"The Rich Are Hoarding Cash And It's Making Us A Lot Worse Off: Experts"

[applegrove]

The Rich Are Hoarding Cash And It's Making Us A Lot Worse Off: Experts

by Jill Berman at the Huffington Post

http://www.huffingtonpost.com/2013/08/07/rich-americans-hoarding-cash_n_3720941.html

"SNIP............................


"This whole hoarding episode just tells us once again that any society that lets wealth concentrate at the top is making a very foolish move economically," Pizzigati added.

One of the best ways to ensure that money continues to circulate in the economy, Pizzigati and Linden said, is to raise taxes on the wealthy. Indeed, slashing taxes on the rich tends to result in a boost in income inequality, according to a May study from the National Bureau of Economic Research, a private nonpartisan research organization.

And contrary to some conservative claims, raising taxes on the rich may not actually make them less productive, Linden said. Instead, boosting taxes on the rich simply encourages them to move their money into less-taxed categories, according to a May study from the left-leaning Economic Policy Institute.

"If the choice is between putting the money under a rich guy's super super expensive mattress or giving it to a middle-class family who needs to pay for child care," Linden said, "I'd rather pay for child care. That's better for the middle-class family and that's better for the economy."



...........................SNIP"

[madokie]

1. No doubt the 1% is our problem

[HiPointDem]

2. kr

[House of Roberts]

3. Moyers and Company is a good one this week.

Bill interviews Richard Wolff, the show title is 'Taming Capitalism Run Wild'.

[Enthusiast]

17. Thanks for the heads up.

One hour of accurate information in an entire week.

[hay rick]

4. The rich have money they can't use (invest) and won't spend.

They are withdrawing money from the economy and stifling growth. Corporations are doing the same.

[Historic NY]

12. Another reason to tax the crap out of them.

[hay rick]

13. Excessive incomes for the rich is waste. nt

[duffyduff]

14. The rude question has to be asked: How much money do these people really need?

They DON'T need that much.

People have no business having fortunes larger than the GNP of some countries.

[ronnie624]

24. I don't think it's a rude question.

When a tiny fraction of the population 'owns' the vast bulk of the worlds material and capital resources, it guarantees that many will not have enough.

We've been propagandized into believing that the unbridled pursuit of money and material possessions equals freedom and democracy. In my opinion, capitalism that is not strictly regulated, is inconsistent with the principles of democracy.

[NickB79]

27. We have a minimum wage

How about a maximum wage?

[Half-Century Man]

51. A long time point of mine.

I suggest a five million dollar per year limit on income. Income includes salary, benefits above the base level of your organization, bonuses, contest winnings, investment income, and profit from owned businesses and properties.
You may save as much as you want, but can only generate it in 5 million dollar chunks.
Corporations can profit much as the do now.
Everyone (human and non-human) taxed at, say 22% of earnings, any earnings.

[mick063]

5. This is the final nail in the Reagan coffin.

He promised us "trickle down" and the "trickle down" is being hoarded off shore.

The point must be relentlessly hammered home. Forever and ever.

[Snake Plissken]

46. the same people who believe the earth is 6,000 years old are the ones who believe

the mythology of Reaganomics, they aren't interested in silly concepts such as mathematics and sciences

[Half-Century Man]

52. Only urine trickles down...

..and I'm told it is raining now.

[ErikJ]

6. K & R

[Brigid]

7. Apparently these experts don't read DU.

We've known that around here for years.

[mick063]

8. It is a well planned Capital Strike

Intended to break unions, bankrupt the government (diminished tax base), and lower wages.


Why bankrupt the government?

To augment the "I told ya so"

"I told you that privatization is more efficient", "I told you that entitlements were breaking us", "I told you that government was too big".

It is treason. Exponentially more treasonous than anything Snowden did.

It is the hypocrisy that is most frustrating. The hypocrisy of what is deemed to be treason.

[Enthusiast]

18. You are precisely correct.

It absolutely is treason.

They can get away with the hypocrisy because of the skewed media. In any kind of an accurate media they would be exposed immediately.

[Cryptoad]

9. Phutocracy just a stone's throw away,,

30 years of supply side economics has just about destroyed us!

[SheilaT]

20. What I get from this chart is that the bottom 40 percent

are totally fucked.

Their household income can't begin to support even a meager lifestyle, and their negative net worth means that they owe. Whether it's mortgage debt or credit card debt or some other debt probably doesn't matter very much. They're in the hole. And that's almost half of the households in this country. Although I do sort of wonder if this includes non-households, by which I mean the homeless.

Anyway, once you get into the top 60th percentile, things look pretty good, although I suspect a lot of those folks also have serious debt of some kind. If it's just a mortgage, that may not be so terrible, although recent depredations in the home market might suggest otherwise.

Once you hit the top 20 percent and above, things are quite sweet. It seems to me that the biggest problem with people at that level is that they tend not to know anyone below their level, so it totally skews their thinking. If everyone you know makes around 6 figures, owns a decent home (by which I mean a very nice home in any one of the major metropolitan areas) and you can afford a couple of nice vacations a year, and you can help your kids out with college expenses, it becomes pretty hard to understand why everyone else can't do the same. If you're in that top 20 percent you do not know anyone who works at Mickey D's, or waits tables at the Olive Garden, or who teaches public school. You know those people exist, because you occasionally go to a fast food place or an Olive Garden, and your kids may very well attend public school. But you don't interact with those people in a meaningful way. So you just don't know what it's like.

I'm thinking here of the recent uproar over McDonald's posting a sample budget for their employees. On one hand, those who say that such a job ought to be a beginner's job are mostly right. It ought to be. But it's not always. Sometimes circumstances force someone into that kind of job while trying to support a family. Which is exactly why minimum wage ought to be a living wage.

Until we reduce the spread from the top to the bottom of the percentile charts like this, things will only get worse.

[Mr. David]

10. The rich needs to be stripped out of their assets and paid back to the U.S. Treasury and forced

to increase their wages to the employees by an additional $25 on top of what they make.

Include their benefits and paid health care, and the employers will be shocked to find a very happy worker.

Well paid workers makes for happy workers, thus minimizing unemployment and giving back to the middle class.

[duffyduff]

15. Thirty-plus years of Washington policies have led to this mess

It needs to be reversed.

These rich are nothing more than parasites.

[sakabatou]

11. We've known that for a while

Even during the Bush admin (I think).

[Igel]

16. Nice straw man.

Yes, the money could be used more productively.

But it's not a choice between putting it under a mattress or helping with childcare.

What do the rich do with their savings? Um ... Banks? Perhaps. But most of the money doesn't go into bank accounts.

Investments? Sure. Stock market. Bonds. They buy US Treasury debt and help keep the interest rates low as their money is spent by the government. They buy morgage derivatives, freeing up the banks' money so they can continue to loan. They buy private paper from companies. They buy muni bonds--things that build schools and roads and sewage treatment plants. They increase demand for stocks and drive up the stock market or put it with hedge funds that fund entrepreneurs or--gasp--places like Bain.

Either/Or. It's a pretty good Kierkegaard book, if you like Kierkegaard. That's about all.

[Enthusiast]

19. Yeah, Igel. It's been wonderful

what they did with the mortgage backed derivatives and hedge funds. You're fucking with us, right?

[Warren Stupidity]

34. If you bothered to read the article

It made specific assertions that in fact the wealthy are reducing investment activities with their surplus income. They are keeping a larger proportion of it in cash, preferring the near zero returns of money markets, t-bills, etc. to equities. Nor are they spending it, which would at least have a stimulative effect. The point is that the trend is going in the wrong direction and that the economic policies of the last 30 years are doing exactly the opposite of their advertised intentions.

[applegrove]

39. The point is the rich park a greater %

of their money in places where they get the best return/risk ratio, not where it will do the most for employment or the economy. And all this should be acknowledged when the country decides how wealth should be distributed. But who am I kidding, the nation has never been asked what they wanted.

[sulphurdunn]

48. It's got to be great,

knowing that the government insures you against risk if you're rich enough.

[valerief]

21. From the Duh files. nt

[millennialmax]

22. Champagne Glass...

Last edited Sun Aug 11, 2013, 03:55 AM - Edit history (1)

[KansDem]

28. That graphic looks like a champagne glass

How apropos...

[millennialmax]

30. That's what the title is, too. My bad. Will edit.

[tclambert]

45. More like a golf tee.

Since it comes to a point at the bottom.

[Curmudgeoness]

50. Looks like a champagne glass that must fall over.

There is no base....it cannot stand on its own.

[Half-Century Man]

53. It stands okay

remember the stem is firmly wedged in the butts of many people, providing a stable base.

[PSPS]

23. Nonsense. It's not that they're "hoarding cash." It's that they're not paying any taxes.

[Warren Stupidity]

35. No actually the article says they are doing just that.

Of course the solution is in fact to restore income tax levels to pre 1980 rates to create disincentives for hoarding. The point is that the stupid top down tax cuts were sold as increasing investment when they have the opposite effect.

[Blanks]

38. Pre-1960 tax rates would be even better.

Taxes were high to pay for the wars, but the high taxes served as an equalizer.

We need a lot of tax deductions that create jobs (solar installation, existing home renovation, small community alternative energy investment etc.) and if the wealthy are spending their money on things that improve the economy they can stay out of the 90% tax bracket (essentially a maximum wage) otherwise, they can just send their huge salary to pay down the debt.

We gave them the opportunity to stimulate the economy and they built themselves car elevators instead. Lets go back to 91% federal income tax on anything (including capital gains) over $2.5 million per year.

[DallasNE]

25. Duh!

This focuses too much on the tax angle. Why? Because taxes went up for the 1% on January 1, 2013 yet the savings rate last quarter is at an all time high. Something besides taxes needs to be looked at then. The first place I would look is at the boards that are interlocking and simply rubber stamp 20% annual wage increases written up by the CEO for the CEO. This suggests strongly that we have a problem with corporate boards and the only way to address this problem is with regulation. The nature of the regulation is still ill-defined in my mind but I know that regulation is the answer. Separate the Chairman and CEO function, indeed, remove the CEO from the board. Make the audit function independent. Break up the interlocking nature of boards. Only outside board members can sit on the compensation committee. Scrap pay for performance because there is no accurate way to measure performance -- besides the CEO cannot be performing at 10 times the rate of rank and file workers so what better proof is there that this yardstick is meaningless and needs to be dumped. All high level stuff and some may not even prove to be feasible but a set of regulations needs to look at all aspects of the makeup and duties of corporate boards because capitalism is currently not working for the betterment of the nation and that needs to change.

[CrispyQ]

37. Good ideas in your post.

"Only outside board members can sit on the compensation committee."

I wish I could determine my pay like the C-level's do. I used to be an exec admin. It was amazing. They would have a day long meeting, in the exec conference room, with the Board members. In only one company that I worked for was the COB not the CEO. Lunch would be brought in. They would knock off around 2:30 & viola! They had all just gotten a nice raise with stock options, too. It was the stock options where they really raked in the loot.

Love this:

"...besides the CEO cannot be performing at 10 times the rate of rank and file workers so what better proof is there that this yardstick is meaningless and needs to be dumped."

[BainsBane]

26. as long as they don't buy expensive handbags

I guess it's okay.

[KansDem]

29. If they were hoarding water, or oxygen, or essential food...

...they'd be hanging from trees by now.

[pansypoo53219]

31. they don't have enough TIME to BUY enough to STIMULATE the economy. AND WHERE ARE THE JOBS???

the GOP demanded the bush tax cuts be extended for JOB CREATORS. where are they? DEMAND CREATED JOBS.

[AZ Progressive]

32. The consequences of taking out the INCOME CAP that America used to impose

That 74 to 91% top tax rate in America decades ago wasn't to oppress the rich, it was to impose a virtual income cap and discourage rich people from making more than say a million dollars a year, and instead of hoarding it, give it back to workers and put it into the economy.

As a result of taking the top tax rate and thus the virtual income cap, the rich have gotten so rich and are now hoarding the money and along with all of their other behavior are basically putting the American people under siege in their quest to basically own and virtually enslave the American people.

[IncessantPerfidy]

33. People need to start targeting the wealthy and those who provide funding to the GOP for protest

they need to be exposed and shamed for what they are doing to this country.

Protest them and their families at their homes, places of business and any place they go in public.

With the continued income inequality in America they are either going to have to start paying more in taxes or the people will get sick of them being well asshats and the people will take matters into their own hands.

1789 France comes to mind when I think of what will happen to the rich when enough people have had enough of their nonsense.

[Bigmack]

36. Envy.... that's what the Right says.

They say all this income inequality stuff is just envy of the rich.

I don't envy the crazy old lady with the 137 cats, or the guy with 350 wrecked cars in the their pasture. They are hoarders... mentally ill.

Why would I envy someone who has more money than they and their heirs could ever spend.. no matter how extravagantly.

Additionally, anybody like the Waltons, who pay their workers shit, must lack empathy. Lack of empathy is sociopathology.

I don't envy mentally ill sociopaths.

[Initech]

40. So let me get this straight:

If you have lots of pets, you're a hoarder and must be treated for your mental illness.

If you're up to your neck in trash, you're a hoarder and must be treated for your mental illness.

But if you sit on trillions of dollars, you're a "job creator" and nothing will stop you from getting punished.

[napoleon_in_rags]

41. Oh, good post. You nailed it. nt

[Snake Plissken]

42. "The Rich Are Hoarding Cash And It's Making Us A Lot Worse Off: Experts"

Thank you Captain Obvious, and in other news ... "Experts" have determined water is wet

[tclambert]

44. Well, there are a lot of bought and paid for experts trying to justify anything the rich do.

Telling rich people how virtuous they are may get you some grant money. Finding a pompous academic sounding pseudo-justification for selfish behavior gets you a show on Fox News.

[napoleon_in_rags]

43. Wealth production is tied to the amount of money spent.

What that means is that no money exchanging hands in an economy corresponds no products or services being produced for people. LOTS of money changing hands corresponds to lots of goods and services (aka wealth) being produced, and sold, driving the creation of more.

The true well being of the economy is tied to how well it creates wealth, and how much its creating. That is tied directly to the amount of money being spent for goods, the amount of money changing hands. Hoarding wealth is one thing, but hoarding money shuts down everything. The low income of so many Americans spells out sure economic doom. They can't buy from any business if they don't have money.

[sulphurdunn]

47. And because of it those businesses

have no incentive to hire more workers. What few mention is that the very wealthy are absolutely terrified of inflation transferring their wealth down the food chain. They will do anything to avoid that, including the capture of representative government to legalize transfer of the nations wealth up and into their vaults, where it can sit, reducing the money supply and taming inflation.

[napoleon_in_rags]

49. Inflation will only transer money down the food chain if the money is created right, though.

Printing money for millionaires will just cause the already large gap between the minimum wage and the inflation adjusted minimum wage to grow, making poor poorer. But if the money were to be loaned to create higher paying jobs for low income people, that stimulus would vastly raise the wealth production.

Maybe we could have a plan, based on the fact that Wal-Mart workers require their workers to live off of welfare, called "Wal-Mart for America" basically what it does is it subsidizes all low income working people, so that employers can pay them less. That would probably do it.