5 ms·

Just don't mention the elephant in the room: the Cantillon effect which is primary reason for the wealth flowing from working classes and savers to the bankers

Just don't mention the elephant in the room: the Cantillon effect which is primary reason for the wealth flowing from working classes and savers to the bankers and the managerial class. Entirely courtesy of artificially low interest rates created by central banks and lax controls on monetary emission (i.e. fractional reserve shenanigans) by private banks.

Proven 7y ago
In most cases these geniuses (economists) are employed by the governments that established the thieving central banks. And after 100 years of "research" they still can't figure it out. Or won't. https://www.austriancenter.com/cantillon-effect-populism/ https://www.austriancenter.com/cantillon-effect-populism/ - "Well, the reason is that this phenomenon has been completely ignored by groups and parties on the left. Newspapers are full of populist campaigns advocating for higher taxes for the rich, and redistribution from the rich to the poor. All of that despite the fact that the concept of central banks was advocated by Karl Marx in his Communist Manifesto. Central banks have been one of the main institutions established by the left in the last two centuries. Nowadays, central banks are a given, almost nobody questions them. Inflation would also exist without central banks, but it would definitely be not as high."
aguyfromnb 7y ago
>artificially low interest Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. There are two sides to every transaction; low rates are good for borrowers and bad for lenders. What makes you think the lenders are entitled to a greater return on their savings? Do you think we should force people to borrow at higher rates for this purpose? >wealth flowing from working classes and savers to the bankers and the managerial class. The working class in America are debtors and have no savings. Outside of low rates contributing to driving housing prices higher in some communities, how are the working class harmed by lower payments on their debt?
- citilife 7y ago
  > Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. While that's somewhat true, its also largely dictated / controlled / heavily influenced by government. This means the overnight lending rate, U.S. bond rate, etc.
  - aguyfromnb 7y ago
    >This means the overnight lending rate, U.S. bond rate, etc. The overnight lending rate is set by the Fed, yes. Treasuries are sold in the market. Although an initial auction price is set, the rates will fluctuate based on demand for the bonds. I don't deny the Fed are a major influence on rates, as it's a major component of their mandate now. However, the market can "agree" or "disagree" with those rates and set corresponding rates however they choose.
    - 0x445442 7y ago
      But your missing the key part. Sometimes if the Fed sets rates too low and there's not enough demand for the bonds the Fed buys the bonds thus keeping the interest rates artificially low.
      - aguyfromnb 7y ago
        >Sometimes if the Fed sets rates too low and there's not enough demand for the bonds the Fed buys the bonds thus keeping the interest rates artificially low. Yes, it's how the Fed conducts monetary policy. Can you name the last time that US treasuries were under-subscribed? Greek bonds have lower rates to US treasuries; which would you rather own? On a relative basis, how can one claim that US interest rates are "too low"?
        AnimalMuppet 7y ago
        > Can you name the last time that US treasuries were under-subscribed? Yes, a couple of months ago.
  - iudqnolq 7y ago
- mamon 7y ago
  Interest rates are set by FED, who can print arbitrary amount of money out of thin air, there is no supply/demand mechanism involved in setting them. Basically every rate change is an experiment testing whatever monetary theory is currently popular among FED board members.
  - aguyfromnb 7y ago
    >Interest rates are set by FED, who can print arbitrary amount of money out of thin air One interest rate is set by the Fed, which serves as a benchmark for other market rates. But it's a simple question: if I can borrow money at 3%, why would I borrow your money at 7% so you can earn a return? And if someone wants to lend me money at 3%, why is that "artificial"? >who can print arbitrary amount of money out of thin air How else should money be created? Should we do pretend mining, like Bitcoin?
    - logicchains 7y ago
      >Should we do pretend mining, like Bitcoin? Real mining seemed to work okay in past. American GDP grew faster in the 1800s under the gold standard (avg. 4%+) than any time after the creation of the federal reserve.
      - aguyfromnb 7y ago
        >Real mining seemed to work okay in past. For the purpose of "creating money", it's a waste of resources. >American GDP grew faster in the 1800s under the gold standard (avg. 4%+) I don't want to go back to that period.
      - kaibee 7y ago
        > American GDP grew faster in the 1800s under the gold standard (avg. 4%+) than any time after the creation of the federal reserve. Yes... during industrialization. Basically all countries experience rapid GDP growth during their industrialization. Even developing countries today get 4%+ GDP growth. Look at China's GDP growth in the last 50 years for a recent example.
      - 7y ago
- macinjosh 7y ago
  > The working class in America are debtors and have no savings. There are plenty of working class people that avoid debt and save money. Why should those people, who are acting responsibly, lose out on savings interest? We should be encouraging people to save, not make it cheaper to go into more debt.
chumali 7y ago
The Cantillion effect describes a phenomena of relative inflation due to the uneven distribution of new money and access to credit. This doesn't really translate to "a flow of wealth from working classes and savers to the bankers and the managerial class". Rather, the impact on inequality is that it reduces the purchasing power of those not benefiting from the increased supply of money and credit. As these tend to be the poorest individuals in society, inequality is made worse.

Proven 7y ago

In most cases these geniuses (economists) are employed by the governments that established the thieving central banks. And after 100 years of "research" they still can't figure it out. Or won't. https://www.austriancenter.com/cantillon-effect-populism/ https://www.austriancenter.com/cantillon-effect-populism/ - "Well, the reason is that this phenomenon has been completely ignored by groups and parties on the left. Newspapers are full of populist campaigns advocating for higher taxes for the rich, and redistribution from the rich to the poor. All of that despite the fact that the concept of central banks was advocated by Karl Marx in his Communist Manifesto. Central banks have been one of the main institutions established by the left in the last two centuries. Nowadays, central banks are a given, almost nobody questions them. Inflation would also exist without central banks, but it would definitely be not as high."

aguyfromnb 7y ago

>artificially low interest Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. There are two sides to every transaction; low rates are good for borrowers and bad for lenders. What makes you think the lenders are entitled to a greater return on their savings? Do you think we should force people to borrow at higher rates for this purpose? >wealth flowing from working classes and savers to the bankers and the managerial class. The working class in America are debtors and have no savings. Outside of low rates contributing to driving housing prices higher in some communities, how are the working class harmed by lower payments on their debt?

citilife 7y ago
> Interest rates are driven by the supply and demand of credit. Supply outstrips demand now. While that's somewhat true, its also largely dictated / controlled / heavily influenced by government. This means the overnight lending rate, U.S. bond rate, etc.
- aguyfromnb 7y ago
  >This means the overnight lending rate, U.S. bond rate, etc. The overnight lending rate is set by the Fed, yes. Treasuries are sold in the market. Although an initial auction price is set, the rates will fluctuate based on demand for the bonds. I don't deny the Fed are a major influence on rates, as it's a major component of their mandate now. However, the market can "agree" or "disagree" with those rates and set corresponding rates however they choose.
  - 0x445442 7y ago
    But your missing the key part. Sometimes if the Fed sets rates too low and there's not enough demand for the bonds the Fed buys the bonds thus keeping the interest rates artificially low.
    - aguyfromnb 7y ago
      >Sometimes if the Fed sets rates too low and there's not enough demand for the bonds the Fed buys the bonds thus keeping the interest rates artificially low. Yes, it's how the Fed conducts monetary policy. Can you name the last time that US treasuries were under-subscribed? Greek bonds have lower rates to US treasuries; which would you rather own? On a relative basis, how can one claim that US interest rates are "too low"?
      - AnimalMuppet 7y ago
        > Can you name the last time that US treasuries were under-subscribed? Yes, a couple of months ago.
- iudqnolq 7y ago
mamon 7y ago
Interest rates are set by FED, who can print arbitrary amount of money out of thin air, there is no supply/demand mechanism involved in setting them. Basically every rate change is an experiment testing whatever monetary theory is currently popular among FED board members.
- aguyfromnb 7y ago
  >Interest rates are set by FED, who can print arbitrary amount of money out of thin air One interest rate is set by the Fed, which serves as a benchmark for other market rates. But it's a simple question: if I can borrow money at 3%, why would I borrow your money at 7% so you can earn a return? And if someone wants to lend me money at 3%, why is that "artificial"? >who can print arbitrary amount of money out of thin air How else should money be created? Should we do pretend mining, like Bitcoin?
  - logicchains 7y ago
    >Should we do pretend mining, like Bitcoin? Real mining seemed to work okay in past. American GDP grew faster in the 1800s under the gold standard (avg. 4%+) than any time after the creation of the federal reserve.
    - aguyfromnb 7y ago
      >Real mining seemed to work okay in past. For the purpose of "creating money", it's a waste of resources. >American GDP grew faster in the 1800s under the gold standard (avg. 4%+) I don't want to go back to that period.
    - kaibee 7y ago
      > American GDP grew faster in the 1800s under the gold standard (avg. 4%+) than any time after the creation of the federal reserve. Yes... during industrialization. Basically all countries experience rapid GDP growth during their industrialization. Even developing countries today get 4%+ GDP growth. Look at China's GDP growth in the last 50 years for a recent example.
    - 7y ago
macinjosh 7y ago
> The working class in America are debtors and have no savings. There are plenty of working class people that avoid debt and save money. Why should those people, who are acting responsibly, lose out on savings interest? We should be encouraging people to save, not make it cheaper to go into more debt.

chumali 7y ago

The Cantillion effect describes a phenomena of relative inflation due to the uneven distribution of new money and access to credit. This doesn't really translate to "a flow of wealth from working classes and savers to the bankers and the managerial class". Rather, the impact on inequality is that it reduces the purchasing power of those not benefiting from the increased supply of money and credit. As these tend to be the poorest individuals in society, inequality is made worse.