[Q&A] Questions you want answered (D&D Edition)

Reviving for the new D&D:
-ask or answer questions better suited for D&D than EE
-not intended as a debate thread; if people want to debate a particular issue feel free to create a new thread for it.

What's the difference between the DNC and the DCCC? Does it make sense to donate to one more than the other? How do I choose between donating to them vs individual campaigns in non-local races?

DCCC (Democratic Congressional Campaign Committee) only covers the House of Representatives.

The DCCC changed their rules to blacklist any one who works on a campaign that challanges an incumbent democrat during a primary in response to Alexandria Ocasio-Cortez and other progressive Dems beating out establishment-friendly incumbent Dems. I wouldn't donate to them if you want more people like her in Congress. She has her own PAC called Courage to Change that goes to candidates she supports.

Does the wealth being accumulated by the millionaires and especially billionaires of the world (but the US in particular) have any impact on inflation? Ie if they're not using the money, does it effectively take it out of circulation?

It has an outsized effect on inflation of the stock market and other investment vehicles. It affects consumer price inflation slightly.

LeapingGnome wrote:

It has an outsized effect on inflation of the stock market and other investment vehicles. It affects consumer price inflation slightly.

This. Billionaires are NOT not using the money. They don't have mansions full of mattresses stuffed with crisp Benjamins. That money is invested somewhere. And if the question is "do those investements affect inflation", the obvious answer is "depends on where it's invested".

I genuinely think that the much longer lever for the billionaires to influence inflation is more direct anyway - money buys political influence. Sufficient political influence can affect interest rates.

One thing it does is drive up house prices like crazy. The problem with that kind of inflation is that A) it's extremely dangerous, and B) people love it. They want their house to go up 15% a year forever.

It can't, and won't, and that's why the economy blew up in 2008. It will probably happen again.

LeapingGnome wrote:

It has an outsized effect on inflation of the stock market and other investment vehicles. It affects consumer price inflation slightly.

I don't know. Have you seen the prices of super yachts lately? They're out of control!

Huh I read in this article that of people worth $1 million or more, they hold 28% of their assets in cash on average, and that rate has been increasing. That sounds like quite a significant amount of money that's just not doing anything at the moment.

That said I agree it's not likely to have a major impact on consumer prices because they wouldn't be increasing demand much for the same things the rest of us buy if they started using it. They literally have nothing to spend it on, and yet so many people could use a small bit of it to have reliable access to basic needs, food, clothing, shelter. Which is to say, if they're not going to spend it, either tax them for it--but it's hard to prevent them skipping out through loopholes--or just print that trillion dollar coin and give people that need it the money. I'm convinced doing so would barely move the needle on inflation.

Huh I read in this article that of people worth $1 million or more, they hold 28% of their assets in cash on average, and that rate has been increasing. That sounds like quite a significant amount of money that's just not doing anything at the moment.

Unless it's under their mattresses, it's probably in banks, meaning it's out there flying around being multiple dollars at once.

I haven't followed too closely but I thought commercial banks are pretty limited in how much they're allowed to put into investments. Most of their money comes from loans. If I'm understanding that article correctly, that 28% must be in commercial banks rather than investment banks, and it's specifically called out as cash assets, so it can't be stuck in some investment vehicle. They're basically hoarding money for an apocalyptic rainy day that will be a self-fulfilling prophecy.

$1 million isn't what it used to be... those numbers for people worth $100 million or more would be more telling since that is the where the wealth is concentrated, and are undoubtedly more in single digit percentages.

Chairman_Mao wrote:

I haven't followed too closely but I thought commercial banks are pretty limited in how much they're allowed to put into investments. Most of their money comes from loans. If I'm understanding that article correctly, that 28% must be in commercial banks rather than investment banks, and it's specifically called out as cash assets, so it can't be stuck in some investment vehicle. They're basically hoarding money for an apocalyptic rainy day that will be a self-fulfilling prophecy.

I don't know what the current percentages are, but for a long time, fractional reserve banking meant that a bank only had to hold about 5% of its outstanding loans as cash. If you deposited $100, that meant that $95 of it would immediately be lent out or invested. Then other banks would eventually get that $95, and loan out another $90.25. That money would trickle into other banks (maybe even the first bank) and they'd lend out $85.74, and so on.

In other words, at a 5% margin rate, for each dollar you put into a bank, about 20 notional dollars get created in the banking system. I don't know what the current margin requirement is, but if you happen to spot it, a simple 1/X will give you the money multiplier. IIRC, this is part of the M3 count of money. There are tons of other notional derivatives of M3, most of which end up taking on a lot of 'moneyness', because they're specified in dollars and trade in the open market, so they end up getting treated a lot like actual dollars. That is, until the inevitable debt contraction, when all these structures start to blow up because there's nothing close to the actual number of dollars required for them to all be serviced at par. The Fed rides to the rescue and prints a whole hell of a lot of new M1 money to bail out its buddies and keep them from collapsing, at which point the spiral takes off again.

This is why stocks and real estate just keep going up and up and up, because anytime they threaten to go down, the Fed intervenes.

This is why all the money in the system is flowing to fewer and fewer people; it's far far far more profitable to manipulate wealth tokens than it is to actually generate wealth.

Malor I remember you predicting this literal exact scenario over a decade ago - before even the 08 crash. I remember thinking it was a bit pessimist at the time but holy sh*t you were right.

Is The Lincoln Project tweeting about "principled conservatives" peak irony?

Mixolyde wrote:

Is The Lincoln Project tweeting about "principled conservatives" peak irony?

Well, the principles are about dog whistling racism, sexism, homophobia, xenophobia, etc., and not explicitly stating them.