And what about all the "free money" being granted to those already holding a high balance?
"Basic income for those with the most savings" has been one of my favourite framinga for interest rates.
"Basic income for those with the most savings" has been one of my favourite framinga for interest rates.
I mean yeah there are a few banks out there with 4.5% on savings accounts so you can use those.
There's plenty of ways for even the poorest to get direct exposure to 5% interest rates.
Not enough people have that for it too matter. The rich getting richer doesn't cause any real inflation but the masses getting a couple of checks does. It's all a numbers game.
Contrary to what common wisdom would lead you to believe, rich people don't usually hold a high balance. In fact, rich people are often highly indebted and hoard wealth through other means. They're good at using debt to accrue wealth, and reducing having to repay debts (just see our government).
Rich people are like this guy: https://www.youtube.com/watch?v=r0HX4a5P8eE
We're a nation of bail outs and tax breaks for people in debt (ie bailouts for the rich!).
I question this idea because it makes no sense to me.
1. because those rich people who currently hold stocks will switch to interest bearing accounts the moment it makes sense, so looking at what they do today isn't enough.
2. because for rich people to buy overpriced stocks off poor people, those people would have to own stocks in the first place.
3. There is significant evidence that major companies are net lenders and therefore their owners are also indirect net lenders.
4. Rich people have more of everything, including money.
There is not much data about it but there is data about cash holding and it shows a simple relationship of rich people having more cash, duh.
https://www.bundesbank.de/resource/blob/854038/6a6978bac2e4d... Page 19
5. Poor people's most valuable asset is their own healthy body and mind which is a highly illiquid asset. If you ignore this asset it will look like poor people keep the vast vast majority of their wealth as money, which is true but also misleading because having a job is a much greater source of income for them which is not worth giving up for a few percent of interest. Of course I am assuming excessive interest rates here, high enough to cause widespread unemployment, but the rich do want them and they don't care if people end up unemployed.
No, I'm saying that who you think is rich and poor isn't so black and white.
Think about it for a moment. If you could borrow something, and then never pay back what you borrowed, you'd in fact end up gaining wealth...
In other words, I'm saying that the rich more often use debt as leverage to acquire assets, and then work to pay back less in real terms what they owe (essentially nudging their borrowing a fraction closer to stealing), than they acquire wealth by scrimping and saving/lending. Sure they might lend once they have acquired wealth, but they don't initially acquire their wealth that way (it's way too slow).
Governments do this anytime they choose to inflate their debts away. Instead of paying back in real terms what they owe, they bail themselves out with printed money reducing their debt burden. But the principle also happens in the stock market with derivatives (such as with a gamma squeeze for one example), and with mortgages and renting amongst other things.
Additionally, if you work to look... tax schemes are debt favored. This is particularly true when it comes to corporate taxes, as debt financing is tax deductible, but dividend payments are not: https://www.imf.org/external/pubs/ft/sdn/2011/sdn1111.pdf
And lest not mention how interest rates where near 0% for over a decade. Who do you think that benefits? People with lots of debt - and the greater the debt the greater the benefit.