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Trickle down

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brightncheerful
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Trickle down

#175049

Postby brightncheerful » October 19th, 2018, 4:21 pm

"The purpose of QE, as Bernanke himself explained it in a Washington Post editorial in 2010, is to create the wealth effect, to bring asset prices up so that the wealthy feel wealthier and spend more money and then this somehow trickles down. So this was an explicit central bank policy that other central banks, especially the ECB and the Bank of Japan, imitated". (quote: Wolf Street)

My take

Trickle down only works as intended when those down have pro-rata means. When they don’t but want to replicate the only alternative is to trigger the law of unintended consequences.

For example, a person wealthy to begin with can borrow on the strength of existing security to buy more tangle assets and become wealthier. A poor person without any security can also borrow but the lack of existing security restricts what can be bought. Instead, the poor person buys experiences which are in effect intangible and addictive. Unable to kick the habit, the intrinsically poor person takes it out on him/her-self generally by comfort over-eating.

Obesity is a way of telling us that society having become greedy is now addicted to greed. To wanting more and more. No wonder so many people are fed up; envious of the wealthy, the masses are up in arms but not having the courage of their convictions they take to social media complaining in the hope that someone somewhere will take pity and do something about it for them. So that instead of taking personal responsibility and doing something about it for themselves they can shift the blame whilst continuing to scoff another bag of crisps.

No wonder the wealthy do not have any time for the poor and needy – it’s just not worth it.

But there is a solution to the mis-match which is beginning to work. When the poor stop buying and reduce spending, instead re-prioritise, the sellers suffer. Which is precisely what is happened to a multitude of retailers and ilk.

Trickle down works both ways. Trickle up.

neversay
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Re: Trickle down

#176452

Postby neversay » October 26th, 2018, 4:35 pm

Everyone has a choice. I'm tired of many of the complaints in this country when the large majority are still among the wealthiest people on the planet. Perhaps the trickle-up starts when people have gratitude for what they have got instead of bragging about what they have on social media. All that forgone personal consumption can be spent instead on helping the genuinely needy.

FWIW, I wear no halo in this regard, but do feel marginally less hypocritical than, dare I say it, the already well-off 'tax the rich' middle-class socialists. Among my friendship groups these are the ones who read the Guardian while sipping a latte and complain about evil business while not seeing the irony in the Guardian Travel articles on holiday homes in Tuscany or Guardian Food articles on Michelin starred restaurants. Unlike myself, none of them volunteer in the community but they always point the finger of responsibility on who is to blame and who is to fix it. It's never them. End of rant.

gryffron
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Re: Trickle down

#176888

Postby gryffron » October 29th, 2018, 12:51 pm

Trickle down certainly seems to be working very poorly in many of the "new" economies of the world. SE Asia, Russia etc.

There is no doubt that the so-called-poor of Western Europe and Japan are massively better off than the poor in the RoTW. With decent housing, heating, healthcare, education etc. Yes, there is a strong argument that they do very well indeed compared to many of the world's population.

So why? What is it that genuinely improves the lot of the poor. Education (arguably USA has decent education but still massive inequality)? Direct government redistribution? Minimum wage legislation? Strong Trade Unions? What?

Gryff


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