Qone0,
I know of the Economic Policy Institute (EPI), and often like to read their articles. I also agree with them on many points. But I never quote them because they are a private organization with a fairly strong bias, are not particularly thorough, and are very clever with weasel words.
All that said, I don’t find your distribution of family wealth as “eye opening”. In fact, it is perfectly normal in any healthy society to have the wealth concentrated in a small percentage of the people. This normal distribution of wealth is described in economics as the Pareto distribution.
The Pareto distribution doesn’t mean that the rest are “very poor” -- for instance, the US Census says that 30% of all homes in the US are owned outright (meaning no mortgage at all). Also, virtually everyone in the US will ultimately have income from a retirement program and/or Social Security, both of which are assets which should have been counted as wealth by the EPI, but I’ll give you odds that the EPI did not count that as wealth; therefore, their report is flawed. For example, a woman I know who just retired and who does not own a home and cannot be considered wealthy (because I’m sure she has far less than $75K in savings) will receive about $21,600 per year from SSI. If that amount were income from a savings account bearing an interest payment of 3% annually, the amount in the account would have to be $720,000. So with that, plus Medicare/Medicaid accounted for in the same manner as SSI, it appears she isn’t so poor after all. This example is sufficient to show that the Pareto distribution in a modern society really only applies to the very rich and not to the people with more moderate wealth.
Regarding the rest of your message, I’m wondering what you mean by: “This is happening with the debit/credit based system we have now. The interest charged on the debt by the private banking system is concentrating wealth.” What interest charged on what debt? Credit cards? Have to agree, those rates are damned high; but the owners of that debt also have to deal with a high rate of defaults. So I choose not to carry a credit card debt; and I think pretty much everyone else has the same choice. All the other interest rates seem pretty reasonable to me. In fact, I have a good personal friend who is a bank VP, and he says his bank (among the largest in the country) follows a very complex formula, much like the one used by all other commercial banks (which he ought to know because he has worked for other banks) which tries to guarantee a net income of 2% over their cost of funds. That seems pretty reasonable to me, particularly since you and I can get a little over 3% now on a 5-yr CD. Look at that -- the owner of a 5-yr CD is making more than the bank’s 2%! Go figure. It appears the real culprits when it comes to concentrating wealth are the owners of CDs. Perhaps I’m just being facetious. So by your statement, are you suggesting that banks should not charge any interest at all? Or are we to get rid of banks altogether because we certainly can’t have them making any profits.
Speaking of banks, do you know what the current margin rate is for commercial banks in the US? This is set by the FED, you know, and they change it from time to time, and is a way of changing the velocity of money, which of course, relates to GDP and inflation and many other things.
AI
