense. You seem to think that "trickle down" economics works. There's no evidence of that. Quite the opposite. Again, you can look this up or just continue to believe what you choose to believe. Up to you. | |||
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"The post that you quoted was my response to someone that said that rich people's money "accrues over time as wealth but can be limited with more efficient taxation on income". My point was that you can't control wealth with income taxes. If the income is taxed before it can become wealth and unearned inheritance then you reduce the gap. So we're back where we started. I'll try again. Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax? The topic is about Government policy encouraging exactly this situation from occurring. Something that you seem happy about. The accumulation of unearned wealth. Not through work but through ownership so that the rich getting richer because they are already rich. As previously stated, if asset values rise and not realised and spent in the real economy then how has QE helped most people? Still no answer? Capital gains tax should recover some value to the state, but the system is games and quite frankly I see no reason why it shouldn't be taxed as income. If you want those with money "earning" through subsidised capital more than rewarding those getting up and working every day then that's your right. Please do not bleat about twisting your words or any such nonesense. You seem to think that "trickle down" economics works. There's no evidence of that. Quite the opposite. Again, you can look this up or just continue to believe what you choose to believe. Up to you." Government sets tax to suit them how govern. People looking after them self. If you really don't like it go in to politics and change it. The rest of us work hard and get out of the law what we can. | |||
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"Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax?" "The topic is about Government policy encouraging exactly this situation from occurring." So you don't have an answer then? Fair enough, let's move away from that. "Something that you seem happy about. The accumulation of unearned wealth. Not through work but through ownership so that the rich getting richer because they are already rich." I wouldn't say that I'm happy about it, but I don't have a problem with it. Some people are better looking than me, and they get more sex than I do, but that's not their fault. Some people have more money than me, and they have an easier time making more. Again, it's not their fault that I'm poorer than they are. Life isn't fair, and complaining that rich people have an easier time of it doesn't achieve anything. "As previously stated, if asset values rise and not realised and spent in the real economy then how has QE helped most people?" Well, if all of the QE money just went into raising asset values, and none of it was realised, then QE would have been a bad thing. But I've seen no evidence that that's the case. As someone else said, a considerable chunk of QE went into the furlough scheme, which clearly didn't all go into share purchases. So where is your evidence that all of the QE money went into inflating bond and share values, of which none were realised? "Capital gains tax should recover some value to the state, but the system is games and quite frankly I see no reason why it shouldn't be taxed as income." Treating capital gains as income is a valid and morally defensible way to do things. I don't think it's the right thing to do, but that's just my opinion. "You seem to think that "trickle down" economics works. There's no evidence of that. Quite the opposite." I don't know where you get that idea. I've not posted anything in support of 'trickle down' economics. I don't think I've ever posted the words 'trickle down' before now. | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction.I don't follow that's the starting figure.
I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me.
I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap.
I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add.
Increased market values may mean some people draw down more and spend more.
I'd need to see some analysis rather than just taken it as a given.
You can start here:
https://lordslibrary.parliament.uk/quantitative-easing/
There have been lots of reports by central bank's, banks and consultancies. The consensus seems to be similar to what is presented here, but pretty hard to calculate an exact figure. Unsurprisingly.
Wow you do have a lot of free time I don't have the time to find reports like this spend 16h a day working. Then looking after the house and banking / shears not much time left..
I doesn't take me very long at all to find this information.
Again, what relevance do my personal circumstances or abilities or lack thereof have to do with the topic at hand?
What point are you trying to make?
It depends on your position in life on how you see things.
But I guess you don't see that as a private school educated uni grad.
Probably in banking earning 200k a year paying top Tax.
You see a trade person how has built up a business form nothing to employing 50 to 60. As new money and as you said corporation tax is an over head. Do you not remember when diverdens where not taxed as it was deemed the tax had all ready be suffered."Why would my background, assumed by you, mean that I wouldn't want someone who's worked hard to do well. Quite the opposite. The point that I am making is that Government policy should not be biased to helping the rich it should be directed towards helping the wider population, particularly the poor. Do you, actually, disagree with that? What has that to do with corporation tax and dividends? I don't remember when dividend tax was introduced in 1954. You don't think that counts as income? What is it then? | |||
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"So OP EasyUK would you have liked to see the Royal Family's pay inheritance tax On the Queens passing and the handing over of property. The King has given his sone the duche of Cornwall so I guess as long as he live for 7 Years no tax to pay. ETC " The Royal family is an anachronism. If it is to continue to exist without acting as a business and growing its wealth, then it's difficult to argue for applying an inheritance tax. Id you don't want it to exist, then the Sovereign should be taxed like anyone else, but also be able to make as much money as they wish, however they wish. Again, not sure what your purpose is in highlighting a unique circumstance. Would you rather that all wealthy people were not taxed on inheritance so that wealth can be hoarded by a few over generations? | |||
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"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. " Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction.I don't follow that's the starting figure.
I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me.
I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap.
I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add.
Increased market values may mean some people draw down more and spend more.
I'd need to see some analysis rather than just taken it as a given.
You can start here:
https://lordslibrary.parliament.uk/quantitative-easing/
There have been lots of reports by central bank's, banks and consultancies. The consensus seems to be similar to what is presented here, but pretty hard to calculate an exact figure. Unsurprisingly.
Wow you do have a lot of free time I don't have the time to find reports like this spend 16h a day working. Then looking after the house and banking / shears not much time left..
I doesn't take me very long at all to find this information.
Again, what relevance do my personal circumstances or abilities or lack thereof have to do with the topic at hand?
What point are you trying to make?
It depends on your position in life on how you see things.
But I guess you don't see that as a private school educated uni grad.
Probably in banking earning 200k a year paying top Tax.
You see a trade person how has built up a business form nothing to employing 50 to 60. As new money and as you said corporation tax is an over head. Do you not remember when diverdens where not taxed as it was deemed the tax had all ready be suffered.
Why would my background, assumed by you, mean that I wouldn't want someone who's worked hard to do well.
Quite the opposite.
The point that I am making is that Government policy should not be biased to helping the rich it should be directed towards helping the wider population, particularly the poor.
No it should not be biased full stop helping the poor more would be biased..NO
Do you, actually, disagree with that?
Yes
What has that to do with corporation tax and dividends? I don't remember when dividend tax was introduced in 1954. You don't think that counts as income? What is it then?"I did not ask if you remember back to the introduction or corporation tax but to when tax had to be paid on dividends at all £2000 is still tax free but I was the case that as the director dividends where tax free up to the high rate of tax. | |||
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"Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax? The topic is about Government policy encouraging exactly this situation from occurring. So you don't have an answer then? Fair enough, let's move away from that. Something that you seem happy about. The accumulation of unearned wealth. Not through work but through ownership so that the rich getting richer because they are already rich. I wouldn't say that I'm happy about it, but I don't have a problem with it. Some people are better looking than me, and they get more sex than I do, but that's not their fault. Some people have more money than me, and they have an easier time making more. Again, it's not their fault that I'm poorer than they are. Life isn't fair, and complaining that rich people have an easier time of it doesn't achieve anything. As previously stated, if asset values rise and not realised and spent in the real economy then how has QE helped most people? Well, if all of the QE money just went into raising asset values, and none of it was realised, then QE would have been a bad thing. But I've seen no evidence that that's the case. As someone else said, a considerable chunk of QE went into the furlough scheme, which clearly didn't all go into share purchases. So where is your evidence that all of the QE money went into inflating bond and share values, of which none were realised? Capital gains tax should recover some value to the state, but the system is games and quite frankly I see no reason why it shouldn't be taxed as income. Treating capital gains as income is a valid and morally defensible way to do things. I don't think it's the right thing to do, but that's just my opinion. You seem to think that "trickle down" economics works. There's no evidence of that. Quite the opposite. I don't know where you get that idea. I've not posted anything in support of 'trickle down' economics. I don't think I've ever posted the words 'trickle down' before now." You are amazing in your determination to argue against me no matter what and try to win your micro victories. Again, and this really is simple to comprehend, in not advantaging those who earn through the deployment of capital (wealth) rather than through working by taxing all income in the same way. So if someone pays 40% through PAYE then they should pay 40% when they buy a share and sell it. You even seem to agree that this is a valid approach so not sure where the confusion lies. However, that is not, actually, the topic of the thread, even if you would like it to be. You said that asset values were not realised and the poor rich people weren't benefitting. I didn't. Between 2008 and 2019 there was no furlough scheme. However, in your eagerness to argue against me you have identified the fact that there, apparently, was a way to distribute QE to the wider population. Why would you not wished that to have happened before? The "evidence" that you seek, as I write in another comment in this same thread, is to go and find the graphs of QE Vs asset value and against growth in the real economy. See what you find. You can also look at the House of Lords report that I posted a link to. You can then look up any number of articles and papers on the topic. You are happy for the wealthy to benefit disproportionately from Government policy that is supposed to help everyone. That was and is the basic premise of trickle down economics. Everyone benefits from the wealthy becoming wealthier. Did you not know this? | |||
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"No, they are not cleverer or more deserving. Unfortunately this will require reading and thinking. I am certain some of you will provide your opinion without bothering though
https://www.aljazeera.com/features/2022/12/27/why-do-the-rich-get-richer-even-during-global
"The short answer: Many countries adopt policies such as tax breaks and financial incentives for businesses to boost economies amid crises like the pandemic. Central banks flood the economy with money to make it easier to lend and spend. This helps the wealthy grow their money through financial market investments."I don't think the tax breaks helped the rich get that much richer, but prevented them from making losses that they could have done.
QE was the main factor imo. It propped up the market valuations. Richer ppl have less reliance on their last dollar, so can take greater risks. Or can turn risk mitigation schemes into profit making schemes. But it looks like the top rich ppl have grown simply because there business have grown. Which is probably a combo of low interest rates making future dividends worth more.
Now, if your net worth comes from businesses you have a high degree of control in, I'd argue that these ppl (to one degree or another) have benefited from being more clever than average. They will also have benefited from good fortune (as does everyone) and possibly a leg up from wealthy friends and family). It's hard to attribute the success between that and government schemes.
I agree. On large part this is QE. Billions if not trillions of Government spending globally.
The bighest direct beneficiaries were the already very rich.
I disagree that it is "clever" to have the money to invest in a rising market anymore than it is "clever" to buy property in similar circumstances.
The previous comments about money making money is true. However, that's not from being clever.
The question being raised is why Governments should be spending public money to create the circumstances to make the rich richer bit not benefit the majority of the population, particularly the poorest.
The three examples on the article didn't increase their wealth by investing. It's from their businesses. That probably requires a degree of smarts.
I agree there is no skill in making money in a rising market, if your wealth increases at the market rate. Bit markets haven't doubled over the last few years (otherwise all out pensions would have seen huge increases). Skill... Or luck/survival bias, that's a debate. You'd need to see how many billionaires have also lost money to flesh that out.
I haven't looked at QE in much detail. But a question I'd have is what would have happened of no QE had taken place ? There's two angles I'd look at. Wealth gap, but also absolute living conditions. As we've seen with cost of living, those at the bottom are wayy more sensitive to these things. It's the same with covid payments. The rich could have ridden out a dive in the economy a lot more than the poor.
Increase in their wealth is not exclusively from their own businesses, but in large part yes.
They are only examples.
The point remains that a large proportion of Government interventions did raise asset prices through QE. This caused the market to rise to the extent that there was so much money sloshing around that the financial markets had to create SPACS to be able to spend the money with minimum scrutiny.
The increase in the asset values of those given in the three examples had little to do with their own actions. That's not to say that the businesses were not inherently valuable, but their actual performance did not reflect their stock valuations by a long way.
All of this money went to and was spent by the already prosperous. It was not seen by the majority of the population who paid for it.
Is that what we should be aspiring to for Government policy to achieve?
Could these excess dividends have been taxed and the money invested in public goods like education and infrastructure?
Could we have had less QE and more public spending on the things that benefit everyone rather than just the wealthy?they are only examples. But they are the examples in the article.
I agree the market values are over inflated. But when someones net worth is concentrated in one stock, their net worth becomes somewhat abritrary. They couldnt access all their wealth at that price.
How would one raise money outside of QE to lay for public spending? Don't get me wrong, I'd love less inequality. I just havent seen the route to it. Especially in gfc/covid type conditions.
Why not direct tax and spend?
Take from the wealthy (who cannot spend it usefully) and invest it in the infrastructure and public services and investments that the private sector do not that drive wider growth and prosperity.
Seems to have worked very well in the past. Why not now?taxing the wealthy (and specifically wealth) isn't the easiest. I'm all for it tho. Albeit imo it's a longer burn. There's no easy windfall under stress conditions.
If you've managed to make them wealthier, why can't you tax what they earned?
There is certainly a financial tax that could have raised a lot of revenue from that sector with the QE injection having still stabilised the system post 2008.wealth isn't earnings.
Are you suggesting a tax on financial companies? You've lost me a little bit as to what you are suggesting.
Why does taxation have to be limited to wealth? It has to transition from earnings to wealth somehow and vice-versa, otherwise it has no purpose.
There already are taxes on the finance industry that could be modified or increased and they (and their clients) were the main beneficiaries of QE, were they not?if course it doesn't. But this started about wealth and also you said about managing to make them wealthy.
Did QE make financial institutions wealthier... Needs working through. Some instructions would have sold bonds to the BoE in return for cash. Is there profit here ?
They then brought other assetsnoff someone, that should have created some tax. They may have made some additional income if they take a pc of asset value. True. Do you have a view on how much QE inflated the markets by ? And so what windfall profit was made ?
Would you also have a view on whether QT would depress asset values ?
It's about Government action making the rich richer. This accrues over time as wealth but can be limited with more efficient taxation on income.
The effects of QE? If we take it as purely spending by central bank's with no multiplier then it stands at about $24 trillion.
QT is not, actually, taking money out of the markets. It's just making speculation more expensive and it will expose those who have been making poor investments. The analyses of various banks and consultancies appear to indicate that this has been long expected and unlikely to create a particular shock.
What have you heard?bit that 24 trillion is used to but bonds right. So on day 1 the overall balance sheet doesn't change. But asset prices may then rise and the same amount of money is chasing a smaller market. Especially if there's a reduction in sellers because of expectations of rising markets. It's that increase I'm looking for.
I dint know how much is priced in for QT. Anything priced in would deflate asset prices I'd imagine. So today's net worth is some balance of qe inflated prices and qt deflated.
Correct. However, the point remains that $24tr weny somewhere, and that's a starting figure.
The start of QT has been predicted for some time, so it's hardly a suprise.
The point remains that the real economy benefited from this by some tiny fraction.I don't follow that's the starting figure.
I have 1m in bonds. The BoE buys it from me. I have 1m in cash. My balance sheet hasn't grown by the 1m teh BOE has given me.
I will do something with that 1m as cash sucks. It's the effect of what that does on asset prices that drives increase in market cap.
I have no idea if the economy benefits and to how much. If I took my 1m and bought new corporate bonds or made loans it would add.
Increased market values may mean some people draw down more and spend more.
I'd need to see some analysis rather than just taken it as a given.
You can start here:
https://lordslibrary.parliament.uk/quantitative-easing/
There have been lots of reports by central bank's, banks and consultancies. The consensus seems to be similar to what is presented here, but pretty hard to calculate an exact figure. Unsurprisingly.
Wow you do have a lot of free time I don't have the time to find reports like this spend 16h a day working. Then looking after the house and banking / shears not much time left..
I doesn't take me very long at all to find this information.
Again, what relevance do my personal circumstances or abilities or lack thereof have to do with the topic at hand?
What point are you trying to make?
It depends on your position in life on how you see things.
But I guess you don't see that as a private school educated uni grad.
Probably in banking earning 200k a year paying top Tax.
You see a trade person how has built up a business form nothing to employing 50 to 60. As new money and as you said corporation tax is an over head. Do you not remember when diverdens where not taxed as it was deemed the tax had all ready be suffered.
Why would my background, assumed by you, mean that I wouldn't want someone who's worked hard to do well.
Quite the opposite.
The point that I am making is that Government policy should not be biased to helping the rich it should be directed towards helping the wider population, particularly the poor.
No it should not be biased full stop helping the poor more would be biased..NO
Do you, actually, disagree with that?
Yes
What has that to do with corporation tax and dividends? I don't remember when dividend tax was introduced in 1954. You don't think that counts as income? What is it then?
I did not ask if you remember back to the introduction or corporation tax but to when tax had to be paid on dividends at all £2000 is still tax free but I was the case that as the director dividends where tax free up to the high rate of tax."I answered the question that you asked rather than the one that you meant to ask. Is it good that a Director should pay significantly lower tax on their income than someone earning a salary? What has this to do on Government policy in dealing with financial crises benefitting the rich more than the majority of the population? | |||
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"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy?" I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. | |||
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"Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax? The topic is about Government policy encouraging exactly this situation from occurring. So you don't have an answer then? Fair enough, let's move away from that. Something that you seem happy about. The accumulation of unearned wealth. Not through work but through ownership so that the rich getting richer because they are already rich. I wouldn't say that I'm happy about it, but I don't have a problem with it. Some people are better looking than me, and they get more sex than I do, but that's not their fault. Some people have more money than me, and they have an easier time making more. Again, it's not their fault that I'm poorer than they are. Life isn't fair, and complaining that rich people have an easier time of it doesn't achieve anything. As previously stated, if asset values rise and not realised and spent in the real economy then how has QE helped most people? Well, if all of the QE money just went into raising asset values, and none of it was realised, then QE would have been a bad thing. But I've seen no evidence that that's the case. As someone else said, a considerable chunk of QE went into the furlough scheme, which clearly didn't all go into share purchases. So where is your evidence that all of the QE money went into inflating bond and share values, of which none were realised? Capital gains tax should recover some value to the state, but the system is games and quite frankly I see no reason why it shouldn't be taxed as income. Treating capital gains as income is a valid and morally defensible way to do things. I don't think it's the right thing to do, but that's just my opinion. You seem to think that "trickle down" economics works. There's no evidence of that. Quite the opposite. I don't know where you get that idea. I've not posted anything in support of 'trickle down' economics. I don't think I've ever posted the words 'trickle down' before now. You are amazing in your determination to argue against me no matter what and try to win your micro victories. Again, and this really is simple to comprehend, in not advantaging those who earn through the deployment of capital (wealth) rather than through working by taxing all income in the same way. As said work hard build a business the pay 19% tax on profit and 50% tax on income. How would bother building that business. So if someone pays 40% through PAYE then they should pay 40% when they buy a share and sell it. Why as this dose not reflect the risk. 40% to buy 40% to sell so to buy a share and sell it with no profit you would lose 80%. Would you want the same for buying gold, wine, art, ETC You even seem to agree that this is a valid approach so not sure where the confusion lies. However, that is not, actually, the topic of the thread, even if you would like it to be. You said that asset values were not realised and the poor rich people weren't benefitting. I didn't. Between 2008 and 2019 there was no furlough scheme. However, in your eagerness to argue against me you have identified the fact that there, apparently, was a way to distribute QE to the wider population. Why would you not wished that to have happened before? The "evidence" that you seek, as I write in another comment in this same thread, is to go and find the graphs of QE Vs asset value and against growth in the real economy. See what you find. You can also look at the House of Lords report that I posted a link to. You can then look up any number of articles and papers on the topic. The loads are a law to them self and would not trust any report by them. They get paid a day to turn up and sign in don't have to stay. You are happy for the wealthy to benefit disproportionately from Government policy that is supposed to help everyone. That was and is the basic premise of trickle down economics. Everyone benefits from the wealthy becoming wealthier. Did you not know this?" Trickle down dose not work Thatcher proved that as you must remember. QE is as bad for all as it only depreciates the pound hence we are now at 1£ to 1€ and 1$ or close to it the weekest we have known it in our life it has dropped. Or crashed. So to tax all equally would you tax per house hold as in 20k per house hold then higher tax or if 6 people living under one roof all getting a tax free allowance the 6 would get £69,000 tax free in come as to 2 persons only getting £23,000 | |||
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Reply privately (closed, thread got too big) | |||
"Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax? The topic is about Government policy encouraging exactly this situation from occurring. So you don't have an answer then? Fair enough, let's move away from that. Something that you seem happy about. The accumulation of unearned wealth. Not through work but through ownership so that the rich getting richer because they are already rich. I wouldn't say that I'm happy about it, but I don't have a problem with it. Some people are better looking than me, and they get more sex than I do, but that's not their fault. Some people have more money than me, and they have an easier time making more. Again, it's not their fault that I'm poorer than they are. Life isn't fair, and complaining that rich people have an easier time of it doesn't achieve anything. As previously stated, if asset values rise and not realised and spent in the real economy then how has QE helped most people? Well, if all of the QE money just went into raising asset values, and none of it was realised, then QE would have been a bad thing. But I've seen no evidence that that's the case. As someone else said, a considerable chunk of QE went into the furlough scheme, which clearly didn't all go into share purchases. So where is your evidence that all of the QE money went into inflating bond and share values, of which none were realised? Capital gains tax should recover some value to the state, but the system is games and quite frankly I see no reason why it shouldn't be taxed as income. Treating capital gains as income is a valid and morally defensible way to do things. I don't think it's the right thing to do, but that's just my opinion. You seem to think that "trickle down" economics works. There's no evidence of that. Quite the opposite. I don't know where you get that idea. I've not posted anything in support of 'trickle down' economics. I don't think I've ever posted the words 'trickle down' before now. You are amazing in your determination to argue against me no matter what and try to win your micro victories. Again, and this really is simple to comprehend, in not advantaging those who earn through the deployment of capital (wealth) rather than through working by taxing all income in the same way. As said work hard build a business the pay 19% tax on profit and 50% tax on income. How would bother building that business. So if someone pays 40% through PAYE then they should pay 40% when they buy a share and sell it. Why as this dose not reflect the risk. 40% to buy 40% to sell so to buy a share and sell it with no profit you would lose 80%. Would you want the same for buying gold, wine, art, ETC You even seem to agree that this is a valid approach so not sure where the confusion lies. However, that is not, actually, the topic of the thread, even if you would like it to be. You said that asset values were not realised and the poor rich people weren't benefitting. I didn't. Between 2008 and 2019 there was no furlough scheme. However, in your eagerness to argue against me you have identified the fact that there, apparently, was a way to distribute QE to the wider population. Why would you not wished that to have happened before? The "evidence" that you seek, as I write in another comment in this same thread, is to go and find the graphs of QE Vs asset value and against growth in the real economy. See what you find. You can also look at the House of Lords report that I posted a link to. You can then look up any number of articles and papers on the topic. The loads are a law to them self and would not trust any report by them. They get paid a day to turn up and sign in don't have to stay. You are happy for the wealthy to benefit disproportionately from Government policy that is supposed to help everyone. That was and is the basic premise of trickle down economics. Everyone benefits from the wealthy becoming wealthier. Did you not know this? Trickle down dose not work Thatcher proved that as you must remember. QE is as bad for all as it only depreciates the pound hence we are now at 1£ to 1€ and 1$ or close to it the weekest we have known it in our life it has dropped. Or crashed. So to tax all equally would you tax per house hold as in 20k per house hold then higher tax or if 6 people living under one roof all getting a tax free allowance the 6 would get £69,000 tax free in come as to 2 persons only getting £23,000" I know this. I'm not advocating for trickle down economics, but that is what Government policies that overly benefit the rich are. You appear to be content with that. I didn't say anything about taxing people in a household "equally". I really have no idea why you are coming up with these obscure questions. Should Government policy in economic crises benefit the rich more than the poor? | |||
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"Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax? The topic is about Government policy encouraging exactly this situation from occurring. So you don't have an answer then? Fair enough, let's move away from that. Something that you seem happy about. The accumulation of unearned wealth. Not through work but through ownership so that the rich getting richer because they are already rich. I wouldn't say that I'm happy about it, but I don't have a problem with it. Some people are better looking than me, and they get more sex than I do, but that's not their fault. Some people have more money than me, and they have an easier time making more. Again, it's not their fault that I'm poorer than they are. Life isn't fair, and complaining that rich people have an easier time of it doesn't achieve anything. As previously stated, if asset values rise and not realised and spent in the real economy then how has QE helped most people? Well, if all of the QE money just went into raising asset values, and none of it was realised, then QE would have been a bad thing. But I've seen no evidence that that's the case. As someone else said, a considerable chunk of QE went into the furlough scheme, which clearly didn't all go into share purchases. So where is your evidence that all of the QE money went into inflating bond and share values, of which none were realised? Capital gains tax should recover some value to the state, but the system is games and quite frankly I see no reason why it shouldn't be taxed as income. Treating capital gains as income is a valid and morally defensible way to do things. I don't think it's the right thing to do, but that's just my opinion. You seem to think that "trickle down" economics works. There's no evidence of that. Quite the opposite. I don't know where you get that idea. I've not posted anything in support of 'trickle down' economics. I don't think I've ever posted the words 'trickle down' before now. You are amazing in your determination to argue against me no matter what and try to win your micro victories. Again, and this really is simple to comprehend, in not advantaging those who earn through the deployment of capital (wealth) rather than through working by taxing all income in the same way. As said work hard build a business the pay 19% tax on profit and 50% tax on income. How would bother building that business. So if someone pays 40% through PAYE then they should pay 40% when they buy a share and sell it. Why as this dose not reflect the risk. 40% to buy 40% to sell so to buy a share and sell it with no profit you would lose 80%. Would you want the same for buying gold, wine, art, ETC You even seem to agree that this is a valid approach so not sure where the confusion lies. However, that is not, actually, the topic of the thread, even if you would like it to be. You said that asset values were not realised and the poor rich people weren't benefitting. I didn't. Between 2008 and 2019 there was no furlough scheme. However, in your eagerness to argue against me you have identified the fact that there, apparently, was a way to distribute QE to the wider population. Why would you not wished that to have happened before? The "evidence" that you seek, as I write in another comment in this same thread, is to go and find the graphs of QE Vs asset value and against growth in the real economy. See what you find. You can also look at the House of Lords report that I posted a link to. You can then look up any number of articles and papers on the topic. The loads are a law to them self and would not trust any report by them. They get paid a day to turn up and sign in don't have to stay. You are happy for the wealthy to benefit disproportionately from Government policy that is supposed to help everyone. That was and is the basic premise of trickle down economics. Everyone benefits from the wealthy becoming wealthier. Did you not know this? Trickle down dose not work Thatcher proved that as you must remember. QE is as bad for all as it only depreciates the pound hence we are now at 1£ to 1€ and 1$ or close to it the weekest we have known it in our life it has dropped. Or crashed. So to tax all equally would you tax per house hold as in 20k per house hold then higher tax or if 6 people living under one roof all getting a tax free allowance the 6 would get £69,000 tax free in come as to 2 persons only getting £23,000 I know this. I'm not advocating for trickle down economics, but that is what Government policies that overly benefit the rich are. You appear to be content with that. I didn't say anything about taxing people in a household "equally". I really have no idea why you are coming up with these obscure questions. Should Government policy in economic crises benefit the rich more than the poor?" No nore should it benefit the poor disproportionately to the rich. The government are not Robin Hood. | |||
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"Again, and this really is simple to comprehend, in not advantaging those who earn through the deployment of capital (wealth) rather than through working by taxing all income in the same way. So if someone pays 40% through PAYE then they should pay 40% when they buy a share and sell it." OK, so you're saying that capital gains tax should be at the same level as income tax. You originally said that wealth could be controlled by income tax. Now you're saying it should be done by capital gains tax. But how does that address my question? In the example I gave, the person bought some shares and kept them, so no capital gains tax (or income tax) would be due. How can you control that person's wealth with an income tax measure (or a capital gains tax measure)? "You said that asset values were not realised and the poor rich people weren't benefitting. I didn't." I did not say that. I gave an example of an imaginary person that bought some shares and kept them (to point out that you can't control wealth through income tax). Nowhere have I said that this has actually happened, let alone that all of the QE money was spent in this way. "Between 2008 and 2019 there was no furlough scheme. However, in your eagerness to argue against me you have identified the fact that there, apparently, was a way to distribute QE to the wider population. Why would you not wished that to have happened before?" Well the furlough scheme gave everyone 80% of their salary, so that doesn't count under your rules because that gave richer people more money, since their 80% was larger than a poor person's 80%. I only mentioned it as proof that not all the QE money was used to buy shares. What method do you think we could have used that would stimulate the economy, and not advantage the rich? "The "evidence" that you seek, as I write in another comment in this same thread, is to go and find the graphs of QE Vs asset value and against growth in the real economy. See what you find." I think we've already established that you and I can look at the same facts and draw different conclusions. I've looked at the graphs, and I see nothing that persuades me that all the QE money just went to increase share prices. If you see something different, why not point me to a specific data source and tell me what you see there. Even if I disagree I might at least understand your point of view. "You are happy for the wealthy to benefit disproportionately from Government policy that is supposed to help everyone. That was and is the basic premise of trickle down economics." That's not it. The basic tenet of 'trickle down' economics is that you target financial measures to advantage the rich, and they spend they money, and everyone benefits. This is what Liz Truss tried to do with income tax reductions, before being booted out for having a stupid idea. What the recent bouts of QE did was to target an increase in the economy in general, both for rich and for poor. This might benefit some rich people more, but that's not the purpose of the plan, so it's not 'trickle down', it's a 'rising tide floats all boats' approach. | |||
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"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. " So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them. | |||
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"Let's say I have a menial job earning £12,000 a year. I win £1,000 on the lottery, which I then invest in Tesla Motors shares. Over time that investment would be worth $119,829.66. How would you limit that wealth accumulation through income tax? The topic is about Government policy encouraging exactly this situation from occurring. So you don't have an answer then? Fair enough, let's move away from that. Something that you seem happy about. The accumulation of unearned wealth. Not through work but through ownership so that the rich getting richer because they are already rich. I wouldn't say that I'm happy about it, but I don't have a problem with it. Some people are better looking than me, and they get more sex than I do, but that's not their fault. Some people have more money than me, and they have an easier time making more. Again, it's not their fault that I'm poorer than they are. Life isn't fair, and complaining that rich people have an easier time of it doesn't achieve anything. As previously stated, if asset values rise and not realised and spent in the real economy then how has QE helped most people? Well, if all of the QE money just went into raising asset values, and none of it was realised, then QE would have been a bad thing. But I've seen no evidence that that's the case. As someone else said, a considerable chunk of QE went into the furlough scheme, which clearly didn't all go into share purchases. So where is your evidence that all of the QE money went into inflating bond and share values, of which none were realised? Capital gains tax should recover some value to the state, but the system is games and quite frankly I see no reason why it shouldn't be taxed as income. Treating capital gains as income is a valid and morally defensible way to do things. I don't think it's the right thing to do, but that's just my opinion. You seem to think that "trickle down" economics works. There's no evidence of that. Quite the opposite. I don't know where you get that idea. I've not posted anything in support of 'trickle down' economics. I don't think I've ever posted the words 'trickle down' before now. You are amazing in your determination to argue against me no matter what and try to win your micro victories. Again, and this really is simple to comprehend, in not advantaging those who earn through the deployment of capital (wealth) rather than through working by taxing all income in the same way. As said work hard build a business the pay 19% tax on profit and 50% tax on income. How would bother building that business. So if someone pays 40% through PAYE then they should pay 40% when they buy a share and sell it. Why as this dose not reflect the risk. 40% to buy 40% to sell so to buy a share and sell it with no profit you would lose 80%. Would you want the same for buying gold, wine, art, ETC You even seem to agree that this is a valid approach so not sure where the confusion lies. However, that is not, actually, the topic of the thread, even if you would like it to be. You said that asset values were not realised and the poor rich people weren't benefitting. I didn't. Between 2008 and 2019 there was no furlough scheme. However, in your eagerness to argue against me you have identified the fact that there, apparently, was a way to distribute QE to the wider population. Why would you not wished that to have happened before? The "evidence" that you seek, as I write in another comment in this same thread, is to go and find the graphs of QE Vs asset value and against growth in the real economy. See what you find. You can also look at the House of Lords report that I posted a link to. You can then look up any number of articles and papers on the topic. The loads are a law to them self and would not trust any report by them. They get paid a day to turn up and sign in don't have to stay. You are happy for the wealthy to benefit disproportionately from Government policy that is supposed to help everyone. That was and is the basic premise of trickle down economics. Everyone benefits from the wealthy becoming wealthier. Did you not know this? Trickle down dose not work Thatcher proved that as you must remember. QE is as bad for all as it only depreciates the pound hence we are now at 1£ to 1€ and 1$ or close to it the weekest we have known it in our life it has dropped. Or crashed. So to tax all equally would you tax per house hold as in 20k per house hold then higher tax or if 6 people living under one roof all getting a tax free allowance the 6 would get £69,000 tax free in come as to 2 persons only getting £23,000 I know this. I'm not advocating for trickle down economics, but that is what Government policies that overly benefit the rich are. You appear to be content with that. I didn't say anything about taxing people in a household "equally". I really have no idea why you are coming up with these obscure questions. Should Government policy in economic crises benefit the rich more than the poor? No nore should it benefit the poor disproportionately to the rich. The government are not Robin Hood." Really? That's a position. You think that the state should not provide more help to those who have the most need than those who have more money than they can spend? | |||
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"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them." can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. | |||
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"So EASY UK are you still keen on taxing company profits as in come or have you broken it down. Also let's not forget after £50,500 dividend tax jumps the same as income tax. The only people to realy benifit from QE and a week £ are foren investors. And tourists coming to the UK" So, ultimately, you seem to agree that Government policy has not helped the wider economy but has helped the wealthy, although I wouldn't say that's restricted to foreigners. Why the long trip to agreement and why the obsession over tax? When you explain how this relates to Government policy on their response to economic crises we can discuss it. Otherwise you can start a thread on tax and see who turns up. | |||
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"Sorry but on the furlough point I would say it benefited the poor more then the rich as it was 80% but only up to £2500 of salary. Lots of rich only have one job and lots of business owners are paid in dividends not salary. Where the poor have multiple jobs so some would have benefited more. I know 1 " I know not realy a poll of the population" how got just under £4k a month as she had moved jobs 3 times in the financial year so was intitald too all furlough from all jobs even through she no longer worked for then." FYI if you reply and quote is easier to see who your replying to. This implies to me that there are ways of targeting Government responses to economic crises... | |||
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"So EASY UK are you still keen on taxing company profits as in come or have you broken it down. Also let's not forget after £50,500 dividend tax jumps the same as income tax. The only people to realy benifit from QE and a week £ are foren investors. And tourists coming to the UK So, ultimately, you seem to agree that Government policy has not helped the wider economy but has helped the wealthy, although I wouldn't say that's restricted to foreigners. Why the long trip to agreement and why the obsession over tax? When you explain how this relates to Government policy on their response to economic crises we can discuss it. Otherwise you can start a thread on tax and see who turns up." But completely disagree the poor should be helped moor than the wealthy or them in-between 10% on benefits and nothing as yet for NHS civil service workers. Is mad. If anything cut benefits increases on pip so the able to work do. Posable if on benefits you only get it if in training most can work there way up. I had almost nothing 20 years ago after a devoice in facked you could say less than nothing as had to give 15% of my income to my ex. | |||
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"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. " The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times. | |||
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"So EASY UK are you still keen on taxing company profits as in come or have you broken it down. Also let's not forget after £50,500 dividend tax jumps the same as income tax. The only people to realy benifit from QE and a week £ are foren investors. And tourists coming to the UK So, ultimately, you seem to agree that Government policy has not helped the wider economy but has helped the wealthy, although I wouldn't say that's restricted to foreigners. Why the long trip to agreement and why the obsession over tax? When you explain how this relates to Government policy on their response to economic crises we can discuss it. Otherwise you can start a thread on tax and see who turns up. But completely disagree the poor should be helped moor than the wealthy or them in-between 10% on benefits and nothing as yet for NHS civil service workers. Is mad. If anything cut benefits increases on pip so the able to work do. Posable if on benefits you only get it if in training most can work there way up. I had almost nothing 20 years ago after a devoice in facked you could say less than nothing as had to give 15% of my income to my ex. " I am, mentally, now including NHS staff as "the poor" because many are pretty much at that threshold. I usually try to say those most in need, but can be lazy. The vocabulary is important in this case. I still don't think that you are really disagreeing with me. | |||
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"So let's go back to cooperation tax and dividend tax in 2016 At this time you payed 19% cooperation tax and no diderdend tak up to the threshold. Now I pay 26.5% tax on profit up to £50,500 and you say I should be paying more why..why.." No. Let's not. It's not relevant to the topic unless you can explain why. Start another thread if it's atopic of interest. | |||
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"West london Acton area that's you right. " Again, not relevant unless you can explain why. | |||
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"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times."
The both the FT and FT advisor talked about interest rates playing a part. Similar to my link. So I'm a t a loss why you did t like that article and see that i am choosing a different explanation to you.
The seeking alpha is interesting. Is it me or does the graph and the table not show like for like? The table has ignored 2019.
To repeat, I do agree that QE increases asset prices above that if QE had not taken place.
But if you look at the S&p graph and the time axis wasn't marked, youd be hard pushed to mark QE, no QE and QT. 2016 to 2018 looks like qe3.
But this is all just arguing about mechanics. I see markets having a degree of behavioural aspects that mean not everything is classical economics. Probably why I liked the idea of confidence in interts rates playing a part. As it stands, we are both just picking a story /stories to explain an observation we both agree on.
To summarise, my position
°QE doesn't typically generate much economic growth (thank you for the info here, I didn't have a view before)
°Although it is a useful tool in certain crisis conditions
°And so protects growth versus not doing QE.
°In such crisis conditions, the poorest would probably be hit hardest, so provides some benefit to them.
°However a byproduct of QE is higher assets prices than without QE, benefitting those with stocks.
°There's a trade off there.
°A trade off that can be mitigated by governments.
°Some people with very concentratee stocks (eg founders) may benefit by an even greater amount where the market has run to them. Maybe because they are growth stocks. Or meme stocks (hello Tesla on both accounts)
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"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times.
The both the FT and FT advisor talked about interest rates playing a part. Similar to my link. So I'm a t a loss why you did t like that article and see that i am choosing a different explanation to you.
The seeking alpha is interesting. Is it me or does the graph and the table not show like for like? The table has ignored 2019.
To repeat, I do agree that QE increases asset prices above that if QE had not taken place.
But if you look at the S&p graph and the time axis wasn't marked, youd be hard pushed to mark QE, no QE and QT. 2016 to 2018 looks like qe3.
But this is all just arguing about mechanics. I see markets having a degree of behavioural aspects that mean not everything is classical economics. Probably why I liked the idea of confidence in interts rates playing a part. As it stands, we are both just picking a story /stories to explain an observation we both agree on.
To summarise, my position
°QE doesn't typically generate much economic growth (thank you for the info here, I didn't have a view before)
°Although it is a useful tool in certain crisis conditions
°And so protects growth versus not doing QE.
°In such crisis conditions, the poorest would probably be hit hardest, so provides some benefit to them.
°However a byproduct of QE is higher assets prices than without QE, benefitting those with stocks.
°There's a trade off there.
°A trade off that can be mitigated by governments.
°Some people with very concentratee stocks (eg founders) may benefit by an even greater amount where the market has run to them. Maybe because they are growth stocks. Or meme stocks (hello Tesla on both accounts)
"Interest rates drive the asset reallocation away from bonds and savings towards equities which in turn drives a demand driven inflation in their value. Any benefit of QE to those less well off is in allowing the liquidity to allow lending at "normal" levels to continue, meaning that things don't get worse. So, the net outcome of this massive Government stimulus is the rich get richer and those in need aren't worse off, except it doesn't necessarily even help that because it seems that companies have now chosen to allocate money to profits and dividends over salary increases over this period until very, very recently. | |||
Reply privately (closed, thread got too big) | |||
"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times.
The both the FT and FT advisor talked about interest rates playing a part. Similar to my link. So I'm a t a loss why you did t like that article and see that i am choosing a different explanation to you.
The seeking alpha is interesting. Is it me or does the graph and the table not show like for like? The table has ignored 2019.
To repeat, I do agree that QE increases asset prices above that if QE had not taken place.
But if you look at the S&p graph and the time axis wasn't marked, youd be hard pushed to mark QE, no QE and QT. 2016 to 2018 looks like qe3.
But this is all just arguing about mechanics. I see markets having a degree of behavioural aspects that mean not everything is classical economics. Probably why I liked the idea of confidence in interts rates playing a part. As it stands, we are both just picking a story /stories to explain an observation we both agree on.
To summarise, my position
°QE doesn't typically generate much economic growth (thank you for the info here, I didn't have a view before)
°Although it is a useful tool in certain crisis conditions
°And so protects growth versus not doing QE.
°In such crisis conditions, the poorest would probably be hit hardest, so provides some benefit to them.
°However a byproduct of QE is higher assets prices than without QE, benefitting those with stocks.
°There's a trade off there.
°A trade off that can be mitigated by governments.
°Some people with very concentratee stocks (eg founders) may benefit by an even greater amount where the market has run to them. Maybe because they are growth stocks. Or meme stocks (hello Tesla on both accounts)
Interest rates drive the asset reallocation away from bonds and savings towards equities which in turn drives a demand driven inflation in their value.
Any benefit of QE to those less well off is in allowing the liquidity to allow lending at "normal" levels to continue, meaning that things don't get worse.
So, the net outcome of this massive Government stimulus is the rich get richer and those in need aren't worse off, except it doesn't necessarily even help that because it seems that companies have now chosen to allocate money to profits and dividends over salary increases over this period until very, very recently."companies always do this. Hence the need for political intervention. Which is where I'd be looking at assigning fault in failures. Making numbers you, without qe way may have seen 10pc of the poorest ppl get made unemployed and the wealthy loose 10pf of their wealth. With qe, no job losses but the wealthy become 10pc richer. With qe and government policies wage growth of 5pc and the wealthy become 5pf richer. My preference would be 3, 2, 1. | |||
Reply privately (closed, thread got too big) | |||
"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times.
The both the FT and FT advisor talked about interest rates playing a part. Similar to my link. So I'm a t a loss why you did t like that article and see that i am choosing a different explanation to you.
The seeking alpha is interesting. Is it me or does the graph and the table not show like for like? The table has ignored 2019.
To repeat, I do agree that QE increases asset prices above that if QE had not taken place.
But if you look at the S&p graph and the time axis wasn't marked, youd be hard pushed to mark QE, no QE and QT. 2016 to 2018 looks like qe3.
But this is all just arguing about mechanics. I see markets having a degree of behavioural aspects that mean not everything is classical economics. Probably why I liked the idea of confidence in interts rates playing a part. As it stands, we are both just picking a story /stories to explain an observation we both agree on.
To summarise, my position
°QE doesn't typically generate much economic growth (thank you for the info here, I didn't have a view before)
°Although it is a useful tool in certain crisis conditions
°And so protects growth versus not doing QE.
°In such crisis conditions, the poorest would probably be hit hardest, so provides some benefit to them.
°However a byproduct of QE is higher assets prices than without QE, benefitting those with stocks.
°There's a trade off there.
°A trade off that can be mitigated by governments.
°Some people with very concentratee stocks (eg founders) may benefit by an even greater amount where the market has run to them. Maybe because they are growth stocks. Or meme stocks (hello Tesla on both accounts)
Interest rates drive the asset reallocation away from bonds and savings towards equities which in turn drives a demand driven inflation in their value.
Any benefit of QE to those less well off is in allowing the liquidity to allow lending at "normal" levels to continue, meaning that things don't get worse.
So, the net outcome of this massive Government stimulus is the rich get richer and those in need aren't worse off, except it doesn't necessarily even help that because it seems that companies have now chosen to allocate money to profits and dividends over salary increases over this period until very, very recently."Why fe you now bringing Dividends back in to this what is wrong with Dividends we do get taxed on them and taxed on profit befor them. | |||
Reply privately (closed, thread got too big) | |||
"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times.
The both the FT and FT advisor talked about interest rates playing a part. Similar to my link. So I'm a t a loss why you did t like that article and see that i am choosing a different explanation to you.
The seeking alpha is interesting. Is it me or does the graph and the table not show like for like? The table has ignored 2019.
To repeat, I do agree that QE increases asset prices above that if QE had not taken place.
But if you look at the S&p graph and the time axis wasn't marked, youd be hard pushed to mark QE, no QE and QT. 2016 to 2018 looks like qe3.
But this is all just arguing about mechanics. I see markets having a degree of behavioural aspects that mean not everything is classical economics. Probably why I liked the idea of confidence in interts rates playing a part. As it stands, we are both just picking a story /stories to explain an observation we both agree on.
To summarise, my position
°QE doesn't typically generate much economic growth (thank you for the info here, I didn't have a view before)
°Although it is a useful tool in certain crisis conditions
°And so protects growth versus not doing QE.
°In such crisis conditions, the poorest would probably be hit hardest, so provides some benefit to them.
°However a byproduct of QE is higher assets prices than without QE, benefitting those with stocks.
°There's a trade off there.
°A trade off that can be mitigated by governments.
°Some people with very concentratee stocks (eg founders) may benefit by an even greater amount where the market has run to them. Maybe because they are growth stocks. Or meme stocks (hello Tesla on both accounts)
Interest rates drive the asset reallocation away from bonds and savings towards equities which in turn drives a demand driven inflation in their value.
Any benefit of QE to those less well off is in allowing the liquidity to allow lending at "normal" levels to continue, meaning that things don't get worse.
So, the net outcome of this massive Government stimulus is the rich get richer and those in need aren't worse off, except it doesn't necessarily even help that because it seems that companies have now chosen to allocate money to profits and dividends over salary increases over this period until very, very recently.
Why fe you now bringing Dividends back in to this what is wrong with Dividends we do get taxed on them and taxed on profit befor them."You are a tiny company. You aren't making billions in profit and not increasing your employees pay. Perhaps you aren't increasing your employees pay and keeping the profit for yourself. I don't know. Your personal circumstances do not drive an economy however important they may be to you. Regardless, that particular aside was a footnote about the reality of how companies appear to be behaving, not the main thread. Again, if specific tax policies are the thing that you really want to discuss, then why not start your own thread? | |||
Reply privately (closed, thread got too big) | |||
"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times.
The both the FT and FT advisor talked about interest rates playing a part. Similar to my link. So I'm a t a loss why you did t like that article and see that i am choosing a different explanation to you.
The seeking alpha is interesting. Is it me or does the graph and the table not show like for like? The table has ignored 2019.
To repeat, I do agree that QE increases asset prices above that if QE had not taken place.
But if you look at the S&p graph and the time axis wasn't marked, youd be hard pushed to mark QE, no QE and QT. 2016 to 2018 looks like qe3.
But this is all just arguing about mechanics. I see markets having a degree of behavioural aspects that mean not everything is classical economics. Probably why I liked the idea of confidence in interts rates playing a part. As it stands, we are both just picking a story /stories to explain an observation we both agree on.
To summarise, my position
°QE doesn't typically generate much economic growth (thank you for the info here, I didn't have a view before)
°Although it is a useful tool in certain crisis conditions
°And so protects growth versus not doing QE.
°In such crisis conditions, the poorest would probably be hit hardest, so provides some benefit to them.
°However a byproduct of QE is higher assets prices than without QE, benefitting those with stocks.
°There's a trade off there.
°A trade off that can be mitigated by governments.
°Some people with very concentratee stocks (eg founders) may benefit by an even greater amount where the market has run to them. Maybe because they are growth stocks. Or meme stocks (hello Tesla on both accounts)
Interest rates drive the asset reallocation away from bonds and savings towards equities which in turn drives a demand driven inflation in their value.
Any benefit of QE to those less well off is in allowing the liquidity to allow lending at "normal" levels to continue, meaning that things don't get worse.
So, the net outcome of this massive Government stimulus is the rich get richer and those in need aren't worse off, except it doesn't necessarily even help that because it seems that companies have now chosen to allocate money to profits and dividends over salary increases over this period until very, very recently.companies always do this. Hence the need for political intervention. Which is where I'd be looking at assigning fault in failures.
Making numbers you, without qe way may have seen 10pc of the poorest ppl get made unemployed and the wealthy loose 10pf of their wealth.
With qe, no job losses but the wealthy become 10pc richer.
With qe and government policies wage growth of 5pc and the wealthy become 5pf richer.
My preference would be 3, 2, 1. "These 10% and 5% figures are arbitrary, aren't they? Just to demonstrate a point. Are they correct or are they actually stacked significantly more in one direction than another? You've created a false choice. It does substantially change the decision process, doesn't it? What if the rich become 50% wealthier, some of the poorest become poorer and most people remain the same. Is that a good trade-off? | |||
Reply privately (closed, thread got too big) | |||
"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times.
The both the FT and FT advisor talked about interest rates playing a part. Similar to my link. So I'm a t a loss why you did t like that article and see that i am choosing a different explanation to you.
The seeking alpha is interesting. Is it me or does the graph and the table not show like for like? The table has ignored 2019.
To repeat, I do agree that QE increases asset prices above that if QE had not taken place.
But if you look at the S&p graph and the time axis wasn't marked, youd be hard pushed to mark QE, no QE and QT. 2016 to 2018 looks like qe3.
But this is all just arguing about mechanics. I see markets having a degree of behavioural aspects that mean not everything is classical economics. Probably why I liked the idea of confidence in interts rates playing a part. As it stands, we are both just picking a story /stories to explain an observation we both agree on.
To summarise, my position
°QE doesn't typically generate much economic growth (thank you for the info here, I didn't have a view before)
°Although it is a useful tool in certain crisis conditions
°And so protects growth versus not doing QE.
°In such crisis conditions, the poorest would probably be hit hardest, so provides some benefit to them.
°However a byproduct of QE is higher assets prices than without QE, benefitting those with stocks.
°There's a trade off there.
°A trade off that can be mitigated by governments.
°Some people with very concentratee stocks (eg founders) may benefit by an even greater amount where the market has run to them. Maybe because they are growth stocks. Or meme stocks (hello Tesla on both accounts)
Interest rates drive the asset reallocation away from bonds and savings towards equities which in turn drives a demand driven inflation in their value.
Any benefit of QE to those less well off is in allowing the liquidity to allow lending at "normal" levels to continue, meaning that things don't get worse.
So, the net outcome of this massive Government stimulus is the rich get richer and those in need aren't worse off, except it doesn't necessarily even help that because it seems that companies have now chosen to allocate money to profits and dividends over salary increases over this period until very, very recently.
Why fe you now bringing Dividends back in to this what is wrong with Dividends we do get taxed on them and taxed on profit befor them.
You are a tiny company. You aren't making billions in profit and not increasing your employees pay.
Perhaps you aren't increasing your employees pay and keeping the profit for yourself. I don't know.
Your personal circumstances do not drive an economy however important they may be to you.
Regardless, that particular aside was a footnote about the reality of how companies appear to be behaving, not the main thread.
Again, if specific tax policies are the thing that you really want to discuss, then why not start your own thread?"Because you realy want to just drive this thread to your own opinion and what is the point of starting a debate if you are not going to listen I would guess now you did not join the debating school or got booted out. | |||
Reply privately (closed, thread got too big) | |||
"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times.
The both the FT and FT advisor talked about interest rates playing a part. Similar to my link. So I'm a t a loss why you did t like that article and see that i am choosing a different explanation to you.
The seeking alpha is interesting. Is it me or does the graph and the table not show like for like? The table has ignored 2019.
To repeat, I do agree that QE increases asset prices above that if QE had not taken place.
But if you look at the S&p graph and the time axis wasn't marked, youd be hard pushed to mark QE, no QE and QT. 2016 to 2018 looks like qe3.
But this is all just arguing about mechanics. I see markets having a degree of behavioural aspects that mean not everything is classical economics. Probably why I liked the idea of confidence in interts rates playing a part. As it stands, we are both just picking a story /stories to explain an observation we both agree on.
To summarise, my position
°QE doesn't typically generate much economic growth (thank you for the info here, I didn't have a view before)
°Although it is a useful tool in certain crisis conditions
°And so protects growth versus not doing QE.
°In such crisis conditions, the poorest would probably be hit hardest, so provides some benefit to them.
°However a byproduct of QE is higher assets prices than without QE, benefitting those with stocks.
°There's a trade off there.
°A trade off that can be mitigated by governments.
°Some people with very concentratee stocks (eg founders) may benefit by an even greater amount where the market has run to them. Maybe because they are growth stocks. Or meme stocks (hello Tesla on both accounts)
Interest rates drive the asset reallocation away from bonds and savings towards equities which in turn drives a demand driven inflation in their value.
Any benefit of QE to those less well off is in allowing the liquidity to allow lending at "normal" levels to continue, meaning that things don't get worse.
So, the net outcome of this massive Government stimulus is the rich get richer and those in need aren't worse off, except it doesn't necessarily even help that because it seems that companies have now chosen to allocate money to profits and dividends over salary increases over this period until very, very recently.companies always do this. Hence the need for political intervention. Which is where I'd be looking at assigning fault in failures.
Making numbers you, without qe way may have seen 10pc of the poorest ppl get made unemployed and the wealthy loose 10pf of their wealth.
With qe, no job losses but the wealthy become 10pc richer.
With qe and government policies wage growth of 5pc and the wealthy become 5pf richer.
My preference would be 3, 2, 1.
These 10% and 5% figures are arbitrary, aren't they? Just to demonstrate a point.
Are they correct or are they actually stacked significantly more in one direction than another?
You've created a false choice.
It does substantially change the decision process, doesn't it?
What if the rich become 50% wealthier, some of the poorest become poorer and most people remain the same. Is that a good trade-off?"I don't see the poorest with a 10% increase in benefits being poorer. The low erner on minimum wage but above universal credit top up might be. But not buy much. The middle with the increase in interest and energy will feel it. | |||
Reply privately (closed, thread got too big) | |||
"Interstate discussing in QE and asset price blogs(dot)cfainstitute(dot)org/investor/2022/08/29/cochrane-and-coleman-quantitative-easing-and-asset-price-dynamics/ Tldr. QE gave the market confidence that interest rates were to remain low so allows them to price future earnings higher. Are you posting this because you think that it is the most likely reading or as a counterpoint to the original article? I don't doubt that it is a contributor. Skimming, the very technical, interview the position actually seems to be that QE didn't make much difference, which is a bit hard to believe. Why do it then? There are lot of articles which do propose the view that QE did benefit asset prices over the real economy. With the caveats of correlation not implying causation, what did you find when you looked for graphs plotting QE against asset values and the growth of the real economy? I thought it may be of interest. Why do QE? To prevent a deflationary spiral especially when a financial panic is under way. The expert witnesses seem to agree this. It also appears a way of raising cash cheaply for HMT. As per covid. They also, as you say, seem to agree that it offers little on GDP stimulus. I was looking for something on how qe inflates asset prices. So far this thread has suggested this without quantifying it. I also wanted to know the mechanism given it doesn't in itself change balance sheets for banks etc. I thought it was because of a reduced supply of assets (as fewer bonds on the market) and was looking for a guess of what this did to overall price. This gave a different view and aligned with other discussions I've had on value v growth stocks. The view on confidence in long term interest rates is one I've not considered (rather than just what are they today). Links into QT starting to be priced in. I'm not 100pc sure what you are asking me to look at wrt graihs. I've found a graph that I believe shows world wide market cap as a percentage of GDP. https://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS?start=1975 It suggests a steady upwards trend. 2008 cause a blip. Is this the kind of thing ? I guess on the end, whether it's inflated assets or prevented an devaluation, the overall effect is the same... Protection of wealth. But I then go back to my original question ... Back in 2008, when markets were falling, and we were facing into a great depression, what would have happened without QE. Recessions tend to hit the poorest hardest. There appears to be a dilemma. Protect the poorest in absolute terms but increase the wealth gap (a relative measure). Or narrow the gap, but risk the poorest becoming even poorer. Interestingly HoL says What is clear is that quantitative easing has distributional outcomes that exacerbate wealth inequalities that can be mitigated only through fiscal policy. We do not believe this is a reason for the Bank of England not to use quantitative easing as a monetary policy tool. Rather, more effective countervailing policies can be introduced by Government if these negative distributional effects are better understood That feels like a fair summary to me. So, you are saying that this is your preferred explanation? There are many papers from the LSE to UBS that indicate that QE, over such an extended period of time, have artificially inflated asset bubbles and significantly benefitted the rich over the real economy. You've made a choice to favour the this explanation. I didn't say that QE should not have been used to create liquidity in the global financial system. That was a transitory problem though, which did not run from 2008 to 2021. It would not have been impossible for a requirement to be laid on the banks to use the generated liquidity to fund research or business growth. It was done with the COVID loan guarantees within a few months but couldn't be conceived of in over ten years previously. There are lots of graphs from many sources where you can see the plots of QE against the growth in asset values and growth of the real economy. One tracks very closely. One does not. Yet later QE was used to indirectly fund furlough which was direct payments to those who needed them.can you link me up ? Especially if it explains the mechanisms. Because the link I provided didnt (from my reading) deny that QE caused asset inflation, just that it may have been through beliefs about interest rates over the longer term. I thought it was interesting. I've not commited to choosing an explanation. I'm still seeking to understand. Which is why I've read both your article, and the HoL webpage and parts of the actual report. And gone looking for my own answers to questions. I don't follow your point on covid loan guarantees. Guaranteeing a loan is different to buying an asset off a bank. HMG isn't gifting money to a bank under QE but buying assets the bank already holds. How can it add conditions? And I agree that 2008 was a one off. I'd need to check but in my head QE largely happened in 2008/2009 and then covid. We shouldnt be using it frequently and (I suspect) 2020 was more driven by HMG/BoE accounting tricks. There is something odd in BoE buying HMG debt which I believe is what happened in 2020. The best graphics for QE and QT are in a Seeking Alpha article. Always be wary as they tend to be partial, but the graphs are useful 'The FED Ends The $6 Trillion QE4: How The Markets May React' CME Group has an interesting analysis on 'Did quantitative easing help spur growth?' comparing the outcomes of each of the central bank policies on economic growth. UBS 'What impact will QT have on financial markets?' A direct link not behind a paywall from the FT (pre-Covid). A bit Noddy though; https://transact.ft.com/qe-unwind-asset-prices/ This a bit better: https://www.ftadviser.com/investments/2022/02/04/what-will-be-the-consequence-of-quantitative-tightening/ Very dense from Imperial College in The Economic Journal: 'QUANTITATIVE EASING AND UNCONVENTIONAL MONETARY POLICY – AN INTRODUCTION' Essentially, QE essentially took the risk of default out of commercial banks into Central banks. That is the liquidity that was "created". The original purpose of the exercise. Consequntly Central banks had a huge lever with which to press commercial banks on how to deploy that liquidity. They didn't use it though and QE was then repeated multiple times.
The both the FT and FT advisor talked about interest rates playing a part. Similar to my link. So I'm a t a loss why you did t like that article and see that i am choosing a different explanation to you.
The seeking alpha is interesting. Is it me or does the graph and the table not show like for like? The table has ignored 2019.
To repeat, I do agree that QE increases asset prices above that if QE had not taken place.
But if you look at the S&p graph and the time axis wasn't marked, youd be hard pushed to mark QE, no QE and QT. 2016 to 2018 looks like qe3.
But this is all just arguing about mechanics. I see markets having a degree of behavioural aspects that mean not everything is classical economics. Probably why I liked the idea of confidence in interts rates playing a part. As it stands, we are both just picking a story /stories to explain an observation we both agree on.
To summarise, my position
°QE doesn't typically generate much economic growth (thank you for the info here, I didn't have a view before)
°Although it is a useful tool in certain crisis conditions
°And so protects growth versus not doing QE.
°In such crisis conditions, the poorest would probably be hit hardest, so provides some benefit to them.
°However a byproduct of QE is higher assets prices than without QE, benefitting those with stocks.
°There's a trade off there.
°A trade off that can be mitigated by governments.
°Some people with very concentratee stocks (eg founders) may benefit by an even greater amount where the market has run to them. Maybe because they are growth stocks. Or meme stocks (hello Tesla on both accounts)
Interest rates drive the asset reallocation away from bonds and savings towards equities which in turn drives a demand driven inflation in their value.
Any benefit of QE to those less well off is in allowing the liquidity to allow lending at "normal" levels to continue, meaning that things don't get worse.
So, the net outcome of this massive Government stimulus is the rich get richer and those in need aren't worse off, except it doesn't necessarily even help that because it seems that companies have now chosen to allocate money to profits and dividends over salary increases over this period until very, very recently.companies always do this. Hence the need for political intervention. Which is where I'd be looking at assigning fault in failures.
Making numbers you, without qe way may have seen 10pc of the poorest ppl get made unemployed and the wealthy loose 10pf of their wealth.
With qe, no job losses but the wealthy become 10pc richer.
With qe and government policies wage growth of 5pc and the wealthy become 5pf richer.
My preference would be 3, 2, 1.
These 10% and 5% figures are arbitrary, aren't they? Just to demonstrate a point.
Are they correct or are they actually stacked significantly more in one direction than another?
You've created a false choice.
It does substantially change the decision process, doesn't it?
What if the rich become 50% wealthier, some of the poorest become poorer and most people remain the same. Is that a good trade-off?"of course they are arbitrary. The point wasn't to show qe is brilliant, but that you need to have an idea of the two futures with and without we before deciding if it's a good idea or not. I'm assuming your example is with QE. What's the outcome with no QE? For me to really order, I'd need to understand actual numbers. Even then, that's cheating as you shouldn't look at outcomes when deciding if a decision was good or not. And I'd also need to see where QT ends up. If a stock doubles for a year and then halves, who has that benefitted? | |||
Reply privately (closed, thread got too big) | |||
