I know I sound like a broken record, but many of the problems go back to when Nixon let the dollar float and we had the oil crisis. Saudis control our oil economy, by ownership of our domestic companies, and through price fixing by OPEC. Exxon Mobil Corp (XOM. N) last Wednesday reported profit of about $15.4 billion in its fourth quarter, pushing it toward a record take for all of 2022. How many Saudi Exxon shareholders report and pay US taxes?
Also when we buy foreign goods, the owners who profited are not US citizens and do not report income in the US although they benefit from being permitted to sell here and expend our infrastructure. I'd tax the hell out of them. .
As a good friend of mine suggested yesterday. "there are universities, there are courses of higher education, there are clubs that you can join for the intellectually developed, and the implication that you get from living in this world for any length of time, is that somehow if you want to succeed, if you want to make something of your life, if you want to count, you have got to have brain power and you have got to be able to process complicated notions and difficult challenging ideas.
At the essence of too many suppositions, is this notion that somehow in order to be happy person you have to conquer all these formulai, you have got to understand all these processes, you have got yo get all this information under your belt, and then well actually and then what is a very moot point".
So we have let the 'intellectuals' run the show and they have made a bloody mess, literally! Time to remove the closed minds and restore the KISS principle - Keep It Simple Sweetheart - and return to Brettton Woods Mark2, and yes it seems that the Davos crowd and its billionaires are the stumbling blocks, along with their captive senators and reps of the Republican Party, no place for them at bargaining table, they use deep pockets and that's about it, so not so smart after all.
I'm not an economist -- but I remember when Nixon - not the Fed - let the dollar float. IMHO this was a gift to gold speculators, who were universally Republican donors. I also remember when the Hunt brothers tried to corner the silver market. https://en.wikipedia.org/wiki/Silver_Thursday
I mentioned earlier that I trace many of our problems to Nixon and the oil crisis. Nixon supposedly closed the gold window in 1971 in order to address the country's inflation problem and to discourage foreign governments from redeeming more and more dollars for gold.
I don't know this as a fact, but I bet a lot of Nixon insiders made a bundle. I know that I lost a bundle when Mexico devalued the peso in 1982. If I had known.....
I don't think we can go back. But if I were king, I'd arbitrage. US rates are 8%. Japan, Sweden, Denmark Switzerland are about 1%. BUY low and SELL high.
Daniel. thank you, thank you, thank you. I feel vindicated. I have always thought the night of October 2/3, 1973 was due to Governmental shenanigans. Coffee was 50 cents a pound in California 10/2, Gasoline was 50 cents a gallon on 10/2. On 10/3/1973 both were $2.00 You are the first person who has explained this to my satisfaction.
Just might work, however knowing the risk factor and the minds of those 'playing the game' will always be the great unknown, in addition to implementing both at the same time, not an either or scenario.
As usual, Daniel. I agree. But, the House retrumplicans just took the money out of the IRS bill to add investigators. Will the bill die in Senate? Will Biden veto it? I agree to a fair tax on wealth, since I had to pay 22.5% on my gross income (and I'm not complaining, I paid it) I think everyone making more than I did (max $190,000) should pay the same rate. (The rate I paid would have been higher on my net)
That's a relief, I thought that would be the direction, thanks for the confirmation, Daniel. But, why does the news media report it as though it were a done deal? This is a rhetorical question, I know the answer - MORE MONEY. Scare tactics wins the day (:-)
That Peter Thiel article was a real eye opener. Any news on the IRS budget, the department responsible, and the people who need to be hired in order to identify and penalize tax evaders?
Daniel Solomon; That sounds Iike a promise made by a previous candidate who 'won' but never delivered. Some of Bernie Sanders' ideas were also appropriated (sort of), and never happened ( like bringing jobs back to the American workers that had been outsourced ).
As an investor you have a lot of myths there,they are not true because they are repeated.
My US shares are taxed at 30% by the US govt..Filling form W8BEN I think it is means I am taxed at 15%.Not a US citizen,never lived there,but pay tax in the US.France and Holland have higher taxes than this To the best of my knowledge this is normal practice and very simple
The share registry withholds tax and gives it to your IRS.Dividends work the same as wages,tax is deducted and you are given your net payment.Things are sorted out when you do your tax at the end of the year
Large owners appear on the shareholder top 20 shareholder list,usually this is pension funds.A large company I have shares in is a family company that got big .The founder has 1.1 billion shares in the company.From his A$4 billion dividend annually 30% of that goes straight to the tax office.I think the tax office will pay a lot more attention to him than they will to me and my $10K in dividends from that company.
Personally I would be far happier paying tax on $4 billion than paying tax on $10K.
He is rich because he owns 36% of the shares in the company he started by borrowing a lot of money. 1.1 billion shares @ $22.50 each,the price changes daily.
There is nothing complicated in it,I don't know why people refuse to see it
My understanding of a ROTH IRA is that it is the same as the Australian system,it is taxed on the way in,taxed during growth,and tax free on the way out.There are around 1000 people in Australia have used the system to accrue fortunes in that system.There other 20 million people use the same rules but don't realise it because of the click bait headline.
They could take every cent off that small amount of people and it isn't going to reduce the tax of the masses by 1 cent.
Wal mart in the US would be the same as the guy here.His wage bill is far higher than his income,anybody that works for the company can enter into the share purchase plan to the maximum the govt will allow because of the tax advantages,but they still pay tax on the dividends just as he does.
Anybody else can buy shares on market and they are then at the mercy of rising and falling markets,and profits and dividends depending on supply and demand for the product
You only file W8BEN if you are a foreign person and you are the beneficial owner of an amount subject to withholding.. That probably means you had trades. Accrued value doesn't get taxed. You had to have has a taxable event like a sales or exchange.
Saudi investors in Exxon control OUR market. Fix prices through OPEC. They buy and hold. Taxed only if they trade or get dividends. [The trick BTW is that they borrow against their own shares - tax free.]
The point about the Roth - had you read the article- is that Thiel placed a low value on his company worth BILLIONS.
The W8BEN is for dividends,income .No different to wages .Selling shares is capital gains ( CGT).Dividends are income as explained,it is very difficult to avoid tax just by the simplicity as explained.
Own 1 share in a company or 1 billion,the treatment is exactly the same.
Companies are owned by pension funds,not Saudi.
Exxon,BP,Shell,Caltex ( Chevron) and Woodside here in Australia.Exxon does not control the market no more than Coca cola control the soft drinks market,they are not controlled by Saudi.Aramco has been listed,perhaps 66% owned by Saudi,you can buy as many shares in Aramco as you like.You can borrow money against your house,buy shares in Aramco,and pay tax on the dividends.You will also pay interest on the money borrowed,then you need to do your own cost/ benefit analysis Options etc will give you higher leverage and faster returns ( or losses)
While I am retired from the stockbroking/ financial industry for a long time now everybody claims to know what rich people do,yet as individuals they never do that,The answer is not,because they don't pay tax.
SEC form 4 will give you information on buying and selling of shares by wealthy individuals.This can be cross referenced with 13 D and G if I remember correctly.
The charities they fund can be looked at through 501(C) and then 501(C) (3).
The companies I own the major shareholders are HSBC and then JP Morgan.Usually 25% and 18% or thereabouts.The rest are smaller pension funds,state Street,Blackrock,Vanguard etc. 50 to 60% would be the normal,unless like Wal mart they are family companies that really grew An investment in Wal mart in 1971 of approx $1760 ( 100 shares) is now around 204,000 shares ( buy and hold) after 11 two for 1 stock splits You aren't going to pay CGT unless you sell any of those shares.You will pay tax on the dividends 204,000 X say $1.40,you would need to look up what the dividend is,it is impossible to avoid paying tax on it.
Finding one person that may or may not have sorted the system does not prove anything.
That is as crazy as the people that will never invest because they have heard of a company that went bust.
Company ABC went bust,this proves that Coke,Pepsi,Exxon,Amazon,Walmart,Microsoft the whole lot will go bust,it is a major failing of the human race,correlation must be causation.
You know nothing about our relationship with Saudis, who happen to be the "market maker" for oil prices through regulation of production. Like I say, you personally had to have a taxable event... They control our oil companies...own the largest US refineries.
"Finding one person that may or may not have sorted the system does not prove anything." Actually hundreds of thousands have been documented loaning to themselves to avoid taxes. The topper has been that corporations buy back shares to artificially boost prices.
Sales Factor Formulary Apportionment of Global Profits as an Alternative
System of Taxation of to the Current U.S. Federal Corporate Income Tax. California and several other states have been using a version of this method for over 50 years. It prevents corporations from allocating most of their profits to low tax jurisdictions.
John, I really like it, but McCarthy, McConnell and their ilk will never go along with a pre-Reagan tax rate. After all, they got where they are through the post-Reagan, Post Roberts' Citizens United financial structure. They will not give it up willingly even though the whole country would benefit if they would, possibly even they would benefit not having so many houses and yachts to worry about and so much campaign money to raise.
There is a big difference between high income individuals and the very wealthy. The very wealthy can reduce their taxable income. So if you raise income tax rates all they have to do is reduce their income and live on money which they borrow against their assets and/or live from investments into municipal bonds. So changing income taxes will affect high income people but not the very wealthy.
Why only two cents while poor people are getting evicted from homes, the rich can’t afford more than two cents? and if you can’t collect the taxes they already owe, how do we collect this tax? Will they not find a loophole?
We’re at the tipping point where the rich have more money and power than anyone on the right side of issues while we try to figure out what to do they keep amassing wealth and power because the system works for them. It’s rather scary.
The usual solution, historically, is to have a world war and destroy an insane amount of infrastructure and kill a lot of people. It's always worked so far, why not now? /s
Jaye Raye ; I like to talk about Elizabeth Warren's proposal for a two percent wealth tax, because wealth is not taxed and the very rich do not 'earn' money that is considered as 'income'. It illustrates just how stingy they are that they strongly oppose it. Elon Musk had a fit when Warren's proposal was in the news. He said something like "Give them two percent and they will want more'!
End tRump's tax giveaway. Or institute a windfall profit tax . The way things are going. There will probably be a windfall for those who loaned money to the government.
BRAVO, Mark! Although I'd limit that rate only to corporations that have a profit level above a certain amount. After eliminating all the loopholes to hide profit, of course. The small corporations (say, under 50 total employees) wouldn't have to be taxed at such a high percentage.
Lower the interest rate on treasury bonds where the wealthy park their money. Don't know if it would save the problem, but I'd like to get even. Raise taxes on the billionaires.
Hartmut Fischer : Is this a suggestion that 'they' should not have to pay their fair share of taxes? What good is this 'professors' chair if it can't have someone in it to help solve the very real problems in our economy?
90% of the equity in stocks is owned by the richest 10%. Over 60% of the income of the wealthy is in the form of unrealized gains in stock appreciation which isn't currently taxable but should be. Taxing corporations attacks their income at the source no matter where they choose to live.
Is there anyone ready to step into the Hon. Sanders’ shoes? We need more people like him representing what’s best for the American people, not big corporations.
I'm torn on the idea of MMT. In some ways, the Fed has been able to control rates in a way that has helped to curb inflation without slowing down the economy enough to increase unemployment. However, I'm not convinced that the Fed can implement policy to slow down spending and bring inflation back down without a recession or an increase in unemployment. Without the natural economic cycles of decreased spending and increased unemployment, followed by lower prices, and a resurgence in demand, I don't know if inflation will return to pre-pandemic levels. The game of near-zero rates that the Fed has been playing since 2008 is a dangerous one.
The Fed members obviously are Republicans who have been sold trickle down theory. I don't think it's a ying/yang issue. False dichotomy. Lots of other factors.
Fiscal policy -- should have declared economic war on price fixers and price gougers before letting monetary theory slow down our domestic economy.
We don't have a good handle on economic indicators, as much of the country is dominated by the gig economy. I keep saying the real solution is collecting from deadbeats and prosecuting price fixers and price gougers. E.G. California's attorney general sued Amazon alleging the company broke state competition laws. Specifically, the suit claims that Amazon keeps prices artificially high via practices barring wholesalers and third-party merchants from offering lower prices to other retailers. May this be an object lesson.
In any other time or place, this jobs report would be seen as incredible, hopeful. However, at the head of the Fed, we have a Republican who has been drinking the Kool-Ade (sorry about the reference, but it feels like it is the right one) that workers are expendable and it is only corporations and what they take in that counts. Powell claims it is workers demanding reasonable wages that caused the inflation we are now experiencing. He has in his mind a magical figure of 2% inflation as his goal. He can't possibly know what it would mean to workers and their families to get that rate so quickly after a massive pandemic that killed millions around the world and well over a million in this country, that closed down China for many months, and brought out the strongest corporate greed in generations. I don't know where he got his economics training, but it did not include taking into account all factors when making a decision. Tunnel vision works well for corporations because they can tell that Powel and his crew are going to do little or nothing to stop them and besides, they have accumulated so much profit and bought back so much stock they will be sitting pretty as they say for a long time no matter what happens. And, the workers are interchangeable, aren't they? If unemployment goes up, they will have their pick of workers who will be forced to do whatever they are told at whatever wage the corporation chooses to pay, right? One can't help but wonder if that is just what Powell and his Republican buddies are hoping for.
This nurse went 3 years without a raise while those in the C-suite got mid-six figure bonuses for cutting costs. When I realized the value of my life-saving work was merely a line item on their spreadsheet, I voted with my feet and retired early.
They don’t! They proved it in my hometown by selling our not for profit, highly rated hospital to HCA. This is in the South and their nurses successfully UNIONIZED because of all the unnecessary cuts during the COVID crisis. Ya truly gotta love these big bastards.
Ruth, I totally agree. Cheryl's response to yours supports something else that I would like to add. Workers are finally getting raises over the last year, after enduring at least a decade without any measurable raises at all. In many cases, people took pay cuts to stay employed in 2008 and didn't see a raise that was even close to keeping pace with inflation after the economy rebounded and productivity grew. Some unlucky others were just plain let go. Working people already endured rising prices for shelter, goods, fuel and food on wages that were shrinking in the face of inflation up until now.
When energy prices rose, they were dismissed by the Fed because those prices are volatile and not part of the "core economic indicators." Working people had to pay those very real price rises and pointed to them as inflationary, but they were waved off because it doesn't make the 'tan book' Chair Powell looks at. When the stock market raged, profits fattened, economy grew and stocks split, no one at the Fed was concerned. As cheap money funded stock buybacks, fueled mergers and acquisitions that drove down competition, and set the table for the oligarchic, profit-driven inflation being witnessed, Fed was unconcerned and kept rates low. Now that businesses have to pay more to hire laborers, the Fed is going to apply 10 years worth of interest rate hikes in a single year to "bring inflationary wage pressure in line", and it's willing to bring the economy and employment to a skidding halt to do it. Working Joes and Janes are getting raises and inflation is suddenly an emergency.
We all must keep saying this until it gets broad traction: the collective purchases of working people is what drives economic growth and creates jobs. Working people are the job creators and policies that support them grow economies in a broad and sustained way. Executives may run entities that employ people but it is the mass of working people buying those goods and services that create jobs. And now his rant is ended.
C. Jacobs, awesome rant! You clearly stand with working people as do I. I remember talking with my high school students about the fact that the Fed didn't seem to mind that low interest rates were allowing corporations to participate in all kinds of behavior that would be bad for our economy, but we couldn't think how to stop it. The Fed has proven over and over that they are bound to the corporate world, not to the people that make Corporate World possible (whether those workers want to or not. We need the income working brings). Powell has an agenda, and it does not bode well for the rest of us. I am sorry Biden, in a fit of good feelings, let Powell stay even though an ignorant fool who originally appointed him wanted Powell to do as much harm to our economy as he could. He is still working at it 2 years after Trump left office. Workers and Corporate World are the pawns that are moved around the board at the whim of the CEOs and owners who are now being forced to pay the higher wages and salaries they don't want to pay. They paid Senators and Representatives not to raise the minimum wage and they kept it where it was set nearly 12 years ago but workers just wouldn't have it. The Fed is now punishing Americans for demanding higher pay and the corporations a bit for giving it to them/us. Powell needs to go, but alas, I don't know how to do that. I would think the other members of the Fed would see what is happening and challenge Powell, but as so often happens, Republicans infect the people they work with, giving them the disease of "OK, I am paid enough so I'll say nothing and do nothing. How bad can it be?"
At a minimum, it should be clear that the Fed demands a serious amount of unemployment in our economy, and if that is our economic policy, then we are obligated to provide a very healthy safety net to support the workers and families who are pushed out of employment.
Yes. If our economy needs workers without work, we must make sure these workers are housed, fed and have medical care. When will that ever happen? . Not in my lifetime. We forget there are more of us than there are of them.
I think the Fed is fine with sub 4% unemployment - unemployment rates were at or below 4% for most of 2018 and 2019. The bigger issue now is that they want to reign in inflation, and there's no way to do that without putting some pressure on the labor market. So far, however, inflation has been decreasing without increasing unemployment so a soft landing is still possible.
Except when 54% of current inflation is directly attributable to increased profits (ie "profiteering, price gouging") ... further punishing the people already paying more for everything is not going to dissuade or punish the profiteering that's taking place.
The Fed is starting to look like a child with a hammer, eager to apply their only tool to a problem that's actually a screw.
The current problem needs legislative fixes from Congress, which Republicans refused to vote for in the last session, and presumably will continue to refuse to do in the current one.
The Fed is basically pulling the handbrake on the entire economy, just because they don't have any other direct mechanism to address rampant profiteering.
Thank you for this commentary, Prof. Reich. It is truly perverse for the Feds to hang on to the outdated, harmful premise that the only way to curb inflation is to keep workers unemployed and keep salaries low. Take a look at the UK now!
You can guarantee it will freak the Fed. Their goal is to keep up unemployment and wages down. They have no appreciation for the FACT that inflation is the result of opportunistic price gouging.
Really, their charter needs to be revamped.
No wonder Americans feel screwed by their government.
And let’s not get started about the latest Supreme Court scandal regarding the chief justice’s corruption.
Jen, you are right about the need to rethink what the Fed should be doing. That is not the whole government nor should it be why people don't trust the government. It is just one piece. We need to find a way for the people to stop electing folks to office who care nothing for them, have an agenda of working against our government and the programs it provides the people, and want to pass legislation that will benefit only the rich as the Trump tax cut was designed to do. Right now, it is Republicans who are holding a circus in the House that is working to give power to insurgents, cut people who understand our problems from the committees that deal with those problems, and pass junk bills like the one to defund the IRS (so they will not have to pay their taxes the way ordinary people do). If more of those people were not elected, things would be better for all. Then the Chief Justice, I listened to his hearing in the Senate and at the time, thought he sounded dishonest. I could not see him, but only heard him and, I can't explain it, but he sounded glib and not really interested in anything but his own thinking even though he said nearly nothing of importance. I know he knows that Alito leaked the draft of the anti-Roe decision, but had to set up a fake investigation to cover. What a jerk!
It’s just one more thing people hate about the government. The rich not paying taxes, the dark money. They feel betrayed. Hell, I feel betrayed.
Your comment about Roberts is interesting. At the time I knew about his signature involvement in getting the Florida recount quashed and W installed. His appointment was the payback he expected. Your input from just hearing his voice validates what I thought at the time. Roberts thought he’d earned the appointment, and frankly he had.
The reason these folks vote for republicans is this they are mad. And the Murdoch empire points their rage at the wrong place.
Jen, you are so right about the Murdoch empire pointing scared white rage at the wrong people. It keeps them worrying and scared, which is exactly where Republicans want them, pathetically struggling while blaming the folks who are actually trying to help them. It is just so hard to watch and experience their pain, and ours. I thought Roberts would grow into the job as Chief Justice, but instead, he grew even further into the whining, undermining, dishonest fool I thought he was from the beginning when he was working for a Bush election when he knew well it was wrong. With the mess in Florida, the vote should have gone to the person with the popular vote win. That is what a decent Supreme Court would have done and they would never have listened to Roberts and his ilk. He did get his repayment and we are all paying for that for nearly 20 years. Disgraceful!
They couldn’t have done that, we still have the electoral college. The NYT did an audit of the Florida vote in fall of 2001 and found that if all votes had been counted Gore,win Florida. And easily had it not been for JEB!
I think the main reason ppl don’t trust government is valid: too much dark and special interest miney, instead of response to voters.
Once again we can thank Roberts, although he didn’t write the majority opinion.
Okay, I fully admit to having no clue about how "the economy" works, other than a woeful generic knowledge. Robert, you've helped me gain a slightly broader understanding. So within that context, am I wrong in saying Jerome Powell is not up to the task? He seems to be a "one trick pony." How does the position of Fed Chair work? Is it a position President Biden can affect? If so, in your opinion, is it time for him make a change? The incessant interest rate increases seem to not be addressing the issue and they're hurting people, exacerbating the impacts of inflation, not helping them. I may be way off base, but any help to gain a better understanding would be greatly appreciated.
Give The Deficit Myth a try. It will blow your mind. I’ve been reading economics since 2008 (I was mad at the banks, and I’m a chemist so BS and jargon don’t scare me). Web of Debt is a good intro about how money is created (it will also blow your mind). Donut Economics is about how economics is taught and sustainable growth. All good stuff and quite readable. Dear Dr Krugman never addresses MMT but I think knowing about it ( the Myth book) is really helpful in giving your a framework to understand the economy.
I will always remember Roger B. Smith's remarks, in 1986, when he was asked about raising prices on all new models at GM. The country was JUST exiting a terrible recession. He said, "We believe we are charging what the market will bear!" That was when I realized that the commonly understood idea of a fair profit had gone away! Big business began wringing as much out of their respective markets as they could. And not ONE reporter asked, "what about a fair profit!"
I don't think the Fed is a human who can be 'spooked'. This system is set up to keep the workers down. If they really want to stabilize our economy, the very wealthiest would lose their big, fat tax 'breaks' ( why would they need a 'break' from something they rarely or never do?).
Powell is 'crazy like a fox'. Since he is working for those who are gaining all the wealth, there isn't much that does not require raising interest rates. When 'we' default on 'our' loans made by the very wealthy to 'US', who will benefit!? What kind of interest will be made on those loans?
Fund the IRS so they can go after big tax cheats and use the fines to lower the debt. That way the cheats will have less money to fund politicians with dark money and thus decrease their power over federal and state budgets. Tax cuts that lower rates for wealthy people and corporations that then profit off buying federal debt might thus be averted. Doesn't it make your head spin?
The points Robert makes are so blatantly obvious to even a casual observer of the economy and global issues that one is forced to conclude that the Fed only exists to serve the interests of the 1%. Why aren't our elected representatives at the local, state and national level raising hell about this?
I agree that that's the case for most of them, but why isn't the progressive wing of the Democratic party raising hell? It's like there's some sort of "hands off" policy surrounding SCOTUS and Federal Reserve Board decisions that harm the general population.
Paul Bruno ; Bernie Sanders and Elizabeth Warren are among those who have magnified these facts for a long time. The corrupt media (that is getting more corrupt) have marginalized and ridiculed them. Bernie is dismissed as a Socialist and Warren is 'that woman '. It's what they won't cover that is important. Katie Porter has been known to kick butt in the calling out greedheads department, too.
I disagree. The Fed must do what it can with the blunt instrument of interest rates. It does hurt the average people to raise rates but unchecked inflation hurts the average person more yet.
I would agree with you if the factors that Robert point out where not spot on. When companies like General Mills, P&G, the oil industry, the shipping industry, etc. are making record profits on inflated prices, beating workers on the head to lower demand is inhumane and criminal (or should be!).
Tax the rich! Corporations with the highest profit margins in 70 years, and pay way less in taxes than they did in the 50's! Use anti trust laws to break up monopolies!
Thanks Robert for explaining this in common sense, understandable terms. When I try to explain this, I use terms like ' inelasticity of supply and demand' and people's eyes glaze over.
Powell's approach to inflation is aimed at only one side of the inflation equation - the price of labor. He avoids the other side - monosomy pricing by corporate America. But the evidence that monosomy is a big cause of inflation is right there, in large increases corporate profit margins.
And it would appear that Powell accepts that Corporate America is incapable of expanding production to meet increased demand from consumers who now have more income. He seeks instead to reduce consumer demand by raising interest rates. So Powell's solution is demand destruction - take money away from people so they can't try to buy as much stuff, and viola supply and demand are once again in balance. This is nuts.
Many of the jobs created in recent months have been taken by non-traditional hires such as those of us who had long abandoned looking for work. I am now employed (as of January) after looking for an appropriate role for many years. We need to start tracking people looking for work who are not collecting unemployment like I did FOR YEARS!
Tax The Rich.
"Tax The Rich."
I also think we need to identify, tax and penalize tax evaders and cheats. Many do not report income or are exempt (like from a Roth IRA) but make a lot of money using our markets. https://www.propublica.org/article/lord-of-the-roths-how-tech-mogul-peter-thiel-turned-a-retirement-account-for-the-middle-class-into-a-5-billion-dollar-tax-free-piggy-bank
We also need a small wealth tax on the top 1%.
I know I sound like a broken record, but many of the problems go back to when Nixon let the dollar float and we had the oil crisis. Saudis control our oil economy, by ownership of our domestic companies, and through price fixing by OPEC. Exxon Mobil Corp (XOM. N) last Wednesday reported profit of about $15.4 billion in its fourth quarter, pushing it toward a record take for all of 2022. How many Saudi Exxon shareholders report and pay US taxes?
Also when we buy foreign goods, the owners who profited are not US citizens and do not report income in the US although they benefit from being permitted to sell here and expend our infrastructure. I'd tax the hell out of them. .
Prof.Reich always mentions a windfall tax.
I remember a time of price controls. If you can’t tax ‘em, do this!
Didn't work as well as prosecution of price fixers. Treble damages plus attorney's fees.
Daniel Solomon ; I wonder if that happens anymore?!
Daniel, I'm no economist and don't have the depth of your knowledge, however, maybe it's more simple than what I have read thus far.
Maybe there is a need to go back to using Gold as the currency standard as it was with the Bretton Woods system, which by the way was sabotaged by none other than the Fed? https://en.wikipedia.org/wiki/Bretton_Woods_system#The_Bretton_Woods_system_in_the_21st_century
As a good friend of mine suggested yesterday. "there are universities, there are courses of higher education, there are clubs that you can join for the intellectually developed, and the implication that you get from living in this world for any length of time, is that somehow if you want to succeed, if you want to make something of your life, if you want to count, you have got to have brain power and you have got to be able to process complicated notions and difficult challenging ideas.
At the essence of too many suppositions, is this notion that somehow in order to be happy person you have to conquer all these formulai, you have got to understand all these processes, you have got yo get all this information under your belt, and then well actually and then what is a very moot point".
So we have let the 'intellectuals' run the show and they have made a bloody mess, literally! Time to remove the closed minds and restore the KISS principle - Keep It Simple Sweetheart - and return to Brettton Woods Mark2, and yes it seems that the Davos crowd and its billionaires are the stumbling blocks, along with their captive senators and reps of the Republican Party, no place for them at bargaining table, they use deep pockets and that's about it, so not so smart after all.
I'm not an economist -- but I remember when Nixon - not the Fed - let the dollar float. IMHO this was a gift to gold speculators, who were universally Republican donors. I also remember when the Hunt brothers tried to corner the silver market. https://en.wikipedia.org/wiki/Silver_Thursday
I mentioned earlier that I trace many of our problems to Nixon and the oil crisis. Nixon supposedly closed the gold window in 1971 in order to address the country's inflation problem and to discourage foreign governments from redeeming more and more dollars for gold.
He and his advisors were probably not active traders - couldn't understand hedge concepts - and although this was supposed to be an inflation measure the price of gold shot up almost 50 %. https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
I don't know this as a fact, but I bet a lot of Nixon insiders made a bundle. I know that I lost a bundle when Mexico devalued the peso in 1982. If I had known.....
I don't think we can go back. But if I were king, I'd arbitrage. US rates are 8%. Japan, Sweden, Denmark Switzerland are about 1%. BUY low and SELL high.
Daniel. thank you, thank you, thank you. I feel vindicated. I have always thought the night of October 2/3, 1973 was due to Governmental shenanigans. Coffee was 50 cents a pound in California 10/2, Gasoline was 50 cents a gallon on 10/2. On 10/3/1973 both were $2.00 You are the first person who has explained this to my satisfaction.
Just might work, however knowing the risk factor and the minds of those 'playing the game' will always be the great unknown, in addition to implementing both at the same time, not an either or scenario.
Need to eliminate the human factor -- AI algorithms.
As usual, Daniel. I agree. But, the House retrumplicans just took the money out of the IRS bill to add investigators. Will the bill die in Senate? Will Biden veto it? I agree to a fair tax on wealth, since I had to pay 22.5% on my gross income (and I'm not complaining, I paid it) I think everyone making more than I did (max $190,000) should pay the same rate. (The rate I paid would have been higher on my net)
The House bills will die in the Senate.
That's a relief, I thought that would be the direction, thanks for the confirmation, Daniel. But, why does the news media report it as though it were a done deal? This is a rhetorical question, I know the answer - MORE MONEY. Scare tactics wins the day (:-)
That Peter Thiel article was a real eye opener. Any news on the IRS budget, the department responsible, and the people who need to be hired in order to identify and penalize tax evaders?
Daniel Solomon; That sounds Iike a promise made by a previous candidate who 'won' but never delivered. Some of Bernie Sanders' ideas were also appropriated (sort of), and never happened ( like bringing jobs back to the American workers that had been outsourced ).
Daniel Solomon; thanks for sharing this. About Peter Thiel, and his piggy bank.
As an investor you have a lot of myths there,they are not true because they are repeated.
My US shares are taxed at 30% by the US govt..Filling form W8BEN I think it is means I am taxed at 15%.Not a US citizen,never lived there,but pay tax in the US.France and Holland have higher taxes than this To the best of my knowledge this is normal practice and very simple
The share registry withholds tax and gives it to your IRS.Dividends work the same as wages,tax is deducted and you are given your net payment.Things are sorted out when you do your tax at the end of the year
Large owners appear on the shareholder top 20 shareholder list,usually this is pension funds.A large company I have shares in is a family company that got big .The founder has 1.1 billion shares in the company.From his A$4 billion dividend annually 30% of that goes straight to the tax office.I think the tax office will pay a lot more attention to him than they will to me and my $10K in dividends from that company.
Personally I would be far happier paying tax on $4 billion than paying tax on $10K.
He is rich because he owns 36% of the shares in the company he started by borrowing a lot of money. 1.1 billion shares @ $22.50 each,the price changes daily.
There is nothing complicated in it,I don't know why people refuse to see it
My understanding of a ROTH IRA is that it is the same as the Australian system,it is taxed on the way in,taxed during growth,and tax free on the way out.There are around 1000 people in Australia have used the system to accrue fortunes in that system.There other 20 million people use the same rules but don't realise it because of the click bait headline.
They could take every cent off that small amount of people and it isn't going to reduce the tax of the masses by 1 cent.
Wal mart in the US would be the same as the guy here.His wage bill is far higher than his income,anybody that works for the company can enter into the share purchase plan to the maximum the govt will allow because of the tax advantages,but they still pay tax on the dividends just as he does.
Anybody else can buy shares on market and they are then at the mercy of rising and falling markets,and profits and dividends depending on supply and demand for the product
You only file W8BEN if you are a foreign person and you are the beneficial owner of an amount subject to withholding.. That probably means you had trades. Accrued value doesn't get taxed. You had to have has a taxable event like a sales or exchange.
Saudi investors in Exxon control OUR market. Fix prices through OPEC. They buy and hold. Taxed only if they trade or get dividends. [The trick BTW is that they borrow against their own shares - tax free.]
The point about the Roth - had you read the article- is that Thiel placed a low value on his company worth BILLIONS.
The W8BEN is for dividends,income .No different to wages .Selling shares is capital gains ( CGT).Dividends are income as explained,it is very difficult to avoid tax just by the simplicity as explained.
Own 1 share in a company or 1 billion,the treatment is exactly the same.
Companies are owned by pension funds,not Saudi.
Exxon,BP,Shell,Caltex ( Chevron) and Woodside here in Australia.Exxon does not control the market no more than Coca cola control the soft drinks market,they are not controlled by Saudi.Aramco has been listed,perhaps 66% owned by Saudi,you can buy as many shares in Aramco as you like.You can borrow money against your house,buy shares in Aramco,and pay tax on the dividends.You will also pay interest on the money borrowed,then you need to do your own cost/ benefit analysis Options etc will give you higher leverage and faster returns ( or losses)
While I am retired from the stockbroking/ financial industry for a long time now everybody claims to know what rich people do,yet as individuals they never do that,The answer is not,because they don't pay tax.
SEC form 4 will give you information on buying and selling of shares by wealthy individuals.This can be cross referenced with 13 D and G if I remember correctly.
The charities they fund can be looked at through 501(C) and then 501(C) (3).
The companies I own the major shareholders are HSBC and then JP Morgan.Usually 25% and 18% or thereabouts.The rest are smaller pension funds,state Street,Blackrock,Vanguard etc. 50 to 60% would be the normal,unless like Wal mart they are family companies that really grew An investment in Wal mart in 1971 of approx $1760 ( 100 shares) is now around 204,000 shares ( buy and hold) after 11 two for 1 stock splits You aren't going to pay CGT unless you sell any of those shares.You will pay tax on the dividends 204,000 X say $1.40,you would need to look up what the dividend is,it is impossible to avoid paying tax on it.
Finding one person that may or may not have sorted the system does not prove anything.
That is as crazy as the people that will never invest because they have heard of a company that went bust.
Company ABC went bust,this proves that Coke,Pepsi,Exxon,Amazon,Walmart,Microsoft the whole lot will go bust,it is a major failing of the human race,correlation must be causation.
You know nothing about our relationship with Saudis, who happen to be the "market maker" for oil prices through regulation of production. Like I say, you personally had to have a taxable event... They control our oil companies...own the largest US refineries.
"Finding one person that may or may not have sorted the system does not prove anything." Actually hundreds of thousands have been documented loaning to themselves to avoid taxes. The topper has been that corporations buy back shares to artificially boost prices.
Tax the corporations, regardless of where they incorporate and domicile!
Sales Factor Formulary Apportionment of Global Profits as an Alternative
System of Taxation of to the Current U.S. Federal Corporate Income Tax. California and several other states have been using a version of this method for over 50 years. It prevents corporations from allocating most of their profits to low tax jurisdictions.
Sounds good to me, Don!
How do you tax the rich? I mean how do you tax the really wealthy? What would you recommend?
Very simple. We return to the same tax structure that we had when Ronald Reagan started his first term.
John, I really like it, but McCarthy, McConnell and their ilk will never go along with a pre-Reagan tax rate. After all, they got where they are through the post-Reagan, Post Roberts' Citizens United financial structure. They will not give it up willingly even though the whole country would benefit if they would, possibly even they would benefit not having so many houses and yachts to worry about and so much campaign money to raise.
There is a big difference between high income individuals and the very wealthy. The very wealthy can reduce their taxable income. So if you raise income tax rates all they have to do is reduce their income and live on money which they borrow against their assets and/or live from investments into municipal bonds. So changing income taxes will affect high income people but not the very wealthy.
How about Elizabeth Warren's wealth tax ? 2 cents on the dollar. It would not hurt them. They would still be very very very wealthy!
Why only two cents while poor people are getting evicted from homes, the rich can’t afford more than two cents? and if you can’t collect the taxes they already owe, how do we collect this tax? Will they not find a loophole?
We’re at the tipping point where the rich have more money and power than anyone on the right side of issues while we try to figure out what to do they keep amassing wealth and power because the system works for them. It’s rather scary.
The usual solution, historically, is to have a world war and destroy an insane amount of infrastructure and kill a lot of people. It's always worked so far, why not now? /s
Jaye Raye ; I like to talk about Elizabeth Warren's proposal for a two percent wealth tax, because wealth is not taxed and the very rich do not 'earn' money that is considered as 'income'. It illustrates just how stingy they are that they strongly oppose it. Elon Musk had a fit when Warren's proposal was in the news. He said something like "Give them two percent and they will want more'!
End tRump's tax giveaway. Or institute a windfall profit tax . The way things are going. There will probably be a windfall for those who loaned money to the government.
None of this will affect the very wealthy.
If their actual WEALTH were taxed, even a small amount 2%, it could help some.
I agree.
Top rate of 70% on individuals and corporations since they are treated as individuals. Live by the sword. Die by the same sword.
BRAVO, Mark! Although I'd limit that rate only to corporations that have a profit level above a certain amount. After eliminating all the loopholes to hide profit, of course. The small corporations (say, under 50 total employees) wouldn't have to be taxed at such a high percentage.
Lower the interest rate on treasury bonds where the wealthy park their money. Don't know if it would save the problem, but I'd like to get even. Raise taxes on the billionaires.
Yes! They are destroying our attempt at democracy and threaten our very existence. Nobody needs that kind of dynastic wealth.
They are financing universities and professors chairs like the chair occupied by Robert Reich.
Hartmut Fischer : Is this a suggestion that 'they' should not have to pay their fair share of taxes? What good is this 'professors' chair if it can't have someone in it to help solve the very real problems in our economy?
Nothing of the kind!
But countries have imposed wealth taxes, most of them failed.
90% of the equity in stocks is owned by the richest 10%. Over 60% of the income of the wealthy is in the form of unrealized gains in stock appreciation which isn't currently taxable but should be. Taxing corporations attacks their income at the source no matter where they choose to live.
You are way way off with your claim of 90%.
Exactly.
Is there anyone ready to step into the Hon. Sanders’ shoes? We need more people like him representing what’s best for the American people, not big corporations.
I'm torn on the idea of MMT. In some ways, the Fed has been able to control rates in a way that has helped to curb inflation without slowing down the economy enough to increase unemployment. However, I'm not convinced that the Fed can implement policy to slow down spending and bring inflation back down without a recession or an increase in unemployment. Without the natural economic cycles of decreased spending and increased unemployment, followed by lower prices, and a resurgence in demand, I don't know if inflation will return to pre-pandemic levels. The game of near-zero rates that the Fed has been playing since 2008 is a dangerous one.
The Fed members obviously are Republicans who have been sold trickle down theory. I don't think it's a ying/yang issue. False dichotomy. Lots of other factors.
Fiscal policy -- should have declared economic war on price fixers and price gougers before letting monetary theory slow down our domestic economy.
We don't have a good handle on economic indicators, as much of the country is dominated by the gig economy. I keep saying the real solution is collecting from deadbeats and prosecuting price fixers and price gougers. E.G. California's attorney general sued Amazon alleging the company broke state competition laws. Specifically, the suit claims that Amazon keeps prices artificially high via practices barring wholesalers and third-party merchants from offering lower prices to other retailers. May this be an object lesson.
But don't forget to ask the Rich "May I?". Just normal etiquette, and shows you know your place in the accepted stratification of our economy.
sherm gallay ; Kneeling might help too.
In theory, but as of right now, not reality on either side.
In any other time or place, this jobs report would be seen as incredible, hopeful. However, at the head of the Fed, we have a Republican who has been drinking the Kool-Ade (sorry about the reference, but it feels like it is the right one) that workers are expendable and it is only corporations and what they take in that counts. Powell claims it is workers demanding reasonable wages that caused the inflation we are now experiencing. He has in his mind a magical figure of 2% inflation as his goal. He can't possibly know what it would mean to workers and their families to get that rate so quickly after a massive pandemic that killed millions around the world and well over a million in this country, that closed down China for many months, and brought out the strongest corporate greed in generations. I don't know where he got his economics training, but it did not include taking into account all factors when making a decision. Tunnel vision works well for corporations because they can tell that Powel and his crew are going to do little or nothing to stop them and besides, they have accumulated so much profit and bought back so much stock they will be sitting pretty as they say for a long time no matter what happens. And, the workers are interchangeable, aren't they? If unemployment goes up, they will have their pick of workers who will be forced to do whatever they are told at whatever wage the corporation chooses to pay, right? One can't help but wonder if that is just what Powell and his Republican buddies are hoping for.
Ruth
This nurse went 3 years without a raise while those in the C-suite got mid-six figure bonuses for cutting costs. When I realized the value of my life-saving work was merely a line item on their spreadsheet, I voted with my feet and retired early.
I'm sorry you had to. At least nurses have professional standards. I'm not sure administrators do.
They don’t! They proved it in my hometown by selling our not for profit, highly rated hospital to HCA. This is in the South and their nurses successfully UNIONIZED because of all the unnecessary cuts during the COVID crisis. Ya truly gotta love these big bastards.
Ruth, I totally agree. Cheryl's response to yours supports something else that I would like to add. Workers are finally getting raises over the last year, after enduring at least a decade without any measurable raises at all. In many cases, people took pay cuts to stay employed in 2008 and didn't see a raise that was even close to keeping pace with inflation after the economy rebounded and productivity grew. Some unlucky others were just plain let go. Working people already endured rising prices for shelter, goods, fuel and food on wages that were shrinking in the face of inflation up until now.
When energy prices rose, they were dismissed by the Fed because those prices are volatile and not part of the "core economic indicators." Working people had to pay those very real price rises and pointed to them as inflationary, but they were waved off because it doesn't make the 'tan book' Chair Powell looks at. When the stock market raged, profits fattened, economy grew and stocks split, no one at the Fed was concerned. As cheap money funded stock buybacks, fueled mergers and acquisitions that drove down competition, and set the table for the oligarchic, profit-driven inflation being witnessed, Fed was unconcerned and kept rates low. Now that businesses have to pay more to hire laborers, the Fed is going to apply 10 years worth of interest rate hikes in a single year to "bring inflationary wage pressure in line", and it's willing to bring the economy and employment to a skidding halt to do it. Working Joes and Janes are getting raises and inflation is suddenly an emergency.
We all must keep saying this until it gets broad traction: the collective purchases of working people is what drives economic growth and creates jobs. Working people are the job creators and policies that support them grow economies in a broad and sustained way. Executives may run entities that employ people but it is the mass of working people buying those goods and services that create jobs. And now his rant is ended.
C. Jacobs, awesome rant! You clearly stand with working people as do I. I remember talking with my high school students about the fact that the Fed didn't seem to mind that low interest rates were allowing corporations to participate in all kinds of behavior that would be bad for our economy, but we couldn't think how to stop it. The Fed has proven over and over that they are bound to the corporate world, not to the people that make Corporate World possible (whether those workers want to or not. We need the income working brings). Powell has an agenda, and it does not bode well for the rest of us. I am sorry Biden, in a fit of good feelings, let Powell stay even though an ignorant fool who originally appointed him wanted Powell to do as much harm to our economy as he could. He is still working at it 2 years after Trump left office. Workers and Corporate World are the pawns that are moved around the board at the whim of the CEOs and owners who are now being forced to pay the higher wages and salaries they don't want to pay. They paid Senators and Representatives not to raise the minimum wage and they kept it where it was set nearly 12 years ago but workers just wouldn't have it. The Fed is now punishing Americans for demanding higher pay and the corporations a bit for giving it to them/us. Powell needs to go, but alas, I don't know how to do that. I would think the other members of the Fed would see what is happening and challenge Powell, but as so often happens, Republicans infect the people they work with, giving them the disease of "OK, I am paid enough so I'll say nothing and do nothing. How bad can it be?"
At a minimum, it should be clear that the Fed demands a serious amount of unemployment in our economy, and if that is our economic policy, then we are obligated to provide a very healthy safety net to support the workers and families who are pushed out of employment.
Yes. If our economy needs workers without work, we must make sure these workers are housed, fed and have medical care. When will that ever happen? . Not in my lifetime. We forget there are more of us than there are of them.
I think the Fed is fine with sub 4% unemployment - unemployment rates were at or below 4% for most of 2018 and 2019. The bigger issue now is that they want to reign in inflation, and there's no way to do that without putting some pressure on the labor market. So far, however, inflation has been decreasing without increasing unemployment so a soft landing is still possible.
Except when 54% of current inflation is directly attributable to increased profits (ie "profiteering, price gouging") ... further punishing the people already paying more for everything is not going to dissuade or punish the profiteering that's taking place.
The Fed is starting to look like a child with a hammer, eager to apply their only tool to a problem that's actually a screw.
The current problem needs legislative fixes from Congress, which Republicans refused to vote for in the last session, and presumably will continue to refuse to do in the current one.
The Fed is basically pulling the handbrake on the entire economy, just because they don't have any other direct mechanism to address rampant profiteering.
Exactly. Thank you for this concise description.
Thank you for this commentary, Prof. Reich. It is truly perverse for the Feds to hang on to the outdated, harmful premise that the only way to curb inflation is to keep workers unemployed and keep salaries low. Take a look at the UK now!
You can guarantee it will freak the Fed. Their goal is to keep up unemployment and wages down. They have no appreciation for the FACT that inflation is the result of opportunistic price gouging.
Really, their charter needs to be revamped.
No wonder Americans feel screwed by their government.
And let’s not get started about the latest Supreme Court scandal regarding the chief justice’s corruption.
Jen, you are right about the need to rethink what the Fed should be doing. That is not the whole government nor should it be why people don't trust the government. It is just one piece. We need to find a way for the people to stop electing folks to office who care nothing for them, have an agenda of working against our government and the programs it provides the people, and want to pass legislation that will benefit only the rich as the Trump tax cut was designed to do. Right now, it is Republicans who are holding a circus in the House that is working to give power to insurgents, cut people who understand our problems from the committees that deal with those problems, and pass junk bills like the one to defund the IRS (so they will not have to pay their taxes the way ordinary people do). If more of those people were not elected, things would be better for all. Then the Chief Justice, I listened to his hearing in the Senate and at the time, thought he sounded dishonest. I could not see him, but only heard him and, I can't explain it, but he sounded glib and not really interested in anything but his own thinking even though he said nearly nothing of importance. I know he knows that Alito leaked the draft of the anti-Roe decision, but had to set up a fake investigation to cover. What a jerk!
It’s just one more thing people hate about the government. The rich not paying taxes, the dark money. They feel betrayed. Hell, I feel betrayed.
Your comment about Roberts is interesting. At the time I knew about his signature involvement in getting the Florida recount quashed and W installed. His appointment was the payback he expected. Your input from just hearing his voice validates what I thought at the time. Roberts thought he’d earned the appointment, and frankly he had.
The reason these folks vote for republicans is this they are mad. And the Murdoch empire points their rage at the wrong place.
May he rot.
Jen, you are so right about the Murdoch empire pointing scared white rage at the wrong people. It keeps them worrying and scared, which is exactly where Republicans want them, pathetically struggling while blaming the folks who are actually trying to help them. It is just so hard to watch and experience their pain, and ours. I thought Roberts would grow into the job as Chief Justice, but instead, he grew even further into the whining, undermining, dishonest fool I thought he was from the beginning when he was working for a Bush election when he knew well it was wrong. With the mess in Florida, the vote should have gone to the person with the popular vote win. That is what a decent Supreme Court would have done and they would never have listened to Roberts and his ilk. He did get his repayment and we are all paying for that for nearly 20 years. Disgraceful!
They couldn’t have done that, we still have the electoral college. The NYT did an audit of the Florida vote in fall of 2001 and found that if all votes had been counted Gore,win Florida. And easily had it not been for JEB!
I think the main reason ppl don’t trust government is valid: too much dark and special interest miney, instead of response to voters.
Once again we can thank Roberts, although he didn’t write the majority opinion.
Okay, I fully admit to having no clue about how "the economy" works, other than a woeful generic knowledge. Robert, you've helped me gain a slightly broader understanding. So within that context, am I wrong in saying Jerome Powell is not up to the task? He seems to be a "one trick pony." How does the position of Fed Chair work? Is it a position President Biden can affect? If so, in your opinion, is it time for him make a change? The incessant interest rate increases seem to not be addressing the issue and they're hurting people, exacerbating the impacts of inflation, not helping them. I may be way off base, but any help to gain a better understanding would be greatly appreciated.
Give The Deficit Myth a try. It will blow your mind. I’ve been reading economics since 2008 (I was mad at the banks, and I’m a chemist so BS and jargon don’t scare me). Web of Debt is a good intro about how money is created (it will also blow your mind). Donut Economics is about how economics is taught and sustainable growth. All good stuff and quite readable. Dear Dr Krugman never addresses MMT but I think knowing about it ( the Myth book) is really helpful in giving your a framework to understand the economy.
I will always remember Roger B. Smith's remarks, in 1986, when he was asked about raising prices on all new models at GM. The country was JUST exiting a terrible recession. He said, "We believe we are charging what the market will bear!" That was when I realized that the commonly understood idea of a fair profit had gone away! Big business began wringing as much out of their respective markets as they could. And not ONE reporter asked, "what about a fair profit!"
The Fed always gives to the corporations and shafts workers. Nothing new, but still. . . 🤬🤬🤬
I don't think the Fed is a human who can be 'spooked'. This system is set up to keep the workers down. If they really want to stabilize our economy, the very wealthiest would lose their big, fat tax 'breaks' ( why would they need a 'break' from something they rarely or never do?).
Powell is 'crazy like a fox'. Since he is working for those who are gaining all the wealth, there isn't much that does not require raising interest rates. When 'we' default on 'our' loans made by the very wealthy to 'US', who will benefit!? What kind of interest will be made on those loans?
Fund the IRS so they can go after big tax cheats and use the fines to lower the debt. That way the cheats will have less money to fund politicians with dark money and thus decrease their power over federal and state budgets. Tax cuts that lower rates for wealthy people and corporations that then profit off buying federal debt might thus be averted. Doesn't it make your head spin?
The points Robert makes are so blatantly obvious to even a casual observer of the economy and global issues that one is forced to conclude that the Fed only exists to serve the interests of the 1%. Why aren't our elected representatives at the local, state and national level raising hell about this?
Paul Bruno ; because our 'representatives' are on the take. They work for the money.
I agree that that's the case for most of them, but why isn't the progressive wing of the Democratic party raising hell? It's like there's some sort of "hands off" policy surrounding SCOTUS and Federal Reserve Board decisions that harm the general population.
Paul Bruno ; Bernie Sanders and Elizabeth Warren are among those who have magnified these facts for a long time. The corrupt media (that is getting more corrupt) have marginalized and ridiculed them. Bernie is dismissed as a Socialist and Warren is 'that woman '. It's what they won't cover that is important. Katie Porter has been known to kick butt in the calling out greedheads department, too.
I disagree. The Fed must do what it can with the blunt instrument of interest rates. It does hurt the average people to raise rates but unchecked inflation hurts the average person more yet.
I would agree with you if the factors that Robert point out where not spot on. When companies like General Mills, P&G, the oil industry, the shipping industry, etc. are making record profits on inflated prices, beating workers on the head to lower demand is inhumane and criminal (or should be!).
Tax the rich! Corporations with the highest profit margins in 70 years, and pay way less in taxes than they did in the 50's! Use anti trust laws to break up monopolies!
Thanks Robert for explaining this in common sense, understandable terms. When I try to explain this, I use terms like ' inelasticity of supply and demand' and people's eyes glaze over.
Powell's approach to inflation is aimed at only one side of the inflation equation - the price of labor. He avoids the other side - monosomy pricing by corporate America. But the evidence that monosomy is a big cause of inflation is right there, in large increases corporate profit margins.
And it would appear that Powell accepts that Corporate America is incapable of expanding production to meet increased demand from consumers who now have more income. He seeks instead to reduce consumer demand by raising interest rates. So Powell's solution is demand destruction - take money away from people so they can't try to buy as much stuff, and viola supply and demand are once again in balance. This is nuts.
(Google "Bed of Procrustes")
I wonder how many are people having to get a second job to keep their heads above water......
Many of the jobs created in recent months have been taken by non-traditional hires such as those of us who had long abandoned looking for work. I am now employed (as of January) after looking for an appropriate role for many years. We need to start tracking people looking for work who are not collecting unemployment like I did FOR YEARS!
I agree with you. They are probably making their money in the cash economy and not showing up as a very discouraged job seeker.
Does anyone track profit margins?
Yes; Robert Reich does.
I wonder why profit margins aren't daily news, along with the inflation rate.