Well that doesn’t add up. Hoarding wealth would imply saving dollars in the bank. But that doesn’t actually store the wealth, they’d have to buy things that don’t devalue, or in other words, invest. Investing is paying people to do things that will be profitable to you, or in other words, use it. Obviously thats not what’s going on, or you wouldn’t have an unusually high a concentration of wealth. There’s got to be more to the story than this.
Investing is not only paying people to do things that are profitable to you (in fact, there’s evidence that this form of investing is on the decline.) It’s also paying for things that generate passive income (ie, you spend nothing and do nothing, but continue to get more money coming in). Housing is a really good example of this. So are stocks and shares, where the owner is basically paid dividends every year just for owning them, not for actually doing anything. The fact that this generates so much wealth for the rich, which is not taxed effectively (or at all in some cases), makes it more appealing than investing in paying people to do things that are profitable: investing in a company comes with a risk that the company might fail and you might actually lose wealth. Investing in housing, though? Well, short of natural disasters that destroy them (which is rare), that wealth will always have value, will always increase in value, and will always generate almost zero-risk income.
This is actually how most wealth is hoarded: not as dollars, but as other capital that has value and can continuously earn income just from being owned. This rent-seeking behaviour also contributes to inequality, because it diverts wealth from the poor to the rich, which is then reinvested into more assets that can be rented out. And so on, and so forth. All these forms of wealth, being not money, have enormous tax loopholes that allow their owners to earn income from them without paying tax, which would otherwise cycle back around to the poor through being spent on public services.
And then there’s the impact on productivity caused by a lack of investment in paying people to do profitable things. When nobody invests in companies, employees, equipment, etc, the amount of wealth generated per person stagnates. This causes wages to stagnate, under the basis of “well you’re not making me any more money, so why should I pay you more?” The cost of essentials, like housing, continues to climb, because the wealthy have bought all the houses and rent them out to the poor at ever-increasing prices. So again, this diverts money away from the poor, away from society as a whole, and into the hands of a few… who will then only use it to generate even more passive income. If they actually spent it on paying people to do things (ie, investing in smaller businesses, start-ups, employee training, etc), there’d be an argument that trickle down economics could work, because the wealth taken by the 1% would cycle back around by being spent. But we have solid proof that this is not what happens. The wealthy want a passive income with zero risk and zero work, whereas investing in paying people to do things requires both risk and work.
Every time you hear the wealthy saying that the poor are lazy and feckless, and that social security just encourages people to be idle, remember this: it’s a projection. The wealthy are the ones who want to earn unlimited money based on other people doing all the work. They’re the parasites sucking the lifeblood out of society, not the sick, the homeless, the single mothers, the immigrants, or anyone else that “doesn’t deserve” enough money to live.
I’m with you on most of that. But I think the problem is more fundamental: the money devalues at a rate of 2-5% a year.
Think about it. Why wouldn’t the wealthy just hoard money? Because you can’t just hoard money. It devalues. You have to monetize other assets. So they buy real estate, with money they made from you when prices go up but your wages haven’t gone up yet. They benefit from the cantillion effect and in the process siphon wealth from the bottom. and as they accumulate non-money assets, that effect compounds because the prices go up some more. The wealth gap, all of this, it stems directly from our inflationary monetary system. Their trick is that they get to fuck with the money.
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The simple answer:
The poor pay for goods and services they need to survive, which are provided by the rich.
The rich make massive profits on this, which they then avoid paying taxes on (which would normally cycle the money back into the hands of the poor).
The wealth is gradually accumulated in the hands of a few, who hoard it rather than use it.
This is why trickle down economics doesn’t work.
Well that doesn’t add up. Hoarding wealth would imply saving dollars in the bank. But that doesn’t actually store the wealth, they’d have to buy things that don’t devalue, or in other words, invest. Investing is paying people to do things that will be profitable to you, or in other words, use it. Obviously thats not what’s going on, or you wouldn’t have an unusually high a concentration of wealth. There’s got to be more to the story than this.
What’s the non simple answer?
Investing is not only paying people to do things that are profitable to you (in fact, there’s evidence that this form of investing is on the decline.) It’s also paying for things that generate passive income (ie, you spend nothing and do nothing, but continue to get more money coming in). Housing is a really good example of this. So are stocks and shares, where the owner is basically paid dividends every year just for owning them, not for actually doing anything. The fact that this generates so much wealth for the rich, which is not taxed effectively (or at all in some cases), makes it more appealing than investing in paying people to do things that are profitable: investing in a company comes with a risk that the company might fail and you might actually lose wealth. Investing in housing, though? Well, short of natural disasters that destroy them (which is rare), that wealth will always have value, will always increase in value, and will always generate almost zero-risk income.
This is actually how most wealth is hoarded: not as dollars, but as other capital that has value and can continuously earn income just from being owned. This rent-seeking behaviour also contributes to inequality, because it diverts wealth from the poor to the rich, which is then reinvested into more assets that can be rented out. And so on, and so forth. All these forms of wealth, being not money, have enormous tax loopholes that allow their owners to earn income from them without paying tax, which would otherwise cycle back around to the poor through being spent on public services.
And then there’s the impact on productivity caused by a lack of investment in paying people to do profitable things. When nobody invests in companies, employees, equipment, etc, the amount of wealth generated per person stagnates. This causes wages to stagnate, under the basis of “well you’re not making me any more money, so why should I pay you more?” The cost of essentials, like housing, continues to climb, because the wealthy have bought all the houses and rent them out to the poor at ever-increasing prices. So again, this diverts money away from the poor, away from society as a whole, and into the hands of a few… who will then only use it to generate even more passive income. If they actually spent it on paying people to do things (ie, investing in smaller businesses, start-ups, employee training, etc), there’d be an argument that trickle down economics could work, because the wealth taken by the 1% would cycle back around by being spent. But we have solid proof that this is not what happens. The wealthy want a passive income with zero risk and zero work, whereas investing in paying people to do things requires both risk and work.
Every time you hear the wealthy saying that the poor are lazy and feckless, and that social security just encourages people to be idle, remember this: it’s a projection. The wealthy are the ones who want to earn unlimited money based on other people doing all the work. They’re the parasites sucking the lifeblood out of society, not the sick, the homeless, the single mothers, the immigrants, or anyone else that “doesn’t deserve” enough money to live.
Edit: Typos.
I’m with you on most of that. But I think the problem is more fundamental: the money devalues at a rate of 2-5% a year.
Think about it. Why wouldn’t the wealthy just hoard money? Because you can’t just hoard money. It devalues. You have to monetize other assets. So they buy real estate, with money they made from you when prices go up but your wages haven’t gone up yet. They benefit from the cantillion effect and in the process siphon wealth from the bottom. and as they accumulate non-money assets, that effect compounds because the prices go up some more. The wealth gap, all of this, it stems directly from our inflationary monetary system. Their trick is that they get to fuck with the money.