We detached this subthread from https://news.ycombinator.com/item?id=26103730.

The March crash was the event that was going to normalize asset prices, but really just became a blip due to the pump.

Should the government have done nothing? Absolutely not, but aid should have been better targeted. Overleveraged and poorly run businesses should fail. People who made excessively risky and speculative bets should have had them go belly up. The business cycle is no longer a cycle at all, things just go up.

Was the virus a predictable event? Not at all, but pretty much every bust in the business cycle is due to a new unforeseen tail risk that materializes. That's why it's prudent not to excessively leverage yourself in the good times, because bad times will come.

Certainly businesses such as restaurants, that were forced by the government to close, or travel, where it truly was an apocalyptic scenario, should have received the bulk of the aid.

The main reason it was a blip, is because earnings have returned almost to pre-COVID levels for large public companies. Just as everyone expected. Did fiscal and monetary policy help smooth things out? Sure. But again, earnings are normalizing, like we knew they would. Markets discount the entire future, not just what's going to happen next month.

> Overleveraged and poorly run businesses should fail. People who made excessively risky and speculative bets should have had them go belly up.

Most companies pre-COVID were nowhere near "excessively leveraged." I think you (as well as OP) are conflating 2009 with COVID. These are two distinctly separate things. As are monetary (The Fed) and fiscal policy (Congress).

> The business cycle is no longer a cycle at all, things just go up.

So you're saying "this time is different." Let's see how that plays out.

Main difference from the past recessions is that today the main way to store money is index funds. In recessions people pump money into savings, ie into index funds, ie into the stock market making stocks value increase rather than fall. As long as people believe that index funds are a more stable currency than the dollar this will continue to be true in future recessions.

We're assuming the crash in March was due to COVID - though there's no proof this was the case. This very much could have been a correction to more realistic valuation.

> So you're saying "this time is different." Let's see how that plays out.

Agree here - I think we're in for an interesting year. We may have amplified the upswing dynamics with Fed action, but I'm pretty sure we'll see amplified downswings, as a result.

Those earning are structurally very different from an accounting perspective than normal earnings (one example being ppp loans). I'm not saying your wrong that these earnings are justifying PE based valuations but I don't think anyone is arguing that propping up earnings won't work in the short term. I think a lot of people are arguing that propping up earnings will backfire in the longer term.

On top of what you said about the effect of printing making valuations high, only temporarily and only on paper, the opposite lack of printing, is actual redistribution towards the rich in a much more real and persistent way.

Insufficiently inflationary money can be used as a way for the rich to withdraw from the private economy when things are getting too turbulent and park their wealth in government paper having greater than market rates of returns (on a risk adjusted, liquidity adjusted basis). If government money didn't exist, these people would have to stay in the turbulence when the economy hits a storm.

In a private economy, it's normal for returns on assets to occasionally turn negative. Wealth is sometimes difficult to keep constantly growing year after year. With low inflation, the rich can divest from private assets at the first sign of trouble, shrink or close businesses, kick employees to the curb and they get to park their wealth in government guaranteed paper. A deflationary government currency is basically a subsidy for causing unemployment and destroying careers, a subsidy that often gets indirectly paid by the poor. Money printer keep going brrr please.

The thing is, stable money that predictably loses value is a great thing to have for the economy as it allows people to negotiate contracts and conduct business in a predictable manner. Medium of account, medium of exchange etc. Money being a store of value is an unfortunate consequence of it being a medium of exchange that often has to be mitigated. Fiat should never be widely used for saving. Money is just an IOU. When everyone's savings are IOUs, on average everybody indirectly owes everybody else their savings. Instead, savings should be tied to real stuff such as businesses, inventory, production capacity etc. not just all be pure promises. When too many people hoard pure promises and all believe that it's true wealth, bad things happens.

Hard currencies while not good for conducting business since they are too unstable might be better as stores of value as they fluctuate and have negative returns when they should so tend to not crowd out other asset markets as much as government stabilized currencies do when inflation is not high enough. Just make sure the government does not try to stabilize hard currencies. That caused the great depression.

Def made me think alot. Seems you can replace your entire argument with crypto. Money printer goes brrr, money gets locked in crypto, does nothing for the economy, leading to massive inequality. Crypto can be though of as "Savings" in your analogy. BTC might cause a economic meltdown if $10T gets locked in'Savings'.

Which is already happening.

Financial institutions are already extending credit (aka 'printing money') based on bitcoin and other cryptocoin collateral.

Bitcoin is not necessarily deflationary.

>we prevented the extension of credit based on bitcoin collateral...

>Which is already happening.

Is in direct contradiction to:

>Financial institutions are already extending credit...

Regardless, the amount of bitcoin is set to be capped and finite - therefore unless this changes it is inherently deflationary. Aside from mining out the remaining unmined bitcoin, no institution is "extending credit" (aka 'printing') bitcoin, they're extending credit via (as you mentioned): other collateral.

You can't make more bitcoin, but if you extend credit to someone based on the bitcoin they have, that's CREATING NEW MONEY.

In that sense, bitcoin is like gold.

In the gold standard, the supply of gold was fixes, but the supply of dollars was not. Because bank's create money when they allow you to borrow.

For bitcoin to be truly deflationary, you would have to prevent all financial institutions from extending credit

Bitcoin is EVENTUALLY deflationary. Right now, about 900 coins are created every day leading to inflation of ~$45M a day that buying pressure needs to eat up. Every four years that inflation is cut in half, but it's still inflationary.

Then again, the potentially stronger network/memetic effects of cryptocoins, along with the amplification factor from markets being synchronized through instant all-encompassing global communications nowadays might make them dangerous to the economy without government involvement. We saw how much people can get hypnotized by these things during the Gamestop episode. I don't think unsophisticated investors' hoarding is enough to cause big problems but it is a bit unsettling that Tesla jumped on the cryptocoin train. If enough businesses follow suit, you get into scary territory. Last time it lead to Hitler and WWII. It makes me second guess my cybertruck reservation. I was on board partly because of Musk's audacious and epic attempts to bring humanity forward. This is a non negligible risk of going in the opposite direction of creating economic carnage that leads to new Hitlers (but with nukes).

"The Great Depression, exacerbated by Brüning's policy of deflation, led to a surge in unemployment.[8] On 30 January 1933, Hindenburg appointed Adolf Hitler as Chancellor at the head of a coalition government. "

or

"In 1933, the American economist Irving Fisher developed the theory of debt deflation. He explained that a deflation causes a decline of profits, asset prices and a still greater decline in the net worth of businesses. Even healthy companies, therefore, may appear over-indebted and facing bankruptcy.[59] The consensus today is that Brüning's policies exacerbated the German economic crisis and the population's growing frustration with democracy, contributing enormously to the increase in support for Hitler's NSDAP."

https://en.wikipedia.org/wiki/Weimar_Republic#Br%C3%BCning's...

Now the above paragraph puts emphasis on businesses with debt but even non-indebted businesses can get caught in these currents if they are put in a position where it's more advantageous to hoard currency than to invest in maintaining or growing production.

It's a fairly low probability that cryptocoins could create this kind of disastrous Nash equilibrium without the involvement of a powerful central bank. However, when I see the fervor in parts of the cryptocurrency movement and the fact that businesses are starting to hoard large amounts, I wonder...

And isn’t that the main way normal people’s savings can be tied to “real stuff?”

If you add up all the IOUs in the economy, financial assets are cancelled by financial liabilities and what remains is real stuff which in economics is called "investment". The nomenclature can be a bit confusing because in finance they use the same word to mean the contract, the claim or the IOU not the physical asset.

The equation for GDP is Consumption plus Investment (sometimes government consumption and investment and exports are broken out). Investment is not financial assets or money or bonds which all cancel out at the global level. Investment means factories built, equipment built, less tangible things like knowledge and intellectual property count too in theory but are sometimes hard to measure. It's important to have a good level of investment. Promise hoarding can crowd it out when things get too speculative. The economy can get into a bad Nash equilibrium where people are chasing IOUs instead of producing real value.

This statement is so vague, I don't know what it means. Are you implying that all "mainstream actually educated economists" (whatever those are) are all in agreement about something? What exactly are they "right" about here?

The crises we're getting are the price to pay for government interference in a self regulating market.

Peter Schiff currently believes Bitcoin is going to collapse, that anyone who buys it is a fool and charlatan, that hyperinflation is around the corner, and the only solution is a return to the gold standard. Do you agree with this?

I don’t like Bitcoin (too many grifters) but even I can admit it has value as a hedge asset against systemic shocks. He just doesn’t like that it may supplant Gold.

Getting the timing right is not easy, sure. He was right about 2008.

You may choose to believe that 2008 was an isolated event or it was just another systematic failure. I think we'll see another one soon, following the way governments treated covid.

I wish Bitcoin would succeed and bring us a step closer to anarchy - but Bitcoin doesn't have any backing and it's not a physical asset which can be used, worst case scenario, as jewellery. Its technology can be replicated entirely by a different coin (and it has, already). Its intrinsic value is null.

The reason the price is so high is because people hope to speculate on it and make money (which they have!) and because people expect the market and currencies to do badly, given the high point they reached. Also, governments' stimuli brought a lot of money in the hands of rich people; this money needs to go somewhere given the risk of inflation, so rich people are investing in growth stocks (eg. tech) and cryptocurrencies.

I'll be honest, I was expecting governments to destroy cryptocurrencies by now, but even without government intervention, I don't see Bitcoin ever holding any value or being stable, without backing. Maybe stable-coins will solve this.

I agree that going back to the gold standard would be an improvement, even better, I'd prefer if private companies could just print and back their own currencies. Instead of backing currencies with gold, you could back them with different commodities (eg: wood, iron, oil, etc). The machinery of freedom has an interesting chapter about how such a system may work.

Schiff on Bitcoin:

https://www.foxbusiness.com/markets/bitcoin-is-a-fools-gold-...

Going back to the gold standard would not be an improvement. I highly recommend reading Karl Polanyi’s The Great Transformation for an analysis of the problems of the gold standard.

Yes. That's what I said.

You said he was consistently wrong for 15 years.

I don't know who to believe regarding gold and bitcoin, but it doesn't help me trust your opinion when you go overboard in your criticism of Schiff.

1. US Equity Markets Crash.

Okay, that happened in 2008. But, did it he get the reason why?

He claims it is all about Debt and easy money. That interest rates should be up and ultimately we should be tethered to hard currency. That’s a really, really simplistic and ahistorical take. It’s like saying, let’s cause issues with the financial economy to completely wipe out the real economy because it is “healthier that way”. Seems to be a big price to pay for a very nebulous benefit. Thoughts like that led to World War 1. (I highly suggest “Lords of Finance” from Liaquat Ahmad and “The Great Transformation” by Polanyi).

As opposed to what we ARE doing loosening the liquidity strings to allow the real economy to continue to function, albeit damaged by the lack of regulations + greed in the financial economy causing it to make terrible risk exposure decisions.

Yes there was plenty of bad behaviour in the housing market and in the whole Lon trading and mortgage trading market (which I was a part of in the past, as a wall st software dev). The interaction of mortgage backed securities and collatorized debt obligations propped up too many balance sheets and weren’t properly valued for systemic risk, and amassing credit default swaps as a hedge quickly unravelled the institutional insurers like AIG .... requiring a massive liquidity injection by the Fed and Congress so that everyone from Wall St to Main St didn’t wind up completely broke. Ultimately it was the only practical solution available given the political will.

2. US Dollar will crash (Hyperinflation)

Completely false and made him and his investors lose their shirts

3. Decoupling of foreign economies from the US slowdown

Also false, the US rebounded far quicker due to a variety of Obama era policies, the world still is not really decoupled as Eurozone troubles and Trump’s trade wars showed.

4. Foreign equities and commodities (gold) will grow and are where you should invest.

Except foreign equities crashed worse than US equities back in 2008! And austerity policies prolonged their suffering.

My criticism isn’t “overboard”, this is public record. If you are an investor and listened to Peter Schiff, you’ve lost a lot of money.

Gold has also done pretty well hasn't it?

You can list wrong predictions all day, but if the guy is occasionally right you need to give credit.

There is no “there” in Austrian economic reasoning or modeling: the fundamental premise is to reject empirical evidence in favour of Praxeology. This is useless for forming economic policy.

The thesis of your post is literally a fallacious argument - the argument from authority. The textbook definition.

Yes, the "experts" are always right, like the experts that ran LTCM, the hedge fund run by rocket scientists that crashed the economy (until being bailed out by the Fed) /s

I would go on with more examples of fallacious "argument from authority" logic gone wrong, but I don't have the time.

An economic theory is not right or wrong, good or bad, or otherwise based what the "educated, mainstream experts" believe. The history of human knowledge is essentially a history of paradigms (sometimes temporarily useful) being proven completely wrong, with some non-mainstream ideas being proven right. QE and mainstream economics, in my opinion, will turn out the same way, and end up causing the destruction of arguably the wealthiest nation in human history.

It's only a "burn" if you actually think it's a legit argument. I was just pointing out that it is not.

"One of the great commandments of science is, "Mistrust arguments from authority." ... Too many such arguments have proved too painfully wrong. Authorities must prove their contentions like everybody else." - Carl Sagan

I've benefited massively in financial terms during the pandemic and resulting fed action and I still think it's dangerous and misguided. You are painting with very broad, simple strokes here.

Regardless of the fact that there is press coverage, the average American could not in any meaningful terms describe what the fed is or what it does, while maybe a quarter might know that it has something to do with "printing money" (obviously anecdotal). The idea that the complex consequences of fed policy are well understood by the average American is preposterous. The "experts" can't even agree on basic facts about what the consequences will be or have been.

Case in point, go ask financial twitter if we should be expecting inflation or deflation and watch that aisles divide.

The people protesting are not protesting the Fed. No institution (i.e. media, grassroots, journalists) criticizes the Fed - it's always the 1%.

But, I guess you wouldn't understand, since you make baseless assumptions about internet strangers. How would you know my net worth - do you think there aren't billionaires that share my "mainstream" opinion?

Your fallacious logic and personal attacks against me do not diminish my argument. In fact, since you cannot attack the substance of my argument, you have already admitted defeat.

So how do you explain everything that happened on the wealth inequality front from the 1970s up to the financial crisis of 2009?

I don't agree with everything in the original article either, but many of the points it made are correct.

In one word: computers. In tsunami after tsunami from 1975 to the present, computers have revolutionized everything we do. I remember one tsunami in 1975, when slide rules in September were $125 and by December they were $5 and in January they disappeared. The calculator had arrived. In 1980 at Boeing you could hear the roar of the tsunami coming in the form of CAD. Then spreadsheets, word processing, on and on.

It's no coincidence that the biggest companies in the world are all American, and all computer companies.

The big increase in wealth was created by the computer companies, and accrued to the people working in them and those smart enough to have invested in them.

BTW, according to Google: "The top 1 percent of taxpayers paid roughly $616 billion, or 38.5 percent of all income taxes, while the bottom 90 percent paid about $479 billion, or 29.9 percent of all income taxes."

What's that as a percentage of their annual increase in wealth? By my calculation, with a wealth increase of "$2.5 trillion a year" (from the article), that income tax amount works out as a flat 25% rate.

Correction: Wealthy enough to be able to invest in them.

$1,000 invested in AMZN is now worth over $1M. or $10 in Bitcoin would have done the trick.

"144 ICOs Launched During 2017 Failed Last Year" https://news.bitcoin.com/144-icos-2017-failed/

Do I really need to illustrate how dumb it is, the idea that the stock market and cryptocurrency are the cure to poverty?

Besides, you can just invest in the S&P500 via SPY.

The survey also found 75 percent of people responded they were living comfortably or "doing ok".

If you know the future. Tells us a few stocks where investing $1000 today would give you a million in 2 decades.

https://www.calculator.net/investment-calculator.html

For $5,000 per year, you'll have $1,073,000 after 40 years.

7% is the average stock market return, adjusted for inflation.

If you invest $0.00, you'll have $0.00 after 40 years.

Robinhood enables buying fractional shares.

I'm not arguing that access in itself is bad. I'm arguing that new money speculating in the equities market often doesn't go well.

> new money speculating in the equities market often doesn't go well.

It goes better than lottery tickets, which target the poor and the mathematically challenged. Stocks at least have an upward bias, while lottery tickets have a strong downward bias.

BTW, wealthy people lose money in the stock market, too. Stocks do not come with guarantees for anybody.

On the TV news a couple weeks ago was a 6 year old kid whose mom gave him $60 worth of Gamestock stock. He cashed it in for $3,000.

Besides, the article wasn't about some people. It was about the majority of people.

Are you able to articulate why you believe "because Fed policy" doesn't apply as a valid argument for 1970 through 2009?

Of course there's never a single thing that explains a complex issue, but the root of the current Fed's monetary policy goes back to Greenspan, so the poster's argument could easily be extended to that iteration of the Fed.

Also, the 1980s is when (modern) wealth inequality really started to take off. And it's much worse today.

https://www.visualcapitalist.com/all-of-the-worlds-money-and...

https://www.ted.com/talks/maneesh_sethi_money_the_greatest_s...

Which led to the removal of the gold standard by those who knew the outcome would proceed as it has.

If Reagan didn't shift the tax burden the very wealthy would not have been able to recover their massive losses as rapidly.

The Fed is not the problem. Congress is the problem. The Fed seems like the problem sometimes because Congressional nonfeasance leaves the Fed, which has a narrow role and a narrow set of controls, the only player doing anything to deal with adverse economic conditions. But Congress’ nonfeasance is the problem.

It's not like the majority of recorded history on the Gold Standard was noted for the bottom 90% enjoying relatively large shares of national wealth and income security.

Shipping technology has only gotten better since than too but that just hurts mom&pops and helps online retailers.

Because there was less competition on the international stage for the goods produced in the US. This meant that production companies could pay their workers more since they were earning more. Relatively low skilled labor would earn a lot more money. This lifted up the poor. Eventually those jobs started moving away from the US, because other countries could produce the same goods at lower cost since they could pay workers less.

>Shipping technology has only gotten better since than too but that just hurts mom&pops and helps online retailers.

None of it has been as revolutionary as the intermodal shipping container. Before that it took days and sometimes weeks to load cargo onto a ship. The main point with the shipping container is that it made international trade significantly cheaper.

> Hell, you can't throw a rock at the Wall Street Journal (conservative) or the New York Times (liberal) without hitting a sentence that mentions wealth inequality brought on by fed policy. For further evidence, your comment has been upvoted to the top because everybody on HN believes the same thing as you.

You just named three institutions that cater to highly educated people. I don’t think much of this is understood by a huge portion of the general population. I’m not talking down about people who didn’t get a higher education (I didn’t finish mine). I’m just pointing out that this is a pretty weak argument for “everybody”.

Edit: a word, a punctuation

Most of my family are clueless about this stuff; do you think Fox News - their and many peoples only news source - are sharing that bit of insight with their audience?

This is patently false. Inequality has been expanding since the 1970s, long before the "evil bank bailouts" and accommodative monetary policy of the 2010s Federal Reserve.

We do know these are all the same group of people, right? Same social strata, same schools, same manners, same wealth, same worldview, etc. Party makes little difference here -- R's and D's are just two right-wing parties who mainly serve special interests (industry). Clinton gutted working people as much as Reagan did -- wages continue to stagnate under allegedly liberal presidential administrations, too.

For all this to be true I don't even have to appeal to the fact that since the 70s the institutions we're talking about are all revolving doors facing each other -- work in government, then work in private industry, then back to government, then I'm Janet Yellen charging Goldman six figures for speeches but pretending they don't influence me.

It's a bit reductionist, maybe -- but by and large they're all the same people and they serve the same interests.

I'm not sure anyone would consider that "easy monetary policy."

Also, you do know that inflation and boom-and-bust cycles still happened while we were on the gold standard right?

I never characterized the Fed as an "evil puppet master" - that is an exaggeration. However, the Fed is certainly responsible for wealth inequality. It's a simple concept that is 100% backed by the financial and socioeconomic data:

- Rich people (small percent of population, i.e. "the 1%") own the vast majority of assets

- Fed is pumping massive amount of money into financial markets, which pumps up asset prices artificially

- Cost of living sky-rockets since the rich use their increased net worth to buy more assets, causing housing prices and other assets to skyrocket

- Purchasing power of the dollar to buy assets is severely decreased. Wages are stagnant but assets have skyrocketed. This causes feedback loops where the poor / middle-class don't have money to buy assets and the rich keep getting more money to buy more assets, hence runaway wealth inequality and social unrest.

No reason to have so much contempt against this argument. It's based on the evidence.

>You're angry because it feels like everybody is getting rich and you aren't.

You could have made your point without these personal attacks.

Also, I don't understand what the parent comment said that you think was wrong. Inflation is basically a flat percentage tax on everyone with USD (and subsidy to debtors as percentage of your debt). If the government is printing money to pay back its own debts through bonds and such, it's taking money from everyone and then giving it back to only the wealthy.

You responded with, paraphrasing, "have you though about if the fed had no accommodative monetary policy?" But the parent didn't say the fed should have done nothing, (s)he said what they did do exacerbated wealth inequality. The monetary policy we got could have been one that bailed out the people whose houses were about to be foreclosed instead. Or a stimulus check to anyone who earned under a certain threshold of income. Or a more conservative approach of letting the banks fail, become liquidated, buy the bank's assets and then auction them off. There are tons of outcomes besides the false dichotomy of "no accommodative policy for the last 10 years" vs the ones we got.

These are fiscal policies, not monetary policies. The fed cannot do these things. The fed can only buy and sell securities, including its infinite supply of Treasury bonds, and raise and lower interest rates. It lacks the capacity to actually help individuals.

I dont feel that's a mass read category. But go to the mass right news you wont see much on inequality at all (obviously you do on the left). Right news like Fox tends to be more about taxes taking your hard work away type rhetoric. And the 'bigger pie' arguement which sounds great but lacks practical application.

> The minute inflation starts creeping up, the federal reserve will have to increase interest rates and cut off the money printer. In an instant, wealth inequality will start shifting the other direction, and valuations will fall.

Really? My understanding is inflation tends to bring wealth inequality on the other end. People who own assets see these protected from value erosion while wages tend to get eroded.

I believe if you want to reduce wealth inequality you need many things but the core is around 1) strong progressive taxation, 2) market regulation to stop monopolistic and similar behaviour and 3) employee protection/regulation to allow workers to have some teeth in the wage negotiations.

This is uncharitable. In fact most middle class folks who sign on to this frame are motivated by basic ideas like justice and fairness. Realistically policies designed to address wealth inequality are going to make very little difference to anyone here making a typical engineering salary.

It's easy to sign on to "a rising tide lifts all boats" when you hear it the first time. But after decades of waiting, the dinghies are just plain sunk at this point as the yachts are pulling out of the harbor. It's time to try something else.

The only difference is that you now have a direct connection to the few that have risen faster - there have always been those people. But you now see them. They are still the 1% but they are in your face like never before.

"it's time to try something else" What else is there? Socialism? Tried, failed worse. Communism? Even worse. In all systems man has created, there's inequality. "equity" (equal outcome) has been proven an unmitigated disaster time and time and time again.

Capitalism is the worst system ever.

Except for all the other systems which are worse.

Are you citing absolute numbers? The study people usually talk about most here is the Pew one: https://www.pewresearch.org/social-trends/2020/01/09/trends-...

Over the past half century, the middle third of the income distribution has dropped from 62% of aggregate income to 43%, mostly at the expense of the upper third (the bottom third is mostly flat, but certainly not "rising").

> "it's time to try something else" What else is there?

The New Deal seems to have done pretty well. Minimum wage laws used to be vastly more effective due to inflation, and we grew just fine in the 60's. Some of it is just fairness: Upper incomes and short term capital gains used to bear a much larger share of the tax burden, and those cuts seem to have done nothing but make rich people richer.

This canard is so tiresome. Someone does the peasant "I think we should improve society somewhat" thing and inevitably they get accused of being a (pause for breah) COMMUNIST. Every time.

https://medium.com/the-radical-center/the-triumph-of-the-mid...

Plenty of info out there that wealth is getting distributed globally. The absolute poor are decreasing and the middle class globally is increasing - absolute numbers and by the %'ages.

> inevitably get accused

If you use the ideas and thoughts of it... then of course you're going to get accused of it.

And your "why you gotta call me a communist" doesn't answer the question... what other options are there?

> what other options are there?

How about a "democrat"?

Unless you mean DS: "democratic socialism" - which is still socialism. Look at the Green New Deal where DS wants to go - control of industry "for the people" by massive expansion of government into various industries.

While you may have a point about the article being American focused, the fact remains that the middle class is expanding and the lower/peasant class is shrinking globally - all boats are rising due to "evil capitalism" and that horrible capitalism, despite being the worst idea ever... is still better than the alternatives that have presented. It's global success compared to the global failure of other "better" ideas is self evident at this point.

Socialism is the perfect theory... until it meets reality... and other setups are in the same boat: Better than capitalism until you look at real world results.

Need to fight cronyism? corporatism? Monopolies with reasonable government controls? Sure... I'm not a PURE capitalism person - My thoughts are based on reality where restrictions keep things reasonable (like restrictions on free speech and owning guns).

And if this the best system that mankind can come up with, then the future looks bleak.

Calls that it's not sustainable are like cries of impending starvation and privation... yet "famines" haven't happened because advances created by... capitalism. Better crop yields, better farm results, etc. Driven by "greedy capitalists".

can we do better? Sure... fight crony capitalism? coporatism? absolutely...

But end of day... the alternatives? have proven worse - unless you have proof otherwise and history isn't with you on that...

Calling it the "best" we got is rather short sighted.

Heck, much of it (the parts that aren't confusing the Fed with other repairs of government) has been echoed by Fed board members and other (in the minority, at the time) government decision makers. Overreliance on the Fed and top-down monetary policy to do the economic job for which fiscal policy is better suited has been a recurring, mainstream criticism for years.

Is this not a bit of a false dichotomy though: "accommodative monetary policy" (as it is done), or nothing? There are numerous different ways we could achieve "accommodative monetary policy", each of which would have different outcomes.

But I guess when you can just readjust the definition and what's included it doesn't matter.

The fed won't be able to raise interest rates without crushing the same people they were lowered to support.

We have not. Your impression of prices doesn't necessarily correlate with actual inflation.

Well I guess wages usually go up for the same kind of job with the same experience when there's considered to be "inflation" and that really hasn't happened. Prices. Yes, they've gone up consistently, haven't we all seen the hard reality of that? And they show no signs of doing anything else. Price indexes used as a proxy measure of inflation may not be capturing that reality. Is it deliberate that the measure is failing to capture the reality? Or is it just poor baskets of goods and services in the index and a lack of will and talent to correct the issue? Anyone arguing about index values and what they mean still has to have a roof over their head quite literally at the end of the day. That has a cost. I haven't noticed the cost going down over any 5 year period. Then look at the cost of eating. Then the captial equipment you need for your job and to be able to pay required bills (some of clothes, vehicle, computing devices). Then look at essential consumables (some of fuel, food, electricity, telecomunications).

I can't see anything other than high inflation and a decrease in disposable income. Note that if you get promoted and get a raise for a new position the reference is how much /that position/ was paid previously not what you were paid fresh out of $whatever.

I don't ever see a measurement that reflects the reality we all see, experience and have to budget in inflation discussions in finance nor do I see a justification of why it's just plain wrong and in so far as these numbers represent anything they represent something else entirely other than the purchasing power of a dollar in your pocket this year as opposed some time in the past.

It may be pandemic influence, but that's the world we live in now.

From USDA (source: https://www.ers.usda.gov/data-products/food-price-outlook/su...):

In 2020, food-at-home prices increased 3.5 percent and food-away-from-home prices increased 3.4 percent. The CPI for all food increased 3.4 percent over this same period. In general, food price inflation in 2020 was much higher than in 2018 (0.4 percent), 2019 (0.9 percent), and the 20-year average (2.0 percent).

The PCE fraction for "food and beverages" (home, away, alcohol) ranges from 13.8% to 17.0%.

That Wiki page also has a nice comparison to the consumer price index (CPI), which was previously used by the US Fed. US Social Security still uses CPI to adjust national pension payments.

Also, you wrote that food prices had more inflation in 2020 compared to other recent years. During the COVID-19 pandemic, many people had cheaper transportation costs, which would offset some or all of this food price inflation.

Obviously the purchase price matters, because the higher prices are, the more money you need to even get in the door with homeownership.

This reads like an oxymoron to anyone who's not a property owner, which is about half the country -- all of whom are in the bottom 90% referred to in the headline.

Should renters not have the opportunity to buy a home?

there should not be societal subsidies for people wanting to buy their home.

If rents are not growing at a rate that's higher than wage growth, then it is stable and thus acceptable. Owning a home is a privilege, not a right. Thus, the CPI calculations correctly only includes rental costs, and not ownership.

Nonsense. Theoretically if wages and rents grew 5% in step together yoy, but most other goods increased at >100% (say houses), your statement implies things would always remain stable. I'd think not...

The real reason CPI is garbage (for measuring total inflation) is because it doesn't track everything, and hence misses the inflation in things that the CPI doesn't track (such as houses). More specifically, it's a measure that only tracks what urban people CAN & typically spend money on. It doesn't track the things which some people have been entirely priced out of and hence don't spend money on (such as home ownership, as well as other assets).

I find this hard to believe. The narrative of the doves, the current administration, and most of the Democratic Party is that these bailouts are necessary. That’s the entire reason they are doing this.

Your post reflects current mainstream thinking in neoliberalism. There is nothing special here and it’s just a disagreement on whether near term depression is worse than supporting the inequality.

That may be the case but traction on this narrative was near zero if not negative even say two months ago. "Inflation? The poor are in debt, so it's good for them right? Lel"

More importantly the professional pundit class (neoliberal economists like krugman) and even the socialist-adjacent MMT theorists do NOT see things this way and push hard for policies that while well meaning will likely result in stealing even more from the working class. The media of course feeds off of this class so it may (finally) be part of the "internet discourse", it's not part of the "mainstream discourse".

> In an instant, wealth inequality will start shifting the other direction, and valuations will fall

No, if you understand the mechanism of how inflation steals from the labor class, you would know that "it doesn't work that way". It is not an "instant reversal" of wealth inequality, except for if the crashes brought out by the interest rate hikes are accompanied by not bailing out the wealthy, and we all know how the track record on that has been going.