The fed has kept interest rates near zero from 2009-2022. This allowed corporations making profits off of the federal stimulus and individuals making money off of their stocks going up to take out zero-interest loans and do stock-buybacks and other asset purchases (to include real estate holdings) to inflate the assets they already owned using their assets as leverage and the loans secured as a way of growing even more ridiculous sums of money. There were no provisions for the banks that the zero interest rates should only apply to the renter class and exclude the asset-holding class. As a result, the rich got richer and the poor got in late and got out late, ultimately being left holding the bag just like they were in 2008/2009. If the banks were basically being incentivized to lend out as much money as possible with zero interest *regardless of who those borrowers were*, then of course rich people were going to take advantage with their wealth, maximize their gains in the market during the money dump, and then pull their money out before most of the rest country has any idea what's about to hit them.
At the end of every bust cycle, the rich get richer and the poor get poorer and the middle class splits into either direction depending on total household income, household wealth, and household debt. The top 12% of the country own over 80% of the stocks. That's not an accident, that's an entrenched economic division that's enforced by the GOP through low taxes on the wealthy and deregulation, but it's also enforced through the federal reserve and the banks not applying a more progressive interest rate model that disincentives the rich from tripling their wealth every 5-10 years while making it easier for the renter class to get home loans. What we're left with instead is a boom-bust economy that grows money for the wealthiest Americans and corporations while the renter class and small businesses get cut further and further out of the economic ladder and growth opportunity each cycle. That's my larger point I suppose. The divide between the renter class and the asset-holding class is also partially-driven by marriage trends, whereby the asset-holding class tends to marry their daughters/sons off to other members of the asset-holding class, lest their offspring marry serfs. A significant chunk of the asset-holding class are post-college liberals who decry wealth inequality by pointing to the billionaire class above them while entrenching themselves and their offspring in the middle-to-upper-middle class--while cutting off the renter class, the same way that the billionaires are cutting them off from the whale money while depleting the middle class.
And while interest rates were near zero for an extended time, we failed to take advantage and use that anomaly to finance gigantic, meaningful infrastructure projects. Oops.
I made that very point SO MANY TIMES. I never could understand why the GOP especially did not take advantage of free money to repair and update infrastructure, instead of blowing up the deficit to give tax breaks to the already wealthy. Then just a s the free money window was closing, it was left to the Dems to pass an infrastructure bill, while the GOP suddenly cares about deficit spending. The GOP simply only whines. They have shown themselves incapable of governance whenever they have had the chance.
Because if the GOP used government money to improve the lives of all Americans through investments in infrastructure, education, and renewable energy, it would actually work. And therefore it would undermine their argument that government is the problem and needs to be starved of resources.
sure but the Fed has few other tools. we don't even have a fully functional unemployment insurance program. so how do we keep capital markets going? i agree that the GOP can be blamed. I just see the 2007-08 collapse as leaving few options. And by the way, I work in life insurance and low interest rates hurt us. but I still don't see the fed as having a better tool . nor was there will in congress (with the gop filibuster) to help mortgage holders directly - as one example.
The fed doesn't have any other tools, nor did it request any new ones from congress, nor did congress think to address it themselves. Everyone seemed to be *perfectly* happy with corporations and the rich taking advantage of zero interest loans using leveraged assets to triple their income in short periods of time and drastically grow the wealth inequality between the asset-owning class and the rental/mortgage class. Probably because every single member of congress and the senate are card-carrying members of the asset-holding class. Think they want a guy like Fetterman in there with them? LOL
Like, we could have simply made some rule for the banks that says "you can give out zero interest loans to renters and mortgage-seekers, but you can't give them to whales using leveraged assets to obtain zero-interest loans to triple their portfolios on the federal stimulus cash swishing around and growing the very same corporations the whales were investing in. Everyone saw this. Occupy Wall Street and the TARP bailout protests were all about this. The issues got ignored. Now we're here with even more wealth inequality that is increasingly radicalizing the country's politics. When vertical inequality because class-set horizontal inequality, political turmoil and political violence at scale follow in close proximity. From the populism of the Graci Brothers to the populism of Bernie Sanders and Donald Trump. The rich in this country are melting democracy down for better profits just like Marian Reforms did to Rome.
In fact there was quite a ruckus at the time. So Republicans had to be begged to support the bank bailout. and Democrats were split re wanted to prosecute the financial sector. and then we have Obama's first term. Folks like Romney wrote strident op-eds against bailing out detroit. and then the GOP fought the relatively mild bail out Obama wanted for the economy. So... there was no way to create a set of measures more than what existed. It was not about happiness that the system was a mess. It was a system that is designed via the senate to make it hard to do anything.
Little that Obama wanted to do was allowed. So sorry why would anyone waste time on more lost causes.
Those issues were with respect to the bailouts by the gov, not about the debt purchases by the federal reserve or the zero-interest loans being given to corporations and rich individuals. Maybe my memory isn't great, as I was only 22 at the time and had just gotten out of mil service, but I don't recall any politician of any stripe--save for perhaps Ron Paul (I don't like him personally)--talking about how the zero-interest loans were going to balloon assets for the rich and drive wealth inequality for the next 14 years because the corporations and the rich were going to take advantage of them and use them to triple their money on a short turnaround. I don't even think Ron Paul's criticism of the fed revolved around what the rich were going to do so much as the fact that somebody like the fed could do quantitative easing. The much bigger issue for me was going to be how the rich were going to capitalize off of what the federal reserve was doing with loans to drive wealth inequality even further. They absorbed the lion's share of the economic gains from the 2009-2022 bull run, because not only were they already making money off of the natural state of play, they could leverage their assets to obtain zero-interest loans to be put into high-growth investments so that they could become even *bigger* multi-millionaires or multi-billionaires. Nobody said shit about THAT greed and wealth inequality in the post-'09 market rally from my memory. MAYBE Bernie Sanders. MAYBE.
The fed has kept interest rates near zero from 2009-2022. This allowed corporations making profits off of the federal stimulus and individuals making money off of their stocks going up to take out zero-interest loans and do stock-buybacks and other asset purchases (to include real estate holdings) to inflate the assets they already owned using their assets as leverage and the loans secured as a way of growing even more ridiculous sums of money. There were no provisions for the banks that the zero interest rates should only apply to the renter class and exclude the asset-holding class. As a result, the rich got richer and the poor got in late and got out late, ultimately being left holding the bag just like they were in 2008/2009. If the banks were basically being incentivized to lend out as much money as possible with zero interest *regardless of who those borrowers were*, then of course rich people were going to take advantage with their wealth, maximize their gains in the market during the money dump, and then pull their money out before most of the rest country has any idea what's about to hit them.
At the end of every bust cycle, the rich get richer and the poor get poorer and the middle class splits into either direction depending on total household income, household wealth, and household debt. The top 12% of the country own over 80% of the stocks. That's not an accident, that's an entrenched economic division that's enforced by the GOP through low taxes on the wealthy and deregulation, but it's also enforced through the federal reserve and the banks not applying a more progressive interest rate model that disincentives the rich from tripling their wealth every 5-10 years while making it easier for the renter class to get home loans. What we're left with instead is a boom-bust economy that grows money for the wealthiest Americans and corporations while the renter class and small businesses get cut further and further out of the economic ladder and growth opportunity each cycle. That's my larger point I suppose. The divide between the renter class and the asset-holding class is also partially-driven by marriage trends, whereby the asset-holding class tends to marry their daughters/sons off to other members of the asset-holding class, lest their offspring marry serfs. A significant chunk of the asset-holding class are post-college liberals who decry wealth inequality by pointing to the billionaire class above them while entrenching themselves and their offspring in the middle-to-upper-middle class--while cutting off the renter class, the same way that the billionaires are cutting them off from the whale money while depleting the middle class.
And while interest rates were near zero for an extended time, we failed to take advantage and use that anomaly to finance gigantic, meaningful infrastructure projects. Oops.
I made that very point SO MANY TIMES. I never could understand why the GOP especially did not take advantage of free money to repair and update infrastructure, instead of blowing up the deficit to give tax breaks to the already wealthy. Then just a s the free money window was closing, it was left to the Dems to pass an infrastructure bill, while the GOP suddenly cares about deficit spending. The GOP simply only whines. They have shown themselves incapable of governance whenever they have had the chance.
Because if the GOP used government money to improve the lives of all Americans through investments in infrastructure, education, and renewable energy, it would actually work. And therefore it would undermine their argument that government is the problem and needs to be starved of resources.
sure but the Fed has few other tools. we don't even have a fully functional unemployment insurance program. so how do we keep capital markets going? i agree that the GOP can be blamed. I just see the 2007-08 collapse as leaving few options. And by the way, I work in life insurance and low interest rates hurt us. but I still don't see the fed as having a better tool . nor was there will in congress (with the gop filibuster) to help mortgage holders directly - as one example.
The fed doesn't have any other tools, nor did it request any new ones from congress, nor did congress think to address it themselves. Everyone seemed to be *perfectly* happy with corporations and the rich taking advantage of zero interest loans using leveraged assets to triple their income in short periods of time and drastically grow the wealth inequality between the asset-owning class and the rental/mortgage class. Probably because every single member of congress and the senate are card-carrying members of the asset-holding class. Think they want a guy like Fetterman in there with them? LOL
Like, we could have simply made some rule for the banks that says "you can give out zero interest loans to renters and mortgage-seekers, but you can't give them to whales using leveraged assets to obtain zero-interest loans to triple their portfolios on the federal stimulus cash swishing around and growing the very same corporations the whales were investing in. Everyone saw this. Occupy Wall Street and the TARP bailout protests were all about this. The issues got ignored. Now we're here with even more wealth inequality that is increasingly radicalizing the country's politics. When vertical inequality because class-set horizontal inequality, political turmoil and political violence at scale follow in close proximity. From the populism of the Graci Brothers to the populism of Bernie Sanders and Donald Trump. The rich in this country are melting democracy down for better profits just like Marian Reforms did to Rome.
In fact there was quite a ruckus at the time. So Republicans had to be begged to support the bank bailout. and Democrats were split re wanted to prosecute the financial sector. and then we have Obama's first term. Folks like Romney wrote strident op-eds against bailing out detroit. and then the GOP fought the relatively mild bail out Obama wanted for the economy. So... there was no way to create a set of measures more than what existed. It was not about happiness that the system was a mess. It was a system that is designed via the senate to make it hard to do anything.
Little that Obama wanted to do was allowed. So sorry why would anyone waste time on more lost causes.
Those issues were with respect to the bailouts by the gov, not about the debt purchases by the federal reserve or the zero-interest loans being given to corporations and rich individuals. Maybe my memory isn't great, as I was only 22 at the time and had just gotten out of mil service, but I don't recall any politician of any stripe--save for perhaps Ron Paul (I don't like him personally)--talking about how the zero-interest loans were going to balloon assets for the rich and drive wealth inequality for the next 14 years because the corporations and the rich were going to take advantage of them and use them to triple their money on a short turnaround. I don't even think Ron Paul's criticism of the fed revolved around what the rich were going to do so much as the fact that somebody like the fed could do quantitative easing. The much bigger issue for me was going to be how the rich were going to capitalize off of what the federal reserve was doing with loans to drive wealth inequality even further. They absorbed the lion's share of the economic gains from the 2009-2022 bull run, because not only were they already making money off of the natural state of play, they could leverage their assets to obtain zero-interest loans to be put into high-growth investments so that they could become even *bigger* multi-millionaires or multi-billionaires. Nobody said shit about THAT greed and wealth inequality in the post-'09 market rally from my memory. MAYBE Bernie Sanders. MAYBE.
R>G was talked about a lot when Picketty brought it up back then. But not enough very serious people cared. They still don't because it benefits them.
That is true. Read Capitalism in the 21st Century when it debuted. Picketty was on Ezra's pod a few weeks back talking a lot about R>G.