Re:The U.S. government’s failed 1890s attempt to forge unity...
by dnautics on Saturday June 12, 2021 @09:23AM
(#27484317)
Forcing down inflation requires raising interest rates as a policy, yes, and that will result in people offering LESS revolving credit, which will decrease the net flow of the siphon. But seriously if you think 2% inflation helps out your credit card at 10% APR... Maybe you should start maxing out your credit card?
> The debt to wealth ratio of the top wealth decile is, obviously, a lot smaller
That's not obvious to me. Donald Trump is probably in very poor shape debt-to-wealth-wise relative to myself. The unbanked in the US are doing literally infinitely better debt-to-wealth-wise than I am.
Anyways, you are strictly thinking of personal debt. There is institutional debt that the wealthiest have either indirect access to, or benefit disproportionately from, for example corporate debt, if you are in the C-suite, or municipal debt, if you own a firm that is frequently obtaining grants to do stuff, or literally banks, if you are a major shareholder in banks, financial instruments that require low-interest debt, if you participate in a hedge fund, etc.
Forcing down inflation raises interest rates, and lower interest rates help the significantly indebted a lot. Interest is literally a siphon that takes wealth from people that are earning it and gives it to those who already had it. And the debt to wealth ratio of the bottom wealth decile of the UK is 3:1
The debt to wealth ratio of the top wealth decile is, obviously, a lot smaller. They might borrow when it's tax efficient to do so, but they don't need to. Also lower interest rates actually reduce the returns they're getting on lending their money. Sure, low interest rates don't hurt their property portfolios, and are fantastic for people becoming rich by starting companies that burn through a lot of borrowed cash (and create jobs), but in general interest is a subsidy for the rich.