I wonder how many Americans realize that when people talk about “the global 1%” they’re talking about them? It only takes an income of about $50,000 to be in the global 1% of income earners. In other words about half of Americans are members of the global 1%. And we’re not exactly lighting our cigars with $100 bills.
Here’s some gasoline on the fire. How many who make moral arguments that the well off should be monetarily caring for their fellow man………are willing to take that argument all the way down to all westerners making, oh, $30K a year or more?
What’s that saying? Taxes for thee, but not for me? Or are people who live in “shithole countries” just to be forgotten?
Actually, that’s sort of my point.
I know. Gasoline on the fire………
Can you really compare world incomes in that manner, does $50k in the U.S. have the same purchasing power as someone from Albania, Cuba, Greece, etc..not likely. I believe the issue is our tax system. Let’s just compare $50k to $200k in the U.S. is the tax system equal between these two groups, does the $50k income have the same opportunity to use tax shelters, educational options for their kids, retirements, where they live, no, it is not equal. The current tax system is not equal, it does benefit those in the in the higher income levels more so than someone form the lower income level. To use the comparison across the world as you did is very misleading. We pay taxes for a reason. We pay taxes as a responsibility. But we do not pay taxes equally. We just had a tax cut, not tax reform.
Even when PPP (purchase price parity) is used we still earn most of the world’s income.
Well, Dave got there first. Relatively, we are filthy rich.
Larry, would really like to see all those tax havens. Its urban myth for the vast majority as far as I’m concerned. And I have talented accountants that traffic in very well heeled clientele – NY metro sports stars, private equity, large corporate senior execs etc. The well to do pay the vast majority of the freight. Its just an empirical fact.
It’s not just that. It’s that the poor here are filthy rich.
What I have observed is that most people only look at the rung on the ladder above them (“the rich”) and the rung on the ladder below them (“the poor”) without seeing the ladder. Something similar goes on in politics. Anyone to your right is “the right” and anyone to your left is “the left”. You are always Omphalos, the Center of the Universe.
Related question. The stock market ( DOW) has risen an almost unprecedented amount in the last year.
I know stock prices only rise because of more bidders than sellers.
So, O K, smart guys, where were people keeping money before this latest “exuberance”?
Inform the bottom rung.
Gray
Other asset classes. Period, full stop.
Why would other asset class values chase equity prices (value) up? 1. A view that equities are less risky, reducing discount rates. 2. A view that earnings prospects have increased, the numerator in the discounted cash flow calculation. (Less risk is in the DCF denominator) 3. What I call yield chase. Lower interest rate returns available. Also in the DCF denominator.
That’s just the arithmetic. The judgments underlying the arithmetic are what make markets go round.
@Gray Shambler
(I do not disagree with @Drew.)
The money did not exist “before this latest ‘exuberance’â€. The assets are used to create the money. This newly created money is mostly available to people with money. The richer get richer
from the newly created money, because they created it.
Today, the stock market is benefitting, but 15 years ago, the housing industry was benefitting because of more bidders than sellers for Mortgage Backed Securities (MBS) The poorer got poorer from the newly created money, because they borrowed it.
(Actually, the poor got richer, until the housing bust, and then, they got poorer – a different story for a different day.)
If corn were money and growers used fractional reserve farming, corn would be lent (not sold), and there would be an accounting ledger for the corn loans. Each loan would be entered on the credit side, and it would be balanced on the debit side by an account created for the corn borrower.
When a person needed to make cornbread, he/she would withdraw the amount of corn needed. Unfortunately, the corn withdrawal would be for fiat corn – slips of paper for various amounts of corn (1lb., 5lb., 10lb., 1oz., 5oz., 10oz., etc.). While the Farmer Corn Notes would be legal tender, they would not make tasty cornbread.
Not to worry, the Free-Traders are here to save the day. These Farmer Corn Notes could be used to trade the Chinese for imported corn. Now, the imported Chinese corn might kill you or your pets, but it is cheap.
The total amount of corn lent each year would be a multiple of the Grain Reserve Requirements set by the government regulators, and fiat corn (Farmer Corn Notes) would be treated the same as real corn. If these slips of paper were planted, they would be be counted in next year’s harvest as if they sprouted an actual corn stalk.
The corn growers would increase their corn wealth (real and imaginary), and the corn borrowers purchase imported Chinese corn ( very real and very toxic).
A wise man once posted about Economic parables.
It has always been more correct to talk about the .1 % (POINT one percent), or the .01 percent. Unfortunately, most Americans (and journalists) are innumerate.
1% of world population is 70 million people. .1% of world population is 7 million people. .01% of world population is 700,000 people.