About tatupu70


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Registered Sep 22, 2009

tatupu70's most recent comments:

  • On 23 Jul 2014 in Is this thinking wrong ? Please advise, tatupu70 said:

    Homeboy says

    Seems like you think EVERYTHING "confirms your hypothesis", whether it does or not.

    Well argued.

    Homeboy says

    Actually, that's wrong. Reagan's tax act wasn't until 1986, after that spike has already ended. What DID change in the early 80s was the Fed discount rate - see my previous chart. Hmmm...very interesting, that.

    Is your argument that lower interest rates cause wealth disparity? I think it's probably true that stocks perform better under lower interest rate environments--but I disagree that the Fed is the cause of lower rates. The market sets the rates that matter.

    Homeboy says

    Right, and the Fed influences the stock market PROFOUNDLY, to the point that even a whisper of the notion that the Fed is planning to change any of its policies can cause wild swings in stock prices

    True--as Bill said earlier, they do have control of rates on the high side to put the brakes on an economy. Any whiff that they are raising rates to slow things down will cause stocks to fall. And, similarly, if folks are expecting the Fed to raise rates and they don't, that could cause stocks to rise.

    Homeboy says

    Right now, the Fed is holding rates so low that banks can essentially get free loans (and keeping them there for so long that it can't reasonably be considered a temporary measure anymore), and wealth disparity just happens to be at an all time high. You really don't think there's any connection there?

    I don't. Disparity has been rising for 30+ years. I don't think a condition that has only been happening for 5 years could be the cause. And, I don't see a mechanism despite all the crony nonsense that is spewed here.

  • On 23 Jul 2014 in Is this thinking wrong ? Please advise, tatupu70 said:

    Homeboy says

    Certainly the things you mention have an effect, but they cannot entirely explain what we see in this graph:

    Interesting graph. I think it confirms my hypthothesis rather than refutes it. The top 10% really takes off in the early 80s, right as Reagan takes over and mucks up the tax code, and as manufacturing begins to go overseas.

    It won't be a straight line because the top 10% earns their money from corporate stock values. Their income will go up and down based on the stock market... But as you pointed out, it's trending up while Aveage Joe is flat.

  • On 22 Jul 2014 in Is this thinking wrong ? Please advise, tatupu70 said:

    Homeboy says

    If you are arguing the other way around, you leave open the question of what caused the wealth disparity.

    I think it's actually several factors. Capital gains tax rate, estate tax rate, top income tax bracket rates have an effect. But, more important, IMO, are the effects of globalization and productivity increases in driving down the value of labor and increasing the return on investment. Real wages have stagnated, while corporate profits are increasing exponentially. This leads to the rich getting richer and the working Joe going nowhere.

    Homeboy says

    The discount rate has been at an all time low for the past 5 years, as have mortgage rates. Who sets the discount rate? The Fed, right? So how can you argue that mortgage rates and the discount rates are both reacting to other factors?

    Like Iwog said--the Fed changes the discount rate because of economic factors. And as I wrote earlier, they usually follow the market rather than set it.

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