The problem is that, for these people, inflation comes first to their costs, and only second to their wages. Sure they get to pay back their car loan with cheaper money. But they also have to buy groceries, and the groceries went up. Meanwhile, the number of dollars they owe on their car didn't go down. Sometime later their wages will go up, but until then, they're hurting.
Those banks, being private enterprise, are owned largely by the same class that owns everything else. If you own shares of the S&P 500 you own pieces of about ~two dozen banks. These are largely the banks that get treasury money which they then loan out at rates often fixed by the federal reserve in exchange for basically free money.
And the trick with that money is that the bank isn't lending philanthropically, its lending to make a profit. So using the current environment as an example you aren't getting favorable bailout loan conditions from Bank of America just because the treasury gave them a hundred billion dollars to doll out, major corporations that want to use that nigh-free money to buy back stock or buy out competition get it.
There are several branches on this tree of money flows but the economics of the last 50 years and particularly this depression from the botched COVID response only point towards the disconnect between the economy of the working poor and the economy of the owner class that gets to see the stock market hit all time record highs while the fed finally agrees to $600 stimulus checks when 50 million people are 6 months behind on rent.
And if you want to see this mechanism in action in simplest terms, the fed bought 3 trillion in securities and the stock market recovered at about 30% rates to hit all time highs again after crashing in March. That kind of recovery is unprecedented and unheard of, but because of direct constant cash flow out of the fed all the investment panic dried up because free capital was flooding investors coffers to keep buying back in with. The dozen richest men all collectively became upwards of 50% richer this year as a direct consequence. Inflation won't come close to those gains.
[0]https://www.businessinsider.com/millions-of-americans-face-e...
Do you have a source for this? It sounds like you might be refering to the discount window? My understanding is that banks rarely borrow money from the discount window. It is really to prevent a large scale liquidity crisis.
From what I understand the Fed has been printing money to make large scale asset purchases. They are essentially buying US bonds to keep the benchmark rate low. This means that the benchmark for interest rates stays low. More recently they have started taking on corporate bonds and equities.
Cash would most likely be the minority of their wealth. As inflation occurs, they do take a hit on their cash holdings. But their land, stocks, apartment complexes, etc may increase in value.
> It should devalue the money that they already have, benefitting the poor
Even if all people both rich and poor held all their wealth in the form of cash, that would certainly hurt the poor too. Say a poor person works 8 hours a day. His 8 hours of work grant him buying power of 3 meals. After inflation his 8 hours of work grant him buying power for only 2 meals. This is not just a theoretical, look at McDonalds meal prices, you can't get a sandwich for a $1 anymore.
There are some benefits to inflation. It's cheaper to employ poor people willing to work the now cheaper paper. So it may create some new jobs that otherwise may never have been created.
1.https://www.econstor.eu/bitstream/10419/70422/1/332991377.pd...
Though its worth adding that in a stateless system capital would concentrate and accumulate because ownership is an inherent advantage in every transaction. So its not like having a government makes inequality, inequality is inherent to capitalism and its up to your society how much it wants to mitigate that effect, if at all, or to just make it worse the way the US regularly does via its monetary policy.
According to the CPI, the cost of living has only increased by 20% over the last ten years, which is just not believable.
Why do stocks go up? Because the money gets pumped into financial institutions, and from there into financial instruments.
Why doesn't bread go up? Because the number of people who own large amounts of financial instruments, and who don't already buy as much bread as they want, is zero.
But this situation - they're suddenly magically richer, and I'm not - magnifies existing wealth inequality.
I am fine and I recognize there are others that are not doing fine. My empathy means I do things within my means to help those, donate money, food, etc.
Regarding the US Federal government, tax dollars going to bailout corporations or tax cuts for corporations doesn't help those who aren't doing fine. Corporations always choose self-preservation (stock buy backs, debt pay down, etc.) vs. helping their employees. I read something a while ago that said for a corporation it makes economic sense to do those things.
The only time I come out of my haze is when I work on side projects or think about ways to change the world by creating some sort of dual-power healthcare union co-op that basically is medicare for all without gov't control. However, having been 3 months since my last client, I'm struggling to put food on the table, let alone work on social good projects.
if I had 400k, I'd invest that so I could live off dividends, then work with other left-leaning programmers to figure out ways to build non-statist programs for UBI and Healthcare.
I had to crowdfund this month's rent and Christmas presents for my two children (under 4). So, financial strain is kind of sucking the life out of me too...
i definitely have empathy, in that i've had good months, years, and bad ones. So, I've been at both ends of spectrum, though never earned > 100k before, i've lived comfortable enough for me. I also want to devote the remainder of my life to helping others, and finally start my non-profit/union/co-op endeavor to build a true sharing economy. Where workers and consumers own the companies they work at and buy goods from, and execs do not get compensated above a decent multiplier of the average worker salary. (Voted on by said workers).
I also am on the 'spectrum', so interviewing has quite often been rough for me. I can solve problems people give, but I make stupid mistakes and am awkward on white board interviews. I guess, might be easier interviewing online though.
Another reason for wanting to do freelance, is I'm hoping to eventually run my own agency, but haven't figured out yet how to get there. Last agency I worked for thought my $40 was basically robbing them, as they mostly pay around $25 for their devs, but since I knew laravel AND vue very well, he went with me.
At this point, I'm willing to do wordpress on odesk for $20/hr, til I get something better going. I just don't have a history there, so have to bid low to get clients.
If you compare wallet size, you're likely bound to find someone with a fatter wallet.
If you compare wealth over time, you may find you're richer than many just by opening your kitchen cabinets. [0]
As long as humanity moves forward for each other (and we don't * up [2]), wealth increases for everyone, on average. [1] In metrics that a dollar amount can't capture.
[0] https://en.wikipedia.org/wiki/History_of_salt [1] https://en.wikipedia.org/wiki/Wealth [2] https://en.wikipedia.org/wiki/Global_catastrophic_risk
Warren Buffett: "Time is the only thing you can't buy."
Also you're going back really far there with a salary..what's the logical conclusion? The minimum standard of living should be based on society hundreds of years ago?
Looking back - I don't think any of it made much difference - though I have no regrets.
Now that I'm in my early 40s I've sort of lost the energy to care so much. I empathize with people struggling but sort of throw my hands up in the air.
I've shifted my focus toward my family and I feel pretty good about that.
It feels like I'm having A LOT more impact by investing time and money into my family than I was able to by investing in others and their families.
the definition of luck i like to use is "when hard work and opportunity meet". there has been a lot of both but i can't stress how much opportunity has presented itself.
i don't believe i deserve 10x the income that many people earn. i do believe i can create 10x the value...but it doesn't seem right that the correlation of rewards should be so drastic. i couldn't be a ceo of a large company but i don't think they deserve 10x my income either.
The most relevant example I can provide is that I was a very strong advocate for racial equality since my teens. Recently after George Floyd's death and the mainstreaming of Black Lives Matter, I told my wife that I don't have the energy to get involved - though I did participate in several marches with my kids (more for them than me or black people - because I'm convinced of the impact). I applaud those doing impactful work .... and perhaps my focus on making an impact had impact which I did not see. I hope it did.
However when my longtime girlfriend (working in finance) feels insecure dating a man with a lower income, and is not happy with me because I can't afford / am not interested in luxury vacations and sport cars then my income becomes an issue. When I chose my job I knew I'd be taking a big loss in earnings and I knew I would be okay with that, but when it affects the people important in my life and they think less of me because of my low salary it feels bad.
On the other hand, I might be giving young me too much credit. I was stubborn as hell and had a lot of other shit to get rid of too! Aging is a hell of a process and I highly recommend it!! :)
She has told me about how her coworkers make fun of men behind their back when their wives are promoted to higher positions than them (e.g., things like "we know who's in charge of that relationship"); asks me questions like how would I afford to pay for my parent's cancer treatment if they were to get cancer; reminds me I will not be able to afford a house while her friends are buying houses; has expressed dissatisfaction for me preferring designer Uniqlo collections rather than actual designer clothing; and has given me a hard time about being in a low income field (not studying CS or engineering).
edited: I thought of more points to add.
Meanwhile, my gut feelings about this say that I wouldn't want my partner to feel this way about my income status.
To bring things back to the original question, I think this whole experience has made me skeptical of people who optimize their life around income (past a certain point). At the same time I think chasing a higher income is probably an addictive to some degree, so I understand how people can fall into that and I think it might change people (my girlfriend obviously was not like this when we met).
My takeaway as a low-income person, is that I think high-income people will always dismiss me if I make these types of statements. "Of course he thinks this way, he's just a poor a student!". It's this kind of tautology that makes it impossible to deny being an alcoholic, etc. As far as I'm concerned, from my current position, it is impossible to persuade anyone that is dismissive about low-income people to think otherwise.
Financial inequality is actually a beautiful "equalizer", because no matter who you are, no matter what genetics you are born with and what family you are born into, you are theoretically able to attain the same status (i.e. worth in the eyes of others) as any other human. Of course in practice this is mostly false but it is still better than the alternative.
Status/power attained through money is much more fair than status/power attained through good looks or family name. Both of the others are much more unequal and unfair.
I don't have any contempt or empathy for people based on how much or how little they make. I would need to know their specifics to judge someone, and even then I try to stay away from that.
Policy-wise, I would like to capital gains reform and strict responsibility for congress when making financial decisions (eg no more "borrowing" from SS/Medicare, pass a budget as required in the Constitution, etc).
I see this sentiment repeated often, but what does it mean exactly? The government has borrowed from SS, for example, since its inception in the 1930s. The entirety of SS assets are held in government debt and all efforts to diversify these assets have become politicized as "privatizing SS".
There's not enough support in Congress for any kind of ammendment. Everyone's afraid of what it could turn out as or what it could lead to.
It is good to be able to do something about something.
Consider being good at something, say electronics or software or "computers" or handicraft. When a situation arises and you can wield that skill to solve a problem, everybody is better off. That is, if you don't consider that knowledge, skill, or "richess" are a pie where one has more, the other has less.
Anyone earning $100 a month is making twice the average salary of Sudan or Afghanistan. But it’s extreme poverty in other countries.
It’s all relative.
- how do you deal with knowing that you're on either of the far ends of tech salaries? (calling this financial inequity is a stretch)
- how do you feel about financial inequity in the general sense? (this is a much bigger societal/economical/political question and the division really isn't between the lower and higher paid tech workers)
I would like to get rid innate status comparisons humans do. It is the cause of uneeded suffering. But it's partly because being on the bottom is so scary in western societies. It's that that needs to change.
This is a Novell idea of redistributing part of the wealth. Since it is built into the tokenomics it works by default without any other intervention.
If you accept that 100%, you understand a looot more things that if you believe in equality.
People who earn less earn less because they have less power or did not know how to use it, for example during negociations. I think 50% workers around do not negociate..
(Even equality comes from power struggles: it's a concept invented by poor / not powerful people to unite behind a concept and creat a "group power".)
It's the cold harsh reality to me.
I come from a left wing family where class awareness was present so it's a concept I think would be nice at a society level to have more equlity.
But where I don't have any sympathy to people who earn less, is that in the engineering world, when you try to explain this, most people get angry or tell me that I'm an asshole. Also they don't want to make unions and refuse to engage in any power struggle. I am not an asshole, I'm trying to be realistic. However in that caae they are the literal cliché of the "nice guys". Well let's say I tried. Now I don't care being called an asshole, it's even a compliment to me. You want more ? Fight for it, don't be just "offended" or "sad".
That's probably correct. And lest anyone reading this makes the rash decision to "negotiate" for a higher salary next time they have a meeting with their boss: negotiation without alternatives is just begging. If you tell your boss give me more money because I'm such a great guy and I work so hard, he'll just say he'd love to, but it's not up to him, etc. If you tell him that you have another job offer, and you are seriously inclined to leave, then you're actually talking serious negotiation.
Morale of the story: best way to prepare for negotiation is to prepare for interviews.
Related note I've been thinking about it a lot recently: Will & Ariel Durant wrote an 11 volume history of the rise and fall of Western Civilizations (after touching on China and the Middle East) called The Story of Civilization https://en.wikipedia.org/wiki/The_Story_of_Civilization
It was written in the 1930s-70s so it has some fascist, racist and pro-eugenics overtones. Different time, pretty expected - you'd have to be pretty high on Western Civilization to spend your entire life, all the way to your deathbed, writing about it. Conveniently, he wrote a summary of what his takeaways were after all of his research The Lessons of History https://www.amazon.com/gp/product/B008GUIEYU/ref=dbs_a_def_r...
After studying the rise and fall of hundreds of states and civilizations, he credited excessive wealth inequality as one of the most consistent causes of a failed state - Romans, Greeks, Chinese, etc. Once you hit a certain level of inequality - norms fail, and it gets redistributed anyways. Since capitalism inherently concentrates wealth upward (returns on capital are higher than returns on labor), controlled income redistribution (e.g. The New Deal) is necessary to maintain stability.
Blog post with a few examples from the book https://fs.blog/2016/03/history-concentration-of-wealth/
It feels like a lesson that humans have repeated thousands of times, and we've managed to forget again.