Comments by "Xyz Same" (@xyzsame4081) on "The Financial Diet"
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I almost did not click - expecting it to be a kind of "Be responsible and smart like rich people, and you can get rich, too" video - nope. The classic of tone deaf rich privilege: Mitt Romney saying when he was campaigning, that "he wants everyone to live like that". The issue then was having a mansion with a park and pools and ponds (he has several).
Exactely who would then build and maintain the whole place ?
Trustfund baby, increased the money he got from family by speculation and mergers = nothing productive or beneficial for society.
Got eductation paid for, had good healthcare as child, had a stable family, enough to eat, a safe place to live, and then some.
Used of course the network and business contacts of his father which is especially valuable when getting started. Was in Paris as missionary (during / after college) and thus evaded the draft for Vietnam, ....
If you ask Mitt Romney he did it all on his own.
I think humans by nature are so SOCIAL that they would feel bad to have that much, WHILE others obviously cannot even live a modest but secure life - so the rich have made up all kind of self-serving, white washing ideological points, narratives and myths how they "earned" it all, how they are better, smarter, more frugal, ....
Plus they avoid to think a lot about it, or to observe the real existing low inocme citizens in their natural habitat. They stick to the thought stopping clichés. They own media, they pay think tansk to create a narrative and then they happily go on and believe it themselves.
That helps to keep a good conscience WHiLE being selfish, greedy, and smug. (it is also good for the ego).
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Jobs and Gates were/are smart, strategic, talented. - And employed some questionable practices which hinder competition (which is allegedly the core of capitalism). And built on / stole good ideas from other people. And they were the good ones.
At least they did contribute a lot to trigger ! the CREATION of something (but then it needs a village, to produce, sell, distribute, the state to pass the laws on which they can base their activites and can expect stable conditions, plus they NEED consumers).
A lot of money comes from speculation (most of high finance), exploitation (outsourcing into developing countries), or driving up prices for real estate.
In the U.S. a lot of good income (not extremely rich but affluent) comes from healthcare, finance, military spending, being a landlord, or being a lawyer. Not to forget law enforcement (police, prison guards).
And a lot of these services are not productive or helpful for the economy or society. think mass incarceration, arms races, or pushing for frivolous lawsuits.
Housing is a scarce resource and essential for the mass of population, so if only certain people / companies have the "money" or are getting the loans or the bailouts or QE it gives them a lot of opportunity to "invest" (for instance buying up forclosed homes for cheap) and EXTRACT money and exploit others - that gives them an enormous advantage and the gap widens.
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@RoseMary-vs3io Nope - if you hold your tongue and wait a litte more, the person almost always will come forward with more. If need be, they can be prompted a little bit. (gving them a hmmm can encourage them to go on. Or: "ou mentioned xyz, so ..... you mean ..... - and that's it, say no more. Pause !
They will elaborate and you learn more.
Either the other person is less eloquent or needs more time to sort their thoughts, the faster talker / thinker, or the more extrovert person will always beat them, and then bask in introducing their experiences and anectodes.
But if given 5 more seconds they will JUMP into the answer. OR they feel the awkwardness and search the depths of their knowledge to "break the silence".
Also sales tactic (or interrogation strategy of FBI):
Pose a question.
Wait ..... wait for an answer (not saying a sillable, looking at the other person, but not staring at them, give them a soft look and smile.
Most people cannot bear the tension, they will answer and it gives you insight (do they just shop around, are they serious, what is it what they REALLY want (or do not want), and they are not even aware of it themselves.
Or is there something going on in the background ?
Husband seems intent on buying getting, but the grey eminence (the wife) does not want that /or your product. Good luck with closing the deal. he is a kind of a macho, and she resents that he makes the decisions and does not include her in the process (in another scenario she would like your offer, but your sale is collateral damage of a relationship battle over who controls money and has that power in the relationship).
At least you can pick up on that, and either solve that and get them all on board - or politely but swiftly end that conversation, it is a waste of your and their time.
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A substantive discussion about money creation and QE would have lead to the logical question: Why not do QE for The People. ? Let the reckless banks go under, pick up the productive part of their business modes (savings accounts, cheque accounts, loan) plus their regular employees, fire top management and start over with prudent and boring banking.
Compensate the savers (and set money aside for a pension fund to compensate the regular staff for pensions that would have been lost during the bankrupcy. A bank or corporation is a legal legal construction and so is the name / brand. You do not need a construction that is called "citibank" or "Bank of America":
you need tellers, offices. software, IT staff, cyber and real security (staff), someone who can operate the machinesand software, and staff that handles the encounters with clients. accountants, etc. etc.
Start afresh. And break up the giant organisations do not just pick up as is after the bankrupcy.
In the U.S. the lobbyists made sure their ! politicians and their president (in that case Obama passed Frank Dodd, some highly complicated window dressing sold as "regulating the banks" and they sneaked in provisions that Fed now can use QE w/o even needing to ask Congress.
_They can act fast, with no accountability, and very much stay under the radar (of a potential public debate). Fed created 1,5 TRILLION USD for the "markets" (= speculators on Wallstreeet) on March 12, 2020. That had nothing to do with any stimulus packages, happened much earlier than even a debate about the first of several stimulus bills (aka handouts to big biz mainly) in Congress and Senate.
Plus they sneaked in the option to use QE for big biz into the 2nd "stimulus" package.
QE is debt and interests free money. The FED or the Treasury does not "print" the money. These days most of the money we use, is in electronic form and not in form of coins or banknotes, that is only a very, very tiny share of money creation (or volume of money in use).
Electronic money is easier to produce, handle and distribute - only a few keystrokes and of course the laws must be passed or be in place.
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QE = Quantitative Easing is a fancy name for creating money (TRILLIONS !) directly and shower the banks with it. Or now (corona stimulus) the Treasury can shower BIG biz with it (not for citizens and not for smaller biz, of course not).
QE for finance to the tune of TRILLIONS (literally !)
4,5 TRILLION USD were CREATED in the U.S. under Obama for banks and finance - means they got money in exchange for "assets" that nobody on the "free market" would buy, around 4 trillion EURO created by the ECB, and around 750 GBP in the U.K.
The U.S. Treasury / Fed did not only hold those "assets" for a few months or 1 - 2 years until the dust had settled - approx 2010 (which still would have been an enourmous help compared to what other businesses and citizens had to deal with), no they kept those "assets". They called it a swap. But they never swapped back !
Nope: it was a handout. Prettying up the balance sheets of reckless banks.
They have started the QE for the Banks and Big Biz game now again, only they got even more brazen and FASTER than after the great Financial Crisis. And in 2009 they needed Congress (or the parliament in the U.K., not sure how they handled the legalities in the Euro zone, but the lobbyists run the show everywhere).
Fed chair = appointed (or left in office) by the president and every president after Carter was heavily financed by big finance. Plus the board members ARE the too big to fail banks. Fed works overtime for the interests of the big donors = big banks (and the donors finance BOTH parties).
Corporate media of course did not start a meaningful discussion WHAT was going on, not in 2009 and not now. There were a few glitches in the matrix (then Fed chair Ben Bernake: No, the money in QE, it is not new debt, it does not add to debt or deficit, we just create the money with a few key strokes) but that was quickly glossed over.
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@laurennguyen1008 no he is NOT rich. weathy yes. Senators get 174k per year, plus good healtcare (Those politicians are not really against "government provided" healthcare, they just do not want everyone have the same as them.
Sanders and wife have a home in Burlington (not a mansion, nice middle class). and a duplex in D.C. (he needs a place to stay, I assume his wife also spends time there).
plus the vacation home nearby the home in Burlington, which they use for family.
Cost 595,000 USD, in 2016 if you look at the pics, it is not that glamorous. Cabin 1980s / 1990s style. The kind where you do not mind if the dog or the kids damage somthing. It is all functional, and looked nice on the photos (realtor) but not exactely chic or fancy. No Hamptons vibe whatsoever.
Of course I would love to have frontlake property like that, would be great for inviting family all summer long).
It is functional 2 buildings both with bath and a small kitchen. Looked like they had been rented out for tourists before. (larger groups).
They financed that because Jane inherited, and they did not find time to use the home in Maine. Plus excellent book revenue in 2016, and it spilled over to 2017.
John McCain (or was it Mitt Romney ?) forgot how many homes they have ! Have you seen pics of some of the Romney property ? THAT is rich. The Sanders family will not forget the number of homes they have, it is very down to earth.
Having a vacation home is nothing unusual in Vermont if you are solid middle class. He was wise to buy the duplex in D.C. (on a mortgage btw) - I think in the early 2000s, prices shot up. Paul Ryan for some time Republican speaker of the House, slept on the couch in his office, he did not bother to rent an apartment - costs a lot in D.C.
Sanders' vacation home is not one of those that sit empty most of the year. Since it is near where family lives, the children and grandchildren can come and use it.
During the campaign he did not have time to go there.
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Any meaningful discussion about the normal form of money creation (FIAT money = if banks give out a loan they CREATE the money, they do not need to "have" it, only 10 % or so, 90 % is created. It is a myth that bank collect the money of savers or need the fortunes of wealthy people, so they have enough moeny to give out loans). - Or the form of direct money creation in form of QE (and a tiny bit in form of coins and bank notes).
Understanding the nature of money, that it should correspond with what the national economy (for which the currency / money is issued) produces
but that a large powerful nation like the U.S. has some wriggle room to issue new money for the lower income brackets NOW in order to boost the economy in a massive crisis - and to deliver the necessary domestic production LATER (getting production BACK into the country is part of the solution).
Now, you can't just create money (that there is no massive inflation because of the trillions created has to do with WHO got it. People that were rich already. they increased their fortunes. The most simplistic
The U.S. had the highest ever federal debt in 1947 (118 or 119 % of GDP). The parameter - ratio of debt versus GDP is typically used, of course you cannot compare absolute numbers of 1947 with 2020.
Not even now the ratio is that high. Over 100 but not even 110 %. But 10 years of a good economy after WW2 with bold government investment (not just spending, they spent the money into things like infrastructure, education, public housing, research, ....) PLUS good wages rising with productivity * and high taxes for the rich and profitable biz made the U.S. grow out of debt.
In the early 1970s the debt versus GDP ration was in the mid 30 % range. so it had massively dropped (despite the Vietnam war), public finances were in a very good shape (to be fair there is also debt on the state and community level). But still. WW2 cost an excessive amount of money, they could recover from that just fine within 30 years and it was the era when the American Middle class was built. So it was not like they had to starve the lower income brackets. Acutally much more generous programs would have been possible to lift people out of poverty, and thus also reduce crime.
The recipe then: the lower to medium income brackets get most of the gains made possible by technology and innovation (and being a highly devloped civilization). The upper brackets did very well too, but they "only" got some and not almost all (see era before and after 1970 - paragraphes below).
There was some inflation (that is a side effect of booming economy, a good and manageable problem to have. Only people with fortunes on savings accounts, in form of bonds HATE inflation. the negative effects can be dealt with so they do not harm people who WORK for a living, or are getting some kind of publicly funded benefits like SS. And productive companies can raise prices, actually inflation will help them to sell their stuff as long as workers have disposable income. Only rich people that are not invested in the real economy see the purchasing power of their fortunes shrink. There is only so much "investment opportunity" even if you include shares (when not allowing and promoting too much specualation, which only leads to bubbles that will burst. Nothing productive about that.
So the rich that do not happen to have an entrepreneurial streak will inevitably lose SOME of their fortunes, while normal people are kept compensated - actually they are catching up. (one could call that a very indirect tax). You can see that in the stats about national income and WHO (which income brackets) got it until the 1970s. Then the increases were HIGHER for the low to medium brackets, while the incomes grew SLOWLIER for the upper income levels. the top wase still doing very, very well of course.
The simple way to put it: then the regular people got the lion's share and the rich and big biz could not have it all.
Debt vesus GDP ratio as metric to express government debt: the absolute number of the amount of debt was less substantive over the course of 10 years. (10 million USD in 1947 and 1957 were not the same). Workers, retired people were compensated for the loss of purchasing power of inflation - they got that and then some (actually they got PLENTY on top of inflation): Workers got the lions share of productivity wins.
Productivity: what can be produced in one workhour (most of those gains are due to innovation, better technology, etc).
The purchasing power of the average hourly wages doubled in the U.S. between 1947 and 1970, but it only rose by 9 % between 1970 and 2013. Productivity wins in those 2 time periods (23 and 43 years):
112 % versus ONLY 69 %.
Note how productivity did not rise nearly as much in the longer period after 1970 - despite new groundbreaking technologies just being deployed in the 1970s: computers, internet later, smartphones and of course countless other potential innovations. Genetic modifications and what not.
BUT: If a company can ONLY evade taxes if they invest into the real creation of goods and services and related research and innovations (not some speculative schemes, and merging companies, or buying them up just because, or stock buybacks ...) then the companies WILL innovate. Even if a lot does not work out, there is gain in knowledge, they employ qualified staff - it offers a potential and else Uncle Sam would have gotten it. so better invest in R & D and of course there came numerous smaller and the occasional big innovation of it.
From a taxation point: Uncle Sam got the taxes one way or the other anyway. The engineers got wages (paid taxes, bought goods - more taxes). The company built new plants, or new machines. Some construction company or machine building company was happy. The company would rather spend on a lavish summer or Christmas party for staff then give it to Uncle Sam. Well the hospitality industry was quite happy about it.
government spent the money right back (unfortunately the U.S. spent lots on war and an arms race). But even inefficient government spending (paper pushers and bureaucracy) is not as bad as the money going right on the top. allegedly too many bureaucrats or food stamps or SS etc. - that money is spent right back into the conomy. But if the Walton family gets one or two billion more (or Michael Bloomberg) - the money will sit idly on their accounts (or if they spend it it gives them undue undemocratic power).
1 or 2 billions CIRCULATING between workers/consumers and businesses and government (paying wages, ordering construction etc) .... that facilitates ! a lot of economic exchanges, the volume will be much higher than 1 or 2 billion. Money that is moving around creates experiences of wealth while people exchange goods and services.
The only way how that money circulates back to government: Taxes. That or creating new money. Both instruments can be used (see MMT discussion Modern Monetary Theory).
Companies need to have customers for their products (even if they sell B2B - in the end it is meant to help produce a product or service that will be bought by consumers OR a government on behalf of the citizens).
Which also explains the inferior gains in productivity in the U.S. after 1970.
For most people WAGES are what they can spend on goods (earned income), if those are stagnating, people can't buy that much and businesses will have to spend more on marketing, and in the end they will create fewer products.
Earned income as opposed to unearned (capital gains, rent, dividents, interests, gains from speculation).
Earned income also means SS based on wages you had before (it is a loose definition).
The reduced spending power (compared with the era after WW2) is very apparent: missing extra savings for retirement: People just kept afloat high RENT, student loan debt, and health"care" costs are a major factor to deplete the regular incomes, so there is not much if anything people can save up. SS often does not cover the bases. Young people are shackled to educational debt, have to deal with expenisive housing, so they are also just scraping by if they do not have wealthy parents to help out.
So why "innovate" in a big way like in the Golden Era (the 30 years after WW2), when so many people have to spend most of their income on the basics: housing, education, childcare. Not a lot of innovation has been going on there. I am sure some would have been possible regarding housing, but not even that was done.
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btw: only in the last 12,000 years of human history there are "rich" and other people (that came with farming, society split up, larger settlements, war, slavery, oppression also of the lower class of your own people).
For hundreds of thousands of years it was the "tribe", where the stronger shoulders carried more of the burden.
Evolution honed us towards empathy, being social, generous, avoid aggression in general (certainly within the tribe). Towards: solidarity and to be eager for the approval of our peers.
Which means social control was a VERY potent control mechanism. It still is (it is in our DNA).
She talks about rich and very upper class, there are different levels of wealth, how much they are grounded in reality and how they are getting feedback. Also what personality traits it needs to get at a certain level. (Remember the banksters crahsing the economy ? they are doing fine. Mnuchin and types like him illegally forclosed people. But now they are rich or even richer).
Even types like Trump want to get approval of their PEERS (evolution made us like that, imagine the tribe in the ice age stuck together in a cave during a long winter, this ensured PEACE).
Just the (felt !) perception of my peer group has changed.
Now most of society are not-peer. Regular people are getting a reality check, with very wealthy or even rich people the insulation is a big factor.
200,000 or 15,000 years ago people contributed what they could: No slackers, there is a LOT of social control in a group of 10, 20, 100 people that are stuck for life with each other. Native Americans (the hunter / gatherer societies of North America) lived like that until a few centuries ago. same with the Inuit, Bushmen, Aborigines.
The hunters that saved the tribe from starvation with riskier than usual actions (if the going was rough, if hunting season wasn't good) got something very valuable:
Status.
What they did NOT get, was material posessions, or privileged access, to reward them for more than normal achievements.
The tribe controlled an area, the water sources, fishing grounds, the place to find the best berries, or salt or wood, etc.
It is not like the reward for outstanding achievements was exclusive access to the water sources, and they would then pass that on to their children. Who then could use that privilege to get "rent" (food, pelts, prey, garments, .. ) or the other tribe members (of future generations) would not be allowed access to something they needed.
If they needed help they got it.
If they could help, they were expected to.
Leadership and status had to be earned (being better at a certain skill, and being good in bringing people together).
Being generous gave you status, too. The chieftain was not the one that owned the most things (beautifully made weapons or garments, or later dogs and horses) but the one that gave the most away (he could afford to = status, and he did).
THAT is what evolution honed us for. Those social instincts are VERY strong, but they do not equip us to live in modern society. We will have to find ways to bring the village, the connection, the personal accountability back in our communities.
Mindlessly applauding the rich / the current economic system isn't getting us anywhere - having rich or major differences in income / provisions needed for living a VERY recent phenomen in the history of homo sapiens.
Actually it is a VERY destructive system. Humans have gotten so much power with technology that the dysfunction has now a lot of leverage.
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Income inequality would not be bad (or good) in itself. It matters how much, what power it gives and what is necessary to make some wealthy, rich or insanely rich. Other countries have less very rich, their wealthy are doing fine (but the American counterpart may have more) - but they also have not nearly as many poor and homeless people.
And much, much less crime or people in prison.
It makes a country SAFE if even the low income people have financial stability and if most of the population is between lower and upper middle class.
And no mentally ill having to live on the streets - in the U.S. prison is where many low income mentally ill people land. Or they become homeless. That includes vets that cannot cope with their experiences, and are unable to lead a "normal" life or to hold on to a job and a relationship.
Some achievement for a rich country.
The billions of Bloomberg, Gates, Buffet, Bezos, ... would not matter (well they do because it gives them undue power, think political financing, or lobbying)
Except: that the very economic system that can gives some people THAT kind of fortunes (and 20 % of the population considerable wealth) keeps the majority in the country on their toes, financially insecure or poor.
(if you are O.K. but do not know if your company moves to Asia next year, you are not stable financially, not even if the home is mortgage free and you have no debt).
I do not care that Bezos is so rich, that is not tangible anyway. But that fortune is ONLY possible in a society in which 40 % of the population have to borrow if they have unexpected expenditures. of 400 !! USD. Fed St. Louis survey of 2019. Mind you that was during the "good and booming" economy, with low levels of unemployement.
And that does not even consider the situation OUTSIDE of the first world nations. This system keeps the majority of humans poor. and it destroys the resources and eco systems.
A minor "emergency" (car repair, washing machine breaks down, field excursions of the kids) and 40 % U.S. citizens - in 2019 ! - have to borrow.
Because Bezos and others in the service industry (in a national economy where those jobs are very important and widespread ! * ) do not have to pay living wages.
* Because the RICH made THEIR politicians (which they bribe with campaign donations and golden parachutes) arrange for trade deals that made outsourcing safe and lucrative
If the FEDERAL minimum wage of the late 1960s (then it was at its peak regarding purchasing power) would have ONLY be raised with inflation it would be between 11 and 12 USD now. It is 7,25 (and 2,75 for tipped wages in some states, I am not kidding !) and in many regions of the country not more is paid. Not when they are remote and do not have a lot of jobs.
How come THOSE kind of wages were possible in the 1960s ? Even in the rural regions (it was the FEDERAL minimum wage in the 1960s, too) ? With goods produced in the U.S. (so they cost more, too including in the rural areas).
But citizens could afford to buy and it was the era of the Building of the American Middle Class.
40 % = systemic. people earn too little, and costs of living (inevitable costs) are too high: think rent, healthcare, education and childcare. They are MADE expensive (being handed over to the profiteers) resp. there is unwillingness to offer good public alternatives that are low cost and / or subsidized for low income people.
There are low income people in other wealthy nations and their politicians have widely given in to the neoliberal order. BUT: there are enough public services and welfare programs to make things easier for low income people, divorced couples, single parents, disabled, and people on low retirement (600 or 800 USD SS in the U.S. - in other nations those retired persons automatically get a raise to the minumum retirement. And they typically can go earlier than age 65.
Plus other benefits. help with rent, not even the small co-pay of 6 USD per package of pharmaceuticals, of course the same good healthcare coverage like everybody else and no need to buy upgrades, free landline telephone, ... and care at home or in a home if they need it.
If you are low income you want to be in Germany, Sweden, Netherlands, Belgium, Australia ... not in the U.S. If you want to start a biz from that base - at least you have healthcare, your children will have childcare, education and also healthcare no matter what.
Social mobility is higher in Canada - or Sweden and all the other "welfare" states of Europe - than in the U.S. No wonder, being born low income does not exclude you from good education or shackle you to debt. And they KEPT the manufacturing jobs.
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