How Central Banks Cause Income Inequality

Mises Daily ^ | 2/1/14 | Frank Hollenbeck

[BfloGuy]

It’s regressive taxation, and it’s destroying the country.

It surely is. It's stealing the savings of retirees, eating the capital of businesses invisibly, and driving the cost of living higher by the year while wages stagnate.

[BfloGuy]

It seems to me that whenever the think tanks and sociologists examine what deprives the lower classes, particularly the middle class, of wealth, they never include government.

Excellent point -- worth repeating. Government is never the cause of our problems to these people. We are the cause of our problems and must be subdued.

[Toddsterpatriot]

Oh, and I suppose you're now going to claim that inflation is just a natural phenomenon

Why would I claim that?

and that it happens all at once equally for every good and every consumer.

If the price of gasoline rises $0.10 tomorrow, how does the bank that sold some bonds last week to the Fed pay a lower price than me?

For Pete's sake, that was understood to be false some four centuries ago.

Thanks for the link. Which part of it was supposed to back your claim?

The Fed buys a bond, yielding say 2.6% to 4.5%, from a bank, giving them in return, cash yielding 0.25%.

Gee! Why did the stupid banks agree to that?

Primary dealers serve as trading counterparties of the New York Fed in its implementation of monetary policy. This role includes the obligations to: (i) participate consistently in open market operations to carry out U.S. monetary policy pursuant to the direction of the Federal Open Market Committee (FOMC); and (ii) provide the New York Fed's trading desk with market information and analysis helpful in the formulation and implementation of monetary policy. Primary dealers are also required to participate in all auctions of U.S. government debt and to make reasonable markets for the New York Fed when it transacts on behalf of its foreign official account-holders.

http://www.newyorkfed.org/markets/pridealers_current.html

[wgmalabama]

As a young man I thought I could change the system by voting and working hard. It was a battle of ideals and effort. I grew older and possibly wiser. Then I thought the system was corrupt and it required more to solve. It would require violence against that system to defeat the ideals. Kind of shoot the lawyers and politicians ideology. I grew older and possibly wiser. I am now at the point where I see the system as a symptom of the populace. My current view is its time to shoot the low info voter. I now advocate decentralization and war against the political tyrants 1000 miles away (NE/West Coast) I hope I grow older and wiser.

I hope my children never ask why I saw this all and did nothing. I speak my opinion in the current safety of my home. I don’t have the conviction or wisdom of Jefferson, Adams or others from history. I am unsure what needs to be done but my current opinion is there needs to be war against those that want to force me my children and grandchildren into slavery for the common good. That’s not 1% or 2%. Its 30% of the people maybe more.

I believe this in my soul to be true.

[Lurkina.n.Learnin]

That is one of the most concise and clear explanations I’ve ever read. Thank you.

[DoughtyOne]

Your job was to work hard and vote. Your job wasn’t to run around after your elected officials with a pooper scooper.

You did your job. They didn’t do theirs.

I will say this about blaming the low information voters.

Please give me a list of even ten steady Conservatives that have run for office at the national level in the last twenty years.

Reagan was the last Conservative presidential candidate. He ran last in 1986. That’s 30 years ago, by 2016.

There you have it. We can blame ignorant voters all we want, but if there aren’t any Conservative “NAMES” out there educating them, it’s our leader’s fault, not the low information voters.

I think Reagan could win today. He had a way of telling it like it is, and you knew your “Uncle Ronald Reagan” was shooting straight with you. How many candidates do we get that from these days?

One tells you, hey I’m dead set against Amnesty. What I do support is them registering so they can stay here and work. Then if they do what they’re supposed to...

They talk out of both sides of their mouth, and expect us to buy in. I say hell no. Not only are they lying to me, they are turning folks off to Conservatism, by playing “Tell me which cup the truth is under.” I’m so sick of that.

We run folks like McCain, and then we talk about the low information voter. Hell, the low information voter saw the fake McCain ten miles off.

Mr. Hey I’m going to dismantle Obamacare and replace it with Romenycare wasn’t fooling anyone. If a government heath system is wrong, then naming it after yourself doesn’t make it right? Who knew? Well, the low information voter did.

I may not like Obama, but geez Louise, I’ll be darned if I can tell my people to vote for McCain.

The GOPe is in for a rough ride over the next few years. I think they deserve just about anything that comes their way.

[wgmalabama]

My adult political life view was based Reagan. I graduated HS while he was president. He was the last patriotic politician in the executive branch or even running for the office.

I just wish we had another leader stepping up to lead the patriots. Its been too long and I am truly fearful of what needs to be done or maybe its fear nothing can be done to stop the madness.

[BfloGuy]

Primary dealers serve as trading counterparties of the New York Fed in its implementation of monetary policy. This role includes the obligations to: (i) participate consistently in open market operations to carry out U.S. monetary policy pursuant to the direction of the Federal Open Market Committee (FOMC); and (ii) provide the New York Fed's trading desk with market information and analysis helpful in the formulation and implementation of monetary policy. Primary dealers are also required to participate in all auctions of U.S. government debt and to make reasonable markets for the New York Fed when it transacts on behalf of its foreign official account-holders.

Toddster, that is so much financial gobbledygook. I don't care a whit about regulations and requirements. I care about the economic theory that a government central bank that continually expands the money supply is damaging the economy.

I get it that you're a great admirer of the Federal Reserve. I just can't see why.

[Toddsterpatriot]

Toddster, that is so much financial gobbledygook.

It answered your question.

So how does that benefit the banking sector?

I care about the economic theory that a government central bank that continually expands the money supply is damaging the economy.

What economic theory is that?

[BfloGuy]

What economic theory is that?

This one. You'd do well to, at least, read it. It isn't unknown.

And it's the only one that makes sense. You may heard of Hayek -- or maybe not.

[Toddsterpatriot]

Thanks for the link.

Which part proves that continually expanding the money supply is damaging the economy?

[MrChips]

Most people live on two incomes. Nothing against women working, but two incomes are necessary for most people because of taxes. I am an accountant for a very small company of three employe3s with modest salaries ($30K to $50K), and our withholding sent in to the government over 22 years is close to $1.3 million dollars! Government takes, and the middle class loses.