"Capital must protect itself in every way...Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principal men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd."-- Taken from the Civil Servants' Year Book, "The Organizer" January 1934.
Well, here is what Henry Ford thought about that: "It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." â Henry Ford
He also believed it was a Jewish plot, so I am not sure Ford is a person I would listen to on this matter. Can anyone still take moral universalism seriously? *shrugs* More or less authoritarian doesn't matter here. I think you will agree that a perfect world (we never defined it though) is governed by the principle that everything that's not forbidden is allowed, and not the opposite. If so, the burden of proof is on the one with the coercive solution. I can see arguments for draft. I cannot see arguments for inheritance tax. The inheritance tax idea reminds me of what Churchill said, âThe inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.â Likewise, you are trying to make the rich poorer just for the sake of equality, even though this "equality" doesn't help the poor. Neither do I see why equality should be the end goal. There is no dynastic wealth today comparable with absolute monarchy of Louis XVI or Elizabeth I of Jefferson and Paine's period. I am not convinced this dynastic wealth exists. Where are the Roman families in forbes 500? Sure, there will be a few millionaires enjoying the life without doing any work and squandering the money, but I don't understand the zeal to make them equally miserable as the rest of the population. I may be authoritarian, but seeing all kinds of bums on a daily basis doesn't increase my faith in humanity. Deferred taxation and elimination of loopholes? That's quite contradictory. There are also plenty of people who want to leave the money for their children. I am not sure why you discard their wishes. Who are we and what is optimal? You linked a study that top 1% of Americans do not wish to pay more in taxes. Unless you have some reasons to believe that people in Midwest are particularly greedy, you should consider moving the quotation marks from "inheritance charity donation" to "voluntary". On this note, I am done with my mental masturbation here.
I'm not a libertarian but it is not likely that taxing the wealthy would do much to alleviate inequality since the money would be going to the government, and we all know how efficient government is at expenditure (theoretically, the money could go directly to the middle and lower classes in the form of reparations, but good luck with that). The restoration of the opportunities for self-improvement and advancement that existed before the government and the courts began siphoning them off would be far more likely to result in at least a somewhat more equitable balance of wealth than would filling government coffers with increased tax revenue. People have not traditionally resented the wealthy simply because of their wealth as long as the opportunities to emulate them were present. Sam Walton, for example, was admired because he was "just like us". His heirs, on the other hand, are resented not because of their wealth but because they screw their employees so badly in order to hold onto it (ditto McDonald's et al). Restore the opportunities for advancement and a more equitable balance is more likely to be achieved.
Let me defer to the late great Milton Friedman on this subject, since he, undoubtedly, is much more of an authority on this than I. You can find his essay "The Role of Monetary Policy" on the web, if you like. There's an awful lot of assumptions and personal judgement here, but you certainly are entitled to them. With all due respect, this is rather naive, Mav. Firstly, how is a small business loan not a financial asset? Secondly, to imagine, as you seem to be doing, that one would lend to a small business at 4% with the long bond trading at 10% is, I dunno, a little bit strange. Just for sh1ts and giggles, I looked. During the early 80s, when the long bond yield was at 10+%, the prime rate ranged between 12% and 15%. Where that would have put the loan rates for small business, I'll leave to your imagination. As to the "real" inequality you mention, yet again I have no idea what evidence you have used to form your assertions. Based on the data I have seen, from ICI and other sources (you can easily google for the ICI data or I can give you links), the seniors' retirement wealth consists of the very same "inflationary assets" and is earning well above 1%. More specifically, based on last year's performance, when SPX gained smth like 45%, the total return of an average retiree's DC plan was arnd 12.5%. This doesn't include the gains on real estate, which constitutes a large portion of retirement resources. Finally, yes, let's go get that tax code simplified, the quicker the better. At any rate, Mav, yet again you seem to be giving me generic slogans, which don't seem to be based on observable reality. Which isn't to say that I am in complete disagreement with some of the things you have stated above (e.g. the idea that leverage is a problem), but I don't think we're gonna get anywhere like that. We may just have to agree to disagree on this one.
With all due respect, this is rather naive, Mav. Firstly, how is a small business loan not a financial asset? Secondly, to imagine, as you seem to be doing, that one would lend to a small business at 4% with the long bond trading at 10% is, I dunno, a little bit strange. Just for sh1ts and giggles, I looked. During the early 80s, when the long bond yield was at 10+%, the prime rate ranged between 12% and 15%. Where that would have put the loan rates for small business, I'll leave to your imagination. I never said one would lend at 4% with the long bond at 10%. I was referring to a time period many years ago when that is what banks use to do, lend to their community. The comment about the long bond at 10% had to do with re-pricing risk assets. Marty, this may come as a shock to you, but businesses for over half a century use to pay 10% to 15% interest on their loans and they thrived. My father was one of them. Let the market set interest rates. You never did answer me. Why is it that the market seems to be capable of setting the price of shares of AAPL, the price of corn, copper and even the price of your vacation home in southern Spain, but for some godforsaken reason, it's not capable of setting the price of money? This is absolutely ludicrous. But I am curious as to your thoughts on that. As to the "real" inequality you mention, yet again I have no idea what evidence you have used to form your assertions. Based on the data I have seen, from ICI and other sources (you can easily google for the ICI data or I can give you links), the seniors' retirement wealth consists of the very same "inflationary assets" and is earning well above 1%. More specifically, based on last year's performance, when SPX gained smth like 45%, the total return of an average retiree's DC plan was arnd 12.5%. This doesn't include the gains on real estate, which constitutes a large portion of retirement resources. Finally, yes, let's go get that tax code simplified, the quicker the better. Are you serious? Marty, are you not seeing the record prices in the paper the last few months about the most expensive home ever sold in London and recently here in NY? Marty, 75% of the US has no discernible net worth. They are drowning in debt. Their rates of interest....take a guess? It ain't no 1% Marty. Oh no sir, for the poor, oh we let the market decide those rates, the poor man or middle class person is paying 15% to 30% for money. Meanwhile the top 5%, yes Marty, the SPX is treating them nicely. I wonder how many single black mothers of 3 on the south side of Chicago are long the SPX? Exactly. As for retired people, have no idea what's going on over in England, but the seniors in this country are NOT long the market and they have not been since the credit crisis. Jesus Mary and Joseph, do you honestly think someone in their 60's and 70's is going to be long stocks with their life savings after that debacle in 2008????????? No offense Marty, but you seem a little out of touch with reality. Maybe I spend more time around poor people then you do, but most seniors, my parents included are living check to check waiting for that social security to come in the mail. They earn NOTHING on their savings with 1% CD rates. And no, they are not going to get long stocks in their 70's. Seniors never had to do that and they should not have to start doing that now.
Here you go Marty, no more slogans, just cold hard facts. Do with them what you please: http://www.ncoa.org/press-room/fact-sheets/economic-security-for.html Retirement is not âgoldenâ for all older adults. Over 23 million Americans aged 60+ are economically insecureâliving at or below 250% of the federal poverty level (FPL) ($28,725 per year for a single person). These older adults struggle each day with rising housing and health care bills, inadequate nutrition, lack of access to transportation, diminished savings, and job loss. For older adults who are above the poverty level, one major adverse life event can change todayâs realities into tomorrowâs troubles. - See more at: http://www.ncoa.org/press-room/fact-sheets/economic-security-for.html#sthash.YoX5ZEgU.dpuf Almost 75% of single Social Security recipients aged 65+ depend on Social Security for all or most of their monthly income. (Social Security Administration) The FPL does not account for the rising cost of living seniors experience as they age, which can include illness, loss of a spouse, or care for a disabled spouse, adult dependent child, or grandchildren. More accurate measures of economic wellbeingâincluding Wider Opportunities for Womenâs Elder Economic Security Standard⢠Index and the Institute on Assets and Social Policyâs Senior Financial Stability Indexâshow millions of older adults struggling to meet their monthly expenses, even though theyâre not considered âpoorâ because they live above the FPL, which is $11,490 for a single elder. - See more at: http://www.ncoa.org/press-room/fact-sheets/economic-security-for.html#sthash.YoX5ZEgU.dpuf The average older adults receiving Supplemental Security Income receives just $423 each month. (Social Security Administration) Older women typically receive about $4,000 less annually in Social Security than older men due to lower lifetime earnings, time taken off for caregiving, occupational segregation into lower wage work, and other issues. Older women of color fare even worse. (Wider Opportunities for Women) By January 2012, older workers displaced in the years following the recession were half as likely to have regained employment as the nationwide average. (Bureau of Labor Statistics) Older workers of color are most at risk for unemployment, with older African American men twice as likely to be unemployed as older white men. (Bureau of Labor Statistics) - See more at: http://www.ncoa.org/press-room/fact-sheets/economic-security-for.html#sthash.YoX5ZEgU.dpuf One-third of senior households has no money left over each month or is in debt after meeting essential expenses. (Institute on Assets and Social Policy) In 2012, the average credit card debt among adults aged 65+ was $9,283. (Demos) 14% of adults aged 65+ face retirement with negative net worth, contributing to a rise in bankruptcies that has grown at the fastest pace ever due to high credit card debt and debts against their home. (Aging and Bankruptcy, U.S. Courts) - See more at: http://www.ncoa.org/press-room/fact-sheets/economic-security-for.html#sthash.YoX5ZEgU.dpuf As of December 2011, 16% of older homeowners owed more on their house than it was worth. (AARP) A majority of older adults have unsustainable housing costs, with 59% of older renters and 33% of homeowners with mortgages spending more than 30% of their income on housing costs. (AARP) 44% of African American and 37% of Latino seniors either rent or have no home equity. (Institute on Assets & Social Policy) - See more at: http://www.ncoa.org/press-room/fact-sheets/economic-security-for.html#sthash.YoX5ZEgU.dpuf
Whoops, look what the cat dragged in: http://www.marketwatch.com/story/how-the-fed-is-hurting-seniors-2014-03-21 Diana Furchtgott-Roth Diana Furchtgott-Roth Archives | Email alerts March 21, 2014, 6:02 a.m. EDT How the Fed is hurting seniors Opinion: The low-interest-rate policy does more harm than good Back in the 1970s or 1980s or 1990s, you might have expected a 5% interest rate or higher on your savings to generate income for your golden years. Now, it is not even 1%. Ten years ago, in 2004, the federal funds rate was about 1%. Then, it temporarily climbed to a plateau of about 5.25% between the summers of 2006 and 2007. However, from the end of 2007 to the beginning of 2009, the rate declined to practically zero and has remained there. Income inequality is âthe defining challenge of our time,â President Obama said last December, and a zero interest rate for savers contributes to inequality. Those with stock portfolios gain because asset prices are inflated as people look for higher returns. Seniors on fixed incomes have to get returns somehow, and junk bonds and riskier stocks are the answer for many. Economists and politicians tend to believe in the greatest good for the greatest number. But the idea of a system in which the returns to frugal saving are zero with certainty, while the returns to investing money in risky high-yield stocks and bonds â a form of gambling â often pays off, is troubling, to say the least. It might pay for a senior to invest in riskier assets in the short run, but if interest rates rise to historical levels and the stock markets adjust down, such senior investors will suffer. It is not only gambling that pays off, it is also borrowing. With mortgage rates at historic lows, people can take on a lot of debt. So winners from low rates include those who want to borrow, and those who hold stocks and commodities. Losers include those who save and lend because they receive less in interest payments from their assets. This situation disproportionately affects seniors. According to data from the Census Bureau, seniors ages 65 and over made an average of $3,239 from interest in 2012, and an average of $32,849 in total income. Thus, just under 10% of their income came from interest. In contrast, people ages 25 to 64 earned an average of $1,356 annually from interest, and $47,364 in total income. Less than 3% of income came from interest for people ages 25 to 64. McKinsey concluded in a November 2013 report that from 2007 to 2012, defined-benefit pension plans and guaranteed-rate life insurance plans lost $270 billion of income due to the Fedâs low-interest-rate policies because they have far more interest bearing assets than liabilities. McKinsey estimated that American households have lost $360 billion of income. On average, American households are net savers. The big winners of the Fedâs policies were the U.S. government, which gained about $900 billion, and non-financial corporations, which gained $310 billion. McKinsey calculated that households headed by people under the age of 45 are net debtors and so have benefitted from lower rates. In particular, those households with heads ages 35 to 44 have gained $1,700 more in spending each year because of lower rates. Those under 35 gained $1,500 a year. The losers are the seniors, especially household heads aged 75 and over, who lost $2,700 a year in income. Those aged between 65 and 74 lost $1,900. If markets were perfectly liquid, seniors would be able to take advantage of falling interest rates to refinance their mortgages. But many seniors have no mortgage. Those that do are often unwilling to refinance. Others, even though they might want to refinance, find that their houses are worth less than the mortgage, and they cannot meet tighter credit standards. Keeping interest rates low is not only bad for seniors and savers, it is bad for the economy as a whole. In a global marketplace, low interest rates in the United States discourage lending to the United States. The reason the Fed had to step in to buy Treasury paper is that there is lower demand because of ultra-low interest rates. When interest rates rise, and eventually they will, many parts of our financial system will have a rude awakening and a difficult adjustment. Our deficit will balloon with our high level of debt. Many businesses predicated on low interest rates will fail. Small- and mid-sized economies cannot pretend that easy money is a successful monetary policy. Japan and Europe have tried easy money. It has not worked. The United States has performed slightly better, not because easy money is a good policy, but because people around the world still look to the dollar as a safe haven in times of trouble. And the world today has more than its fair share of troubles. All Americans, and seniors in particular, will be better when the Fed abandons its low-interest-rate policy, despite some initial turbulence. Almost five years into the recovery, economic growth is stunted, and labor force participation rates are at 1978 levels. Seniors always tell their children they know better â now they should tell Janet Yellen to let those rates rise. Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute.
And it's taken them all this time to figure this out because policy-makers -- and those to whom they cater -- have no idea what it means to struggle.