It's still early William, you should keep some powder dry for the general. I'm thinking you are a little bored now that Carson is out and want to ease some of that disappointment by dumping on Hillary and Bernie a bit, and that's all well and good, but if you go shooting all ya got right now, it will all be old by the time the general rolls around. Pace yourself buddy.
Sanders is an honest man. His voting record and his personal life reflect a man who has fought for the working class his entire life. Buzzwords, rather than actions are important to you, for whatever reason. Sanders is not Stalin or Chairman Mao or Fidel Castro. He is acknowledging a simple fact, which is that we already have a mixed system that includes socialism, socialism that you personally will make sure you get your share of.
You don't seem to like Trump, and certainly don't like either Democrat candidate, and I gather you don't like Cruz either. Yet those are the people who are relevant. Not because of the evil media empire, but because that's who primary voters are going for. I'm sure you have a long list of people to blame but it doesn't change reality.
I like Bernie he's an honest to goodness independant communist. He and Trump have tapped into the economic unrest caused by a stagnant economy. Welfare, food stamps, disability, and scores of other government insurance programs are straining at record levels. 20 Trillion dollars of debt are on the doorstep.
I know you admire Bernie Max. I respect that. I know you exist within your rigid employment constraints and find it simpler to blame societies creators of wealth than to imagine a more limited regulatory structure where other people are actually encouraged to elevate themselves rather than be tied down to layer after layer of compliance.
But, do you honestly think that Bernie can lead us towards a Northern European style social utopia? Maybe I answered my own question, of course you do.
Actually, I don't think Bernie can lead us there. I mean, if he wins and faces Foghorn Leghorn in the Senate and Ryan in congress, Bernie's not going to get anything done that he wants. But, he can continue to raise issues that are important to me.
You are partially right about my view in your second para, but as I have said before William, the single document that really describes my view is Andrew Carnegie's gospel of wealth. If the rich and the business leaders of our country espoused his views, I would be way, way more willing to see regulation eased. I don't blame business for every downfall in society I don't like. Let's face it, these trade deals got passed and the middle class was more than willing to consume consume consume even though it meant their jobs would leave. When you chide me about regulations, though, you speak as if there has never been disasters that killed people specifically because regulations were ignored.
Bernie's whole premise, and mine, is that the whole thing has shifted. the existence of food stamps is not keeping people down. I would argue, however, that lack of education clearly is. I don't like government programs that just give stuff out, I like to see people working. On the flip side though, through a combination of lower taxes, and a FED that has debased the dollar to keep stocks up, we have seen an enormous pile of wealth grow, but only at the top. The money is not "trickling down" and has not for the last 30 years. I believe in competition, but I want to see EVERYONE have to compete. Right now, those in the middle and bottom have to compete, while those at the top basically sit idle and hoard money that they can pass on to their lucky sperm club brat kids. If I was hearing from someone on the right they supported programs that helped young people get access to capital for school, tht would be one thing. What I'm hearing instead is just a regurgitation of talking points about food stamps, and other programs that are abused. On the other end, the wealthy abuse government programs too. I think In contrast to you, my view is that you need to keep everyone honest and not just assume that cheating comes only from one socioeconomic class. I found this on Forbes the other day and thought it summed things up well http://www.forbes.com/sites/moneywisewomen/2012/03/21/average-america-vs-the-one-percent/#3f44808e11a8
It doesn't help that we rank 54th in educational expenditure. However, it runs deeper than that. We actually rank low in just about everything. https://rankingamerica.wordpress.com/category/education/page/2/
Good point. In fact these ratings are, for the most part, based on elementary and secondary school standardized tests. I was Department Chair at a large urban university and we typically had large numbers of applicants from foreign students wanting in our graduate program. Most of those came from China, although we also had students from India, Greece, South America, Ukraine and other USSR countries. Very few from Europe.
We've covered this before William, you know my views on this. To me, there is a big difference between the person who puts their money into a new business and person who just keeps buying low and selling high. Yeah, technically, they are both investors, and you will probably argue this, but IMO, only one of those people is actually doing something that will grow the economy. Here's an example, we are moving this week to a newer house, and we are still renting. The property manager told me that the owner was a wealthy woman who lives in San Francisco, and she and her husband own multiple businesses. Since this woman bought this house, she did several things, she helped create some housing stock, she indirectly provided jobs to the contractors, which further prompted more spending in the LOCAL economy, and she helped improve an area of empty, ugly lots. She added something to our community.
In contrast, there is also the "investor" who puts their money into various capital markets. They care nothing about any local economy, and if they keep buying things that they sell for a higher price, the net effect is hoarding. Your response in the past has been that I have to to drop my broker mentality as if saying that somehow negates everything I just said.
BTW, despite the fact that our rent will essentially leave the state, the woman who own our new house still has a stake in our local economy. If the housing market here goes to shit again, which it could very easily do, she will stuck holding an asset that has lost value. In other words, she actually has some risk tied to the local economy and a hope that the local economy continues to do well because it is good for her investment.
What is the difference if you were to buy stock (invest) in a home building company? Wouldn't you be a small part of creating local economy where the homes were built?
I partially see your point when buying commodities. But without the hundreds of billions invested in all sorts of companies would we have the benefit of what these companies create?
Here's another example. I have a 401k like everyone else. Technically, I'm an investor. But, I'm not investing in startups, I'm not buying debt so a company can expand, and I'm not spending a dime of anything I make for a long, long time. I am trying to hoard money to live on later. It reduces my income now and lowers my taxes, so that's one way the money stays out of the economy, and through my mutual funds, the money just stays out there in the market, but not in the economy.
As for your home building company. Again, I see a difference. If that homebuilder is issuing new stock to expand, then I think your example does indeed contribute to the local economy. On the other hand, if I just go into the open market and buy existing shares because new home sales have been trending up and I think the price of the shares will rise, I don't think it supports your example at all. In the latter case, the investor isn't really putting anything into the community at all. They are simply buying an asset in hopes that it's price will rise. At best, they may hope the local economy is doing well enough to continue supporting sales of new homes, but quite honestly, if you are that guy, do you give a flying leap who is buying the homes? Whether it's local people or investors from San Francisco, as long as the home builder is booking profit, that is all that matters.
I think you're deranged Max and have no understanding at all about what constitutes investing. I suggest you read a bit about early corporations and the pooling of money to diversify risk while creating economic wealth. I'm tired of talking to a socialist who continues to support failed ideologies.
I wish you didn't bail, William, cuz I find this discussion very interesting & enlightening.
I hesitate to jump in b/c both of you are better versed in investing than I, but I'm gonna try to pick up the mic on the side on William.
Max, I get what you're saying if maybe you're a venture capitalist or an entrepreneur, but the overwhelming majority of investors are neither. Your arguments seem to center around the motivation of the investor. Please clarify, I fail to see the difference if you're investing to stimulate the economy, local or otherwise, or if you're buying low & selling high to build a nest egg to live off of if the end result is essentially the same. Whether it's tomorrow or in 30 years, that money will eventually end up circulating thru the economy, no?
Again, I'll admit I'm a bit out of my element here, but I don't see how your points counter what William's saying.
What got this particular thread started up top was William asked me to explain my view of hoarding. I think we have a situation in this country right now wherein the wealth of the nation has pretty drastically redistributed upward. The growth of personal wealth in the top 1% and in even smaller subsets of that small group, have been astronomical. IMO, that wealth that has moved upward is basically money that has left the economy. With less of that money circulating, it's been a drag on growth and it's not just left economists saying this.
What I always bitch about, and where I always start to argue with William, is that I don't see these people as wealth generators. Undeniably, they are generating wealth, for themselves. But I see little benefit to the economy when all the really do is just keeping making already gargantuan piles of cash exponentially higher. It's like the money enters the market at 30k feet, hopefully goes up to 40k feet, and then leaves the market with a dime falling to the ground. The government has done backflips protecting this wealth via the FED, in ways that truly have hurt pretty much anyone making less than 500k. Some, of course, much more than others.
I go round and round on the issue of what I believe actually grows the economy. Near as I can tell, William's argument to me seems to be that any dollar invested in the markets is essentially equal, and that an exponentially growing pile of cash that will never be spent down into the economy, is just as useful the country as the guy backing some new business that will create jobs. It's not so much a desire to focus on intention for me, it's really just a matter of follow the money. I believe that money invested in a new venture that creates jobs, or money invested in a company trying to expand will have a far greater wealth creation ripple.
I get that a lot of people are neither the venture guy nor the mega rich guy and by definition, they are still investors. That said, I think that term gets overused. When the housing market was going nuts, all kinds of people were buying houses and flipping them a year later. I guess that if they bought the house that created some jobs and maybe some local cash runoff into the economy. In reality though, they were really just kind of speculators, more or less gambling. And it was basically the same thing back in 2000 when people were day trading.
To your final example there, I guess the only distinction is this, what ever money I may bank to spend later, chances are, I'm eventually going to spend all that money, so it will recirculate. The economy now would probably benefit much more from me spending instead of saving and taking the money out of circulation. I am an investor because I'm in the market, but I really don't consider myself that. I see it as basically saving and using mutual funds instead of banks. Am I contributing to the economy with my investing? I really don't think so
I get what your saying, Mike, and you make some good points, but I think your logic is more applicable to arguing against the Trickle Down theory of tax cuts for the rich, which I agree with 100% in that context and I'll expand upon in a moment.
Let's look at your 401k which is the way most "investors" (for lack of a better term) play in the market. Most are comprised of various funds which include stocks from small, medium, & large companies, both foreign & domestic, and bonds (debt), both public & private. In most cases you have the option of selecting the funds that you want your money (along with the company match if you get one) invested in and how you want that money distributed between them usually based on perceived risk. The entities then use your investment to expand their businesses, fund infrastructure projects, launch a new product, etc., and in exchange, you get a return (hopefully) on your investment. Your investment money is getting dumped into the economy somewhere. To William's point, in many cases a dollar invested is creating jobs and making the economy run.
I think what you're doing (and I'm sure you'll correct me if I'm wrong, lol), is hybridizing the argument against tax cuts for the rich in an effort to stimulate investment & create jobs.
Let's take the Koch Brothers for my example - not because of their involvement in American Politics, but because their combined wealth would make then the single richest person in the US, estimating be to somewhere in the neighborhood of $120B. Let's say for the sake of my hypothetical, that they die & I'm the only living heir to their fortune. I decide to cash out & live out my days on my yacht on the return of $100B that I invested.
Now I have good money people, my ROI is 10%, so I'm making $10B per year from my deck chair. I am subject to Capital Gains, which is 15%. Again, I have good money people, who whittle down my actual tax rate 10% thru breaks & deductions. I net $9B this year water skiing behind my yacht. Not bad, huh?
Now let's look at the same scenario, only let's say the Supply Siders win and manage to cut the Capital Gains rate from 15% to 10% by arguing that it'll stimulate the economy & job growth.
I gross $10B, my money guys manage to get my real tax rate down to %5, so now I net $9.5B instead of only $9B.
Is that extra $500M gonna spur me to toss off my flip flops in exchange for some power pumps, put on a suit and wander the country creating jobs like some entrepreneurial Janet Appleseed? Not fucking likely. This is where I think the points you're making in your posts apply.
I hope I'm making sense. Again, I defer to your superior knowledge when it comes to capital markets and investing.
That's a fair assessment. After I posted, I thought about it later and was thinking I should have answered your post with a much shorter answer. William asked me to describe what I thought hoarding was, and the simple answer is that I believe hoarding is anything that basically keeps money out of the economy. I posted an S&P article before and I've read other articles before that have highlighted how are our current concentration of wealth into such a small amount of hands has started to become a drag on growth because that wealth is not going back into the economy. I think this specific part of it is really straightforward. I was really more trying to flesh out what I thought the mechanics were of why that money sequestered at the top does not recirculate. I've said before that I think all that wealth at the top is basically dead money. Dead in the sense that it's just staying where it is. Another way of seeing that is, like you said, a refutation of trickle down theory, which I am kinda indirectly saying.
I'm interested in the phenomenon of how we can keep seeing a continuing growth for a small group in the 1%, while there has been a contraction for everyone else. If every dollar invested in the market is a job creating thing, it just seems odd to me that we have had such anemic growth despite fabulous returns in that fabled 1%.
Envy is a terrible thing Max. Start there before you even begin to study investing 101. As I have said many times before. Splitting the baby with a progressive-socialist still results in a dead baby.
And as for pfunky. I would even trust you to make smart choices with your 9.5B trust income over some government statist. Even if you never got out of your PJ's and flip flops.
"The last time Congress changed capital gains taxes was when it passed a bill to avoid the so-called "fiscal cliff." The bill raised taxes to 20 percent for couples earning $450,000 or individuals earning $400,000. The 20-percent taxation level was the rate under President Bill Clinton."
The thing you always, always, always skip over is that I don't make suggestions, socialist or otherwise, of how to fix it. But, that is the environment today. It's been written about by multiple different people who have echoed what I have said, which is that the upward shift of wealth has pulled money out of the economy. It doesn't matter really how it happened, but I think it's a fact. Whenever anyone simply points out the obvious, there is always a response that it's envy, it's class warfare, and so on and so on. I just got a big raise William, this isn't hurting me. Further, I really don't think there is anything the government can do about it. At the margins, I believe we could really focus on encouraging local investment and I'm all for seeing things that help SMALL business rather than these mega fuckers who suck up gobs of corporate welfare. But, it's same ol same ol, you want to hurl your tired and repetitive epithets at me.
In our lifetime William, there has been a vast redistribution in this country not just of wealth of but also income. I believe you do give the things I say some consideration, but we frequently drift back to the labeling. I think some of this is very simple, if the vast majority of the country makes less and less money every year, they will spend less, and the economy will shrink. When the dollar is strong, that blunts some of the pain. But in the midst of this shift, there has been a massive increase in productive. American workers today are way, way more productive than previous generations. And they get paid less for it. It's not like this increase in productivity has increased competition between companies, because the profit line tells the story. Profits have been up, wages have been down. But when it comes to compensation for those running businesses, the growth in compensation has been exponential. Do you think that money is recirculating in the economy?
Before we megasized everything and allowed consolidation in every industry, I believe wage earners had a much more real stake in the economy. Give some guy who works a wage job a 2-3k a year raise, he's gonna spend that money, or most of it anyway. And he's going to spend it where he lives. And the stores that he goes to where local people work are gonna make money that they are also going to spend in the local economy. This has all largely evaporated and the results speak for themselves. Please correct me if any piece of this is wrong and try to stick to just these paragraphs.
It's no secret, CEO and other executive pay has simply skyrocketed. Doctors aren't getting that kind raise. Teachers certainly aren't, although every community bitches about how overpaid they are. But the big thing is that in just the teeny slice of 1% of Americans, and an even smaller subset of that group, the growth of wealth has been beyond anything I think the country has ever seen. I honestly don't begrudge people being wealthy. But with that wealth has come power that is brutalizing a lot of people. They basically have the access to make whatever rules they want for themselves. And again, if people deep down feel like that's just the way it should be and poor people should eat shit if they can't compete, that's fine. I start my soapboxing though when people start trying to tell me that I'm not seeing what I'm seeing, the equivalent of pissing down my back and telling me it's rain. Maybe there'd be a lot less social programs if those who hold the reigns of power decided they didn't need to pay themselves an extra 20 million they will never spend in this lifetime.
It's still early William, you should keep some powder dry for the general. I'm thinking you are a little bored now that Carson is out and want to ease some of that disappointment by dumping on Hillary and Bernie a bit, and that's all well and good, but if you go shooting all ya got right now, it will all be old by the time the general rolls around. Pace yourself buddy.
ReplyDeleteWhat we have is a future felon and a communist vying for what is left of a party that used to produce legitimate candidates.
ReplyDeleteSanders is an honest man. His voting record and his personal life reflect a man who has fought for the working class his entire life. Buzzwords, rather than actions are important to you, for whatever reason. Sanders is not Stalin or Chairman Mao or Fidel Castro. He is acknowledging a simple fact, which is that we already have a mixed system that includes socialism, socialism that you personally will make sure you get your share of.
DeleteYou don't seem to like Trump, and certainly don't like either Democrat candidate, and I gather you don't like Cruz either. Yet those are the people who are relevant. Not because of the evil media empire, but because that's who primary voters are going for. I'm sure you have a long list of people to blame but it doesn't change reality.
I like Bernie he's an honest to goodness independant communist. He and Trump have tapped into the economic unrest caused by a stagnant economy. Welfare, food stamps, disability, and scores of other government insurance programs are straining at record levels. 20 Trillion dollars of debt are on the doorstep.
DeleteI know you admire Bernie Max. I respect that. I know you exist within your rigid employment constraints and find it simpler to blame societies creators of wealth than to imagine a more limited regulatory structure where other people are actually encouraged to elevate themselves rather than be tied down to layer after layer of compliance.
But, do you honestly think that Bernie can lead us towards a Northern European style social utopia? Maybe I answered my own question, of course you do.
Actually, I don't think Bernie can lead us there. I mean, if he wins and faces Foghorn Leghorn in the Senate and Ryan in congress, Bernie's not going to get anything done that he wants. But, he can continue to raise issues that are important to me.
DeleteYou are partially right about my view in your second para, but as I have said before William, the single document that really describes my view is Andrew Carnegie's gospel of wealth. If the rich and the business leaders of our country espoused his views, I would be way, way more willing to see regulation eased. I don't blame business for every downfall in society I don't like. Let's face it, these trade deals got passed and the middle class was more than willing to consume consume consume even though it meant their jobs would leave. When you chide me about regulations, though, you speak as if there has never been disasters that killed people specifically because regulations were ignored.
Bernie's whole premise, and mine, is that the whole thing has shifted. the existence of food stamps is not keeping people down. I would argue, however, that lack of education clearly is. I don't like government programs that just give stuff out, I like to see people working. On the flip side though, through a combination of lower taxes, and a FED that has debased the dollar to keep stocks up, we have seen an enormous pile of wealth grow, but only at the top. The money is not "trickling down" and has not for the last 30 years. I believe in competition, but I want to see EVERYONE have to compete. Right now, those in the middle and bottom have to compete, while those at the top basically sit idle and hoard money that they can pass on to their lucky sperm club brat kids. If I was hearing from someone on the right they supported programs that helped young people get access to capital for school, tht would be one thing. What I'm hearing instead is just a regurgitation of talking points about food stamps, and other programs that are abused. On the other end, the wealthy abuse government programs too. I think In contrast to you, my view is that you need to keep everyone honest and not just assume that cheating comes only from one socioeconomic class. I found this on Forbes the other day and thought it summed things up well http://www.forbes.com/sites/moneywisewomen/2012/03/21/average-america-vs-the-one-percent/#3f44808e11a8
What do you attribute our low educational rankings compared with other nations
DeleteIt doesn't help that we rank 54th in educational expenditure. However, it runs deeper than that. We actually rank low in just about everything. https://rankingamerica.wordpress.com/category/education/page/2/
DeleteIf the US has such educational deficiencies why do more foreign students attend school here?
Deletehttps://rankingamerica.files.wordpress.com/2009/04/foreign-studentsxlsx1.jpg?w=595
Good point. In fact these ratings are, for the most part, based on elementary and secondary school standardized tests. I was Department Chair at a large urban university and we typically had large numbers of applicants from foreign students wanting in our graduate program. Most of those came from China, although we also had students from India, Greece, South America, Ukraine and other USSR countries. Very few from Europe.
DeleteMax I fail to see how investing money is equivalent to hording money in you view. Please explain.
DeleteWe've covered this before William, you know my views on this. To me, there is a big difference between the person who puts their money into a new business and person who just keeps buying low and selling high. Yeah, technically, they are both investors, and you will probably argue this, but IMO, only one of those people is actually doing something that will grow the economy. Here's an example, we are moving this week to a newer house, and we are still renting. The property manager told me that the owner was a wealthy woman who lives in San Francisco, and she and her husband own multiple businesses. Since this woman bought this house, she did several things, she helped create some housing stock, she indirectly provided jobs to the contractors, which further prompted more spending in the LOCAL economy, and she helped improve an area of empty, ugly lots. She added something to our community.
DeleteIn contrast, there is also the "investor" who puts their money into various capital markets. They care nothing about any local economy, and if they keep buying things that they sell for a higher price, the net effect is hoarding. Your response in the past has been that I have to to drop my broker mentality as if saying that somehow negates everything I just said.
BTW, despite the fact that our rent will essentially leave the state, the woman who own our new house still has a stake in our local economy. If the housing market here goes to shit again, which it could very easily do, she will stuck holding an asset that has lost value. In other words, she actually has some risk tied to the local economy and a hope that the local economy continues to do well because it is good for her investment.
DeleteWhat is the difference if you were to buy stock (invest) in a home building company? Wouldn't you be a small part of creating local economy where the homes were built?
DeleteI partially see your point when buying commodities. But without the hundreds of billions invested in all sorts of companies would we have the benefit of what these companies create?
I just can't understand why you can't see this.
Here's another example. I have a 401k like everyone else. Technically, I'm an investor. But, I'm not investing in startups, I'm not buying debt so a company can expand, and I'm not spending a dime of anything I make for a long, long time. I am trying to hoard money to live on later. It reduces my income now and lowers my taxes, so that's one way the money stays out of the economy, and through my mutual funds, the money just stays out there in the market, but not in the economy.
DeleteAs for your home building company. Again, I see a difference. If that homebuilder is issuing new stock to expand, then I think your example does indeed contribute to the local economy. On the other hand, if I just go into the open market and buy existing shares because new home sales have been trending up and I think the price of the shares will rise, I don't think it supports your example at all. In the latter case, the investor isn't really putting anything into the community at all. They are simply buying an asset in hopes that it's price will rise. At best, they may hope the local economy is doing well enough to continue supporting sales of new homes, but quite honestly, if you are that guy, do you give a flying leap who is buying the homes? Whether it's local people or investors from San Francisco, as long as the home builder is booking profit, that is all that matters.
I think you're deranged Max and have no understanding at all about what constitutes investing. I suggest you read a bit about early corporations and the pooling of money to diversify risk while creating economic wealth. I'm tired of talking to a socialist who continues to support failed ideologies.
DeleteAh, the classic dismissal comment that says you've run out of things to say. Have a good day.
DeleteI wish you didn't bail, William, cuz I find this discussion very interesting & enlightening.
DeleteI hesitate to jump in b/c both of you are better versed in investing than I, but I'm gonna try to pick up the mic on the side on William.
Max, I get what you're saying if maybe you're a venture capitalist or an entrepreneur, but the overwhelming majority of investors are neither. Your arguments seem to center around the motivation of the investor. Please clarify, I fail to see the difference if you're investing to stimulate the economy, local or otherwise, or if you're buying low & selling high to build a nest egg to live off of if the end result is essentially the same. Whether it's tomorrow or in 30 years, that money will eventually end up circulating thru the economy, no?
Again, I'll admit I'm a bit out of my element here, but I don't see how your points counter what William's saying.
Hey Funky,
DeleteWhat got this particular thread started up top was William asked me to explain my view of hoarding. I think we have a situation in this country right now wherein the wealth of the nation has pretty drastically redistributed upward. The growth of personal wealth in the top 1% and in even smaller subsets of that small group, have been astronomical. IMO, that wealth that has moved upward is basically money that has left the economy. With less of that money circulating, it's been a drag on growth and it's not just left economists saying this.
What I always bitch about, and where I always start to argue with William, is that I don't see these people as wealth generators. Undeniably, they are generating wealth, for themselves. But I see little benefit to the economy when all the really do is just keeping making already gargantuan piles of cash exponentially higher. It's like the money enters the market at 30k feet, hopefully goes up to 40k feet, and then leaves the market with a dime falling to the ground. The government has done backflips protecting this wealth via the FED, in ways that truly have hurt pretty much anyone making less than 500k. Some, of course, much more than others.
I go round and round on the issue of what I believe actually grows the economy. Near as I can tell, William's argument to me seems to be that any dollar invested in the markets is essentially equal, and that an exponentially growing pile of cash that will never be spent down into the economy, is just as useful the country as the guy backing some new business that will create jobs. It's not so much a desire to focus on intention for me, it's really just a matter of follow the money. I believe that money invested in a new venture that creates jobs, or money invested in a company trying to expand will have a far greater wealth creation ripple.
I get that a lot of people are neither the venture guy nor the mega rich guy and by definition, they are still investors. That said, I think that term gets overused. When the housing market was going nuts, all kinds of people were buying houses and flipping them a year later. I guess that if they bought the house that created some jobs and maybe some local cash runoff into the economy. In reality though, they were really just kind of speculators, more or less gambling. And it was basically the same thing back in 2000 when people were day trading.
To your final example there, I guess the only distinction is this, what ever money I may bank to spend later, chances are, I'm eventually going to spend all that money, so it will recirculate. The economy now would probably benefit much more from me spending instead of saving and taking the money out of circulation. I am an investor because I'm in the market, but I really don't consider myself that. I see it as basically saving and using mutual funds instead of banks. Am I contributing to the economy with my investing? I really don't think so
There is no way to respond to this. It is basically babble.
DeleteI'll make an attempt, William.
DeleteI get what your saying, Mike, and you make some good points, but I think your logic is more applicable to arguing against the Trickle Down theory of tax cuts for the rich, which I agree with 100% in that context and I'll expand upon in a moment.
Let's look at your 401k which is the way most "investors" (for lack of a better term) play in the market. Most are comprised of various funds which include stocks from small, medium, & large companies, both foreign & domestic, and bonds (debt), both public & private. In most cases you have the option of selecting the funds that you want your money (along with the company match if you get one) invested in and how you want that money distributed between them usually based on perceived risk. The entities then use your investment to expand their businesses, fund infrastructure projects, launch a new product, etc., and in exchange, you get a return (hopefully) on your investment. Your investment money is getting dumped into the economy somewhere. To William's point, in many cases a dollar invested is creating jobs and making the economy run.
I think what you're doing (and I'm sure you'll correct me if I'm wrong, lol), is hybridizing the argument against tax cuts for the rich in an effort to stimulate investment & create jobs.
Let's take the Koch Brothers for my example - not because of their involvement in American Politics, but because their combined wealth would make then the single richest person in the US, estimating be to somewhere in the neighborhood of $120B. Let's say for the sake of my hypothetical, that they die & I'm the only living heir to their fortune. I decide to cash out & live out my days on my yacht on the return of $100B that I invested.
Now I have good money people, my ROI is 10%, so I'm making $10B per year from my deck chair. I am subject to Capital Gains, which is 15%. Again, I have good money people, who whittle down my actual tax rate 10% thru breaks & deductions. I net $9B this year water skiing behind my yacht. Not bad, huh?
Now let's look at the same scenario, only let's say the Supply Siders win and manage to cut the Capital Gains rate from 15% to 10% by arguing that it'll stimulate the economy & job growth.
I gross $10B, my money guys manage to get my real tax rate down to %5, so now I net $9.5B instead of only $9B.
Is that extra $500M gonna spur me to toss off my flip flops in exchange for some power pumps, put on a suit and wander the country creating jobs like some entrepreneurial Janet Appleseed? Not fucking likely. This is where I think the points you're making in your posts apply.
I hope I'm making sense. Again, I defer to your superior knowledge when it comes to capital markets and investing.
That's a fair assessment. After I posted, I thought about it later and was thinking I should have answered your post with a much shorter answer. William asked me to describe what I thought hoarding was, and the simple answer is that I believe hoarding is anything that basically keeps money out of the economy. I posted an S&P article before and I've read other articles before that have highlighted how are our current concentration of wealth into such a small amount of hands has started to become a drag on growth because that wealth is not going back into the economy. I think this specific part of it is really straightforward. I was really more trying to flesh out what I thought the mechanics were of why that money sequestered at the top does not recirculate. I've said before that I think all that wealth at the top is basically dead money. Dead in the sense that it's just staying where it is. Another way of seeing that is, like you said, a refutation of trickle down theory, which I am kinda indirectly saying.
DeleteI'm interested in the phenomenon of how we can keep seeing a continuing growth for a small group in the 1%, while there has been a contraction for everyone else. If every dollar invested in the market is a job creating thing, it just seems odd to me that we have had such anemic growth despite fabulous returns in that fabled 1%.
DeleteEnvy is a terrible thing Max. Start there before you even begin to study investing 101. As I have said many times before. Splitting the baby with a progressive-socialist still results in a dead baby.
DeleteAnd as for pfunky. I would even trust you to make smart choices with your 9.5B trust income over some government statist. Even if you never got out of your PJ's and flip flops.
"The last time Congress changed capital gains taxes was when it passed a bill to avoid the so-called "fiscal cliff." The bill raised taxes to 20 percent for couples earning $450,000 or individuals earning $400,000. The 20-percent taxation level was the rate under President Bill Clinton."
The thing you always, always, always skip over is that I don't make suggestions, socialist or otherwise, of how to fix it. But, that is the environment today. It's been written about by multiple different people who have echoed what I have said, which is that the upward shift of wealth has pulled money out of the economy. It doesn't matter really how it happened, but I think it's a fact. Whenever anyone simply points out the obvious, there is always a response that it's envy, it's class warfare, and so on and so on. I just got a big raise William, this isn't hurting me. Further, I really don't think there is anything the government can do about it. At the margins, I believe we could really focus on encouraging local investment and I'm all for seeing things that help SMALL business rather than these mega fuckers who suck up gobs of corporate welfare. But, it's same ol same ol, you want to hurl your tired and repetitive epithets at me.
DeleteIn our lifetime William, there has been a vast redistribution in this country not just of wealth of but also income. I believe you do give the things I say some consideration, but we frequently drift back to the labeling. I think some of this is very simple, if the vast majority of the country makes less and less money every year, they will spend less, and the economy will shrink. When the dollar is strong, that blunts some of the pain. But in the midst of this shift, there has been a massive increase in productive. American workers today are way, way more productive than previous generations. And they get paid less for it. It's not like this increase in productivity has increased competition between companies, because the profit line tells the story. Profits have been up, wages have been down. But when it comes to compensation for those running businesses, the growth in compensation has been exponential. Do you think that money is recirculating in the economy?
ReplyDeleteBefore we megasized everything and allowed consolidation in every industry, I believe wage earners had a much more real stake in the economy. Give some guy who works a wage job a 2-3k a year raise, he's gonna spend that money, or most of it anyway. And he's going to spend it where he lives. And the stores that he goes to where local people work are gonna make money that they are also going to spend in the local economy. This has all largely evaporated and the results speak for themselves. Please correct me if any piece of this is wrong and try to stick to just these paragraphs.
It's no secret, CEO and other executive pay has simply skyrocketed. Doctors aren't getting that kind raise. Teachers certainly aren't, although every community bitches about how overpaid they are. But the big thing is that in just the teeny slice of 1% of Americans, and an even smaller subset of that group, the growth of wealth has been beyond anything I think the country has ever seen. I honestly don't begrudge people being wealthy. But with that wealth has come power that is brutalizing a lot of people. They basically have the access to make whatever rules they want for themselves. And again, if people deep down feel like that's just the way it should be and poor people should eat shit if they can't compete, that's fine. I start my soapboxing though when people start trying to tell me that I'm not seeing what I'm seeing, the equivalent of pissing down my back and telling me it's rain. Maybe there'd be a lot less social programs if those who hold the reigns of power decided they didn't need to pay themselves an extra 20 million they will never spend in this lifetime.