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How can it be "socialism for the rich" when it benefits every American who has purchased a house with a fixed rate (low) interest mortgage? That sounds like the "common man" to me. A person buys a house with a long term low interest mortgage, then the FED comes in and stimulates inflation. This means that the common man gets to pay off his mortgage with cheaper dollars PLUS gets the benefit of a HUGE capital gain if/when he gets ready to sell it.
And even better, that huge capital gain likely won't even be subject to taxes due to our tax laws. Hell, as it is now, fewer than 50% of working Americans pay any federal income taxes at all. So how is it that you figure that the system is rigged for the RICH? Sounds to me like our system is more like a "Soak the Rich" and give it to the poor type system. Fewer and fewer people are paying more and more taxes in order that the masses pay nothing.
Yes, SOCIALISM FOR THE RICH. Inflation cycles widen the gap between the rich and the poor, but deflation cycles are supposed to diminish that gap again. It is a breathing process. But the Fed is trying with all their might and nearly unlimited resources to keep deflation from happening, a deflation designed to bring prices back down to the grasp of ordinary Americans, without debt slavery.
The ruling class in America will be suprised at some point by the furious rage triggered by the human devastation of policies designed to inflate prices for ever.
I think that a modest rate of inflation IS good for the economy. It encourages even the low income people to invest in a part of America and, with time and effort, move into the middle and even upper wealth classes. When there's no hope of your assets appreciating in value, there's little incentive to invest in anything.
That's one of the great things about the American economy... even people with relatively modest means can have ownership in a small piece of America whether that be by a house, or some shares of stock in American companies, or whatever. In socialist countries, the peasants don't own anything.
I think you are confusing socialism with communism. I have several relatives who live in Norway and Sweden. In Norway 81% of the population owns their home while 65.8% of people in the US own their home.
Much of the inflation we are experiencing now is the result of liberal politicians redistributing wealth without ever having to hold a vote to do so. EITC is an example.
Less than half of Americans are taxpayers. Most of the rest are tax users.
Much of the inflation we are experiencing now is the result of liberal politicians redistributing wealth without ever having to hold a vote to do so. EITC is an example.
Less than half of Americans are taxpayers. Most of the rest are tax users.
We're all paying the inflation tax, and the poor are being hit the hardest by this tax. This is not a 'liberal' vs 'conservative' issue; let's not forget that Trump was running record deficits even before Covid.
Some people are not as smart as they portray themselves.
A 50- 60% drop is significant and it will likely fall farther ….almost all products are higher because of supply chain issues …the bond market collectively sees inflation fears as over done as bond yield have come down a lot as the bond market is not fearing this inflation sticking around or rates would be higher then they were when the bond market spooked the beginning of the year.
Some people are a lot smarter than those give them credit for and collectively the bond market tends to get it right just like it did in 2007 when it pulled rates into an inverted yield curve as the fed was trying to raise them and the bond market didn’t see it that way at all and drove bond rates lower.
At 2% the 30 year bond is not fearing much inflation sticking around.
Neither is the 10 year at 1.43%
Last edited by mathjak107; 07-04-2021 at 06:29 AM..
At 2% the 30 year bond is not fearing much inflation sticking around. Neither is the 10 year at 1.43%
This is correct. Most of the inflation we are seeing now are due to disruption in global supply chain. If we've learning anything from the pandemic it's that the global supply chain is fragile, complex, and takes many months to restart. Look at the automakers, they backed out of contracts for silicon chips with Asian foundries last year, and now they find themselves at the end of the line and it's going to take a year or more for them to get the chip deliveries they need. You can't snap your fingers and build a new semiconductor factory, the global capacity is more or less fixed over the short term.
Milton Friedman also maintained that ~2% general price inflation was more or less mandatory for long term growth allowing for healthy levels of investment, price stability and so on.
There's a big difference between 2% inflation and 10% inflation. And we could be headed towards 10% like back in the Carter days.
Depends , not all areas work like that because of local laws and conditions ….
Here in nyc assets can soar but rent regulations may give you nothing as far as increased income .
Our apartments in Manhattan were golden but they produced no income to speak of .
They had to be sold to realize huge gains.
Today many commercial properties have horrible cash flow as tenants default left and right.
I prefer assets with no cash flow right now …I rather create my own dividends as needed off appreciation
If someone is willing to pay higher and higher price for an asset despite price deflationary factors, then they are just speculating. Certainly, the money supply should not be increased just so someone can speculate. If they have enough money on hand already, then its their own risk. But if they dont, then they simply cant afford to.
Quote:
Originally Posted by Chas863
I don't recall saying that your appreciating assets DID have to be sold. I was just making the point that inflation can be good for those who own assets that appreciate. If the assets pay rent or dividends of some kind along the way, that's even better... although selling something for a really large long term capital gain isn't so bad either.
But before the asset was "yours", one has to buy from someone else. Unless you brought at an extremely deflationary price, all your assets appreciation is going to a specially privileged third party who created more money at a whim to purchase asset.
In that sense, deflation is your friend.
Anyways any asset that is beyond the reach of individuals should be publicly/taxpayer owned, or should not exist to begin with.
If someone is willing to pay higher and higher price for an asset despite price deflationary factors, then they are just speculating. Certainly, the money supply should not be increased just so someone can speculate. If they have enough money on hand already, then its their own risk. But if they dont, then they simply cant afford to.
But before the asset was "yours", one has to buy from someone else. Unless you brought at an extremely deflationary price, all your assets appreciation is going to a specially privileged third party who created more money at a whim to purchase asset.
In that sense, deflation is your friend.
Anyways any asset that is beyond the reach of individuals should be publicly/taxpayer owned, or should not exist to begin with.
This is far more complex then you and I can even understand…..
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