sycasey said:

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I don't disagree with either of those ideas. Beefing up estate taxes seems like a bit of a no-brainer, frankly.

---

So what would you suggest regarding estates taxes?

Would you lower the exemption that's currently at $11.7 million? The Democrats wanted to lower the exemption down to $5.0 million in order to help pay for "Build, Back, Better". That would have obviously impacted many families here in the Bay Area.

Are you aware that the Estate Tax rate is 40%? Do you think it should be higher?

Cal_79 said:

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How is an entrepreneur producing a product, a product that's so popular the entrepreneur ultimately becomes wealthy, not giving back? Why do people want this product? Perhaps it's because it fills a need or solves a problem. How is filling a need or solving a problem not good for society?

Just curious, why do you feel the government knows better what to do with your money than you do? When millionaires and billionaires (including Buffet, Gates, Musk, Zuckerberg) pledge to give their fortunes to philanthropic causes, how is this not a good thing? Is this not a redistribution of wealth? Why do you want the government to step in and take their money instead of allowing these people to give it away freely?

By the way, one of the scariest phrases ever uttered is, "Hi, I'm from the government and I'm here to help..."

---

Stop it.
You're making far too much sense!

DiabloWags said:

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sycasey said:

---

I don't disagree with either of those ideas. Beefing up estate taxes seems like a bit of a no-brainer, frankly.

---

So what would you suggest regarding estates taxes?

Would you lower the exemption that's currently at $11.7 million? The Democrats wanted to lower the exemption down to $5.0 million in order to help pay for "Build, Back, Better". That would have obviously impacted many families here in the Bay Area.

Are you aware that the Estate Tax rate is 40%? Do you think it should be higher?

---

I'm not proposing changing the portion of the estate that's above the $11.70 million limit that is taxed at the top federal statutory estate tax rate of 40%. In fact, I would probably raise the $11.7 million amount (disturbingly, there are many non-mansion houses in California these days the cost close to that amount). Only a few thousand estate tax returns are filed and the revenue produced in minimal, like $15 Billion annuallu. That is because in practice, various discounts, deductions, and loopholes allow skilled tax heads to pare the effective rate of taxation to well below that level or in most cases, simply avoid the tax.I would keep the marital deduction, but put a max on the amount of assets that can be sheltered though trusts, freezes, and other devises. I'm spit-balling here, but maybe a max out at $200 million. Thus, some one like a Bezos passing would mean a $100 billion plus in revenues. Still plenty for heirs. And a significant annual gain for Treasury with the benefit of preventing a decent portion of generational wealth to be passed so we have fewer entrenched wealthy families. Dajo should love this, and Bearsister wouldn't understand. It is not a perfect idea, but I think it is one that could be practically enforced. As I said previously, I not a big proponent on confiscatory taxes for productive people. But they are not productive after they pass.

sycasey said:

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Cal_79 said:

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sycasey said:

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Even allowing for the idea that wealth is not finite (and I think I generally agree with that), don't folks also think there are at least some social/political issues that get raised when wealth or income inequality goes past a certain amount? Like, even if absolute wealth is generally raised across the board for all groups, the obvious disparity between the highest and lowest groups is going to have consequences if people are aware of it.

Even if it's all just psychological and not based on concrete numbers, that still matters in a democracy. Heck, even in a non-democracy it will matter past a certain point. Revolutionary attitudes can foment in such an environment, where the have-nots become increasingly envious of the haves.

---

Perspective matters. For some, they see 'haves and have nots' and are jealous for what the 'haves' have that they don't. For others, they see the 'haves', imagine what's possible, and think that perhaps they can do it, too.

---

Fine, but I'm talking about this on a sociological level. If too many people become jealous you have a problem.

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Perhaps that's what this entire Wealth Gap discussion is about!

I've often remarked that the poorest 10% (not including the very bottom 1%: homeless destitute) experience a higher standard of living than 99% of the population 150 years ago. Consider:

Indoor plumbing
Modern HVAC
Modern grocery stores
Cars and planes
TV
Internet
Medical knowledge and medicines.

Today, people feel disenfranchised because their expectations are that they compare to what they see around them and feel they are being ripped off. When in reality, modern man has it so damn good!!!

So, I agree with you. I very much think the "problem" is in our heads.

That said, I still think the gap should be closed.

"For the greater good", as an overriding value.

calbear93 said:

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DiabloWags said:

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Cal_79 said:

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This reminded me of the interesting conversation we had back in February of last year before there was any inflation or supply chain constraints (although my friends were already telling me back then that supply chain will be an issue, especially with chips). I may have called the inflation and supply chain issues a few months early (still glad for the rotation to energy and cyclicals) but even back then, it was pretty interesting how people suspend common sense and ignore insight from people who actually have life experiences but instead choose to abstract theory and google posting that go against common sense and real life results.

---

---

https://bearinsider.com/forums/6/topics/100562/replies/1852155

I just want to say that I loved this discussion by Diablo, WIAF and Unit2. I would not be surprised if life successes reflected level of common sense and actual market understanding and vice versa.

Good job, fellas.

---

Thank You Calbear93.

I would whole-heartedly agree with your primary point about Quantitative Easing (QE) having turbo-charged the wealth inequality gap.

While people can make a case (as Dajo has) that the wealth gap has expressed itself in wage growth not keeping up with productivity growth (which can be graphically illustrated since the mid-70's, but much more so since the advent of the computer age in the early 90's), - - - it's so obvious to me that QE has been behind the basis for this wealth gap given what I do in every day life that I perhaps take it for granted that everyone understand this.

The bottom line, is that when you inject LIQUIDITY into the financial markets, people are more willing to take on RISK and there is what we call TINA which leads to FOMO. For those unaware, TINA = There is no alternative. FOMO - Fear of missing out.

Remember, the stock market is not a reflection of how well the economy is doing. It's a discounted cash-flow machine and it's performance is much more dependent on how much LIQUIDITY is in the system, and the perceptions of that liquidity increasing or decreasing in the system.

Wealth for the average American is largely driven by the house that they own, especially in places like California where the economy is tremendously diverse and there is a hot-bed of game-changing technology companies like Silicon Valley. When you have more and more educated, highly trained workers attracted to innovative growing companies in geographic areas with a limited supply of housing AND interest rates near zero, is it any surprise that the housing market explodes higher along with wealth?

But where the Middle Class and lower economic classes wind up getting themselves into trouble, is that many of these families also have much higher debt levels. Higher mortgages to repay, much higher consumer credit, and student loans to service than ever before, etc. - - - which means less cash on hand to invest in the financial markets.

When you get a "pop" in the housing market (like in 2007) these economic classes see their "wealth" get crushed and their wealth doesnt recover until the real estate market does; and invariably there may also be job loss in the family that also compounds the inability of their household wealth to rebound.. As a result, the average "wealth" of the bottom 90% in 2012 ($80,000) several years after the Great Recession of 2008-2009 winds up being the same as it was back in 1986 (wish I could post the chart of this). - - - In stark contrast, the wealth of the Top 10% is able to bounce back rather sharply after 2012 due to the equity markets rallying and an aggressive QE monetary policy by the FED.

This is the primary reason why our Golden State is enjoying a $75 Billion dollar budget surplus during an economic contraction and pandemic. The wealthy are highly educated skilled professionals that can work from home and are much more connected to the financial markets. State income tax in California is highly progressive, hence the record budget surplus.

Again, much of this can be linked to how the FED reacts to an economic contraction (with helicopter money) and massive injections of LIQUIDITY. Rates get reduced to zero and the entire system becomes a sea of liquidity. Anyone with available cash (the Top 10%) understands this and invests in the equity market. There simply is no alternative (TINA) when rates are this low. By default, the money goes into the stock market. As a result, the Top 10% sees their wealth increase dramatically and the bottom 90% unfortunately gets left behind.

It's a fascinating subject and I could probably spend hours and hours on this thread exploring all kinds of factors that have gone into creating such a massive wealth "gap". But the biggest driving factor for me is the FED.

The "globalized" Economy also comes to mind, as "outsourcing" by multi-national companies has injected another aspect of how cheaper labor is used outside of the United States. It is this "globalization" that has most likely crippled the (previous) power of labor unions and resulted in stagnant wage growth for the average American - - - even for those that were in middle management type positions. Case in Point: I have a friend here in the East Bay that retired from Chevron. A De LaSalle and Cal Poly alum, he was in charge of all accounting for state excise taxes on fuel. His accounting group used to be based off of Diamond Way in Concord. It wasnt too long before that group was eventually "outsourced" to Argentina/Chile because the payroll costs were 30 - 35% cheaper. - - - Dont even get me started on automation!

We could go on and on for hours.

But I really believe that one cant honestly talk about the wealth gap without highlighting the (change) in monetary policy by the Federal Reserve and an expanded use of their monetary tools over the last 15 years.

calbear93 said:

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One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

DiabloWags said:

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calbear93 said:

---

DiabloWags said:

---

Cal_79 said:

---

This reminded me of the interesting conversation we had back in February of last year before there was any inflation or supply chain constraints (although my friends were already telling me back then that supply chain will be an issue, especially with chips). I may have called the inflation and supply chain issues a few months early (still glad for the rotation to energy and cyclicals) but even back then, it was pretty interesting how people suspend common sense and ignore insight from people who actually have life experiences but instead choose to abstract theory and google posting that go against common sense and real life results.

---

---

https://bearinsider.com/forums/6/topics/100562/replies/1852155

I just want to say that I loved this discussion by Diablo, WIAF and Unit2. I would not be surprised if life successes reflected level of common sense and actual market understanding and vice versa.

Good job, fellas.

---

Dont even get me started on automation!

We could go on and on for hours.

But I really believe that one cant honestly talk about the wealth gap without highlighting the (change) in monetary policy by the Federal Reserve and an expanded use of their monetary tools over the last 15 years.

---

That's an awesome explanation.

I remember posts that I made here about four years ago after meeting with some of the top thought leaders during our then biannual SV tour. One thing that I came away with back then was how data analytics, artificial intelligence and automation may eventually create a dystopian society where big portion of existing labor will not be needed. Also posted then about how predictive analysis will make the Facebooks and Youtubes of the world dictate what and how we think and divide us further. It is not as dystopian now as I predicted back then but I think we will have a society where those clinging to old models will fall further behind. It was great for our investment game theories, and we made some amazing bets on industrial tech, automation software, and companies that were going beyond just IoT to data mining and value add through data analysis and artificial intelligence. However, I do worry about the impact of automation and AI on the middle class in the not too distant future. People who are not retraining for that eventuality will suffer.

I think we should look at zero interest rate policy (ZIRP) and QE separately.

QE may make sense for a short time in the middle of a crisis - say 2009 / 2010 and again in spring 2020, but it has been incredibly abused by the Fed. Remember, the current round of QE began before the pandemic, in Fall 2019, because indications were that the stock market was going to go down so the Fed juiced it. The Fed won't put it that directly, but that is basically what happened. With QE you have to wonder whether the Fed will ever let the stock market go down again.

The growth of wealth inequality has predated QE but QE is like pouring rocket fuel on asset prices and wealth inequality. Its use isn't going to end either, because it benefits the wealthy so much and they have outsized political power in this country. And what is not to like about QE for the investor class (in general, not everybody). Asset appreciation from the government while the vast majority of people don't even know what you are talking about. Socialism for the rich and meanwhile, Americans priced out of the housing market don't know that QE has a big role in that.

On the other hand, ZIRP has been necessary from the time of the Great Recession until now. There is a view that the Fed controls interest rates but that isn't really the case. Interest rates control the Fed. All indications are that the Equilibrium interest rate has been negative since the Great Recession (equilibrium interest rate is a theoretical interest rate at which the demand for money equals the supply of money). With a negative equilibrium interest rate, zero interest rates are still too high to boost economic growth. A good indication that Fed controlled interest rates are too high (even if at zero) is that if the Fed raises the rates they control, would the other rates controlled by the market go down. The answer to that question has been generally yes since the Great Recession.

For the past decade, people demanding that the Fed raise the rates they control have been unwittingly demanding lower interest rates everywhere the market controls them. The end result of that is a downward sloping yield curve which is a pretty good indicator of economic dysfunction and a probable recession.

calbear93 said:

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No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Bingo.

dajo9 said:

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There is a view that the Fed controls interest rates but that isn't really the case. Interest rates control the Fed.

For the past decade, people demanding that the Fed raise the rates they control have been unwittingly demanding lower interest rates everywhere the market controls them. The end result of that is a downward sloping yield curve which is a pretty good indicator of economic dysfunction and a probable recession.

---

Your presentation is rather "jumbled" and lacks clarity.

First off, the FED does in fact control the Fed Funds rate.
That is not up for dispute and something that I'm quite sure we agree on.

Secondly, market participants price the rest of the yield curve and currently, the yield curve is anything but downward sloping.

In fact, the benchmark 10 year yield soared to a 2 year high today (1.80%) even though the non-farm payroll number showed fewer than expected jobs created in December, of 199,000 vs the 400,000 expected. - - - Yields across the curve exploded higher today. Even the 30 year yield hit a new 11 week high.

Market participants are clearly reacting to not only an increased amount of supply this week, but also are reacting to the FED shrinking its balance sheet much more aggressively than initially thought last month, per the comments made today by SF Fed President, Mary Daly, who thinks the Fed could start shrinking its $8 trillion dollar balance sheet soon after it has raised rates once or twice.

It should go without saying, that the FED is often times able to jawbone rates with statements from its board of governors and presidents, like the one above from Mary Daly.

DiabloWags said:

---

dajo9 said:

---

There is a view that the Fed controls interest rates but that isn't really the case. Interest rates control the Fed.

For the past decade, people demanding that the Fed raise the rates they control have been unwittingly demanding lower interest rates everywhere the market controls them. The end result of that is a downward sloping yield curve which is a pretty good indicator of economic dysfunction and a probable recession.

---

---

Quote:

---

First off, the FED does in fact control the Fed Funds rate.

That is not up for dispute.

---

Yes, the Fed Funds rate and the discount window are controlled by the Fed. Everything else is controlled by the market.

Quote:

---

Secondly, market participants price the rest of the yield curve and currently, the yield curve is anything but downward sloping.

In fact, the benchmark 10 year yield soared to a 2 year high today (1.80%) even though the non-farm payroll number showed fewer than expected jobs created in December, of 199,000 vs the 400,000 expected. - - - Yields across the curve exploded higher today. Even the 30 year yield hit a new 11 week high.

---

I wasn't talking about the current market. I was talking about a hypothetical market in years past in which the Fed raised their rates.

dajo9 said:

---

I wasn't talking about the current market. I was talking about a hypothetical market in years past in which the Fed raised their rates.

---

Thank you for the clarification.

Agreed. There have been times when the curve inverted because market participants were concerned by a downturn, if not disinflation.

calbear93 said:

---

DiabloWags said:

---

Cal_79 said:

---

How is an entrepreneur producing a product, a product that's so popular the entrepreneur ultimately becomes wealthy, not giving back? Why do people want this product? Perhaps it's because it fills a need or solves a problem. How is filling a need or solving a problem not good for society?

Just curious, why do you feel the government knows better what to do with your money than you do? When millionaires and billionaires (including Buffet, Gates, Musk, Zuckerberg) pledge to give their fortunes to philanthropic causes, how is this not a good thing? Is this not a redistribution of wealth? Why do you want the government to step in and take their money instead of allowing these people to give it away freely?

By the way, one of the scariest phrases ever uttered is, "Hi, I'm from the government and I'm here to help..."

---

Stop it.
You're making far too much sense!

---

Have avoided OT for months because of all of the idiotic and tribal takes. However, wanted to see people's take on inflation, monetary policy and stock market.

I have to say that Diablo, WIAF, Cal79 and Unit2 have provided some awesome analysis. I think people who have actual experience are better able to remove emotions and politics from their analysis.

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

This reminded me of the interesting conversation we had back in February of last year before there was any inflation or supply chain constraints (although my friends were already telling me back then that supply chain will be an issue, especially with chips). I may have called the inflation and supply chain issues a few months early (still glad for the rotation to energy and cyclicals) but even back then, it was pretty interesting how people suspend common sense and ignore insight from people who actually have life experiences but instead choose to rely on abstract theory and google posting that go against common sense and real life results.

https://bearinsider.com/forums/6/topics/100562/replies/1852155

I just want to say that I loved this discussion by Diablo, WIAF, Cal79 and Unit2. I would not be surprised if life successes reflected level of common sense and actual market understanding and vice versa.

Good job, fellas.

---

The monetarist has arrived with a different and interesting perspective.

I would also include Dajo9 in the conversation, as he has an historical perspective of the Feds actions. There are some great discussions here.

At some point, the FED was actively trying to cause inflation after the demise of Leyman Brothers, for legitimate policy reasons. When we move past the Great Recession and into C-19 periods, the FED policy was to save a partially shut down economy. At some point the FED policy finally was working, and then you add massive deficit spending and now you have inflation. There clearly is evidence that inflation causes some income inequality.Inflation Disproportionately Hurts the Poor - WSJhttps://www.wsj.com Opinion Letters. The arguments that inflation would also cause wealth inequality, at a minimum in the short run, seems persuasive. I certainly think the FED's actions were justified, even if one consequence was greater wealth inequality.

going4roses said:

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wifeisafurd said:

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concordtom said:

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wifeisafurd said:

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concordtom said:

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wifeisafurd said:

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going4roses said:

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When your great great grandparents/grandparents were legally considered as property(chattel slaves) that directly shapes ones outlook on a lot of things.

---

Wait, is this from the guy who posted about the cost of the apartment in the tony (read white liberal artsy) gentrified East Village? Holy crap. Hey get your butt over to East Queens to live with the brothers for far less.

---

Wife,
Not a good look, man.
Kinda ugly, actually.

---

Tom, coming from you that is really rich. Who you looking to have die today?

The bizarro guy starts talking about F-ing people and then is a complete hypocrite on the housing thing and gets called out and you of all people say its a bad look.

---

Really not sure what you are talking about!
Who is talking about F-ing people? Go ahead and quote that. Context??? What are you talking about?

You also wrote: "Who you looking to have die today?"
Did you omit the word "are" after who?
Hey, I've got a long and healthy list. Heart attacks, strokes, hit by a train. Did you want that list?
There are lots of people who are ruining this country through their lies and nastiness. Call it rich. I don't care. It's true.
I've asked rhetorically many times, "would you have preferred Hitler be dead in 1935?" The correct answer, it turns out, is Yes.

I'm a hypocrite on housing?
How so?
Where was I "called out"?

By the way, you've not stoned for your racist comment, merely attacked the person who pointed it out.

Not a good look #2.

---

Tom, let me invite you back to the planet. I you go through the posts, you will see going4roses, who as pointed out by others communicates in garbled language, posted about a tour of an apartment in a posh portion of Manhattan, known for it white liberal hipness, that said all landlord should get f--ked. He then asked if anyone saw a problem.

His next post was to say: "When your great great grandparents/grandparents were legally considered as property(chattel slaves) that directly shapes ones outlook on a lot of things." He did not say they were his grandparents. I assumed, perhaps incorrectly becuase one never is sure what this poster is talking about given his failure to often communicate in full sentences, is African Americans.

It seems to me there is a hypocrisy that the guy is upset about housing prices because he wants to live where the cool white people live, and then he pulls out the race card. It might not to you, but you have not followed the discussion to even consider this and why I said what I said and what it means. Somehow you think I'm talking about you. Not the first time on just this thread you didn't keep-up. Your too busy calling people Nazis and other things, wanting people you don't like to die immediately, demanding people disclose personal information, and saying other stuff that actually got you a time out from off topic, which is almost impossible to do, you can't even keep up with what is being talked about. Try to keep up and get a grip dude.

---

Do you strive to be the worst person you could possibly be? What is wrong with you ? Why are you so evil ? I feel sorry for you.

By the way your off the cuff attempted assessment of my thoughts and or analysis was completely wrong. But nevertheless you assume your always right thus you could never do any/could be wrong.

---

Doesn't seem like you love me and want me to have a good day. So I guess your are good with some guy who constantly uses Nazi references against people that disagree with his political viewpoint, including those with Jewish heritage, and uses other offensive approaches to arguing issues. Rather than developing arguments, he is personal, offensive and often off base because he doesn't follow the thread, so much so he is asked to take breaks from the site. Yet you ask what is wrong with me.

Then I see your posts on O/tTand your you often respond to posters here to f-k off. And it is not like you stick to posters. So why all the hate? This whole thing started with your non-sequitur to "f--k all the Manhattan landlords"? Maybe you need to hold up the mirror and repeat the first couple lines of your post to yourself.

Because you next post was what seemingly was a lucid statement:

"When your great great grandparents/grandparents were legally considered as property(chattel slaves) that directly shapes ones outlook on a lot of things. " Seemed to address racial discrimination. That seems consistent with your perspective of seeing the issues in the prism of race in posts here. Just looking at last couple days.

To a discussion the Jan. 6 protestors had different backgrounds that doesn't even mention Congress:
"So. The 147 Congress members that refused to ratify/acknowledge Biden as the presidential selected.
Should they be allowed to hold office in congress let alone a school board knowing the aided the Jan 6 white racial uprising."

On a book dealing with July 6 events: "This is from the facists (sic) textbook weaponizing racist white vs everyone else."

Earlier in the thread you said we missed the entire issues which was about back income. And in this thread and the last several days in other threads you have posted numerous posts from social media on on black vs white income. So if I was wrong when I assumed the intention of your comments, perhaps you may understand maybe I'm viewing what you say based on the words you write. And it terms of racial discrimination and its impact, I thoubght I was pretty clear earlier, notwithstanding the barrage from Tom who never seems to bother reading the posts before he lets loose. But yes, I called you on the comment about the apartment for a personal reason. My cousin is a black African. His response when I ran this by him was that you went after an area of Manhattan where he would be welcome as long as wasn't buying a co-op in someone's building. If you can't see the disconnect from your words in the two posts, then I can't help you. But I know what he went through being adopted at a young age and living in a upper middle class white area, not to mention being one of the few non-white faces at an investment bank. If I misinterpreted something that I apologize, but in fairness you are not exactly an easy guy to understand. This from just the last couple days:


In response to a post re: wealth distribution economics you responded with: " No no no. No more wire hangers. But I guess to some they see nothing wrong whatsoever " What does this have to do with topic matter? Maybe there is some dots to connect or perhaps this another angry post belongs in the a different thread about abortion?

Just then there are just plain garbled messages. Let's just look at the last few days:

- "This information (reality) is not a secret but so many rich people that know better but act/lie as if it doesn't exist. Just because one is not effected by it does NOT it doesn't exist."

- "If the top does better (when they don't have a need) the bottom will do even worse. And middle has been shifted to the bottom."

- "Trained w/ deadly force (your job)> knife or board with a nail (unskilled)"

- "Because there is no racism never was it was all made up"

- "Are you blind ? Or do you only see what you want I don't have that privilege. As you were have wonderful day"

This is gibberish. I'm not the only person saying this is hard to follow.

Look, having read your posts on O/T, you seem nasty to people that don't share your views, so I guess I should take offense. I guess its better to be called evil. You might find you will be better able to engage in a discussion of issues without the name calling and explaining your positions more fully. But you are not getting serious responses to your comments for a reason. I'm happy to engage with you but I need to understand your positions. As for being wrong and having to acknowledge the same, there are plenty of people who can tell you that I have changed my position based on their comments and said so. Can you say the same?

bearister said:

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DiabloWags said:

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Just curious Bearister . . .

What do you do to give back to your Community?

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Is this the part where I'm suppose to brag about the money I give away and hours donated like you guys brag about how self made and successful you are?

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I guess the Cat got a hold of Bearister's tongue.
As expected.

Sad really.

calbear93 said:

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dajo9 said:

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calbear93 said:

---

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

---

No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Ok, so you believe there is a wealth gap, and it hurts the middle class, and it is caused by monetary policy (Friedmanism, which was the conservative response to Keynes).

What is your solution to reverse the damage?

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

---

No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Ok, so you believe there is a wealth gap, and it hurts the middle class, and it is caused by monetary policy (Friedmanism, which was the conservative response to Keynes).

What is your solution to reverse the damage?

---

Is this a serious question? Loose monetary policies during economic health create asset bubbles that exacerbate unrealized wealth gap, create inflation and increase risks of a devastating crash. So what is the solution? Maybe tighten the monetary policy like they are doing now by accelerating shutting down quantitative easing and indicating more fed funds rate hikes? That alone reduced Musks' unrealized wealth and abridged the wealth gap more than taxes could have. When monetary policies tighten, won't high multiple companies always get hit first? Kind of like what happened with high multiple tech companies and EV companies this week? When inflation hits and there is more demand than supply, energy and cyclicals do better, right? Some people are going to get hurt and those who invest without understanding valuation in fear of missing out will lose out, but the longer the Fed encourages delusional valuation and high inflation, the more the middle class will get hurt when the eventual crash comes. When people arrogantly claim basic fundamental analysis doesn't matter and the market starts pricing mismanaged companies at high multiples like well managed companies, amazing opportunity for people who take the time to scrub the financial statements and analyze strength of management team to separate those worthy of lofty valuation from those that are hype. But crash comes because people who don't know the difference between titans like Larry Culp from any idiot Joe Schmo or free cash flow and net retention rate from latest Reddit hype jack up valuation of speculative investments because money is cheap, savings is a money loser and there is no place to invest wisely without doing the diligence. Where we were with crap like crypto having the valuations it had and with a SPAC trying to generate capital raise because Shaq is associated with it (why would I think Shaq is better at finding a private company to take public?) is not a healthy place to be.

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

---

No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Ok, so you believe there is a wealth gap, and it hurts the middle class, and it is caused by monetary policy (Friedmanism, which was the conservative response to Keynes).

What is your solution to reverse the damage?

---

Is this a serious question? Loose monetary policies during economic health create asset bubbles that exacerbate unrealized wealth gap, create inflation and increase risks of a devastating crash. So what is the solution? Maybe tighten the monetary policy like they are doing now by accelerating shutting down quantitative easing and indicating more fed funds rate hikes? That alone reduced Musks' unrealized wealth and abridged the wealth gap more than taxes could have. When monetary policies tighten, won't high multiple companies always get hit first? Kind of like what happened with high multiple tech companies and EV companies this week? When inflation hits and there is more demand than supply, energy and cyclicals do better, right? Some people are going to get hurt and those who invest without understanding valuation in fear of missing out will lose out, but the longer the Fed encourages delusional valuation and high inflation, the more the middle class will get hurt when the eventual crash comes. When people arrogantly claim basic fundamental analysis doesn't matter and the market starts pricing mismanaged companies at high multiples like well managed companies, amazing opportunity for people who take the time to scrub the financial statements and analyze strength of management team to separate those worthy of lofty valuation from those that are hype. But crash comes because people who don't know the difference between titans like Larry Culp from any idiot Joe Schmo or free cash flow and net retention rate from latest Reddit hype jack up valuation of speculative investments because money is cheap, savings is a money loser and there is no place to invest wisely without doing the diligence. Where we were with crap like crypto having the valuations it had and with a SPAC trying to generate capital raise because Shaq is associated with it (why would I think Shaq is better at finding a private company to take public?) is not a healthy place to be.

---

You believe the wealth gap has priced much of the middle class out of the housing market (among other things).
Do you want to tighten monetary policy to the point that asset inflation stops (leaving the status quo) or do you want to tighten monetary policy to the point that asset inflation is reversed and housing prices come down?

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

---

No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Ok, so you believe there is a wealth gap, and it hurts the middle class, and it is caused by monetary policy (Friedmanism, which was the conservative response to Keynes).

What is your solution to reverse the damage?

---

Is this a serious question? Loose monetary policies during economic health create asset bubbles that exacerbate unrealized wealth gap, create inflation and increase risks of a devastating crash. So what is the solution? Maybe tighten the monetary policy like they are doing now by accelerating shutting down quantitative easing and indicating more fed funds rate hikes? That alone reduced Musks' unrealized wealth and abridged the wealth gap more than taxes could have. When monetary policies tighten, won't high multiple companies always get hit first? Kind of like what happened with high multiple tech companies and EV companies this week? When inflation hits and there is more demand than supply, energy and cyclicals do better, right? Some people are going to get hurt and those who invest without understanding valuation in fear of missing out will lose out, but the longer the Fed encourages delusional valuation and high inflation, the more the middle class will get hurt when the eventual crash comes. When people arrogantly claim basic fundamental analysis doesn't matter and the market starts pricing mismanaged companies at high multiples like well managed companies, amazing opportunity for people who take the time to scrub the financial statements and analyze strength of management team to separate those worthy of lofty valuation from those that are hype. But crash comes because people who don't know the difference between titans like Larry Culp from any idiot Joe Schmo or free cash flow and net retention rate from latest Reddit hype jack up valuation of speculative investments because money is cheap, savings is a money loser and there is no place to invest wisely without doing the diligence. Where we were with crap like crypto having the valuations it had and with a SPAC trying to generate capital raise because Shaq is associated with it (why would I think Shaq is better at finding a private company to take public?) is not a healthy place to be.

---

You believe the wealth gap has priced much of the middle class out of the housing market (among other things).
Do you want to tighten monetary policy to the point that asset inflation stops (leaving the status quo) or do you want to tighten monetary policy to the point that asset inflation is reversed and housing prices come down?

---

Dajo, that is a really good question, and I appreciate you addressed it to someone else. But let me put in my two cents.

I think both of us during the last 10 years have pointed out times during and after the Great Recession when monetary policy has little or no impact. We both have degrees from Cal in Econ (I was Econ and Business) and we were trained by Keynes folks, so have our biases, but monetary policy has periods were it doesn't work well.

With that in mind, the goals of monetary policy for the last decade at least have been establish conditions for long-term economic growth and maximum employment. The concept of stable prices or interest rates or address inflation have taken a back seat in order to achieve growth. If anything there were times when the FED wanted prices to increase due to to the Great Pandemic, and then to prevent the impacts of C-19 on the economy. The view is (was?) that the US, if not the world, was otherwise heading towards economic catastrophe. Now at least the US economy is doing well and we are starting to see inflation. To complain about the side effects of policies by the FED (and our legislators through deficit spending) to save the economy from the shocks of the Great Recession and C-19 seems to me a little like the folks saying I should not have gotten vaccinated for C-19 because I could be ill for 24 to 48 hours.

Monetary policy increases liquidity to create economic growth. It reduces liquidity to prevent inflation. We are starting to have inflation and in most cases monetary policy then wants to slow the economy for better price stability. That has consequences that politicians don't like. Interest rates rise. Capital become more expensive and that means less economic growth. Cap rates rise to compete, and real estate is worth less (not good for me personally). The stock market, which many people are invested in either directly or indirectly through pension or similar plans generally goes down. These are the consequences of using monetary policy if you are going to use it - there is pain and people's personal wealth goes down. I'm assuming the FED is willing to allow this for the greater good. But as interest rates rise, housing prices decline with housing become somewhat more affordable, and use the example in this thread, people in the Bay Area lose wealth. This again leaves the question if the government is willing to induce pain for price stabilization.

You really don't see this type of interaction on a USC site. Good discussion guys.

dajo9 said:

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calbear93 said:

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dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

---

No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Ok, so you believe there is a wealth gap, and it hurts the middle class, and it is caused by monetary policy (Friedmanism, which was the conservative response to Keynes).

What is your solution to reverse the damage?

---

Is this a serious question? Loose monetary policies during economic health create asset bubbles that exacerbate unrealized wealth gap, create inflation and increase risks of a devastating crash. So what is the solution? Maybe tighten the monetary policy like they are doing now by accelerating shutting down quantitative easing and indicating more fed funds rate hikes? That alone reduced Musks' unrealized wealth and abridged the wealth gap more than taxes could have. When monetary policies tighten, won't high multiple companies always get hit first? Kind of like what happened with high multiple tech companies and EV companies this week? When inflation hits and there is more demand than supply, energy and cyclicals do better, right? Some people are going to get hurt and those who invest without understanding valuation in fear of missing out will lose out, but the longer the Fed encourages delusional valuation and high inflation, the more the middle class will get hurt when the eventual crash comes. When people arrogantly claim basic fundamental analysis doesn't matter and the market starts pricing mismanaged companies at high multiples like well managed companies, amazing opportunity for people who take the time to scrub the financial statements and analyze strength of management team to separate those worthy of lofty valuation from those that are hype. But crash comes because people who don't know the difference between titans like Larry Culp from any idiot Joe Schmo or free cash flow and net retention rate from latest Reddit hype jack up valuation of speculative investments because money is cheap, savings is a money loser and there is no place to invest wisely without doing the diligence. Where we were with crap like crypto having the valuations it had and with a SPAC trying to generate capital raise because Shaq is associated with it (why would I think Shaq is better at finding a private company to take public?) is not a healthy place to be.

---

You believe the wealth gap has priced much of the middle class out of the housing market (among other things).
Do you want to tighten monetary policy to the point that asset inflation stops (leaving the status quo) or do you want to tighten monetary policy to the point that asset inflation is reversed and housing prices come down?

---

Just doing what the Fed is now finally starting to do will result in asset prices coming down. You are seeing that now, so not sure if your question is in good faith. You do seem smarter than your questions would indicate, but I will go against my better judgment and answer in good faith on what I believe. Asset inflations of any kind results in asset inflation of many other kinds. When kids are making millions on equity grants because tech stocks are rocket fueled by excess liquidity, those kids will be able to bid up real estate prices. When assets price in illogical exuberance, any reversal in sentiment usually comes with illogical fear. Some assets are more responsive to immediate reaction depending on liquidity of transfer. Stock market will see immediate hit and reversal as we saw this week and last February when the market believes monetary policies and inflation will be faster or longer than what was priced in. I think there is a bigger crash that needs to come and will come to remove the speculators from investors. And when there is a bubble based on perfection, there will be likewise panic that is the partner of FOMO that will drive DOWN relatively quickly and to the other extreme prices of assets. As you know, real estate is not as liquid and prices are slower to react to Fed action and sentiment but it will catch up. When 25 year old engineer from Facebook claiming he is doing good stops seeing RSU valuations in millions, there will be less gentrification and "hip" liberals outpricing locals and middle class in urban centers. Especially with remote work even more possible, real estate prices in urban centers will self-correct even more. When 10 year treasury rate increases because zero interest rate will not last forever, mortgage rates will catch up and purchase power will go down and real estate prices will react. Just common sense. We rightfully praise the scientific method but fail to appreciate the same concept when it comes to learning from history.

wifeisafurd said:

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dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

---

No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Ok, so you believe there is a wealth gap, and it hurts the middle class, and it is caused by monetary policy (Friedmanism, which was the conservative response to Keynes).

What is your solution to reverse the damage?

---

Is this a serious question? Loose monetary policies during economic health create asset bubbles that exacerbate unrealized wealth gap, create inflation and increase risks of a devastating crash. So what is the solution? Maybe tighten the monetary policy like they are doing now by accelerating shutting down quantitative easing and indicating more fed funds rate hikes? That alone reduced Musks' unrealized wealth and abridged the wealth gap more than taxes could have. When monetary policies tighten, won't high multiple companies always get hit first? Kind of like what happened with high multiple tech companies and EV companies this week? When inflation hits and there is more demand than supply, energy and cyclicals do better, right? Some people are going to get hurt and those who invest without understanding valuation in fear of missing out will lose out, but the longer the Fed encourages delusional valuation and high inflation, the more the middle class will get hurt when the eventual crash comes. When people arrogantly claim basic fundamental analysis doesn't matter and the market starts pricing mismanaged companies at high multiples like well managed companies, amazing opportunity for people who take the time to scrub the financial statements and analyze strength of management team to separate those worthy of lofty valuation from those that are hype. But crash comes because people who don't know the difference between titans like Larry Culp from any idiot Joe Schmo or free cash flow and net retention rate from latest Reddit hype jack up valuation of speculative investments because money is cheap, savings is a money loser and there is no place to invest wisely without doing the diligence. Where we were with crap like crypto having the valuations it had and with a SPAC trying to generate capital raise because Shaq is associated with it (why would I think Shaq is better at finding a private company to take public?) is not a healthy place to be.

---

You believe the wealth gap has priced much of the middle class out of the housing market (among other things).
Do you want to tighten monetary policy to the point that asset inflation stops (leaving the status quo) or do you want to tighten monetary policy to the point that asset inflation is reversed and housing prices come down?

---

Dajo, that is a really good question, and I appreciate you addressed it to someone else. But let me put in my two cents.

I think both of us during the last 10 years have pointed out times during and after the Great Recession when monetary policy has little or no impact. We both have degrees from Cal in Econ (I was Econ and Business) and we were trained by Keynes folks, so have our biases, but monetary policy has periods were it doesn't work well.

With that in mind, the goals of monetary policy for the last decade at least have been establish conditions for long-term economic growth and maximum employment. The concept of stable prices or interest rates or address inflation have taken a back seat in order to achieve growth. If anything there were times when the FED wanted prices to increase due to to the Great Pandemic, and then to prevent the impacts of C-19 on the economy. The view is (was?) that the US, if not the world, was otherwise heading towards economic catastrophe. Now at least the US economy is doing well and we are starting to see inflation. To complain about the side effects of policies by the FED (and our legislators through deficit spending) to save the economy from the shocks of the Great Recession and C-19 seems to me a little like the folks saying I should not have gotten vaccinated for C-19 because I could be ill for 24 to 48 hours.

Monetary policy increases liquidity to create economic growth. It reduces liquidity to prevent inflation. We are starting to have inflation and in most cases monetary policy then wants to slow the economy for better price stability. That has consequences that politicians don't like. Interest rates rise. Capital become more expensive and that means less economic growth. Cap rates rise to compete, and real estate is worth less (not good for me personally). The stock market, which many people are invested in either directly or indirectly through pension or similar plans generally goes down. These are the consequences of using monetary policy if you are going to use it - there is pain and people's personal wealth goes down. I'm assuming the FED is willing to allow this for the greater good. But as interest rates rise, housing prices decline with housing become somewhat more affordable, and use the example in this thread, people in the Bay Area lose wealth. This again leaves the question if the government is willing to induce pain for price stabilization.

---

WIAF - I will say this. Using monetary policy to artificially stimulate speculation and sugar-high growth is like taking pain killers just to feel good. It is less effective when needed at times of crisis. And it has always created asset bubbles, whether with oil speculations in early 80s, internet bubbles in late 90s, and sub-prime mortgage in late 2000. I am all for artificially gaming growth to avoid a depression but wary of using to minimize unemployment and stimulate growth when the economy is relatively healthy. For example, I think the Fed should have done even more immediately in the aftermath of the Great Recession but should have retreated when we recovered.

https://www.theguardian.com/us-news/2016/feb/04/still-a-city-of-slaves-selma-in-the-words-who-those-who-live-there

calbear93 said:

---

wifeisafurd said:

---

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

---

No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Ok, so you believe there is a wealth gap, and it hurts the middle class, and it is caused by monetary policy (Friedmanism, which was the conservative response to Keynes).

What is your solution to reverse the damage?

---

Is this a serious question? Loose monetary policies during economic health create asset bubbles that exacerbate unrealized wealth gap, create inflation and increase risks of a devastating crash. So what is the solution? Maybe tighten the monetary policy like they are doing now by accelerating shutting down quantitative easing and indicating more fed funds rate hikes? That alone reduced Musks' unrealized wealth and abridged the wealth gap more than taxes could have. When monetary policies tighten, won't high multiple companies always get hit first? Kind of like what happened with high multiple tech companies and EV companies this week? When inflation hits and there is more demand than supply, energy and cyclicals do better, right? Some people are going to get hurt and those who invest without understanding valuation in fear of missing out will lose out, but the longer the Fed encourages delusional valuation and high inflation, the more the middle class will get hurt when the eventual crash comes. When people arrogantly claim basic fundamental analysis doesn't matter and the market starts pricing mismanaged companies at high multiples like well managed companies, amazing opportunity for people who take the time to scrub the financial statements and analyze strength of management team to separate those worthy of lofty valuation from those that are hype. But crash comes because people who don't know the difference between titans like Larry Culp from any idiot Joe Schmo or free cash flow and net retention rate from latest Reddit hype jack up valuation of speculative investments because money is cheap, savings is a money loser and there is no place to invest wisely without doing the diligence. Where we were with crap like crypto having the valuations it had and with a SPAC trying to generate capital raise because Shaq is associated with it (why would I think Shaq is better at finding a private company to take public?) is not a healthy place to be.

---

You believe the wealth gap has priced much of the middle class out of the housing market (among other things).
Do you want to tighten monetary policy to the point that asset inflation stops (leaving the status quo) or do you want to tighten monetary policy to the point that asset inflation is reversed and housing prices come down?

---

Dajo, that is a really good question, and I appreciate you addressed it to someone else. But let me put in my two cents.

I think both of us during the last 10 years have pointed out times during and after the Great Recession when monetary policy has little or no impact. We both have degrees from Cal in Econ (I was Econ and Business) and we were trained by Keynes folks, so have our biases, but monetary policy has periods were it doesn't work well.

With that in mind, the goals of monetary policy for the last decade at least have been establish conditions for long-term economic growth and maximum employment. The concept of stable prices or interest rates or address inflation have taken a back seat in order to achieve growth. If anything there were times when the FED wanted prices to increase due to to the Great Pandemic, and then to prevent the impacts of C-19 on the economy. The view is (was?) that the US, if not the world, was otherwise heading towards economic catastrophe. Now at least the US economy is doing well and we are starting to see inflation. To complain about the side effects of policies by the FED (and our legislators through deficit spending) to save the economy from the shocks of the Great Recession and C-19 seems to me a little like the folks saying I should not have gotten vaccinated for C-19 because I could be ill for 24 to 48 hours.

Monetary policy increases liquidity to create economic growth. It reduces liquidity to prevent inflation. We are starting to have inflation and in most cases monetary policy then wants to slow the economy for better price stability. That has consequences that politicians don't like. Interest rates rise. Capital become more expensive and that means less economic growth. Cap rates rise to compete, and real estate is worth less (not good for me personally). The stock market, which many people are invested in either directly or indirectly through pension or similar plans generally goes down. These are the consequences of using monetary policy if you are going to use it - there is pain and people's personal wealth goes down. I'm assuming the FED is willing to allow this for the greater good. But as interest rates rise, housing prices decline with housing become somewhat more affordable, and use the example in this thread, people in the Bay Area lose wealth. This again leaves the question if the government is willing to induce pain for price stabilization.

---

For example, I think the Fed should have done even more immediately in the aftermath of the Great Recession but should have retreated when we recovered.

---

Okay, in theory all of your post makes sense. C-19 is taking huge hits on other economies. But with respect to the US, that last sentence is a little like trying to invest at the bottom of the market. You often don't really know when you hit the bottom until much later. I suspect that Powell and Biden, if they had a crystal ball, would have started applying the breaks to the ecnomy maybe six months ago. Powell has the luxury of being able to do things more quickly. I suspect Biden is trying to figure out how to reduce the spending in BBB and/or raise taxes that he can get through Congress, so he has a lot less deficit spending. But six months ago, many people were still getting vaccinations shots and there was a lot of uncertainly about the economy.

wifeisafurd said:

---

calbear93 said:

---

wifeisafurd said:

---

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

---

No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Ok, so you believe there is a wealth gap, and it hurts the middle class, and it is caused by monetary policy (Friedmanism, which was the conservative response to Keynes).

What is your solution to reverse the damage?

---

Is this a serious question? Loose monetary policies during economic health create asset bubbles that exacerbate unrealized wealth gap, create inflation and increase risks of a devastating crash. So what is the solution? Maybe tighten the monetary policy like they are doing now by accelerating shutting down quantitative easing and indicating more fed funds rate hikes? That alone reduced Musks' unrealized wealth and abridged the wealth gap more than taxes could have. When monetary policies tighten, won't high multiple companies always get hit first? Kind of like what happened with high multiple tech companies and EV companies this week? When inflation hits and there is more demand than supply, energy and cyclicals do better, right? Some people are going to get hurt and those who invest without understanding valuation in fear of missing out will lose out, but the longer the Fed encourages delusional valuation and high inflation, the more the middle class will get hurt when the eventual crash comes. When people arrogantly claim basic fundamental analysis doesn't matter and the market starts pricing mismanaged companies at high multiples like well managed companies, amazing opportunity for people who take the time to scrub the financial statements and analyze strength of management team to separate those worthy of lofty valuation from those that are hype. But crash comes because people who don't know the difference between titans like Larry Culp from any idiot Joe Schmo or free cash flow and net retention rate from latest Reddit hype jack up valuation of speculative investments because money is cheap, savings is a money loser and there is no place to invest wisely without doing the diligence. Where we were with crap like crypto having the valuations it had and with a SPAC trying to generate capital raise because Shaq is associated with it (why would I think Shaq is better at finding a private company to take public?) is not a healthy place to be.

---

You believe the wealth gap has priced much of the middle class out of the housing market (among other things).
Do you want to tighten monetary policy to the point that asset inflation stops (leaving the status quo) or do you want to tighten monetary policy to the point that asset inflation is reversed and housing prices come down?

---

Dajo, that is a really good question, and I appreciate you addressed it to someone else. But let me put in my two cents.

I think both of us during the last 10 years have pointed out times during and after the Great Recession when monetary policy has little or no impact. We both have degrees from Cal in Econ (I was Econ and Business) and we were trained by Keynes folks, so have our biases, but monetary policy has periods were it doesn't work well.

With that in mind, the goals of monetary policy for the last decade at least have been establish conditions for long-term economic growth and maximum employment. The concept of stable prices or interest rates or address inflation have taken a back seat in order to achieve growth. If anything there were times when the FED wanted prices to increase due to to the Great Pandemic, and then to prevent the impacts of C-19 on the economy. The view is (was?) that the US, if not the world, was otherwise heading towards economic catastrophe. Now at least the US economy is doing well and we are starting to see inflation. To complain about the side effects of policies by the FED (and our legislators through deficit spending) to save the economy from the shocks of the Great Recession and C-19 seems to me a little like the folks saying I should not have gotten vaccinated for C-19 because I could be ill for 24 to 48 hours.

Monetary policy increases liquidity to create economic growth. It reduces liquidity to prevent inflation. We are starting to have inflation and in most cases monetary policy then wants to slow the economy for better price stability. That has consequences that politicians don't like. Interest rates rise. Capital become more expensive and that means less economic growth. Cap rates rise to compete, and real estate is worth less (not good for me personally). The stock market, which many people are invested in either directly or indirectly through pension or similar plans generally goes down. These are the consequences of using monetary policy if you are going to use it - there is pain and people's personal wealth goes down. I'm assuming the FED is willing to allow this for the greater good. But as interest rates rise, housing prices decline with housing become somewhat more affordable, and use the example in this thread, people in the Bay Area lose wealth. This again leaves the question if the government is willing to induce pain for price stabilization.

---

For example, I think the Fed should have done even more immediately in the aftermath of the Great Recession but should have retreated when we recovered.

---

Okay, in theory all of your post makes sense. C-19 is taking huge hits on other economies. But with respect to the US, that last sentence is a little like trying to invest at the bottom of the market. You often don't really know when you hit the bottom until much later. I suspect that Powell and Biden, if they had a crystal ball, would have started applying the breaks to the ecnomy maybe six months ago. Powell has the luxury of being able to do things more quickly. I suspect Biden is trying to figure out how to reduce the spending in BBB and/or raise taxes that he can get through Congress, so he has a lot less deficit spending. But six months ago, many people were still getting vaccinations shots and there was a lot of uncertainly about the economy.

---

You are absolutely right on difficulty of timing. There are often conflicting indicators. However, most insiders knew the supply chain constraints back in January of last year and inevitable inflation. I was hearing from my friends that they were seeing lead time spike up like they had never seen before.

https://bearinsider.com/forums/6/topics/100562/replies/1852155

I am not really blaming Powell or Yellen. If anything, Trump was upset with Powell for not agreeing to continue to artificially engineer the stock market. I do blame him for keep calling inflation transitory not requiring any change in policy for awhile. Yellen was even more of a moderate and traditionalist, I believe. I would argue that Greenspan and Bernanke were the ones more inclined to spike the economy even when healthy to cater to asset owners like me.

calbear93 said:

---

wifeisafurd said:

---

calbear93 said:

---

wifeisafurd said:

---

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

dajo9 said:

---

calbear93 said:

---

One thing I don't think gets mentioned enough is the impact that monetary policies and quantitative easing have had on wealth disparity. When zero interest rate is applied during economic shock and recession, it can avoid another depression like the Great Depression. However, when you experiment with loose monetary policies and continue something radical like quantitative easing during economic health as Greenspan and Bernanke did, it always creates asset bubbles and dislocates appropriate balance of reward for risk. While Tesla is a great company, its valuation and Musk's wealth were heavily influenced by monetary policies punishing savings and creating so much liquidity that it puts into hyperdrive FOMO where, instead of rising price discouraging demand, it turbocharges it. All you have to do is look at something like cryptocurrency to realize the dislocation that the monetary policies have created. Musk would still be approaching trillion no matter the incremental tax policies. However, when you raise interest rate and turn off purchases of securities by the Fed from the balance sheets of banks that flooded the market with money magically created with a push of a button, you will always see repricing of high growth companies, which will not only reduce inflation but also reduce wealth gap. Nothing wrong with wealth discrepancy on its own. But the portion created by loose monetary policy to artificially drive down unemployment rate and stroke the speculative investment will always result in a crash and create massive damage to the late comers and middle class. Don't get me wrong. I have been able to take care of myself and my future generation based on the longest bull market as well as from prior equity grants / hedge fund interests. But loose monetary policies have increased economic risks, increased wealth gap, and increased homelessness. On top of that, when you have inflation created by loose monetary policies and loose fiscal policies (geez, what could go wrong with stimulating demand beyond supply levels with government handouts and flooding the market with cheap money), you create more harm to the poor than to the rich who are asset owners. For example, the asset bubbles impact real estate prices that lead to pricing out middle class and lead to NIMBY behavior, even by those who otherwise profess to care about the poor (always easier to talk about what others should do instead of making actual personal sacrifices - but when the rubber meets the road, most people who profess to debate in favor of liberal policies will argue against actual affordable real estate in their neighborhood that impacts their "wealth"). If people lived the way they talk, you would not have the greatest wealth disparities and homelessness in the most liberal and heavily taxed places.

---

The argument here seems to be that loose monetary policy increases wealth inequality and that hurts the middle class and poor, particularly with rising home prices, but the only part of wealth inequality that hurts the middle class and poor is that part created by loose monetary policy.

My opinion is that what you are saying holds true about wealth inequality, for the portion created by loose monetary policy and the portion created otherwise.

---

No, the point is that people talk about tax policies as the solution for or cause of the wealth gap. The greatest reason for the wealth gap is the monetary policies and flooding the market with excess liquidity. Those who were concerned about Bernanke's policies were not only worried about inflation but also about the impact on wealth gap the asset inflation would create and the harm it was creating for those with fixed income at the benefit of asset owners. And when the eventual inflation hits, it hurts the poor the most because wages will never outpace prices during period of high inflation driven by excess demand because, as much power as labor may have, vendors will have even more pricing power when supply falls far short of artificially created demand.

---

Ok, so you believe there is a wealth gap, and it hurts the middle class, and it is caused by monetary policy (Friedmanism, which was the conservative response to Keynes).

What is your solution to reverse the damage?

---

Is this a serious question? Loose monetary policies during economic health create asset bubbles that exacerbate unrealized wealth gap, create inflation and increase risks of a devastating crash. So what is the solution? Maybe tighten the monetary policy like they are doing now by accelerating shutting down quantitative easing and indicating more fed funds rate hikes? That alone reduced Musks' unrealized wealth and abridged the wealth gap more than taxes could have. When monetary policies tighten, won't high multiple companies always get hit first? Kind of like what happened with high multiple tech companies and EV companies this week? When inflation hits and there is more demand than supply, energy and cyclicals do better, right? Some people are going to get hurt and those who invest without understanding valuation in fear of missing out will lose out, but the longer the Fed encourages delusional valuation and high inflation, the more the middle class will get hurt when the eventual crash comes. When people arrogantly claim basic fundamental analysis doesn't matter and the market starts pricing mismanaged companies at high multiples like well managed companies, amazing opportunity for people who take the time to scrub the financial statements and analyze strength of management team to separate those worthy of lofty valuation from those that are hype. But crash comes because people who don't know the difference between titans like Larry Culp from any idiot Joe Schmo or free cash flow and net retention rate from latest Reddit hype jack up valuation of speculative investments because money is cheap, savings is a money loser and there is no place to invest wisely without doing the diligence. Where we were with crap like crypto having the valuations it had and with a SPAC trying to generate capital raise because Shaq is associated with it (why would I think Shaq is better at finding a private company to take public?) is not a healthy place to be.

---

You believe the wealth gap has priced much of the middle class out of the housing market (among other things).
Do you want to tighten monetary policy to the point that asset inflation stops (leaving the status quo) or do you want to tighten monetary policy to the point that asset inflation is reversed and housing prices come down?

---

Dajo, that is a really good question, and I appreciate you addressed it to someone else. But let me put in my two cents.

I think both of us during the last 10 years have pointed out times during and after the Great Recession when monetary policy has little or no impact. We both have degrees from Cal in Econ (I was Econ and Business) and we were trained by Keynes folks, so have our biases, but monetary policy has periods were it doesn't work well.

With that in mind, the goals of monetary policy for the last decade at least have been establish conditions for long-term economic growth and maximum employment. The concept of stable prices or interest rates or address inflation have taken a back seat in order to achieve growth. If anything there were times when the FED wanted prices to increase due to to the Great Pandemic, and then to prevent the impacts of C-19 on the economy. The view is (was?) that the US, if not the world, was otherwise heading towards economic catastrophe. Now at least the US economy is doing well and we are starting to see inflation. To complain about the side effects of policies by the FED (and our legislators through deficit spending) to save the economy from the shocks of the Great Recession and C-19 seems to me a little like the folks saying I should not have gotten vaccinated for C-19 because I could be ill for 24 to 48 hours.

Monetary policy increases liquidity to create economic growth. It reduces liquidity to prevent inflation. We are starting to have inflation and in most cases monetary policy then wants to slow the economy for better price stability. That has consequences that politicians don't like. Interest rates rise. Capital become more expensive and that means less economic growth. Cap rates rise to compete, and real estate is worth less (not good for me personally). The stock market, which many people are invested in either directly or indirectly through pension or similar plans generally goes down. These are the consequences of using monetary policy if you are going to use it - there is pain and people's personal wealth goes down. I'm assuming the FED is willing to allow this for the greater good. But as interest rates rise, housing prices decline with housing become somewhat more affordable, and use the example in this thread, people in the Bay Area lose wealth. This again leaves the question if the government is willing to induce pain for price stabilization.

---

For example, I think the Fed should have done even more immediately in the aftermath of the Great Recession but should have retreated when we recovered.

---

Okay, in theory all of your post makes sense. C-19 is taking huge hits on other economies. But with respect to the US, that last sentence is a little like trying to invest at the bottom of the market. You often don't really know when you hit the bottom until much later. I suspect that Powell and Biden, if they had a crystal ball, would have started applying the breaks to the ecnomy maybe six months ago. Powell has the luxury of being able to do things more quickly. I suspect Biden is trying to figure out how to reduce the spending in BBB and/or raise taxes that he can get through Congress, so he has a lot less deficit spending. But six months ago, many people were still getting vaccinations shots and there was a lot of uncertainly about the economy.

---

You are absolutely right on difficulty of timing. There are often conflicting indicators. However, most insiders knew the supply chain constraints back in January of last year and inevitable inflation. I was hearing from my friends that they were seeing lead time spike up like they had never seen before.

https://bearinsider.com/forums/6/topics/100562/replies/1852155

I am not really blaming Powell or Yellen. If anything, Trump was upset with Powell for not agreeing to continue to artificially engineer the stock market. I do blame him for keep calling inflation transitory not requiring any change in policy for awhile. Yellen was even more of a moderate and traditionalist, I believe. I would argue that Greenspan and Bernanke were the ones more inclined to spike the economy even when healthy to cater to asset owners like me.

---

Agreed. Given the weirdness the pandemic brings, the US economy has been fairly well managed.

I think QE should have ended summer 2020 when the stock market had fully recovered. It was after that when assets like housing went bonkers. Of course, QE started Fall 2019 so it was never about Covid to begin with. It was always about boosting asset prices.

Fiscal policy has been great and we should continue with BBB and slightly higher interest rates as well as light Quantitative Tightening. If we need to reduce spending we should reduce military spending.

dajo9 said:

---

I think QE should have ended summer 2020 when the stock market had fully recovered. It was after that when assets like housing went bonkers. Of course, QE started Fall 2019 so it was never about Covid to begin with. It was always about boosting asset prices.

Fiscal policy has been great and we should continue with BBB and slightly higher interest rates as well as light Quantitative Tightening. If we need to reduce spending we should reduce military spending.

---

I agree that the recent QE, was not about C-19 to be begin with. But the Fed was never going change policy while C-19 was raging, and there was little inflation.

wifeisafurd said:

---

I agree that the recent QE, was not about C-19 to be begin with. But the Fed was never going change policy while C-19 was raging, and there was little inflation.

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While there's been a lot of focus on the Fed and their role, I think its important to note that most of our recent price inflation has occurred due to weather related issues, which started with the Texas "Freeze" back in February 2021 and another big hurricane season that caused one refinery shut-down after another, not too mention a ransomware attack on the Colonial Pipeline, along with an OPEC that refused to significantly increase output, combined with MASSIVE FISCAL SPENDING that wound up creating a ton of demand against a back-drop of supply chain issues. - - - Too much money chasing too few goods.

As a result, I think that it's unfair to point too many fingers at the Fed or monetary policy.
20/20 hindsight is too easy of a "trap" when it comes to the Fed. They've certainly had a lot on their plate over the past 2 years and the massive fiscal policy and weather related issues hasnt it made it any easier. Meanwhile, progressives like Elizabeth Warren are leading the charge to increase the Fed's responsibilities to also include Climate Change.

The US jobs report was a warning sign even before the Omicron surge


https://www.theguardian.com/commentisfree/2022/jan/09/us-jobs-report-warning-sign-even-before-omicron-surge?CMP=Share_iOSApp_Other